Silverio vs. Court of Appeals

The order of preference in the appointment of an estate administrator under Section 6, Rule 78 of the Revised Rules of Court is not absolute but directory, and the probate court may disregard the preferential right of the surviving spouse where the latter is unsuitable or has an adverse interest to the estate. The surviving spouse's preferential right yields to the court's sound discretion to appoint a competent and suitable person, and factual findings of the trial court on suitability, when affirmed by the Court of Appeals, are binding and conclusive on the Supreme Court.

Beatriz Silverio died intestate on October 7, 1987 in Makati, Metro Manila, survived by her husband Ricardo C. Silverio, Sr. and five children: Edmundo, Edgardo, Ricardo Jr., Nelia, and Ligaya. The estate comprised real and personal properties in the Philippines and abroad, the character, identity, and aggregate value of which remained undetermined. During the marriage, Ricardo Sr. had allegedly stripped conjugal assets by transferring properties to his illegitimate children with another woman and by removing assets to California, creating a conflict of interest that bore directly on his suitability to serve as administrator of the estate.

Beatriz Silverio died intestate on October 7, 1987 in Makati, Metro Manila, survived by her husband Ricardo C. Silverio, Sr. and five children: Edmundo, Edgardo, Ricardo Jr., Nelia, and Ligaya. The estate comprised real and personal properties in the Philippines and abroad, the character, identity, and aggregate value of which were still undetermined, except for personal properties estimated at ₱1,000,000.00. No settlement, judicial or extrajudicial, of the properties had been made by the surviving spouse during Beatriz's lifetime. Their son Ricardo Jr. had allegedly taken control and management of the properties left by the deceased for his own benefit.

On November 12, 1990, more than three years after Beatriz's death, Edgardo Silverio filed a Petition for Letters of Administration with RTC Makati, Branch 57, followed on November 28, 1990 by an Urgent Petition for Appointment of Special Administrator, alleging his competence and willingness to act as administrator. On December 4, 1990, the respondent judge issued an Order setting the petition for hearing on January 24, 1991 and directing publication once a week for three consecutive weeks in a newspaper of general circulation, posting at the Municipal Building and Public Market of Makati, and registered mail notice to all surviving heirs. On December 17, 1990, respondent Judge Francisco X. Velez appointed Edgardo Silverio as Special Administrator pending appointment of a regular administrator.

Ricardo Sr. interposed his Opposition on January 24, 1991. The private respondent testified on his behalf on February 21, 1997 and was cross-examined on October 7, 1991. The reception of evidence for the petitioner was scheduled for October 25 and 28, 1991. However, on October 22, 1991, petitioner filed an Urgent Motion to Transfer the Hearing, citing a settlement conference in California in an unrelated case. On October 28, 1991, the trial judge declared that petitioner's failure to appear and adduce evidence amounted to a waiver of his right to present evidence, noting that petitioner had never appeared personally since January 1991 despite repeated assurances from counsel, and that his opposing counsel incurred substantial expenses traveling from Sydney, Australia only to face postponements. The following day, October 29, 1991, the respondent judge appointed Edgardo Silverio as regular administrator with a ₱200,000.00 bond.

Petitioner subsequently filed an Omnibus Motion on November 19, 1991 seeking to transfer the hearing on the ground that he was preoccupied with post-election matters and preparation for his assumption of office as Congressman for the Third District of Bulacan, which was denied on June 4, 1992. A Motion for Reconsideration filed on June 29, 1992 was denied on August 17, 1992. Petitioner elevated the matter to the Court of Appeals via certiorari on September 23, 1992, but the appellate court dismissed the petition on January 20, 1993, finding that the trial judge had not acted with grave abuse of discretion, that petitioner was estopped by laches from questioning the December 17, 1990 order, and that any error committed was an error of judgment correctible only by appeal, not certiorari.

During the pendency of the Supreme Court petition, respondent Judge Velez issued an Order on July 31, 1996 approving an Agreement for Attorney's Contingent Fee entered into between private respondent Edgardo Silverio and his counsel Atty. Cesar P. Uy on January 21, 1991, granting the latter 33⅓ percent of the fair market value of all properties recovered for the estate — estimated at ₱150,000,000.00 — and directing the Register of Deeds to annotate the claim and authorizing the administrator to sell the real properties to pay the attorney's fees. Petitioner assailed this order as a grave abuse of discretion, arguing that a special administrator may sell only perishable property for preservation purposes, not real properties for payment of debts, and that the contingent fee was unconscionable and had never been disclosed to the heirs. Private respondent countered that petitioner was unfit to serve as administrator due to his systematic stripping of conjugal assets, his cohabitation with another woman during the marriage, and his transfer of conjugal properties to his illegitimate children, and that private respondent had already demonstrated competence by obtaining a judgment for reconveyance of three valuable Makati properties.

• Due Process: Petitioner contended that he was denied due process of law when the respondent judge considered his failure to be present on October 28 and 29, 1991 and adduce evidence on his behalf as a waiver of his right to present evidence.
• Order of Preference: Petitioner argued that the Court of Appeals erred in interpreting Section 6, Rule 78 of the Revised Rules of Court as not providing for an order of preference in the appointment of the administrator, asserting that the surviving spouse has a preferential right to be appointed.
• Qualifications of Private Respondent: Petitioner maintained that private respondent had not satisfactorily established by at least an iota of proof that he is qualified and competent to act as administrator.
• Sale of Estate Properties: Petitioner argued that the respondent judge had no power to authorize the private respondent to sell conjugal partnership and estate real properties to pay attorney's fees of Atty. Cesar P. Uy, as a special administrator may only sell perishable and personal properties, not real properties, and only for preservation of the estate, not payment of debts.
• Unconscionable Attorney's Fees: Petitioner contended that the 33⅓% contingent fee agreement was never submitted to the court immediately after its execution on January 21, 1991, was never disclosed to the heirs, and was unconscionable, granting counsel ₱150,000,000.00 — larger than the share of any heir.
• Judicial Bias: Petitioner alleged that respondent Judge Velez showed undue interest, bias, and partiality toward private respondent and his counsel, and filed a Motion to Inhibit seeking the judge's voluntary inhibition.

• Unfitness of Petitioner: Respondent countered that petitioner was utterly unfit to serve as administrator, having systematically stripped conjugal partnership assets by purchasing three valuable Makati properties using conjugal funds and fraudulently registering them in the names of his illegitimate children with his mistress Carmen Zuniga, and by removing conjugal assets to California to the exclusion of his lawful wife.
• Competence of Private Respondent: Respondent argued that private respondent had demonstrated his competence as administrator by identifying four valuable real properties belonging to the conjugal partnership and by obtaining a judgment in Civil Case No. 17467 ordering reconveyance of three real properties to the conjugal partnership, which judgment had become final.
• Conflict of Interest: Respondent maintained that petitioner's conflict of interest was manifest, as he could not be expected to bring suit against himself for recovery of assets he had fraudulently removed and concealed.
• Due Process Not Denied: Respondent argued that petitioner was not denied due process, as he had been given ample opportunity to present evidence but repeatedly sought postponements without appearing personally.
• Non-Stay of Special Administrator Appointment: Respondent theorized that under Section 1(e), Rule 109 of the Revised Rules of Court, no appeal lies from the appointment of a special administrator, and such order could not be stayed by certiorari.
• Motion to Inhibit Procedurally Defective: Respondent maintained that the Motion to Inhibit must be denied for failing to contain a notice of hearing and for being addressed to the Branch Clerk of Court rather than the parties, and that bare allegations of bias without supporting facts are insufficient to disqualify a judge.

• Due Process: Whether petitioner was denied due process of law when the trial judge declared his failure to appear and adduce evidence as a waiver of his right to present evidence.
• Order of Preference: Whether Section 6, Rule 78 of the Revised Rules of Court provides for an absolute order of preference in the appointment of an administrator, such that the surviving spouse must be appointed over other heirs.
• Suitability of Administrator: Whether the appointment of Edgardo S. Silverio as administrator was proper given the attendant facts and circumstances.
• Sale of Estate Property: Whether the trial court had the power to order the sale of estate real properties to pay contingent attorney's fees while the validity of the regular administrator's appointment was pending review.
• Judicial Inhibition: Whether respondent Judge Velez should be required to inhibit himself from the case on the ground of alleged bias and partiality.

• Due Process: No. Petitioner was not denied due process, as he was afforded ample opportunity to be heard and present evidence but repeatedly sought postponements without personally appearing.
• Order of Preference: No. Section 6, Rule 78 does not provide for an absolute order of preference; the order of preference is directory and depends on the attendant facts and circumstances, with the probate court exercising sound discretion to appoint a suitable person.
• Suitability of Administrator: Yes. The appointment of Edgardo S. Silverio as administrator was proper, the factual findings of the trial court on his competence, as affirmed by the Court of Appeals, being binding and conclusive.
• Sale of Estate Property: No. The trial court was not vested with the power to order the sale of estate real properties to pay attorney's fees pending determination of the validity of the regular administrator's appointment; a special administrator may sell only perishable property as the court orders, pursuant to Section 2, Rule 80.
• Judicial Inhibition: No. Petitioner's mere allegation of partiality and bias without supporting facts is insufficient to require the respondent judge to inhibit, as it does not constitute a "just and valid reason" under Section 1(2), Rule 137.

• Due Process: The essence of due process is the reasonable opportunity to be heard and submit evidence in support of one's defense, not that an actual hearing must always be held. The records showed that petitioner was amply given the opportunity to present evidence but waived it through repeated unexcused absences and postponement requests. The trial court found that petitioner had never appeared personally since January 1991 despite assurances from counsel, and that his opposing counsel incurred substantial expenses traveling from Australia only to face postponements. Factual findings of the trial court, especially when affirmed by the Court of Appeals, are deemed final and conclusive when supported by substantial evidence. The Court found no ground to disregard these findings, as petitioner was not sincere in his assurances to attend scheduled hearings.

• Order of Preference: Section 6, Rule 78 enumerates the persons who may be appointed administrator in a specified order, but the order of preference is not absolute. In Intestate Estate of the deceased Geronima Uy Coque (44 Phil 711 [1923]), the Court held that while a probate court cannot arbitrarily disregard the preferential rights of the surviving spouse, it may appoint another person if the one enjoying preferential rights is unsuitable. Unsuitableness may consist in adverse interest or hostility to those interested in the estate. In Esler vs. Tad-y (46 Phil 854), the Court affirmed that the probate court has discretion to issue letters of administration to any of the persons mentioned in the section, and absent abuse of discretion, the appointment will not be revoked. In Villamor vs. Court of Appeals (162 SCRA 578), the Court upheld the appointment of strangers to the decedent where the persons with preferential right were incompetent or unwilling. The determination of suitability rests in the sound judgment of the probate court and will not be interfered with on appeal unless it affirmatively appears that the court below was in error.

• Suitability of Administrator: Petitioner's conduct — cohabiting with another woman during the marriage, fraudulently transferring conjugal properties to his illegitimate children, and removing conjugal assets to California — demonstrated an adverse interest to the estate and its heirs, rendering him unsuitable for appointment. By contrast, private respondent had demonstrated competence by obtaining a judgment for reconveyance of three valuable Makati properties to the conjugal partnership. The trial court's findings on Edgardo's competence, affirmed by the Court of Appeals, were binding and conclusive, and the Court discerned no ground to disregard them.

• Sale of Estate Property: Under Section 2, Rule 80 of the Revised Rules of Court, a special administrator may sell only perishable and other property as the court orders sold, and shall not be liable to pay any debt of the deceased unless so ordered by the court. The Court found that the respondent court was not vested with the power to order the special administrator to sell real properties of the estate pending determination of the validity of the regular administrator's appointment. Citing Tecla Arganda vs. Velez (Vol. XXXV, No. 134 O.G. 2429), the Court reiterated that the court may grant authority for the sale of estate property only upon petition of the executor or administrator, provided legal requirements and grounds are satisfied — namely, preservation of other property, payment of debts or expenses of administration, or settlement of legacies. The order authorizing sale of real properties to pay contingent attorney's fees was not preservation but dissipation of the estate, constituting grave abuse of discretion. The issue of the attorney's lien became moot and academic in light of the finding that Edgardo Silverio had been duly appointed as regular administrator.

• Judicial Inhibition: While no judge should handle a case in which he might be perceived, rightly or wrongly, to be susceptible to bias and partiality, and a judge may voluntarily disqualify himself for just or valid reasons under Section 1(2), Rule 137, petitioner's bare allegation of partiality without supporting facts was insufficient. The Court held that such unsupported allegations do not constitute a "just and valid reason" for inhibition and carry the insidious insinuation of malice on the part of the respondent judge.

• Order of Preference in Appointment of Administrator — The enumeration in Section 6, Rule 78 of the Revised Rules of Court provides a directory, not mandatory, order of preference. The probate court may disregard the preferential right of the surviving spouse if the latter is unsuitable, which may consist in adverse interest of some kind or hostility to those immediately interested in the estate. The determination of a person's suitability rests in the sound judgment of the probate court, and its judgment will not be interfered with on appeal unless it affirmatively appears that the court below was in error. Applied in this case to uphold the appointment of Edgardo Silverio over the surviving spouse Ricardo Sr., who had an adverse interest through his fraudulent stripping of conjugal assets.

• Due Process in Probate Proceedings — The essence of due process is the reasonable opportunity to be heard and submit evidence, not that an actual hearing must always and indispensably be held. There is no denial of due process where a party was given the opportunity to be heard but waived it through repeated unexcused absences and postponement requests. Applied to uphold the trial court's declaration of waiver when petitioner repeatedly failed to appear at scheduled hearings despite assurances.

• Factual Findings of Trial Court Binding on Appellate Courts — Factual findings of the trial court, especially when affirmed by the Court of Appeals, are deemed final and conclusive by the Supreme Court when supported by substantial evidence. Such findings shall not be disturbed on appeal unless the trial court overlooked or ignored some fact or circumstance of sufficient weight or significance which, if considered, would alter the situation. Where the factual findings of both the trial court and the Court of Appeals coincide, the same are binding on the Supreme Court.

• Powers of Special Administrator — Under Section 2, Rule 80, a special administrator may sell only perishable and other property as the court orders sold, for the purpose of preserving the estate. A special administrator may not sell real properties for the payment of debts or attorney's fees, as this constitutes dissipation rather than preservation of the estate. The court may grant authority for sale of estate property only upon petition of the executor or administrator, provided the legal requirements and grounds specified by law are complied with.

• "The order of preference in the appointment of an administrator depends on the attendant facts and circumstances." — This passage states the Court's ruling on the directory nature of the order of preference under Section 6, Rule 78, and is the ratio decidendi on the second issue.

• "The essence of due process is to be found in the reasonable opportunity to be heard and submit any evidence one may have in support of one's defense." — This is the canonical formulation of the due process standard applied in probate proceedings, frequently cited in subsequent jurisprudence on procedural due process.

• "A probate court cannot arbitrarily disregard the preferential rights of the surviving spouse to the administration of the estate of a deceased person; but if the person enjoying such preferential rights is unsuitable the court may appoint another person." — This quotation from Intestate Estate of the deceased Geronima Uy Coque (44 Phil 711 [1923]), as adopted by the Court, defines the controlling doctrine on the probate court's discretion to bypass the statutory order of preference.

• "He may sell only such perishable and other property as the court orders sold. A special administrator shall not be liable to pay any debt of the deceased unless so ordered by the court." — This verbatim quotation of Section 2, Rule 80 defines the statutory limit on a special administrator's power to sell estate property, the basis for setting aside the trial court's order authorizing sale of real properties to pay attorney's fees.

• Intestate Estate of the deceased Geronima Uy Coque. Juan Navas L. Sioca vs. Jose Garcia, 44 Phil 711 (1923) — Controlling precedent followed. Held that a probate court cannot arbitrarily disregard the preferential rights of the surviving spouse but may appoint another person if the one enjoying preferential rights is unsuitable, with unsuitableness consisting in adverse interest or hostility to those interested in the estate.

• Esler vs. Tad-y, 46 Phil 854 — Followed. Affirmed that the probate court, in the exercise of its discretion, may disregard the order of preference to administration set forth in the Rules of Court, absent abuse of discretion.

• Villamor vs. Court of Appeals, 162 SCRA 578 — Followed. Upheld the appointment of persons who were complete strangers to the decedents where the persons with preferential right were incompetent or unwilling to serve.

• En el intestado del finado BERNABE BUSTAMANTE. RUFINA AREVALO contra JOSE BUSTAMANTE, ET AL., 69 Phil 656 (1940) — Followed. Held that having an interest adverse to the estate or to those interested in it is sufficient ground for disqualification as administrator.

• De Gala vs. Gonzales and Ona, 53 Phil 104 (1929) — Followed. Held that the appointment of a special administrator lies in the sound discretion of the court, and the special administrator may be removed without reference to the provisions on removal of administrators.

• Tecla Arganda vs. Velez, et al., Vol. XXXV, No. 134 O.G. 2429 — Followed. Defined the court's powers regarding sale of estate property, holding that the court may grant authority for sale only upon petition of the executor or administrator, provided legal requirements and grounds are satisfied, and cannot directly order the sale.

• Urbanes, Jr. vs. Court of Appeals, 236 SCRA 72 — Followed on judicial inhibition. Held that no judge should handle a case in which he might be perceived to be susceptible to bias and partiality, but that judgment must not be tainted by even the slightest suspicion of improbity.

• Purefoods Corp. vs. NLRC, 171 SCRA 475 — Cited by the Court of Appeals and noted. Held that errors of judgment are not within the province of a special civil action for certiorari.

• Section 6, Rule 78, Revised Rules of Court — Enumerates the persons to whom letters of administration may be granted, in order: (a) the surviving spouse or next of kin, or the person selected by them; (b) if such persons are incompetent or unwilling, or neglect to apply for thirty days, to the principal creditors; (c) if no such creditor, to such other person as the court may select. Applied as directory rather than mandatory, with the probate court retaining discretion to appoint a suitable person outside the preferential order.

• Section 2, Rule 80, Revised Rules of Court — Defines the powers and duties of a special administrator, providing that the special administrator may sell only such perishable and other property as the court orders sold and shall not be liable to pay any debt of the deceased unless so ordered. Applied to invalidate the trial court's order authorizing the sale of estate real properties to pay contingent attorney's fees.

• Section 1(2), Rule 137, Revised Rules of Court — Provides that a judge may, in the exercise of sound discretion, disqualify himself from sitting in a case for just or valid reasons. Applied to hold that petitioner's bare allegations of bias, without supporting facts, did not constitute a "just and valid reason" for mandatory inhibition.

• Section 1(e), Rule 109, Revised Rules of Court — Provides that no appeal shall be allowed from the appointment of a special administrator. Cited by private respondent to argue that the order appointing a special administrator could not be stayed by certiorari.

Romero, Vitug, Panganiban, and Gonzaga-Reyes, JJ., concurred.