Professional Documents
Culture Documents
SCHOOL OF LAW
PROBATE/ADMINISTRATION MODE
9.
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Reliance by the lower court on the fact that 2 of the 4 heirs do not wish to reinstate
GONZALES is misplaced. Removal of an administrator does not lie on the whims, caprices
and dictates of the heirs or beneficiaries of the estate, nor on the belief of the court that it
would result in orderly and efficient administration.
10.
Sec. 1. Inventory and appraisal to be returned within three months. - When three (3) months
after his appointment every executor or administrator shall return to the court a true
inventory and appraisal of all the real and personal estate of the deceased which has come
into his possession or knowledge. In the appraisement of such estate, the court may order
one or more of the inheritance tax appraisers to give his or their assistance.
Sec. 2. Certain articles not to be inventoried. - The wearing apparel of the surviving husband
or wife and minor children, the marriage bed and bedding, and such provisions and other
articles as will necessarily be consumed in the subsistence of the family of the deceased,
under the direction of the court, shall not be considered as assets, nor administered as
such, and shall not be included in the inventory.
Sec. 3. Allowance to widow and family. - The widow and minor or incapacitated children of a
deceased person, during the settlement of the estate, shall receive therefrom, under the
direction of the court, such allowance as are provided by law.
Santero v. CFI of Cavite, 153 SCRA 728 (1987)
and her first three (3) children who were then of age should have been included
since all her children have the right to receive allowance as advance payment of
their shares in the inheritance of Pablo Santero. But an Order was issued by the
court directing the administrator of the estate to get back the allowance of the three
additional recipients or children of Anselma.
Felixberta's children (P,F,W) filed a petition for certiorari, arguing that Anselma's
children are not entitled to any allowance since they have already attained majority
age, two are gainfully employed and one is married. They also said that the
administrator of the estate of Pablo Santero did not have sufficient funds to cover
said allowance.
HELD:
SC dismissed the petition for certiorari and upheld the assailed order.
The controlling provision of law is not Rule 83, Sec. 3 of the New Rules of Court but Arts.
290 and 188 of the Civil Code reading as follows:
Art. 290. Support is everything that is indispensable for sustenance, dwelling, clothing
and medical attendance, according to the social position of the family.
Support also includes the education of the person entitled to be supported until he
completes his education or training for some profession, trade or vocation, even beyond
the age of majority.
Art. 188. From the common mass of property support shall be given to the surviving
spouse and to the children during the liquidation of the inventoried property and until
what belongs to them is delivered; but from this shall be deducted that amount received
for support which exceeds the fruits or rents pertaining to them.
The fact that Anselma's children are of age, gainfully employed, or married is of no moment
and should not be regarded as the determining factor of their right to allowance under Art.
188. While the Rules of Court limit allowances to the widow and minor or incapacitated
children of the deceased, the New Civil Code gives the surviving spouse and his/her
children without distinction. Hence, Anselma's children (V,R,A,M) are entitled to
allowances as advances from their shares in the inheritance from their father Pablo
Santero. Since the provision of the Civil Code (substantial law) gives the surviving spouse
and to the children the right to receive support during the liquidation of the estate of the
deceased, such right cannot be impaired by Rule 83 Sec. 3 of the Rules of Court which is a
procedural rule. Be it noted however that with respect to "spouse," the same must be the
"legitimate spouse" (not common-law spouses who are the mothers of the children here).
Heirs of Miguel Franco v. Court of Appeals,
418 SCRA 60 (2003)
ORIGINAL:
Before us is a Petition for Review on Certiorari seeking to overturn a Decision rendered by the Fourteenth
Division of the Court of Appeals on 6 October 1995 in CA G.R. CV No. 37609. The Court of Appeals reversed
the decision of the Regional Trial Court of Dipolog City, Branch 7 (RTC) and ordered the cancellation of TCT
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11.
Sec. 1. Executor or administrator to have access to partnership books and property; How
right enforced. - The executor or administrator of the estate of a deceased partner shall at
all times have access to, and may examine and take copies of, books and papers relating to
the partnership business, and may examine and make invoices of the property belonging to
such partnership; and the surviving partner or partners, on request, shall exhibit to him all
such books, papers, and property in their hands or control. On the written application of
such executor or administrator, the court having jurisdiction of the estate may order any
such surviving partner or partners to freely permit the exercise of the rights, and to exhibit
the books, papers, and property, as in this section provided, and may punish any partner
failing to do so for contempt.
Sec. 2. Executor or administrator to keep buildings in repair. - An executor or administrator
shall maintain in tenantable repair the houses and other structures and fences belonging to
the estate, and deliver the same in such repair to the heirs or devisees when directed so to
do by the court.
Sec. 3. Executor or administrator to retain whole estate to pay debts, and to administer estate
not willed. - An executor or administrator shall have the right to the possession and
management of the real as well as the personal estate of the deceased so long as it is
necessary for the payment of the debts and the expenses of administration.
Mananquil v. Villegas, 189 SCRA 335 (1990)
- This is actually a disbarment case against VILLEGAS.
- It turns out that VILLEGAS was counsel of record of one Felix LEONG, the administrator
for the testate estate of one Felomina Zerna.
- In 1963, LEONG, as administrator of Zernas estate, entered into a lease contract with
the partnership of HIJOS DE VILLEGAS over several lots included in Zernas estate.
- The said lease contract was renewed several times henceforth.
- It is important to note at this point that VILLEGAS was both counsel of LEONG and a
partner in the partnership of HIJOS DE VILLEGAS.
- When LEONG died, this disbarment suit was filed by MANANQUIL, the appointed
administrator for LEONGs estate. MANANQUIL alleged that the lease contracts were
made under iniquitous terms and conditions. Also, MANANQUIL alleged that VILLEGAS
should have first notified and secured the approval of the probate court in Zernas
estate before the contracts were renewed, VILLEGAS being counsel of that estates
administrator.
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ISSUES:
1 Whether VILLEGAS should have first secured the probate courts approval regarding
the lease.
2 Whether VILLEGAS should be disbarred.
RULING:
1
NO. Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial
executor or administrator has the right to the possession and management of the real as
well as the personal estate of the deceased so long as it is necessary for the payment of the
debts and the expenses of administration. He may, therefore, exercise acts of
administration without special authority from the court having jurisdiction of the estate.
For instance, it has long been settled that an administrator has the power to enter into
lease contracts involving the properties of the estate even without prior judicial authority
and approval.
Thus, considering that administrator LEONG was not required under the law and
prevailing jurisprudence to seek prior authority from the probate court in order to validly
lease real properties of the estate, VILLEGAS, as counsel of LEONG, cannot be taken to task
for failing to notify the probate court of the various lease contracts involved herein and to
secure its judicial approval thereto.
2
NO. There is no evidence to warrant disbarment, although VILLEGAS should be
suspended from practice of law because he participated in the renewals of the lease
contracts involving properties of Zernas estate in favor of the partnership of HIJOS DE
VILLEGAS. Under Art. 1646 of the Civil Code, lawyers, with respect to the property and
rights which may be the object of any litigation in which they may take part by virtue of
their profession are prohibited fro leasing, either in person or through the mediation of
another, the properties or things mentioned. Such act constituted gross misconduct, hence,
suspension for four months.
12.
Sec. 1. Executor or administrator chargeable with all estate and income. - Except as
otherwise expressly provided in the following sections, every executor or administrator is
chargeable in his account with the whole of the estate of the deceased which has come into
his possession, at the value of the appraisement contained in the inventory; with all the
interest, profit, and income of such estate; and with the proceeds of so much of the estate as
is sold by him, at the price at which it was sold.
Sec. 2. Not to profit by increase or lose by decrease in value. - No executor or administrator
shall profit by the increase, or suffer loss by the decrease or destruction, without his fault,
of any part of the estate. He must account for the excess when he sells any part of the estate
for more than appraisement, and if any is sold for less than the appraisement, he is not
responsible for the loss, if the sale has been justly made. If he settles any claim against the
estate for less than its nominal value, he is entitled to charge in his account only the amount
he actually paid on the settlement.
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Sec. 3. When not accountable for debts due estate. - No executor or administrator shall be
accountable for debts due the deceased which remain uncollected without his fault.
Sec. 4. Accountable for income from realty used by him. - If the executor or administrator
uses or occupies any part of the real estate himself, he shall account for it as may be agreed
upon between him and the parties interested, or adjusted by the court with their assent;
and if the parties do not agree upon the sum to be allowed, the same may be ascertained by
the court, whose determination in this respect shall be final.
Sec. 5. Accountable if he neglects or delays to raise or pay money. - When an executor or
administrator neglects or unreasonably delays to raise money, by collecting the debts or
selling the real or personal estate of the deceased, or neglects to pay over the money he has
in his hands, and the value of the estate is thereby lessened or unnecessary cost or interest
accrues, or the persons interested suffer loss, the same shall be deemed waste and the
damage sustained may be charged and allowed against him in his account, and he shall be
liable therefor on his bond.
Sec. 6. When allowed money paid as costs. - The amount paid by an executor or
administrator for costs awarded against him shall be allowed in his administration account,
unless it appears that the action or proceeding in which the costs are taxed was prosecuted
or resisted without just cause, and not in good faith.
Sec. 7. What expenses and fees allowed executor or administrator. - Not to charge for services
as attorney. Compensation provided by will controls unless renounced. An executor or
administrator shall be allowed the necessary expenses in the care, management, and
settlement of the estate, and for his services, four pesos per day for the time actually and
necessarily employed, or a commission upon the value of so much of the estate as comes
into his possession and is finally disposed of by him in the payment of debts, expenses,
legacies, or distributive shares, or by delivery to heirs or devisees, of two per centum of the
first five thousand pesos of such value, one per centum of so much of such value as exceeds
five thousand pesos and does not exceed thirty thousand pesos, one-half per centum of so
much of such value as exceeds thirty thousand pesos and does not exceed one hundred
thousand pesos and one-quarter per centum of so much of such value as exceed one
hundred thousand pesos. But in any special case, where the estate is large, and the
settlement has been attended with great difficulty, and has required a high degree or
capacity on the part of the executor or administrator, a greater sum may be allowed. If
objection to the fees allowed be taken, the allowance may be re-examined on appeal.
If there are two or more executors or administrators, the compensation shall be
apportioned among them by the court according to the services actually rendered by them
respectively.
When the executor or administrator is an attorney, he shall not charge against the estate
any professional fees for legal services rendered by him.
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When the deceased by will makes some other provision for the compensation of his
executor, that provision shall be a full satisfaction for his services unless by a written
instrument filed in the court he renounces all claim to the compensation provided by the
will.
Sec. 8. When executor or administrator to render account. - Every executor or administrator
shall render an account of his administration within one (1) year from the time of receiving
letters testamentary or of administration, unless the court otherwise directs because of
extensions of time for presenting claims against, or paying the debts of, the estate, or for
disposing of the estate; and he shall render such further accounts as the court may require
until the estate is wholly settled.
Sec. 9. Examination on oath with respect to account. - The court may examine the executor
or administrator upon oath with respect to every matter relating to any account rendered
by him, and shall so examine him as to the correctness of his account before the same is
allowed, except when no objection is made to the allowance of the account and its
correctness is satisfactorily established by competent proof. The heirs, legatees,
distributees, and creditors of the estate shall have the same privilege as the executor or
administrator of being examined on oath of any matter relating to an administration.
Sec. 10. Account to be settled on notice. - Before the account of an executor or administrator
is allowed, notice shall be given to persons interested of time and place of examining and
allowing the same; and such notice may be given personally to such persons interested or
by advertisement in a newspaper or newspapers, or both, as the court directs.
Sec. 11. Surety on bond may be party to accounting. - Upon the settlement of the account of
an executor or administrator, a person liable as surety in respect to such account may,
upon application, be admitted as party to such accounting.
Tioco v. Imperial, 53 Phil 802 (1928)
Respondent Panis, counsel for the administration of estate of the deceased, before
final settlement of the accounts, moved for the allowance of attorneys fees in the
sum of P15,000
The judge, over the objection of the petitioner administrator Uy Tioco, granted the
same; Uy Tioco did not appeal
Almost 2 months later, Jacinto Yangco, in his capacity as guardian ad litem of minors
Pedro and Bruno Uy Tioco, sons and only heirs of the deceased, presented a motion
for reconsideration on the ground that he was not notified of the motion for
allowance and the grant thereof; denied
Yangco gave notice of his intention to appeal
Meanwhile, Panis, through Wijangco, filed a motion for execution of of the
P15,000; he claims that since Bruno Uy was already dead, his share will go to his
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father (petitioner) who did not appeal the decision of the court and consequently,
only the share of Pedro Uy should be withheld
Yangco objected but the judge ordered the payment of of P15,000
ISSUES, HELD and RATIO:
Whether the orders were valid and final
court said that they need not be determined in the case at hand, but they are
appealable
there is no provision of law authorizing the lower court to enforce the immediate
execution of such orders in probate proceedings after an appeal has been perfected
what is the character of liability for attorneys fees in probate proceedings?
the attorney cannot hold the estate directly liable for his fees; such fees are allowed to
the executor or administrator
the services for which fees are claimed are supposed to have been rendered to the
executor or administrator to assist him in the execution of his trust; thus, liability for the
payment of attorneys fees rests on the executor or administrator (if the fees are
beneficial to the estate, then executor or administrator is entitled to reimbursement from
the estate)
Tumang v. Laguio, 96 SCRA 124 (1980)
Tumang was the executrix of the will of her husband, Dominador Tumang. She filed a
petition to have the probate proceedings closed so that she and her children can have the
inherited properties transferred in their names. However, Laguio opposed claiming that
Tumang failed to account for additional property that came under her possession.
Apparently, certain cash and stock dividends were not included in the initial accounting.
Tumang countered that since she had already rendered an accounting to the court
then the court had no more jurisdiction.
ISSUE:
Whether the court still has jurisdiction to require accounting
HELD:
Yes. Section 8 of Rule 85 provides that the "executor or administrator shall render an
account of his administration within one (1) year from the time of receiving letters
testamentary or of administration ..., and he shall render such further accounts as the court
may require until the estate is wholly settled."
It has been held that an executor or administrator who receives assets of the estate
after he has filed an account should file a supplementary account thereof, and may be
compelled to do so, but that it is only with respect to matters occurring after the settlement
of final account that representatives will be compelled to file supplementary account."
There is no question that in the instant case, the fact that the executrix received funds of
the estate after the approval of her final accounts and before the issuance of an order
finally closing the proceedings is admitted. She must, therefore, account for the same, in
consonance with her duty to account for all the assets of the decedent's estate which have
come into her possession by virtue of her office.
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have agreed to pay, as and for his legal services rendered the sum of P68,000.00. The heirs
denied the claim and alleged that the sum agreed upon was only P7,000.00 which was
already paid. Lower court granted the motion.
ISSUE:
Whether or not Serquina is entitled to attorneys fees.
HELD:
No. First, no docket fee was paid, hence, the court did not acquire jurisdiction. Second, The
Rules of Court provides that an administrator or executor may be allowed fees for the
necessary expenses he has incurred as such, but he may not recover attorneys fees from
the estate. His compensation is fixed by the rule but such a compensation is in the nature of
executors or administrators commissions, and never as attorneys fees. Where the
administrator is himself the counsel for the heirs, it the latter who must pay therefore.
Court ruled attorneys fees in the amount of P15,000.00 can be recovered from the heirs
and not from the estate of Carmelita Farlin.
Salonga v. Pascual, 488 SCRA 449 (2006)
Law partnership files petition for review of the CA 1995 decision which affirmed the orders
of the RTC of Malabon regarding the estate of Dona Adela Pascual with Dr. Olivia Pascual as
executrix.
Olivia Pascual engaged the services of petitioner in connection with the settlement
of the estate of Doa Adela. Their agreement stipulated that the final professional fee "shall
be 3% of the total gross estate as well as the fruits thereof based on the court approved
inventory of the estate.
Olivia then initiated probate proceedings of the will Dona Adela, the court allowed
probate of the 1978 Last Will and Testament of Doa Adela.
Petitioner then filed a Notice of Attorney's Lien equivalent to three percent (3%) of
the total gross estate of the late Doa Adela S. Pascual as well as the fruits thereof based on
the court approved inventory of the estate, pursuant to the retainer agreement.
The Probate court noted the lien as chargeable to the share of Olivia Pascual. It then
issued an order requiring all persons having claims for money against the decedent to file
said claims with the Clerk of Court at Malabon. Accordingly, petitioner filed a Motion to
Annotate Attorney's Lien on Properties of the Estate of Doa Adela Vda. de Pascual.
Petitioner also filed a Motion for Writ of Execution for the partial execution of
petitioner's attorney's lien the figure, characterized as "tentative," based on the gross
appraised value of the estate of Dona Adela
Olivia Pascual filed her comment and/or opposition to the motion for the issuance
of a writ of execution on attorney's fees. She argued that a lawyer of an administrator or
executor should charge the individual client, not the estate, for professional fees. Olivia
Pascual also claimed, citing jurisprudence, that the counsel claiming attorney's fees should
give sufficient notice to all interested parties to the estate, and that such was not
accomplished by petitioner considering that no notices were given to the several legatees
designated in Doa Adela's will.
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The Probate Court denied the motions for writ of execution filed by the petitioner
saying that the bulk of the estate of Dona Adela is still tied up with the estate of her late
husband Don Andres, the proceedings over which still pending in another court. The CA
upheld the order of denial of the probate court arguing that petitioner may directly claim
attorney's fees only against Olivia Pascual and not against the estate of Doa Adela; and
that petitioner's claim is also premature since contrary to the requisite stipulated in the
Retainer Agreement, there is no court-approved agreement for the distribution of the
properties of the estate of Doa Adela as yet.
ISSUE:
1. Whether or not petitioner can only claim attorneys fees against Olivia and not the
estate
2. Whether or not sufficient notice of the claim was given to the heirs of Dona Adela
3. Whether or not the motion for execution is premature
HELD:
1. As a general rule, it is the executor or administrator who is primarily liable for
attorney's fees due to the lawyer who rendered legal services for the executor or
administrator in relation to the settlement of the estate. The executor or
administrator may seek reimbursement from the estate for the sums paid in
attorney's fees if it can be shown that the services of the lawyer redounded to the
benefit of the estate. However, if the executor or administrator refuses to pay the
attorney's fees, the lawyer has two modes of recourse. First, the lawyer may file an
action against the executor or administrator, but in his/her personal capacity and
not as administrator or executor. Second, the lawyer may file a petition in the testate
or intestate proceedings, asking the court to direct the payment of attorney's fees as
an expense of administration. If the second mode is resorted to, it is essential that
notice to all the heirs and interested parties be made so as to enable these persons
to inquire into the value of the services of the lawyer and on the necessity of his
employment. Attorneys fees, as stated in Escueta, partake the nature of an
administration expense. It is an expense attending the accomplishment of the
purpose of administration growing out of the contract or obligation entered into by
the personal representative of the estate, and thus the claim for reimbursement
must be superior to the rights of the beneficiaries.
Moreover, it cannot be escaped that the Retainer Agreement was entered into
between petitioner and Olivia Pascual prior to the filing of the probate petition, and
that at such time, she had no recognized right to represent the estate of Doa Adela
yet. This circumstance further bolsters our opinion that if petitioner insists on the
judicial enforcement of the Retainer Agreement, its proper remedy, authorized by
law and jurisprudence, would be a personal action against Olivia Pascual, and not
against the estate of Doa Adela. If this were the recourse pursued by petitioner,
and Olivia Pascual is ultimately held liable under the Retainer Agreement for
attorney's fees, she may nonetheless seek reimbursement from the estate of Doa
Adela if she were able to establish that the attorney's fees paid to petitioner were
necessary administration expenses.
There may however be instances wherein the estate should not be charged with
attorney's fees. If the costs of counsel's fees arise out of litigation among the
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(b) The direct claim for attorney's fees against the estate, as authorized under
Escueta. The character of this claim is not contractual in nature, but rather, as a
reimbursement for a necessary expense of administration, and it will be
allowed if it satisfies the criteria for necessary expenses of administration. Its
entitlement can be established by the actual services rendered by the lawyer
necessary to the accomplishment of the purposes of administration, and not
necessarily by the contract of engagement of the attorney's services.
By filing their claim directly against the estate of Doa Adela, petitioner has clearly
resorted to this second cause of action. There are consequent advantages and
disadvantages to petitioner. Since the claim arises irrespective of the contingencies
as stipulated in the Retainer Agreement, the attorney's fees may be collected against
the estate even before the final determination of its gross total value or the final
approval of the project of partition. As earlier stated, such claim for reimbursement
is superior to the right of the beneficiaries to the estate, and as such, there is need to
finally determine the respective shares of the beneficiaries before attorney's fees in
the nature of administration expenses may be paid out.
The one distinct disadvantage, however, is that the Retainer Agreement cannot be
deemed binding on the estate or the Probate Court since the estate is not a party to
such contract. This would not preclude the Probate Court from enforcing the
provisions of the Retainer Agreement if, in its sound discretion, the terms of
payment therein are commensurate to the value of the actual services necessary to
the administration of the estate actually rendered by petitioner. Yet if the Probate
Court does choose to adopt the Retainer Agreement as binding on the estate of Doa
Adela, petitioner may again be precluded from immediate recovery of attorney's
fees in view of the necessity or precondition of ascertaining the gross total value of
the estate, as well as the judicial approval of the final agreement of partition. In any
event, whether the claim for attorney's fees was pursued through a separate suit
against Olivia Pascual (in her personal capacity) for the enforcement of the Retainer
Agreement, or against the estate of Doa Adela as reimbursement for necessary
administration expenses, it remains essential that a hearing be conducted on the
claim. In either case too, the hearing will focus on the value of the services of the
petitioner and the necessity of engaging petitioner as counsel.
In short: Administrator or executor primarily liable for attorneys fees subject to
reimbursement from the estate. When direct recovery of the attorneys fees is made on
the estate rather than on the administrator or executor, proper notice must be given to
all heirs of the decedent.
Quasha Ancheta Pea and Nolasco Law Office
v. LCN Construction Corp., 563 SCRA 426 (2008)
ORIGINAL:
This is a Petition for Review under Rule 45 of the Revised Rules of Court with petitioners Quasha Ancheta
Pea and Nolasco Law Office (Quasha Law Office) and the Heirs of Raymond Triviere praying for the
reversal of the Decision[1] dated 11 May 2006 and Resolution[2] dated 22 September 2006 of the Court of
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That, together with Co-administrator Atty. William H. Quasha, they have performed diligently and
conscientiously their duties as Co-administrators, having paid the required Estate tax and settled the
various claims against the Estate, totaling approximately twenty (20) claims, and the only remaining
claim is the unmeritorious claim of LCN Construction Corp., now pending before this Honorable Court;
(3)
That for all their work since April 22, 1988, up to July 1992, or for four (4) years, they were only given
the amount of P20,000.00 each on November 28, 1988; and another P50,00.00 each on October 1991;
and the amount of P100,000.00 each on July 1992; or a total of P170,000.00 to cover their
administration fees, counsel fees and expenses;
(4)
That through their work, they were able to settle all the testate (sic) claims except the remaining
baseless claim of LCN Construction Corp., and were able to dismiss two (2) foreign claims, and were
also able to increase the monetary value of the estate from roughly over P1Million to the present
P4,738,558.63 as of August 25, 2002 and maturing on September 27, 2002; and the money has always
been with the Philippine National Bank, as per the Order of this Honorable Court;
(5)
That since July 1992, when the co-administrators were paid P100,000.00 each, nothing has been paid to
either Administrator Syquia or his client, the widow Consuelo Triviere; nor to the Quasha Law Offices or
their clients, the children of the deceased Raymond Triviere;
(6)
That as this Honorable Court will notice, Administrator Syquia has always been present during the
hearings held for the many years of this case; and the Quasha Law Offices has always been represented
by its counsel, Atty. Redentor C. Zapata; and after all these years, their clients have not been given a part
of their share in the estate;
(7)
That Administrator Syquia, who is a lawyer, is entitled to additional Administrator's fees since, as
provided in Section 7, Rule 85 of the Revised Rules of Court:
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That considering all the foregoing, especially the fact that neither the Administrator or his client, the
widow; and the Quasha Law Offices or their clients, the children of the deceased, have received any
money for more than ten (10) years now, they respectfully move that the amount of P1Million be taken
from the Estate funds, to be divided as follows:
a)
P450,000.00 as share of the children of the deceased [Triviere] who are represented by the Quasha
Ancheta Pea & Nolasco Law Offices;
b)
P200,000.00 as attorney's fees and litigation expenses for the Quasha Ancheta Pea & Nolasco Law
Offices;
c)
P150,000.00 as share for the widow of the deceased [Raymond Triviere], Amy Consuelo Triviere; and
d)
P200,000.00 for the administrator Syquia, who is also the counsel of the widow; and for litigation costs
and expenses.
LCN, as the only remaining claimant[4] against the Intestate Estate of the Late Raymond Triviere in Special
Proceedings Case No. M-1678, filed its Comment on/Opposition to the afore-quoted Motion on 2 October
2002. LCN countered that the RTC had already resolved the issue of payment of litigation expenses when it
denied the first Motion for Payment filed by Atty. Syquia and Atty. Quasha for failure of the administrators to
submit an accounting of the assets and expenses of the estate as required by the court. LCN also averred that
the administrators and the heirs of the late Raymond Triviere had earlier agreed to fix the former's fees at
only 5% of the gross estate, based on which, per the computation of LCN, the administrators were even
overpaid P55,000.00. LCN further asserted that contrary to what was stated in the second Motion for
Payment, Section 7, Rule 85 of the Revised Rules of Court was inapplicable, [5] since the administrators failed
to establish that the estate was large, or that its settlement was attended with great difficulty, or required a
high degree of capacity on the part of the administrators. Finally, LCN argued that its claims are still
outstanding and chargeable against the estate of the late Raymond Triviere; thus, no distribution should be
allowed until they have been paid; especially considering that as of 25 August 2002, the claim of LCN against
the estate of the late Raymond Triviere amounted to P6,016,570.65 as against the remaining assets of the
estate totaling P4,738,558.63, rendering the latter insolvent.
On 12 June 2003, the RTC issued its Order[6] taking note that "the widow and the heirs of the deceased
Triviere, after all the years, have not received their respective share (sic) in the Estate x x x."
The RTC declared that there was no more need for accounting of the assets and liabilities of the estate
considering that:
[T]here appears to be no need for an accounting as the estate has no more assets except the money deposited
with the Union Bank of the Philippines under Savings Account No. 12097-000656-0 x x x; on the estate taxes,
records shows (sic) that the BIR Revenue Region No. 4-B2 Makati had issued a certificate dated April 27, 1988
indicating that the estate taxes has been fully paid.[7]
As to the payment of fees of Atty. Syquia and the Quasha Law Office, the RTC found as follows:
[B]oth the Co-Administrator and counsel for the deceased (sic) are entitled to the payment for the services
they have rendered and accomplished for the estate and the heirs of the deceased as they have over a decade
now spent so much time, labor and skill to accomplish the task assigned to them; and the last time the
administrators obtained their fees was in 1992.[8]
Hence, the RTC granted the second Motion for Payment; however, it reduced the sums to be paid, to wit:
In view of the foregoing considerations, the instant motion is hereby GRANTED. The sums to be paid to the
co-administrator and counsel for the heirs of the deceased Triviere are however reduced.
4D Page 20
P450,000.00 as share of the children of the deceased who are represented by the Quasha, Ancheta,
Pena, Nolasco Law Offices;
b)
P100,000.00 as attorney's fees and litigation expenses for said law firm;
c)
P150,000.00 as share for the widow of the deceased Amy Consuelo Triviere; and
d)
P100,000.00 for the Co-administrator Atty. Enrique P. Syquia and for litigation costs and expenses. [9]
LCN filed a Motion for Reconsideration[10] of the foregoing Order on 2 July 2003, but it was denied by the RTC
on 29 October 2003.[11]
On 13 May 2004, LCN sought recourse from the Court of Appeals by assailing in CA-G.R. SP No. 81296, a
Petition for Certiorari, the RTC Orders dated 12 June 2003 and 2 July 2003, for having been rendered with
grave abuse of discretion.[12] LCN maintained that:
(1) The administrator's claim for attorney's fees, aside from being prohibited under paragraph 3, Section 7
of Rule 85 is, together with administration and litigation expenses, in the nature of a claim against the
estate which should be ventilated and resolved pursuant to Section 8 of Rule 86;
(2)
The awards violate Section 1, Rule 90 of the Rules of Court, as there still exists its (LCN's) unpaid claim
in the sum of P6,016,570.65; and
(3)
The alleged deliberate failure of the co-administrators to submit an accounting of the assets and
liabilities of the estate does not warrant the Court's favorable action on the motion for payment.[13]
On 11 May 2006, the Court of Appeals promulgated a Decision essentially ruling in favor of LCN.
While the Court of Appeals conceded that Atty. Syquia and the Quasha Law Office, as the administrators of the
estate of the late Raymond Triviere, were entitled to administrator's fees and litigation expenses, they could
not claim the same from the funds of the estate. Referring to Section 7, Rule 85 of the Revised Rules of Court,
the appellate court reasoned that the award of expenses and fees in favor of executors and administrators is
subject to the qualification that where the executor or administrator is a lawyer, he shall not charge against
the estate any professional fees for legal services rendered by him. Instead, the Court of Appeals held that the
attorney's fees due Atty. Syquia and the Quasha Law Offices should be borne by their clients, the widow and
children of the late Raymond Triviere, respectively.
The appellate court likewise revoked the P450,000.00 share and P150,000.00 share awarded by the RTC to
the children and widow of the late Raymond Triviere, respectively, on the basis that Section 1, Rule 91 of the
Revised Rules of Court proscribes the distribution of the residue of the estate until all its obligations have
been paid.
The appellate court, however, did not agree in the position of LCN that the administrators' claims against the
estate should have been presented and resolved in accordance with Section 8 of Rule 86 of the Revised Rules
of Court. Claims against the estate that require presentation under Rule 86 refer to "debts or demands of a
pecuniary nature which could have been enforced against the decedent during his lifetime and which could
have been reduced to simple judgment and among which are those founded on contracts." The Court of
Appeals also found the failure of the administrators to render an accounting excusable on the basis of Section
8, Rule 85 of the Revised Rules of Court.[14]
Finding the Petition for Certiorari of LCN partly meritorious, the Court of Appeals decreed:
WHEREFORE, premises considered, the instant petition is hereby PARTLY GRANTED. The assailed Orders of
the public respondent are hereby AFFIRMED with MODIFICATION in that (1)
the shares awarded to the heirs of the deceased Triviere in the assailed Order of June 12, 2003 are
4D Page 21
the attorney's fees awarded in favor of the co-administrators are hereby DELETED. However,
inasmuch as the assailed order fails to itemize these fees from the litigation fees/administrator's fees
awarded in favor of the co-administrators, public respondent is hereby directed to determine with
particularity the fees pertaining to each administrator.[15]
Petitioner filed a Motion for Reconsideration[16] of the 11 May 2006 Decision of the Court of Appeals. The
Motion, however, was denied by the appellate court in a Resolution dated 22 September 2006, [17] explaining
that:
In sum, private respondents did not earlier dispute [herein respondent LCN's] claim in its petition that the
law firm and its lawyers served as co-administrators of the estate of the late Triviere. It is thus quite absurd
for the said law firm to now dispute in the motion for reconsideration its being a co-administrator of the
estate.
[Herein petitioners], through counsel, likewise appear to be adopting in their motion for reconsideration a
stance conflicting with their earlier theory submitted to this Court. Notably, the memorandum for [petitioner]
heirs states that the claim for attorney's fees is supported by the facts and law. To support such allegation,
they contend that Section 7 (3) of Rule 85 of the 1997 Rules of Civil Procedure finds no application to the
instant case since "what is being charged are not professional fees for legal services rendered but payment for
administration of the Estate which has been under the care and management of the co-administrators for the
past fourteen (14) years." Their allegation, therefore, in their motion for reconsideration that Section 7 (3) of
Rule 85 is inapplicable to the case of Quasha Law Offices because it is "merely seeking payment for legal
services rendered to the estate and for litigation expenses" deserves scant consideration.
xxxx
WHEREFORE, premises considered, private respondents' motion for reconsideration is hereby DENIED for
lack of merit. [18]
Exhausting all available legal remedies, petitioners filed the present Petition for Review on Certiorari based
on the following assignment of errors:
I.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE AWARD IN FAVOR OF THE HEIRS OF
THE LATE RAYMOND TRIVIERE IS ALREADY A DISTRIBUTION OF THE RESIDUE OF THE ESTATE.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF ATTORNEY'S FEES IN FAVOR
OF THE CO-ADMINISTRATORS
I
The Court of Appeals modified the 12 June 2003 Order of the RTC by deleting the awards of P450,000.00 and
P150,000.00 in favor of the children and widow of the late Raymond Triviere, respectively. The appellate
court adopted the position of LCN that the claim of LCN was an obligation of the estate which was yet unpaid
and, under Section 1, Rule 90 of the Revised Rules of Court, barred the distribution of the residue of the
estate.
Petitioners, though, insist that the awards in favor of the petitioner children and widow of the late Raymond
Triviere is not a distribution of the residue of the estate, thus, rendering Section 1, Rule 90 of the Revised
Rules of Court inapplicable.
Section 1, Rule 90 of the Revised Rules of Court provides:
Section 1. When order for distribution of residue made. - When the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate in accordance
4D Page 22
4D Page 23
4D Page 24
Finally, the Memorandum it submitted to the Court of Appeals on behalf of its clients, the petitioner-children
of the late Raymond Triviere, the Quasha Law Office alleged that:
2.
The petition assails the Order of the Honorable Regional Trial Court of Makati, Branch 63 granting
the Motion for Payment filed by Co-Administrators Atty. Enrique P. Syquia and the undersigned
counsel together with the children of the deceased Raymond Triviere, and the Order dated 29
October 2003 denying Petitioner's Motion for Reconsideration of the First Order.
xxxx
I.
xxxx
4.
On 13 May 2004, Atty. Enrique Syquia, co-administrator and counsel for respondent Amy Consuelo
Triviere and the undersigned counsel, co-administrator and counsel for the children of the late
Raymond Triviere filed their Comment.[22]
Petitioner Quasha Law Office asserts that it is not within the purview of Section 7, Rule 85 of the Revised
Rules of Court since it is not an appointed administrator of the estate. [23] When Atty. Quasha passed away in
1996, Atty. Syquia was left as the sole administrator of the estate of the late Raymond Triviere. The person of
Atty. Quasha was distinct from that of petitioner Quasha Law Office; and the appointment of Atty. Quasha as
administrator of the estate did not extend to his law office. Neither could petitioner Quasha Law Office be
deemed to have substituted Atty. Quasha as administrator upon the latter's death for the same would be in
violation of the rules on the appointment and substitution of estate administrators, particularly, Section 2,
Rule 82 of the Revised Rules of Court.[24] Hence, when Atty. Quasha died, petitioner Quasha Law Office merely
helped in the settlement of the estate as counsel for the petitioner children of the late Raymond Triviere.
In its Memorandum before this Court, however, petitioner Quasha Law Office argues that "what is being
charged are not professional fees for legal services rendered but payment for administration of the Estate
which has been under the care and management of the co-administrators for the past fourteen (14) years." [25]
On the other hand, in the Motion for Payment filed with the RTC on 3 September 2002, petitioner Quasha Law
Office prayed for P200,000.00 as "attorney's fees and litigation expenses." Being lumped together, and absent
evidence to the contrary, the P200,000.00 for attorney's fees and litigation expenses prayed for by the
petitioner Quasha Law Office can be logically and reasonably presumed to be in connection with cases
handled by said law office on behalf of the estate. Simply, petitioner Quasha Law Office is seeking attorney's
fees as compensation for the legal services it rendered in these cases, as well as reimbursement of the
litigation expenses it incurred therein.
The Court notes with disfavor the sudden change in the theory by petitioner Quasha Law Office. Consistent
with discussions in the preceding paragraphs, Quasha Law Office initially asserted itself as co-administrator
of the estate before the courts. The records do not belie this fact. Petitioner Quasha Law Office later on denied
it was substituted in the place of Atty. Quasha as administrator of the estate only upon filing a Motion for
Reconsideration with the Court of Appeals, and then again before this Court. As a general rule, a party cannot
change his theory of the case or his cause of action on appeal. [26] When a party adopts a certain theory in the
court below, he will not be permitted to change his theory on appeal, for to permit him to do so would not
only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and due
process.[27] Points of law, theories, issues and arguments not brought to the attention of the lower court need
not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time
at such late stage.[28]
4D Page 25
This rule, however, admits of certain exceptions. [29] In the interest of justice and within the sound discretion
of the appellate court, a party may change his legal theory on appeal, only when the factual bases thereof
would not require presentation of any further evidence by the adverse party in order to enable it to properly
meet the issue raised in the new theory.[30]
On the foregoing considerations, this Court finds it necessary to exercise leniency on the rule against changing
of theory on appeal, consistent with the rules of fair play and in the interest of justice. Petitioner Quasha Law
Office presented conflicting arguments with respect to whether or not it was co-administrator of the estate.
Nothing in the records, however, reveals that any one of the lawyers of Quasha Law Office was indeed a
substitute administrator for Atty. Quasha upon his death.
The court has jurisdiction to appoint an administrator of an estate by granting letters of administration to a
person not otherwise disqualified or incompetent to serve as such, following the procedure laid down in
Section 6, Rule 78 of the Rules of Court.
Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in clear and unequivocal terms the modes
for replacing an administrator of an estate upon the death of an administrator, to wit:
Section 2. Court may remove or accept resignation of executor or administrator. Proceedings upon death,
resignation, or removal. x x x.
When an executor or administrator dies, resigns, or is removed the remaining executor or administrator may
administer the trust alone, unless the court grants letters to someone to act with him. If there is no
remaining executor or administrator, administration may be granted to any suitable person.
The records of the case are wanting in evidence that Quasha Law Office or any of its lawyers substituted Atty.
Quasha as co-administrator of the estate. None of the documents attached pertain to the issuance of letters of
administration to petitioner Quasha Law Office or any of its lawyers at any time after the demise of Atty.
Quasha in 1996. This Court is thus inclined to give credence to petitioner's contention that while it rendered
legal services for the settlement of the estate of Raymond Triviere since the time of Atty. Quasha's death in
1996, it did not serve as co-administrator thereof, granting that it was never even issued letters of
administration.
The attorney's fees, therefore, cannot be covered by the prohibition in the third paragraph of Section 7, Rule
85 of the Revised Rules of Court against an attorney, to charge against the estate professional fees for legal
services rendered by them.
However, while petitioner Quasha Law Office, serving as counsel of the Triviere children from the time of
death of Atty. Quasha in 1996, is entitled to attorney's fees and litigation expenses of P100,000.00 as prayed
for in the Motion for Payment dated 3 September 2002, and as awarded by the RTC in its 12 June 2003 Order,
the same may be collected from the shares of the Triviere children, upon final distribution of the estate, in
consideration of the fact that the Quasha Law Office, indeed, served as counsel (not anymore as coadministrator), representing and performing legal services for the Triviere children in the settlement of the
estate of their deceased father.
Finally, LCN prays that as the contractor of the house (which the decedent caused to be built and is now part
of the estate) with a preferred claim thereon, it should already be awarded P2,500,000.00, representing one
half (1/2) of the proceeds from the sale of said house. The Court shall not take cognizance of and rule on the
matter considering that, precisely, the merits of the claim of LCN against the estate are still pending the
proper determination by the RTC in the intestate proceedings below.
WHEREFORE, premises considered, the Petition for Review on Certiorari is hereby PARTLY GRANTED. The
Decision dated 11 May 2006 and Resolution dated 22 September 2006 of the Court of Appeals in CA-G.R. SP
No. 81296 are AFFIRMED, with the following MODIFICATIONS:
1)
Petitioner Quasha Law Office is entitled to attorney's fees of ONE HUNDRED THOUSAND PESOS
(P100,000.00), for legal services rendered for the Triviere children in the settlement of the estate of
4D Page 26
Attorneys Enrique P. Syquia and William H. Quasha are entitled to the payment of their corresponding
administrators' fees, to be determined by the RTC handling Special Proceedings Case No. M-1678,
Branch 63 of the Makati RTC, the same to be chargeable to the estate of Raymond Trieviere.
SO ORDERED.
13.
the claim had been presented directly before the court in the administration proceedings.
Claims not yet due or contingent, may be approved at their present value.
Sec. 6. Solidary obligation of decedent. - Where the obligation of the decedent is solidary
with another debtor, the claim shall be filed against the decedent as if he were the only
debtor, without prejudice to the right of the estate to recover contribution form the other
debtor. In a joint obligation of the decedent, the claim shall be confined to the portion
belonging to him.
Sec. 7. Mortgage debt due from estate. - A creditor holding a claim against the deceased
secured by mortgage or other collateral security, may abandon the security and prosecute
his claim in the manner provided in this rule, and share in the general distribution of the
assets of the estate; or he may foreclose his mortgage or realize upon his security, by action
in court, making the executor or administrator a party defendant, and if there is a judgment
for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the
foreclosure or other proceeding to realize upon the security, he may claim his deficiency
judgment in the manner provided in the preceding section; or he may rely upon his
mortgage of other security alone, and foreclose the same at any time within the period of
the statute of limitations, and in that event he shall not be admitted as a creditor, and shall
receive no share in the distribution of the other assets of the estate; but nothing herein
contained shall prohibit the executor or administrator from redeeming the property
mortgaged or pledged, by paying the debt for which it is held as security, under the
direction of the court, if the court shall adjudge it to be for the best interest of the estate
that such redemption shall be made.
Sec. 8. Claim of executor or administrator against an estate. - If the executor or
administrator has a claim against the estate he represents, he shall give notice thereof, in
writing, to the court, and the court shall appoint a special administrator, who shall, in the
adjustment of such claim, have the same power and be subject to the same liability as the
general administrator or executor in the settlement of other claims. The court may order
the executor or administrator to pay to the special administrator necessary funds to defend
such claim.
Sec. 9. How to file a claim. Contents thereof; Notice to executor or administrator. - A claim
may be filed by delivering the same with the necessary vouchers to the clerk of court and
by serving a copy thereof on the executor or administrator. If the claim be founded on a
bond, bill, note or any other instrument, the original need not be filed, but a copy thereof
with all indorsements shall be attached to the claim and filed therewith. On demand,
however, of the executor or administrator, or by order of the court or judge, the original
shall be exhibited, unless it be lost or destroyed, in which case the claimant must
accompany his claim with affidavit or affidavits containing a copy or particular description
of the instrument and stating its loss or destruction. When the claim is due, it must be
supported by affidavit stating the amount justly due, that no payments have been made
thereon which are not credited, and that there are no offsets to the same, to the knowledge
of the affiant. If the claim is not due, or is contingent, when filed, it must also be supported
4D Page 28
by affidavit stating the particulars thereof. When the affidavit is made by a person other
than the claimant, he must set forth therein the reason why it is not made by the claimant.
The claim once filed shall be attached to the record of the case in which the letters
testamentary or of administration were issued, although the court, in its discretion, and as
a matter of convenience, may order all the claims to be collected in a separate folder.
Sec. 10. Answer of executor or administrator; Offsets. - Within fifteen (15) days after service
of a copy of the claim on the executor or administrator, he shall file his answer admitting or
denying the claim specifically, and setting forth the substance of the matters which are
relied upon to support the admission or denial. If he has no knowledge sufficient to enable
him to admit or deny specifically, he shall state such want of knowledge. The executor or
administrator in his answer shall allege in offset any claim which the decedent before death
has against the claimant, and his failure to do so shall bar the claim forever. A copy of the
answer shall be served by the executor or administrator on the claimant. The court in its
discretion may extend the time for filing such answer.
Sec. 11. Disposition of admitted claim. - Any claim admitted entirely by the executor or
administrator shall immediately be submitted by the clerk to the court who may approve
the same without hearing; but the court, in its discretion, before approving the claim, may
order that known heirs, legatees, or devisees be notified and heard. If upon hearing, an heir,
legatee, or devisee opposes the claim, the court may, in its discretion, allow him fifteen (15)
days to file an answer to the claim in the manner prescribed in the preceding section.
Sec. 12. Trial of contested claim. - Upon the filing of an answer to a claim, or upon the
expiration of the time for such filing, the clerk of court shall set the claim for trial with
notice to both parties. The court may refer the claim to a commissioner.
Sec. 13. Judgment appealable. - The judgment of the court approving or disapproving a
claim, shall be filed with the record of the administration proceedings with notice to both
parties, and is appealable as in ordinary cases. A judgment against the executor or
administrator shall be that he pay, in due course of administration, the amount ascertained
to be due, and it shall not create any lien upon the property of the estate, or give to the
judgment creditor any priority of payment.
Sec. 14. Costs. - When the executor or administrator, in his answer, admits and offers to pay
part of a claim, and the claimant refuses to accept the amount offered in satisfaction of his
claim, if he fails to obtain a more favorable judgment, he cannot recover costs, but must pay
to the executor or administrator costs from the time of the offer. Where an action
commenced against the deceased for money has been discontinued and the claim
embraced therein presented as in this rule provided, the prevailing party shall be allowed
the costs of his action up to the time of its discontinuance.
4D Page 29
Sec. 20. Action on contractual money claims. - When the action is for recovery of money
arising from contract, express or implied, and the defendant dies before entry of final
judgment in the court in which the action was pending at the time of such death, it shall not
be dismissed but shall instead be allowed to continue until entry of final judgment. A
favorable judgment obtained by the plaintiff therein shall be enforced in the manner
especially provided in these Rules for prosecuting claims against the estate of a deceased
person.
Santos v. Manarang, 27 Phil 209 (1914)
Don Ocampo died in 1906 and possessed certain real properties which he left to his three
children by virtue of a will. The fourth clause of the will stated that: I also declare that I
have contracted the debts detailed below, and it is my desire that they may be religiously
paid by my wife and executors in the form and at the time agreed upon with my creditors.
The will was probated and a committee was appointed to hear and determine the claims
against the estate. The committee then submitted a report on June 27, 2008. On July 12,
2009, Isidro Santos, one of the creditors of Don Ocampo, filed a petition in court asking the
committee to reconvene and pass upon his claims against the estate. The petition was
denied by the court. Isidro Santos then instituted a proceeding against the administratrix of
the estate to recover his claims. This case was dismissed by the court.
ISSUE:
1. Whether the court committed an error when it denied the petition to reconvene the
committee.
2. Whether the court committed an error when it dismissed the petition against the
administratrix considering that the testator, by his will, acknowledge the debts and
directed that they be paid.
HELD:
1. The court did not commit an error. Where the proper notices has been given, the right
to have the committee recalled for the consideration of belated claims rest upon the
condition that it is presented within 6 months. In the present case, the 6 months starts
to run from July 23, 1907, thus, petitioner can only present his claim until January 23,
1908.
2. The court did not commit an error. The claim against the estate is enforceable only
when the prescribed legal procedure was followed. Moreover, the action cannot be
considered as an enforcement of a legacy in order that it may be instituted against the
administratrix. The testator, in his will, left the total net assets of his estate, without
reservation of any kind, to his children per capita. There is no indication that he desired
to leave anything, by way of legacy to any other person. These considerations clearly
refute the suggestion that the testator intended to leave to Isidro Santos anything by
way of legacy. His claim against the estate having been a simple debt, the present action
was improperly instituted against the administratrix.
Stronghold Insurance v. Republic-Asahi Glass,
492 SCRA 179 (2006)
4D Page 30
DOCTRINE:
A surety companys liability under the performance bond it issues is solidary. The death of
the principal obligor does not, as a rule, extinguish the obligation and the solidary nature of
that liability.
FACTS:
Republic-Asahi Glass Corporation entered into a contract with Jose D. Santos, Jr., the proprietor
of JDS Construction, for the construction of roadways and a drainage system in RepublicAsahis compound in Barrio Pinagbuhatan, Pasig City, where Republic-Asahi was to pay JDS
P5,300,000.00 for said construction, which was supposed to be completed within a period of 240
days. In order to guarantee the faithful and satisfactory performance of its undertakings, JDS
shall post a performance bond of P795,000.00. JDS executed, jointly and severally with
Stronghold Insurance Co., Inc. a performance bond.
The pace of the construction progress turned out to be slow, and Republic-Asahi
rescinded the contract when it became apparent that the project cannot be completed
within the 240-day target. As a result of the rescission, Republic-Asahi was compelled to
hire the services of another contractor, to which it incurred additional expenses. RepublicAsahi filed for its claim against Stronghold under bond that the latter issued for JDS in favor
of Republic-Asahi. Stronghold refused to pay, claiming that its obligation had been
extinguished by the death of JDSs proprietor, Jose Santos.
ISSUE:
W/N Strongholds liability under the performance bond was automatically extinguished by the
death of Santos, the principal.
HELD:
No. As a general rule, the death of either the creditor or the debtor does not extinguish the
obligation. Obligations are transmissible to the heirs, except when the transmission is prevented
by the law, the stipulations of the parties, or the nature of the obligation. Only obligations that
are personal or are identified with the persons themselves are extinguished by death.
Section 5 of Rule 86 of the Rules of Court expressly allows the prosecution of money
claims arising from a contract against the estate of a deceased debtor. Evidently, those claims are
not actually extinguished. What is extinguished is only the obligees action or suit filed before
the court, which is not then acting as a probate court.
In the present case, whatever monetary liabilities or obligations Santos had under his
contracts with Republic-Asahi were not intransmissible by their nature, by stipulation, or by
provision of law. Hence, his death did not result in the extinguishment of those obligations or
liabilities, which merely passed on to his estate. Death is not a defense that he or his estate can
set up to wipe out the obligations under the performance bond. Consequently, Stronghold as
surety cannot use his death to escape its monetary obligation under its performance bond.
The liability of Stronghold is contractual in nature, because it executed a performance
bond. As a surety, Stronghold is solidarily liable with Santos in accordance with the Civil Code.
Under the law and jurisprudence, Republic-Asahi may sue, separately or together, the principal
debtor and the surety, in view of the solidary nature of their liability. The death of the principal
debtor will not work to convert, decrease or nullify the substantive right of the solidary creditor.
Evidently, despite the death of the principal debtor, Republic-Asahi may still sue Stronghold
alone, in accordance with the solidary nature of the latters liability under the performance bond.
4D Page 31
14.
Sec. 1. Actions which may and which may not be brought against executor or administrator. No action upon a claim for the recovery of money or debt or interest thereon shall be
commenced against the executor or administrator; but actions to recover real or personal
property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to
recover damages for an injury to person or property, real or personal, may be commenced
against him.
Sec. 2. Executor or administrator may bring or defend actions which survive. - For the
recovery or protection of the property or rights of the deceased, an executor or
administrator may bring or defend, in the right of the deceased, actions for causes which
survive.
Sec. 3. Heir may not sue until have share assigned. - When an executor or administrator is
appointed and assumes the trust, no action to recover the title or possession of lands or for
damages done to such lands shall be maintained against him by an heir or devisee until
there is an order of the court assigning such lands to such heir or devisee until the time
allowed for paying debts has expired.
Sec. 4. Executor or administrator may compound with debtor. - With the approval of the
court, an executor or administrator may compound with the debtor of the deceased for a
debt due, and may give a discharge of such debt on receiving a just dividend of the estate of
the debtor.
Sec. 5. Mortgage due estate may be foreclosed. - A mortgage belonging to the estate of a
deceased person, as mortgagee or assignee of the right of a mortgagee, may be foreclosed
by the executor or administrator.
Sec. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed. - If an
executor or administrator, heir, legatee, creditor, or other individual interested in the
estate of the deceased, complains to the court having jurisdiction of the estate that a person
is suspected of having concealed, embezzled, or conveyed away any of the money, goods, or
chattels of the deceased, or that such person has in his possession or has knowledge of any
deed, conveyance, bond, contract, or other writing which contains evidence of or tends to
disclose the right, title, interest, or claim of the deceased to real or personal estate, or the
last will and testament of the deceased, the court may cite such suspected person to appear
before it and may examine him on oath on the matter of such complaint; and if the person
so cited refuses to appear, or to answer on such examination or such interrogatories as are
put to him, the court may punish him for contempt, and may commit him to prison until he
submits to the order of the court. The interrogatories put to any such person, and his
answers thereto, shall be in writing and shall be filed in the clerk's office.
4D Page 32
Sec. 7. Person entrusted with estate compelled to render account. - The court, on complaint of
an executor or administrator, may cite a person entrusted by an executor or administrator
with any part of the estate of the deceased to appear before it, and may require such person
to render a full account, on oath, of the money, goods, chattels, bonds, accounts, or other
papers belonging to such estate as came to his possession in trust for such executor or
administrator, and of his proceedings thereon; and if the person so cited refuses to appear
to render such account, the court may punish him for contempt as having disobeyed a
lawful order of the court.
Sec. 8. Embezzlement before letters issued. - If a person, before the granting of letters
testamentary or of administration on the estate of the deceased, embezzles or alienates any
of the money, goods, chattels, or effects of such deceased, such person shall be liable to an
action in favor of the executor or administrator of the estate for double the value of the
property sold, embezzled, or alienated, to be recovered for the benefit of such estate.
Sec. 9. Property fraudulently conveyed by deceased may be recovered; When executor or
administrator must bring action. - When there is deficiency of assets in the hands of an
executor or administrator for the payment of debts and expenses of administration, and the
deceased in his lifetime had conveyed real or personal property, or a right or interest
therein, or a debt or credit, with intent to defraud his creditors or to avoid any right, debt,
or duty; or had so conveyed such property, right, interest, debt, or credit that by law the
conveyance would be void as against his creditors, and the subject of the attempted
conveyance would be liable to attachment by any of them in his lifetime, the executor or
administrator may commence and prosecute to final judgment an action for the recovery of
such property, right, interest, debt, or credit for the benefit of the creditors; but he shall not
be bound to commence the action unless on application of the creditors of the deceased,
nor unless the creditors making the application pay such part of the costs and expenses, or
give security therefor to the executor or administrator, as the court deems equitable.
Sec. 10. When creditor may bring action; Lien for costs. - When there is such a deficiency of
assets, and the deceased in his lifetime had made or attempted such a conveyance, as is
stated in the last preceding section, and the executor or administrator has not commenced
the action therein provided for, any creditor of the estate may, with the permission of the
court, commence and prosecute to final judgment, in the name of the executor or
administrator, a like action for the recovery of the subject of the conveyance or attempted
conveyance for the benefit of the creditors. But the action shall not be commenced until the
creditors has filed in a court a bond executed to the executor or administrator, in an
amount approved by the judge, conditioned to indemnify the executor or administrator
against the costs and expenses incurred by reason of such action. Such creditor shall have a
lien upon any judgment recovered by him in the action for such costs and other expenses
incurred therein as the court deems equitable. Where the conveyance or attempted
conveyance has been made by the deceased in his lifetime in favor of the executor or
administrator, the action which a creditor may bring shall be in the name of all the
creditors, and permission of the court and filing of bond as above prescribed, are not
necessary.
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Alfonso Orfinada died intestate, leaving properties located in Angeles City, Dagupan City
and Caloocan City. He was survived by his wife and several children. 6 months later, the
heirs found out that an Extrajudicial Settlement of Estate was executed by Teodora Rioferio
(Alfonsos paramour) and her children involving the properties in Dagupan. Alfonso
Clyde Orfinada (son) filed a Petition for Letters of Administration of the estate of Alfonso.
He was joined by his mother and siblings in filing the complaint for Annulment/Rescission
of the Extrajudicial Settlement of Estate and Cancellation of TCTs. In their answers, the
Rioferios argued, among others, that the parties are not the real parties-in-interest but
rather the estate of Alfonso Orfinada in view of the pendency of the administration
proceedings.
ISSUE:
Whether the heirs have legal standing to prosecute rights belonging to the deceased
subsequent to the commencement of administration proceedings.
HELD:
Yes. Even if administration proceedings have already been commenced, the heirs may still
bring the suit if an administrator has not yet been appointed. In Gochan v Young, the Court
ruled that Rule 87, Section 2, while permitting an executor or administrator to represent or
to bring suits on behalf of the deceased, do not prohibit the heirs from representing the
deceased. These rules are easily applicable to cases in which an administrator has
already been appointed. But no rule categorically addresses the situation in which
special proceedings for the settlement of an estate have already been instituted, yet
no administrator has been appointed. In such instances, the heirs cannot be expected to
wait for the appointment of an administrator; then wait further to see if the administrator
appointed would care enough to file a suit to protect the rights and the interests of the
deceased; and in the meantime do nothing while the rights and the properties of the
decedent are violated or dissipated.
Even if there is an appointed administrator, jurisprudence recognizes two
exceptions, viz: (1) if the executor or administrator is unwilling or refuses to bring suit; and
(2) when the administrator is alleged to have participated in the act complained of and he
is made a party defendant. Evidently, the necessity for the heirs to seek judicial relief to
recover property of the estate is as compelling when there is no appointed administrator, if
not more, as where there is an appointed administrator but he is either disinclined to bring
suit or is one of the guilty parties himself.
15.
Sec. 1. Debts paid in full if estate sufficient. - If, after hearing all the money claims against the
estate, and after ascertaining the amount of such claims, it appears that there are sufficient
assets to pay debts, the executor or administrator shall pay the same within the time
limited for that purpose.
Sec. 2. Part of estate from which debt paid when provision made by will. - If the testator
makes provision by his will, or designates the estate to be appropriated for the payment of
debts, the expenses of administration, or the family expenses, they shall be paid according
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to the provisions of the will; but if the provisions made by the will or the estate
appropriated, is not sufficient for that purpose, such part of the estate of the testator, real
or personal, as is not disposed of by will, if any, shall be appropriated for that purpose.
Sec. 3. Personalty first chargeable for debts, then realty. - The personal estate of the
deceased not disposed of by will shall be first chargeable with the payment of debts and
expenses; and if said personal estate is not sufficient for that purpose, or its sale would
redound to the detriment of the participants of the estate, the whole of the real estate not
disposed of by will, or so much thereof as is necessary, may be sold, mortgaged, or
otherwise encumbered for that purpose by the executor or administrator, after obtaining
the authority of the court therefor. Any deficiency shall be met by contributions in
accordance with the provisions of section 6 of this rule.
Sec. 4. Estate to be retained to meet contingent claims. - If the court is satisfied that a
contingent claim duly filed is valid, it may order the executor or administrator to retain in
his hands sufficient estate to pay such contingent claim when the same becomes absolute,
or, if the estate is insolvent, sufficient to pay a portion equal to the dividend of the other
creditors.
Sec. 5. How contingent claim becoming absolute in two years allowed and paid; Action
against distributees later. - If such contingent claim becomes absolute and is presented to
the court, or to the executor or administrator, within two (2) years from the time limited
for other creditors to present their claims, it may be allowed by the court if not disputed by
the executor or administrator, and, if disputed, it may be proved and allowed or disallowed
by the court as the facts may warrant. If the contingent claim is allowed, the creditor shall
receive payment to the same extent as the other creditors if the estate retained by the
executor or administrator is sufficient. But if the claim is not so presented, after having
become absolute, within said two (2) years, and allowed, the assets retained in the hands of
the executor or administrator, not exhausted in the payment of claims, shall be distributed
by the order of the court to the persons entitled to the same; but the assets so distributed
may still be applied to the payment of the claim when established, and the creditor may
maintain an action against the distributees to recover the debt, and such distributees and
their estates shall be liable for the debt in proportion to the estate they have respectively
received from the property of the deceased.
Sec. 6. Court to fix contributive shares where devisees, legatees, or heirs have been in
possession. - Where devisees, legatees, or heirs have entered into possession of portions of
the estate before the debts and expenses have been settled and paid, and have become
liable to contribute for the payment of such debts and expenses, the court having
jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of
their several liabilities, and order how much and in what manner each person shall
contribute, and may issue execution as circumstances require.
Sec. 7. Order of payment if estate insolvent. - If the assets which can be appropriated for the
payment of debts are not sufficient for that purpose, the executor or administrator shall
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pay the debts against the estate, observing the provisions of Articles 1059 and 2239 to
2251 of the Civil Code.
Art. 1059. If the assets of the estate of a decedent which can be applied to the payment of debts are not
sufficient for that purpose, the provisions of Articles 2239 to 2251 on Preference of Credits shall be observed,
provided that the expenses referred to in Article 2244, No. 8, shall be those involved in the administration of
the decedent's estate. (n)
Art. 2239. If there is property, other than that mentioned in the preceding article, owned by two or more
persons, one of whom is the insolvent debtor, his undivided share or interest therein shall be among the
assets to be taken possession of by the assignee for the payment of the insolvent debtor's obligations. (n)
Art. 2240. Property held by the insolvent debtor as a trustee of an express or implied trust, shall be excluded
from the insolvency proceedings. (n)
CHAPTER 2 - CLASSIFICATION OF CREDITS
Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall be
preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed in the
performance of their duties, on the movables, money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as they are in the possession of the
debtor, up to the value of the same; and if the movable has been resold by the debtor and the price is still
unpaid, the lien may be enforced on the price; this right is not lost by the immobilization of the thing by
destination, provided it has not lost its form, substance and identity; neither is the right lost by the sale of the
thing together with other property for a lump sum, when the price thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the hands of the creditor, or those
guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal property, on the movable thus
made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising from the contract of tenancy on shares, on the share
of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses,
until their delivery and for thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to travellers by hotel keepers, on the movables
belonging to the guest as long as such movables are in the hotel, but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest advanced to the debtor, upon the fruits
harvested;
(12) Credits for rent for one year, upon the personal property of the lessee existing on the immovable leased
and on the fruits of the same, but not on money or instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully sold the thing deposited, upon the price
of the sale.
In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully taken,
the creditor may demand them from any possessor, within thirty days from the unlawful seizure. (1922a)
Art. 2242. With reference to specific immovable property and real rights of the debtor, the following claims,
mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the immovable sold;
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Art. 2246. Those credits which enjoy preference with respect to specific movables, exclude all others to the
extent of the value of the personal property to which the preference refers.
Art. 2247. If there are two or more credits with respect to the same specific movable property, they shall be
satisfied pro rata, after the payment of duties, taxes and fees due the State or any subdivision thereof. (1926a)
Art. 2248. Those credits which enjoy preference in relation to specific real property or real rights, exclude all
others to the extent of the value of the immovable or real right to which the preference refers.
Art. 2249. If there are two or more credits with respect to the same specific real property or real rights, they
shall be satisfied pro rata, after the payment of the taxes and assessments upon the immovable property or
real right. (1927a)
Art. 2250. The excess, if any, after the payment of the credits which enjoy preference with respect to specific
property, real or personal, shall be added to the free property which the debtor may have, for the payment of
the other credits. (1928a)
Art. 2251. Those credits which do not enjoy any preference with respect to specific property, and those which
enjoy preference, as to the amount not paid, shall be satisfied according to the following rules:
(1) In the order established in Article 2244;
(2) Common credits referred to in Article 2245 shall be paid pro rata regardless of dates. (1929a)
Sec. 8. Dividends to be paid in proportion to claims. - If there are no assets sufficient to pay
the credits of any one class of creditors after paying the credits entitled to preference over
it, each creditor within such class shall be paid a dividend in proportion to his claim. No
creditor of any one class shall receive any payment until those of the preceding class are
paid.
Sec. 9. Estate of insolvent nonresident, how disposed of. - In case administration is taken in
the Philippines of the estate of a person who was at the time of his death an inhabitant of
another country, and who died insolvent, his estate found in the Philippines shall, as far as
practicable, be so disposed of that his creditors here and elsewhere may receive each an
equal share, in proportion to their respective credits.
Sec. 10. When and how claim proved outside the Philippines against insolvent resident's
estate paid. - If it appears to the court having jurisdiction that claims have been duly proven
in another country against the estate of an insolvent who was at the time of his death an
inhabitant of the Philippines, and that the executor or administrator in the Philippines had
knowledge of the presentation of such claims in such country and an opportunity to contest
their allowance, the court shall receive a certified list of such claims, when perfected in
such country, and add the same to the list of claims proved against the deceased person in
the Philippines so that a just distribution of the whole estate may be made equally among
all its creditors according to their respective claims; but the benefit of this and the
preceding sections shall not be extended to the creditors in another country if the property
of such deceased person there found is not equally apportioned to the creditors residing in
the Philippines and the other creditors, according to their respective claims.
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Sec. 11. Order for payment of debts. - Before the expiration of the time limited for the
payment of the debts, the court shall order the payment thereof, and the distribution of the
assets received by the executor or administrator for that purpose among the creditors, as
the circumstances of the estate require and in accordance with the provisions of this rule.
Sec. 12. Orders relating to payment of debts where appeal is taken. - If an appeal has been
taken from a decision of the court concerning a claim, the court may suspend the order for
the payment of the debts or may order the distribution among the creditors whose claims
are definitely allowed, leaving in the hands of the executor or administrator sufficient
assets to pay the claim disputed and appealed. When a disputed claim is finally settled the
court having jurisdiction of the estate shall order the same to be paid out of the assets
retained to the same extent and in the same proportion with the claims of other creditors.
Sec. 13. When subsequent distribution of assets ordered. - If the whole of the debts are not
paid on the first distribution, and if the whole assets are not distributed, or other assets
afterwards come to the hands of the executor or administrator, the court may from time to
time make further orders for the distribution of assets.
Sec. 14. Creditors to be paid in accordance with terms of order. - When an order is made for
the distribution of assets among the creditors, the executor or administrator shall, as soon
as the time of payment arrives, pay the creditors the amounts of their claims, or the
dividend thereon, in accordance with the terms of such order. chan robles virtual law
library
Sec. 15. Time for paying debts and legacies fixed, or extended after notice, within what
periods. - On granting letters testamentary or administration the court shall allow to the
executor or administrator a time for disposing of the estate and paying the debts and
legacies of the deceased, which shall not, in the first instance, exceed one (1) year; but the
court may, on application of the executor or administrator and after hearing on such notice
of the time and place therefor given to all persons interested as it shall direct, extend the
time as the circumstances of the estate require not exceeding six (6) months for a single
extension nor so that the whole period allowed to the original executor or administrator
shall exceed two (2) years.
Sec. 16. Successor of dead executor or administrator may have time extended on notice within
certain period. - When an executor or administrator dies, and a new administrator of the
same estate is appointed, the court may extend the time allowed for the payment of the
debts or legacies beyond the time allowed to the original executor or administrator, not
exceeding six (6) months at a time and not exceeding six (6) months beyond the time which
the court might have allowed to such original executor or administrator; and notice shall be
given of the time and place for hearing such application, as required in the last preceding
section.
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16.
Sec. 1. Order of sale of personalty. - Upon the application of the executor or administrator,
and on written notice to the heirs and other persons interested, the court may order the
whole or a part of the personal estate to be sold, if it appears necessary for the purpose of
paying debts, expenses of administration, or legacies, or for the preservation of the
property.
Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts
and legacies through personalty not exhausted. - When the personal estate of the deceased is
not sufficient to pay the debts, expenses of administration, and legacies, or where the sale
of such personal estate may injure the business or other interests of those interested in the
estate, and where a testator has not otherwise made sufficient provision for the payment of
such debts, expenses, and legacies, the court, on the application of the executor or
administrator and on written notice to the heirs, devisees, and legatees residing in the
Philippines, may authorize the executor or administrator to sell, mortgage, or otherwise
encumber so much as may be necessary of the real estate, in lieu of personal estate, for the
purpose of paying such debts, expenses, and legacies, if it clearly appears that such sale,
mortgage, or encumbrances would be beneficial to the persons interested; and if a part
cannot be sold, mortgaged, or otherwise encumbered without injury to those interested in
the remainder, the authority may be for the sale, mortgage, or other encumbrance of the
whole of such real estate, or so much thereof as is necessary or beneficial under the
circumstances.
Sec. 3. Persons interested may prevent such sale, etc., by giving bond. - No such authority to
sell, mortgage, or otherwise encumber real or personal estate shall be granted if any person
interested in the estate gives a bond, in a sum to be fixed by the court, conditioned to pay
the debts, expenses of administration, and legacies within such time as the court directs;
and such bond shall be for the security of the creditors, as well as of the executor or
administrator, and may be prosecuted for the benefit of either.
Sec. 4. When court may authorize sale of estate as beneficial to interested persons; Disposal of
proceeds. - When it appears that the sale of the whole or a part of the real or personal
estate, will be beneficial to the heirs, devisees, legatees, and other interested persons, the
court may, upon application of the executor or administrator and on written notice to the
heirs, devisees and legatees who are interested in the estate to be sold, authorize the
executor or administrator to sell the whole or a part of said estate, although not necessary
to pay debts, legacies, or expenses of administration; but such authority shall not be
granted if inconsistent with the provisions of a will. In case of such sale, the proceeds shall
be assigned to the persons entitled to the estate in the proper proportions.
Sec. 5. When court may authorize sale, mortgage, or other encumbrance of estate to pay debts
and legacies in other countries. - When the sale of personal estate, or the sale, mortgage, or
other encumbrance of real estate is not necessary to pay the debts, expenses of
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administration, or legacies in the Philippines, but it appears from records and proceedings
of a probate court in another country that the estate of the deceased in such other country
is not sufficient to pay the debts, expenses of administration, and legacies there, the court
here may authorize the executor or administrator to sell the personal estate or to sell,
mortgage, or otherwise encumber the real estate for the payment of debts or legacies in the
other country, in the same manner as for the payment of debts or legacies in the
Philippines.
Sec. 6. When court may authorize sale, mortgage, or other encumbrance of realty acquired on
execution or foreclosure. - The court may authorize an executor or administrator to sell,
mortgage, or otherwise encumber real estate acquired by him on execution or foreclosure
sale, under the same circumstances and under the same regulations as prescribed in this
rule for the sale, mortgage, or other encumbrance of other real estate.
Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The court having jurisdiction of the estate of the deceased may authorize the executor or
administrator to sell personal estate, or to sell, mortgage, or otherwise encumber real
estate; in cases provided by these rules and when it appears necessary or beneficial, under
the following regulations:
(a) The executor or administrator shall file a written petition setting forth the debts due
from the deceased, the expenses of administration, the legacies, the value of the personal
estate, the situation of the estate to be sold, mortgaged, or otherwise encumbered, and such
other facts as show that the sale, mortgage, or other encumbrance is necessary or
beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition, and cause
notice stating the nature of the petition, the reason for the same, and the time and place of
hearing, to be given personally or by mail to the persons interested, and may cause such
further notice to be given, by publication or otherwise, as it shall deem proper;
(c) If the court requires it, the executor or administrator shall give an additional bond, in
such sum as the court directs, conditioned that such executor or administrator will account
for the proceeds of the sale, mortgage, or other encumbrance;
(d) If the requirements in the preceding subdivisions of this section have been complied
with, the court, by order stating such compliance, may authorize the executor or
administrator to sell, mortgage, or otherwise encumber, in proper cases, such part of the
estate as is deemed necessary, and in case of sale the court may authorize it to be public or
private, as would be most beneficial to all parties concerned. The executor or administrator
shall be furnished with a certified copy of such order;
(e) If the estate is to be sold at auction, the mode of giving notice of the time and place of
the sale shall be governed by the provisions concerning notice of execution sale;
(f) There shall be recorded in the registry of deeds of the province in which the real estate
thus sold, mortgaged, or otherwise encumbered is situated, a certified copy of the order of
the court, together with the deed of the executor or administrator for such real estate,
which shall be as valid as if the deed had been executed by the deceased in his lifetime.
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Sec. 8. When a court may authorize conveyance or realty which deceased contracted to
convey; Notice; Effect of deed. - Where the deceased was in his lifetime under contract,
binding in law, to deed real property, or an interest therein, the court having jurisdiction of
the estate may, on application for that purpose, authorize the executor or administrator to
convey such property according to such contract, or with such modifications as are agreed
upon by the parties and approved by the court; and if the contract is to convey real
property to the executor or administrator, the clerk of the court shall execute the deed. The
deed executed by such executor, administrator, or clerk of court shall be as effectual to
convey the property as if executed by the deceased in his lifetime; but no such conveyance
shall be authorized until notice of the application for that purpose has been given
personally or by mail to all persons interested, and such further notice has been given, by
publication or otherwise, as the court deems proper; nor if the assets in the hands of the
executor or administrator will thereby be reduced so as to prevent a creditor from
receiving his full debt or diminish his dividend.
Sec. 9. When court may authorize conveyance of lands which deceased held in trust. - Where
the deceased in his lifetime held real property in trust for another person, the court may,
after notice given as required in the last preceding section, authorize the executor or
administrator to deed such property to the person, or his executor or administrator, for
whose use and benefit it was so held; and the court may order the execution of such trust,
whether created by deed or by law.
Acebedo v. Abesamis, 217 SCRA 186 (1993)
Felix Acebedo died with several real estate properties, and settlement of his estate was
pending with the probate court for 16 years. Some of his heirs wanted to sell some
properties (to pay unsettled claims against the estate then distribute the remainder among
the heirs) so they filed a motion with the court to approve a conditional sale already made
to a third party. The petitioner, who is also an heir and the administrator of the estate,
opposed the motion, questioning the validity of the sale since it was made without prior
court approval. The probate court approved the conditional sale.
ISSUE:
Is it within the jurisdiction of the lower court, acting as a probate court, to issue an Order
approving the Deed of Conditional Sale executed by respondents-heirs without prior court
approval and to order herein Administrator to sell the remaining portion of said
properties?
HELD: YES.
Although the Rules of Court do not specifically state that the sale of an immovable
property belonging to an estate of a decedent, in a special proceeding, should be made with
the approval of the court, this authority is necessarily included in its capacity as a probate
court. Therefore, it is clear that the probate court in the case at bar, acted within its
jurisdiction in issuing the Order approving the Deed of Conditional Sale.
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An heir can sell whatever right, interest, or participation he may have in the
property under administration. This is a matter which comes under the jurisdiction of the
probate court.
The right of an heir to dispose of the decedent's property, even if the same is under
administration, is based on the Civil Code provision stating that the possession of
hereditary property is deemed transmitted to the heir without interruption and from the
moment of the death of the decedent, in case the inheritance is accepted. Where there are
however, two or more heirs, the whole estate of the decedent is, before its partition, owned
in common by such heirs.
The Civil Code, under the provisions on co-ownership, further qualifies this right.
Although it is mandated that each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and thus may alienate, assign or mortgage it, and
even substitute another person in its enjoyment, the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-ownership. In other words,
the law does not prohibit a co-owner from selling, alienating or mortgaging his ideal share
in the property held in common.
Opulencia v. Court of Appeals, 293 SCRA 385 (1998)
ISSUE:
Whether a contract to sell a real property involved in an estate proceeding valid and
binding without the approval of the probate court?
HELD: YES
Contract to Sell Valid
Section 7 of Rule 89 of the Rules of Court is not applicable, because petitioner
entered into the Contract to Sell in her capacity as an heiress, not as an executrix or
administratrix of the estate. In the contract, she represented herself as the "lawful
owner" and seller of the subject parcel of land.
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The Supreme Court emphasized that hereditary rights are vested in the heir or heirs
from the moment of the decedent's death. Petitioner, therefore, became the owner
of her hereditary share the moment her father died. Thus, the lack of judicial
approval does not invalidate the Contract to Sell, because the petitioner has the
substantive right to sell the whole or a part of her share in the estate of her late
father.
Administration of the Estate not Prejudiced by the Contract to Sell
The Contract to Sell stipulates that petitioner's offer to sell is contingent on the
"complete clearance of the court on the Last Will Testament of her father." 19
Consequently, although the Contract to Sell was perfected between the petitioner
and private respondents during the pendency of the probate proceedings, the
consummation of the sale or the transfer of ownership over the parcel of land to the
private respondents is subject to the full payment of the purchase price and to the
termination and outcome of the testate proceedings. Therefore, there is no basis for
petitioner's apprehension that the Contract to Sell may result in a premature
partition and distribution of the properties of the estate.
Estoppel
Petitioner is estopped from backing out of her representations in her valid Contract to Sell
with private respondents, from whom she had already received P300,000 as initial
payment of the purchase price. Petitioner may not renege on her own acts and
representations, to the prejudice of the private respondents who have relied on them.
Jurisprudence teaches us that neither the law nor the courts will extricate a party from an
unwise or undesirable contract he or she entered into with all the required formalities and
with full awareness of its consequences.
17.
Sec. 1. When order for distribution of residue made. - When the debts, funeral charges, and
expenses of administration, the allowance to the widow, and inheritance tax, if any,
chargeable to the estate in accordance with law, have been paid, the court, on the
application of the executor or administrator, or of a person interested in the estate, and
after hearing upon notice, shall assign the residue of the estate to the persons entitled to
the same, naming them and the proportions, or parts, to which each is entitled, and such
person may demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession. If there is a
controversy before the court as to who are the lawful heirs of the deceased person or as to
the distributive shares to which each person is entitled under the law, the controversy shall
be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above mentioned has
been made or provided for, unless the distributees, or any of them, give a bond, in a sum to
be fixed by the court, conditioned for the payment of said obligations within such time as
the court directs.
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xxx
x x x."4
On September 27, 1994, the RTC issued an Order directing Ramon "to submit pertinent documents relative to
the transfer of the properties from the registered owners during their lifetime for proper determination of
the court if such properties should be collated, and set it for hearing with notice to the present registered
owners to show cause why their properties may not be included in the collation of properties." 5
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xxx
x x x."6
A comparison with the original motion for collation reveals that the amended motion refers to the same real
properties enumerated in the original except Nos. 6 and 7 above which are not found in the original motion.
On November 11, 1994, the RTC issued an Order, to wit:
"Acting on the Amended Motion for Collation filed by oppositor-applicant Ramon G. Nicolas and the
comment thereto filed by petitioner-administratrix, the Court finds the following properties to be
collated to the estate properties under present administration, to wit:
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18.
Rule 91 Escheats
Sec. 1. When and by whom petition filed. - When a person dies intestate, seized of real or
personal property in the Philippines, leaving no heir or person by law entitled to the same,
the Solicitor General or his representative in behalf of the Republic of the Philippines, may
file a petition in the Court of First Instance of the province where the deceased last resided
or in which he had estate, if he resided out of the Philippines, setting forth the facts, and
praying that the estate of the deceased be declared escheated.
Sec. 2. Order for hearing. - If the petition is sufficient in form and substance, the court, by an
order reciting the purpose of the petition, shall fix a date and place for the hearing thereof,
which date shall be not more than six (6) months after the entry of the order, and shall
direct that a copy of the order be published before the hearing at least once a week for six
(6) successive weeks in some newspaper of general circulation published in the province,
as the court shall deem best.
Sec. 3. Hearing and judgment. - Upon the satisfactory proof in open court on the date fixed
in the order that such order has been published as directed and that the person died
intestate, seized of real or personal property in the Philippines, leaving no heir or person
entitled to the same, and no sufficient cause being shown to the contrary, the court shall
adjudge that the estate of the deceased in the Philippines, after the payment of just debts
and charges, shall escheat; and shall, pursuant to law, assign the personal estate to the
municipality or city where he last resided in the Philippines, and the real estate to the
municipalities or cities, respectively, in which the same is situated. If the deceased never
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resided in the Philippines, the whole estate may be assigned to the respective
municipalities or cities where the same is located. Such estate shall be for the benefit of
public schools, and public charitable institutions and centers in said municipalities or
cities.
The court, at the instance of an interested party, or on its own motion, may order the
establishment of a permanent trust, so that only the income from the property shall be
used.
Sec. 4. When and by whom claim to estate filed. - If a devisee, legatee, heir, widow, widower
or other person entitled to such estate appears and files a claim thereto with the court
within five (5) years from the date of such judgment, such person shall have possession of
and title to the same, or if sold, the municipality or city shall be accountable to him for the
proceeds, after deducting reasonable charges for the care of the estate; but a claim not
made within said time shall be forever barred.
Sec. 5. Other actions for escheat. - Until otherwise provided by law, actions for reversion or
escheat of properties alienated in violation of the Constitution or of any statute shall be
governed by this rule, except that the action shall be instituted in the province where the
land lies in whole or in part.
In re Estate of Lao Sayco, 21 Phil. 991 (1924)
[Wrong citation. This is a 1912 case.]
Lao Sayco died. The administrator of his estate requested that the property of the decedent
be delivered to his nephew (allegedly his sole heir). Notices were sent to interested parties
to establish the right of the alleged heir, and the notice of the date of the hearing was made
thru publication for three weeks prior to the date set. The municipality of Mambajao
entered its opposition, claiming that the property of the decedent should be delivered to it
because the decedent had no legal heirs. The lower court ruled in favor of Mambajao. The
administrator appealed the judgment.
ISSUE:
W/N the municipality of Mambajao was entitled to the property left by the decedent.
HELD:
No, for failure of Mambajao to comply with procedural requirements. In order that the
property which belonged to the decedent Lao Sayco may be decreed to have reverted to the
Senate, pursuant to the provisions of section 751 of the Code of Civil Procedure, it is
indispensable that the requirements contained in the above-quoted section of the said code
should have been complied with. The municipality of Mambajao merely prayed for an order
of reversion and for the adjudication in behalf of the municipality of the property
aforementioned; it did not comply with the provisions of the law by furnishing the required
proofs in regard to the matters hereinabove indicated, which must be the subject of an
investigation. It does not appear that there was an inquisition provided by law, for the
record is not accompanied by any certified copy of the investigatory of the real and
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personal property that belonged to the said decedent, with a statement of the places where
the realty is located. Neither is it shown to have ascertained whether the deceased
Chinaman executed any will during his lifetime, or whether the deceased Chinaman
executed any will during his lifetime, or whether he left in Mambajao or in any other place
any relative entitled to inherit from him. Moreover, the notice summoning the persons who
believed they were entitled to his property should have been published for at least six
consecutive weeks, and not for three as was directed in the order.
Republic v. Court of Appeals, 375 SCRA 484 (2002)
Elizabeth Hankins, a widow and a French national, died without heirs, leaving properties
behind. Solano, a faithful girl Friday of Hawkins, alleged that a deed of donation was
executed in her favor by Hawkins, but such were misplaced and could not be found.
The Republic, in light of the missing deeds of donation, filed for a petition for
escheat of the estate of Hankins. After establishing that there were no known heirs and
persons entitled to the properties of decedent Hankins, the lower court escheated the
estate of the decedent in favor of petitioner Republic of the Philippines.
Seven years after the judgment, Solano, claiming that she had found the deeds of
donation, filed for annulment of judgment due to extrinsic fraud and lack of jurisdiction
over the subject matter. The Republic opposed, stating that Solanos petition for annulment
of judgment had no basis and that the same was barred by the statute of limitations.
ISSUE:
W/N Solanos claim had prescribed.
HELD:
Yes. Escheat is a proceeding, unlike that of succession or assignment, whereby the state, by
virtue of its sovereignty, steps in and claims the real or personal property of a person who
dies intestate leaving no heir. In the absence of a lawful owner, a property is claimed by the
state to forestall an open "invitation to self-service by the first comers." Since escheat is one
of the incidents of sovereignty, the state may, and usually does, prescribe the conditions
and limits the time within which a claim to such property may be made. The procedure by
which the escheated property may be recovered is generally prescribed by statute, and a
time limit is imposed within which such action must be brought. A claimant to an
escheated property must file his claim "within five (5) years from the date of such
judgment, such person shall have possession of and title to the same, or if sold, the
municipality or city shall be accountable to him for the proceeds, after deducting the estate;
but a claim not made shall be barred forever." A claimant has been defined to be any
person alleging to have a direct right or interest in the property sought to be escheated is
likewise an interested party and may appear and oppose the petition for escheat. Solano,
as a donee, is a claimant within this definition. Thus, her claim had prescribed because it
was filed 7 years after the judgment, way beyond the 5-year prescriptive period.
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