RULE 86 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
Claims Against Estate assistance.

Section 2. Certain article not to be inventoried. The wearing apparel of the

Section 6. When allowed money paid as cost. The amount paid by an executor or surviving husband or wife and minor children., the marriage bed and bedding, and
administrator for costs awarded against him shall be allowed in his administration
such provisions and other articles as will necessarily be consumed in the substinence
account, unless it appears that the action or proceeding in which the costs are taxed
of the family of the deceased, under the direction of the court, shall not be
was prosecuted or resisted without just cause, and not in good faith.
considered as assets, nor administered as such, and shall not be included in the
inventory.
Section 7. What expenses and fees allowed executor or administrator. Not to charge
for services as attorney. Compensation provided by will controls unless renounced. Section 3. Allowance to widow and family. The widow and minor or incapacitated
An executor or administrator shall be allowed the necessary expenses the care, children of a deceased person, during the settlement of the estate, shall receive
management, and settlement of the estate, and for his services, four pesos per day therefrom, under the direction of the court, such allowance as are provided by law.
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 FAMILY CODE
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 Art. 133. From the common mass of property support shall be given to the surviving
centum of so much of such value as exceeds five thousand pesos and does not spouse and to the children during the liquidation of the inventoried property and until
exceed thirty thousand pesos, one-half per centum of so much of such value as what belongs to them is delivered; but from this shall be deducted that amount
exceed one hundred thousand pesos. But in any special case, where the estate is
received for support which exceeds the fruits or rents pertaining to them. (188a)
large, and the settlement has been attended with great difficulty, and has required a
high degree of 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 executors or administrator is an attorney, he shall not

charge against the estate any professional fees for legal services
rendered by him.

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.

RULE 83

Inventory and Appraisal. Provision for Support of Family

Section 1. Inventory and appraisal to be returned within three months. Within three
(3) months after his appointment every executor or administrator shall return to the
court a true inventory and appraisal of all real and personal estate of the deceased
G.R. No. L-61700 September 14, 1987
PRINCESITA SANTERO, FEDERICO SANTERO and WILLIE SANTERO, petitioners,
vs.
HON. COURT OF FIRST INSTANCE OF CAVITE, ANSELMA DIAZ, VICTOR, RODRIGO,
ANSELMINA, MIGUEL, all surnamed SANTERO, and REYNALDO EVARISTO, in his capacity
as Administrator of the Intestate Estate of PABLO SANTERO, respondents.
PARAS, J.:
This is a Petition for certiorari which questions the order of the respondent court
granting the Motion for Allowance filed by private respondents. Said order reads as
follows:
Acting on the Motion For Allowance dated June 30, 1982 filed by
Victor, Rodrigo, Anselmina and Miguel, all surnamed Santero, thru
their guardian, Anselma Diaz, the Opposition thereto dated July 8,
1982 filed by the oppositors, the Reply to Opposition dated July 12,
1982 filed by movant Anselma Diaz and the Rejoinder dated July 26,
1982 filed by the oppositors, the Court was constrained to examine
the Motion For Allowance filed by the herein movant last year
wherein the ground cited was for support which included
educational expenses, clothing and medical necessities, which was
granted and said minors were given an allowance prayed for in their
motion.
In the Motion For Allowance in question guardian-movant Anselma
Diaz only followed the precedent of the Court which granted a
similar motion last year to be spent for the school expenses of her
wards. In their opposition the oppositors contend that the wards for
whom allowance is sought are no longer schooling and have
attained majority age so that they are no longer under guardianship.
They likewise allege that the administrator does not have sufficient
funds to cover the said allowance because whatever funds are in
the hands of the administrator, they constitute funds held in trust for
the benefit of whoever will be adjudged as owners of the Kawit
property from which said administrator derives the only income of
the intestate estate of Pablo Santero, et al.
In the Reply filed by the guardian-movant, she admitted some of her
children are of age and not enrolled for the first semester due to lack
of funds but will be enrolled as soon as they are given the requested
allowances. She cited Article 290 of the Civil Code providing that:
Support is everything that is indispensable for
substance, 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 trade or vocation,
even beyond the age of majority.'
citing also Section 3 of Rule 83 of the Rules of Court which provides:
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 provided by law.'
From the foregoing discussion alone, the Court cannot deviate from
its duty to give the allowance sought by the wards, the fact that they
need further education which should have been provided to them
if their deceased father were alive.
On the allegation that the funds from which the allowance would be
derived are trust funds, the Court, time and again had emphasized
that the estate of the Santeros is quite big and the amount to be
released for allowances is indeed insignificant and which can easily
be replaced from its general fund if the so-called trust fund is
adjudicated to the oppositors.
WHEREFORE, Victor, Rodrigo, Anselmina and Miguel, all surnamed
Santero are hereby granted an allowance of two thousand
(P2,000.00) pesos each for tuition fees, clothing materials and
subsistence out of any available funds in the hands of the
administrator who is ordered to reimburse to them the said amount
after this order shall have become final to enable the oppositors to
file their appeal by certiorari if they so desire within the reglementary
period.
SO ORDERED.
Bacoor, Cavite, July 28, 1982.

(pp. 35-36, Rollo)
It appears from the records that petitioners Princesita Santero-Morales, Federico
Santero and Winy Santero are the children begotten by the late Pablo Santero with
Felixberta Pacursa while private respondents Victor, Rodrigo, Anselmina and Miguel all
surnamed Santero are four of the seven children begotten by the same Pablo Santero
with Anselma Diaz. Both sets of children are the natural children of the late Pablo
Santero since neither of their mothers, was married to their father Pablo. Pablo Santero
in turn, who died on November 30, 1973 was the only legitimate son of Pascual Santero
who died in 1970 and Simona Pamuti Vda. de Santero who died in 1976.
Meanwhile before We could act on the instant petition private respondents filed
another Motion for Allowance dated March 25, 1985 with the respondent court to
include Juanita, Estelita and Pedrito all surnamed Santero as children of the late Pablo
Santero with Anselma Diaz praying that an order be granted directing the
administrator Reynaldo C. Evaristo, to deliver the sum of P6,000.00 to each of the seven
(7) children of Anselma Diaz as their allowance from the estate of Pablo Santero. The
respondentD Court granted the motion of the private respondents but oppositors
(petitionersEherein) asked the court to reconsider said Order.
F
On SeptemberO 10, 1985, an Amended Order was issued by respondent Court directing
Anselma DiazN to submit her clarification or explanation as to the additional three (3)
children of SAnselma Diaz included in the motion. In compliance therewith Anselma
O "Clarification" stating among others that in her previous motions, only the
Diaz filed her
M children as represented by the mother, Anselma Diaz were included in
last four minor
the motion. for support and her first three (3) children who were then of age should
have beenB included since all her children have the right to receive allowance as
L
advance payment of their shares in the inheritance of Pablo Santero under Art. 188,
of the NewECivil Code.
Z
A
On October 15, 1985, petitioners herein filed their Motion to Admit Supplemental
Petition opposing the inclusion of three (3) more heirs. We denied that "Motion for
Extension ofE Time to file their Supplemental Petition" as per Our Resolution dated
October 23,x 1985.
e
c
On November u 11, 1985, another Order was issued by the respondent court directing
the administrator
t of the estate to get back the allowance of the three additional
recipients or
i children of Anselma Diaz apparently based on the oppositors' (petitioners
herein) "Urgent
v Motion to Direct the Administrator to Withhold Disbursement of
Allowance eto the Movants."
J
u being raised in this present Petition are:
The issues now
d
g 1. Whether or not respondent court acted with abuse of discretion
e amounting to lack of jurisdiction in granting the allowance to the
respondents Victor, Rodrigo, Anselmina and Miguel-P2,000.00 each
despite the fact that all of them are not minors and all are gainfully
employed with the exception of Miguel.
2. Whether or not respondent Court acted with abuse of discretion
in granting the allowance based on the allegations of the said
respondents that the abovenamed wards are still schooling and they
are in actual need of money to defray their school expenses for 1982-
83 when the truth is that they are no longer schooling.
3. Whether or not respondent Court acted with abuse of discretion
in granting the motion for allowance without conducting a hearing
thereon, to determine the truth of allegations of the private
respondents.
Petitioners argue that private respondents are not entitled to any allowance since they
have already attained majority age, two are gainfully employed and one is married
as provided for under Sec. 3 Rule 83, of the Rules of Court. Petitioners also allege that
there was misrepresentation on the part of the guardian in asking for allowance for
tuition fees, books and other school materials and other miscellaneous expenses for
school term 1982-83 because these wards have already attained majority age so that
they are no longer under guardianship. They further allege that the administrator of
the estate of Pablo Santero does not have sufficient funds to cover said allowance
because whatever funds are in the hands of the administrator constitute funds held in
trust for the benefit of whoever will be adjudged as owners of the Kawit properties from
where these funds now held by the administrator are derived.
In this connection, the question of whether the private respondents are entitled to
allowance or not concerns only the intestate estate of the late Pablo Santero and not
the intestate estates of Pascual Santero and Simona Pamuti, parents of their late
legitimate son Pablo Santero. The reason for this is Art. 992 of the New Civil Code which
states that "An illegitimate child has no right to inherit ab intestato from the legitimate
children and relatives of his father or mother; nor shall such children or relatives inherit
in the same manner from the illegitimate child." The question of whether or not the
petitioners and private respondents are entitled to inherit by right of representation
from their grandparents more particularly from Simona Pamuti was settled by Us in the
related case of "Anselma Diaz, et al. vs. Felisa Pamuti-Jardin" (G.R. No. 66574-R)
wherein We held that in view of the barrier present in said Art. 992, petitioners and
private respondents are excluded from the intestate estate of Simona Pamuti Vda. de
Santero.
The present petition obviously lacks merit.
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 tothe 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 private respondents 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, the private
respondents Victor, Rodrigo, Anselmina and Miguel all surnamed Santero are entitled
to allowances as advances from their shares in the inheritance from their father Pablo
Santero. Since the provision of the Civil Code, a substantive 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).
It is not true that the Motion for Allowance was granted by respondent Court without
hearing. The record shows that the "Motion for Allowance" dated June 30, 1982
contains a Notice of Hearing (p. 2, Annex "A") addressed to the lawyers for the
petitioners and setting the hearing thereof on July 8, 1982 at 9:00 in the morning.
Apparently a copy of said motion was duly received by the lawyer, Atty. Beltran as he
filed an opposition thereto on the same date of hearing of the motion. Furthermore
even the instant petition admits that the wards, (petitioners and private respondents
as represented by their respective guardians) "have been granted allowances for
school expenses for about 8 years now." The respondent court in granting the motion
for allowance merely "followed the precedent of the court which granted a similar
motion last year." (Annex "F") However in previous years (1979-1981) the "wards"
(petitioners and private respondents) only received P1,500.00 each depending upon
the availability of funds as granted by the court in several orders. (Annex 1 to Annex
4).
WHEREFORE, in the light of the aforementioned circumstances, the instant Petition is
hereby DISMISSED and the assailed judgment is AFFIRMED.
SO ORDERED.
CORAZON G. RUIZ, petitioner, vs. COURT OF APPEALS and CONSUELO
TORRES, respondents.
DECISION
PUNO, J.:
On appeal is the decision[1] of the Court of Appeals in CA-G.R. CV No. 56621
dated 25 August 2000, setting aside the decision[2] of the trial court dated 19 May 1997
and lifting the permanent injunction on the foreclosure sale of the subject lot covered
by TCT No. RT-96686, as well as its subsequent Resolution[3] dated 26 January 2001,
denying petitioners Motion for Reconsideration.
The facts of the case are as follows:
Petitioner Corazon G. Ruiz is engaged in the business of buying and selling
jewelry.[4] She obtained loans from private respondent Consuelo Torres on different
occasions, in the following amounts: P100,000.00; P200,000.00; P300,000.00;
and P150,000.00.[5] Prior to their maturity, the loans were consolidated under one (1)
promissory note dated March 22, 1995, which reads as follows:[6]
P750,000.00 Quezon City, March 22, 1995
PROMISSORYNOTE
For value received, I, CORAZON RUIZ, as principal and ROGELIO RUIZ as surety in
solidum, jointly and severally promise to pay to the order of CONSUELO P. TORRES the
sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00) Philippine Currency, to
earn an interest at the rate of three per cent (3%) a month, for thirteen months,
payable every _____ of the month, and to start on April 1995 and to mature on April
1996, subject to renewal.
If the amount due is not paid on date due, a SURCHARGE of ONE PERCENT of the
principal loan, for every month default, shall be collected.
Remaining balance as of the maturity date shall earn an interest at the rate of ten
percent a month, compounded monthly.
It is finally agreed that the principal and surety in solidum, shall pay attorneys fees at
the rate of twenty-five percent (25%) of the entire amount to be collected, in case this
note is not paid according to the terms and conditions set forth, and same is referred
to a lawyer for collection.
In computing the interest and surcharge, a fraction of the month shall be considered
one full month.
In the event of an amicable settlement, the principal and surety in solidum shall
reimburse the expenses of the plaintiff.
(Sgd.) Corazon Ruiz __________________
Principal Surety
The consolidated loan of P750,000.00 was secured by a real estate mortgage on
a 240-square meter lot in New Haven Village, Novaliches, Quezon City, covered by
Transfer Certificate of Title (TCT) No. RT-96686, and registered in the name of
petitioner.[7] The mortgage was signed by Corazon Ruiz for herself and as attorney-in-
fact of her husband Rogelio. It was executed on 20 March 1995, or two (2) days before
the execution of the subject promissory note.[8]
Thereafter, petitioner obtained three (3) more loans from private respondent,
under the following promissory notes: (1) promissory note dated 21 April 1995, in the
amount of P100,000.00;[9] (2) promissory note dated May 23, 1995, in the amount
of P100,000.00;[10] and (3) promissory note dated December 21, 1995, in the amount
of P100,000.00.[11] These combined loans of P300,000.00 were secured by P571,000.00
worth of jewelry pledged by petitioner to private respondent.[12]
From April 1995 to March 1996, petitioner paid the stipulated 3% monthly interest
on the P750,000.00 loan,[13] amounting to P270,000.00.[14] After March 1996, petitioner
was unable to make interest payments as she had difficulties collecting from her clients
in her jewelry business.[15]
Due to petitioners failure to pay the principal loan of P750,000.00, as well as the
interest payment for April 1996, private respondent demanded payment not only of
the P750,000.00 loan, but also of the P300,000.00 loan.[16] When petitioner failed to pay,
private respondent sought the extra-judicial foreclosure of the aforementioned real
estate mortgage.[17]
On September 5, 1996, Acting Clerk of Court and Ex-Officio Sheriff Perlita V. Ele,
Deputy Sheriff In-Charge Rolando G. Acal and Supervising Sheriff Silverio P. Bernas
issued a Notice of Sheriffs Sale of subject lot. The public auction was scheduled on
October 8, 1996.[18]
On October 7, 1996, one (1) day before the scheduled auction sale, petitioner
filed a complaint with the RTC of Quezon City docketed as Civil Case No. Q-96-29024,
with a prayer for the issuance of a Temporary Restraining Order to enjoin the sheriff
from proceeding with the foreclosure sale and to fix her indebtedness to private
respondent to P706,000.00. The computed amount of P706,000.00 was based on the
aggregate loan of P750,000.00, covered by the March 22, 1995 promissory note, plus
the other loans of P300,000.00, covered by separate promissory notes, plus interest,
minus P571,000.00 representing the amount of jewelry pledged in favor of private
respondent.[19]
The trial court granted the prayer for the issuance of a Temporary Restraining
Order,[20] and on 29 October 1996, issued a writ of preliminary injunction.[21] In its
Decision dated May 19, 1997, it ordered the Clerk of Court and Ex-Officio Sheriff to
desist with the foreclosure sale of the subject property, and it made permanent the
writ of preliminary injunction. It held that the real estate mortgage is unenforceable
because of the lack of the participation and signature of petitioners husband. It noted
that although the subject real estate mortgage stated that petitioner was attorney-in-
fact for herself and her husband, the Special Power of Attorney was never presented
in court during the trial.[22]
The trial court further held that the promissory note in question is a unilateral
contract of adhesion drafted by private respondent. It struck down the contract as
repugnant to public policy because it was imposed by a dominant bargaining party
(private respondent) on a weaker party (petitioner).[23] Nevertheless, it held that
petitioner still has an obligation to pay the private respondent. Private respondent was
further barred from imposing on petitioner the obligation to pay the surcharge of one
percent (1%) per month from March 1996 onwards, and interest of ten percent (10%)
a month, compounded monthly from September 1996 to January 1997. Petitioner was
thus ordered to pay the amount of P750,000.00 plus three percent (3%) interest per
month, or a total of P885,000.00, plus legal interest from date of [receipt of] the
decision until the total amount of P885,000.00 is paid.[24]
Aside from the foregoing, the trial court took into account petitioners proposal to
pay her other obligations to private respondent in the amount of P392,000.00.[25]
The trial court also recognized the expenses borne by private respondent with
regard the foreclosure sale and attorneys fees. As the notice of the foreclosure sale
has already been published, it ordered the petitioner to reimburse private respondent
the amount of P15,000.00 plus attorneys fees of the same amount.[26]
Thus, the trial court computed petitioners obligation to private respondent, as
follows:
Principal Loan . P 750,000.00
Interest.. 135,000.00
Other Loans..392,000.00
Publication Fees.15,000.00
Attorneys Fees 15,000.00
TOTAL P1,307,000.00
with legal interest from date of receipt of decision until payment of total amount
of P1,307,000.00 has been made.[27]
Private respondents motion for reconsideration was denied in an Order dated
July 21, 1997.
Private respondent appealed to the Court of Appeals. The appellate court set
aside the decision of the trial court. It ruled that the real estate mortgage is valid
despite the non-participation of petitioners husband in its execution because the land
on which it was constituted is paraphernal property of petitioner-wife. Consequently,
she may encumber the lot without the consent of her husband.[28] It allowed its
foreclosure since the loan it secured was not paid.
Nonetheless, the appellate court declared as invalid the 10% compounded
monthly interest[29] and the 10% surcharge per month stipulated in the promissory notes
dated May 23, 1995 and December 1, 1995,[30] and so too the 1% compounded
monthly interest stipulated in the promissory note dated 21 April 1995,[31] for being
excessive, iniquitous, unconscionable, and contrary to morals. It held that the legal
rate of interest of 12% per annum shall apply after the maturity dates of the notes until
full payment of the entire amount due, and that the only permissible rate of surcharge
is 1% per month, without compounding.[32] The appellate court also granted attorneys
fees in the amount of P50,000.00, and not the stipulated 25% of the amount due,
following the ruling in the case of Medel v. Court of Appeals.[33]
Now, before this Court, petitioner assigns the following errors:
(1) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
PROMISSORY NOTE OF P750,000.00 IS NOT A CONTRACT OF ADHESION DESPITE THE
CLEAR SHOWING THAT THE SAME IS A READY-MADE CONTRACT PREPARED BY (THE)
RESPONDENT CONSUELO TORRES AND DID NOT REFLECT THEIR TRUE INTENTIONS AS IT
WEIGHED HEAVILY IN FAVOR OF RESPONDENT AND AGAINST PETITIONER.
(2) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE
PROPERTY COVERED BY THE SUBJECT DEED OF MORTGAGE OF MARCH 20, 1995 IS A
PARAPHERNAL PROPERTY OF THE PETITIONER AND NOT CONJUGAL EVEN THOUGH THE
ISSUE OF WHETHER OR NOT THE MORTGAGED PROPERTY IS PARAPHERNAL WAS NEVER
RAISED, NOR DISCUSSED AND ARGUED BEFORE THE TRIAL COURT.
(3) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE
TRIAL COURTS COMPUTATION OF THE ACTUAL OBLIGATIONS OF THE PETITIONER WITH
(THE) RESPONDENT TORRES EVEN THOUGH THE SAME IS BASED ON EVIDENCE SUBMITTED
BEFORE IT.
The pertinent issues to be resolved are:
(1) Whether the promissory note of P750,000.00 is a contract of adhesion;
(2) Whether the real property covered by the subject deed of mortgage dated
March 20, 1995 is paraphernal property of petitioner; and
 (3) Whether the rates of interests and surcharges on the obligation of petitioner
to private respondent are valid.
I
We hold that the promissory note in the case at bar is not a contract of
adhesion. In Sweet Lines, Inc. vs. Teves,[34] this Court discussed the nature of a contract
of adhesion as follows:
. . . there are certain contracts almost all the provisions of which have been drafted
only by one party, usually a corporation. Such contracts are called contracts of
adhesion, because the only participation of the other party is the signing of his
signature or his adhesion thereto. Insurance contracts, bills of lading, contracts of sale
of lots on the installment plan fall into this category.[35]
. . . it is drafted only by one party, usually the corporation, and is sought to be
accepted or adhered to by the other party . . . who cannot change the same and
who are thus made to adhere hereto on the take it or leave it basis . . . [36]
In said case of Sweet Lines,[37] the conditions of the contract on the 4 x 6 inches
passenger ticket are in fine print. Thus we held:
. . . it is hardly just and proper to expect the passengers to examine their tickets
received from crowded/congested counters, more often than not during rush hours,
for conditions that may be printed thereon, much less charge them with having
consented to the conditions, so printed, especially if there are a number of such
conditions in fine print, as in this case.[38]
We further stressed in the said case that the questioned Condition No. 14 was
prepared solely by one party which was the corporation, and the other party who was
then a passenger had no say in its preparation. The passengers have no opportunity
to examine and consider the terms and conditions of the contract prior to the
purchase of their tickets.[39]
In the case at bar, the promissory note in question did not contain any fine print
provision which could not have been examined by the petitioner. Petitioner had all
the time to go over and study the stipulations embodied in the promissory note. Aside
from the March 22, 1995 promissory note for P750,000.00, three other promissory notes
of different dates and amounts were executed by petitioner in favor of private
respondent. These promissory notes contain similar terms and conditions, with a little
variance in the terms of interests and surcharges. The fact that petitioner and private
respondent had entered into not only one but several loan transactions shows that
petitioner was not in any way compelled to accept the terms allegedly imposed by
private respondent. Moreover, petitioner, in her complaint[40] dated October 7, 1996
filed with the trial court, never claimed that she was forced to sign the subject
note.Paragraph five of her complaint states:
That on or about March 22, 1995 plaintiff was required by the defendant Torres to
execute a promissory note consolidating her unpaid principal loan and interests which
said defendant computed to be in the sum of P750,000.00 . . .
To be required is certainly different from being compelled. She could have rejected
the conditions made by private respondent. As an experienced business- woman, she
ought to understand all the conditions set forth in the subject promissory note. As held
by this Court in Lee, et al. vs. Court of Appeals, et al.,[41] it is presumed that a person
takes ordinary care of his concerns.[42] Hence, the natural presumption is that one does
not sign a document without first informing himself of its contents and
consequences. This presumption acquires greater force in the case at bar where not
only one but several documents were executed at different times by petitioner in favor
of private respondent.
II
We also affirm the ruling of the appellate court that the real property covered by
the subject deed of mortgage is paraphernal property. The property subject of the
mortgage is registered in the name of Corazon G. Ruiz, of legal age, married to Rogelio
Ruiz, Filipinos. Thus, title is registered in the name of Corazon alone because the phrase
married to Rogelio Ruiz is merely descriptive of the civil status of Corazon and should
not be construed to mean that her husband is also a registered owner. Furthermore,
registration of the property in the name of Corazon G. Ruiz, of legal age, married to
Rogelio Ruiz is not proof that such property was acquired during the marriage, and
thus, is presumed to be conjugal. The property could have been acquired by Corazon
while she was still single, and registered only after her marriage to Rogelio
Ruiz. Acquisition of title and registration thereof are two different acts.[43] The
presumption under Article 116 of the Family Code that properties acquired during the
marriage are presumed to be conjugal cannot apply in the instant case. Before such
presumption can apply, it must first be established that the property was in fact
acquired during the marriage. In other words, proof of acquisition during the marriage
is a condition sine qua non for the operation of the presumption in favor of conjugal
ownership.[44] No such proof was offered nor presented in the case at bar. Thus, on the
basis alone of the certificate of title, it cannot be presumed that said property was
acquired during the marriage and that it is conjugal property. Since there is no
showing as to when the property in question was acquired, the fact that the title is in
the name of the wife alone is determinative of its nature as paraphernal, i.e.,
belonging exclusively to said spouse.[45] The only import of the title is that Corazon is
the owner of said property, the same having been registered in her name alone, and
that she is married to Rogelio Ruiz.[46]
III
We now resolve the issue of whether the rates of interests and surcharges on the
obligation of petitioner to private respondent are legal.
The four (4) unpaid promissory notes executed by petitioner in favor of private
respondent are in the following amounts and maturity dates:
(1) P750,000.00, dated March 22, 1995 matured on April 21, 1996;
 (2) P100,000.00, dated April 21, 1995 matured on August 21, 1995;
(3) P100,000.00, dated May 23, 1995 matured on November 23, 1995; and
(4) P100,000.00, dated December 21, 1995 matured on March 1, 1996.
The P750,000.00 promissory note dated March 22, 1995 has the following
provisions:
(1) 3% monthly interest, from the signing of the note until its maturity date;
(2) 10% compounded monthly interest on the remaining balance at maturity
date;
(3) 1% surcharge on the principal loan for every month of default; and
(4) 25% attorneys fees.
The P100,000.00 promissory note dated April 21, 1995 has the following provisions:
(1) 3% monthly interest, from the signing of the note until its maturity date;
(2) 10% monthly interest on the remaining balance at maturity date;
(3) 1% compounded monthly surcharge on the principal loan for every month of
default; and
(4) 10% attorneys fees.
The two (2) other P100,000.00 promissory notes dated May 23, 1995 and
December 1, 1995 have the following provisions:
(1) 3% monthly interest, from the signing of the note until its maturity date;
(2) 10% compounded monthly interest on the remaining balance at maturity
date;
(3) 10% surcharge on the principal loan for every month of default; and
(4) 10% attorneys fees.
We affirm the ruling of the appellate court, striking down as invalid the 10%
compounded monthly interest, the 10% surcharge per month stipulated in the
promissory notes dated May 23, 1995 and December 1, 1995, and the 1%
compounded monthly interest stipulated in the promissory note dated April 21,
1995. The legal rate of interest of 12% per annum shall apply after the maturity dates
of the notes until full payment of the entire amount due. Also, the only permissible rate
of surcharge is 1% per month, without compounding. We also uphold the award of the
appellate court of attorneys fees, the amount of which having been reasonably
reduced from the stipulated 25% (in the March 22, 1995 promissory note) and 10% (in
the other three promissory notes) of the entire amount due, to a fixed amount
of P50,000.00. However, we equitably reduce the 3% per month or 36% per annum
interest present in all four (4) promissory notes to 1% per month or 12% per annum
interest.
The foregoing rates of interests and surcharges are in accord with Medel vs. Court
of Appeals,[47] Garcia vs. Court of Appeals,[48] Bautista vs. Pilar Development
Corporation,[49]and the recent case of Spouses Solangon vs. Salazar.[50] This Court
invalidated a stipulated 5.5% per month or 66% per annum interest on a P500,000.00
loan in Medel[51] and a 6% per month or 72% per annum interest on a P60,000.00 loan
in Solangon[52] for being excessive, iniquitous, unconscionable and exorbitant. In both
cases, we reduced the interest rate to 12% per annum. We held that while the Usury
Law has been suspended by Central Bank Circular No. 905, s. 1982, effective on
January 1, 1983, and parties to a loan agreement have been given wide latitude to
agree on any interest rate, still stipulated interest rates are illegal if they are
unconscionable. Nothing in the said circular grants lenders carte blanche authority to
raise interest rates to levels which will either enslave their borrowers or lead to a
hemorrhaging of their assets.[53] On the other hand, in Bautista vs. Pilar Development
Corp.,[54] this Court upheld the validity of a 21% per annum interest on a P142,326.43
loan, and in Garcia vs. Court of Appeals, sustained the agreement of the parties to a
24% per annum interest on an P8,649,250.00 loan. It is on the basis of these cases that
we reduce the 36% per annum interest to 12%. An interest of 12% per annum is deemed
fair and reasonable. While it is true that this Court invalidated a much higher interest
rate of 66% per annum in Medel[55] and 72% in Solangon[56] it has sustained the validity
of a much lower interest rate of 21% in Bautista[57]and 24% in Garcia.[58] We still find the
36% per annum interest rate in the case at bar to be substantially greater than those
upheld by this Court in the two (2) aforecited cases.
The 1% surcharge on the principal loan for every month of default is valid. This
surcharge or penalty stipulated in a loan agreement in case of default partakes of the
nature of liquidated damages under Art. 2227 of the New Civil Code, and is separate
and distinct from interest payment.[59] Also referred to as a penalty clause, it is expressly
recognized by law. It is an accessory undertaking to assume greater liability on the
part of an obligor in case of breach of an obligation.[60] The obligor would then be
bound to pay the stipulated amount of indemnity without the necessity of proof on
the existence and on the measure of damages caused by the breach.[61] Although
the courts may not at liberty ignore the freedom of the parties to agree on such terms
and conditions as they see fit that contravene neither law nor morals, good customs,
public order or public policy, a stipulated penalty, nevertheless, may be equitably
reduced if it is iniquitous or unconscionable.[62] In the instant case, the 10% surcharge
per month stipulated in the promissory notes dated May 23, 1995 and December 1,
1995 was properly reduced by the appellate court.
In sum, petitioner shall pay private respondent the following:
1. Principal of loan under promissory note dated
March 22, 1995 ... P750,000.00
a. 1% interest per month on principal from March 22, 1995
until fully paid, less P270,000.00 paid by petitioner as interest
from April 1995 to March 1996
 b. 1% surcharge per month on principal from May 1996 until
fully paid

2. Principal of loan under promissory note dated

April 21, 1995 .. P100,000.00

a. 1% interest per month on principal from April 21, 1995 until

fully paid

b. 1% surcharge per month on principal from September

1995 until fully paid

3. Principal of loan under promissory note dated

May 23, 1995 .... P100,000.00

a. 1% interest per month on principal from May 23, 1995 until fully paid

b. 1% surcharge per month on principal from December 1995 until

fully paid

4. Principal of loan under promissory note dated

December 1, 1995 ... P100,000.00

a. 1% interest per month on principal from December 1, 1995

until fully paid

b. 1% surcharge per month on principal from April 1996 until

fully paid

5. Attorneys fees...P 50,000.00

Hence, since the mortgage is valid and the loan it secures remains unpaid, the
foreclosure proceedings may now proceed.

IN VIEW WHEREOF, the appealed Decision of the Court of Appeals is AFFIRMED,

subject to the MODIFICATION that the interest rate of 36% per annum is ordered
reduced to 12 % per annum.

SO ORDERED.
G.R. No. 86250 February 26, 1990
ALBERTO F. LACSON, EDITHA F. LACSON, ROMEO F. LACSON and ZENA F.
VELASCO, petitioners,
vs.
HON. LUIS R. REYES, in his capacity as presiding judge of Branch 22 of the Regional Trial
Court of Cavite, Branch 22, and/or Multiple Sala, Imus, Cavite, and EPHRAIM J.
SERQUINA, respondents.
Victor H. Volfango for petitioners.
Ephraim J. Serquina for and his own behalf as respondent.
SARMIENTO, J.:
On August 26, 1987, the private respondent, Ephraim Serquina, petitioned the
respondent court for the probate of the last will and testament of Carmelita Farlin. His
petition was docketed as Sp. Proc. No. 127-87 of the respondent court, entitled "In Re
Testate Estate of Carmelita S. Farlin, Ephraim J. Serquina, Petitioner." He also petitioned
the court in his capacity as counsel for the heirs, the herein petitioners, and as executor
under the will.
The petition was not opposed and hence, on November 17, 1987, the respondent
court issued a "certificate of allowance," 1 the dispositive part of which reads as follows:
WHEREFORE, upon the foregoing, the Court hereby renders
certification that subject will and testament is accordingly allowed
in accordance with Sec. 13 of Rule 76 of the Rules of Court.
SO ORDERED. 2
On March 14, 1988, Atty. Ephraim Serquina filed a "motion for attorney's fees" 3 against
the petitioners, alleging that the heirs had agreed to pay, as and for his legal services
rendered, the sum of P68,000.00.
Thereafter summonses were served upon the heirs "as if it were a complaint against
said heirs" 4 directing them to answer the motion.
Thereafter, the heirs filed their answer and denied the claim for P68,000.00 alleging that
the sum agreed upon was only P7,000.00, a sum they had allegedly already paid.
After pre-trial, the respondent court rendered judgment and disposed as follows:
In the light of the foregoing, considering the extent of the legal
services rendered to the clients, the value of the properties gained
by the clients out of said services, the petition for attorney's fees is
granted. Judgment is hereby rendered directing the respondent
heirs to pay their lawyer the sum of P65,000.00 as true and
reasonable attorney's fees which shall be a lien on the subject
properties. Cost against the respondent.
SO ORDERED. 5
On October 21, 1988, eleven days after the heirs received a copy of the decision, 6 the
latter filed a notice of appeal.
On November 7, 1988, the respondent court issued an order directing the heirs to
amend their notice of appeal. 7
On October 27, 1988, the respondent court issued an order "noting" the notice on
appeal "appellants [the heirs] having failed to correct or complete the same within
the reglementary period to effect an appeal." 8
On November 24, 1988, the respondent court issued yet another order denying the
notice of appeal for failure of the heirs to file a record on appeal. 9
Thereafter, Atty. Serquina moved for execution.
On December 5, 1988, the respondent court issued an order granting execution. 10
The petitioners submit that the decision, dated October 26, 1988, and the orders,
dated October 27, 1988, November 24, 1988, and December 5, 1988, respectively, are
nun and void for the following reasons: (1) the respondent court never acquired
jurisdiction over the "motion for attorney's fees" for failure on the part of the movant,
Ephraim Serquina, to pay docket fees; (2) the respondent court gravely abused its
discretion in denying the heirs' notice of appeal for their failure to file a record on
appeal; and (3) the respondent court also gravely abused its discretion in awarding
attorney's fees contrary to the provisions of Section 7, of Rule 85, of the Rules of Court.
Atty. Serquina now defends the challenged acts of the respondent court: (1) his
motion was a mere incident to the main proceedings; (2) the respondent court rightly
denied the notice of appeal in question for failure of the heirs to submit a record on
appeal; and (3) in collecting attorney's fees, he was not acting as executor of
Carmelita Farlin's last will and testament because no letters testamentary had in fact
been issued.
We take these up seriatim.
I.
Anent docket fees, it has been held 11 that the court acquires jurisdiction over any
case only upon payment of the prescribed docket fee.
Although the rule has since been tempered, 12 that is, there must be a clear showing
that the party had intended to evade payment and to cheat the courts, it does not
excuse him from paying docket fees as soon as it becomes apparent that docket fees
are indeed payable.
In the case at bar, the "motion for attorney's fees" was clearly in the nature of an action
commenced by a lawyer against his clients for attorney's fees. The very decision of the
court states:
This case is an out-growth from Sp. Proc. No. 127-87 of same Court
which was long decided (sic). It resulted from the filing of a petition
for attorney's fees by the lawyer of the petitioner's heirs in the case
against the latter.
Upon the filing of the petition for attorney's fees, the heir-
respondents (sic) were accordingly summoned to answer the
petition as if it were a complaint against said heirs who retained the
petitioner as their lawyer in the said case. 13
In that event, the parties should have known, the respondent court in particular, that
docket fees should have been priorly paid before the court could lawfully act on the
case, and decide it.
It may be true that the claim for attorney's fees was but an incident in the main case,
still, it is not an escape valve from the payment of docket fees because as in all actions,
whether separate or as an offshoot of a pending proceeding, the payment of docket
fees is mandatory.
Assuming, therefore, ex gratia argumenti, that Atty. Serquina's demand for attorney's
fees in the sum of P68,000.00 is valid, he, Atty. Serquina, should have paid the fees in
question before the respondent court could validly try his "motion".
II.
With respect to the second issue, it has been held that in appeals arising from an
incident in a special proceeding, a record on appeal is necessary, otherwise, the
appeal faces a dismissal. 14 It has likewise been held, however, that in the interest of
justice, an appeal, brought without a record on appeal, may be reinstated under
exceptional circumstances. Thus:
xxx xxx xxx
It is noted, however, that the question presented in this case is one
of first impression; that the petitioner acted in honest, if mistaken,
interpretation of the applicable law; that the probate court itself
believed that the record on appeal was unnecessary; and that the
private respondent herself apparently thought so, too, for she did not
move to dismiss the appeal and instead impliedly recognized its
validity by filing the appellee's brief.
In view of these circumstances, and in the interest of justice, the
Court feels that the petitioner should be given an opportunity to
comply with the above-discussed rules by submitting the required
record on appeal as a condition for the revival of the appeal. The
issue raised in his appeal may then be fully discussed and, in the light
of the briefs already filed by the parties, resolved on the merits by the
respondent court. 15
In the instant case, the Court notes the apparent impression by the parties at the
outset, that a record on appeal was unnecessary, as evidenced by: (1) the very
holding of the respondent court that "[i]t is now easy to appeal as there is no more
need for a record on appeal . . . [b]y merely filing a notice of appeal, the appellant
can already institute his appeal . . . ;" 16 (2) in its order to amend notice of appeal, it
did not require the appellants to submit a record on appeal; and (3) Atty. Serquina
interposed no objection to the appeal on that ground.
In any event, since we are annulling the decision appealed from, the matter is a dead
issue.
III.
As we have indicated, we are granting certiorari and are annulling the decision
appealed from, but there seems to be no reason why we can not dispose of the heirs'
appeal in a single proceeding.
It is pointed out that an attorney who is concurrently an executor of a will is barred
from recovering attorney's fees from the estate. The Rule is specifically as follows:
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 exceeds 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 of 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
reexamined on appeal.
rather, his client. 22 Mutatis mutandis, where the administrator is himself the counsel for
the heirs, it is the latter who must pay therefor.
In that connection, attorney's fees are in the nature of actual damages, which must
be duly proved. 23 They are also subject to certain standards, to wit: (1) they must be
reasonable, that is to say, they must have a bearing on the importance of the subject
matter in controversy; (2) the extent of the services rendered; and (3) the professional
standing of the lawyer. 24 In all cases, they must be addressed in a full-blown trial and
not on the bare word of the parties. 25 And always, they are subject to the moderating
hand of the courts.
The records show that Atty. Ephraim Serquina, as counsel for the heirs, performed the
following:

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.
When the deceased by will makes some other provision for
compensation of his executor, that provision shall be a
satisfaction for his services unless by a written instrument filed in
court he renounces all claim to the compensation provided by
will. 17
The rule is therefore clear that an administrator or executor may be allowed fees for
the necessary expenses he has incurred as such, but he may not recover attorney's
fees from the estate. His compensation is fixed by the rule but such a compensation is
in the nature of executor's or administrator's commissions, and never as attorney's fees.
In one case, 18 we held that "a greater sum [other than that established by the rule]
may be allowed 'in any special case, where the estate is large, and the settlement has
been attended with great difficulty, and has required a high degree of capacity on
the part of the executor or administrator.'" 19 It is also left to the sound discretion of the
court. 20With respect to attorney's fees, the rule, as we have seen, disallows them.
Accordingly, to the extent that the trial court set aside the sum of P65,000.00 as and
for Mr. Serquina's attorney's fees, to operate as a "lien on the subject properties," 21the
trial judge must be said to have gravely abused its discretion (apart from the fact that
it never acquired jurisdiction, in the first place, to act on said Mr. Serquina's "motion for
attorney's fees").
The next question is quite obvious: Who shoulders attorney's fees? We have held that
a lawyer of an administrator or executor may not charge the estate for his fees, but
xxx xxx xxx
5. That after the order of allowance for probate of the will, the
undersigned counsel assisted the heirs to transfer immediately the
above-mentioned real estate in their respective names, from (sic)
the payment of estate taxes in the Bureau of Internal Revenue to the
issuance by the Registry of Deeds of the titles, in order for the heirs to
sell the foregoing real estate of 10,683 sq. cm (which was also the
subject of sale prior to the death of the testator) to settle testator's
the obligations and day-to-day subsistence being (sic) that the heirs,
full except Zena F. Velasco, are not employed neither doing any
the business; 26
the
The Court is not persuaded from the facts above that Atty. Serquina is entitled to the
sum claimed by him (P68,000.00) or that awarded by the lower court (P65,000.00). The
Court observes that these are acts performed routinely since they form part of what
any lawyer worth his salt is expected to do. The will was furthermore not contested.
They are not, so Justice Pedro Tuason wrote, "a case [where] the administrator was
able to stop what appeared to be an improvident disbursement of a substantial
amount without having to employ outside legal help at an additional expense to the
estate," 27 to entitle him to a bigger compensation. He did not exactly achieve
anything out of the ordinary.
The records also reveal that Atty. Serquina has already been paid the sum of
P6,000.00. 28 It is our considered opinion that he should be entitled to P15,000.00 for his
efforts on a quantum meruit basis. Hence, we hold the heirs liable for P9,000.00 more.
WHEREFORE, premises considered, judgment is hereby rendered: (1) GRANTING the
petition and making the temporary restraining order issued on January 16, 1989
PERMANENT; and (2) ORDERING the petitioners to PAY the private respondent, Atty.
Ephraim Serquina, attorney's fees in the sum of P9,000.00. The said fees shall not be
recovered from the estate of Carmelita Farlin.
No costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.

G.R. No. 174873 August 26, 2008
QUASHA ANCHETA PEA AND NOLASCO LAW OFFICE FOR ITS OWN BEHALF, AND
REPRESENTING THE HEIRS OF RAYMOND TRIVIERE, petitioners,
vs.
LCN CONSTRUCTION CORP., respondent.
DECISION
CHICO-NAZARIO, J.:
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 Decision1 dated 11 May 2006 and
Resolution2 dated 22 September 2006 of the Court of Appeals granting in part the
Petition for Certiorari filed by respondent LCN Construction Corporation (LCN) in CA-
G.R. SP No. 81296.
The factual antecedents of the case are as follows:
Raymond Triviere passed away on 14 December 1987. On 13 January 1988,
proceedings for the settlement of his intestate estate were instituted by his widow, Amy
Consuelo Triviere, before the Regional Trial Court (RTC) of Makati City, Branch 63 of the
National Capital Region (NCR), docketed as Special Proceedings Case No. M-1678.
Atty. Enrique P. Syquia (Syquia) and Atty. William H. Quasha (Quasha) of the Quasha
Law Office, representing the widow and children of the late Raymond Triviere,
respectively, were appointed administrators of the estate of the deceased in April
1988. As administrators, Atty. Syquia and Atty. Quasha incurred expenses for the
payment of real estate taxes, security services, and the preservation and
administration of the estate, as well as litigation expenses.
In February 1995, Atty. Syquia and Atty. Quasha filed before the RTC a Motion for
Payment of their litigation expenses. Citing their failure to submit an accounting of the
assets and liabilities of the estate under administration, the RTC denied in May 1995 the
Motion for Payment of Atty. Syquia and Atty. Quasha.
In 1996, Atty. Quasha also passed away. Atty. Redentor Zapata (Zapata), also of the
Quasha Law Office, took over as the counsel of the Triviere children, and continued to
help Atty. Syquia in the settlement of the estate.
On 6 September 2002, Atty. Syquia and Atty. Zapata filed another Motion for
Payment,3 for their own behalf and for their respective clients, presenting the following
allegations:
(1) That the instant Petition was filed on January 13, 1988; and Atty. Enrique P.
Syquia was appointed Administrator by the Order of this Honorable Court
dated April 12, 1988, and discharged his duties starting April 22, 1988, after
properly posting his administrator's bond up to this date, or more than
fourteen (14) years later. Previously, there was the co-administrator Atty.
William H. Quasha, but he has already passed away.
(2) 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:
"x x x where the estate is large, and the settlement has been
attended with great difficulty, and has required a high degree of
 capacity on the part of the executor or administrator, a greater sum
may be allowed"
In addition, Atty. Zapata has also been present in all the years of this case. In
addition, they have spent for all the costs of litigation especially the
transcripts, as out-of-pocket expenses.
(8) 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 claimant4 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 Order6 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.
Accordingly, the co-administrator Atty. Syquia and aforenamed counsel are
authorized to pay to be sourced from the Estate of the deceased as follows:
a) 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 Reconsideration10 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 hereby DELETED; and
(2) 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 Reconsideration16 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 2006,17explaining 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 therefrom for more than a decade. Out of the reported P4,738,558.63 value of the
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
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 persons 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.
According to petitioners, the 12 June 2003 Order of the RTC should not be construed
as a final order of distribution. The 12 June 2003 RTC Order granting the second Motion
for Payment is a mere interlocutory order that does not end the estate proceedings.
Only an order of distribution directing the delivery of the residue of the estate to the
proper distributees brings the intestate proceedings to a close and, consequently, puts
an end to the administration and relieves the administrator of his duties.
A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not yet
distributing the residue of the estate. The said Order grants the payment of certain
amounts from the funds of the estate to the petitioner children and widow of the late
Raymond Triviere considering that they have not received their respective shares
estate, the petitioner children and widow were being awarded by the RTC, in its 12
June 2003 Order, their shares in the collective amount of P600,000.00. Evidently, the
remaining portion of the estate still needs to be settled. The intestate proceedings were
not yet concluded, and the RTC still had to hear and rule on the pending claim of LCN
against the estate of the late Raymond Triviere and only thereafter can it distribute the
residue of the estate, if any, to his heirs.
While the awards in favor of petitioner children and widow made in the RTC Order
dated 12 June 2003 was not yet a distribution of the residue of the estate, given that
there was still a pending claim against the estate, still, they did constitute a partial and
advance distribution of the estate. Virtually, the petitioner children and widow were
already being awarded shares in the estate, although not all of its obligations had
been paid or provided for.
Section 2, Rule 109 of the Revised Rules of Court expressly recognizes advance
distribution of the estate, thus:
Section 2. Advance distribution in special proceedings. - Notwithstanding a
pending controversy or appeal in proceedings to settle the estate of a
decedent, the court may, in its discretion and upon such terms as it may
deem proper and just, permit that such part of the estate as may not be
affected by the controversy or appeal be distributed among the heirs or
legatees, upon compliance with the conditions set forth in Rule 90 of these
rules. (Emphases supplied.)
The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court allows the
distribution of the estate prior to the payment of the obligations mentioned therein,
provided that "the distributees, or any of them, gives 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."
In sum, although it is within the discretion of the RTC whether or not to permit the
advance distribution of the estate, its exercise of such discretion should be qualified
by the following: [1] only part of the estate that is not affected by any pending
controversy or appeal may be the subject of advance distribution (Section 2, Rule
109); and [2] the distributees must post a bond, fixed by the court, conditioned for the
payment of outstanding obligations of the estate (second paragraph of Section 1,
Rule 90). There is no showing that the RTC, in awarding to the petitioner children and
widow their shares in the estate prior to the settlement of all its obligations, complied
with these two requirements or, at the very least, took the same into consideration. Its
Order of 12 June 2003 is completely silent on these matters. It justified its grant of the
award in a single sentence which stated that petitioner children and widow had not
yet received their respective shares from the estate after all these years. Taking into
account that the claim of LCN against the estate of the late Raymond Triviere
allegedly amounted to P6,016,570.65, already in excess of the P4,738,558.63 reported
total value of the estate, the RTC should have been more prudent in approving the
advance distribution of the same.
Petitioners earlier invoked Dael v. Intermediate Appellate Court,,19 where the Court
sustained an Order granting partial distribution of an estate.
However, Dael is not even on all fours with the case at bar, given that the Court therein
found that:
Where, however, the estate has sufficient assets to ensure equitable
distribution of the inheritance in accordance with law and the final judgment
in the proceedings and it does not appear there are unpaid obligations, as
contemplated in Rule 90, for which provisions should have been made or a
bond required, such partial distribution may be allowed. (Emphasis supplied.)
No similar determination on sufficiency of assets or absence of any outstanding
obligations of the estate of the late Raymond Triviere was made by the RTC in this case.
In fact, there is a pending claim by LCN against the estate, and the amount thereof
exceeds the value of the entire estate.
Furthermore, in Dael, the Court actually cautioned that partial distribution of the
decedent's estate pending final termination of the testate or intestate proceeding
should as much as possible be discouraged by the courts, and, except in extreme
cases, such form of advances of inheritance should not be countenanced. The reason
for this rule is that courts should guard with utmost zeal and jealousy the estate of the
decedent to the end that the creditors thereof be adequately protected and all the
rightful heirs be assured of their shares in the inheritance.
Hence, the Court does not find that the Court of Appeals erred in disallowing the
advance award of shares by the RTC to petitioner children and the widow of the late
Raymond Triviere.
II
On the second assignment of error, petitioner Quasha Law Office contends that it is
entitled to the award of attorney's fees and that the third paragraph of Section 7, Rule
85 of the Revised Rules of Court, which reads:
Section 7. What expenses and fees allowed executor or administrator. Not to
charge for services as attorney. Compensation provided by will controls
unless renounced. x x x.
xxxx
When the executor or administrator is an attorney, he shall not charge against
the estate any professional fees for legal services rendered by him. (Emphasis
supplied.)
is inapplicable to it. The afore-quoted provision is clear and unequivocal and needs
no statutory construction. Here, in attempting to exempt itself from the coverage of
said rule, the Quasha Law Office presents conflicting arguments to justify its claim for
attorney's fees against the estate. At one point, it alleges that the award of attorney's
fees was payment for its administration of the estate of the late Raymond Triviere; yet,
it would later renounce that it was an administrator.
In the pleadings filed by the Quasha Law Office before the Court of Appeals, it referred
to itself as co-administrator of the estate.
In the Comment submitted to the appellate court by Atty. Doronila, the member-
lawyer then assigned by the Quasha Law Office to the case, it stated that:
The 12 June 2003 Order granted the Motion for Payment filed by Co-
Administrator and counsel Atty. Enrique P. Syquia and the counsel Atty. Cirilo
E. Doronila and Co-Administrator for the children of the late Raymond Triviere.
x x x.20 (Emphasis supplied.)
It would again in the same pleading claim to be the "co-administrator and counsel for
the heirs of the late Raymond Triviere."21
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. Statement of Antecedent Facts
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
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 RTC handling Special Proceedings Case No. M-1678, Branch 63 of the Makati
administrator, administration may be granted to any suitable person. RTC, the same to be chargeable to the estate of Raymond Trieviere.

The records of the case are wanting in evidence that Quasha Law Office or any of its SO ORDERED.
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 co-administrator), 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 their deceased father, the same to
be paid by the Triviere children in the manner herein discussed; and

2) Attorneys Enrique P. Syquia and William H. Quasha are entitled to the

payment of their corresponding administrators' fees, to be determined by the
G.R. No. L-8235 March 19, 1914
ISIDRO SANTOS, plaintiff-appellant,
vs.
LEANDRA MANARANG, administratrix, defendant-appellee.
W. A. Kincaid and Thomas L. Hartigan for appellant.
Ramon Salinas for appellee.
TRENT, J.:
Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and
personal property which, by his last will and testament dated July 26, 1906, 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.
In his first assignment of error, the appellant takes exception to the action of the court
in denying his petition asking that the committee be reconvened to consider his claim.
In support of this alleged error counsel say that it does not appear in the committee's
report that the publications required by section 687 of the Code of Civil Procedure
had been duly made. With reference to this point the record affirmatively shows that
the committee did make the publications required by law. It is further alleged that at
the time the appellant presented his petition the court had not approved the report
of the committee. If this were necessary we might say that, although the record does
not contain a formal approval of the committee's report, such approval must
undoubtedly have been made, as will appear from an inspection of the various orders
of the court approving the annual accounts of the administratrix, in which claims
allowed against the estate by the committee were written off in accordance with its
report. This is shown very clearly from the court's order of August 1, 1912, in which the
account of the administratrix was approved after reducing final payments of some of
the claims against the estate to agree with the amounts allowed by the committee. It
is further alleged that at the time this petition was presented the administration
proceedings had not been terminated. This is correct.
In his petition of July 14, 1909, asking that the committee be reconvened to consider
his claims, plaintiff states that his failure to present the said claims to the committee
was due to his belief that it was unnecessary to do so because of the fact that the
testator, in his will, expressly recognized them and directed that they should be paid.
The inference is that had plaintiff's claims not been mentioned in the will he would
have presented to the committee as a matter of course; that plaintiff was held to
believe by this express mention of his claims in the will that it would be unnecessary to
present them to the committee; and that he did not become aware of the necessity
of presenting them to the committee until after the committee had made its final
report.
Under these facts and circumstances, did the court err in refusing to reconvene the
committee for the purpose of considering plaintiff's claim? The first step towards the
solution of this question is to determine whether plaintiff's claims were such as a
committee appointed to hear claims against an estate is, by law, authorized to pass
upon. Unless it was such a claim plaintiff's argument has no foundation. Section 686
empowers the committee to try and decide claims which survive against the
executors and administrators, even though they be demandable at a future day
"except claims for the possession of or title to real estate." Section 700 provides that all
actions commenced against the deceased person for the recovery of money, debt,
or damages, pending at the time the committee is appointed, shall be discontinued,
and the claims embraced within such actions presented to the committee. Section
703 provides that actions to recover title or possession of real property, actions to
recover damages for injury to person or property, real and personal, and actions to
recover the possession of specified articles of personal property, shall survive, and may
be commenced and prosecuted against the executor or administrator; "but all other
actions commenced against the deceased before his death shall be discontinued
and the claims therein involved presented before the committee as herein provided."
Section 708 provides that a claim secured by a mortgage or other collateral security
may be abandoned and the claim prosecuted before the committee, or the
mortgage may be foreclosed or the security be relied upon, and in the event of a
deficiency judgment, the creditor may, after the sale of mortgage or upon the
insufficiency of the security, prove such deficiency before the committee on claims.
There are also certain provisions in section 746 et seq., with reference to the
presentation of contingent claims to the committee after the expiration of the time
allowed for the presentation of claims not contingent. Do plaintiff's claims fall within
any of these sections? They are described in the will as debts. There is nothing in the
will to indicate that any or all of them are contingent claims, claims for the possession
of or title to real property, damages for injury to person or property, real or personal, or
for the possession of specified articles of personal property. Nor is it asserted by the
plaintiff that they do. The conclusion is that they were claims proper to be considered
by the committee.
This being true, the next point to determine is, when and under what circumstances
may the committee be recalled to consider belated claims? Section 689 provides:
That court shall allow such time as the circumstances of the case require for the
creditors to present their claims the committee for examination and allowance; but
not, in the first instance, more than twelve months, or less than six months; and the time
allowed shall be stated in the commission. The court may extend the time as
circumstances require, but not so that the whole time shall exceed eighteen months.
It cannot be questioned that thus section supersedes the ordinary limitation of actions
provided for in chapter 3 of the Code. It is strictly confined, in its application, to claims
against the estate of deceased persons, and has been almost universally adopted as
part of the probate law of the United States. It is commonly termed the statute of
nonclaims, and its purpose is to settle the affairs of the estate with dispatch, so that
residue may be delivered to the persons entitled thereto without their being afterwards
called upon to respond in actions for claims, which, under the ordinary statute of
limitations, have not yet prescribed.
The object of the law in fixing a definite period within which claims must be presented
is to insure the speedy settling of the affairs of a deceased person and the early
delivery of the property of the estate in the hands of the persons entitled to receive it.
(Estate of De Dios, 24 Phil. Rep., 573.)
Due possibly to the comparative shortness of the period of limitation applying to such
claims as compared with the ordinary statute of limitations, the statute of nonclaims
has not the finality of the ordinary statute of limitations. It may be safely said that a
saving provision, more or less liberal, is annexed to the statute of nonclaims in every
jurisdiction where is found. In this country its saving clause is found in section 690, which
reads as follows:
On application of a creditor who has failed to present his claim, if made within six
months after the time previously limited, or, if a committee fails to give the notice
required by this chapter, and such application is made before the final settlement of
the estate, the court may, for cause shown, and on such terms as are equitable, renew
the commission and allow further time, not exceeding one month, for the committee
to examine such claim, in which case it shall personally notify the parties of the time
and place of hearing, and as soon as may be make the return of their doings to the
court.
If the committee fails to give the notice required, that is a sufficient cause for
reconvening it for further consideration of claims which may not have been presented
before its final report was submitted to the court. But, as stated above, this is not the
case made by the plaintiff, as the committee did give the notice required by law.
Where the proper notice has been given the right to have the committee recalled for
the consideration of a belated claim appears to rest first upon the condition that it is
presented within six months after the time previously limited for the presentation of
claims. In the present case the time previously limited was six months from July 23, 1907.
This allowed the plaintiff until January 23, 1908, to present his claims to the committee.
An extension of this time under section 690 rested in the discretion of the court. (Estate
of De Dios, supra.) In other words, the court could extend this time and recall the
committee for a consideration of the plaintiff's claims against the estate of justice
required it, at any time within the six months after January 23, 1908, or until July 23,
1908. Plaintiff's petition was not presented until July 14, 1909. The bar of the statute of
nonclaims is an conclusive under these circumstances as the bar of the ordinary
statute of limitations would be. It is generally held that claims are not barred as to
property not included in the inventory. (Waughop vs. Bartlett, 165 III., 124; Estate of
Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court in the case last cited, fraud
would undoubtedly have the same effect. These exceptions to the operation of the
statute are, of course, founded upon the highest principles of equity. But what is the
plea of the plaintiff in this case? Simply this: That he was laboring under a mistake of
law a mistake which could easily have been corrected had he sought to inform
himself; a lack of information as to the law governing the allowance of claims against
estate of the deceased persons which, by proper diligence, could have been
remedied in ample to present the claims to the committee. Plaintiff finally discovered
his mistake and now seeks to assert his right when they have been lost through his own
negligence. Ignorantia legis neminem excusat. We conclude that the learned trial
court made no error in refusing to reconvene the committee for the purpose of
considering plaintiff's claims against the estate.
In his second assignment of error the appellant insists that the court erred in dismissing
his petition filed on November 21, 1910, wherein he asks that the administratrix be
compelled to pay over to him the amounts mentioned in the will as debts due him.
We concede all that is implied in the maxim, dicat testor et erit lex. But the law imposes
certain restrictions upon the testator, not only as to the disposition of his estate, but
also as to the manner in which he may make such disposition. As stated in Rood on
Wills, sec. 412: "Some general rules have been irrevocably established by the policy of
the law, which cannot be exceeded or transgressed by any intention of the testator,
be it ever so clearly expressed."
It may be safely asserted that no respectable authority can be found which holds that
the will of the testator may override positive provisions of law and imperative
requirements of public policy. (Page on Wills, sec. 461.)
Impossible conditions and those contrary to law and good morals shall be considered
as not imposed, . . . (Art. 792, Civil Code.)
Conceding for the moment that it was the testator's desire in the present case that the
debts listed by him in his will should be paid without referring them to a committee
appointed by the court, can such a provision be enforced? May the provisions of the
Code of Civil Procedure relating to the settlement of claims against an estate by a
committee appointed by the court be superseded by the contents of a will?
It is evident from the brief outline of the sections referred to above that the Code of
Civil Procedure has established a system for the allowance of claims against the
estates of decedents. Those are at least two restrictions imposed by law upon the
power of the testator to dispose of his property, and which pro tanto restrict the maxim
that "the will of the testator law: (1) His estate is liable for all legal obligations incurred
by him; and (2) he can not dispose of or encumber the legal portion due his heirs by
force of law. The former take precedence over the latter. (Sec. 640, Code Civ, Proc.)
In case his estate is sufficient they must be paid. (Sec, 734, id.) In case the estate is
insolvent they must be paid in the order named in section 735. It is hardly necessary to
say that a provision in an insolvent's will that a certain debt be paid would not entitle
it to preference over other debts. But, if the express mention of a debt in the will
requires the administrator to pay it without reference to the committee, what
assurance is there, in the case of an insolvent estate, that it will not take precedence
over preferred debts?
If it is unnecessary to present such claim to the committee, the source of nonclaims is
not applicable. It is not barred until from four to ten years, according to its classification
in chapter 3 of the Code of Civil Procedure, establishing questions upon actions. Under
such circumstances, when then the legal portion is determined? If, in the meantime
the estate has been distributed, what security have the differences against the
interruption of their possession? Is the administrator required to pay the amount
stipulated in the will regardless of its correctness? And, if not, what authority has he to
vise the claim? Section 706 of the Code of Civil Procedure provides that an executor
may, with the approval of the court, compound with a debtor of deceased for a debt
due the estate, But he is nowhere permitted or directed to deal with a creditor of the
estate. On the contrary, he is the advocate of the estate before an impartial
committee with quasi-judicial power to determine the amount of the claims against
the estate, and, in certain cases, to equitably adjust the amounts due. The
administrator, representing the debtor estate, and the creditor appear before this
body as parties litigant and, if either is dissatisfied with its decision, an appeal to the
court is their remedy. To allow the administrator to examine and approve a claim
against the estate would put him in the dual role of a claimant and a judge. The law
in this jurisdiction has been so framed that this may not occur. The most important
restriction, in this jurisdiction, on the disposition of property by will are those provisions
of the Civil Code providing for the preservation of the legal portions due to heirs by
force of law, and expressly recognized and continued in force by sections 614, 684,
and 753 of the Code of Civil Procedure. But if a debt is expressly recognized in the will
must be paid without its being verified, there is nothing to prevent a partial or total
alienation of the legal portion by means of a bequest under a guise of a debt, since
all of the latter must be paid before the amount of the legal portion can be
determined.
We are aware that in some jurisdictions executors and administrators are, by law,
obligated to perform the duties which, in this jurisdiction, are assign to the committee
on claims; that in some other jurisdictions it is the probate court itself that performs
these duties; that in some jurisdictions the limitation upon the presentment of claims
for allowance is longer and, possibly, in some shorter; and that there is a great
divergence in the classification of actions which survive and actions which do not
survive the death of the testator. It must be further remembered that there are but
few of the United States which provide for heirs by force of law. These differences
render useless as authorities in this jurisdiction many of the cases coming from the
United States. The restriction imposed upon the testator's power to dispose of his
property when they are heirs by force of law is especially important. The rights of these
heirs by force law pass immediately upon the death of the testator. (Art. 657, Civil
Code.) The state intervenes and guarantees their rights by many stringent provisions
of law to the extent mentioned in article 818 of the Civil Code. Having undertaken
the responsibility to deliver the legal portion of the net assets of the estate to the heirs
by force of law, it is idle to talk of substituting for the procedure provided by law for
determining the legal portion, some other procedure provided in the will of the
testator. The state cannot afford to allow the performance of its obligations to be
directed by the will of an individual. There is but one instance in which the settlement
of the estate according to the probate procedure provided in the Code of Civil
Procedure may be dispense with, and it applies only to intestate estates. (Sec. 596,
Code Civ. Proc.) A partial exemption from the lawful procedure is also contained in
section 644, when the executor or administrator is the sole residuary legatee. Even in
such case, and although the testator directs that no bond be given, the executor is
required to give a bond for the payment of the debts of the testator. The facts of the
present case do not bring it within either of this sections. We conclude that the claims
against the estate in the case at bar were enforceable only when the prescribed
legal procedure was followed.
But we are not disposed to rest our conclusion upon this phase of the case entirely
upon legal grounds. On the contrary we are strongly of the opinion that the
application of the maxim, "The will of the testator is the law of the case," but
strengthens our position so far as the present case is concerned.
It will ordinarily be presumed in construing a will that the testator is acquainted with
the rules of law, and that he intended to comply with them accordingly. If two
constructions of a will or a part thereof are possible, and one of these constructions is
consistent with the law, and the other is inconsistent, the presumption that the testator
intended to comply with the law will compel that construction which is consistent with
the law to be adopted. (Page on Wills, sec. 465.)
Aside from this legal presumption, which we believe should apply in the present case
as against any construction of the will tending to show an intention of the testator that
the ordinary legal method of probating claims should be dispensed with, it must be
remembered that the testator knows that the execution of his will in no way affects his
control over his property. The dates of his will and of his death may be separated by a
period of time more or less appreciable. In the meantime, as the testator well knows,
he may acquire or dispose of property, pay or assume additional debts, etc. In the
absence of anything to the contrary, it is only proper to presume that the testator, in
his will, is treating of his estate at the time and in the condition it is in at his death.
Especially is this true of his debts. Debts may accrue and be paid in whole or in part
between the time the will is made and the death of the testator. To allow a debt
mentioned in the will in the amount expressed therein on the ground that such was
the desire of the testator, when, in fact, the debt had been wholly or partly paid, would
be not only unjust to the residuary heirs, but a reflection upon the good sense of the
testator himself. Take the present case for example. It would be absurd to say that the
testator knew what the amount of his just debt would be at a future and uncertain
date. A mere comparison of the list of the creditors of the testator and the amounts
due them as described in his will, with the same list and amounts allowed by the
committee on claims, shows that the testator had creditors at the time of his death not
mention in the will at all. In other instances the amounts due this creditors were either
greater or less than the amounts mentioned as due them in the will. In fact, of those
debts listed in the will, not a single one was allowed by the committee in the amount
named in the will. This show that the testator either failed to list in his will all his creditors
and that, as to those he did include, he set down an erroneous amount opposite their
names; or else, which is the only reasonable view of the matter, he overlooked some
debts or contracted new ones after the will was made and that as to others he did
include he made a partial payments on some and incurred additional indebtedness
as to others.
While the testator expresses the desire that his debts be paid, he also expressly leaves
the residue of his estate, in equal parts, to his children. Is it to be presumed that he
desired to overpay some of his creditors notwithstanding his express instructions that
his own children should enjoy the net assets of his estate after the debts were paid?
Again, is the net statement of the amount due some of his creditors and the omission
all together of some of his creditors compatible with his honorable and commendable
desire, so clearly expressed in his will, that all his debts be punctually paid? We cannot
conceive that such conflicting ideas were present in the testator's mind when he
made his will.
Again, suppose the testator erroneously charged himself with a debt which he was
under no legal or even moral obligation to pay. The present case suggests, if it does
not actually present, such a state of affairs. Among the assets of the estate mentioned
in the will is a parcel of land valued at P6,500; while in the inventory of the administratrix
the right to repurchase this land from one Isidro Santos is listed as an asset. Counsel for
the administratrix alleges that he is prepared to prove that this is the identical plaintiff
in the case at bar; that the testator erroneously claimed the fee of this land in his last
will and stated Santos' rights in the same as a mere debt due him of P5,000; that in
reality, the only asset of the testator regard to this land was the value of the right to
repurchase, while the ownership of the land, subject only to that right of redemption,
belonged to Santos; that the right to repurchase this land expired in 1907, after the
testator's death. Assuming, without in the least asserting, that such are the underlying
facts of this case, the unjust consequences of holding that a debt expressly mentioned
in the will may be recovered without being presented to the committee on claims, is
at once apparent. In this supposed case, plaintiff needed only wait until the time for
redemption of the land had expired, when he would acquired an absolute title to the
land, and could also have exacted the redemption price. Upon such a state of facts,
the one item of P5,000 would be a mere fictitious debt, and as the total net value of
the estate was less than P15,000, the legal portion of the testator's children would be
consumed in part in the payment of this item. Such a case cannot occur if the
prescribed procedure is followed of requiring of such claims be viseed by the
committee on claims.
The direction in the will for the executor to pay all just debts does not mean that he
shall pay them without probate. There is nothing in the will to indicate that the testator
in tended that his estate should be administered in any other than the regular way
under the statute, which requires "all demands against the estates of the deceased
persons," "all such demands as may be exhibited," etc. The statute provides the very
means for ascertaining whether the claims against the estate or just debts.
(Kaufman vs. Redwine, 97 Ark., 546.)
See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208).
The petition of the plaintiff filed on November 21, 1910, wherein he asks that the
administratrix be compelled to pay over to him the amounts mentioned in the will as
debts due him appears to be nothing more nor less than a complaint instituting an
action against the administratrix for the recovery of the sum of money. Obviously, the
plaintiff is not seeking possession of or title to real property or specific articles of
personal property.
When a committee is appointed as herein provided, no action or suit shall be
commenced or prosecute against the executor or administrator upon a claim against
the estate to recover a debt due from the state; but actions to recover the seizing and
possession of real estate and personal chattels claimed by the estate may be
commenced against him. (Sec. 699, Code Civ. Proc.)
The sum of money prayed for in the complaint must be due the plaintiff either as a
debt of a legacy. If it is a debt, the action was erroneously instituted against the
administratrix. Is it a legacy?
Plaintiff's argument at this point becomes obviously inconsistent. Under his first
assignment of error he alleges that the committee on claims should have been
reconvened to pass upon his claim against the estate. It is clear that this committee
has nothing to do with legacies. It is true that a debt may be left as a legacy, either to
the debtor (in which case it virtually amounts to a release), or to a third person. But this
case can only arise when the debt is an asset of the estate. It would be absurd to
speak of a testator's leaving a bare legacy of his own debt. (Arts. 866, 878, Civil Code.)
The creation of a legacy depends upon the will of the testator, is an act of pure
beneficence, has no binding force until his death, and may be avoided in whole or in
part by the mere with whim of the testator, prior to that time. A debt arises from an
obligation recognized by law (art. 1089, Civil Code) and once established, can only
be extinguished in a lawful manner. (Art. 1156, id.) Debts are demandable and must
be paid in legal tender. Legacies may, and often do, consist of specific articles of
personal property and must be satisfied accordingly. In order to collect as legacy the
sum mentioned in the will as due him, the plaintiff must show that it is in fact a legacy
and not a debt. As he has already attempted to show that this sum represents a debt,
it is an anomaly to urge now it is a legacy.
Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have
already touched upon this question. Plaintiff's claim is described by the testator as a
debt. It must be presumed that he used this expression in its ordinary and common
acceptation; that is, a legal liability existing in favor of the plaintiff at the time the will
was made, and demandable and payable in legal tender. Had the testator desired
to leave a legacy to the plaintiff, he would have done so in appropriate language
instead of including it in a statement of what he owed the plaintiff. The decedent's
purpose in listing his debts in his will is set forth in the fourth clause of the will, quoted
above. There is nothing contained in that clause which indicates, even remotely, a
desire to pay his creditors more than was legally due them.
A construction leading to a legal, just and sensible result is presumed to be correct, as
against one leading to an illegal, unnatural, or absurd effect. (Rood on Wills, sec. 426.)
The testator, in so many words, 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 plaintiff any thing by way of legacy. His
claim against the estate having been a simple debt, the present action was
improperly instituted against the administratrix. (Sec. 699, Code Civ. Proc.)
But it is said that the plaintiff's claims should be considered as partaking of the nature
of a legacy and disposed of accordingly. If this be perfect then the plaintiff would
receive nothing until after all debts had been paid and the heirs by force of law had
received their shares. From any point of view the inevitable result is that there must be
a hearing sometime before some tribunal to determine the correctness of the debts
recognized in the wills of deceased persons. This hearing, in the first instance, can not
be had before the court because the law does not authorize it. Such debtors must
present their claims to the committee, otherwise their claims will be forever barred.
For the foregoing reasons the orders appealed from are affirmed, with costs against
the appellant.
Torres, Carson and Araullo, JJ., concur.
Separate Opinions
MORELAND, J., dissenting:
The decision of the court in this case produces, in my humble opinion, a serious
miscarriage of justice. It causes the appellant to lose more than P7,000, a debt against
the respondent estate, which debt, but a few months before his death, was
specifically recognized by the testator in his will as a debt due and owing to petitioner
and which he, in said will, ordered and directed his executor to pay "religiously."
If I could find justification for such a decision either in the proceedings as they are
unfolded by the record or in the law as laid down in the Code of Civil Procedure, I
would, of course, acquiesce. Far from finding such justification, I am met so far as my
judgment can discern, with facts of record which demonstrate conclusively that the
decision is erroneous in fact.
The opinion seeks to demonstrate that a creditor, whose claim is recognized by the
highest possible authority, the debtor himself, in the most solemn instrument known to
the law, his last will and testament, as legal, just and valid, must lose that
claim because the validity thereof has not been established by the committee. And
this inspite of the fact that, upon the record of the case, no one interested in the estate
disputes the claim or challengers its validity. Take this proposition in connection with
the fact that the committee to hear claims had not been discharged, that the estate
has not been finally closed but is still pending settlement, and that, therefore, there
exist not a single reason, in equity or justice, why the claimant should not be permitted
to present his claim, if that is necessary, and we have before us a situation which
indicates how far the decision has gone.
It should be carefully observed that the petitioner Isidro Santos, was defeated in this
litigation upon the ground, and the sole ground, that he did not present his claim to
the committee, in pursuance of a notice to creditors published under an order
dated July 23, 1907, and that he, therefore, lost the right to enforce the claim; that the
notice having been published from July 25, 1907, to August 16, 1907, petitioner's
application on July 14, 1909, for the extension of time for the presentation of claims to
the old committee or the appointment of a new committee for that purpose, was too
late and was properly denied, and that his motion made November 21, 1909, praying
that the executor be compelled to carry out the wishes of the testator and pay the
claim, was also properly denied.
In my judgment the decision is erroneous from whatever point viewed:
1. Even if it be assumed that the notice to creditors should have been published in
accordance with the order of July 23, 1907, the record is entirely lacking in legal
evidence to establish the publication which the law requires under that order. That
being so the claim is not barred.
2. I contend, and the record shows, that the notice should not have been published
in accordance with the order of July 23, 1907, but in pursuance of an order of January
8, 1908, which was an order for a new publication, and, being later order, necessarily
vacated and annulled the order of July 23, 1907, and all proceedings thereunder
relative to the matters included in said order of January 8, 1908; that publication was
concededly never made under and in pursuance of that order and that, for that
reason, the petitioner's claim is not barred.
3. The claim was not one that must be submitted to a committee, being recognized
as a legal and valid debt by the will and the testator having ordered his executor to
pay it. The motion made to require the executor to pay the claim should have been
heard by the court.
The facts of this case, as shown by the record, are:
Don Lucas de Ocampo made a will July 26, 1906. He died November 18, 1906. The will
specifically named Isidoro Santos, the petitioner, a creditor of the testator, set out the
specific amount due him, named an executor, and directed him to pay the claim
"religiously."
The will was probated July 15, 1907, and Leandra Manarang, the widow, appointed
temporary administratrix. Her administration was terminated on July 23, 1907, and
Cosme Naval, the person named in the will as executor, was, on that date, duly
appointed executor. On the same day Pedro Abad Santos and Marcos Tancuaco
were named the committee of appraisal and to her claims presented against the
estate, the court making the following order:
There having been heard the petition presented by Seor Cosme Naval, praying that
he be appointed executor of the above named estate as provided in the will of the
deceased Lucas de Ocampo; and also praying the appointment of a committee of
appraisal consisting of Seores Pedro Abad Santos and Marcos Tancuaco:
It is ordered that the said Cosme Naval may be and he hereby is appointed executor
of the will of Lucas de Ocampo, deceased, the clerk being authorized to issue in favor
of said Cosme Naval letters testamentary, the petitioner being first required to take the
oath prescribed by law and to file a bond in the sum of P500 Philippine currency, with
two sureties satisfactory to the court.
It is also ordered that the special letters of administration issued temporarily in favor of
the widow of the deceased, Leandra Manarang, remain without effect from this day.
It is further ordered that Seores Pedro Abad Santos and Marcos Tancuaco be and
they hereby appointed the committee of appraisal and claims of this estate.
On the 28th of September, 1907, Naval was removed from office and Leandra
Manarang named in his place. On December 3, same year, Pedro Abad Santos
resigned from the committee to become the attorney for the estate and Donato
Iturralde was appointed in his stead.
Following these changes both in the office of executor and in that of the committee,
on January 8, 1908, the court made an order which, in itself, is, in my judgment, a
complete refutation of the decision in this case and demonstrates that a contrary
judgment should have been rendered. That order, dated, as I have said, on January
8, 1908, and promulgated on that day, reads as follows:
Whereas, the Hon. Julio Llorente, in decree dated December 3, 1907, appointed Seor
Donato Iturralde, a resident of this city, to the office of committee of appraisal in the
above-entitled proceeding:
Therefore, and in compliance with the above-mentioned decree, Seor Donato
Iturralde, a resident of this city, is appointed a member of the committee of appraisal
and to hear the claims that may be presented against the property of this estate,
which committee within thirty days from the date of said decree shall deliver a copy
of the inventory to this court and another to the administratrix Seora Leandra
Manarang, and within sixty days shall post a notice at the main door of this courthouse
and in three public places in the municipality where the property of the said deceased
is located, in which shall be stated the dates and places when and where the
meetings of the committee will be held and notifying that creditors that they should
present their claims within six months counting from the date of said notice; said notice,
furthermore, to be published during three consecutive weeks in the newspaper "El
Imparcial," having general circulation in this province.
Given to-day, the 8th of January, 1908, by order of the Hon. Julio Llorente, Judge of
the Fourth Judicial District and of this Province of Pampanga.
On July 14, 1908, the committee filed a report, the only report in the record, in which
appears the following statement:
The undersigned, committee of appraisal and claims against the above estate,
presents a to the court the following list of all claims presented against the said estate
since the 25th day of July, 1907, in which date the first publication to creditors was
made.
The publication under which committee was reporting was begun under the order
of July 23, 1907, which was vacated and annulled by the order of January 8, 1908,
which, by reason of the changes in the offices of executor and committee, ordered a
new and different notice to the creditors.
On July 14, 1909, petitioner herein made an application to the court to reopen the
sessions of the committee and permit him to present the claim mentioned in the will.
This was denied November 27, 1909, the court simply saying:
This cause having been heard and the parties having presented their arguments, the
motion is denied by reason of the lapse of time.
On November 21, 1910, the petitioner moved the court that, the testator having
recognized and legalized the debt in his will and having ordered his executor to pay
the same to the petitioner, said executor be ordered and directed to pay said claim
to the petitioner pursuant to the testator's directions. This motion was denied April 26,
1911, upon the same ground as the other motion.
The appeal is from both of these orders and brings up so much of the record as is
pertinent to these questions.
The court has held on this appeal:
1. That the motion last mentioned is an action. The opinion says: "The petition of the
plaintiff filed on November 21, 1910, . . . appears to be nothing more or less than a
complaint instituting an action against the administratrix for the recovery of the sum of
money." After discussing this phase of the case the court concludes: "His claim against
the estate having been a simple debt, the present action was improperly instituted
against the administratrix (sec. 699, Code of Civ. Proc.)." This is one of the grounds of
the decision.
2. That the recognition of the debt in the will and the direction of the testator to pay
the same have no significance in the law.
3. That, notwithstanding this recognition and direction, the claim should have been
presented to the committee appointed to hear and determine claims against the
estate.
4. That the claim was not presented to the committee.
5. That all of the formalities required by law relative to the notice to the creditors t
present their claims were fully observed, the court saying that "the record affirmatively
shows that the committee did make the publications required by law."
6. That the court below did not err in denying the motion to extend the time of the old
committee or appoint a new one to the end that the claim in question might be
presented.
7. That the court did not err in denying the motion to compel the executor to pay the
claim in pursuance of the direction contained in the will.
Laying aside for a moment those holdings of the court which declare that the claim is
one which must be presented to and passed upon by a committee. I am compelled
to differ from every other propositions and statement of fact appearing in the decision
pertinent to the issue involved, except the single one that the claim was not presented
to a committee. That it was not presented is conceded; indeed, that fact that it was
not is the whole cause of this proceeding.
I am compelled to believe that the statement of the decision that "the record
affirmatively shows that the committee did make the publications required by law," is
not quite in accordance with the record as I read it.
The opinion does not refer me to any evidence of record which supports its statement.
Where is this evidence, where is this record which "affirmatively shows?" I have been
unable to find it. Here is all the evidence, if it may be called evidence, which I am able
to find it in the record relative to the publication of the notices to the creditors:
(a) An affidavit of the publisher of "El Imparcial" setting out that the notice to creditors
attached to the affidavit and signed by Pedro Abad Santos (who before the
completion of the publication, resigned) and Marcos Tancuaco, dated July 23, 1907,
was published "three weeks from the 25th of July to the 16th of August, 1907."
The notice referred to is as follows:
The undersigned committee of appraisal hereby notifies the creditors of Lucas de
Ocampo, deceased, and all other persons who have claims against the estate of said
deceased, to present the same with vouchers within six months from the date of this
notice to the committee, every Monday, between 4 and 5 o'clock p. m., at the
dwelling house of Pedro A. Santos, Sagasta Street, San Fernando, Pampanga. Dated
San Fernando, Pampanga, P. I., July 23, 1907. Signed: Pedro Abad Santos, committee.
Marcos Tancuaco, committee.
The defectiveness of the affidavit is apparent. It does not show whether the newspaper
was daily, weekly, biweekly or monthly, or the day of the week or month on which
published. It does not show that the notice was published three weeks successively,
that is, once each week for three successive weeks, as required by law and the order
of the court. So ambiguous is it that is might mean that the notice was published once,
namely, three weeks from July 25. Passing, however, these defects, I note that the
notice to creditors requires them to present their claims at the dwelling house of Pedro
Abad Santos. It should be noted, as before stated, that this commissioner resigned
before the expiration of the six months, thus making it necessary for creditors to present
their claims and their proofs thereof to one who was not a member of the committee
and to a man who, immediately on his resignation, became the attorney of the estate.
This will become important when we later discuss the significance of the fact that the
court, as already seen, on January 8, 1908, made a new order requiring that a new
notice be given to creditors, to be published thereafter, thereby revoking the order of
July 23, 1907, and annulling the notice to creditors above set out and then in course
of publication.
(b) The remaining item of evidence which it is claimed tends to show that the notice
to creditors was duly published is the reference made by the commissioners in their
report to the court, above quoted, in which they say, referring to July 25, 19076, "on
which date the first publication to creditors was made."
This reference cannot be called evidence of publication, although the court accepts
it as such. At most it refers and is limited, in terms, to the first publication. It has not the
slightest reference to the other publications, if any.
This, (a) and (b), is all evidence in the whole record relative to the publication of the
notice to creditors. Admitting it all to be true and giving it all weight possible, does it
establish "affirmatively that the committee did make the publications required by
law?" I am of the opinion not The law requires, in addition to the publication in the
newspapers, that "the committee . . . shall post a notice in four public places in
province stating the times and places of their meetings, and the time limited for
creditors to present their claims . . . and give such other notice as the court directs.
Where is there in the record evidence showing that this was done? Nowhere. As I read
the record, there is not a syllable of such evidence in all the case.
I, therefore, am forced to the conclusion that the declaration of the court that "the
record affirmatively shows that the committee did make the publications required by
law" is without sufficient evidence to support it.
After a thorough reading of the record, I am reluctantly forced to a further conclusion,
namely, that instead of there being evidence in the case showing the publication
required by law. there is evidence showing the precise contrary.
Let us remember that the first order of the court directing the committee to publish
notice to creditors was issued July 23, 1907. It conceded that publication in a
newspaper of some sort was started under that order. But, the court, evidently
becoming satisfied that, under all the circumstances, the publication under that order
would not be sufficient to give creditors fair notice, on January 8, 1908, and before the
publication under the first order, if there was ever started in reality a publication under
that order, was completed, made a second order of publication. The reason for this
order was evidently that, during the six months succeeding the date of the notice
which it is claimed was published under the first order, three persons held the office of
executor, the complexion of the committee itself was changed, and the member of
the committee at whose house the notice required the claims and vouchers to be
presented resigned from the committee and became the attorney for the estate.
Pedro Abad Santos having ceased to be a member of the committee and having
become the attorney for the estate, and the notice to the creditors requiring that
claims with their vouchers to be presented at his house, there was no longer a proper
place designated where creditors could present their claims. Furthermore, the
continual change in the executorship already noted may have resulted in grave
prejudice to the estate if the estate were to be held responsible for all claims presented
during the time those changes were taking place, it being the duty of the executor,
under the law, to be present at the hearing on claims and defend the estate against
those which deemed unjust, and the frequent change in the office, thereby bringing
the persons unfamiliar with what had gone before, certainly not tending to efficiency.
All these facts, taken in connection with the defectiveness of the affidavit of the
publication of the notice, and the fact that there was no posting of the notices as
required by law, that the notice itself was defective in that it required the claims to be
presented within six months from the date of the notice instead of the date of the last
publication thereof, as the law, properly interpreted, requires, all these facts, I say,
undoubtedly led the court to believe that the previous proceedings relative to claims
should be annulled and that a new order of publication should be made. Accordingly,
on January 8, 1908, as aforesaid, an order was made and entered as above set forth,
requiring a new publication by a new committee. This order had the effect, of course,
of vacating and annulling the previous order covering the same subject matter.
It is undisputed that no publication has ever been made or even attempted under this
order of January 8, 1908. The only publication referred to in the record or in the opinion
in this case is that under the order of July 23, 1907. No one contends that any other
publication has ever been made or attempted.
That this order of January 8, 1908, was considered the governing order in the case and
that it was an annullment of all prior proceedings and orders relative to the same
subject matter, is clear. If notice had been given as provided by the order, the six
months' term, according to the order, would have expired some time in July, 1908. This,
of course, was clearly understood by the court, and we find the court, ever anxious to
have the estate settled as quickly as possible under the law, making the following order
on the 2d day of April, 1908:
It is hereby ordered that the administratrix present her inventory before the 1st day of
May and the committee its report within the time provided by law, and that the
administratrix present her account before the 1st day of August, 1908.
This order demonstrates conclusively that the court believed that the committee was
giving the notice to creditors as provided by order of January 8, 1908, and not that of
July 23, 1907; for, if the notice was to be given under the latter and the publication
began July 25, 1907, then the time within which the committee was to report expired
in January, 1908 (see opinion), long before the order of April 2, 1908, was issued (Code
Civ. Proc., sec. 693) and the requirement therein that the committee report "within the
time provided by law" was idle. The court evidently believed that the notice was being
published under the order of January 8, 1908, that the six months' period would expire
in July, that the committee could therefore report to the administratrix the number and
amounts of the claims presented and allowed, and that she could, therefore render
her account before the 1st day of August, as in the order of April 2 required. This order
is strictly inconsistent from every point of view with the idea that the order of July 23,
1907, was in force and that publication of the notice to creditors was proceeding
thereunder.
I, therefore, say that the record demonstrates not only that the declaration of the court
that "the record affirmatively shows that the committee did make the publications
required by law" is without sufficient foundation in fact, but also that the contrary is
true, namely, that no publication was ever made under the only order under which it
could be legally made.
I contend, furthermore, that this proceeding is not an action against an executor to
recover a debt against the estate of his testator. The decision of the court that it is an
action and not being one of those which, under the Code, can be brought against
an executor and must be dismissed for that reason is, in my judgment, erroneous. I do
not understand how a motion to compel an executor to comply with the directions in
a will can be called an action to recover a debt in a sense that such motion is
prohibited by law.
Dealing with the second branch of the case, wherein the court holds that the debt
should have been presented to a committee:
The proposition that a debt which is recognized by the highest possible authority, the
debtor himself, in then most solemn instrument known to the law and the one whose
provisions are the most sacredly carried out by the courts, his last will and testament,
which debt the testator, in his will, expressly ordered his executor to pay to the creditor
by name, must be presented to the committee for them to determine whether it is a
valid claim and whether it ought to be paid, is a proposition which appeals neither to
my reason nor my sense of justice. There is no statute expressly requiring such
presentation. There is none which by necessary implication requires it. To bring such a
debt within the law requiring presentation to the committee, interpretation and
construction must be invoked to such an extent as to shock if not violate the ordinary
canons applicable thereto. This is particularly true when such interpretation and
construction are resorted to deprive a creditor of a claim, the validity and justice of
which is not only undisputed but unquestioned.
There is no provision of the Code of Civil Procedure expressly requiring the presentation
of any claim to a committee. Provision is made for the appointment of a committee
which is authorized to hear certain classes of claims but nowhere is there an express
provision requiring a creditor to present his claim. There is, to be sure, a section which
provides (sec. 695) that if the creditor fails to present his claim, if it is a certain kind of
claim, within the time provided in the law, it will be barred. It is therefore, gathered by
implication that every creditor having a certain kind of claim must present it; but there
is no provision expressly requiring it. Moreover, it must be carefully noted that
only certain claims need to be presented to the committee and that
only certain claims are barred provided they are not exhibited. Section 686 confers
upon the committee whatever jurisdiction it may have with respect to the hearing of
claims, apart from those which actions were begun against decedent in his lifetime. It
provides that "they may try and decide upon claims, which by law survive against
executors or administrators, except claims for the possession of or title to real state;"
and under section 695 only those claims are barred which are " proper to be allowed
by the committee."
We see then that the committee is authorized to take jurisdiction over those claims
only which survive against an executor or administrator. The code does not define or
declare "what claims survive against executor or administrators." It refers to
certain actions which, having been commenced by the deceased in his lifetime, may
be continued after his death by his executor or administrator. It nowhere tells us "what
claims survive against executors or administrators, " or what claims are " proper to be
allowed by the committee." We are unable to say, therefore, from the context of the
Code itself what the authors thereof meant by the use of the phrases "claims which
survive against executors or administrators" and which are "proper to be allowed by
the committee." All that is clear is that it was the intention of the law to restrict the
jurisdiction of the committee and keep it within certain limitations, and to that end
used these limited expressions. It should be noted, however, that these limitations refer
to claims and have no reference to actions begun against the deceased before his
death. The distinction made in the Code between claims and actions begun against
the decedent during his lifetime, and the respective provisions referring to those two
subjects, is entirely lost sight of in the decision of the court. This being so, the following
reasoning found in the decision, based upon the failure to distinguish between claims
and actions begun against the deceased in his lifetime, involves a conclusion in no
sense related to the premises from which it is deduced:
Do plaintiff's claims fall within any of these sections? They are described in the will, as
debts, There is nothing in the will to indicate that any or all of them are contingent
claims, claims for the possession of or title to real property damages for injury to person
or property, real or personal, or for the possession of specified articles of personal
property. Nor is it asserted by the plaintiff that they do. The conclusion is that, they were
claims proper to be considered by the committee.
That there is no necessary relation between those two subjects is apparent. That an
action for "money, debt, or damages" begun against the decedent in his lifetime must,
under section 710, be discontinued upon his death "and the claim embraced in such
action may be presented to the committee, who shall allow the party prevailing the
cost of such action to the time of its discontinuance," does not necessarily mean that
such claim, if no action had been begun upon it, is one which must be exhibited to
the committee. Whether an action begun against the decedent in his lifetime survives
or does not survive, has no necessary relation with the necessity of presenting a claim
to the committee. Would it be logical to argue that because an action begun against
the deceased did not survive, the claim upon which it is based cannot, therefore, be
presented to the committee, or that because in action begun against the deceased
in his lifetime did survive, that, therefore, the claim upon which it was based could and
must be presented to the committee? Assuredly not.
No general requirement that all claims must be presented to the committee
appearing in the Code, and it affirmatively appearing that there was an intention to
restrict the power of the committee in the hearing of claims, it necessarily follows that
the conclusion reached by the court that all claims must be exhibited to the
committee is pure inference and one but at all warranted by the provisions of the
Code or by the rules of interpretation and construction, To me it is a conclusion
absolutely necessary from the language of sections 686 and 695 that not all claims
need to be exhibited. By express language these sections restrict the committee to
the hearing of such claims as survive against executors or administrators and only those
are barred which are proper to be presented to the committee.
The answer to the question, does not claim at bar survive against executors or
administrators, brings us to an exposition of the various fundamental error made by the
court in holding that the debt in question is one which must be presented to the
committee. One of them is involved in the declaration that the debt in question is a
claim within the meaning of the law. In cases such as this it is proper and necessary to
make a distinction between a claim and a debt. A debt is a claim which has been
favorably passed upon by the highest authority to which in can in law be submitted
and has been declared to be a debt. A claim, on the other hand, is a debt in embryo.
It is a mere evidence of a debt and must pass through the process prescribed by law
before it develops into what is properly called a debt. The debt in the case at bar
never was a claim. By the act of the testator himself, it was raised to the dignity of a
debt and it remains such and must be acted upon as such by the courts as well as by
all other. It was by the testator selected from the mass of his obligations, which are
correctly called claims, and treated to a process which developed it into a thing
called a "debt" over which no committee has jurisdiction and with the due course of
which it has no authority to interfere.
The second fundamental error, following naturally from the first, is found in the
declaration of the court that the debt in question is a claim which survives against the
executors or administrator and must, therefore, be exhibit to the committee. This error
involves, in my humble opinion, a misunderstanding of the nature of a will imposes
upon all persons executing it. A will is the testator speaking after death. Its provisions
have substantially the same force and effect in the probate court as if the testator
stood before the court in full life making the declarations by word of mouth as they
appear in the will. That was the special purpose of the law in the creation of the
instrument known as the last will and testament. Men wished to speak after they were
dead and the law, by the creation of that instrument, permitted them to do so. It is a
upon this theory and around this purpose that there has grown that body of the law
which uniformly and universally declares that the words of the testator spoken in his
will shall be sacredly attended by his executor and enforced by the court. It has been
declared a fundamental maxim, the first greatest rule, the sovereign guide, the
polestar, in giving effect to the will, that the intention of the testator as expressed in
the will shall be fully and punctually observed. If by the use of clear and certain, his will
explains itself, and all that the court can do is to give it effect. All doubts must be
resolved in favor of the testator's having meant just what he said. His purpose may
seem unjust, unnatural or absurd to us; yet, to refuse to execute it is to destroy it. As
Chief Justice Marshall said: "That intent of the testator is the cardinal rule in the
construction of wills; and if that intent can be clearly perceived, and is not contrary to
some positive rule of law, it must prevail." (3 Peters, 346.)
The intention of the testator is said in the recent Virginia case to be "the life and soul of
a will" and if this intention is clear it must be govern with absolute sway. A will is not like
a promissory note or a judgment or any other instrument which acknowledges or
incorporates an obligation. Those instruments are mere evidences of a debt. A will is
not, primarily, evidence of anything; it is the thing itself. It is not so much
the evidence of what the testator did or intended to do; it is then testator himself. The
court has failed in this case to distinguish between a will and a promissory note, or a
mortgage, so far as their legal effects are concerned, and the statement which I
made early in this opinion, that the court has given no legal significance whatever to
the fact that the instrument in which this debt was acknowledged and in which it was
ordered paid was a last will and testament, is literally true. It has given the testamentary
directions of the testator no more force, effect or significance than it gives to the words
of a promissory note or a mortgage.
The third fundamental error which the decision has fallen is that it is misconceives the
duties of an executor and of a court relative to the provisions of the will. It is, of course,
axiomatic that is the duty of the executor, under the direction of the court, to carry
out punctually and with the utmost care every provision of the will. That is why he is
named "executor." He is an "executor" of a will because he "executes" the will. When
he refuses or neglects to perform that function he ceases to be an executor and
becomes a perverter or destroyer. Section 640 provides that the estate of the
decedent shall be disposed of according to his will and the bond to be given by an
executor, prescribed in section 643, must contain a clause in which the executor
agrees, and his bondsmen assure, that he will administer "according to the will of the
testator" the estate which comes into his hands.
Under the provisions of this will it is as much the duty of the executor to pay the debt
here in litigation as it is to pay a legacy bequeathed by the will or to carry out a devise
found therein. Of course, as we shall see later, if it appear to the executor that the
debt in suit was paid, in whole or in part, as the case may be. In such case his refusal
to pay will not be a refusal to carry out the will, but will be grounded in fact that the
testator himself executed it prior to his demise. The proposition remains that the will
must be executed; and the only excuse the executor can give for a refusal to execute
it is that it has already been executed.
It is nowhere claimed in this case, and it cannot be, for no proceeding has reached
far enough to involve the fact, that this debt has been paid, and nowhere in the
record has its validity or binding force upon the estate been challenged or even
disputed. That being the case, upon the facts, as they stand before us, there is no
excuse which the executor of the court can now offer why the debt in suit has not
been paid.
The fourth fundamental error into which the court has fallen in its decision is that it
submits to the jurisdiction of a committee to hear claims the question of whether or not
the provisions of the will are to be executed. This, although, it seems to me, is strange
upon its face, is precisely what the court has, in effect, done in its decision; for, if a
debt expressly acknowledged in the will and specifically ordered paid therein, must
be submitted to a committee, it means that they may, in the excercise of their
judgment, refuse its payment. This, in turn, means that the provision of the will in relation
thereto is annulled. By this process the committee may, therefore, annul an express
and mandatory provision of a will which is as binding as a provision giving legacy or
making a devise. It is to the probate court, and to it alone, that the law confides the
power to annul and set aside provisions in wills. The executor himself may not do so.
And the court itself may do so only after the very clearest demonstration that the
provision violates a positive provision of law or is against the public policy of the state.
In spite of this, it is the decision of this court that a committee of two or more persons,
none of whom is a lawyer, none of whom may be even a business man, all of whom
may be ignorant and inexperienced, may sit in an informal way, and with all the
imperfections inherent in such a tribunal and the practice which governs its
deliberations, may revoke a mandatory provision in the most solemn instrument known
to law. The bare statement of such a proposition is, it seems to me, its clearest
refutation.
The fifth fundamental error into which the court has fallen follows naturally. As we have
said, the decision give no significance to the fact that the debt at bar appears
acknowledged and legalized in a last will and testament and that the testator therein
solemnly ordered and directed his executor to pay it. Instead, the decision remands
the creditor to the committee in exactly the same condition as any other creditor. He
goes there with the burden of proof on him, with the necessity of establishing
affirmatively and by a fair preponderance of the evidence the existence of the claim,
the consideration therefore, and the fact that it has not been paid. There are laid upon
him the restrictions and limitations imposed by section 383 of the Code of Civil
Procedure, which stop his mouth as a witness under certain conditions. He is there with
every burden, with every restriction upon him under which another creditors labors
who has not a scrap of written evidence to support his claim. It is no adequate reply
to say that he can put the will in evidence. He could do that with any other evidence
that he might have. Moreover, that reply is a full admission of all that I have
maintained, that the will is given no significance or value, as such, but is reduced to
the mere function of being evidence to be passed upon by the committee.
Furthermore, it is incumbent upon him to prove that the claim has not been paid and
this is the very point which may be the thing most difficult to establish; and it is in relation
to this that the restrictions and limitations imposed by the section referred to produce
their greatest effect. This certainly cannot be law. It cannot be that the creditor whose
debt is recognized as is the one at bar occupies a position no different from that of a
creditor whose debt is not recognized. To contend the contrary, it seems to me, flies in
the face not only of law and justice, but of common sense as well.
The fact that a debt is mentioned in the will as one not satisfied has, at least, the effect
of changing the burden of proof from the creditor to the estate. Instead of the creditor
being required to establish the validity of the claim and the fact of nonpayment, it is
incumbent upon the estate to show payment affirmatively. At the very least,
recognition by the testator in his will should be given that much significance. The court
does not even concede this. The provision before us, while not a provision for a legacy,
has nevertheless the same force and effect; and as a legatee is not bound to show
affirmatively his right to the legacy and as it is the duty of the executor to seek out the
legatee and pay him the legacy, so it is not the duty of the creditor in this case to show
affirmatively his right to the payment of the debt, but it is the duty of the executor,
knowing nothing to the contrary, to seek out the creditor and pay him as the testator
has ordered him to do. If he knows anything to the contrary the burden is on him to
demonstrate it.
These considerations naturally lead us to the point so strongly urged in the decision,
and which I regard, for the purpose urged, without force, that the debt may have
been paid between the time of the making of the will and the death of the testator;
and that, therefore, it ought not to be paid by the executor until the question of
payment is properly determined. No one is disputing that proposition. But its admission
does not all mean that, to determine whether the claim has been paid or not, it must
be presented to the committee. If it is the duty of the court, through the executor, to
see if the will is conscientiously executed, what more natural, if not absolutely
necessary, than to submit to the court whether the provision recognizing a debt
ordering its payment should be carried out. What argument can be adduced, which
does not fly squarely in the face of reason, to establish the proposition that a court has
no business to determine whether a particular provision of a will shall be carried out or
not, when its supreme duty is to require the punctual and precise execution of the
whole will? How can it be maintained that, whether or not a particular provision in a
will shall be carried out must be submitted not to the court, which has exclusive
jurisdiction of the whole will, but to a committee of two or more ignorant and
inexperienced persons? If it is the duty of the court to see that the will is executed as a
whole, then there must go with that duty the power to determine whether
a particular provision ordering the payment of a specific debt shall be executed or
not. But the determination of this question is the determination of the question of
payment. Why take from the court, which is the whole body that has the power to
determine whether provisions in wills shall be carried out, the determination of whether
a debt recognized in a particular provision has or has not been paid and turn it over
to a committee such as I have described?
It is thus seen that the proposition given so great weight in the decision, namely, that
the debt should be submitted to the committee in order to determine whether it has
bee paid, is without point or force. The court should make that determination far better
than a committee. The practice leading to the determination by a court as to whether
or not a given provision in a will shall be carried out is very simple, much simpler than is
the proceeding before a committee. The executor finding that the will orders him to
pay a certain debt and having no knowledge of his own that such debt has already
been paid, presents his final account to the court, in which he asserts that he is going
to pay the debt in accordance with the provision of the will. Notice is given to all
parties interested in the estate. They appear. If they or any of them know of any reason
why the provision of the will should not be carried out, they may manifest it. Upon that
manifestation a hearing will be had and the court will determine whether or not the
provision of the will has already been executed, in the whole or in part, and upon that
determination he will rest a judgment in which he will order the executor to carry out
the provision of the will by the payment of the debt or he will declare that the provision
has already been carried out by payment. What simpler than this and what more
conducive to justice? Who can say that the submission of the same question to a
committee is better than the submission to a court? It might as well be urged that the
legalization of the will, itself were better left to a committee than to a court; for, if
whether or not the provisions of a will are to be carried out must be left to a committee,
then whether it is a will at all or not may as well be left to the same authority.

The attempt of the court to meet the proposition that the will of the testator is the law
of the case does not satisfy my judgment. It is claimed that the will of the testator is not
the law of the case where it is in direct violation of a provision of law; and that the
Court of Civil Procedure requiring that all claims shall be presented to the committee,
the testator has no right to except a particular debt or any debt from the operation of
the Code.

In the first place, the Code of Civil Procedure does not require that all claims shall be
presented to the committee. It expressly limits the claims which must be exhibited. In
the second place, the claim that there is anything contradictory between the will of
the testator in this particular case and the provision of the Code of Civil Procedure is,
in my judgment, rather fanciful than real. What is the purpose of requiring the exhibition
of a claim to a committee? Simply to save the estate from being defrauded. There is
absolutely no other reason which is behind the law requiring such a presentation. Is it
claimed that a debtor may not pay a claim during his lifetime? If not, and the will is
but a testator speaking after death, may he not pay a debt in that manner? If the man
who is the estate solemnly acknowledges a debt and offers to pay it, who shall say
that the estate is defrauded if the debt be paid? And if the estate is not defrauded,
neither the spirit nor the letter of the law which has for its object the protection of the
estate has been violated or evaded, but has, on the contrary, been fully observed.

I do not discuss or express an opinion relative to the proposition that the statute of
nonclaims runs against a provision of a will, or suggests the results which may follow
such doctrine.

The judgment should be reversed and the probate court ordered to hear petitioner's
motion of the 21st of November and decide it upon the merits.
G.R. No. L-6871 January 15, 1912
JOSE McMICKING, administrator of the estate of Margarita Jose, plaintiff-appellant,
vs.
BENITO SY CONBIENG, administrator of the estate of Pio de la Gurdia Barretto Sy
Pioco, defendant-appellee.
Haussermann, Cohn & Fisher for appellant.
D. R. Williams for appellee.
MORELAND, J.:
On or about the 5th of February, 1902, one Margarita Jose, a native of the Philippine
Islands, died at Amoy, in the empire of China, leaving an estate consisting of personal
property partly in Hongkong and partly in the Philippine Islands. On the 16th of April,
1902, one Engracio Palanca was appointed administrator with the will annexed of the
estate of the said Margarita Jose, deceased, by the Court of First Instance of the city
of Manila, and Mariano Ocampo Lao Sempco and Dy Cunyao became his sureties
and qualified as such in the sum of P60,000. After the execution of this bond the said
Palanca, as such administrator, took possession of all the property of the said Margarita
Jose, amounting in all to $58,820.29 Hongkong currency. On the 22d of April, 1904, the
Mariano Ocampo Lao Sempco died in the city of Manila, testate. The fact of his death
was brought to the attention of the Court of First Instance of said city on the 2nd of
November, 1904, by an application made by one of the legatees of said Margarita
Jose, deceased, for an order directing said administrator to furnish a new bond.
Pursuant to this application the court, on the 10th of November, 1904, made an order
directing the said Palanca to furnish a bond in the sum of P60,000 to take the place of
the undertaking upon which said Mariano Ocampo, deceased, and Dy Cunyao were
sureties. The bond thus required was duly filed on the 22nd of November, 1904, the
sureties thereon being Juan Fernandez, Luis Saenz de Vismanos and Alejandro
Palanca. On the 11th of May, 1904, one Doroteo Velasco was appointed administrator
with the will annexed of said Mariano Ocampo Lao Sempco, deceased, and on July
7 following Mariano Velasco and Pio de la Guardia Barretto qualified as sureties of the
said administrator in the sum of P30,000. Said Mariano Ocampo Lao Sempco left him
surviving as his heirs at law and devises and legatees one daughter, to whom he
devised two-thirds of his estate, and three sons in China, to whom he devised the
remaining one-third. On the 27th of July, 1904, said Doroteo Velasco, as such
administrator, filed with the court a complete report and inventory of the property of
the deceased, together with a statement of all his debts and liabilities. As a part of this
report and inventory said administrator filed an instrument signed by all of the persons
interested in the estate of the said Mariano Ocampo agreeing to the partition of he
estate among themselves without proceedings in court, at the same time assuming
the payment of all obligations against the estate. This agreement of partition was
drawn and executed under sections 596 and 597 of the Code of Civil Procedure for
the purposes and to attain the ends therein mentioned. On the 28th of July, 1904, the
Court of First Instance of the city of Manila, upon the request of the administrator with
the will annexed and of all parties interested in the estate of the said Mariano
Ocampo, deceased, entered an order in said agreement. Pursuant to such
agreement and order of the court approving the same, and after all the liabilities
under which said estate lay had been fully paid and satisfied, the said Doroteo
Velasco, as said administrator, delivered to the devisees and legatees of the said
Mariano Ocampo, deceased, all of the property of said decedent pursuant to the
terms of said agreement of partition, leaving in the hands of said administrator no
property or thing of value whatsoever belonging to the said estate. From that time
forward said administrator has not had in his possession or control any of the assets of
the said estate and has not had any participation in the management thereof. At the
time the agreement for participation was made and signed and at the time of the
distribution of the property of the estate pursuant thereto, no committee had been
appointed to hear claims against the estate of the said Mariano Ocampo, deceased,
and no notice had been published to creditors of the said deceased to present their
claims against the said estate in the manner prescribed by law.
On the 30th of March, 1908, by virtue of an order made by the Court of First Instance
of the city of Manila, upon application of all parties interested, the said Engracio
Palanca was removed from office as administrator of the estate of said Margarita
Jose, deceased, and the plaintiff herein, Jose McMicking, was appointed in his stead.
The said Palanca was removed from office by reason of the fact that he failed and
refused to render an account of the property and funds of the estate of the said
Margarita Jose, deceased, which has come to his possession as such administrator,
and failed and refused, on order of the court, to deliver said property and funds or any
portion thereof to the court or to the said Jose McMicking, his successor. Instead of so
doing, he retained possession of said property and funds, absconded with the same,
and never returned to the Philippine Islands. At the time of his removal he was
indebted to the estate in the sum of P41,960.15, no part of which has ever been
received by the estate or by its representative.
On the 30th of June, 1909, Jose McMicking, as administrator, made an application to
the court for the appointment of commissioners of the estate of said Mariano Ocampo
for the purpose of hearing claims against the estate. The commission having been
appointed and qualified, a claim was presented to it by the plaintiff based upon the
defalcation of said Engracio Palanca, as administration with the will annexed of
Margarita Jose, deceased, which claim was allowed by said commission and later
approved by the court, which directed that the said claim be paid by Doroteo
Velasco, if he had sufficient funds to make such payment. No part of the sum thus
found to be due by the commission has been paid to the representative of the estate
of said Margarita Jose, deceased.
On the 3rd of November, 1905, Pio de la Barretto, who, it will be remembered, was one
of the sureties on the undertaking of Doroteo Velasco, as administrator with the will
annexed of Mariano Ocampo, deceased, died in the city of Manila, leaving an estate
consisting of real and personal property located in the city. Said deceased left a will
which was admitted to probate by the Court of First Instance of the city of Manila on
the 3rd day of February, 1906, and letters of administration with the will annexed were
issued to Benito Sy Conbieng, the defendant in this case. On the 4th of June, 1909,
upon the application of the plaintiff in this case, a committee was appointed by the
Court of First Instance of the city of Manila to appraise the estate of the said Pio de la
Guardia Barretto, deceased, and to hear claims presented against his estate.
Thereafter and within the time prescribed by law the plaintiff herein presented to said
committee a claim for the sum of P30,000 "based upon the fact that the claim for the
larger amount had been allowed in favor of the estate of said Margarita Jose Sempco,
deceased;" and based upon the further fact "that the Court of First Instance had
ordered the said Doroteo Velasco, as administrator of the estate of said Mariano
Ocampo Lao Sempco, deceased, to pay the said claim if there were funds sufficient
to make such payment, but that it has not been paid by the said Doroteo Velasco, or
any part thereof," The claim so presented against the estate of Pio de la Guardia
Barretto, deceased, was disallowed by the committee thereof. The plaintiff herein
within the time allowed by law appealed to the Court of First Instance of the city of
Manila from the order of the committee disallowing said claim.
It is disputed in the case that all of the claims against the estate of Mariano Ocampo
were fully paid and satisfied at the time of the partition of said estate, with the
exception of the alleged claim arising by virtue of his having been a surety of the
default Palanca. It nowhere appears in the evidence or the record exactly when this
claim arose it may be inferred from the time of presentation in 1909, and we have no
means of determining whether the defalcation represented by the said claim
occurred before or after the substitution of sureties herefore referred to.
Upon these facts it was contended by counsel for plaintiff that the judgment should
be rendered in his favor for the sum of P30,000, with costs, while counsel of defendant
contended that upon said facts judgment should be rendered in favor of defendant,
dismissing the complaint, with costs. The court having heard the evidence and the
arguments of counsel, rendered judgment in favor of the defendant and against the
plaintiff, dismissing the complaint upon merits, without costs. This appeal is from that
judgment.
We are of the opinion that the judgment must be affirmed. We base our affirmance
upon the ground that Doroteo Velasco, for whom the deceased Pio de la Guardia
Barretto was surety, would not have been liable himself had this action been
commenced against him. If the principal is not liable upon the obligation, the surety
cannot be.
At the head of the law of administration of the Philippine Islands stands sections 596
and 597 of the Code of Civil Procedure. They are as follows:
SEC. 596. Settlement of intestate estates, without legal proceedings, in certain cases.
Whatever all the heirs of a deceased person are of lawful age and legal capacity,
and their are no debts due from the intestate estate, or all the debts have been paid
by the heirs, the heirs may, by a family council as shown under Spanish law, or by
agreement between themselves, duly executed in writing, apportion and divide the
estate among themselves, as they may see fit, without proceedings in court.
SEC. 597. In such case distributees liable for debts. But if it shall appear, at any time
within two years after such settlement and distribution of the estate, that there are
debts outstanding against the estate which have not been paid, any creditor may
compel the settlement of the estate in the courts in the manner hereinafter provided,
unless his debt shall be paid, with interest; and the administrator appointed by the
court may recover the assets of the estate from those who have received them, for
the purpose of paying the debts; and the real estate belonging to the deceased shall
remain charged with the liability to creditors for the full period of two years after such
distribution, notwithstanding any transfers thereof that may have been made.
These sections provide for the voluntary division of the whole property of the decedent
without proceedings in court. The provisions which they contain are extremely
important. The wisdom which underlies them is apparent. It is the undisputed policy of
every people which maintains the principle of private ownership of property that he
who owns a thing shall not be deprived of its possession or use except for the most
urgent and imperative reason and then only so long as is necessary to make the rights
which underlie those reasons effective. It is a principle of universal acceptance which
declares that one has the instant right to occupy and use that which he owns, and it
is only in the presence of reasons of the strongest and most urgent nature that that
principle is prevented from accomplishing the purpose which underlies it. The force
which gave birth to this stern and imperious principle is the same force which
destroyed the feudal despotism and created the democracy of private owners.
These provisions should, therefore, be given the most liberal construction so that the
intent of the framers may be fully carried out. They should not be straitened or
narrowed but should rather be given that wideness and fullness of application without
which they cannot produce their most beneficial effects.
Standing, as we have said, at the head of the law of administration of these Islands,
they are the first provisions to which our attention is directed in seeking a legal method
for the division and distribution of the property of deceased persons. They are thus
made prominent. And justly so. The purpose which underlies them, as we have already
intimated, is to put into one's hands the property which belongs to him not only at the
earliest possible moment but also with the least possible expense. By permitting the
partition and division without proceedings in court no time is lost and substantially all
expense and waste are saved. This is as it should be. The State fails wretchedly in its
duty to its citizens if the machinery furnished by it for the division and distribution of the
property of a decedent is no cumbersome, unwidely and expensive that a
considerable portion of the estate is absorbed in the process of such division. Where
administration is necessary, it ought to be accomplished quickly and at very small
expense; and a system which consumes any considerable portion of the property
which it was designed to distribute is a failure. It being undoubted that the removal of
property from the possession of its owner and its deposit in the hands of another for
administration is a suspension of some of its most important rights of property and is
attended with an expense sometimes entirely useless and unnecessary, such
procedure should be avoided whenever and wherever possible.
In the case at the bar we are of the opinion that, under the broad and liberal policy
which we must adopt in the interpretation and application of the provisions referred
to, the decision of the property of Mariano Ocampo, deceased, in the form, in the
manner and for the purposes expressed, falls within the provisions of said sections and
may be termed, therefore, and we hold it to be, a partition of the property of a
decedent without legal proceedings within the meaning of those sections. The fact of
the prior appointment of an administrator and the filing of an inventory before such
partition is of no consequence so far as the right of the owners to partition is
concerned. The only requisite for such petition prescribed by the law is that "there are
no debts . . . or all the debts have been paid by the heirs." When the condition is fulfilled
the partition can take place, no matter what stage the administration may have
reached. By this it is, of course, not meant that the partition after the appointment of
an administrator will interfere with the rights acquired by third person dealing with said
administrator within the limits of his authority and prior to the partition; nor that the
administrator can be deprived of the property of which he is legally in possession
without proper proceedings and the consent of the court.
As we have already indicated, the basis of the liability of a surety on an administrators'
bond is the fault or failure of the principal. The liability of the principal precedes that of
the surety. If Velasco incurred no liability, then his surety incurred none. The question
that naturally suggests itself is, then, In what was Velasco at fault or in what did he fail?
When the persons interested in the estate of Mariano Ocampo agreed voluntarily
upon a partition and division of the property of said estate and the actual partition
followed, the matter passed out of the hands of Velasco as administrator. The parties
to the partition stood invoking their rights under section 596 and 597. Velasco was
helpless. He was powerless to prevent the parties from taking the property to which
they were entitled under the agreement, it being conceded that they were actually
entitled thereto in law. Those sections were applicable to the situation and there was
nothing that Velasco could do to prevent the estate from being divided according to
their provisions. In giving his consent to the partition and in assisting the parties to obtain
the approval of the court thereto he did no wrong. He simply aided in carrying out the
provisions of the sections referred to. It is a universal principle that one who follows a
law commits no fault, incurs no failure and wounds no rights. If one obeys the law he is
free not only in person but in property. Observance of the law discharges obligations;
it does not create them; and an obligation once discharged cannot be re-acted by
the act of others in which the person as to whom it was discharged takes no part. The
proceedings under sections referred to were, after the partition was actually made
and the property duly turned over the administrator under the proper proceedings, a
complete settlement of the estate of Mariano Ocampo, deceased, as it then stood,
so far as the administrator was concerned. Nothing further needed to be done. Every
duty which Velasco owed up to the time of the partition had been met. All debts
presented or known had been paid. The court had given it approbation to the delivery
of the property by the administrator to the partitioning parties. Every obligation which
lay upon him had been removed. Nor could there arise against him any obligation in
the future in relation to the same property. The instant that the partition occurred, in
the form and manner stated, he stood stripped of all responsibility to the estate, to its
creditors, to the heirs and to the court. He stood divested o every official duty and
obligation, as fully as before his appointment as completely as if he had not been
appointed at all. In law, therefore, he was no longer administrator with the will annexed
of the estate of Mariano Ocampo, deceased. He was in effect, discharged. As to him
the estate had been wiped out as a legal entity. It had ceased to exist. And, while at
any time within two years after the partition the property, or a portion thereof, then in
the possession of the partitioning persons could have been placed in administration
upon the happening of certain events, it would not have been the same estate that
had been represented by Velasco, nor would Velasco have been the administrator of
the estate by virtue of his appointment in the old. It would have been necessary for
the court, upon the proper application setting forth the conditions prescribed by the
sections, to appoint another administrator for the purposes specified therein. It might
have been Velasco, if he would have accepted the appointment, or it might have
been another. The point is that it would have been necessary to appoint a new
administrator just as if one had not been named before. The new administrator would
have had new duties, some of which would have been quite different from those of
the administrator appointed originally. He would have had different sureties, who
would have found themselves to different obligations.
That on the partition under said section the estate was, in this case, completely wiped
out and the administrator as completely discharged cannot be doubted for the
following reasons:
1. The whole estate was, by virtue of these sections, taken from the administrator and
turned over to the partitioning persons. No security was required or given for its
safekeeping or return.
2. The persons to whom the estate was thus turned over became absolute owners of
the same, subject to be devastated, wholly or only partly, on the happening of certain
events and the taking of certain proceedings thereon. But even such divestiture could
not have been avoided by the payment by the parties, or any of them, of the debt
which was the moving cause thereof.
From these premises it is the merest conclusion to say that the decedent's estate was
merged in their partitioning parties; and this no matter whether the partition occurred
before or after the appointment of an administrator. When one has been named to
perform certain acts in relation to a given thing, and before said acts have been
begun, or, having been begun, are completed, the appointing power has placed the
thing upon which those acts were to operate wholly beyond the possession, jurisdiction
and control of the one so appointed, there is a complete revocation of such
appointment, so far as all subsequent acts are concerned. An administrator cannot
be held to any accountability for property over which he has absolutely no power or
jurisdiction and in which he has not the slightest legal interest. The thing on which he
was appointed to operate having been withdrawn wholly beyond his ken by the very
power (the law) which appointed him, there is a complete revocation of the
appointment.
Moreover, the sureties of an administrator so appointed can not be held liable for
property which by force of law has been taken from the principal and its ownership
and control turned over to others. Their obligation is that their principal shall obey the
law in the handling and distribution of the estate. Their obligation is discharged when
the estate is legally turned over to those entitled thereto. The law requires the principal
to turn it over to those who bring themselves within the provisions of section 596. Having
turned over the whole estate under the compelling power of the law, his obligation
ceased. The responsibility of the sureties ceased at the same time. Without their
consent another obligation could not be imposed upon them in relation to the same
principal, and the same property, or apart thereof, especially after the lapse of two
years. Their undertaking was that their principal should discharge one obligation, not
two.
It requires no argument to demonstrate that the duties and obligations imposed upon
an administrator appointed under section 597 might and probably would be different
in many respects from those of an administrator appointed in the first instance; and
that, therefore, the obligation of his sureties would not be the same as that of the
sureties of the administrator appointed originally. The administration contemplated by
section 597 is a new administration and one entirely apart from any other
administration theretofore had. This section requires the appointment of a new
administrator, with a new undertaking. The administration under the section is distinct
and separate from any administration which may have been in progress at the time
of the partition and division under section 596. This is clear for the following reasons:
After the partition and division provided for in sections 596 and 597 have been fully
consummated, no further administration of the estate can be had unless there occur
the following requisites:
1. There must have been discovered a claim against the estate "within two years after
such settlement and distribution of estate."
2. The creditor holding the claim must be the person who moves the court for the
appointment of an administrator.
If those requisites are lacking, there can be no administration. When one fails the right
too such administration does not arise and any person intersted in the estate may
oppose any effort to administer under such circumstances. These requisites combined
are that and that alone which give to the administrator when appointed the right to
recover the assets from the persons who received them on the a partition. Indeed, if
these requisites are lacking no administrator can lawfully be appointed, and, if
improperly appointed, he fails of legal power to maintain an action to recover the
assets in the hands of those among whom they have partitioned; in other words, he is
powerless to administer. If these requisites fail, then the real estate in the hands either
of the persons among whom it has been partitioned or of their assignees is free from
the lien created by section 597 and any attempt to enforce such lien can be
successfully opposed by any person interested in such property. The appointment of
an administrator without the concurrence of these requisites is without warrant of law
and the appointee is powerless to perform any act of administration. The statute must
be strictly complied with in every essential before it operates. Every essential
requirements must be fulfilled before it will be permitted that a partition which has the
clear sanction of the law and which is strictly in accord with the public policy of the
estate shall be set aside and destroyed with all the evil consequences thereby
entailed.
It is necessary deduction from the provisions of the sections mentioned that the
appointment of an administrator ought not to be permitted, even when the requisites
above mentioned occur, unless the heirs or the persons among whom the property
was partitioned have been given an opportunity to be heard on that application. It
would be extremely unusual to proceed to the appointment of an administrator under
section 597, by virtue of a debt which had been discovered after the partition and
division, without giving the heirs an opportunity to avoid such administration by the
payment of the debt, it being kept in view that the object of the law in originally giving
the right to pay the debts and having partition without proceedings in court was to
avoid that every administration. Such a proceeding would be unusual and irrational.
Such a course would be in direct opposition to the purposes which animated the
provisions authorizing the original partition.
(1) In the case at bar no debt was discovered during the prescribed period. It was
nearly four years after the partition of the estate and the taking possession by the heirs
of their respective portions before it was even discovered that Palanca had been
guilty of converting the property of the estate to his own use; and, so far as the records
shows, it was nearly five years before the alleged claim against the estate of Mariano
Ocampo was fixed.
(2) No creditor made his application.
The requirements of section 597 not having been met, there could be no
administration under section. Therefore, the appointment of commissioners for the
hearing of the claim against the estate of Mariano Ocampo presented by the plaintiff
in this case was an appointment without warrant or authority of law. It was
appointment in respect to an estate that did not exist and in relation to an
administration that had never been inaugurated. Under section 597 the
commencement of the administration is the application of the creditor and the
appointment of the administrator pursuant to such application. Without such
appointment there is no administration. As we have before stated, when the property
was partitioned a described heretofore, the estate, as such, ceased to exist and the
administration thereof by Doroteo Velasco was wiped out. There was no administrator
to carry on the administration. By operation of the law the estate had been passed on
the heirs who had become the absolute owners of it. They were subject to the orders
of the old administrator and they held rights inferior to no one. To be sure, as we have
already stated, those rights might be modified to a certain extent by the happening
of subsequent events; but until those events transpired their rights were absolute. Those
conditions never having been met, a fact admitted by both parties in the case at bar,
there was absolutely no estate at all, much less one in the process of administration,
at the time the commissioners were appointed to her the claim for P30,000 presented
against the estate of Mariano Ocampo, deceased, by the plaintiff herein. Add to this
the fact that there was no administrator of said estate in extense at the time, and we
have before us the absurdity of the appointment of the commissioners to report on a
claim against an estate which did not exist and under the direction of an administrator
that had never been appointed.
The necessary conclusion is that the appointment of commissioners to hear the claim
above referred to was beyond the powers of the court and was without jurisdiction.
The finding of the commissioners had no force or effect. It gave no right against the
estate and none against the so-called administrator.
It must be remembered that it is only debts discovered within the prescribed period
that can be made the reason for an administration of the estate subsequent to its
partition. The necessary result is t hat a debt not discovered within that period cannot
be made the reason for an administration of the estate. The debt in the case at bar
having first discovered more than four years after the partition of the estate of Mariano
Ocampo, deceased, an administrator, even though appointed under section 57,
would not no authority in law, over the objection of one interested, to pay the debt in
question or to maintain an action or other proceeding for the recovery of property for
that purpose. This section creates a statute of limitations which deprives all debts which
are not discovered within the prescribed time of the power of requiring an
administration of the estate. The administration of the estate after the partition under
the law has been accomplished depends upon the discovery of the debt "at any time
within two years after such settlement and distribution of the estate." The law does not
operate unless that discovery is made within the time prescribed.
We have not overlooked the contention that at the time this partition took place there
was a contingent claim against the estate partitioned, namely, the claim which would
arise on the contingency that the administrator for whom Mariano Ocampo was surety
might default or otherwise fail to perform his duties thus rendering Mariano Ocampo
liable on his bond; and that contingent claim, being one expressly recognized by
sections 746 to 749 of the Code of Civil Procedure as a claim entirely proper to present,
no partition of this estate under section 596 and 597 was legally possible until such
claim was provided for by the petitioning parties. This contention goes upon the
assumption that a partition under the sections of the Code of Civil Procedure so often
referred to is void unless every debt is paid or provided for by the petitioning parties,
and may therefore be entirely disregarded by the creditor holding a claim either
unpaid or provided for. We do not believe that this assumption is warranted. In the first
place, we must remember that the partition proceedings in question are
proceedings out of court. Consequently there is no prescribed method of ascertaining
and settling claims. The appointment of commissioners, the publication of notice to
creditors, and all the other proceedings necessary in cases of administration in
court are not required in partition out of court. The law is silent as to how the claims are
to be ascertained, presented and determined. We must assume, therefore, that the
method of ascertaining them and determining their validity was left to the good sense
and sound judgment of the persons concerned. Usually no difficulty will be
experienced in solving the problem presented by this conclusion. It is obvious that
creditors always know who owes them and that debtors generally know whom they
owe. It is equally obvious that, generally speaking, a creditor is one of the first to learn
of the death of the debtor, and that heirs of the latter are the first to begin to calculate
how much of his property they are to receive. This cannot be known until the debts
are determined. The heirs know they cannot escape payment of the debts. A
surreptitious division behind the backs of the creditors would not avail as the latter
have two years thereafter in which to throw at least a portion of the estate into
administration and thereby nullify the attempt to overreach them. Even the transfer by
the partitioning persons of the property received on the partition to third persons would
not profit them, inasmuch as the consideration received on such transfer would, if
necessary, be subject to seizure to pay the debt presented and the real estate would
go into the hands of the vendees charged with the lien of said debt.
The method of ascertaining claims against the defendant's estate not being
prescribed, it is apparent that no objection to a partition can be urged by a creditor
whose claim has not been paid, due to the faulty method adopted by the partitioning
parties to ascertain claims, or, even, the absence of any effort at all to ascertain them.
In the second place, it must be on served that express provisions is made by sections
596 and 597 for the payment of a claim discovered by them or presented after the
partition. That is one of the main provisions. It is a necessary deduction, therefore, that
it was not the intention of the law to pronounce the partition void of no effect simply
because not all of the debts were paid before the partition was made. The fact of non
payment cannot, then, because by the creditor as a reason for attacking the
partition directly; that is, by asserting that, inasmuch as a payment of all the debts is a
condition precedent to the right of partition, such partition cannot legally and validly
take place while a debt is outstanding. While a partition manifestly fraudulent in
inception and result might possibly be attacked directly by an action to set aside, a
question which we do not discuss or decide, the manner of attacking the partition
prescribed by the law is the one, generally speaking, preferably to be followed; and
that is to throw into administration so much of the estate as is necessary to pay the
outstanding claim. The method, though indirect, accomplishes a better result than
a direct attack. The latter, by destroying the validity of the partition, would throw the
whole situation into confusion and uncertainty, something always to be avoided. The
former does not produce that result. Where there is no fraud, and possibly where there
is, a direct attack on the partition is impossible under the provisions under discussion. A
claim discovered and presented within the two years serves not to destroy, primarily,
the partition. It does not even permit the whole estate to be thrown into administration.
Only such portion as is necessary to pay the discovered debt can be administered.
This is apparent when it is observed that on such administration the administrator is
authorized to recover only the amount of property necessary to pay the debt
presented, leaving the partitioning parties in undisturbed possession of the remainder.
Moreover, the partitioning parties may still pay the debt and preserve undisturbed the
partition in all it parts and thus assure and maintain the rights of the parties thereunder.
The mere fact, therefore, that a creditor was not paid before the partition took place
furnishes no ground for a revocation of the partition. It simply provides a fact which he
may urge as a reason for the appointment of an administrator and the consequent
administration of so much of the estate as may be necessary to pay the debt
discovered.

But, as already seen, in order that it be a reason for such appointment and
administration, the claim must be presented within two years from the date of the
partition and distribution.

Summarizing, we have seen that lack of opportunity, either by want of notice or

otherwise, and the consequent failure to present a claim before partition, is, under the
sections we are discussing, of no consequence whatever in so far as the validity of the
partition is concerned.

We have also seen that the fact that there were debts outstanding and unpaid at the
time the partition took place is of no importance so far as the validity of the partition is
concerned, leaving out account the question of fraud to which we have already
adverted and left undecided.

We have also seen that the fact such claim exists and is valid and subsistent against
the estate is of no consequence whatever with respect to the right of its holder to
require an administration of the estate unless such claim is discovered and presented
within two years.

The fact that the claim in the case at bar was, during a certain period, a contingent
one is of no importance. The sections under discussion make no distinction between
claims.

The creditor himself is not without duties. In the case at bar it was five years after the
petition before the alleged creditor made any attempt whatsoever to "discover" or
present his claim. He knew of the death of Ocampo very soon after it occurred. He
knew that it was among the possibilities that Ocampo's estate might be called upon
to respond for the failure of Palanca to perform his duty as administrator. It was his duty
to see to it that he would be protected in that event. Nevertheless he permitted the
estate of Ocampo to be partitioned and distributed without protest and without the
presentation of his contingent claim, and sat quiet and passive for nearly five years
thereafter knowing that it was very probable that the property of the estate was being
consumed, incumbered, and transferred by the persons among whom it had been
distributed.

The judgment appealed from is hereby affirmed, without special finding as to costs.

Arellano, C.J., Torres, Mapa and Johnson, JJ., concur.

Carson and Trent, JJ., concur as to the dispositive part.
G.R. No. 164108 May 8, 2009
ALFREDO HILADO, LOPEZ SUGAR CORPORATION, FIRST FARMERS HOLDING
CORPORATION,Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE AMOR A. REYES, Presiding Judge,
Regional Trial Court of Manila, Branch 21 and ADMINISTRATRIX JULITA CAMPOS
BENEDICTO, Respondents.
DECISION
TINGA, J.:
The well-known sugar magnate Roberto S. Benedicto died intestate on 15 May 2000.
He was survived by his wife, private respondent Julita Campos Benedicto
(administratrix Benedicto), and his only daughter, Francisca Benedicto-Paulino.1 At the
time of his death, there were two pending civil cases against Benedicto involving the
petitioners. The first, Civil Case No. 95-9137, was then pending with the Regional Trial
Court (RTC) of Bacolod City, Branch 44, with petitioner Alfredo Hilado as one of the
plaintiffs therein. The second, Civil Case No. 11178, was then pending with the RTC of
Bacolod City, Branch 44, with petitioners Lopez Sugar Corporation and First Farmers
Holding Corporation as one of the plaintiffs therein.2
On 25 May 2000, private respondent Julita Campos Benedicto filed with the RTC of
Manila a petition for the issuance of letters of administration in her favor, pursuant to
Section 6, Rule 78 of the Revised Rules of Court. The petition was raffled to Branch 21,
presided by respondent Judge Amor A. Reyes. Said petition acknowledged the value
of the assets of the decedent to be P5 Million, "net of liabilities."3 On 2 August 2000, the
Manila RTC issued an order appointing private respondent as administrator of the
estate of her deceased husband, and issuing letters of administration in her favor. 4 In
January 2001, private respondent submitted an Inventory of the Estate, Lists of Personal
and Real Properties, and Liabilities of the Estate of her deceased husband. 5 In the List
of Liabilities attached to the inventory, private respondent included as among the
liabilities, the above-mentioned two pending claims then being litigated before the
Bacolod City courts.6 Private respondent stated that the amounts of liability
corresponding to the two cases as P136,045,772.50 for Civil Case No. 95-9137
and P35,198,697.40 for Civil Case No. 11178.7 Thereafter, the Manila RTC required
private respondent to submit a complete and updated inventory and appraisal report
pertaining to the estate.8
On 24 September 2001, petitioners filed with the Manila RTC a Manifestation/Motion Ex
Abundanti Cautela,9praying that they be furnished with copies of all processes and
orders pertaining to the intestate proceedings. Private respondent opposed the
manifestation/motion, disputing the personality of petitioners to intervene in the
intestate proceedings of her husband. Even before the Manila RTC acted on the
manifestation/motion, petitioners filed an omnibus motion praying that the Manila RTC
set a deadline for the submission by private respondent of the required inventory of
the decedents estate.10 Petitioners also filed other pleadings or motions with the
Manila RTC, alleging lapses on the part of private respondent in her administration of
the estate, and assailing the inventory that had been submitted thus far as unverified,
incomplete and inaccurate.
On 2 January 2002, the Manila RTC issued an order denying the manifestation/motion,
on the ground that petitioners are not interested parties within the contemplation of
the Rules of Court to intervene in the intestate proceedings.11 After the Manila RTC had
denied petitioners motion for reconsideration, a petition for certiorari was filed with
the Court of Appeals. The petition argued in general that petitioners had the right to
intervene in the intestate proceedings of Roberto Benedicto, the latter being the
defendant in the civil cases they lodged with the Bacolod RTC.
On 27 February 2004, the Court of Appeals promulgated a decision12 dismissing the
petition and declaring that the Manila RTC did not abuse its discretion in refusing to
allow petitioners to intervene in the intestate proceedings. The allowance or
disallowance of a motion to intervene, according to the appellate court, is addressed
to the sound discretion of the court. The Court of Appeals cited the fact that the claims
of petitioners against the decedent were in fact contingent or expectant, as these
were still pending litigation in separate proceedings before other courts.
Hence, the present petition. In essence, petitioners argue that the lower courts erred
in denying them the right to intervene in the intestate proceedings of the estate of
Roberto Benedicto. Interestingly, the rules of procedure they cite in support of their
argument is not the rule on intervention, but rather various other provisions of the Rules
on Special Proceedings.13
To recall, petitioners had sought three specific reliefs that were denied by the courts a
quo. First, they prayed that they be henceforth furnished "copies of all processes and
orders issued" by the intestate court as well as the pleadings filed by administratrix
Benedicto with the said court.14 Second, they prayed that the intestate court set a
deadline for the submission by administratrix Benedicto to submit a verified and
complete inventory of the estate, and upon submission thereof, order the inheritance
tax appraisers of the Bureau of Internal Revenue to assist in the appraisal of the fair
market value of the same.15 Third, petitioners moved that the intestate court set a
deadline for the submission by the administrator of her verified annual account, and,
upon submission thereof, set the date for her examination under oath with respect
thereto, with due notice to them and other parties interested in the collation,
preservation and disposition of the estate.16
The Court of Appeals chose to view the matter from a perspective solely informed by
the rule on intervention. We can readily agree with the Court of Appeals on that point.
Section 1 of Rule 19 of the 1997 Rules of Civil Procedure requires that an intervenor "has
a legal interest in the matter in litigation, or in the success of either of the parties, or an
interest against both, or is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court x x x" While the language of
Section 1, Rule 19 does not literally preclude petitioners from intervening in the intestate
proceedings, case law has consistently held that the legal interest required of an
intervenor "must be actual and material, direct and immediate, and not simply
contingent and expectant."17
Nonetheless, it is not immediately evident that intervention under the Rules of Civil
Procedure necessarily comes into operation in special proceedings. The settlement of
estates of deceased persons fall within the rules of special proceedings under the Rules
of Court,18 not the Rules on Civil Procedure. Section 2, Rule 72 further provides that "[i]n
the absence of special provisions, the rules provided for in ordinary actions shall be, as
far as practicable, applicable to special proceedings."
We can readily conclude that notwithstanding Section 2 of Rule 72, intervention as set
forth under Rule 19 does not extend to creditors of a decedent whose credit is based
on a contingent claim. The definition of "intervention" under Rule 19 simply does not
accommodate contingent claims.
Yet, even as petitioners now contend before us that they have the right to intervene
in the intestate proceedings of Roberto Benedicto, the reliefs they had sought then
before the RTC, and also now before us, do not square with their recognition as
intervenors. In short, even if it were declared that petitioners have no right to intervene
in accordance with Rule 19, it would not necessarily mean the disallowance of the
reliefs they had sought before the RTC since the right to intervene is not one of those
reliefs.
To better put across what the ultimate disposition of this petition should be, let us now
turn our focus to the Rules on Special Proceedings.
In several instances, the Rules on Special Proceedings entitle "any interested persons"
or "any persons interested in the estate" to participate in varying capacities in the
testate or intestate proceedings. Petitioners cite these provisions before us, namely: (1)
Section 1, Rule 79, which recognizes the right of "any person interested" to oppose the
issuance of letters testamentary and to file a petition for administration;" (2) Section 3,
Rule 79, which mandates the giving of notice of hearing on the petition for letters of
administration to the known heirs, creditors, and "to any other persons believed to
have interest in the estate;" (3) Section 1, Rule 76, which allows a "person interested in
the estate" to petition for the allowance of a will; (4) Section 6 of Rule 87, which allows
an individual interested in the estate of the deceased "to complain to the court of the
concealment, embezzlement, or conveyance of any asset of the decedent, or of
evidence of the decedents title or interest therein;" (5) Section 10 of Rule 85, which
requires notice of the time and place of the examination and allowance of the
Administrators account "to persons interested;" (6) Section 7(b) of Rule 89, which
requires the court to give notice "to the persons interested" before it may hear and
grant a petition seeking the disposition or encumbrance of the properties of the estate;
and (7) Section 1, Rule 90, which allows "any person interested in the estate" to petition
for an order for the distribution of the residue of the estate of the decedent, after all
obligations are either satisfied or provided for.
Had the claims of petitioners against Benedicto been based on contract, whether
express or implied, then they should have filed their claim, even if contingent, under
the aegis of the notice to creditors to be issued by the court immediately after granting
letters of administration and published by the administrator immediately after the
issuance of such notice.19 However, it appears that the claims against Benedicto were
based on tort, as they arose from his actions in connection with Philsucom, Nasutra
and Traders Royal Bank. Civil actions for tort or quasi-delict do not fall within the class
of claims to be filed under the notice to creditors required under Rule 86.20These
actions, being as they are civil, survive the death of the decedent and may be
commenced against the administrator pursuant to Section 1, Rule 87. Indeed, the
records indicate that the intestate estate of Benedicto, as represented by its
administrator, was successfully impleaded in Civil Case No. 11178, whereas the other
civil case21 was already pending review before this Court at the time of Benedictos
death.
Evidently, the merits of petitioners claims against Benedicto are to be settled in the
civil cases where they were raised, and not in the intestate proceedings. In the event
the claims for damages of petitioners are granted, they would have the right to
enforce the judgment against the estate. Yet until such time, to what extent may they
be allowed to participate in the intestate proceedings?
Petitioners place heavy reliance on our ruling in Dinglasan v. Ang Chia,22 and it does
provide us with guidance on how to proceed. A brief narration of the facts therein is
in order. Dinglasan had filed an action for reconveyance and damages against
respondents, and during a hearing of the case, learned that the same trial court was
hearing the intestate proceedings of Lee Liong to whom Dinglasan had sold the
property years earlier. Dinglasan thus amended his complaint to implead Ang Chia,
administrator of the estate of her late husband. He likewise filed a verified claim-in-
intervention, manifesting the pendency of the civil case, praying that a co-
administrator be appointed, the bond of the administrator be increased, and that the
intestate proceedings not be closed until the civil case had been terminated. When
the trial court ordered the increase of the bond and took cognizance of the pending
civil case, the administrator moved to close the intestate proceedings, on the ground
that the heirs had already entered into an extrajudicial partition of the estate. The trial
court refused to close the intestate proceedings pending the termination of the civil
case, and the Court affirmed such action.
If the appellants filed a claim in intervention in the intestate proceedings it was only
pursuant to their desire to protect their interests it appearing that the property in
litigation is involved in said proceedings and in fact is the only property of the estate
left subject of administration and distribution; and the court is justified in taking
cognizance of said civil case because of the unavoidable fact that whatever is
determined in said civil case will necessarily reflect and have a far reaching
consequence in the determination and distribution of the estate. In so taking
cognizance of civil case No. V-331 the court does not assume general jurisdiction over
the case but merely makes of record its existence because of the close interrelation
of the two cases and cannot therefore be branded as having acted in excess of its
jurisdiction.
Appellants' claim that the lower court erred in holding in abeyance the closing of the
intestate proceedings pending determination of the separate civil action for the
reason that there is no rule or authority justifying the extension of administration
proceedings until after the separate action pertaining to its general jurisdiction has
been terminated, cannot be entertained. Section 1, Rule 88, of the Rules of Court,
expressly provides that "action to recover real or personal property 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 the executor or administrator."
What practical value would this provision have if the action against the administrator
cannot be prosecuted to its termination simply because the heirs desire to close the
intestate proceedings without first taking any step to settle the ordinary civil case? This
rule is but a corollary to the ruling which declares that questions concerning ownership
of property alleged to be part of the estate but claimed by another person should be
determined in a separate action and should be submitted to the court in the exercise
of its general jurisdiction. These rules would be rendered nugatory if we are to hold that
an intestate proceedings can be closed by any time at the whim and caprice of the
heirs x x x23 (Emphasis supplied) [Citations omitted]
It is not clear whether the claim-in-intervention filed by Dinglasan conformed to an
action-in-intervention under the Rules of Civil Procedure, but we can partake of the
spirit behind such pronouncement. Indeed, a few years later, the Court, citing
Dinglasan, stated: "[t]he rulings of this court have always been to the effect that in the
special proceeding for the settlement of the estate of a deceased person, persons not
heirs, intervening therein to protect their interests are allowed to do so to protect the
same, but not for a decision on their action."24
Petitioners interests in the estate of Benedicto may be inchoate interests, but they are
viable interests nonetheless. We are mindful that the Rules of Special Proceedings
allows not just creditors, but also "any person interested" or "persons interested in the
estate" various specified capacities to protect their respective interests in the estate.
Anybody with a contingent claim based on a pending action for quasi-delict against
a decedent may be reasonably concerned that by the time judgment is rendered in
their favor, the estate of the decedent would have already been distributed, or
diminished to the extent that the judgment could no longer be enforced against it.
In the same manner that the Rules on Special Proceedings do not provide a creditor
or any person interested in the estate, the right to participate in every aspect of the
testate or intestate proceedings, but instead provides for specific instances when such
persons may accordingly act in those proceedings, we deem that while there is no
general right to intervene on the part of the petitioners, they may be allowed to seek
certain prayers or reliefs from the intestate court not explicitly provided for under the
Rules, if the prayer or relief sought is necessary to protect their interest in the estate,
and there is no other modality under the Rules by which such interests can be
protected. It is under this standard that we assess the three prayers sought by
petitioners.
The first is that petitioners be furnished with copies of all processes and orders issued in
connection with the intestate proceedings, as well as the pleadings filed by the
administrator of the estate. There is no questioning as to the utility of such relief for the
petitioners. They would be duly alerted of the developments in the intestate
proceedings, including the status of the assets of the estate. Such a running account
would allow them to pursue the appropriate remedies should their interests be
compromised, such as the right, under Section 6, Rule 87, to complain to the intestate
court if property of the estate concealed, embezzled, or fraudulently conveyed.
At the same time, the fact that petitioners interests remain inchoate and contingent
counterbalances their ability to participate in the intestate proceedings. We are
mindful of respondents submission that if the Court were to entitle petitioners with
service of all processes and pleadings of the intestate court, then anybody claiming
to be a creditor, whether contingent or otherwise, would have the right to be furnished
such pleadings, no matter how wanting of merit the claim may be. Indeed, to impose
a precedent that would mandate the service of all court processes and pleadings to
anybody posing a claim to the estate, much less contingent claims, would unduly
complicate and burden the intestate proceedings, and would ultimately offend the
guiding principle of speedy and orderly disposition of cases.
Fortunately, there is a median that not only exists, but also has been recognized by this
Court, with respect to the petitioners herein, that addresses the core concern of
petitioners to be apprised of developments in the intestate proceedings. In Hilado v.
Judge Reyes,25 the Court heard a petition for mandamus filed by the same petitioners
herein against the RTC judge, praying that they be allowed access to the records of
the intestate proceedings, which the respondent judge had denied from them.
Section 2 of Rule 135 came to fore, the provision stating that "the records of every court
of justice shall be public records and shall be available for the inspection of any
interested person x x x." The Court ruled that petitioners were "interested persons"
entitled to access the court records in the intestate proceedings. We said:
Petitioners' stated main purpose for accessing the records tomonitor prompt
compliance with the Rules governing the preservation and proper disposition of the
assets of the estate, e.g., the completion and appraisal of the Inventory and the
submission by the Administratrix of an annual accountingappears legitimate, for, as
the plaintiffs in the complaints for sum of money against Roberto Benedicto, et al., they
have an interest over the outcome of the settlement of his estate. They are in fact
"interested persons" under Rule 135, Sec. 2 of the Rules of Court x x x26
Allowing creditors, contingent or otherwise, access to the records of the intestate
proceedings is an eminently preferable precedent than mandating the service of
court processes and pleadings upon them. In either case, the interest of the creditor
in seeing to it that the assets are being preserved and disposed of in accordance with All told, the ultimate disposition of the RTC and the Court of Appeals is correct.
the rules will be duly satisfied. Acknowledging their right to access the records, rather Nonetheless, as we have explained, petitioners should not be deprived of their
than entitling them to the service of every court order or pleading no matter how prerogatives under the Rules on Special Proceedings as enunciated in this decision.
relevant to their individual claim, will be less cumbersome on the intestate court, the
administrator and the heirs of the decedent, while providing a viable means by which WHEREFORE, the petition is DENIED, subject to the qualification that petitioners, as
the interests of the creditors in the estate are preserved.1awphi1 persons interested in the intestate estate of Roberto Benedicto, are entitled to such
notices and rights as provided for such interested persons in the Rules on Settlement of
Nonetheless, in the instances that the Rules on Special Proceedings do require notice Estates of Deceased Persons under the Rules on Special Proceedings. No
to any or all "interested parties" the petitioners as "interested parties" will be entitled to pronouncements as to costs.
such notice. The instances when notice has to be given to interested parties are
provided in: (1) Sec. 10, Rule 85 in reference to the time and place of examining and SO ORDERED.
allowing the account of the executor or administrator; (2) Sec. 7(b) of Rule 89
concerning the petition to authorize the executor or administrator to sell personal
estate, or to sell, mortgage or otherwise encumber real estates; and; (3) Sec. 1, Rule
90 regarding the hearing for the application for an order for distribution of the estate
residue. After all, even the administratrix has acknowledged in her submitted inventory,
the existence of the pending cases filed by the petitioners.

We now turn to the remaining reliefs sought by petitioners; that a deadline be set for
the submission by administratrix Benedicto to submit a verified and complete inventory
of the estate, and upon submission thereof: the inheritance tax appraisers of the
Bureau of Internal Revenue be required to assist in the appraisal of the fair market
value of the same; and that the intestate court set a deadline for the submission by
the administratrix of her verified annual account, and, upon submission thereof, set the
date for her examination under oath with respect thereto, with due notice to them
and other parties interested in the collation, preservation and disposition of the estate.
We cannot grant said reliefs.

Section 1 of Rule 83 requires the administrator to return to the court a true inventory
and appraisal of all the real and personal estate of the deceased within three (3)
months from appointment, while Section 8 of Rule 85 requires the administrator to
render an account of his administration within one (1) year from receipt of the letters
testamentary or of administration. We do not doubt that there are reliefs available to
compel an administrator to perform either duty, but a person whose claim against the
estate is still contingent is not the party entitled to do so. Still, even if the administrator
did delay in the performance of these duties in the context of dissipating the assets of
the estate, there are protections enforced and available under Rule 88 to protect the
interests of those with contingent claims against the estate.

Concerning complaints against the general competence of the administrator, the

proper remedy is to seek the removal of the administrator in accordance with Section
2, Rule 82. While the provision is silent as to who may seek with the court the removal
of the administrator, we do not doubt that a creditor, even a contingent one, would
have the personality to seek such relief. After all, the interest of the creditor in the
estate relates to the preservation of sufficient assets to answer for the debt, and the
general competence or good faith of the administrator is necessary to fulfill such
purpose.
G.R. No. 157912 December 13, 2007
ALAN JOSEPH A. SHEKER, Petitioner,
vs.
ESTATE OF ALICE O. SHEKER, VICTORIA S. MEDINA-Administratrix, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari seeking the reversal of the Order1 of
the Regional Trial Court of Iligan City, Branch 6 (RTC) dated January 15, 2003 and its
Omnibus Order dated April 9, 2003.
The undisputed facts are as follows.
The RTC admitted to probate the holographic will of Alice O. Sheker and thereafter
issued an order for all the creditors to file their respective claims against the estate. In
compliance therewith, petitioner filed on October 7, 2002 a contingent claim for
agent's commission due him amounting to approximately P206,250.00 in the event of
the sale of certain parcels of land belonging to the estate, and the amount
of P275,000.00, as reimbursement for expenses incurred and/or to be incurred by
petitioner in the course of negotiating the sale of said realties.
The executrix of the Estate of Alice O. Sheker (respondent) moved for the dismissal of
said money claim against the estate on the grounds that (1) the requisite docket fee,
as prescribed in Section 7(a), Rule 141 of the Rules of Court, had not been paid; (2)
petitioner failed to attach a certification against non-forum shopping; and (3)
petitioner failed to attach a written explanation why the money claim was not filed
and served personally.
On January 15, 2003, the RTC issued the assailed Order dismissing without prejudice
the money claim based on the grounds advanced by respondent. Petitioner's motion
for reconsideration was denied per Omnibus Order dated April 9, 2003.
Petitioner then filed the present petition for review on certiorari, raising the following
questions:
(a) must a contingent claim filed in the probate proceeding contain a certification
against non-forum shopping, failing which such claim should be dismissed?
(b) must a contingent claim filed against an estate in a probate proceeding be
dismissed for failing to pay the docket fees at the time of its filing thereat?
(c) must a contingent claim filed in a probate proceeding be dismissed because of its
failure to contain a written explanation on the service and filing by registered mail?2
Petitioner maintains that the RTC erred in strictly applying to a probate proceeding the
rules requiring a certification of non-forum shopping, a written explanation for non-
personal filing, and the payment of docket fees upon filing of the claim. He insists that
Section 2, Rule 72 of the Rules of Court provides that rules in ordinary actions are
applicable to special proceedings only in a suppletory manner.
The Court gave due course to the petition for review on certiorari although directly
filed with this Court, pursuant to Section 2(c), Rule 41 of the Rules of Court. 3
The petition is imbued with merit.
However, it must be emphasized that petitioner's contention that rules in ordinary
actions are only supplementary to rules in special proceedings is not entirely correct.
Section 2, Rule 72, Part II of the same Rules of Court provides:
Sec. 2. Applicability of rules of Civil Actions. - In the absence of special provisions, the
rules provided for in ordinary actions shall be, as far as practicable, applicable in
special proceedings.
Stated differently, special provisions under Part II of the Rules of Court govern special
proceedings; but in the absence of special provisions, the rules provided for in Part I of
the Rules governing ordinary civil actions shall be applicable to special proceedings,
as far as practicable.
The word "practicable" is defined as: possible to practice or perform; capable of being
put into practice, done or accomplished.4 This means that in the absence of special
provisions, rules in ordinary actions may be applied in special proceedings as much as
possible and where doing so would not pose an obstacle to said proceedings.
Nowhere in the Rules of Court does it categorically say that rules in ordinary actions
are inapplicable or merely suppletory to special proceedings. Provisions of the Rules
of Court requiring a certification of non-forum shopping for complaints and initiatory
pleadings, a written explanation for non-personal service and filing, and the payment
of filing fees for money claims against an estate would not in any way obstruct probate
proceedings, thus, they are applicable to special proceedings such as the settlement
of the estate of a deceased person as in the present case.
Thus, the principal question in the present case is: did the RTC err in dismissing
petitioner's contingent money claim against respondent estate for failure of petitioner
to attach to his motion a certification against non-forum shopping?
The Court rules in the affirmative.
The certification of non-forum shopping is required only for complaints and other
initiatory pleadings. The RTC erred in ruling that a contingent money claim against the
estate of a decedent is an initiatory pleading. In the present case, the whole probate
proceeding was initiated upon the filing of the petition for allowance of the decedent's
will. Under Sections 1 and 5, Rule 86 of the Rules of Court, after granting letters of
testamentary or of administration, all persons having money claims against the
decedent are mandated to file or notify the court and the estate administrator of their
respective money claims; otherwise, they would be barred, subject to certain
exceptions.5
Such being the case, a money claim against an estate is more akin to a motion for
creditors' claims to be recognized and taken into consideration in the proper
disposition of the properties of the estate. In Arquiza v. Court of Appeals,6 the Court
explained thus:
x x x The office of a motion is not to initiate new litigation, but to bring a material but
incidental matter arising in the progress of the case in which the motion is filed. A
motion is not an independent right or remedy, but is confined to incidental matters in
the progress of a cause. It relates to some question that is collateral to the main object
of the action and is connected with and dependent upon the principal
remedy.7 (Emphasis supplied)
A money claim is only an incidental matter in the main action for the settlement of the
decedent's estate; more so if the claim is contingent since the claimant cannot even
institute a separate action for a mere contingent claim. Hence, herein petitioner's
contingent money claim, not being an initiatory pleading, does not require a
certification against non-forum shopping.
On the issue of filing fees, the Court ruled in Pascual v. Court of Appeals,8 that the trial
court has jurisdiction to act on a money claim (attorney's fees) against an estate for
services rendered by a lawyer to the administratrix to assist her in fulfilling her duties to
the estate even without payment of separate docket fees because the filing fees shall
constitute a lien on the judgment pursuant to Section 2, Rule 141 of the Rules of Court,
or the trial court may order the payment of such filing fees within a reasonable
time.9 After all, the trial court had already assumed jurisdiction over the action for
settlement of the estate. Clearly, therefore, non-payment of filing fees for a money
claim against the estate is not one of the grounds for dismissing a money claim against
the estate.
With regard to the requirement of a written explanation, Maceda v. De Guzman Vda.
de Macatangay10 is squarely in point. Therein, the Court held thus:
In Solar Team Entertainment, Inc. v. Ricafort, this Court, passing upon Section 11 of Rule
13 of the Rules of Court, held that a court has the discretion to consider a pleading or
paper as not filed if said rule is not complied with.
Personal service and filing are preferred for obvious reasons. Plainly, such should
expedite action or resolution on a pleading, motion or other paper; and conversely,
minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail,
considering the inefficiency of the postal service. Likewise, personal service will do
away with the practice of some lawyers who, wanting to appear clever, resort to the
following less than ethical practices: (1) serving or filing pleadings by mail to catch
opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for
instance, responsive pleadings or an opposition; or (2) upon receiving notice from the
post office that the registered mail containing the pleading of or other paper from the
adverse party may be claimed, unduly procrastinating before claiming the parcel, or,
worse, not claiming it at all, thereby causing undue delay in the disposition of such
pleading or other papers.
If only to underscore the mandatory nature of this innovation to our set of adjective
rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives
the court the discretion to consider a pleading or paper as not filed if the other modes
of service or filing were not resorted to and no written explanation was made as to
why personal service was not done in the first place. The exercise of discretion must,
necessarily consider the practicability of personal service, for Section 11 itself begins
with the clause "whenever practicable".
We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules
of Civil Procedure, personal service and filing is the general rule, and resort to other
modes of service and filing, the exception. Henceforth, whenever personal service or
filing is practicable, in the light of the circumstances of time, place and person,
personal service or filing is mandatory. Only when personal service or filing is not
practicable may resort to other modes be had, which must then be accompanied by
a written explanation as to why personal service or filing was not practicable to begin
with. In adjudging the plausibility of an explanation, a court shall likewise consider the
importance of the subject matter of the case or the issues involved therein, and the
prima facie merit of the pleading sought to be expunged for violation of Section 11.
(Emphasis and italics supplied)
In Musa v. Amor, this Court, on noting the impracticality of personal service, exercised
its discretion and liberally applied Section 11 of Rule 13:
"As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of pleadings
must be done personally whenever practicable. The court notes that in the present
case, personal service would not be practicable. Considering the distance between
the Court of Appeals and Donsol, Sorsogon where the petition was posted,
clearly, service by registered mail [sic] would have entailed considerable time, effort
and expense. A written explanation why service was not done personally might have
been superfluous. In any case, as the rule is so worded with the use of "may", signifying
permissiveness, a violation thereof gives the court discretion whether or not to consider
the paper as not filed. While it is true that procedural rules are necessary to secure an
orderly and speedy administration of justice, rigid application of Section 11, Rule 13
may be relaxed in this case in the interest of substantial justice. (Emphasis and italics WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Iligan
supplied)1wphi1 City, Branch 6 dated January 15, 2003 and April 9, 2003, respectively,
are REVERSED and SET ASIDE. The Regional Trial Court of Iligan City, Branch 6, is
In the case at bar, the address of respondents counsel is Lopez, Quezon, while hereby DIRECTED to give due course and take appropriate action on petitioner's
petitioner Sonias counsels is Lucena City. Lopez, Quezon is 83 kilometers away from money claim in accordance with Rule 82 of the Rules of Court.
Lucena City. Such distance makes personal service impracticable. As in Musa v. Amor,
a written explanation why service was not done personally "might have been No pronouncement as to costs.
superfluous."
SO ORDERED.
As this Court held in Tan v. Court of Appeals, liberal construction of a rule of procedure
has been allowed where, among other cases, "the injustice to the adverse party is not
commensurate with the degree of his thoughtlessness in not complying with the
procedure prescribed."11 (Emphasis supplied)

In the present case, petitioner holds office in Salcedo Village, Makati City, while
counsel for respondent and the RTC which rendered the assailed orders are both in
Iligan City. The lower court should have taken judicial notice of the great distance
between said cities and realized that it is indeed not practicable to serve and file the
money claim personally. Thus, following Medina v. Court of Appeals,12 the failure of
petitioner to submit a written explanation why service has not been done personally,
may be considered as superfluous and the RTC should have exercised its discretion
under Section 11, Rule 13, not to dismiss the money claim of petitioner, in the interest
of substantial justice.

The ruling spirit of the probate law is the speedy settlement of estates of deceased
persons for the benefit of creditors and those entitled to residue by way of inheritance
or legacy after the debts and expenses of administration have been paid.13 The
ultimate purpose for the rule on money claims was further explained in Union Bank of
the Phil. v. Santibaez,14 thus:

The filing of a money claim against the decedents estate in the probate court is
mandatory. As we held in the vintage case of Py Eng Chong v. Herrera:

x x x This requirement is for the purpose of protecting the estate of the deceased by
informing the executor or administrator of the claims against it, thus enabling him to
examine each claim and to determine whether it is a proper one which should be
allowed. The plain and obvious design of the rule is the speedy settlement of the affairs
of the deceased and the early delivery of the property to the distributees, legatees, or
heirs. The law strictly requires the prompt presentation and disposition of the claims
against the decedent's estate in order to settle the affairs of the estate as soon as
possible, pay off its debts and distribute the residue.15 (Emphasis supplied)

The RTC should have relaxed and liberally construed the procedural rule on the
requirement of a written explanation for non-personal service, again in the interest of
substantial justice.
G.R. No. 129008 January 13, 2004
TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY
EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband
BEDA UNGOS, petitioners,
vs.
COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO
ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P.
ORFINADA and ANGELO P. ORFINADA, respondents.
DECISION
TINGA, J.:
Whether the heirs may bring suit to recover property of the estate pending the
appointment of an administrator is the issue in this case.
This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set
aside the Decision1 of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31,
1997, as well as its Resolution2 dated March 26, 1997, denying petitioners motion for
reconsideration.
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving
several personal and real properties located in Angeles City, Dagupan City and
Kalookan City.3 He also left a widow, respondent Esperanza P. Orfinada, whom he
married on July 11, 1960 and with whom he had seven children who are the herein
respondents, namely: Lourdes P. Orfinada, Alfonso "Clyde" P. Orfinada, Nancy P.
Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso
Mike P. Orfinada (deceased) and Angelo P. Orfinada.4
Apart from the respondents, the demise of the decedent left in mourning his paramour
and their children. They are petitioner Teodora Riofero, who became a part of his life
when he entered into an extra-marital relationship with her during the subsistence of
his marriage to Esperanza sometime in 1965, and co-petitioners Veronica5, Alberto and
Rowena.6
On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered
that on June 29, 1995, petitioner Teodora Rioferio and her children executed
an Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving
the properties of the estate of the decedent located in Dagupan City and that
accordingly, the Registry of Deeds in Dagupan issued Certificates of Titles Nos. 63983,
63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica Orfinada-
Evangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also found
out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of
Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of
the extra-judicial settlement.7
On December 1, 1995, respondent Alfonso "Clyde" P. Orfinada III filed a Petition for
Letters of Administration docketed as S.P. Case No. 5118 before the Regional Trial
Court of Angeles City, praying that letters of administration encompassing the estate
of Alfonso P. Orfinada, Jr. be issued to him.8
On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of
Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate
Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and
63984 and Other Related Documents with Damages against petitioners, the Rural Bank
of Mangaldan, Inc. and the Register of Deeds of Dagupan City before the Regional
Trial Court, Branch 42, Dagupan City.9
On February 5, 1996, petitioners filed their Answer to the aforesaid complaint
interposing the defense that the property subject of the contested deed of extra-
judicial settlement pertained to the properties originally belonging to the parents of
Teodora Riofero10 and that the titles thereof were delivered to her as an advance
inheritance but the decedent had managed to register them in his name.11 Petitioners
also raised the affirmative defense that respondents are not the real parties-in-interest
but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the
administration proceedings.12 On April 29, 1996, petitioners filed a Motion to Set
Affirmative Defenses for Hearing13 on the aforesaid ground.
The lower court denied the motion in its Order14 dated June 27, 1996, on the ground
that respondents, as heirs, are the real parties-in-interest especially in the absence of
an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved
for its reconsideration15 but the motion was likewise denied.16
This prompted petitioners to file before the Court of Appeals their Petition for
Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No.
42053.17 Petitioners averred that the RTC committed grave abuse of discretion in
issuing the assailed order which denied the dismissal of the case on the ground that
the proper party to file the complaint for the annulment of the extrajudicial settlement
of the estate of the deceased is the estate of the decedent and not the respondents.18
The Court of Appeals rendered the assailed Decision19 dated January 31, 1997, stating
that it discerned no grave abuse of discretion amounting to lack or excess of
jurisdiction by the public respondent judge when he denied petitioners motion to set
affirmative defenses for hearing in view of its discretionary nature.
A Motion for Reconsideration was filed by petitioners but it was denied.20 Hence, the
petition before this Court.
The issue presented by the petitioners before this Court is whether the heirs have legal
standing to prosecute the rights belonging to the deceased subsequent to the
commencement of the administration proceedings.21
Petitioners vehemently fault the lower court for denying their motion to set the case for
preliminary hearing on their affirmative defense that the proper party to bring the
action is the estate of the decedent and not the respondents. It must be stressed that
the holding of a preliminary hearing on an affirmative defense lies in the discretion of
the court. This is clear from the Rules of Court, thus:
SEC. 5. Pleadings grounds as affirmative defenses.- Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an affirmative
defense, and a preliminary hearing may be had thereon as if a motion to dismiss had
been filed.22 (Emphasis supplied.)
Certainly, the incorporation of the word "may" in the provision is clearly indicative of
the optional character of the preliminary hearing. The word denotes discretion and
cannot be construed as having a mandatory effect.23Subsequently, the electivity of
the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with
the inclusion of the phrase "in the discretion of the Court", apart from the retention of
the word "may" in Section 6,24 in Rule 16 thereof.
Just as no blame of abuse of discretion can be laid on the lower courts doorstep for
not hearing petitioners affirmative defense, it cannot likewise be faulted for
recognizing the legal standing of the respondents as heirs to bring the suit.
Pending the filing of administration proceedings, the heirs without doubt have legal
personality to bring suit in behalf of the estate of the decedent in accordance with
the provision of Article 777 of the New Civil Code "that (t)he rights to succession are
transmitted from the moment of the death of the decedent." The provision in turn is
the foundation of the principle that the property, rights and obligations to the extent
and value of the inheritance of a person are transmitted through his death to another
or others by his will or by operation of law.25
Even if administration proceedings have already been commenced, the heirs may still
bring the suit if an administrator has not yet been appointed. This is the proper modality
despite the total lack of advertence to the heirs in the rules on party representation,
namely Section 3, Rule 326 and Section 2, Rule 8727 of the Rules of Court. In fact, in the
case of Gochan v. Young,28 this Court recognized the legal standing of the heirs to
represent the rights and properties of the decedent under administration pending the
appointment of an administrator. Thus:
The above-quoted rules,29 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;30 and (2) when the administrator is alleged to have participated in the act
complained of31 and he is made a party defendant.32 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.
All told, therefore, the rule that the heirs have no legal standing to sue for the recovery
of property of the estate during the pendency of administration proceedings has three
exceptions, the third being when there is no appointed administrator such as in this
case.
As the appellate court did not commit an error of law in upholding the order of the
lower court, recourse to this Court is not warranted.
WHEREFORE, the petition for review is DENIED. The assailed decision and resolution of
the Court of Appeals are hereby AFFIRMED. No costs.
Footnotes
26 Section 3 of Rule 3 of the Rules of Court:
Sec. 3. Representatives as parties. - Where the action is allowed to be prosecuted or
defended by a representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be deemed to be the
real party in interest. A representative may be a trustee of an express trust, a guardian,
an executor or administrator, or a party authorized by law or these Rules. An agent
acting in his own name and for the benefit of an undisclosed principal may sue or be
sued without joining the principal except when the contract involves things belonging
to the principal.
27 Section 2 of Rule 87:
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."
G.R. No. 144881 October 16, 2003
BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN, BENISON T. CHUA, and BALDWIN T.
CHUA, petitioners
vs.
ABSOLUTE MANAGEMENT CORPORATION and COURT OF APPEALS, respondents<.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Decision2 dated 9 May 2000 of the
Court of Appeals in CA-G.R. SP No. 57421, as well as the Resolution dated 5 September
2000 denying the motion for reconsideration. The Court of Appeals set aside the
Order3 dated 7 February 2000 issued by Branch 112 of the Regional Trial Court of Pasay
City which denied the petitioners "Motion for the Examination of the Administratrix and
Others" ("Motion").
Antecedent Facts
The facts are not in dispute. As found by the Court of Appeals, the essential
antecedents are as follows:
Sometime in 1999, upon a petition for letters of administration filed by [herein
petitioners] Jennifer T. Chua-Locsin, Benison T. Chua, and Baldwin T. Chua with the
Regional Trial Court, Branch 112, Pasay City, presided by [Judge Manuel P. Dumatol],
xxx Betty T. Chua was appointed as administratrix of the intestate estate of the
deceased Jose L. Chua. Thereafter, she submitted to the trial court an inventory of all
the real and personal properties of the deceased.1awphi1.nt
One of the creditors of the deceased, [herein respondent] Absolute Management
Corporation, filed a claim on [sic] the estate in the amount of P63,699,437.74. As
administratrix, Betty T. Chua tentatively accepted said amount as correct, with a
statement that it shall be reduced or adjusted as additional evidences [sic] may
warrant.
In the interim, Absolute Management Corporation noticed that the deceaseds shares
of stocks with Ayala Sales Corporation and Ayala Construction Supply, Inc. were not
included in the inventory of assets. As a consequence, it filed a motion to require Betty
T. Chua to explain why she did not report these shares of stocks in the inventory.
Through a reply, Betty T. Chua alleged that these shares had already been assigned
and transferred to other parties prior to the death of her husband, Jose L. Chua. She
attached to her reply the deeds of assignment which allegedly constituted proofs of
transfer. Judge Dumatol accepted the explanation as meritorious.
Absolute Management Corporation, suspecting that the documents attached to
Betty T. Chuas reply were spurious and simulated, filed a motion for the examination
of the supposed transferees. xxx It premised its motion on Section 6, Rule 87, Revised
Rules of Court, infra, which states that when a person is suspected of having
concealed, embezzled, or conveyed away any of the properties of the deceased, a
creditor may file a complaint with the trial court and the trial court may cite the
suspected person to appear before it and be examined under oath on the matter of
such complaint. Private respondents opposed the motion on the ground that this
provision bears no application to the case. On February 7, 2000, Judge Dumatol issued
the assailed order.4
The Ruling of the Trial Court
The trial courts order denying Absolute Management Corporations ("Absolute")
Motion reads:
This resolves the undated Motion for the Examination of the Administratrix and Others,
filed on January 11, 2000 by claimant Absolute Management Corporation, to which
petitioners, through counsel filed their opposition, and claimant Absolute
Management Corporation in turn filed its reply.
Finding no merit in the motion filed by claimant Absolute Management Corporation,
as it in effect seeks to engage in a fishing expedition for evidence to be used against
the administratrix and others whom it seeks to examine, it being the consensus of the
Court that the Rules of Procedure does [sic] not allow the fishing of evidence to use
[sic] against the adverse party, claimant Absolute Management Corporations motion
is hereby DENIED.
SO ORDERED.5
Aggrieved, Absolute filed a petition for certiorari and mandamus with the Court of
Appeals.
The Ruling of the Court of Appeals
In its petition for certiorari and mandamus before the Court of Appeals, Absolute
claimed that the trial court committed grave abuse of discretion in denying its Motion
and in failing to act on its claim. Absolute alleged that the trial court deprived it of the
right to show that the documents presented by petitioners were fictitious to the
prejudice of Absolute.
During the hearing6 conducted on 9 August 2000 before the members of the Special
Sixth Division of the Court of Appeals, counsel for Absolute presented the following
evidence to support its assertion that the transfers of the shares were spurious:
1. Exhibit "A"7 - Certification from the Office of the Clerk of Court of the
Regional Trial Court of Pasay City that Atty. Hilarion A.D. Maagad (the notary
public who notarized the questioned Secretarys Certificate8 and Deeds of
Assignment of Shares of Stock9) is not listed in the Roll of Notaries Public for the
City of Pasay particularly for the period of 1993-1994, 1994-1995, 1998-1999
and 1999-2000.
2. Exhibit "B"10 Certification from the Clerk of Court of the Regional Trial Court
of Makati City that the questioned Secretarys Certificate11 was not included
in the Notarial Report of Atty. Lope M. Velasco for the years 1998-1999.
3. Exhibits "B-1," "B-2," and "B-3"12 Certification from the Clerk of Court of the
Regional Trial Court of Makati City that the questioned Deeds of Assignment
of Shares of Stock13 were not included in the Notarial Report of Atty. Lope M.
Velasco for the years 1998-1999.
In setting aside the trial courts order, the Court of Appeals pointed out that the
presentation of the deeds of assignment executed by the decedent in petitioners
favor does not automatically negate the existence of concealment. The appellate
court stated that it is a common occurrence in estate proceedings for heirs to execute
simulated deeds of transfer which conceal and place properties of the decedent
beyond the reach of creditors.
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, the petition is GRANTED. The order dated February 7, 2000 of respondent
Judge Manuel P. Dumatol is hereby SET ASIDE. He is hereby ORDERED to give due
course to petitioners "Motion for the Examination of the Administratrix and Others" and
thereafter, to dispose of the claim accordingly.
SO ORDERED.14
Hence, this petition.
Issue
Petitioners would like this Court to rule whether Section 6, Rule 87 of the Rules of Court,
which is the principal basis of Absolutes Motion, is mandatory or merely directory on
the trial court. This perspective misses the point. The issue in this case is whether the
Court of Appeals correctly ordered the trial court to give due course to the Motion for
Examination.
Petitioners also point out that the Court of Appeals should have dismissed Absolutes
petition because of these procedural infirmities:
1. Counsel for Absolute, not the proper officers of Absolute, filed the
Certification against Forum Shopping;
2. Absolute attached only a duplicate original copy of the challenged order
of the trial court to the petition submitted to the Court of Appeals; and
3. No proper proof of service accompanied the petition submitted to the
Court of Appeals.15
The Ruling of the Court
The petition has no merit.
Whether the Court of Appeals correctly ordered the Trial Court to give due course to
Absolutes Motion for Examination
Section 6, Rule 87 of the Rules of Court provides:
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, 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 clerks office.
Section 6 of Rule 87 seeks to secure evidence from persons suspected of having
possession or knowledge of the properties left by a deceased person, or of having
concealed, embezzled or conveyed any of the properties of the deceased.16
The court which acquires jurisdiction over the properties of a deceased person through
the filing of the corresponding proceedings has supervision and control over these
properties. The trial court has the inherent duty to see to it that the inventory of the
administrator lists all the properties, rights and credits which the law requires the
administrator to include in his inventory. In compliance with this duty, the court also
has the inherent power to determine what properties, rights and credits of the
deceased the administrator should include or exclude in the inventory. An heir or
person interested in the properties of a deceased may call the courts attention that
certain properties, rights or credits are left out from the inventory. In such a case, it is
likewise the courts duty to hear the observations of such party. The court has the
power to determine if such observations deserve attention and if such properties
belong prima facie to the estate.17
However, in such proceedings the trial court has no authority to decide whether the
properties, real or personal, belong to the estate or to the persons examined. If after
such examination there is good reason to believe that the person examined is keeping
properties belonging to the estate, then the administrator should file an ordinary action
in court to recover the same.18 Inclusion of certain shares of stock by the administrator
in the inventory does not automatically deprive the assignees of their shares. They
have a right to be heard on the question of ownership, when that property is properly
presented to the court.19
In the present case, some of the transferees of the shares of stock do not appear to
be heirs of the decedent. Neither do they appear to be parties to the intestate
proceedings.20 Third persons to whom the decedents assets had been conveyed may
be cited to appear in court and examined under oath as to how they came into
possession of the decedents assets. In case of fraudulent conveyances, a separate
action is necessary to recover these assets.21
Taken in this light, there is no reason why the trial court should disallow the examination
of the alleged transferees of the shares of stocks. This is only for purposes of eliciting
information or securing evidence from persons suspected of concealing or conveying
some of the decedents properties to the prejudice of creditors. Petitioners admission
that these persons are the decedents assignees does not automatically negate
concealment of the decedents assets on their part. The assignment might be
simulated so as to place the shares beyond the reach of creditors. In case the shares
are eventually included in the estate, this inventory is merely provisional and is not
determinative of the issue of ownership. A separate action is necessary for
determination of ownership and recovery of possession. 221a\^/phi1.net
Whether the Petition submitted to the Court of Appeals suffered from procedural
infirmities which merit its dismissal
The petition filed before the Court of Appeals contained a certificate of non-forum
shopping executed by counsel and not by the authorized officer of Absolute.
However, the subsequent filing of an affidavit of non-forum shopping signed by the
corporate director cured this defect. In Maricalum Mining Corp. v. National Labor
Relations Commission,23 the Court held that a slight delay in the filing of an affidavit of
non-forum shopping should not defeat the action. A liberal interpretation of the rules
is more in keeping with the objective to "secure a just, speedy and inexpensive
disposition of every action and proceeding." As held in Loyola v. Court of
Appeals,24substantial compliance is sufficient. While submission of the certificate of
non-forum shopping is mandatory, nonetheless we must not interpret the requirement
too literally to defeat the objective of preventing the undesirable practice of forum
shopping.25 Technical rules of procedure should be used to promote, not frustrate,
justice. While the swift unclogging of court dockets is a laudable objective, the
granting of substantial justice is an even more urgent ideal.26
Petitioners claim that the attachment of a mere duplicate original copy of the assailed
order violates the express mandate of Section 1, Rule 65, of the 1997 Rules of Civil
Procedure. This rule states that "the petition shall be accompanied by a certified true
copy of the judgment, order, or resolution subject thereof." However, under Section 3,
Rule 46 of the 1997 Rules of Civil Procedure, as amended by Circular No. 39-98, either
a certified true copy or a duplicate original copy may be attached to the petition.
The affidavit of service executed by petitioners counsel stating that he served a copy
of the petition by registered mail to respondents with the corresponding registry
receipts constitutes sufficient proof of service.27 This complies with Section 13, Rule 13
of the 1997 Rules of Civil Procedure.
Lastly, petitioners quote Arcega and Miranda v. Pecson and Arcega 28 to question the
propriety of filing a petition for certiorari before the Court of Appeals:
Without deciding whether the proceeding thus conducted complies with the provision
of Section 6 of Rule 88 [Section 6, Rule 87 under the 1997 Rules of Civil Procedure],
which says that "the court may cite such suspected person to appear before it and
may examine him on oath on the matter of such complaint," and without deciding
whether the duty of the judge to make the examination is or not mandatory, we are
satisfied that certiorari is not an appropriate remedy under the aforecited rule.
(Emphasis supplied)
The facts in Arcega are not on all fours with the facts in the instant case. In Arcega, the
judge granted the examination but only with respect to three of the several lots
involved. In the present case, there was an absolute refusal by the trial court to
conduct an examination on the ground that it would constitute a "fishing expedition"
of evidence that could be used against the administratrix. In Arcega, the trial court
issued an order in favor of the person suspected of having concealed properties of
the estate and against the special administratrix and the judicial receiver. The special
administratrix had the remedy of filing another case to recover such properties in the
name of thee state.29
In the present case, Absolute as a creditor of the decedent filed the petition after the
trial court denied its Motion for examination. Absolute questioned the ruling in favor of
the administratrix and heirs of the decedent. Although as a creditor, Absolute does
have the remedy of filing another case to recover such properties,30 its Motion for
examination was intended merely to investigate and take testimony in preparation for
an independent action.31Aside from the administratrix and the heirs of the decedent,
Absolute also sought to examine the supposed assignees of the decedents shares,
who are third persons with respect to the probate proceedings. The Motion was a
preparatory move sanctioned by the Rules of Court. The denial of Absolutes Motion
was an interlocutory order not subject to appeal. The order of denial may, however,
be challenged before a superior court through a petition for certiorari under Rule 65.

WHEREFORE, we DENY the petition for lack of merit. The Decision of the Court of
Appeals in CA-G.R. SP No. 57421 dated 9 May 2000 as well as the Resolution dated 5
September 2000 denying the motion for reconsideration is AFFIRMED.

SO ORDERED.

Footnotes

30 Section 10, Rule 87 states:

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 creditor
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.