G.R. No. L-29407 July 29, 1983
ESTATE OF AMADEO MATUTE OLAVE, represented by JOSE S. MATUTE, petitioner, vs. HON. MANASES G. REYES, Presiding Judge, CFI of Davao, et al., respondents.

FACTS

The Estate of Amadeo Matute Olave, under administration in Sp. Proc. No. 25876 of the Court of First Instance (CFI) of Manila, owned a parcel of land in Davao covered by OCT No. 0-27. In April 1965, respondent Southwest Agricultural Marketing Corporation (SAMCO) filed Civil Case No. 4623 for a sum of money against respondents Carlos V. Matute and Matias S. Matute, in their capacities as co-administrators of the estate, before the CFI of Davao. The Manila probate court had previously issued an order directing the administrators to secure its approval before entering into any transaction involving the estate’s properties, including the subject land.
On October 20, 1967, the parties in the Davao case submitted an Amicable Settlement whereby the estate’s land would be conveyed to SAMCO in full payment of its claim. This settlement was executed without the prior approval of the Manila probate court and without notice to the estate’s beneficiaries. Despite opposition from intervenors, respondent Judge Reyes approved the settlement on November 10, 1967, effectively ordering the conveyance of the property.

ISSUE

Whether the respondent CFI of Davao acted without or in excess of jurisdiction or with grave abuse of discretion in approving the Amicable Settlement that conveyed estate property without the requisite approval of the probate court.

RULING

Yes. The Supreme Court granted the petition for certiorari and set aside the Davao court’s order. The legal logic is anchored on the exclusive jurisdiction of the probate court and the proper procedure for enforcing claims against an estate. Under Section 1, Rule 87 of the Rules of Court, no action for the recovery of a money claim can be commenced against an executor or administrator. Such claims must be filed in the administration proceedings themselves for examination, allowance, and orderly pro-rata payment alongside other debts. SAMCO’s filing of a separate collection suit in Davao was an improper circumvention of this rule.
Furthermore, the property of the estate is in custodia legis under the exclusive jurisdiction of the Manila probate court, which first took cognizance of the settlement proceedings. Under Section 1, Rule 73, that court exercises jurisdiction to the exclusion of all other courts. Consequently, the administrators could not validly encumber or convey estate assets through a compromise in another court without prior approval from the probate court. The Davao court’s approval of the settlement, which disposed of estate property without this mandatory approval, was a grave abuse of discretion amounting to lack of jurisdiction. The settlement was void for undermining the probate court’s exclusive authority to control and preserve the estate for the benefit of creditors and heirs.