Case Summary (G.R. No. 146006)
Petitioners
Jose C. Lee (President of Philinterlife and FLAG)
Alma Aggabao (Corporate Secretary of Philinterlife)
Respondents
Regional Trial Court of Quezon City, Branch 85 (Judge Pedro M. Areola et al.)
Ma. Divina OrtaÁez-Enderes (Special Administratrix of Dr. OrtaÁez’s estate)
Key Dates
• July 6, 1956 – Incorporation of Philinterlife
• July 21, 1980 – Death of Dr. OrtaÁez
• March 10, 1982 – Appointment of Rafael and José OrtaÁez as joint special administrators
• April 15, 1989 & October 30, 1991 – Sales of Philinterlife shares by widow and son, respectively, to FLAG without court approval
• August 11 & 29, 1997 – Intestate court orders voiding sales and extrajudicial partition
• June 23, 1998 & October 9, 1998 – Court of Appeals and Supreme Court affirm nullity of sales
• July 6, 2000 – Intestate court issues writ of execution to restore shares to the estate
• July 26, 2000 – Court of Appeals dismisses petitioners’ certiorari
• February 23, 2004 – Supreme Court decision on Rule 45 petition
Applicable Law
1987 Philippine Constitution; Civil Code (Art. 493 on co-ownership; Art. 533 on transmission of hereditary property); Rules of Court (Rule 39, Sec. 10; Rule 45).
Background of Estate Proceedings
Upon Dr. OrtaÁez’s death, his widow and children filed for letters of administration. No regular administrator was appointed; special administrators Rafael and José OrtaÁez submitted an inventory including 2,029 Philinterlife shares (50.725% of outstanding stock).
Unauthorized Sales and Acquisition by FLAG
Without prior court approval, Juliana OrtaÁez sold 1,014 shares to FLAG on April 15, 1989, failing to repurchase within the agreed period. On October 30, 1991, José OrtaÁez likewise sold 1,011 shares to FLAG. FLAG consolidated title to all 2,029 shares.
Intestate Court Orders Annulling the Sales
Ma. Divina OrtaÁez-Enderes moved to nullify the extrajudicial settlement and sales. On August 11, 1997, the trial court ruled that any sale of estate property without probate court approval is void (citing Godoy v. Orellano). On August 29, 1997, it declared the 1982 partition agreement partially void ab initio insofar as it transferred stock.
Appellate Proceedings
José OrtaÁez alone sought certiorari in the Court of Appeals, which denied relief on June 23, 1998, holding that heirs cannot dispose of estate property without court approval and that the resulting sales were void. The Supreme Court dismissed his Rule 45 petition on technical grounds (Oct. 5, 1998), rendering the nullity final on February 23, 1999.
FLAG thereafter diluted the estate’s interest by increasing Philinterlife’s capital stock. Enderes obtained a writ of execution on July 6, 2000, to restore the 2,029 shares to the estate and to recognize her voting rights as special administratrix. Petitioners ignored service, prompting contempt proceedings.
Issue on Execution and Due Process
FLAG and its officers questioned the intestate court’s authority to execute orders annulling the sales and argued deprivation of property without due process, contending the trial court’s determination was provisional and should await a separate ownership action.
Supreme Court’s Analysis on Probate Court Authority
The Court reiterated that:
• Any disposition of estate property pending final adjudication requires prior court approval (Godoy v. Orellano; Dillena v. Court of Appeals; Man
Case Syllabus (G.R. No. 146006)
Background and Parties
- Petitioners Jose C. Lee and Alma Aggabao duly representing the Philippines Internationl Life Insurance Company (“Philinterlife”) as President and Corporate Secretary, respectively.
- Petitioner Filipino Loan Assistance Group (“FLAG”) as the corporate entity that consolidated ownership of Philinterlife shares.
- Respondents include the Regional Trial Court (RTC) of Quezon City, Branch 85 (Judge Pedro M. Areola, Branch Clerk Janice Y. Antero, Deputy Sheriffs Adenauer G. Rivera and Pedro L. Borja), Ma. Divina Enderes as Special Administratrix of the estate shares, and other officers acting for them.
- Nature of the case: petition for review under Rule 45 to set aside the Court of Appeals’ dismissal of petitioners’ certiorari and prohibition case against RTC orders executing final adjudication of estate shares.
Factual Antecedents
- Dr. Juvencio P. OrtaAez incorporated Philinterlife on July 6, 1956, owning 90% of subscribed capital. He died on July 21, 1980, leaving a widow, three legitimate children (Rafael, Jose, Antonio) and five acknowledged illegitimate children including Ma. Divina OrtaAez-Enderes.
- September 24, 1980: petition for letters of administration filed before RTC Quezon City, Branch 85, docketed SP Proc. Q-30884; opposition and motion for special administrator filed by Enderes et al.
- March 10, 1982: appointment of Rafael and Jose OrtaAez as joint special administrators; inventory submitted showing 2,029 Philinterlife shares (50.725% outstanding stock).
- Extrajudicial settlement (Memorandum of Agreement dated March 4, 1982) partitioned estate among Juliana Salgado OrtaAez (widow), Rafael and Jose OrtaAez, despite adverse claims by Enderes et al.
- April 15, 1989: Juliana sold 1,014 shares to FLAG with right to repurchase; repurchase not exercised and ownership consolidated by FLAG.
- October 30, 1991: Jose sold 1,011 shares to FLAG under same terms; ownership likewise consolidated by FLAG.
Intestate Court Proceedings and Orders
- July 12, 1995: Enderes et al. moved for appointment of special administratrix for estate shares; opposed by Jose OrtaAez.
- November 8, 1995: Enderes appointed Special Administratrix of Philinterlife shares.
- December 20, 1995 & January 9, 1996: Enderes filed urgent motions to declare void ab initio the 1982 memorandum of