G.R. No.

21969

Sep 25, 1924

EN BANC

Ponente: J Malcolm

MAXIMINA TAN, administratrix of the property of the deceased Go Bung Kiu,

v
GO CHIONG LEE, TIO LIOK, AND CHANGCO and MANUEL GO TIANUY,
Fisher, DeWitt, Perkins & Brady for appellants.
Del Rosario & Del Rosario and Palma, Leuterio & Yamzon for appellee.
-

When Go Bung Kiu was alive, Go Chiong Lee was his encargado (manager)
Kiu died in China on April 15, 1920
April 16, 1920: Lee was appointed special administrator of the estate, with Tio Liok, Ang Changco
and Manuel Go Tianuy as sureties on his bond worth 30K
Lees status was eventually changed to administrator (May 25)
On the same day, Lee filed a motion that he be allowed to operate 2 stores belonging to the estate
[CFI] granted such authority. However, on the original copy of the order, the judge inked the following
words in Spanish: Condition that he furnish a written report each month
Another bond of 30K was required. After which, he was given letters of administration
Lee continued duties until he was relieved by Maximina Tan (Oct 28, 1921)
During this period, the administrator filed 3 reports (May Sep), (Oct-July 1921), and a final report
The committee on claims later rendered its report, admitted and proved, of claims worth 69K
1 month later, the court ordered the following tenor:
The admin is immediately ordered to pay out of estate funds to each party mentioned
in the report of the committee on claims, the whole amount appearing therein

Lee states that he had already paid creditors the sum of 16,700 on July 29, 1921. Payments were
made without preference to any creditor, considering there are many debtors to the estate. Most
importantly, he cites that the 2 establishments which he operates have slow sales

The inventory made by the Admin alleged merchandise value on hand at the time of deceased is
39K; outstanding credits were 61K, or a combined gross of 100,816

However, CPA Pangalinan stated that the estate was worth 28K when Lee became admin, while it
was worth 8K when he ceased to be admin. A loss of 19K! Debts of the estate allowed by the
commissioner on claims reached 69K

The last report made by the administrator discloses, however, that there may be P21,009.77 on
hand which can be used to satisfy the claimants. The present administratrix is running the estate
with apparently profitable results.

A table of amounts are being claimed by plaintiff Maxima Tan, now the present administrator. The
court DISALLOWED 3 claims from the table and allowed only 1
2 sub-issues:

Whether Lee had a lack of authority as administrator to run the 2 stores of the estate
The permission to operate the stores were given upon his appointment as administrador definitivo
He acted as such for over a year without being challenged by anyone
It would be preposterous to suppose that the authority to run the stores ceased. The only reasonable
deduction is that the permission was transmitted as soon as he was appointed general admin.

 Whether Lee failed to render the monthly reports, as a condition of his appointment as admin
- Lees atty had knowledge of the condition of monthly reports.
- The administrator was repeatedly ordered by the courts to submit reports without specifying monthly
accounts. On three occasions the administrator rendered his accounts, without anyone protesting
- Court finds it implausible that furnishing monthly reports would have stopped such losses. Court
believes that a more reasonable assumption is that running such business is inherently risky. (An
adverse testimony from tailor Vidal Reynes, was found by the court as not impressive)
The standard of responsibility of the administrator is best measured as in essence the responsibility
of a bailee. Like any bailee, he must pursue his discretion honestly and in good faith, or he will
become personally liable, to those who are interested in the estate, for waste, conversion, or
embezzlement. But where an administrator, entrusted with the carrying on of an estate, acts in good
faith and in accordance with the usual rules and methods obtaining in such business, he will not be
held liable for losses incurred.
MAIN ISSUE: Whether or not Lee is personally liable for the estate debts?
NO. Court finds that his personal liability and the sureties on his bond for losses incurred by the
estate during his administration, has NOT been proved.
Lee allegedly failed to inventory 850 sacks of corn, but the court was not impressed with this
allegation.
There are legal provisions that an administrator who has qualified shall, within 3 months after
appointment, return to the court a true inventory of the real and personal property of the deceased,
which come into his possession or knowledge, and that the administrator shall be chargeable in his
account with such properties which come into his possession. The administrator is accountable on
his bond along with the sureties for the performance of these legal obligations.
Law provides how the estate debts shall be paid, and that after the return of the report of the
committee on claims, the court shall then order the payment of debts and the distribution of assets.
The committee on claims adjudged that the debts amount to 69K. Also, it is not disputed that
payment was made. However, the anomaly is that not all creditors were paid due to the hit
and miss method followed by the administrator.
Court finds that administrator attempted to follow the order to the best of his ability. Since the
projected profit is seen to pay the extent of the claims. Thus, in these same proceedings, the
administatrix on her own motion, or by the creditors at their own motion, may recover the excess
imprudently paid out to certain creditors.
For all the foregoing, the judgment modified to the extent that the plaintiff shall only have and
recover from the defendants jointly and severally the amount of P6,375, with legal interest from the
date when the complaint was presented. Without costs. So ordered.
Johnson, Street, Avancea, Villamor, Ostrand and Romualdez, JJ., concur.