RULE 88

PAYMENT OF THE
DEBTS OF THE
ESTATE

Sec.1-D EB TS IS PA ID IN FU LL IF TH E
ESTATE IS SU FFICIEN T

A writ of execution is not the proper

procedure to satisfy the debts. The

court shall order the SALE OR
MORTGAGE of the properties of the
decedent. The proceeds of which will
satisfy the debts and expenses.

Q- ls the remedy of execution available in

favor of a creditor against the estate of a
decedent? Why?
Ans: No, because the procedure outlined by
law is the sale of personal property or the sale
of mortgage of real property of the decedent
and the proceeds shall be paid out of said
proceeds.
(Aldamiz vs. CFI of Mindoro, 85 Phil. 228).
GEN. RULE: Payment of the debts of the
estate must be taken in the ff. order of
preference:
1. From the portion or property designated in
the will,

Sec.2-PA RT O F ESTATE FR O M W H ICH

D EB T PA ID W H EN PR O V ISIO N M A D E BY
W ILL
If the testator makes a provision in

his will or designates the estate to be

appropriated for the payment of his
debts that will be followed.
But if it not sufficient, such part of

the estate is not disposed of by will,

if any, shall be appropriated for that
purpose.

Sec.3. PER SO N A LITY FIR ST

CH A R G EA B LE FO R D EB TS, TH EN R EA LTY
TWO (2) INSTANCES WHEN REALTY IS LIABLE

FOR DEBTS AND EXPENSES

1. When the personal estate of the decedent
is not
sufficient for that purpose,
2. When the sale of such personalty would be
for the detriment of the participants of the
estate.

Sec. 4- ESTATE TO B E R ETA IN ED TO

M EET CO N TIN G EN T CLA IM S

If the court is satisfied that the

contingent claim duly filed is valid. It

may order the executor or
administrator to retain in his hands a
sufficient part of the estate to pay a
portion equal to the dividend of the
creditors.
Requisites:
1. Contingent Claim is duly filed;
2. Court is satisfied that the claim is

valid; and

Sec.5-H O W CO N TIN G EN T CLA IM

B ECO M IN G A B SO LU TE IN TW O YEA R S
A LLO W ED A N D PA ID
1. If such contingent claim becomes absolute and is

presented to the court as an absolute claim within

two years from the time allowed for the
presentation of claims, it will be paid in the same
manner as the other absolute claims.
2. If the contingent claim matures after the
expiration of two years, the creditors may sue
distributees, who are liable in proportion to the
shares in the estate respectively received by them.
Note: The contingent claims must first have been
established and allowed in the probate court before
the creditors can file an action directly against the
distributees.

Sec.6- CO URT TO FIX CO N TRIBUTIVE SH ARES

W H ERE D EVISEES,LEG ATEES O R H EIRS
H AVE BEEN IN PO SSESSIO N
The heirs and distributees are liable

individually for payment of all lawful

outstanding claims against he estate
in proportion to the amount or value
of the property they have
respectively received from the
estate.

Sec.7-O RD ER O F PAYM EN T IF ESTATE IS

IN SO LVEN T

If estate is insolvent, as in liabilities

are more than the assets, Sec.7 in

relation to Art. 1059 and 2239 to
2251 of the Civil Code (Concurrence
and Preference of Credits) must
apply.

Sec. 8- D IV ID EN D S TO B E PA ID IN
PR O PO RTIO N TO CLA IM S

If there are no assets sufficient to

pay the credits of any once 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 non-resident,

how disposed of.
In case administration is taken in the

Philippine of the estate of a person

who was at the time of his death an
inhabitant of another country, and
who died insolvent, hi 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

Section 10. W hen and how claim

proved outside the Philippines against
insolvent resident's estate paid
Claims proven outside the Philippines where the

executor had knowledge and opportunity to

contest its allowance therein may be added to the
list of the claims in the Philippines against the
estate of an INSOLVENT RESIDENT and the estate
will be distributed equally among those creditors.
Principle of Reciprocity_ the benefits of Sections 9
and 10 cannot be extended to the creditors in
another country if the property of such deceased
there found is not equally apportioned to the
creditors residing in the Philippines.

Sec.11-O rder for paym ent 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. O rders relating to paym ent of

debts w here appealis 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 distributions 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. W hen subsequent distribution

of assets ordered

CONDITIONS:
1. Whole of the debts are not paid;
2. Whole assets are not distributed,

or other assets afterwards come to

the hands of the executor or
administrator.

Sec. 14. Creditors to be paid in

accordance w ith term s of order

When an order is made for the

distribution of assets among the

creditors, the executor or
administration 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.

Sec. 15. Tim e for paying debts and

legacies f x
ied ,or extended after
notice,w ithin w hat period s
Shall not exceed 1 year in the first instance;
But the court may extend period on application

or executor or administrator and after hearing

and notice on the following conditions:
1. The extension must not exceed 6 months for

single extension.
2. The whole period allowed to the original executor
or administrator shall not exceed 2 years.
Note: The extension may be granted by the court
taking into account to the distribution of the estate

Sec 16. Successor of dead executor or

adm inistrator m ay have tim e extended
on notice w ithin certain period

Successor of deceased executor or

administrator may be given an

extension not to exceed 6 months.

Santos vs. M anarang

Facts: Don Lucas de Ocampo died on

November 18, 1906, possessed of

certain real and personal property
which, by his last will and testament, he
left to his three children. The fourth
clause of this will reads as follows:
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.

 Among the debts mentioned in the list

referred to are two in favor of the

plaintiff, Isidro Santos; one due on
April 14, 1907, for P5,000, and various
other described as falling due at
different dates (the dates are not
given) amounting to the sum of
P2,454. The will was duly probated and
a committee was regularly appointed
to hear and determine such claims
against the estate as might be
presented.

 This committee submitted its report to the

court on June 27, 1908. On July 14, 1908,

the plaintiff, Isidro Santos, presented a
petition to the court asking that the
committee be required to reconvene and
pass upon his claims against the estate
which were recognized in the will of
testator. This petition was denied by the
court, and on November 21, 1910, the
plaintiff instituted the present proceedings
against the administratrix of the estate to
recover the sums mentioned in the will as
due him. Relief was denied in the court
below, and now appeals to this court.

Issue:W O N the low er court erred in denying

the petition ofthe plaintiff
.

Ruling.Yes.