EN BANC

[G.R. No. L-9324. August 30, 1957.]

TESTATE ESTATE OF JACOBO FAJARDO Y PUNO. ANGELINA F. DE

LOPEZ, ET AL. , petitioners-appellees, vs . ANTONIA J. VDA. DE
FAJARDO, ET AL. , oppositor-appellant.

Emigdio G. Tanjuatco for appellees.

M.H. de Joya for appellant.

SYLLABUS

1. ARBITRATION; WHEN AWARD OF ARBITRATOR NOT DEEMED FINAL AND

BINDING UPON THE PARTIES; CASE AT BAR. — In order to arrive at a fair distribution of
the estate, a committee of two was formed to appraise the value of the share
adjudicated to each group of heirs. The parties agreed that in case of conflict in the
reports of the members, the arbitrator shall submit a report on the value of the lots as
appraised by him and his report shall be final and binding upon the parties. As the
members submitted conflicting reports, the arbitrator submitted his own report, in
which he awarded to the petitioners certain sum of money as due from the
administratrix. The administratrix objected to the award on the ground that it is
unreasonable and the same has not been approved by the probate court. The probate
court overruled the objection and held that the report of the arbitrator does not require
judicial approval and the reasonableness of the amount awarded is not one of the
grounds provided for by law to contest the award of the arbitrator. Held: The probate
court erred. The agreement entered into by the parties did not empower the arbitrator
to make an award in favor of any heir as he did award to the petitioners. The purpose in
forming the committee was to appraise the value of the estate as a step leading to its
just and fair partition among the heirs. At most that part of the report of the arbitrator
making award to petitioners would merely be recommendatory but could not be
deemed final and binding upon the administratrix.

DECISION

PADILLA , J : p

On 3 November 1954 Angelina F. de Lopez, Pacita F. de Villavicencio and

Corazon F. del Castillo, children of the late Jacobo Fajardo y Puno, led a petition in the
Court of First Instance of Manila in Special Proceedings No. 59819, alleging that,
pursuant to an agreement dated 18 November 1952, as amended by another dated 30
September 1953, entered into by and between the widow and heirs of the deceased,
they agreed to subdivide into several lots the parcel of land covered by transfer
certi cate of title No. 352 and the parcel of land leased by the deceased in his lifetime
CD Technologies Asia, Inc. 2016 cdasiaonline.com
 from the Government, all situate in the province of Cotabato, and adjudicate the lots
thus subdivided to the groups of heirs; that in order to arrive at a fair distribution of the
estate, a committee to appraise the value of the share adjudicated to each group of
heirs was formed; that the committee formed was composed of Demetrio Fajardo,
representing the rst group of heirs, and Lucio R. Ildefonso, representing the second
group of heirs; that the parties agreed further that in case of con ict in the reports of
the two members, Edgardo Villavicencio shall submit a report on the value of the lots
as appraised by him and his report shall be nal and binding upon the parties; that as
the two members of the committee submitted different and con icting reports,
Edgardo Villavicencio submitted his own report on 6 September 1954; that in this
report the widow Antonia J. Vda. de Fajardo, who is the administratrix of the estate, is
called upon to pay to the petitioners the sum of P44,539.68, to settle the difference in
value between the share adjudicated to the former and the latter; and that all the heirs
are about to register the two agreements mentioned and to secure the corresponding
certi cates of title to the respective parcels of land adjudicated to them. Upon the
foregoing allegations the petitioners prayed that the probate court direct the Registrar
of Deeds in and for the province of Cotabato to annotate on the transfer certi cate of
title to be issued to Antonia J. Vda. de Fajardo for the lots adjudicated to her her
obligation to pay the sum of P44,539.68 due and owing to the petitioners.

On 12 November 1954 the administratrix objected to the motion to annotate the

lien on the ground that the sum of P44,539.68 awarded to the petitioners has not yet
been approved by the Court, and for that reason the order to annotate the lien would be
premature; that the sum of P44,539.68 awarded to the petitioners is unreasonable
because the coconut trees planted in the parcel of land owned by the deceased are
given the same valuation as those planted in the parcel of land leased from the
Government; that the administratrix has a claim still unpaid in the sum of P3,681.76
against each of the petitioners which may be set off partially against the sum of
P44,539.68; that the administratrix has made certain advances reimbursible by the
heirs which may also be set off partially against the sum claimed by the heirs due them;
that in the project of partition dated 24 November 1952 already approved by the Court,
the petitioner Angelina F. de Lopez is required to pay the estate of the deceased
Abelardo Fajardo the sum of P2,018.40, but the said sum still remains unpaid; and that
the report submitted by Edgardo Villavicencio has not yet been approved by the Court.
On 12 January 1955, the petitioners led a reply to the opposition alleging that
the report of Edgardo Villavicencio was submitted in compliance with the agreement
entered into by the heirs duly approved by the Court on 10 October 1953; that in
accordance with article 2044 of the new Civil Code, the report need not be approved by
the Court to bind the parties therein; that granting that the sum of P44,539.68 awarded
to the petitioners is unreasonable, the objection thereto is not well taken, because
unreasonableness is not a ground upon which the validity of the report may be assailed
pursuant to article 2038 of the same Code; that the administratrix has waived her right
to collect from each of the heirs the sum of P3,631.76; that even if there is a sum of
money due the estate of the deceased Abelardo Fajardo from petitioners Angelina F. de
Lopez, the same cannot be set up as ground to object to the report led by Edgardo
Villavicencio because the creditor is a different estate; and that if any sum of money is
due the estate of the late Abelardo Fajardo from the petitioners, their individual liability
does not exceed P672.80 which they are willing to pay to the said estate.
On 28 January 1955 the Court issued an order, the dispositive part of which
provides:
CD Technologies Asia, Inc. 2016 cdasiaonline.com
 Premises considered this Court finds that the report of Edgardo
Villavicencio in question does not require judicial approval in view of the terms of
the agreement above quoted, and that the unreasonableness of the amount
awarded is not one of the grounds provided for by law to contest the award or
decision of an arbitrator.
However, it appearing that there are amounts allegedly due and payable to
the oppositor from each of the movants, and in order to avoid multiplicity of
incidents and actions, this Court is of the opinion that the matter should be set for
hearing, as it is hereby set for hearing on February 17, 1965, at 8:30 a.m., for the
purpose of adjusting respective claims of the movants and the oppositor
indicated above.
On 9 March 1955, acting upon the various pleadings led by the parties, namely,
motion for reconsideration, reply thereto, rejoinder to reply, and opposition to the
rejoinder, the Court issued an order denying the motion for reconsideration.
The administratrix has appealed.
The aforequoted dispositive part of the order of the probate court appealed from
holds in effect that the report of Edgardo Villavicencio is nal and binding upon the
parties and that the sum of P44,539.68 is due and payable by the administratrix to the
petitioners.
The appellant contends that the said report is not nal and binding upon the
parties; that it must be approved by the Court to be so; and that that part of the
agreement stipulating that the decision of the arbitrator is nal, is contrary to public
policy, for it deprives the courts of jurisdiction, and for that reason null and void. The
appellees, on the other hand, invoke article 2044 of the new Civil Code which provides
that "Any stipulation that the arbitrators' award or decision shall be final, is valid . . ."
Paragraphs 7 and 8 of the agreement entered into by and between the parties on
18 November 1952, as amended by another on 30 September 1953, provide:
7.° — Para la igualacion de valores tanto del terreno como de sus mejoras
y plantaciones, queda constituido un comite de dos miembros, o sea: uno por
parte de la viuda, hijo y nietos (primer grupo) y otro por parte de las tres hijas
(segundo grupo). Para el primer grupo queda nombrado el heredero Dn. Demetrio
Fajardo y para el segundo grupo, Dn. Lucio Ildefonso;
8° — En caso de desacuerdo en su actuacion entre los dos comisionados,
actuara como arbitro Edgardo Villavicencio, cuya decision sera decisiva y final.
Nowhere in the aforequoted stipulations of the agreement, as amended, is the
arbitrator empowered to award to any heir the sum of money he did award to the
petitioners. The purpose in forming the committee of two was to appraise the value of
the estate as a step leading to its just and fair partition among the heirs. At most that
part of the report of the arbitrator awarding to the herein petitioners the sum of
P44,539.68 as due from the administratrix, would merely be recommendatory but
could not be deemed nal and binding upon the administratrix. What is nal and binding
upon the parties is that part of the report appraising the subdivided parcels of land and
improvements thereon. Section 24(d), Republic Act No. 876, known as the Arbitration
Law, which took effect on 19 December 1953, and may be retroactively applied to the
case at bar because it is procedural in character, provides that the court may vacate an
award of an arbitrator when he has exceeded his powers. The probate court in effect
awards to the petitioners the sum of P44,539.68 as due from the administratrix upon
the ground "that the report of Edgardo Villavicencio in question does not require judicial
approval in view of the terms of the agreement above quoted, and that the
CD Technologies Asia, Inc. 2016 cdasiaonline.com
 unreasonableness of the amount awarded is not one of the grounds provided for by law
to contest the award or decision of an arbitrator." As already adverted to, this is an
error, because the agreement entered into by the parties does not give the arbitrator
the power to do so.

The order appealed from in so far as it holds "that the report of Edgardo
Villavicencio in question does not require judicial approval in view of the terms of the
agreement above quoted, and that the unreasonableness of the amount awarded is not
one of the grounds provided for by law to contest the award or decision of an
arbitrator," is set aside. Let the probate court proceed with the hearing of the case "for
the purpose of adjusting the respective claims of the movants and the oppositor
indicated above," without pronouncement as to costs.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., and Endencia, JJ., concur.

CD Technologies Asia, Inc. 2016 cdasiaonline.com