1

THIRD DIVISION and disallowing the purported 1985 Will. Letters testamentary were
issued to Olivia Pascual.9 Cornejo attempted to appeal this decision
G.R. No. 127165 May 2, 2006 of the Probate Court, but his notice of appeal was denied due course
by the Probate Court, said notice "not having been accompanied by
SALONGA HERNANDEZ & ALLADO, Petitioner, any record on appeal as required under the Interim Rules and by Rule
vs. 109 of the Rules of Court."10
OLIVIA SENGCO PASCUAL and THE HONORABLE COURT OF
APPEALS, Respondents. On 27 July 1993, petitioner filed a Notice of Attorney's Lien equivalent
to three percent (3%) of the total gross estate of the late Doña Adela
DECISION S. Pascual as well as the fruits thereof based on the court approved
inventory of the estate, pursuant to the retainer agreement signed by
TINGA, J.:
and between petitioner and Olivia S. Pascual, on 25 August 1987. In
Petitioner, a professional law partnership, brings forth this Petition for an Order dated 4 November 1993, the Probate Court ruled that
Review assailing the Decision1 of the Court of Appeals dated 22 petitioner's "notice of attorney's lien, being fully supported by a
December 1995. The appellate court had affirmed two orders retainer's contract not repudiated nor questioned by his client Olivia
promulgated by the Malabon Regional Trial Court (RTC), Branch 72 S. Pascual, is hereby noted as a lien that must be satisfied chargeable
(Probate Court), in Sp. Proc. No. 136-MN, entitled "In the Matter of to the share of Olivia S. Pascual."11 This was followed by another
Testate Estate of Doña Adela Pascual, Dr. Olivia S. Pascual, Order, dated 11 November 1993, wherein it was directed "that notice
Executrix." be x x x given, requiring all persons having claims for money against
the decedent, Doña Adela S. Vda. de Pascual, arising from contracts,
The case actually centers on two estate proceedings, that of Doña express or implied, whether the same be due, not due, or contingent,
Adela Pascual (Doña Adela) and the other, her husband Don Andres for funeral expenses and expenses of the last sickness of the said
Pascual's (Don Andres), who predeceased her. Don Andres died decedent, and judgment for money against her, to file said claims with
intestate, while Doña Adela left behind a last will and testament. The the Clerk of Court at Malabon, Metro Manila, within six (6) months
dispute over the intestate estate of Don Andres has spawned at least from November 4, 1993."12
two cases already settled by this Court.2
Accordingly, on 22 November 1993, petitioner filed a Motion to
On 1 December 1973, an intestate proceeding for the settlement of Annotate Attorney's Lien on Properties of the Estate of Doña Adela
the estate of Don Andres was commenced by his widow Doña Adela Vda. de Pascual.13
before the then Court of First Instance, now Regional Trial Court of
Pasig, Branch 23 (Intestate Court), docketed as Sp. Proc. No. 7554. It was at this stage, on 19 January 1994, that the Intestate Court
Apart from his wife, who bore him no children, Don Andres was rendered a Decision in Sp. Proc. No. 7554, finally giving judicial
survived by several nephews and nieces from his full-blood and half- approval to the aforementioned 1985 Compromise Agreement, and
blood brothers.3 This proceeding proved to be the source of many partitioning the estate of Don Andres by adjudicating one-fourth (1/4)
controversies, owing to the attempts of siblings Olivia and Hermes thereof to the heirs of Don Andres and three-fourths (3/4) thereof to
Pascual, acknowledged natural children of Don Andres's brother, the estate of Doña Adela. The Intestate Court also awarded attorney's
Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths
Pascual procured the initial support of Doña Adela to their claims. (3/4) share of the estate of Doña Adela.14 Olivia Pascual filed a petition
However, on 16 October 1985, the other heirs of Don Andres entered for annulment of the award of attorney's fees with the Court of
into a Compromise Agreement over the objections of Olivia and Appeals, but the same was denied, first by the appellate court, then
Hermes Pascual, whereby three-fourths (3/4) of the estate would go finally by this Court in its 1998 decision in Pascual v. Court of
to Doña Adela and one-fourth (1/4) to the other heirs of Don Andres, Appeals.15
without prejudice to the final determination by the court or another
On 26 April 1994, petitioner filed a Motion for Writ of Execution for the
compromise agreement as regards the claims of Olivia and Hermes
partial execution of petitioner's attorney's lien estimated at
Pascual.4 Subsequently, the Intestate Court denied the claims of
P1,198,097.02. The figure, characterized as "tentative," was arrived
Olivia and Hermes Pascual. Said denial was eventually affirmed by
at based on a Motion to Submit Project Partition dated 26 October
this Court in 1992 in Pascual v. Pascual-Bautista,5 applying Article
1993 filed by Olivia Pascual, which alleged the gross appraised value
992 of the Civil Code.
of Doña Adela's estate at P39,936,567.19. This sum was in turn
In the meantime, Doña Adela died on 18 August 1987, leaving behind derived from the alleged value of the total estate of Don Andres, three-
a last will and testament executed in 1978, designating Olivia Pascual fourths (3/4) of which had been adjudicated to Doña Adela. At the
as the executrix, as well as the principal beneficiary of her estate. The same time, petitioner noted that the stated values must be considered
will also bequeathed several legacies and devises to several as only provisional, considering that they were based on a July 1988
individuals and institutions. appraisal report; thus, the claim for execution was, according to
petitioner, without prejudice to an updated appraisal of the properties
Olivia Pascual then engaged the services of petitioner in connection comprising the gross estate of Doña Adela.16
with the settlement of the estate of Doña Adela. Their agreement as
to the professional fees due to petitioner is contained in a letter dated On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed
25 August 1987, signed by Atty. Esteban Salonga in behalf of her comment and/or opposition to the motion for the issuance of a writ
petitioner and Olivia Pascual. It is stipulated therein, among others, of execution on attorney's fees. She argued that a lawyer of an
that the final professional fee "shall be 3% of the total gross estate as administrator or executor should charge the individual client, not the
well as the fruits thereof based on the court approved inventory of the estate, for professional fees. Olivia Pascual also claimed, citing
estate. Fruits shall be reckoned from the time of [Olivia Pascual's] jurisprudence17, that the counsel claiming attorney's fees should give
appointment as executrix of the estate. The 3% final fee shall be sufficient notice to all interested parties to the estate, and that such
payable upon approval by the court of the agreement for the was not accomplished by petitioner considering that no notices were
distribution of the properties to the court designated heirs of the given to the several legatees designated in Doña Adela's will.18 It was
estate."6 further argued that the motion for execution was premature,
considering that the proceedings before the Intestate Court had not
On 26 August 1987, private respondent, represented by petitioner, yet been terminated; that the computation of the figure of
commenced a petition for the probate of the last will and testament of P1,198,097.02 was erroneous; and that the enforcement of the writ of
Doña Adela before the Probate Court, docketed as Sp. Proc. No. 136- execution on the undivided estate of Don Andres would prejudice his
MN and raffled to Branch 72 presided by Judge Benjamin M. Aquino, other heirs entitled to one-fourth (1/4) thereof.
Jr. The petition was opposed by a certain Miguel Cornejo, Jr. and his
siblings, who in turn presented a purported will executed in 1985 by On 2 June 1994, the Probate Court issued the first assailed order
Doña Adela in their favor. 7 denying the motion for writ of execution in view of the fact that "the
bulk of the estate of the late Doña Adela S. Vda. De Pascual is still
After due trial, on 1 July 1993, the Probate Court rendered a Decision8 tied-up with the estate of the late Don Andres Pascual, the
allowing probate of the 1978 Last Will and Testament of Doña Adela proceedings over which and the final disposition thereof with respect
 2

to the partition and segregation of what is to form part of the estate of Petitioner sought to reconsider the Decision of the Court of Appeals,
the late Doña Adela S. Vda. De Pascual is pending with another court but in vain.26 Hence this petition.
sitting in Pasig, Metro Manila, and for having been prematurely
filed."19 Petitioner argues that as held in Occeña v. Marquez,27 the counsel
seeking to recover attorney's fees for legal services to the executor or
On 14 November 1994, Olivia Pascual, filed with the Probate Court a administrator is authorized to file a petition in the testate or intestate
Motion to Declare General Default and Distribution of Testamentary proceedings asking the court, after notice to all the heirs and
Dispositions with Cancellation of Administrator's Bond. It was noted interested parties, to direct the payment of his fees as expenses of
therein that no creditor had filed a claim against the estate of Doña administration.28 Lacson, it is alleged, was inappropriately cited, since
Adela despite due notice published pursuant to Section 1, Rule 86 of that case involved an executor who
the Rules of Court. The Probate Court was also informed of the fact
that the proceedings before the Intestate Court had already been concurrently was a lawyer who subsequently claimed attorney's fees
terminated by reason of the 14 January 1994 Decision rendered by as part of the expenses of administration. Petitioner also claims that
the latter court. It was also stated "that the corresponding estate taxes the decision of the probate court admitting Doña Adela's will to
had been paid as evidenced by the Estate Tax Return filed with the probate sufficiently satisfies the condition in the Retainer Agreement
Bureau of Internal Revenue, and of the Certificate of Authority issued that the final fee be payable "upon approval by the court of the
by the said agency."20 Interestingly, it was also manifested that two of agreement for the distribution of the properties to the court designated
the properties that formed part of the estates of the spouses, "the heirs of the estate," the court-approved will comprising the agreement
Ongpin Property" and "the Valenzuela Property," had in fact already referred to in the contract.
been partitioned between the estate of Doña Adela and the heirs of
Don Andres at the ratio of three-fourths (3/4) and one-fourth (1/4), Petitioner also takes exception to the Probate Court's finding that "the
respectively. bulk of the estate subject of this case, as far as this [c]ourt is
concerned, has not been turned over to the executrix or to the [c]ourt
In response, petitioner filed a Comment/Manifestation praying that an itself," on which the appellate court predicated its ruling that the
order be issued: motion for a writ of execution was premature. Petitioner submits that
the Probate Court ineluctably has jurisdiction over the estate of Doña
(1) ordering the annotation of the attorney's lien on the properties Adela, and has necessarily assumed control over the properties
comprising the estate of Doña Adela Pascual; belonging to the said estate. Thus, petitioner continues, there is no
longer need to await the turnover of the properties involved in the
(2) a writ of partial execution be issued for the satisfaction of the intestate estate of Don Andres which constitute part of the testate
attorney's lien of the undersigned counsel [herein petitioner] in relation estate of Doña Adela since the Probate Court and the Intestate Court
to the Ongpin and Valenzuela properties for the amount of have concurrent jurisdiction over these properties as they have not
P635,368.14,without prejudice to the issuance of a writ of execution yet been physically divided.
after the re-appraisal of the present market value of the estate and the
determination of the amount due to [petitioner] as attorney's fees; Petitioner refers to the averment made by Olivia Pascual before the
Probate Court that the proceedings before the Intestate Court had
(3) ordering the appointment of a reputable appraisal company to re- already been terminated, and that the proceeds of the sale of the
appraise the present market value of the estate of Doña Adela Ongpin Property and the Valenzuela Property had in fact been already
Pascual including the fruits thereof for the purpose of determining the divided based on the three-fourths (3/4) to one-fourth (1/4) ratio
value of the attorney's fees of [petitioner]; and between the estate of Doña Adela and the heirs of Don Andres.
Petitioner further points out that the Probate Court had authorized and
(4) after the re-appraisal of the estate of Doña Adela Pascual a writ of approved the sale of the Ongpin Property, yet refused to allow the
execution be issued for the full satisfaction and settlement of the partial execution of its claim for attorney's fees.
attorney's lien of [petitioner].21
Finally, petitioner asserts that the Probate Court erred in refusing to
On 17 March 1995, the Probate Court issued an order which denied grant the prayer seeking the re-appraisal of the property of Doña
petitioner's motion for a re-appraisal of the property and the issuance Adela's estate. Such re-appraisal, so it claims, is necessary in order
of a partial writ of execution "for being prematurely filed as there is no to determine the three percent (3%) share in the total gross estate
exact estate yet to be inventoried and re-appraised, assuming re- committed to petitioner by reason of the Retainer Agreement.
appraisal would be proper, because the bulk of the estate subject of
this case, as far as this court is concerned, has not yet been turned It appears that the thrust of the assailed Decision of the Court of
over to the executrix or to the court itself."22 Appeals is along these lines: that petitioner may directly claim
attorney's fees only against Olivia Pascual and not against the estate
Through a petition for certiorari and mandamus, petitioner assailed of Doña Adela; and that petitioner's claim is also premature since
the two orders of the Probate Court denying its motion for the contrary to the requisite stipulated in the Retainer Agreement, there is
immediate execution, partial or otherwise, of its claim for attorney's no court-approved agreement for the distribution of the properties of
fees: the 2 June 1994 Order and the 17 March 1995 Order. the estate of Doña Adela as yet.
Nonetheless, the twin orders of the RTC were affirmed by the Court
of Appeals, effectively precluding petitioner's attempt to execute on its As an initial premise, we consider whether a lawyer who renders legal
attorney's lien. The appellate court noted that the attorney's lien services to the executor or administrator of an estate can claim
issued by the Probate Court was chargeable only to the share of Olivia attorney's fees against the estate instead of the executor or
Pascual, and not to the estate of Doña Adela, since it was Olivia administrator. Petitioner correctly cites Occeña v. Marquez29 as
Pascual who entered into the agreement with petitioner for the providing the governing rule on that matter as previously settled in the
payment of attorney's fees in connection with the settlement of the 1905 case of Escueta v. Sy-Juilliong,30 to wit:
estate of Doña Adela. Citing Lacson v. Reyes,23 the Court of Appeals
asserted that as a rule an administrator or executor may be allowed The rule is that when a lawyer has rendered legal services to the
fees for the necessary expenses he has incurred but he may not executor or administrator to assist him in the execution of his trust, his
recover attorney's fees from the estate. attorney's fees may be allowed as expenses of administration. The
estate is, however, not directly liable for his fees, the liability for
The Court of Appeals likewise noted that in the retainer agreement payment resting primarily on the executor or administrator. If the
between petitioner and Olivia Pascual, it is stipulated that "the 3% final administrator had paid the fees, he would be entitled to
fee shall be payable upon approval by the court of the agreement for reimbursement from the estate. The procedure to be followed by
the distribution of the properties to the court designated heirs of the counsel in order to collect his fees is to request the administrator to
estate."24 On this score, the Court of Appeals ruled that as the petition make payment, and should the latter fail to pay, either to (a) file an
before it did not show "that an agreement on the distribution of action against him in his personal capacity, and not as administrator,
properties of the estate of Doña Adela S. Pascual has been submitted or (b) file a petition in the testate or intestate proceedings asking the
and approved by the probate court,"25 the filing of the motion for court, after notice to all the heirs and interested parties, to direct the
execution and that of the motion for re-appraisal of the market value payment of his fees as expenses of administration. Whichever course
of the estate were both premature. is adopted, the heirs and other persons interested in the estate will
 3

have the right to inquire into the value of the services of the lawyer November 1993, "as a lien that must be satisfied chargeable to the
and on the necessity of his employment.31 share of Olivia S. Pascual."

We reiterate that as a general rule, it is the executor or administrator It may be so that petitioner, in filing this Notice of Attorney's Lien,
who is primarily liable for attorney's fees due to the lawyer who initially intended to hold Olivia Pascual, and not Doña Adela's estate,
rendered legal services for the executor or administrator in relation to liable for the attorney's fees. It did identify itself as the lawyer of Olivia
the settlement of the estate. The executor or administrator may seek Pascual, and the Probate Court did note that the lien be satisfied
reimbursement from the estate for the sums paid in attorney's fees if chargeable to the share of the executor. Yet it must also be noted that
it can be shown that the services of the lawyer redounded to the such lien, as it is, is only contingent on the final settlement of the
benefit of the estate.32 However, if the executor or administrator estate of Doña Adela, at such time, since the Retainer Agreement on
refuses to pay the attorney's fees, the lawyer has two modes of which the lien is hinged provides that the final fee "be payable upon
recourse. First, the lawyer may file an action against the executor or approval by the court of the agreement for the distribution of the
administrator, but in his/her personal capacity and not as properties to the court designated heirs of the estate."39 This is also
administrator or executor. Second, the lawyer may file a petition in the made clear by the order noting the lien, which qualified that said lien
testate or intestate proceedings, asking the court to direct the was chargeable only to the share of Olivia Pascual, hence implying
payment of attorney's fees as an expense of administration. If the that at the very least, it may be claimed only after her share to Doña
second mode is resorted to, it is essential that notice to all the heirs Adela's estate is already determinate.
and interested parties be made so as to enable these persons to
inquire into the value of the services of the lawyer and on the necessity In rendering its assailed Decision, the Court of Appeals relied on this
of his employment. qualification made by the Probate Court that the lien for attorney's fees
was chargeable only to the share of Olivia Pascual. Yet the Notice of
Lacson v. Reyes,33 cited by the appellate court, involved an executor Attorney's Lien only seeks to serve notice of the pendency of the
who also happened to be the lawyer for the heirs who had filed the claim for attorney's fees, and not the payment of such fees itself.
petition for probate. For that reason, that case is not squarely in point On its own, the Notice of Attorney's Lien cannot serve as the
to the case at bar. It was pronounced therein that the administrator or basis for the Probate Court to authorize the payment to petitioner
executor of the estate cannot charge professional fees for legal of attorney's fees.
services against the same estate, as explicitly provided under Section
7, Rule 85 of the Rules of Court of 1985.34 No such rule exists barring On the other hand, Escueta and its kindred cases do explicitly
direct recovery of professional legal fees from the estate by the lawyer recognize the recourse for the lawyer to directly make the claim
who is not the executor or administrator of the said estate. The for attorney's fees against the estate, not the executor or
limitations on such direct recovery are nonetheless established by administrator. The filing of the Notice of Attorney's Lien and the
jurisprudence, as evinced by the rulings in Escueta and Occeña. qualificatory character of the rulings thereon, do not preclude
the resort to the mode of recovery against the estate as
The character of such claim for attorney's fees bears reiteration. As authorized by jurisprudence. Clearly then, we disagree with the
stated in Escueta, it partakes the nature of an administration expense. opinion of the Court of Appeals that attorney's fees can be
Administration expenses include attorney's fees incurred in claimed only against the share of Olivia Pascual.
connection with the administration of the estate.35 It is an expense
attending the accomplishment of the purpose of administration The instant case is rooted in an incomplete attempt to resort to the
growing out of the contract or obligation entered into by the personal second mode of recovery of attorney's fees as authorized in Escueta,
representative of the estate, and thus the claim for reimbursement originating as it did from the denial of petitioner's Motion for Writ of
must be superior to the rights of the beneficiaries.36 Execution, and not the Notice of Attorney's Lien. The Motion did
expressly seek the payment of attorney's fees to petitioner. Escueta
Notwithstanding, there may be instances wherein the estate should and Occeña, among other cases, did clearly lay down the manner
not be charged with attorney's fees. If the costs of counsel's fees arise under which such fees may be paid out even prior to the final
out of litigation among the beneficiaries thereof themselves or in the settlement of the estate as an administration expense directly
protection of the interests of particular persons, the estate generally chargeable to the estate itself. The critical question in the present
cannot be held liable for such costs, although when the administrator petition is thus whether this Motion for Writ of Execution satisfies the
employs competent counsel on questions which affect his/her duties requisites set in Escueta for a claim for attorney's fees directly
as the administrator and on which he/she is in reasonable doubt, chargeable against the estate. It does not.
reasonable expenses for such services may be charged against the
estate subject to the approval of the court.37 It has also been held that The fact that the prayer for attorney's fees was cast in a motion and
an administrator who brings on litigation for the deliberate purpose of not a petition should not impede such claim, considering that the
defrauding the legitimate heirs and for his own benefit is not entitled motion was nonetheless filed with the Probate Court. However, the
to reimbursement for counsel's fees incurred in such record bears that the requisite notice to all heirs and interested
litigation.381avvphil.net parties has not been satisfied. Doña Adela's will designated 19
other individuals apart from Olivia Pascual, and four (4) different
Clearly then, while the direct recovery of attorney's fees from the institutions as recipients of devises or legacies consisting of real
estate may be authorized if the executor refuses to pay such fees, and properties, jewelries, and cash amounts. Yet only Olivia Pascual was
claimed through the filing of the proper petition with the probate court, served with a copy of the Motion for Writ of Execution, the motion
such claim remains controvertible. This is precisely why Escueta and which effectively sought the immediate payment of petitioner's
its progenies require that the petition be made with notice to all the attorney's fees. As early as 29 April 1994, Olivia Pascual, in opposing
heirs and interested parties. the Motion for Writ of Execution, already pointed out that petitioner
had failed to give sufficient notice to all interested parties to the estate,
It is these perspectives that we apply to the case at bar. Notably, particularly the several devisees and legatees so named in Doña
petitioner had filed both a Notice of Attorney's Lien and a Motion for Adela's will.
Writ of Execution. These two pleadings have distinct character and
must be treated as such. Such notice is material to the other heirs to Doña Adela's estate. The
payment of attorney's fees, especially in the amount of 3% of the total
After Doña Adela's will had been admitted to probate, petitioner had gross estate as sought for by petitioner, substantially diminishes the
initially filed a Notice of Attorney's Lien wherein it identified itself as estate of Doña Adela and may consequently cause the diminution of
"the attorney for the executrix named in the said will, Dra. Olivia S. their devises and legacies. Since these persons were so named in the
Pascual", and sought to file its "claim and/or lien for attorney's fees very will itself and the action for probate which was filed by petitioner
equivalent to Three Percent (3%) of the total gross estate," pursuant itself, there is no reason why petitioner could not have given due
to the 1987 Retainer Agreement. Copies of this Notice of Attorney's notice to these persons on its claim for attorney's fees.
Lien were furnished Attys. Fortunato Viray, Jr. and Crisanto Cornejo,
who appear on record to have served as counsels for the various The requisite notice to the heirs, devisees, and legatees is anchored
oppositors to the probate of the 1978 will of Doña Adela. This Notice on the constitutional principle that no person shall be deprived of
of Attorney's Lien was noted by the Probate Court in its Order of 4 property without due process of law.40 The fact that these persons
 4

were designated in the will as recipients of the testamentary the probate petition, and that at such time, she had no recognized
dispositions from the decedent establishes their rights to the right to represent the estate of Doña Adela yet. This
succession, which are transmitted to them from the moment of the
death of the decedent.41 The payment of such attorney's fees circumstance further bolsters our opinion that if petitioner insists on
necessarily diminishes the estate of the decedent, and may effectively the judicial enforcement of the Retainer Agreement, its proper
diminish the value of the testamentary dispositions made by the remedy, authorized by law and jurisprudence, would be a personal
decedent. These heirs, devisees, and legatees acquire proprietary action against Olivia Pascual, and not against the estate of Doña
rights by reason of the will upon the moment of the death of the Adela. If this were the recourse pursued by petitioner, and Olivia
decedent, incipient or inchoate as such rights may be. Hence, notice Pascual is ultimately held liable under the Retainer Agreement for
to these interested persons of the claims for attorney's fees is integral, attorney's fees, she may nonetheless seek reimbursement from the
so as to allow them to pose any objections or oppositions to such estate of Doña Adela if she were able to establish that the attorney's
claim which, after all, could lead to the reduction of their benefits from fees paid to petitioner were necessary administration expenses.
the estate.
The second or alternative recourse is the direct claim for attorney's
The failure to notify the other heirs, devisees or legatees, to the estate fees against the estate, as authorized under Escueta. The character
of Doña Adela likewise deprives these interested persons of the right of this claim is not contractual in nature, but rather, as a
to be heard in a hearing geared towards determining whether reimbursement for a necessary expense of administration, and it
petitioner was entitled to the immediate payment of attorney's fees. will be allowed if it satisfies the criteria for necessary expenses
Notably, petitioner, in filing its Motion for Writ of Execution, had initially of administration. Its entitlement can be established by the actual
set the hearing on the motion on 29 April 1994, but one day prior to services rendered by the lawyer necessary to the accomplishment of
the scheduled hearing, gave notice instead that the motion was being the purposes of administration, and not necessarily by the contract of
submitted for the consideration of the Probate Court without further engagement of the attorney's services.
argument.42 Evidently, petitioner did not intend a full-blown hearing to
ensue on whether it was entitled to the payment of attorney's fees. Yet By filing their claim directly against the estate of Doña Adela, petitioner
the claim for attorney's fees is hardly incontrovertible. has clearly resorted to this second cause of action. There are
consequent advantages and disadvantages to petitioner. Since the
That the Retainer Agreement set the attorney's fees at three percent claim arises irrespective of the contingencies as stipulated in the
(3%) of the gross estate does not imply that the basis for attorney's Retainer Agreement, the attorney's fees may be collected against the
fees is beyond controversy. Attorney's fees in this case are in the estate even before the final determination of its gross total value or
nature of administration expenses, or necessary expenses in the first the final approval of the project of partition. As earlier stated, such
place. Any party interested in the estate may very well, in theory, posit claim for reimbursement is superior to the right of the beneficiaries to
a myriad of objections to the attorney's fees sought, such as for the estate, and as such, there is need to finally determine the
example, that these fees were not necessary expenses in the care, respective shares of the beneficiaries before attorney's fees in the
management, and settlement of the estate. Whether or not such basis nature of administration expenses may be paid out.
for valid objections exists in this case is not evident, but the fact
remains that all the parties interested in the estate, namely the other The one distinct disadvantage, however, is that the Retainer
devisees and legatees, were deprived of the opportunity to raise such Agreement cannot be deemed binding on the estate or the Probate
objections as they were not served notice of the Motion for Writ of Court since the estate is not a party to such contract. This would not
Execution. preclude the Probate Court from enforcing the provisions of the
Retainer Agreement if, in its sound discretion, the terms of payment
The instant claim for attorney's fees is thus precluded by the absence therein are commensurate to the value of the actual services
of the requisite notices by petitioner to all the interested persons such necessary to the administration of the estate actually rendered by
as the designated heirs, devisees, legatees, as required by the petitioner. Yet if the Probate Court does choose to adopt the Retainer
jurisprudential rule laid down in Escueta. However, the Court of Agreement as binding on the estate of Doña Adela, petitioner may
Appeals held that it was the prematurity of the claim for attorney's fees again be precluded from immediate recovery of attorney's fees in view
that served as the fatal impediment. On this point, the Court does not of the necessity or precondition of ascertaining the gross total value
agree. of the estate, as well as the judicial approval of the final agreement of
partition.
Again, the remaining peripheral questions warrant clarification.
In any event, whether the claim for attorney's fees was pursued
Escueta itself provides for two alternative approaches through which through a separate suit against Olivia Pascual (in her personal
counsel may proceed with his claim for attorney's fees. The first capacity) for the enforcement of the Retainer Agreement, or against
involves a separate suit against the executor or administrator in the the estate of Doña Adela as reimbursement for necessary
latter's personal capacity. The second approach is a direct claim administration expenses, it remains essential that a hearing be
against the estate itself, with due notice to all interested persons, filed conducted on the claim. In either case too, the hearing will focus on
with the probate court. the value of the services of the petitioner and the necessity of
engaging petitioner as counsel.
In the same vein, the existence of the Retainer Agreement between
petitioner and Olivia Pascual allows petitioner two possible causes of We reiterate that the direct claim against the estate for attorney's fees
action on which to claim attorney's fees in connection with the must be made with due notice to the heirs, devisees, and legatees.
administration of the estate of Doña Adela. The first possible cause of The failure of petitioner to give such notice renders its present claim
action pivots on the Retainer Agreement, which establishes an inefficacious for now. Indeed, there is sufficient cause to dismiss
obligation on the part of Olivia Pascual to pay the final fee of 3% of outright petitioner's Motion for Writ of Immediate Execution filed with
the gross total estate of Doña Adela, payable upon approval by the the Probate Court, for its failure to notify therein the other persons
Probate Court of the agreement for the distribution of the properties interested in the estate of Doña Adela. Nonetheless, to authorize said
to the court- designated heirs of the estate. Necessarily, since the outright denial at this stage could unduly delay the settlement of the
recovery of attorney's fees is premised on the Retainer Agreement estate of Doña Adela, considering the likelihood that petitioner would
any award thereupon has to await the final ascertainment of value of again pursue such claim for attorney's fees as the right to which is
the gross total estate of Doña Adela, as well as the approval by the affirmed by law and jurisprudence.
Probate Court of the agreement for the distribution of the properties.
The Retainer Agreement makes it clear that the final payment of Hence, in order not to unduly protract further the settlement of the
attorney's fees is contingent on these two conditions,43 and the claim estate of Doña Adela, the Court deems it proper instead to mandate
for attorney's fees based on the Retainer Agreement cannot ripen until the Probate Court to treat the Motion for Writ of Immediate Execution
these conditions are met. as a petition seeking a court order to direct the payment of attorney's
fees as expenses of administration, but subject to the condition that
Moreover, it cannot be escaped that the Retainer Agreement was petitioner give due notice to the other designated devisees and
entered into between petitioner and Olivia Pascual prior to the filing of legatees so designated in the will of the claim prior to the requisite
hearing thereon. Petitioner may as well seize such opportunity to
 5

formally amend or reconfigure its motion to a petition to direct payment

of attorney's fees. Once this step is accomplished, there should be no
impediment to petitioner's claim for recovery of attorney's fees as
reimbursement for necessary administration expenses, within the
terms established by law, jurisprudence, and this decision.

One final note. Petitioner's final prayer before this court is that it be
issued a partial writ of execution, consistent with its position before
the Probate Court that it is already entitled to at least a partial payment
of its attorney's fees. This prayer cannot obviously be granted at this
stage by the Court, considering the fatal absence of due notice to the
other designated beneficiaries to the estate of Doña Adela. Still, we
do not doubt that the Probate Court, within its discretion, is
capacitated to render the award of attorney's fees as administration
expenses either partially or provisionally, depending on the particular
circumstances and its ultimate basis for the determination of the
appropriate attorney's fees.

WHEREFORE, the petition is GRANTED IN PART. The Decision of

the Court of Appeals dated 22 December 1995 and the Orders of the
Regional Trial Court of Malabon, Branch 72, dated 2 June 1994 and
17 March 1995 are hereby SET ASIDE insofar as said orders denied
petitioner's Motion for Writ of Immediate Execution dated 26 April
1994. Petitioner is hereby directed to set for hearing its claim for
attorneys fees, giving due notice thereof to all the heirs, devisees, and
legatees designated in the 1978 Last Will and Testament executed by
Doña Adela Pascual. The Regional Trial Court is directed to treat
petitioner's aforesaid motion as a PETITION for the payment of
attorney's fees as expenses of administration, and after due hearing
resolve the same with DISPATCH, conformably with this decision. No
pronouncement as to costs.

SO ORDERED.
 6

SECOND DIVISION The Court’s Rulings

G.R. No. 172879 February 2, 2011 One. Atty. Bermudo points out that Roxas’ remedy for contesting the
RTC order of execution against her should be an ordinary appeal to
ATTY. RICARDO B. BERMUDO, Petitioner, the CA. He invokes Section 1, Rule 109 of the Revised Rules of Court
vs. which enumerates the orders or judgments in special proceedings
FERMINA TAYAG-ROXAS, Respondent. from which parties may appeal. One of these is an order or judgment
which settles the account of an executor or administrator.1 The
x - - - - - - - - - - - - - - - - - - - - - - -x rationale behind this multi-appeal mode is to enable the rest of the
case to proceed in the event that a separate and distinct issue is
G.R. No. 173364
resolved by the court and held to be final.2
FERMINA TAYAG-ROXAS, Petitioner,
But the earlier award in Atty. Bermudo’s favor did not settle his
vs.
account as administrator. Rather, it fixed his attorney’s fees for the
HON. COURT OF APPEALS and ATTY. RICARDO BERMUDO,
legal services he rendered in the suit contesting Roxas’ right as sole
Respondents.
heir. Consequently, Section 1 (d) of Rule 109 does not apply.
DECISION
Actually, the CA decided with finality the award of attorney’s fees in
ABAD, J.: Atty. Bermudo’s favor in CA-G.R. CV 53143 when it fixed such fees
at 20% of the value of the estate’s lands. On remand of the case to
These cases pertain to the right of an administrator, who happened to the RTC, Atty. Bermudo filed a motion for execution of the award in
be a lawyer, to collect attorney’s fees from the sole heir for his favor which could be carried out only after the RTC shall have
successfully representing the latter in the suit contesting her right to determined what represented 20% of the value of the estate’s lands.
inherit. The fixing of such value at ₱12,644,300.00 was not appealable since
it did not constitute a new judgment but an implementation of a final
The Facts and the Case one. Indeed, an order of execution is not appealable.3 Consequently,
Roxas’ remedy in contesting the RTC’s exercise of discretion in
On October 19, 1979 Atty. Ricardo Bermudo (Atty. Bermudo), as ascertaining what constitutes 20% of the value of the estate’s lands is
executor, filed a petition for his appointment as administrator of the a special civil action of certiorari.
estate of Artemio Hilario (Hilario) and for the allowance and probate
of the latter’s will before the Regional Trial Court (RTC) of Angeles Two. Roxas asserts that Atty. Bermudo is not entitled to attorney’s
City. The testator instituted Fermina Tayag-Roxas (Roxas) as his only fees but only to compensation as administrator in accordance with
heir but several persons, who claimed to be Hilario’s relatives, Section 7, Rule 85 of the Rules of Court.
opposed the petition. On October 28, 1987 the RTC rendered a
decision, allowing the will and recognizing Roxas as Hilario’s sole heir. But Atty. Bermudo did not only serve as administrator of the estate.
On appeal, the Court of Appeals (CA) affirmed the RTC decision. This He also served as Roxas’ counsel in the suit that assailed her right as
Court sustained the CA decision on December 7, 1992. sole heir. Atty. Bermudo brought the contest all the way up to this
Court to defend her rights to her uncle’s estate. And Atty. Bermudo
When the decision constituting Roxas as the sole heir became final, succeeded. Acting as counsel in that suit for Roxas was not part of his
Atty. Bermudo who also served as counsel for her in the actions duties as administrator of the estate. Consequently, it was but just that
concerning her inheritance filed a motion to fix his legal fees and to he is paid his attorney’s fees.
constitute a charging lien against the estate for the legal services he
rendered. On August 16, 1995 the RTC granted him fees equivalent Besides, Atty. Bermudo’s right to attorney’s fees had been settled with
to 20% of the estate and constituted the same as lien on the estate’s finality in CA-G.R. CV 53143.1avvphil This Court can no longer
property. Roxas appealed the order to the CA in CA-G.R. CV 53143. entertain Roxas’ lament that he is not entitled to those fees.

On July 27, 2000 the CA rendered a decision that modified the RTC Three. Atty. Bermudo assails the CA’s reduction of his attorney’s fees
Order, limiting Atty. Bermudo’s compensation as administrator to what from ₱12,644,300.00 to ₱4,234,770.00. In fixing the higher amount,
Section 7, Rule 85 of the Rules of Court provides and making his the RTC relied on the advice of an amicus curiae regarding the value
lawyer’s fees 20% of the value of the land belonging to the estate. of the lands belonging to the estate. But the CA found such procedure
Atty. Bermudo subsequently filed a motion with the RTC for execution unwarranted, set aside the RTC’s valuation, and used the values
and appraisal of the estate on which his 20% compensation would be established by the Angeles City Assessor for computing the lawyer’s
based. On October 1, 2004 the RTC granted the motion and ordered fees of Atty. Bermudo. The Court finds no compelling reason to
Roxas to pay Atty. Bermudo ₱12,644,300.00 as attorney’s fees with deviate from the CA’s ruling. Given their wide experience and the
interest at the rate of 6% per annum. Roxas challenged the order official nature of their work, the city assessors’ opinions deserve great
before the CA through a petition for certiorari. weight and reliability.4 Thus, the Court must sustain the CA’s
computation based on the market values reflected on the schedule
On December 19, 2005, using a different valuation of the land of the proposed by the Angeles City Assessor.
estate, the CA ordered Roxas to pay Atty. Bermudo a reduced amount
of ₱4,234,770.00 as attorney's fees with interest at 6% per annum. WHEREFORE, the Court AFFIRMS the decision of the Court of
Atty. Bermudo’s motion for reconsideration having been denied, he Appeals in CA-G.R. SP 87411 dated December 19, 2005.
filed a petition for review before this Court in G.R. 172879. Roxas also
filed a motion for partial reconsideration of the CA decision and when SO ORDERED.
this was denied, she filed a petition for certiorari with this Court in G.R.
173364.

The Issues Presented

The issues presented in these cases are:

1. Whether or not the CA erred in not dismissing Roxas’ special civil

action of certiorari when her remedy should have been an appeal from
the settlement of his account as administrator;

2. Whether or not the CA erred in holding that Atty. Bermudo, as

administrator, is entitled to collect attorney’s fees; and

3. Whether or not the CA erred in reducing Atty. Bermudo’s attorney’s

fees from ₱12,644,300.00 to ₱4,234,770.00.
 7

THIRD DIVISION and disallowing the purported 1985 Will. Letters testamentary were
issued to Olivia Pascual.9 Cornejo attempted to appeal this decision
G.R. No. 127165 May 2, 2006 of the Probate Court, but his notice of appeal was denied due course
by the Probate Court, said notice "not having been accompanied by
SALONGA HERNANDEZ & ALLADO, Petitioner, any record on appeal as required under the Interim Rules and by Rule
vs. 109 of the Rules of Court."10
OLIVIA SENGCO PASCUAL and THE HONORABLE COURT OF
APPEALS, Respondents. On 27 July 1993, petitioner filed a Notice of Attorney's Lien equivalent
to three percent (3%) of the total gross estate of the late Doña Adela
DECISION S. Pascual as well as the fruits thereof based on the court approved
inventory of the estate, pursuant to the retainer agreement signed by
TINGA, J.:
and between petitioner and Olivia S. Pascual, on 25 August 1987. In
Petitioner, a professional law partnership, brings forth this Petition for an Order dated 4 November 1993, the Probate Court ruled that
Review assailing the Decision1 of the Court of Appeals dated 22 petitioner's "notice of attorney's lien, being fully supported by a
December 1995. The appellate court had affirmed two orders retainer's contract not repudiated nor questioned by his client Olivia
promulgated by the Malabon Regional Trial Court (RTC), Branch 72 S. Pascual, is hereby noted as a lien that must be satisfied chargeable
(Probate Court), in Sp. Proc. No. 136-MN, entitled "In the Matter of to the share of Olivia S. Pascual."11 This was followed by another
Testate Estate of Doña Adela Pascual, Dr. Olivia S. Pascual, Order, dated 11 November 1993, wherein it was directed "that notice
Executrix." be x x x given, requiring all persons having claims for money against
the decedent, Doña Adela S. Vda. de Pascual, arising from contracts,
The case actually centers on two estate proceedings, that of Doña express or implied, whether the same be due, not due, or contingent,
Adela Pascual (Doña Adela) and the other, her husband Don Andres for funeral expenses and expenses of the last sickness of the said
Pascual's (Don Andres), who predeceased her. Don Andres died decedent, and judgment for money against her, to file said claims with
intestate, while Doña Adela left behind a last will and testament. The the Clerk of Court at Malabon, Metro Manila, within six (6) months
dispute over the intestate estate of Don Andres has spawned at least from November 4, 1993."12
two cases already settled by this Court.2
Accordingly, on 22 November 1993, petitioner filed a Motion to
On 1 December 1973, an intestate proceeding for the settlement of Annotate Attorney's Lien on Properties of the Estate of Doña Adela
the estate of Don Andres was commenced by his widow Doña Adela Vda. de Pascual.13
before the then Court of First Instance, now Regional Trial Court of
Pasig, Branch 23 (Intestate Court), docketed as Sp. Proc. No. 7554. It was at this stage, on 19 January 1994, that the Intestate Court
Apart from his wife, who bore him no children, Don Andres was rendered a Decision in Sp. Proc. No. 7554, finally giving judicial
survived by several nephews and nieces from his full-blood and half- approval to the aforementioned 1985 Compromise Agreement, and
blood brothers.3 This proceeding proved to be the source of many partitioning the estate of Don Andres by adjudicating one-fourth (1/4)
controversies, owing to the attempts of siblings Olivia and Hermes thereof to the heirs of Don Andres and three-fourths (3/4) thereof to
Pascual, acknowledged natural children of Don Andres's brother, the estate of Doña Adela. The Intestate Court also awarded attorney's
Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths
Pascual procured the initial support of Doña Adela to their claims. (3/4) share of the estate of Doña Adela.14 Olivia Pascual filed a petition
However, on 16 October 1985, the other heirs of Don Andres entered for annulment of the award of attorney's fees with the Court of
into a Compromise Agreement over the objections of Olivia and Appeals, but the same was denied, first by the appellate court, then
Hermes Pascual, whereby three-fourths (3/4) of the estate would go finally by this Court in its 1998 decision in Pascual v. Court of
to Doña Adela and one-fourth (1/4) to the other heirs of Don Andres, Appeals.15
without prejudice to the final determination by the court or another
On 26 April 1994, petitioner filed a Motion for Writ of Execution for the
compromise agreement as regards the claims of Olivia and Hermes
partial execution of petitioner's attorney's lien estimated at
Pascual.4 Subsequently, the Intestate Court denied the claims of
P1,198,097.02. The figure, characterized as "tentative," was arrived
Olivia and Hermes Pascual. Said denial was eventually affirmed by
at based on a Motion to Submit Project Partition dated 26 October
this Court in 1992 in Pascual v. Pascual-Bautista,5 applying Article
1993 filed by Olivia Pascual, which alleged the gross appraised value
992 of the Civil Code.
of Doña Adela's estate at P39,936,567.19. This sum was in turn
In the meantime, Doña Adela died on 18 August 1987, leaving behind derived from the alleged value of the total estate of Don Andres, three-
a last will and testament executed in 1978, designating Olivia Pascual fourths (3/4) of which had been adjudicated to Doña Adela. At the
as the executrix, as well as the principal beneficiary of her estate. The same time, petitioner noted that the stated values must be considered
will also bequeathed several legacies and devises to several as only provisional, considering that they were based on a July 1988
individuals and institutions. appraisal report; thus, the claim for execution was, according to
petitioner, without prejudice to an updated appraisal of the properties
Olivia Pascual then engaged the services of petitioner in connection comprising the gross estate of Doña Adela.16
with the settlement of the estate of Doña Adela. Their agreement as
to the professional fees due to petitioner is contained in a letter dated On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed
25 August 1987, signed by Atty. Esteban Salonga in behalf of her comment and/or opposition to the motion for the issuance of a writ
petitioner and Olivia Pascual. It is stipulated therein, among others, of execution on attorney's fees. She argued that a lawyer of an
that the final professional fee "shall be 3% of the total gross estate as administrator or executor should charge the individual client, not the
well as the fruits thereof based on the court approved inventory of the estate, for professional fees. Olivia Pascual also claimed, citing
estate. Fruits shall be reckoned from the time of [Olivia Pascual's] jurisprudence17, that the counsel claiming attorney's fees should give
appointment as executrix of the estate. The 3% final fee shall be sufficient notice to all interested parties to the estate, and that such
payable upon approval by the court of the agreement for the was not accomplished by petitioner considering that no notices were
distribution of the properties to the court designated heirs of the given to the several legatees designated in Doña Adela's will.18 It was
estate."6 further argued that the motion for execution was premature,
considering that the proceedings before the Intestate Court had not
On 26 August 1987, private respondent, represented by petitioner, yet been terminated; that the computation of the figure of
commenced a petition for the probate of the last will and testament of P1,198,097.02 was erroneous; and that the enforcement of the writ of
Doña Adela before the Probate Court, docketed as Sp. Proc. No. 136- execution on the undivided estate of Don Andres would prejudice his
MN and raffled to Branch 72 presided by Judge Benjamin M. Aquino, other heirs entitled to one-fourth (1/4) thereof.
Jr. The petition was opposed by a certain Miguel Cornejo, Jr. and his
siblings, who in turn presented a purported will executed in 1985 by On 2 June 1994, the Probate Court issued the first assailed order
Doña Adela in their favor. 7 denying the motion for writ of execution in view of the fact that "the
bulk of the estate of the late Doña Adela S. Vda. De Pascual is still
After due trial, on 1 July 1993, the Probate Court rendered a Decision8 tied-up with the estate of the late Don Andres Pascual, the
allowing probate of the 1978 Last Will and Testament of Doña Adela proceedings over which and the final disposition thereof with respect
 8

to the partition and segregation of what is to form part of the estate of Petitioner sought to reconsider the Decision of the Court of Appeals,
the late Doña Adela S. Vda. De Pascual is pending with another court but in vain.26 Hence this petition.
sitting in Pasig, Metro Manila, and for having been prematurely
filed."19 Petitioner argues that as held in Occeña v. Marquez,27 the counsel
seeking to recover attorney's fees for legal services to the executor or
On 14 November 1994, Olivia Pascual, filed with the Probate Court a administrator is authorized to file a petition in the testate or intestate
Motion to Declare General Default and Distribution of Testamentary proceedings asking the court, after notice to all the heirs and
Dispositions with Cancellation of Administrator's Bond. It was noted interested parties, to direct the payment of his fees as expenses of
therein that no creditor had filed a claim against the estate of Doña administration.28 Lacson, it is alleged, was inappropriately cited, since
Adela despite due notice published pursuant to Section 1, Rule 86 of that case involved an executor who
the Rules of Court. The Probate Court was also informed of the fact
that the proceedings before the Intestate Court had already been concurrently was a lawyer who subsequently claimed attorney's fees
terminated by reason of the 14 January 1994 Decision rendered by as part of the expenses of administration. Petitioner also claims that
the latter court. It was also stated "that the corresponding estate taxes the decision of the probate court admitting Doña Adela's will to
had been paid as evidenced by the Estate Tax Return filed with the probate sufficiently satisfies the condition in the Retainer Agreement
Bureau of Internal Revenue, and of the Certificate of Authority issued that the final fee be payable "upon approval by the court of the
by the said agency."20 Interestingly, it was also manifested that two of agreement for the distribution of the properties to the court designated
the properties that formed part of the estates of the spouses, "the heirs of the estate," the court-approved will comprising the agreement
Ongpin Property" and "the Valenzuela Property," had in fact already referred to in the contract.
been partitioned between the estate of Doña Adela and the heirs of
Don Andres at the ratio of three-fourths (3/4) and one-fourth (1/4), Petitioner also takes exception to the Probate Court's finding that "the
respectively. bulk of the estate subject of this case, as far as this [c]ourt is
concerned, has not been turned over to the executrix or to the [c]ourt
In response, petitioner filed a Comment/Manifestation praying that an itself," on which the appellate court predicated its ruling that the
order be issued: motion for a writ of execution was premature. Petitioner submits that
the Probate Court ineluctably has jurisdiction over the estate of Doña
(1) ordering the annotation of the attorney's lien on the properties Adela, and has necessarily assumed control over the properties
comprising the estate of Doña Adela Pascual; belonging to the said estate. Thus, petitioner continues, there is no
longer need to await the turnover of the properties involved in the
(2) a writ of partial execution be issued for the satisfaction of the intestate estate of Don Andres which constitute part of the testate
attorney's lien of the undersigned counsel [herein petitioner] in relation estate of Doña Adela since the Probate Court and the Intestate Court
to the Ongpin and Valenzuela properties for the amount of have concurrent jurisdiction over these properties as they have not
P635,368.14,without prejudice to the issuance of a writ of execution yet been physically divided.
after the re-appraisal of the present market value of the estate and the
determination of the amount due to [petitioner] as attorney's fees; Petitioner refers to the averment made by Olivia Pascual before the
Probate Court that the proceedings before the Intestate Court had
(3) ordering the appointment of a reputable appraisal company to re- already been terminated, and that the proceeds of the sale of the
appraise the present market value of the estate of Doña Adela Ongpin Property and the Valenzuela Property had in fact been already
Pascual including the fruits thereof for the purpose of determining the divided based on the three-fourths (3/4) to one-fourth (1/4) ratio
value of the attorney's fees of [petitioner]; and between the estate of Doña Adela and the heirs of Don Andres.
Petitioner further points out that the Probate Court had authorized and
(4) after the re-appraisal of the estate of Doña Adela Pascual a writ of approved the sale of the Ongpin Property, yet refused to allow the
execution be issued for the full satisfaction and settlement of the partial execution of its claim for attorney's fees.
attorney's lien of [petitioner].21
Finally, petitioner asserts that the Probate Court erred in refusing to
On 17 March 1995, the Probate Court issued an order which denied grant the prayer seeking the re-appraisal of the property of Doña
petitioner's motion for a re-appraisal of the property and the issuance Adela's estate. Such re-appraisal, so it claims, is necessary in order
of a partial writ of execution "for being prematurely filed as there is no to determine the three percent (3%) share in the total gross estate
exact estate yet to be inventoried and re-appraised, assuming re- committed to petitioner by reason of the Retainer Agreement.
appraisal would be proper, because the bulk of the estate subject of
this case, as far as this court is concerned, has not yet been turned It appears that the thrust of the assailed Decision of the Court of
over to the executrix or to the court itself."22 Appeals is along these lines: that petitioner may directly claim
attorney's fees only against Olivia Pascual and not against the estate
Through a petition for certiorari and mandamus, petitioner assailed of Doña Adela; and that petitioner's claim is also premature since
the two orders of the Probate Court denying its motion for the contrary to the requisite stipulated in the Retainer Agreement, there is
immediate execution, partial or otherwise, of its claim for attorney's no court-approved agreement for the distribution of the properties of
fees: the 2 June 1994 Order and the 17 March 1995 Order. the estate of Doña Adela as yet.
Nonetheless, the twin orders of the RTC were affirmed by the Court
of Appeals, effectively precluding petitioner's attempt to execute on its As an initial premise, we consider whether a lawyer who renders legal
attorney's lien. The appellate court noted that the attorney's lien services to the executor or administrator of an estate can claim
issued by the Probate Court was chargeable only to the share of Olivia attorney's fees against the estate instead of the executor or
Pascual, and not to the estate of Doña Adela, since it was Olivia administrator. Petitioner correctly cites Occeña v. Marquez29 as
Pascual who entered into the agreement with petitioner for the providing the governing rule on that matter as previously settled in the
payment of attorney's fees in connection with the settlement of the 1905 case of Escueta v. Sy-Juilliong,30 to wit:
estate of Doña Adela. Citing Lacson v. Reyes,23 the Court of Appeals
asserted that as a rule an administrator or executor may be allowed The rule is that when a lawyer has rendered legal services to the
fees for the necessary expenses he has incurred but he may not executor or administrator to assist him in the execution of his trust, his
recover attorney's fees from the estate. attorney's fees may be allowed as expenses of administration. The
estate is, however, not directly liable for his fees, the liability for
The Court of Appeals likewise noted that in the retainer agreement payment resting primarily on the executor or administrator. If the
between petitioner and Olivia Pascual, it is stipulated that "the 3% final administrator had paid the fees, he would be entitled to
fee shall be payable upon approval by the court of the agreement for reimbursement from the estate. The procedure to be followed by
the distribution of the properties to the court designated heirs of the counsel in order to collect his fees is to request the administrator to
estate."24 On this score, the Court of Appeals ruled that as the petition make payment, and should the latter fail to pay, either to (a) file an
before it did not show "that an agreement on the distribution of action against him in his personal capacity, and not as administrator,
properties of the estate of Doña Adela S. Pascual has been submitted or (b) file a petition in the testate or intestate proceedings asking the
and approved by the probate court,"25 the filing of the motion for court, after notice to all the heirs and interested parties, to direct the
execution and that of the motion for re-appraisal of the market value payment of his fees as expenses of administration. Whichever course
of the estate were both premature. is adopted, the heirs and other persons interested in the estate will
 9

have the right to inquire into the value of the services of the lawyer November 1993, "as a lien that must be satisfied chargeable to the
and on the necessity of his employment.31 share of Olivia S. Pascual."

We reiterate that as a general rule, it is the executor or administrator It may be so that petitioner, in filing this Notice of Attorney's Lien,
who is primarily liable for attorney's fees due to the lawyer who initially intended to hold Olivia Pascual, and not Doña Adela's estate,
rendered legal services for the executor or administrator in relation to liable for the attorney's fees. It did identify itself as the lawyer of Olivia
the settlement of the estate. The executor or administrator may seek Pascual, and the Probate Court did note that the lien be satisfied
reimbursement from the estate for the sums paid in attorney's fees if chargeable to the share of the executor. Yet it must also be noted that
it can be shown that the services of the lawyer redounded to the such lien, as it is, is only contingent on the final settlement of the
benefit of the estate.32 However, if the executor or administrator estate of Doña Adela, at such time, since the Retainer Agreement on
refuses to pay the attorney's fees, the lawyer has two modes of which the lien is hinged provides that the final fee "be payable upon
recourse. First, the lawyer may file an action against the executor or approval by the court of the agreement for the distribution of the
administrator, but in his/her personal capacity and not as properties to the court designated heirs of the estate."39 This is also
administrator or executor. Second, the lawyer may file a petition in the made clear by the order noting the lien, which qualified that said lien
testate or intestate proceedings, asking the court to direct the was chargeable only to the share of Olivia Pascual, hence implying
payment of attorney's fees as an expense of administration. If the that at the very least, it may be claimed only after her share to Doña
second mode is resorted to, it is essential that notice to all the heirs Adela's estate is already determinate.
and interested parties be made so as to enable these persons to
inquire into the value of the services of the lawyer and on the necessity In rendering its assailed Decision, the Court of Appeals relied on this
of his employment. qualification made by the Probate Court that the lien for attorney's fees
was chargeable only to the share of Olivia Pascual. Yet the Notice of
Lacson v. Reyes,33 cited by the appellate court, involved an executor Attorney's Lien only seeks to serve notice of the pendency of the
who also happened to be the lawyer for the heirs who had filed the claim for attorney's fees, and not the payment of such fees itself.
petition for probate. For that reason, that case is not squarely in point On its own, the Notice of Attorney's Lien cannot serve as the
to the case at bar. It was pronounced therein that the administrator or basis for the Probate Court to authorize the payment to petitioner
executor of the estate cannot charge professional fees for legal of attorney's fees.
services against the same estate, as explicitly provided under Section
7, Rule 85 of the Rules of Court of 1985.34 No such rule exists barring On the other hand, Escueta and its kindred cases do explicitly
direct recovery of professional legal fees from the estate by the lawyer recognize the recourse for the lawyer to directly make the claim
who is not the executor or administrator of the said estate. The for attorney's fees against the estate, not the executor or
limitations on such direct recovery are nonetheless established by administrator. The filing of the Notice of Attorney's Lien and the
jurisprudence, as evinced by the rulings in Escueta and Occeña. qualificatory character of the rulings thereon, do not preclude
the resort to the mode of recovery against the estate as
The character of such claim for attorney's fees bears reiteration. As authorized by jurisprudence. Clearly then, we disagree with the
stated in Escueta, it partakes the nature of an administration expense. opinion of the Court of Appeals that attorney's fees can be
Administration expenses include attorney's fees incurred in claimed only against the share of Olivia Pascual.
connection with the administration of the estate.35 It is an expense
attending the accomplishment of the purpose of administration The instant case is rooted in an incomplete attempt to resort to the
growing out of the contract or obligation entered into by the personal second mode of recovery of attorney's fees as authorized in Escueta,
representative of the estate, and thus the claim for reimbursement originating as it did from the denial of petitioner's Motion for Writ of
must be superior to the rights of the beneficiaries.36 Execution, and not the Notice of Attorney's Lien. The Motion did
expressly seek the payment of attorney's fees to petitioner. Escueta
Notwithstanding, there may be instances wherein the estate should and Occeña, among other cases, did clearly lay down the manner
not be charged with attorney's fees. If the costs of counsel's fees arise under which such fees may be paid out even prior to the final
out of litigation among the beneficiaries thereof themselves or in the settlement of the estate as an administration expense directly
protection of the interests of particular persons, the estate generally chargeable to the estate itself. The critical question in the present
cannot be held liable for such costs, although when the administrator petition is thus whether this Motion for Writ of Execution satisfies the
employs competent counsel on questions which affect his/her duties requisites set in Escueta for a claim for attorney's fees directly
as the administrator and on which he/she is in reasonable doubt, chargeable against the estate. It does not.
reasonable expenses for such services may be charged against the
estate subject to the approval of the court.37 It has also been held that The fact that the prayer for attorney's fees was cast in a motion and
an administrator who brings on litigation for the deliberate purpose of not a petition should not impede such claim, considering that the
defrauding the legitimate heirs and for his own benefit is not entitled motion was nonetheless filed with the Probate Court. However, the
to reimbursement for counsel's fees incurred in such record bears that the requisite notice to all heirs and interested
litigation.381avvphil.net parties has not been satisfied. Doña Adela's will designated 19
other individuals apart from Olivia Pascual, and four (4) different
Clearly then, while the direct recovery of attorney's fees from the institutions as recipients of devises or legacies consisting of real
estate may be authorized if the executor refuses to pay such fees, and properties, jewelries, and cash amounts. Yet only Olivia Pascual was
claimed through the filing of the proper petition with the probate court, served with a copy of the Motion for Writ of Execution, the motion
such claim remains controvertible. This is precisely why Escueta and which effectively sought the immediate payment of petitioner's
its progenies require that the petition be made with notice to all the attorney's fees. As early as 29 April 1994, Olivia Pascual, in opposing
heirs and interested parties. the Motion for Writ of Execution, already pointed out that petitioner
had failed to give sufficient notice to all interested parties to the estate,
It is these perspectives that we apply to the case at bar. Notably, particularly the several devisees and legatees so named in Doña
petitioner had filed both a Notice of Attorney's Lien and a Motion for Adela's will.
Writ of Execution. These two pleadings have distinct character and
must be treated as such. Such notice is material to the other heirs to Doña Adela's estate. The
payment of attorney's fees, especially in the amount of 3% of the total
After Doña Adela's will had been admitted to probate, petitioner had gross estate as sought for by petitioner, substantially diminishes the
initially filed a Notice of Attorney's Lien wherein it identified itself as estate of Doña Adela and may consequently cause the diminution of
"the attorney for the executrix named in the said will, Dra. Olivia S. their devises and legacies. Since these persons were so named in the
Pascual", and sought to file its "claim and/or lien for attorney's fees very will itself and the action for probate which was filed by petitioner
equivalent to Three Percent (3%) of the total gross estate," pursuant itself, there is no reason why petitioner could not have given due
to the 1987 Retainer Agreement. Copies of this Notice of Attorney's notice to these persons on its claim for attorney's fees.
Lien were furnished Attys. Fortunato Viray, Jr. and Crisanto Cornejo,
who appear on record to have served as counsels for the various The requisite notice to the heirs, devisees, and legatees is anchored
oppositors to the probate of the 1978 will of Doña Adela. This Notice on the constitutional principle that no person shall be deprived of
of Attorney's Lien was noted by the Probate Court in its Order of 4 property without due process of law.40 The fact that these persons
 10

were designated in the will as recipients of the testamentary the probate petition, and that at such time, she had no recognized
dispositions from the decedent establishes their rights to the right to represent the estate of Doña Adela yet. This
succession, which are transmitted to them from the moment of the
death of the decedent.41 The payment of such attorney's fees circumstance further bolsters our opinion that if petitioner insists on
necessarily diminishes the estate of the decedent, and may effectively the judicial enforcement of the Retainer Agreement, its proper
diminish the value of the testamentary dispositions made by the remedy, authorized by law and jurisprudence, would be a personal
decedent. These heirs, devisees, and legatees acquire proprietary action against Olivia Pascual, and not against the estate of Doña
rights by reason of the will upon the moment of the death of the Adela. If this were the recourse pursued by petitioner, and Olivia
decedent, incipient or inchoate as such rights may be. Hence, notice Pascual is ultimately held liable under the Retainer Agreement for
to these interested persons of the claims for attorney's fees is integral, attorney's fees, she may nonetheless seek reimbursement from the
so as to allow them to pose any objections or oppositions to such estate of Doña Adela if she were able to establish that the attorney's
claim which, after all, could lead to the reduction of their benefits from fees paid to petitioner were necessary administration expenses.
the estate.
The second or alternative recourse is the direct claim for attorney's
The failure to notify the other heirs, devisees or legatees, to the estate fees against the estate, as authorized under Escueta. The character
of Doña Adela likewise deprives these interested persons of the right of this claim is not contractual in nature, but rather, as a
to be heard in a hearing geared towards determining whether reimbursement for a necessary expense of administration, and it
petitioner was entitled to the immediate payment of attorney's fees. will be allowed if it satisfies the criteria for necessary expenses
Notably, petitioner, in filing its Motion for Writ of Execution, had initially of administration. Its entitlement can be established by the actual
set the hearing on the motion on 29 April 1994, but one day prior to services rendered by the lawyer necessary to the accomplishment of
the scheduled hearing, gave notice instead that the motion was being the purposes of administration, and not necessarily by the contract of
submitted for the consideration of the Probate Court without further engagement of the attorney's services.
argument.42 Evidently, petitioner did not intend a full-blown hearing to
ensue on whether it was entitled to the payment of attorney's fees. Yet By filing their claim directly against the estate of Doña Adela, petitioner
the claim for attorney's fees is hardly incontrovertible. has clearly resorted to this second cause of action. There are
consequent advantages and disadvantages to petitioner. Since the
That the Retainer Agreement set the attorney's fees at three percent claim arises irrespective of the contingencies as stipulated in the
(3%) of the gross estate does not imply that the basis for attorney's Retainer Agreement, the attorney's fees may be collected against the
fees is beyond controversy. Attorney's fees in this case are in the estate even before the final determination of its gross total value or
nature of administration expenses, or necessary expenses in the first the final approval of the project of partition. As earlier stated, such
place. Any party interested in the estate may very well, in theory, posit claim for reimbursement is superior to the right of the beneficiaries to
a myriad of objections to the attorney's fees sought, such as for the estate, and as such, there is need to finally determine the
example, that these fees were not necessary expenses in the care, respective shares of the beneficiaries before attorney's fees in the
management, and settlement of the estate. Whether or not such basis nature of administration expenses may be paid out.
for valid objections exists in this case is not evident, but the fact
remains that all the parties interested in the estate, namely the other The one distinct disadvantage, however, is that the Retainer
devisees and legatees, were deprived of the opportunity to raise such Agreement cannot be deemed binding on the estate or the Probate
objections as they were not served notice of the Motion for Writ of Court since the estate is not a party to such contract. This would not
Execution. preclude the Probate Court from enforcing the provisions of the
Retainer Agreement if, in its sound discretion, the terms of payment
The instant claim for attorney's fees is thus precluded by the absence therein are commensurate to the value of the actual services
of the requisite notices by petitioner to all the interested persons such necessary to the administration of the estate actually rendered by
as the designated heirs, devisees, legatees, as required by the petitioner. Yet if the Probate Court does choose to adopt the Retainer
jurisprudential rule laid down in Escueta. However, the Court of Agreement as binding on the estate of Doña Adela, petitioner may
Appeals held that it was the prematurity of the claim for attorney's fees again be precluded from immediate recovery of attorney's fees in view
that served as the fatal impediment. On this point, the Court does not of the necessity or precondition of ascertaining the gross total value
agree. of the estate, as well as the judicial approval of the final agreement of
partition.
Again, the remaining peripheral questions warrant clarification.
In any event, whether the claim for attorney's fees was pursued
Escueta itself provides for two alternative approaches through which through a separate suit against Olivia Pascual (in her personal
counsel may proceed with his claim for attorney's fees. The first capacity) for the enforcement of the Retainer Agreement, or against
involves a separate suit against the executor or administrator in the the estate of Doña Adela as reimbursement for necessary
latter's personal capacity. The second approach is a direct claim administration expenses, it remains essential that a hearing be
against the estate itself, with due notice to all interested persons, filed conducted on the claim. In either case too, the hearing will focus on
with the probate court. the value of the services of the petitioner and the necessity of
engaging petitioner as counsel.
In the same vein, the existence of the Retainer Agreement between
petitioner and Olivia Pascual allows petitioner two possible causes of We reiterate that the direct claim against the estate for attorney's fees
action on which to claim attorney's fees in connection with the must be made with due notice to the heirs, devisees, and legatees.
administration of the estate of Doña Adela. The first possible cause of The failure of petitioner to give such notice renders its present claim
action pivots on the Retainer Agreement, which establishes an inefficacious for now. Indeed, there is sufficient cause to dismiss
obligation on the part of Olivia Pascual to pay the final fee of 3% of outright petitioner's Motion for Writ of Immediate Execution filed with
the gross total estate of Doña Adela, payable upon approval by the the Probate Court, for its failure to notify therein the other persons
Probate Court of the agreement for the distribution of the properties interested in the estate of Doña Adela. Nonetheless, to authorize said
to the court- designated heirs of the estate. Necessarily, since the outright denial at this stage could unduly delay the settlement of the
recovery of attorney's fees is premised on the Retainer Agreement estate of Doña Adela, considering the likelihood that petitioner would
any award thereupon has to await the final ascertainment of value of again pursue such claim for attorney's fees as the right to which is
the gross total estate of Doña Adela, as well as the approval by the affirmed by law and jurisprudence.
Probate Court of the agreement for the distribution of the properties.
The Retainer Agreement makes it clear that the final payment of Hence, in order not to unduly protract further the settlement of the
attorney's fees is contingent on these two conditions,43 and the claim estate of Doña Adela, the Court deems it proper instead to mandate
for attorney's fees based on the Retainer Agreement cannot ripen until the Probate Court to treat the Motion for Writ of Immediate Execution
these conditions are met. as a petition seeking a court order to direct the payment of attorney's
fees as expenses of administration, but subject to the condition that
Moreover, it cannot be escaped that the Retainer Agreement was petitioner give due notice to the other designated devisees and
entered into between petitioner and Olivia Pascual prior to the filing of legatees so designated in the will of the claim prior to the requisite
hearing thereon. Petitioner may as well seize such opportunity to
 11

formally amend or reconfigure its motion to a petition to direct payment

of attorney's fees. Once this step is accomplished, there should be no
impediment to petitioner's claim for recovery of attorney's fees as
reimbursement for necessary administration expenses, within the
terms established by law, jurisprudence, and this decision.

One final note. Petitioner's final prayer before this court is that it be
issued a partial writ of execution, consistent with its position before
the Probate Court that it is already entitled to at least a partial payment
of its attorney's fees. This prayer cannot obviously be granted at this
stage by the Court, considering the fatal absence of due notice to the
other designated beneficiaries to the estate of Doña Adela. Still, we
do not doubt that the Probate Court, within its discretion, is
capacitated to render the award of attorney's fees as administration
expenses either partially or provisionally, depending on the particular
circumstances and its ultimate basis for the determination of the
appropriate attorney's fees.

WHEREFORE, the petition is GRANTED IN PART. The Decision of

the Court of Appeals dated 22 December 1995 and the Orders of the
Regional Trial Court of Malabon, Branch 72, dated 2 June 1994 and
17 March 1995 are hereby SET ASIDE insofar as said orders denied
petitioner's Motion for Writ of Immediate Execution dated 26 April
1994. Petitioner is hereby directed to set for hearing its claim for
attorneys fees, giving due notice thereof to all the heirs, devisees, and
legatees designated in the 1978 Last Will and Testament executed by
Doña Adela Pascual. The Regional Trial Court is directed to treat
petitioner's aforesaid motion as a PETITION for the payment of
attorney's fees as expenses of administration, and after due hearing
resolve the same with DISPATCH, conformably with this decision. No
pronouncement as to costs.

SO ORDERED.
 12

EN BANC inadequately, to set up a counterclaim, in that, if true, it involved a

claim for money, tending to diminish the recovery sought by the
G.R. No. L-7622 May 27, 1955 plaintiff in said case No. 106. The judgment therein rendered bars,
therefore, any subsequent suit based upon said claim.
GABRIEL MACLAN, plaintiff-appellant,
vs. Again, if the claim for repairs were deemed not filed in case No. 106,
RUBEN GARCIA, defendant-appellee. plaintiff would be confronted by Rule 10, Section 6, of the Rules of
Court, which provides:
CONCEPCION, J.:
A counterclaim not set up shall be barred if it arises out of or is
On July 3, 1945, Andres Mariano executed an instrument, purporting necessarily connected with, the transaction or occurrence that is the
to be a deed of conveyance, in favor of Gabriel Maclan, of two (2) subject-matter of the opposing party's claim and does not require for
parcels of land, containing fishponds, located in the municipality of its adjudication the presence of third parties of whom the court cannot
Polo, and covered by Certificates of Title Nos. 20410 and 20411 of acquire jurisdiction.
the office of the Register of Deeds of Bulacan, which, accordingly,
were cancelled and then substituted by Transfer Certificates of Title It is clear that the claim for repairs or necessary expenses allegedly
Nos. 27813 and 27814, of the same office, in the name of Gabriel made the Maclan in the property in dispute in case No. 106, is
Maclan. About a year later, or on or about August 2, 1946, Andres necessarily connected with the action of the plaintiff therein to recover
Mariano instituted Civil Case No. 106 in the Court of First Instance of said property from Maclan. Said connection is substantially identical
said province, against Gabriel Maclan, for the annulment of said with that which exists between an action for recovery of a land and
instrument, upon the ground of fraud, and the recovery of the the claim for improvements therein made by the defendant in said
aforementioned property. In due course, said court rendered case. It is well settled that such claim for improvements is barred
judgment, on or about May 19, 1949 — which was affirmed by the unless set up by way of counterclaim in the aforementioned action for
Court of Appeals on December 18, 1950 (CA — G.R. No. 3350-R) — recovery of the land (Bautista vs. Jimenez, 24 Phil., III; Berses vs.
the dispositive part of which reads as follows: Villanueva, 25 Phil., 473; Lopez vs. Gloria, 40 Phil., 76; Beltran vs.
Balbuena, 53 Phil., 697; Galit vs. Ginosa & Hernandez, 62 Phil., 451).
WHEREFORE, the Court hereby renders judgement in favor of the The same rule applies to the claim for necessary expenses or repairs.
plaintiff Andres Mariano as follows: That the deed of extrajudicial Consequently, if said claim was not filed in case No. 106, plaintiff may
adjudication and sale (Exhibit A) in favor of the defendant Gabriel no longer bring another action therefore, the same being "barred
Maclan is null and void; and that the Transfer Certificates of Title Nos. forever", pursuant to said section 6 of Rule 10 of the Rules of Court.
27813 and 27814 issued in the name of the defendant thus Gabriel
Maclan by the Register of Deeds of Bulacan be cancelled, thus With reference to the question whether the claim for repairs should
restoring in its entirety the former Transfer Certificate of Title Nos. have been filed in the proceedings for the settlement of the estate of
20410 and 20411 issued in the name of Basilio Mariano, the expenses the deceased Andres Mariano, plaintiff contends that the answer
of which to be borne by the defendant Tiburcio Ramirez alone, with should be in the negative, for, pursuant to Section 5 of Rule 87 of the
costs against the defendants. (Record on Appeal, p. 47.) Rules of Court, reading:
On June 25, 1952, Gabriel Maclan filed the complaint in the case at All claims for money against the decedent, arising from contract,
bar, which was docketed as Civil Case No. 1752 of the Court of First express or implied, whether the same be due, not due, or contingent,
Instance of Rizal. Ruben Garcia, who acquired the property in dispute all claims for funeral expenses and expenses of the last sickness of
in case No. 106, by inheritance from Andres Mariano (who had died the decedent, and judgment for money against the decedent, must be
in the meanwhile), as his grandson and sole heir, is the defendant in filed within the time limited in the notice; otherwise they are barred
the present case. The purpose thereof is to recover the sum of forever, except that they may be set forth as counterclaims in any
P5,200, as necessary expenses allegedly incurred in the preservation action that the executor or administrator may bring against the
of said property prior to the commencement of said case No. 106. In claimants. Where an executor or administrator commenced an action,
his answer to the complaint in case No. 1752, Garcia set up, among or prosecutes an action already commenced by the deceased in his
other things, the defense that plaintiff's cause of action is barred by lifetime, the debtor may set forth by answer the claims he has against
the final judgment rendered in case No. 106 and by his failure to file the decedent, instead of presenting them independently against each
his claim in Special Proceedings No. 917 of the Court of First Instance other in such action; and if final judgment is rendered in favor of the
of Rizal — in which the estate of the deceased Andres Mariano was defendant, the amount so determined shall be considered the true
settled — which has already been closed. After due hearing on this balance against the estate, as though the claim had been presented
plea, which was considered as being in the nature of a motion to directly before the court in the administration proceedings. Claims not
dismiss, the Court of First Instance of Rizal, in an order dated yet due, or contingent, may be approved at their present value.
September 25, 1952, found Garcia's pretense to be well taken, an
accordingly dismissed plaintiff's complaint, without special only money claims, "arising from contract express or implied" are
pronouncement as to costs. Hence, this appeal by Maclan. enforceable is said proceedings, and plaintiff's cause of action herein
arises from law, not — according to plaintiff's counsel — from
He maintains (1) that the decision in case No. 106 does not bar his "contract, express or implied." This argument, seemingly, stems from
cause of action in the present case, because the same refers to a misconception of the nature of "implied contracts," as the term is
necessary expenses, which, he claims, is distinct from the sum of used in the provision just quoted. The meaning the history and said
P4,800, for repairs, alleged by him in his answer in case No. 106; (2) expression are set forth in the decision, written by Mr. Justice Street,
that said "repairs" were alleged in case No. 106 by way of "special in the case of Leung Ben vs. O'Brien (38 Phil., 182), from which we
defense," not as counterclaim, and may not be considered as such; quote:
(3) that he was not bound, in case No. 106, to set up, as counterclaim,
his present claim for necessary expenses; (4) that neither was it The term "implied contract" takes us into the shadow domain of those
necessary for him to file said claim in the special proceedings for the obligations the theoretical classification of which has engaged the
settlement of the estate of the deceased, Andres Mariano; and (5) that attention of scholars form the time of Gaius until our own day and has
defendant herein is under obligation to pay said expenses. been a source of as much difficulty to the civilian as to the common-
law jurist. Here we are concerned with those acts which make one
There is absolutely no merit in appellant's pretense, for "repairs" are, person debtor to another without there having intervened between
in general, necessary for the preservation of the thing repaired, and, them any true agreement tending to produce a legal bond (vinculum
hence, the cost of said repairs are in the nature of necessary juris). Of late years some American and English legal writers have
expenses. Moreover, the repairs, amounting to P4,800, alleged in adopted the term quasi-contract as descriptive of these obligations or
plaintiff's answer in case No. 106, as defendant therein, was some of them; but the expression more commonly used is "implied
erroneously included under the heading of "special defenses," for, contract."
obviously, said repairs could not bar the annulment of the deed of
conveyance involved therein, the same having been obtained by Upon examination of these obligations, from the view point of the
fraud. At best, said allegation could be regarded (under Rule 9, common-law jurisprudence, it will be found that they fall readily into
section 9, of the Rules of Court) as an attempt, though made two division, according as they bear an analogy to the common-law
 13

debt or to the common-law assumpsit. To exhibit the scope of these

different classes of obligations is here impracticable. It is only
necessary in this connection to observe that the most conspicuous
division is that which comprises duties in the nature of debt. The
characteristic feature of these obligations is that upon certain states
of fact the law imposes an obligation to pay a sum certain of money;
and it is characteristic of this obligation that the money in respect to
which the duty is raised is conceived as being the equivalent of
something taken or detained under circumstances giving rise to the
duty to return or compensate therefor. The proposition that no one
shall be allowed to enrich himself unduly at the expense of another
embodies the general principle here lying at the basis of obligation.
The right to recover money improperly paid (repeticion de lo indebido)
is also recognized as belonging to this class of duties.

It will be observed that according to the Civil Code (article 1089)

obligations are supposed to be derived either from (1) the law, (2)
contracts and quasi-contracts, (3) illicit acts and omissions, of (4) acts
in which some sort or blame or negligence is present. This
enumeration of the sources of obligations supposes that the quasi-
contractual obligation and the obligation imposed by law are of
different types. The learned Italian jurist, Jorge Giorgi, criticizes this
assumption and says that the classification embodied in the code is
theoretically erroneous. His conclusion is that one or the other of
these categories should have been suppressed and merged in the
other. (Giorgi, Teoria de las Obligaciones, Spanish es., Vol. 5, arts, 5,
7, 9.) The validity of this criticism is, we think, self-evident; and it is of
interest to not that the common law makes no distinction between the
two sources of liability. The obligations which in the Code are
indicated as quasi-contracts, as well as those arising ex-lege, are in
the common law system merged into the category of obligations
imposed by law, and all are denominated implied contracts. (Id., pp.
192-193; Emphasis supplied.)

It is clear from the foregoing that plaintiff's cause of action arises from
an "implied contract" — as this term is understood in the common-law,
which is the sense in which it is used in our remedial laws — and that,
accordingly his claim, which is "barred forever," may no longer be
asserted against defendant herein.

Wherefore, the decision appealed from is hereby affirmed, with costs

against plaintiff-appellee, Gabriel Maclan. It is so ordered.
 14

SECOND DIVISION In its answer23 dated December 1, 2003, Metrobank admitted that it
deposited the checks in question to the account of Ayala Lumber and
G.R. No. 170498 January 9, 2013 Hardware, a sole proprietorship Chua owned and managed. The
deposit was allegedly done with the knowledge and consent of AMC.
METROPOLITAN BANK & TRUST COMPANY, Petitioner, According to
vs.
ABSOLUTE MANAGEMENT CORPORATION, Respondent. Metrobank, Chua then gave the assurance that the arrangement for
the handling of the checks carried AMC’s consent. Chua also
DECISION submitted documents showing his position and interest in AMC.
These documents, as well as AMC’s admission in its answer that it
BRION, J.:
allowed Chua to manage AMC with a relative free hand, show that it
We resolve petitioner Metropolitan Bank & Trust Company's (Metro knew of Chua’s arrangement with Metrobank. Further, Chua’s records
bank's) petition for review on certiorari1 seeking the reversal of the show that the proceeds of the checks were remitted to AMC which
decision2 dated August 25, 2005 and the resolution3 dated November cannot therefore now claim that it did not receive these proceeds.
17, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 86336. The
Metrobank also raised the defense of estoppel. According to
assailed decision affirmed the order4 dated May 7, 2004 of the
Metrobank, AMC had knowledge of its arrangements with Chua for
Regional Trial Court (RTC) of Quezon City, Branch 80. The RTC had
several years. Despite this arrangement, AMC did not object to nor
denied the admission of Metrobank's Fourth-Party Complaint5 against
did it call the attention of Metrobank about Chua’s alleged lack of
the Estate of Jose L. Chua for being a money claim that falls under
authority to deposit the checks in Ayala Lumber and Hardware’s
Section 5, Rule 86 of the Rules of Court; the claim should have been
account. At this point, AMC is already estopped from questioning
filed in the pending judicial settlement of Chua’s estate before the
Chua’s authority to deposit these checks in Ayala Lumber and
RTC of Pasay City. The CA affirmed the RTC’s order based on the
Hardware’s account.
same ground.
Lastly, Metrobank asserted that AMC gave Chua unbridled control in
Factual Antecedents
managing AMC’s affairs. This measure of control amounted to gross
On October 5, 2000, Sherwood Holdings Corporation, Inc. (SHCI) negligence that was the proximate cause of the loss that AMC must
filed a complaint for sum of money against Absolute Management now bear.
Corporation (AMC). The complaint was docketed as Civil Case No. Q-
Subsequently, Metrobank filed a motion for leave to admit fourth-party
00-42105 and was assigned to the RTC of Quezon City, Branch 80.6
complaint24 against Chua’s estate. It alleged that Chua’s estate should
SHCI alleged in its complaint that it made advance payments to AMC reimburse Metrobank in case it would be held liable in the third-party
for the purchase of 27,000 pieces of plywood and 16,500 plyboards complaint filed against it by AMC.
in the sum of ₱12,277,500.00, covered by Metrobank Check Nos.
The RTC’s Ruling
1407668502, 140768507, 140768530, 140768531, 140768532,
140768533 and 140768534. These checks were all crossed, and In an order25 dated May 7, 2004, the RTC denied Metrobank’s motion.
were all made payable to AMC. They were given to Chua, AMC’s It likewise denied Metrobank’s motion for reconsideration in an order26
General Manager, in 1998.7 dated July 7, 2004.
Chua died in 1999, 8 and a special proceeding for the settlement of The RTC categorized Metrobank’s allegation in the fourth-party
his estate was commenced before the RTC of Pasay City. This complaint as a "cobro de lo indebido"27 – a kind of quasi-contract that
proceeding was pending at the time AMC filed its answer with mandates recovery of what has been improperly paid. Quasi-
counterclaims and third-party complaint.9 contracts fall within the concept of implied contracts that must be
included in the claims required to be filed with the judicial settlement
SHCI made demands on AMC, after Chua’s death, for allegedly
of the deceased’s estate under Section 5, Rule 86 of the Rules of
undelivered items worth ₱8,331,700.00. According to AMC, these
Court. As such claim, it should have been filed in Special Proceedings
transactions could not be found in its records. Upon investigation,
No. 99-0023, not before the RTC as a fourth-party complaint. The
AMC discovered that in 1998, Chua received from SHCI 18
RTC, acting in the exercise of its general jurisdiction, does not have
Metrobank checks worth ₱31,807,500.00. These were all payable to
the authority to adjudicate the fourth-party complaint. As a trial court
AMC and were crossed or "for payee’s account only."10
hearing an ordinary action, it cannot resolve matters pertaining to
In its answer with counterclaims and third-party complaint,11 AMC special proceedings because the latter is subject to specific rules.
averred that it had no knowledge of Chua’s transactions with SHCI
Metrobank responded to the RTC ruling by filing a petition for
and it did not receive any money from the latter. AMC also asked the
certiorari28 under Rule 65 before the CA.
RTC to hold Metrobank liable for the subject checks in case it is
adjudged liable to SHCI. The CA’s Ruling
12
Metrobank filed a motion for bill of particulars, seeking to clarify The CA affirmed the RTC’s ruling that Metrobank’s fourth-party
certain ambiguous statements in AMC’s answer. The RTC granted the complaint should have been filed in Special Proceedings No. 99-
motion but AMC failed to submit the required bill of particulars. Hence, 0023.29 According to the CA, the relief that Metrobank prayed for was
Metrobank filed a motion to strike out the third-party complaint.13 based on a quasi-contract and was a money claim categorized as an
implied contract that should be filed under Section 5, Rule 86 of the
In the meantime, Metrobank filed a motion to dismiss14 against AMC
Rules of Court.
on the ground that the latter engaged in prohibited forum shopping.
According to Metrobank, AMC’s claim against it is the same claim that Based on the statutory construction principle of lex specialis derogat
it raised against Chua’s estate in Special Proceedings No. 99-0023 generali, the CA held that Section 5, Rule 86 of the Rules of Court is
before the RTC of Pasay City, Branch 112. The RTC subsequently a special provision that should prevail over the general provisions of
denied this motion.15 Section 11, Rule 6 of the Rules of Court. The latter applies to money
claims in ordinary actions while a money claim against a person
The RTC of Quezon City opted to defer consideration16 of Metrobank’s
already deceased falls under the settlement of his estate that is
motion to strike out third-party complaint17 and it instead granted
governed by the rules on special proceedings. If at all, rules for
AMC’s motion for leave to serve written interrogatories on the third-
ordinary actions only apply suppletorily to special proceedings.
party defendant.18 While Metrobank filed its answer to the written
interrogatories, AMC was again directed by the RTC, in an order19 The Present Petition
dated August 13, 2003, to submit its bill of particulars. Instead, AMC
filed a motion for reconsideration20 which was denied in an order21 In its present petition for review on certiorari,30 Metrobank asserts that
dated October 28, 2003. AMC still did not file its bill of particulars. The it should be allowed to file a fourth-party complaint against Chua’s
RTC, on the other hand, did not act on Metrobank’s motion to strike estate in the proceedings before the RTC; its fourth-party complaint
out AMC’s third-party complaint.22 was filed merely to enforce its right to be reimbursed by Chua’s estate
 15

in case Metrobank is held liable to AMC. Hence, Section 11, Rule 6 of Our examination of Metrobank’s petition shows that it contains AMC’s
the Rules of Court should apply. opposition to its motion to admit fourth-party complaint among its
annexes. The rest of the pleadings have been subsequently submitted
AMC, in its comment,31 maintains the line that the CA and the RTC as attachments in Metrobank’s Reply. A reading of these pleadings
rulings should be followed, i.e., that Metrobank’s claim is a quasi- shows that their arguments are the same as those stated in the orders
contract that should be filed as a claim under Section 5, Rule 86 of of the trial court and the Court of Appeals. Thus, even if Metrobank’s
the Rules of Court. petition did not contain some of AMC’s pleadings, the Court still had
the benefit of a clear narration of facts and arguments according to
AMC also challenges the form of Metrobank’s petition for failure to both parties’ perspectives. In this broader view, the mischief that the
comply with Section 4, Rule 45 of the Rules of Court. This provision Rules of Court seeks to avoid has not really been present. If at all, the
requires petitions filed before the Supreme Court to be accompanied omission is not a grievous one that the spirit of liberality cannot
by "such material portions of the record as would support the petition." address.
According to AMC, the petition’s annexes are mostly Metrobank’s The Merits of the Main Issue
pleadings and court issuances. It did not append all relevant AMC
pleadings before the RTC and the CA. For this reason, the petition The main issue poses to us two essential points that must be
should have been dismissed outright. addressed. First, are quasi-contracts included in claims that should be
filed pursuant to Rule 86, Section 5 of the Rules of Court? Second, if
Issues so, is Metrobank’s claim against the Estate of Jose Chua based on a
quasi-contract?
The parties’ arguments, properly joined, present to us the following
issues: Quasi-contracts are included in
claims that should be filed under Rule
1) Whether the petition for review on certiorari filed by Metrobank
86, Section 5 of the Rules of Court
before the Supreme Court complies with Section 4, Rule 45 of the
Rules of Court; and In Maclan v. Garcia,39 Gabriel Maclan filed a civil case to recover from
Ruben Garcia the necessary expenses he spent as possessor of a
2) Whether Metrobank’s fourth-party complaint against Chua’s estate
piece of land. Garcia acquired the land as an heir of its previous
should be allowed.
owner. He set up the defense that this claim should have been filed in
The Court’s Ruling the special proceedings to settle the estate of his predecessor.
Maclan, on the other hand, contended that his claim arises from law
The Present Petition Complies With Section 4, Rule 45 of the Rules and not from contract, express or implied. Thus, it need not be filed in
of Court the settlement of the estate of Garcia’s predecessor, as mandated by
Section 5, Rule 87 of the Rules of Court (now Section 5, Rule 86).
AMC posits that Metrobank’s failure to append relevant AMC
pleadings submitted to the RTC and to the CA violated Section 4, Rule The Court held under these facts that a claim for necessary expenses
45 of the Rules of Court,32 and is a sufficient ground to dismiss the spent as previous possessor of the land is a kind of quasi-contract.
petition under Section 5, Rule 45 of the Rules of Court.33 Citing Leung Ben v. O’Brien,40 it explained that the term "implied
contracts," as used in our remedial law, originated from the common
We disagree with AMC’s position. law where obligations derived from quasi-contracts and from law are
both considered as implied contracts. Thus, the term quasi-contract is
In F.A.T. Kee Computer Systems, Inc. v. Online Networks included in the concept "implied contracts" as used in the Rules of
International, Inc.,34 Online Networks International, Inc. similarly Court. Accordingly, liabilities of the deceased arising from quasi-
assailed F.A.T. Kee Computer Systems, Inc.’s failure to attach the contracts should be filed as claims in the settlement of his estate, as
transcript of stenographic notes (TSN) of the RTC proceedings, and provided in Section 5, Rule 86 of the Rules of Court.41
claimed this omission to be a violation of Section 4, Rule 45 of the
Rules of Court that warranted the petition’s dismissal. The Court held Metrobank’s fourth-party complaint is
that the defect was not fatal, as the TSN of the proceedings before based on quasi-contract
the RTC forms part of the records of the case. Thus, there was no
incurable omission that warranted the outright dismissal of the Both the RTC and the CA described Metrobank’s claim against
petition. Chua’s estate as one based on quasi-contract. A quasi-contract
involves a juridical relation that the law creates on the basis of certain
The Court significantly pointed out in F.A.T. Kee that the requirement voluntary, unilateral and lawful acts of a person, to avoid unjust
in Section 4, Rule 45 of the Rules of Court is not meant to be an enrichment.42 The Civil Code provides an enumeration of quasi-
absolute rule whose violation would automatically lead to the petition’s contracts,43 but the list is not exhaustive and merely provides
dismissal.35 The Rules of Court has not been intended to be totally examples.44
rigid. In fact, the Rules of Court provides that the Supreme Court "may
require or allow the filing of such pleadings, briefs, memoranda or According to the CA, Metrobank’s fourth-party complaint falls under
documents as it may deem necessary within such periods and under the quasi-contracts enunciated in Article 2154 of the Civil Code.45
such conditions as it may consider appropriate";36 and "[i]f the petition Article 2154 embodies the concept "solutio indebiti" which arises
is given due course, the Supreme Court may require the elevation of when something is delivered through mistake to a person who has no
the complete record of the case or specified parts thereof within fifteen right to demand it. It obligates the latter to return what has been
(15) days from notice."37 These provisions are in keeping with the received through mistake.46
overriding standard that procedural rules should be liberally construed
to promote their objective and to assist the parties in obtaining a just, Solutio indebiti, as defined in Article 2154 of the Civil Code, has two
speedy and inexpensive determination of every action or indispensable requisites: first, that something has been unduly
proceeding.38 delivered through mistake; and second, that something was received
when there was no right to demand it.47
Under this guiding principle, we do not see Metrobank’s omission to
be a fatal one that should warrant the petition’s outright dismissal. To In its fourth-party complaint, Metrobank claims that Chua’s estate
be sure, the omission to submit the adverse party’s pleadings in a should reimburse it if it becomes liable on the checks that it deposited
petition before the Court is not a commendable practice as it may lead to Ayala Lumber and Hardware’s account upon Chua’s instructions.
to an unduly biased narration of facts and arguments that masks the
This fulfills the requisites of solutio indebiti. First, Metrobank acted in
real issues before the Court. Such skewed presentation could lead to
a manner akin to a mistake when it deposited the AMC checks to
the waste of the Court’s time in sifting through the maze of the parties’
Ayala Lumber and Hardware’s account; because of Chua’s control
narrations of facts and arguments and is a danger the Rules of Court
over AMC’s operations, Metrobank assumed that the checks payable
seeks to avoid.
to AMC could be deposited to Ayala Lumber and Hardware’s account.
Second, Ayala Lumber and Hardware had no right to demand and
 16

receive the checks that were deposited to its account; despite Chua’s AFFIRMED. Costs against Metropolitan Bank & Trust Company.
control over AMC and Ayala Lumber and Hardware, the two entities
are distinct, and checks exclusively and expressly payable to one SO ORDERED.
cannot be deposited in the account of the other. This disjunct created
an obligation on the part of Ayala Lumber and Hardware, through its
sole proprietor, Chua, to return the amount of these checks to
Metrobank.

The Court notes, however, that its description of Metrobank’s fourth-

party complaint as a claimclosely analogous to solutio indebiti is only
to determine the validity of the lower courts’ orders denying it. It is not
an adjudication determining the liability of Chua’s estate against
Metrobank. The appropriate trial court should still determine whether
Metrobank has a lawful claim against Chua’s estate based on quasi-
contract.1âwphi1

Metrobank’s fourth-party complaint,

as a contingent claim, falls within the
claims that should be filed under
Section 5, Rule 86 of the Rules of
Court

A distinctive character of Metrobank’s fourth-party complaint is its

contingent nature – the claim depends on the possibility that
Metrobank would be adjudged liable to AMC, a future event that may
or may not happen. This characteristic unmistakably marks the
complaint as a contingent one that must be included in the claims
falling under the terms of Section 5, Rule 86 of the Rules of Court:

Sec. 5. Claims which must be filed under the notice. If not filed, barred;
exceptions. – All claims for money against the decedent, arising from
contract, express or implied, whether the same be due, not due, or
contingent, all claims for funeral expenses and expenses for the last
sickness of the decedent, and judgment for money against the
decedent, must be filed within the time limited in the notice. [italics
ours]

Specific provisions of Section 5, Rule

86 of the Rules of Court prevail over
general provisions of Section 11, Rule
6 of the Rules of Court

Metrobank argues that Section 11, Rule 6 of the Rules of Court should
apply because it impleaded Chua’s estate for reimbursement in the
same transaction upon which it has been sued by AMC. On this point,
the Court supports the conclusion of the CA, to wit:

Notably, a comparison of the respective provisions of Section 11, Rule

6 and Section 5, Rule 86 of the Rules of Court readily shows that
Section 11, Rule 6 applies to ordinary civil actions while Section 5,
Rule 86 specifically applies to money claims against the estate. The
specific provisions of Section 5, Rule 86 x x x must therefore prevail
over the general provisions of Section 11, Rule 6.48

We read with approval the CA’s use of the statutory construction

principle of lex specialis derogat generali, leading to the conclusion
that the specific provisions of Section 5, Rule 86 of the Rules of Court
should prevail over the general provisions of Section 11, Rule 6 of the
Rules of Court; the settlement of the estate of deceased persons
(where claims against the deceased should be filed) is primarily
governed by the rules on special proceedings, while the rules
provided for ordinary claims, including Section 11, Rule 6 ofthe Rules
of Court, merely apply suppletorily.49

In sum, on all counts in the considerations material to the issues

posed, the resolution points to the affirmation of the assailed CA
decision and resolution. Metrobank's claim in its fourth-party
complaint against Chua's estate is based on quasi-contract. It is also
a contingent claim that depends on another event. Both belong to the
category of claims against a deceased person that should be filed
under Section 5, Rule 86 of the Rules of Comi and, as such, should
have been so filed in Special Proceedings No. 99-0023.

WHEREFORE, premises considered, we hereby DENY the petition

for lack of merit. The decision of the Court of Appeals dated August
25, 2005, holding that the Regional Trial Court of Quezon City, Branch
80, did not commit grave abuse of discretion in denying Metropolitan
Bank & Trust Company's motion for leave to admit fourth-party
complaint Is
 17

SECOND DIVISION The decision reviving the judgment states: "For the estate of Felisa
Tiglao, no evidence was presented, it having been declared in default
G.R. No. L-51151 July 24, 1981 previously." But as can be gleaned from the facts stated above, the
Estate of Felisa Tiglao filed an Answer, dated April 1, 1971, and a
PAZ G. ROMUALDEZ, BELEN A. GUECO, assisted by her second Motion to Dismiss, dated September 25, 1973. The reason for
husband, JOSE TINSAY, and CATALINA A. GUECO, assisted by the mistake is that the case was handled by several judges (Judges
her husband JOSE SIOPONGCO, plaintiffs-appellees, Lorenzo Relova and Santiago O. Tatiada) before it was decided by
vs. Judge Augusta L. Valencia. However, the mistake is not fatal for the
ANTONIO P. TIGLAO, ERNESTO TIGLAO, BERNARDO TIGLAO Estate of Felisa Tiglao did not raise any factual issue in the court
and JUANA TIGLAO, defendants, ESTATE OF FELISA TIGLAO,
below. It raised a question of law only which we now resolve in this
defendant-appellant. appeal.

The appellant argues that the present action is one for the recovery of
a sum of money so that it is barred by Sec. I of Rule 87 of the Rules
ABAD SANTOS, J.:
of Court and that the remedy of the appellees is to present their claim
This is an appeal by the Estate of Felisa Tiglao from a decision in Civil in Special Proc. No. Q-10731 of the Court of First Instance of Rizal.
Case No. Q-14424 of the Court of First Instance of Rizal which revived
This argument is simply answered thus: the original judgment which
a judgment rendered in Civil Case No.Q-5055 also of the Court of First
was rendered on May 31, 1960, has become stale because of its non-
Instance of Rizal.
execution after the lapse of five years. (Sec. 6, Rule 39 of the Rules
Originally appealed to the Court of Appeals, that court certified the of Court.) Accordingly, it cannot be presented against the Estate of
case to us on the ground that it involves questions of law only. Felisa Tiglao unless it is first revived by action. This is precisely why
the appellees have instituted the second suit whose object is not to
The relevant facts are the following: make the Estate of Felisa Tiglao pay the sums of money adjudged in
the first judgment but merely to keep alive said judgment so that the
On March 15, 1960, Paz G. Romualdez and others sued Antonio sums therein awarded can be presented as claims against the estate
Tiglao for the payment of unpaid rentals for the lease of a hacienda in Special Proc. No. Q-10731 of the Court of First Instance of Rizal.
and its sugar quota. Included in the suit were Felisa Tiglao and others
who had guaranteed the payment of the rents jointly and severally WHEREFORE, finding no error in the judgment insofar as the Estate
with Antonio Tiglao. The suit was docketed as Civil Case No. Q-5055 of Felisa Tiglao is concerned, its appeal is hereby dismissed with
of the Court of First Instance of Rizal. On May 31, 1960, a decision costs against the appellant.
was rendered with the following dispositive portion:
SO ORDERED.
IN VIEW OF THE FOREGOING, the Court hereby renders judgment
in favor of the plaintiffs and against the defendants, by ordering said
defendants to pay jointly and severally the plaintiffs the sum of
P22,767.17 representing the unpaid rentals on the sugar quota, to pay
P5,000.00 as liquidated damages and the sum of P1,000.00 as
attorney's fees plus costs.

The judgment was not satisfied notwithstanding a writ of execution to

enforce it. Accordingly, on May 18, 1970, Paz G. Romualdez, et al.
filed Civil Case No. Q-14424 in the Court of First Instance of Rizal
against Antonio Tiglao and his sureties in order to revive the judgment
above quoted.

It should be stated that when the suit to revive judgment was filed,
Felisa F. Tiglao had died and her estate was being settled in Special
Proc. No. Q-10731 of the Court of First Instance of Rizal. Accordingly,
the one who was made defendant was her estate represented by the
Special Administratrix Maningning Tiglao-Naguiat, In her Motion to
Dismiss, dated October 5, 1970, Answer dated April 5, 1971, and still
another .Motion to Dismiss, dated September 25, 1973, the
administratrix questioned the jurisdiction of the court a quo to entertain
the suit to revive judgment. She invoked Sec. 1 of Rule 87 of the Rules
of Court that, "No action upon a claim for the recovery of money or
debt or interest thereon shall be commenced against the executor or
administrator; ... "

Brushing aside the posture of the administratrix, the court a quo

rendered a decision on January 21, 1974, with the following
dispositive portion:

WHEREFORE, for all the foregoing considerations the Court hereby

renders judgment in favor of the plaintiffs ordering the revival of the
judgment of this court in Civil Case No. 5055, which runs as follows:

IN VIEW OF THE FOREGOING, the Court hereby renders judgment

in favor of the plaintiffs and against the defendants, by ordering the
said defendants to pay jointly and severally the plaintiffs the sum of
P22,767.17 representing the unpaid rental on the sugar quota, to pay
P5,000.00 as liquidated damages and the sum of P1,000.00 as
attorney's fees plus costs.

without pronouncement as to costs.

The Estate of Felisa Tiglao filed a separate appeal which is now

before us.
 18

FIRST DIVISION claimant may only proceed to sue the heirs of the deceased directly
where such heirs have entered into an extra-judicial partition of such
G.R. No. L-28298 November 25, 1983 estate and have distributed the latter among themselves, in which
case, the heirs become liable to the claimant in proportion to the share
ROSITA SANTIAGO DE BAUTISTA, ET AL., plaintiffs-appellees, which they have received as inheritance. Plaintiffs' complaint does not
vs. state that the defendants have received any such inheritance from
VICTORIA DE GUZMAN, ET AL., defendants-appellants. their said deceased father, Rosendo de Guzman, and hence, there is
no cause of action against aforesaid defendants.
Jose D. Villena for plaintiffs-appellees.
This order became final.
Antonio Gonzales for defendants-appellants.
Then on December 14, 1954, plaintiffs-appellees filed with the same
trial court Civil Case No. 3530 (subject of this appeal) against the
GUTIERREZ, JR., J.: same defendants in the former case, the complaint containing
analogous allegations as those embodied in the first complaint but in
This is an appeal from the decision of the Court of First Instance of this second complaint they further allege that on June 12, 1952,
Rizal, Pasay City branch, in Civil Case No. 3530, ordering the Rosendo de Guzman died intestate and that intestate proceedings
defendants-appellants to pay the plaintiffs-appellees damages and were filed in the same court and docketed therein as Special
attorney's fees and dismissing the former's counterclaim. As no Proceedings No. 1303-P, wherein on April 20, 1953, a project of
questions of facts were raised by the appellants in their brief, the Court partition was presented in and approved by said Court with the five
of Appeals certified this case to us for decision. heirs receiving their shares valued at P2,294.05 each, and on May 14,
1953, said intestate proceedings were closed. They also alleged that
The facts, as stated in the resolution of the appellate court, are as Numeriano Bautista during his lifetime was the only one supporting
follows: têñ.£îhqw⣠them and his death caused them shock, sufferings and anxiety and
therefore defendants-appellants should pay to them, aside from the
On May 10, 1952, Numeriano Bautista, husband and father of the P3,000.00, an additional amount of P15,000.00 as moral, exemplary
plaintiffs-appellees, respectively, was a passenger of jeepney bearing and compensatory damages, plus the sum of P2,000.00 as attorney's
Plate No. TPU-4013, owned and operated by Rosendo de Guzman, fees for the prosecution of this case, besides the costs of suit.
deceased husband and father of defendants-appellants, respectively,
as one of the jeepneys used in his transportation business. Eugenio Defendants-appellants again filed a motion to dismiss on May 5, 1955,
Medrano y Torres was employed by said Rosendo de Guzman as the alleging the same grounds as those interposed in the first complaint
driver of said jeepney. Said driver drove and managed said jeepney but adding the further ground of res judicata in view of the dismissal
at that time along Taft Avenue, Pasay City, in a negligent and reckless of the first case which became final as no appeal or any other action
manner and, as a result, the jeepney turned turtle and, consequently, was taken thereon by the appellees. On August 22, 1955, the lower
passenger Numeriano Bautista sustained physical injuries which court denied the motion to dismiss for lack of sufficient merit.
caused his death. Eugenio Medrano, the driver, was accused and
convicted of homicide through reckless imprudence by the trial court xxx xxx xxx
in a decision promulgated on May 27, 1952 and sentenced to a
penalty of imprisonment of four (4) months and one (1) day of arresto Then on July 11, 1961, the parties through their respective counsel
mayor and to indemnify the heirs of Numeriano Bautista, plaintiffs- submitted a partial stipulation of facts found on pages 63 to 67 of the
appellees herein, in the sum of P3,000.00. A writ of execution was amended record on appeal which stipulation of facts, was made the
issued against said driver, Eugenio Medrano for the said sum of basis of the decision of the lower court which was rendered on August
P3,000.00 but the same was returned to the Court unsatisfied. 26, 1961 (should be August 14, 1961), aside from the testimony of the
widow of Numeriano Bautista, appellee Rosita Bautista, who testified
On May 12, 1952, Rosendo de Guzman died. on the same incidents already recited herein and on the sufferings
and shock she and her children, all appellees in this case, suffered.
Because of their failure to collect the said sum of P3,000.00 from the From said decision, the present appeal has been interposed ...
driver, Eugenio Medrano, plaintiffs-appellees filed a complaint (Civil
Case No. 2050) dated October 7, 1952, with the Court of First Defendants-appellants assign the following errors:
Instance of Rizal, Pasay City Branch, against defendants-appellants
alleging, among other things besides the above-mentioned incidents, Itêñ.£îhqwâ£
that they demanded from Rosendo de Guzman and from the
THE COURT BELOW ERRED IN NOT SUSTAINING THE MOTION
defendants-appellants the payment of the sums of P3,000.00 as
TO DISMISS MOCION DE SOBRESIMIENTO) FILED BY THE
subsidiary liability; P10,000.00 as actual exemplary and moral
DEFENDANTS-APPELLANTS ON OR ABOUT MAY, 1955,
damages and Pl,000.00 as attorney's fees for the suit by reason of the
APPEARING ON PAGE 10 ET SEQ. OF THE AMENDED RECORD
death of Numeriano Bautista as related above, but Rosendo de
ON APPEAL.
Guzman and later the herein defendants-appellants refused to pay
the same. Plaintiffs-appellees therefore prayed that the defendants- IItêñ.£îhqwâ£
appellants be ordered to pay the said sums as well as the costs of
suit. THE COURT BELOW ERRED IN NOT DECLARING THAT THE
CLAIM OF THE PLAINTIFFS-APPELLEES IS ALREADY BARRED
Defendants-appellants through counsel filed a motion to dismiss FOR FAILURE ON THEIR PART TO FILE THEIR CLAIM IN THE
predicated on two grounds, namely, that the lower court had no INTESTATE PROCEEDINGS OF THE DECEASED ROSENDO DE
jurisdiction over the subject matter of the litigation and that the GUZMAN (SPECIAL PROCEEDINGS NO. 1303-P) OF THE COURT
complaint stated no cause of action. In support of said motion, they OF FIRST INSTANCE OF RIZAL.
maintained that the suit was for a money claim against the supposed
debtor who was already dead and as such it should be filed in testate IIItêñ.£îhqwâ£
or intestate proceedings or, in the absence of such proceedings, after
the lapse of thirty (30) days, the creditors should initiate such THE COURT ERRED IN NOT SUSTAINING THE DEFENSE OF RES
proceedings, that the heirs could not be held liable therefor since there JUDICATA INTERPOSED BY DEFENDANTS-APPELLANTS BY
was no allegation that they assumed the alleged obligation. VIRTUE OF THE FINAL ORDER RENDERED OR ISSUED BY THE
COURT OF FIRST INSTANCE OF RIZAL IN CIVIL CASE NO. 2050,
The lower court sustained the motion to dismiss in an order dated May DATED MAY 11, 1953, COPY OF SAID ORDER IS ATTACHED AS
11, 1953, stating, among other things, that: têñ.£îhqw⣠EXHIBIT "F" AND MADE AN INTEGRAL PART OF THE PARTIAL
STIPULATION OF FACTS.
The procedure thus opened for a money claimant against a deceased
person, as in the instant case, is for said claimant to file proceedings IVtêñ.£îhqwâ£
for the opening of the judicial administration of the estate of said
deceased person and to present his claim in said proceedings. The
 19

THE COURT BELOW ERRED IN RENDERING A DECISION and, if disputed, it may be proved and allowed or disallowed by the
ORDERING THE HEREIN DEFENDANTS-APPELLANTS TO court as the facts may warrant. If the contingent claim is allowed, the
JOINTLY AND SEVERALLY PAY THE PLAINTIFFS-APPELLEES creditor shall receive payment to the same extent as the other
THE SUM OF THREE THOUSAND PESOS (p3,000.00), WITH creditors if the estate retained by the executor or administrator is
INTERESTS AND COSTS. sufficient. But if the claim is not so presented, after having become
absolute, within said two (2) years, and allowed, the assets retained
V têñ.£îhqw⣠in the hands of the executor or administrator, not exhausted in the
payment of claims, shall be distributed by the order of the court to the
HE COURT BELOW ERRED IN DISMISSING DEFENDANTS- persons entitled to the same; but the assets so distributed may still be
APPELLANTS' COUNTER-CLAIM AND IN NOT RENDERING A applied to the payment of the claim when established, and the creditor
DECISION IN ACCORDANCE THEREWITH. may maintain an action against the distributees to recover the debt,
and such distributees and their estates shall be liable for the debt in
The only question presented in the assigned errors is whether or not
proportion to the estate they have respectively received from the
the trial court erred in giving due course to the complaint on the
property of the deceased.
grounds stated above. We sympathize with the plight of the plaintiffs-
appellees but they have lost their right to recover because of Even under the above rule, the contingent claims must first have been
negligence and a failure to observe mandatory provisions of the law established and allowed in the probate court before the creditors can
and the Rules. They overlooked the fact that they were no longer file an action directly, against the distributees. Such is not the
suing Rosendo de Guzman who died shortly after the accident but his situation, however, in the case at bar. The complaint herein was filed
heirs. after the intestate proceedings had terminated and the estate finally
distributed to the heirs. If we are to allow the complaint to prosper and
Section 5, Rule 86 of the Rules of Court provides: têñ.£îhqwâ£
the trial court to take cognizance of the same, then the rules providing
All claims for money against the decedent arising from contract, for the claims against the estate in a testate or intestate proceedings
express or implied, whether the same be due, not due, or contingent, within a specific period would be rendered nugatory as a subsequent
all claims for funeral expenses and expenses for the last sickness of action for money against the distributees may be filed independently
the decedents, and judgment for money against the decedent, must of such proceedings. This precisely is what the rule seeks to prevent
be filed within the time in the notice; otherwise they are barred forever; so as to avoid further delays in the settlement of the estate of the
except that they may be set forth as counterclaims in any action that deceased and in the distribution of his property to the heirs, legatees
the executor or administrator may bring against the claimants ... or devisees.
Claims not yet due, or contingent, may be approved at their present
Furthermore, even assuming that the plaintiffs-appellees had no
value.
knowledge of the intestate proceedings which is not established, the
The above-quoted rule is mandatory. The requirement therein is for law presumes that they had such knowledge because the settlement
the purpose of protecting the estate of the deceased. The executor or of estate is a proceeding in remark and therefore the failure to file their
administrator is informed of the claims against it, thus enabling him to claims before such proceedings barred them from subsequently filing
examine each claim and to determine whether it is a proper one which the same claims outside said proceedings.
should be allowed. Therefore, upon the dismiss of the first complaint
WHEREFORE, the decision of the Court of First Instance appealed
of herein plaintiffs-appellees in Civil Case No. 2050, they should have
from is hereby reversed and set aside and another one entered
presented their claims before the intestate proceedings filed in the
dismissing the complaint and the counterclaim. No costs.
same court and docketed as Special Proceedings No. 1303-P.
Instead of doing so, however. the plaintiffs-appellees slept on their SO ORDERED.1ä
right. They allowed said proceedings to terminate and the properties
to be distributed to the heirs pursuant to a project of partition before
instituting this separate action. Such do not sanctioned by the above
rule for it strictly requires the prompt presentation and disposition of
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.
(See Py Eng Chong v. Herrera, 70 SCRA 130). With the exception
provided for in the above rule, the failure of herein plaintiffs-appellees
to present their claims before the intestate proceedings of the estate
of Rosendo de Guzman within the prescribed period constituted a bar
to a subsequent claim against the estate or a similar action of the
same import.

Therefore, it was an error on the part of the trial court to hold that the
plaintiffs-appellees had a cause of action against the defendants-
appellants who are the heirs of the deceased against whom the
liability is sought to be enforced, much less take cognizance of the
complaint. As in the first complaint, said court could not have assumed
jurisdiction over the second case for the simple reason that it was no
longer acting as a probate court which was the proper forum to file
such complaint. The termination of the intestate proceedings and the
distribution of the estate to the heirs did not alter the fact that plaintiffs-
appellees' claim was a money claim which should have been
presented before the probate court. The liability of the late Rosendo
de Guzman arose from the breach of his obligations under the
contract of carriage between him and the unfortunate passenger. The
obligations are spelled out by law but the liability arose from a breach
of contractual obligations. The resulting claim is a money claim.

The only instance wherein a creditor can file an action against a

distributee of the debtor's asset is under Section 5, Rule 88 of the
Rules of Court which provides: têñ.£îhqwâ£

If such contingent claim becomes absolute and is presented to the

court, or to the executor or administrator, within two (2) years from the
time limited for other creditors to present their claims, it may be
allowed by the court if not disputed by the executor or administrator,
 20

EN BANC 3. That the administrator has not answered the claim nor denied the
same.1awphîl.nèt
G.R. No. L-18403 September 30, 1961
WHEREFORE, it is respectfully prayed that an order be issued
IN RE ADMINISTRATION OF THE ESTATE OF PASCUAL admitting and approving the claim and ordering the administrator to
VILLANUEVA. MAURICIA G. DE VILLANUEVA, petitioner, pay the Bank the amount of the claim.
vs.
PHILIPPINE NATIONAL BANK, defendant-appellant. The administrator, on November 5, 1954, opposed the alleging that
he had no knowledge or information sufficient to form a belief as to
Ramon B. de los Reyes for defendant-appellant. the truth of the allegations therein. As special defenses, he interposed
Marcos M. Calo for petitioners. —

That the same indebtedness, if it existed, has already been paid;

That the caused action for the recovery of the aforesaid amount of
PAREDES, J.: P1,847.45 is barred by the statute of limitations, for more than ten (10)
Years have elapsed since the cause of action accrued up to present
A case certified by the Court of Appeals on the ground that the issues time;
involved are purely of law.
That the said claim is barred forever on the ground that notice to
For the administration of the estate of her deceased husband, Pascual creditors having been published in the MORNING TIMES of Cebu
Villanueva, the widow Mauricia G. Villanueva, on December 19, 1949, City, a newspaper of general circulation in on November 16, 23 and
petitioned the Court of First Instance of Agusan, for letters of 30, 1950, ... the Philippine National Bank failed to file its claim within
Administration (Sp. Proc. No. 67). The petition was set for hearing and the time limited in the notice, ....
Notice thereof was published on February 25, March 4, and 11, 1950,
in the Manila Daily Bulletin. At the hearing, other heirs while agreeing The appellant PNB, on November 14, 1958, more than four (4) Years
to the placing of estate under administration, opposed the after the opposition of the claim presented by the administrator, filed
appointment the widow. The name of Atty. Teodulo R. Ricaforte, a pleading captioned "Petition for an Extension of time within which to
suggested and all the parties agreed. After the taking the required File the Claim of Philippine National Bank", alleging, among others,
oath, Atty. Ricaforte entered upon the performance of his duties. that Sec. 2, Rule 87 of the Rules, allows the filing of claims even if the
Under date of November 9, 1950 the Clerk of the Agusan CFI, issued period stated in the notice to creditors elapsed, upon cause shown
the following Notice to Creditors: and on such terms as equitable; that its failure to present the claiming
with the period stated in the notice, was its lack of knowledge of
Letters of administration having been issued in the above entitled administration proceedings, for while said maintains a branch office in
case in favor of Teodulo R. Ricaforte for the settle of the intestate of Agusan, the employees did not come to know of the proceedings, the
Pascual Villanueva, deceased; notice has been published in the Morning Times, a newspaper very
limited circulation.
Notice is hereby given to all persons having claims for money against
the decedent, the said Pascual Villanueva, arising from contract, On January 16, 1959, the CFI issued the following Order —
express or implied, whether the same be due, not due or contingent,
for funeral expenses and expenses of last sickness of the deceased, It appearing that the claim of the Philippine National Bank against the
and Judgment for money against him, requiring them to file their estate of the deceased Pascual Villanueva already barred by the
claims with the clerk of court within six but not beyond twelve months statute of limitations because the claim was due and demandable
after date of the first publication of this notice, serving copies of such since December 20, 1940, but filed on July 20, 1953, after the
claims upon administrator, the said Teodulo R. Ricaforte. expiration of ten years, considering that said filing was furthermore
not present court within the period fixed by Sec. 2, Rule 87 of the
The above notice contained the usual order for publication thereof Rules of Court, and no reason having been shown to justify the
(once a week for three consecutive weeks) which was effected, thru tension of time for its filing, the Court resolves to deny it as it hereby
the Morning Times of City, a newspaper of general circulation, on Nov. denies the petition for an extension of time for filing of the claim by the
16, 23 and 30, 1950, which expired on November 16, 1951. Philippine National Bank. The failure of the Bank to present on time
the claim was due its own fault and can hardly be considered
On July 20, 1953, the defendant-appellant Philippine National Bank
excusable negligence.
filed in the administration proceedings, Creditor's Claim of the
following tenor — Appellant Bank moved to reconsider the above Order, arguing that
the statute of limitations had been suspended by the Moratorium Law,
The Philippine National Bank, Creditor of Pascual Villanueva,
and that the courts can extend the period limited in the notice, under
deceased, respectfully presents its claim against the estate of the said
special circumstances, and on grounds of equity (Velasquez v. Teod
deceased for Approval as follows:
46 Phil. 757). The PNB listed five incidents, which considered special
Original amount thru Agusan Agency on Dec. 20, 1939 circumstances to warrant the of the extension to present the claim,
........................................................ P600.00 among which the lack of knowledge of the pendency of the
administration proceedings; the legitimacy of the loan secured the
To int. at 10%: on P600.00 fr. 12-20-39 to 6-5-53 deceased; that when it filed the claim, it did know that the period stated
...................................................................... 747.45 in the notice had already expired.

Total due as of June 5, 1953 (Daily int. of P0.1644 after June 5, 1953) In disposing the motion for reconsideration, the lower court, on March
.......................... P1,347.45 3,1959, said —

That the said obligation has been due demandable since Dec. 20, The Court believes that the filing of money claim on July 20, 1953 in
1940; that the same is true and just claim and that it is still unpaid the Office of the Clerk of Court did not suspend running of the period
without any set-off. of prescription because said claim was filed out of time and therefore
invalid for all legal purposes. A careful revision of the record shows
On October 12, 1954, the Philippine National Bank filed a Motion for that the Philippine National Bank, contrary to the pretension of its
Admission of claim, stating — counsel, had knowledge of the present administration proceedings
long before July 20, 1953, because the second payment of the claim
1. That the Philippine National Bank filed its claim dated July 20, 1953; due to the deceased Pascual Villanueva from the Philippine War
Damage Commission in the amount of P6,441.30, was deposited in
2. That the last action taken on the claim was an ordered this
the Agusan Agency of the Bank in June, 1951. And in the inventory
Honorable Court issued on March 20, 1954, transferring the hearing
filed by the new administrator Francisco S. Conde, on February 27,
of the claim until the next calendar of the court, without objection of
1957, the following item appears:
the administrator;
 21

Money belonging to the said deceased which came into the hands of
the administrator on December 1, 1951, appearing in the Bank A-
1114, Agusan Agency deposited by the late administrator Teodulo R.
Ricaforte. — P6,897.52.

WHEREFORE, the motion for reconsideration is denied for lack of

merits.

The order of January 16, 1959 was the subject of the appeal to the
Court of Appeals which, as stated at the threshold of this opinion,
certified the same to this Court.

The important issue presented is whether or not the in question is

already barred. Admittedly, the claim was filed outside of the period
provided for in the Order of the lower court, within which to present
claims against the estate. The period fixed in the notice lapsed on
November 16, 1951 and the claim was filed on July 20, 1953 or about
1 year and 8 months late. This notwithstanding, appellant contends
that it did not know of such administration proceedings, not even its
employees in the Branch Office in Butuan City, Agusan. It is to be
noted that the petition for Letters of Administration and the Notice to
Creditors were duly published in the Manila Daily Bulletin and in the
Morning Times, respectively, which was a full compliance with the
requirements of the Rules. Moreover, the supposed lack of knowledge
of the proceedings on the part of appellant and its employees had
been belied by uncontested and eloquent evidence, consisting of a
deposit of an amount of money by the administrator Of the estate in
said Bank (Agusan Agency). The deposit was made on December 1,
1951, inspite of which the appellant Bank only filed its claim on July
20, 1953. It is quite true that the Courts can extend the period within
Which to present claims against the estate, even after the period
limited has elapsed; but such extension should be granted under
special circumstances. The lower did not find any justifiable reason to
give the extension and for one thing, there was no period to extend,
the same had elapsed.

Having reached the above conclusions, We deem it necessary to

determine the question as to whether or not the Moratorium Law had
suspended the prescriptive period for filing of the claim under
consideration.

WHEREFORE, the order subject of the appeal is hereby affirmed, with

costs against appellant Philippine National Bank, in both instances.
 22

EN BANC claims which survive against the executors and administrators, even
though they be demandable at a future day "except claims for the
G.R. No. L-8235 March 19, 1914 possession of or title to real estate." Section 700 provides that all
actions commenced against the deceased person for the recovery of
ISIDRO SANTOS, plaintiff-appellant, money, debt, or damages, pending at the time the committee is
vs. appointed, shall be discontinued, and the claims embraced within
LEANDRA MANARANG, administratrix, defendant-appellee. such actions presented to the committee. Section 703 provides that
actions to recover title or possession of real property, actions to
W. A. Kincaid and Thomas L. Hartigan for appellant.
recover damages for injury to person or property, real and personal,
Ramon Salinas for appellee.
and actions to recover the possession of specified articles of personal
TRENT, J.: property, shall survive, and may be commenced and prosecuted
against the executor or administrator; "but all other actions
Don Lucas de Ocampo died on November 18, 1906, possessed of commenced against the deceased before his death shall be
certain real and personal property which, by his last will and testament discontinued and the claims therein involved presented before the
dated July 26, 1906, he left to his three children. The fourth clause of committee as herein provided." Section 708 provides that a claim
this will reads as follows: secured by a mortgage or other collateral security may be abandoned
and the claim prosecuted before the committee, or the mortgage may
I also declare that I have contracted the debts detailed below, and it be foreclosed or the security be relied upon, and in the event of a
is my desire that they may be religiously paid by my wife and deficiency judgment, the creditor may, after the sale of mortgage or
executors in the form and at the time agreed upon with my creditors. upon the insufficiency of the security, prove such deficiency before
the committee on claims. There are also certain provisions in section
Among the debts mentioned in the list referred to are two in favor of 746 et seq., with reference to the presentation of contingent claims to
the plaintiff, Isidro Santos; one due on April 14, 1907, for P5,000, and the committee after the expiration of the time allowed for the
various other described as falling due at different dates (the dates are presentation of claims not contingent. Do plaintiff's claims fall within
not given) amounting to the sum of P2,454. The will was duly probated any of these sections? They are described in the will as debts. There
and a committee was regularly appointed to hear and determine such is nothing in the will to indicate that any or all of them are contingent
claims against the estate as might be presented. This committee claims, claims for the possession of or title to real property, damages
submitted its report to the court on June 27, 1908. On July 14, 1908, for injury to person or property, real or personal, or for the possession
the plaintiff, Isidro Santos, presented a petition to the court asking that of specified articles of personal property. Nor is it asserted by the
the committee be required to reconvene and pass upon his claims plaintiff that they do. The conclusion is that they were claims proper
against the estate which were recognized in the will of testator. This to be considered by the committee.
petition was denied by the court, and on November 21, 1910, the
plaintiff instituted the present proceedings against the administratrix This being true, the next point to determine is, when and under what
of the estate to recover the sums mentioned in the will as due him. circumstances may the committee be recalled to consider belated
Relief was denied in the court below, and now appeals to this court. claims? Section 689 provides:

In his first assignment of error, the appellant takes exception to the That court shall allow such time as the circumstances of the case
action of the court in denying his petition asking that the committee be require for the creditors to present their claims the committee for
reconvened to consider his claim. In support of this alleged error examination and allowance; but not, in the first instance, more than
counsel say that it does not appear in the committee's report that the twelve months, or less than six months; and the time allowed shall be
publications required by section 687 of the Code of Civil Procedure stated in the commission. The court may extend the time as
had been duly made. With reference to this point the record circumstances require, but not so that the whole time shall exceed
affirmatively shows that the committee did make the publications eighteen months.
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 It cannot be questioned that thus section supersedes the ordinary
committee. If this were necessary we might say that, although the limitation of actions provided for in chapter 3 of the Code. It is strictly
record does not contain a formal approval of the committee's report, confined, in its application, to claims against the estate of deceased
such approval must undoubtedly have been made, as will appear from persons, and has been almost universally adopted as part of the
an inspection of the various orders of the court approving the annual probate law of the United States. It is commonly termed the statute of
accounts of the administratrix, in which claims allowed against the nonclaims, and its purpose is to settle the affairs of the estate with
estate by the committee were written off in accordance with its report. dispatch, so that residue may be delivered to the persons entitled
This is shown very clearly from the court's order of August 1, 1912, in thereto without their being afterwards called upon to respond in
which the account of the administratrix was approved after reducing actions for claims, which, under the ordinary statute of limitations,
final payments of some of the claims against the estate to agree with have not yet prescribed.
the amounts allowed by the committee. It is further alleged that at the
time this petition was presented the administration proceedings had The object of the law in fixing a definite period within which claims
not been terminated. This is correct. 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 his petition of July 14, 1909, asking that the committee be in the hands of the persons entitled to receive it. (Estate of De Dios,
reconvened to consider his claims, plaintiff states that his failure to 24 Phil. Rep., 573.)
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 Due possibly to the comparative shortness of the period of limitation
will, expressly recognized them and directed that they should be paid. applying to such claims as compared with the ordinary statute of
The inference is that had plaintiff's claims not been mentioned in the limitations, the statute of nonclaims has not the finality of the ordinary
will he would have presented to the committee as a matter of course; statute of limitations. It may be safely said that a saving provision,
that plaintiff was held to believe by this express mention of his claims more or less liberal, is annexed to the statute of nonclaims in every
in the will that it would be unnecessary to present them to the jurisdiction where is found. In this country its saving clause is found in
committee; and that he did not become aware of the necessity of section 690, which reads as follows:
presenting them to the committee until after the committee had made
On application of a creditor who has failed to present his claim, if made
its final report.
within six months after the time previously limited, or, if a committee
Under these facts and circumstances, did the court err in refusing to fails to give the notice required by this chapter, and such application
reconvene the committee for the purpose of considering plaintiff's is made before the final settlement of the estate, the court may, for
claim? The first step towards the solution of this question is to cause shown, and on such terms as are equitable, renew the
determine whether plaintiff's claims were such as a committee commission and allow further time, not exceeding one month, for the
appointed to hear claims against an estate is, by law, authorized to committee to examine such claim, in which case it shall personally
pass upon. Unless it was such a claim plaintiff's argument has no notify the parties of the time and place of hearing, and as soon as may
foundation. Section 686 empowers the committee to try and decide be make the return of their doings to the court.
 23

If the committee fails to give the notice required, that is a sufficient But, if the express mention of a debt in the will requires the
cause for reconvening it for further consideration of claims which may administrator to pay it without reference to the committee, what
not have been presented before its final report was submitted to the assurance is there, in the case of an insolvent estate, that it will not
court. But, as stated above, this is not the case made by the plaintiff, take precedence over preferred debts?
as the committee did give the notice required by law. Where the
proper notice has been given the right to have the committee recalled If it is unnecessary to present such claim to the committee, the source
for the consideration of a belated claim appears to rest first upon the of nonclaims is not applicable. It is not barred until from four to ten
condition that it is presented within six months after the time previously years, according to its classification in chapter 3 of the Code of Civil
limited for the presentation of claims. In the present case the time Procedure, establishing questions upon actions. Under such
previously limited was six months from July 23, 1907. This allowed circumstances, when then the legal portion is determined? If, in the
the plaintiff until January 23, 1908, to present his claims to the meantime the estate has been distributed, what security have the
committee. An extension of this time under section 690 rested in the differences against the interruption of their possession? Is the
discretion of the court. (Estate of De Dios, supra.) In other words, the administrator required to pay the amount stipulated in the will
court could extend this time and recall the committee for a regardless of its correctness? And, if not, what authority has he to vise
consideration of the plaintiff's claims against the estate of justice the claim? Section 706 of the Code of Civil Procedure provides that
required it, at any time within the six months after January 23, 1908, an executor may, with the approval of the court, compound with a
or until July 23, 1908. Plaintiff's petition was not presented until July debtor of deceased for a debt due the estate, But he is nowhere
14, 1909. The bar of the statute of nonclaims is an conclusive under permitted or directed to deal with a creditor of the estate. On the
these circumstances as the bar of the ordinary statute of limitations contrary, he is the advocate of the estate before an impartial
would be. It is generally held that claims are not barred as to property committee with quasi-judicial power to determine the amount of the
not included in the inventory. (Waughop vs. Bartlett, 165 III., 124; claims against the estate, and, in certain cases, to equitably adjust the
Estate of Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court amounts due. The administrator, representing the debtor estate, and
in the case last cited, fraud would undoubtedly have the same effect. the creditor appear before this body as parties litigant and, if either is
These exceptions to the operation of the statute are, of course, dissatisfied with its decision, an appeal to the court is their remedy.
founded upon the highest principles of equity. But what is the plea of To allow the administrator to examine and approve a claim against
the plaintiff in this case? Simply this: That he was laboring under a the estate would put him in the dual role of a claimant and a judge.
mistake of law — a mistake which could easily have been corrected The law in this jurisdiction has been so framed that this may not occur.
had he sought to inform himself; a lack of information as to the law The most important restriction, in this jurisdiction, on the disposition of
governing the allowance of claims against estate of the deceased property by will are those provisions of the Civil Code providing for the
persons which, by proper diligence, could have been remedied in preservation of the legal portions due to heirs by force of law, and
ample to present the claims to the committee. Plaintiff finally expressly recognized and continued in force by sections 614, 684,
discovered his mistake and now seeks to assert his right when they and 753 of the Code of Civil Procedure. But if a debt is expressly
have been lost through his own negligence. Ignorantia legis neminem recognized in the will must be paid without its being verified, there is
excusat. We conclude that the learned trial court made no error in nothing to prevent a partial or total alienation of the legal portion by
refusing to reconvene the committee for the purpose of considering means of a bequest under a guise of a debt, since all of the latter must
plaintiff's claims against the estate. be paid before the amount of the legal portion can be determined.

In his second assignment of error the appellant insists that the court We are aware that in some jurisdictions executors and administrators
erred in dismissing his petition filed on November 21, 1910, wherein are, by law, obligated to perform the duties which, in this jurisdiction,
he asks that the administratrix be compelled to pay over to him the are assign to the committee on claims; that in some other jurisdictions
amounts mentioned in the will as debts due him. We concede all that it is the probate court itself that performs these duties; that in some
is implied in the maxim, dicat testor et erit lex. But the law imposes jurisdictions the limitation upon the presentment of claims for
certain restrictions upon the testator, not only as to the disposition of allowance is longer and, possibly, in some shorter; and that there is a
his estate, but also as to the manner in which he may make such great divergence in the classification of actions which survive and
disposition. As stated in Rood on Wills, sec. 412: "Some general rules actions which do not survive the death of the testator. It must be
have been irrevocably established by the policy of the law, which further remembered that there are but few of the United States which
cannot be exceeded or transgressed by any intention of the testator, provide for heirs by force of law. These differences render useless as
be it ever so clearly expressed." authorities in this jurisdiction many of the cases coming from the
United States. The restriction imposed upon the testator's power to
It may be safely asserted that no respectable authority can be found dispose of his property when they are heirs by force of law is
which holds that the will of the testator may override positive especially important. The rights of these heirs by force law pass
provisions of law and imperative requirements of public policy. (Page immediately upon the death of the testator. (Art. 657, Civil Code.) The
on Wills, sec. 461.) state intervenes and guarantees their rights by many stringent
provisions of law to the extent mentioned in article 818 of the Civil
Impossible conditions and those contrary to law and good morals shall Code. Having undertaken the responsibility to deliver the legal portion
be considered as not imposed, . . . (Art. 792, Civil Code.) 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
Conceding for the moment that it was the testator's desire in the the legal portion, some other procedure provided in the will of the
present case that the debts listed by him in his will should be paid testator. The state cannot afford to allow the performance of its
without referring them to a committee appointed by the court, can such obligations to be directed by the will of an individual. There is but one
a provision be enforced? May the provisions of the Code of Civil instance in which the settlement of the estate according to the probate
Procedure relating to the settlement of claims against an estate by a procedure provided in the Code of Civil Procedure may be dispense
committee appointed by the court be superseded by the contents of a with, and it applies only to intestate estates. (Sec. 596, Code Civ.
will? Proc.) A partial exemption from the lawful procedure is also contained
in section 644, when the executor or administrator is the sole
It is evident from the brief outline of the sections referred to above that
residuary legatee. Even in such case, and although the testator
the Code of Civil Procedure has established a system for the
directs that no bond be given, the executor is required to give a bond
allowance of claims against the estates of decedents. Those are at
for the payment of the debts of the testator. The facts of the present
least two restrictions imposed by law upon the power of the testator
case do not bring it within either of this sections. We conclude that the
to dispose of his property, and which pro tanto restrict the maxim that
claims against the estate in the case at bar were enforceable only
"the will of the testator law: (1) His estate is liable for all legal
when the prescribed legal procedure was followed.
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 But we are not disposed to rest our conclusion upon this phase of the
precedence over the latter. (Sec. 640, Code Civ, Proc.) In case his case entirely upon legal grounds. On the contrary we are strongly of
estate is sufficient they must be paid. (Sec, 734, id.) In case the estate the opinion that the application of the maxim, "The will of the testator
is insolvent they must be paid in the order named in section 735. It is is the law of the case," but strengthens our position so far as the
hardly necessary to say that a provision in an insolvent's will that a present case is concerned.
certain debt be paid would not entitle it to preference over other debts.
 24

It will ordinarily be presumed in construing a will that the testator is the legal portion of the testator's children would be consumed in part
acquainted with the rules of law, and that he intended to comply with in the payment of this item. Such a case cannot occur if the prescribed
them accordingly. If two constructions of a will or a part thereof are procedure is followed of requiring of such claims be viseed by the
possible, and one of these constructions is consistent with the law, committee on claims.
and the other is inconsistent, the presumption that the testator
intended to comply with the law will compel that construction which is The direction in the will for the executor to pay all just debts does not
consistent with the law to be adopted. (Page on Wills, sec. 465.) 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
Aside from this legal presumption, which we believe should apply in administered in any other than the regular way under the statute,
the present case as against any construction of the will tending to which requires "all demands against the estates of the deceased
show an intention of the testator that the ordinary legal method of persons," "all such demands as may be exhibited," etc. The statute
probating claims should be dispensed with, it must be remembered provides the very means for ascertaining whether the claims against
that the testator knows that the execution of his will in no way affects the estate or just debts. (Kaufman vs. Redwine, 97 Ark., 546.)
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 See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45
meantime, as the testator well knows, he may acquire or dispose of N. J. L., 208).
property, pay or assume additional debts, etc. In the absence of
anything to the contrary, it is only proper to presume that the testator, The petition of the plaintiff filed on November 21, 1910, wherein he
in his will, is treating of his estate at the time and in the condition it is asks that the administratrix be compelled to pay over to him the
in at his death. Especially is this true of his debts. Debts may accrue amounts mentioned in the will as debts due him appears to be nothing
and be paid in whole or in part between the time the will is made and more nor less than a complaint instituting an action against the
the death of the testator. To allow a debt mentioned in the will in the administratrix for the recovery of the sum of money. Obviously, the
amount expressed therein on the ground that such was the desire of plaintiff is not seeking possession of or title to real property or specific
the testator, when, in fact, the debt had been wholly or partly paid, articles of personal property.
would be not only unjust to the residuary heirs, but a reflection upon
When a committee is appointed as herein provided, no action or suit
the good sense of the testator himself. Take the present case for
shall be commenced or prosecute against the executor or
example. It would be absurd to say that the testator knew what the
administrator upon a claim against the estate to recover a debt due
amount of his just debt would be at a future and uncertain date. A
from the state; but actions to recover the seizing and possession of
mere comparison of the list of the creditors of the testator and the
real estate and personal chattels claimed by the estate may be
amounts due them as described in his will, with the same list and
commenced against him. (Sec. 699, Code Civ. Proc.)
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 The sum of money prayed for in the complaint must be due the plaintiff
other instances the amounts due this creditors were either greater or either as a debt of a legacy. If it is a debt, the action was erroneously
less than the amounts mentioned as due them in the will. In fact, of instituted against the administratrix. Is it a legacy?
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 Plaintiff's argument at this point becomes obviously inconsistent.
either failed to list in his will all his creditors and that, as to those he Under his first assignment of error he alleges that the committee on
did include, he set down an erroneous amount opposite their names; claims should have been reconvened to pass upon his claim against
or else, which is the only reasonable view of the matter, he overlooked the estate. It is clear that this committee has nothing to do with
some debts or contracted new ones after the will was made and that legacies. It is true that a debt may be left as a legacy, either to the
as to others he did include he made a partial payments on some and debtor (in which case it virtually amounts to a release), or to a third
incurred additional indebtedness as to others. 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
While the testator expresses the desire that his debts be paid, he also legacy of his own debt. (Arts. 866, 878, Civil Code.) The creation of a
expressly leaves the residue of his estate, in equal parts, to his legacy depends upon the will of the testator, is an act of pure
children. Is it to be presumed that he desired to overpay some of his beneficence, has no binding force until his death, and may be avoided
creditors notwithstanding his express instructions that his own in whole or in part by the mere with whim of the testator, prior to that
children should enjoy the net assets of his estate after the debts were time. A debt arises from an obligation recognized by law (art. 1089,
paid? Again, is the net statement of the amount due some of his Civil Code) and once established, can only be extinguished in a lawful
creditors and the omission all together of some of his creditors manner. (Art. 1156, id.) Debts are demandable and must be paid in
compatible with his honorable and commendable desire, so clearly legal tender. Legacies may, and often do, consist of specific articles
expressed in his will, that all his debts be punctually paid? We cannot of personal property and must be satisfied accordingly. In order to
conceive that such conflicting ideas were present in the testator's collect as legacy the sum mentioned in the will as due him, the plaintiff
mind when he made his will. 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
Again, suppose the testator erroneously charged himself with a debt
urge now it is a legacy.
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 Was it the intention of the testator to leave the plaintiff a legacy of
affairs. Among the assets of the estate mentioned in the will is a parcel P7,454? We have already touched upon this question. Plaintiff's claim
of land valued at P6,500; while in the inventory of the administratrix is described by the testator as a debt. It must be presumed that he
the right to repurchase this land from one Isidro Santos is listed as an used this expression in its ordinary and common acceptation; that is,
asset. Counsel for the administratrix alleges that he is prepared to a legal liability existing in favor of the plaintiff at the time the will was
prove that this is the identical plaintiff in the case at bar; that the made, and demandable and payable in legal tender. Had the testator
testator erroneously claimed the fee of this land in his last will and desired to leave a legacy to the plaintiff, he would have done so in
stated Santos' rights in the same as a mere debt due him of P5,000; appropriate language instead of including it in a statement of what he
that in reality, the only asset of the testator regard to this land was the owed the plaintiff. The decedent's purpose in listing his debts in his
value of the right to repurchase, while the ownership of the land, will is set forth in the fourth clause of the will, quoted above. There is
subject only to that right of redemption, belonged to Santos; that the nothing contained in that clause which indicates, even remotely, a
right to repurchase this land expired in 1907, after the testator's death. desire to pay his creditors more than was legally due them.
Assuming, without in the least asserting, that such are the underlying
facts of this case, the unjust consequences of holding that a debt A construction leading to a legal, just and sensible result is presumed
expressly mentioned in the will may be recovered without being to be correct, as against one leading to an illegal, unnatural, or absurd
presented to the committee on claims, is at once apparent. In this effect. (Rood on Wills, sec. 426.)
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 testator, in so many words, left the total net assets of his estate,
the land, and could also have exacted the redemption price. Upon without reservation of any kind, to his children per capita. There is no
such a state of facts, the one item of P5,000 would be a mere fictitious indication that he desired to leave anything by way of legacy to any
debt, and as the total net value of the estate was less than P15,000, other person. These considerations clearly refute the suggestion that
 25

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.
 26

EN BANC executrix-appellant Felisa Camia de Reyes filed a project of partition,

which was also opposed by the oppositor-appellee Juana Reyes de
G.R. No. L-42092 October 28, 1936 Ilano in a pleading of October 20, 1933, alleging, among other things,
that the valuation of the properties made by the commissioners on
In re Estate of the deceased Andres Reyes. FELISA CAMIA DE claims and appraisal is inadequate and unjust; that said project does
REYES, petitioner-appellant, not contain all the properties that should be partitioned; that it contains
vs. properties belonging to the conjugal partnership of the first marriage;
JUANA REYES DE ILANO, oppositor-appellee. and that said project is based upon the will, some of the provisions of
which are inofficious and illegal; at the same time submitting a
Manuel Jose for appellant.
counterproject of partition with an appraisal of the properties therein
Vicente J. Francisco for appellee.
enumerated, which appraisal is different from that made by the
commissioners on claims and appraisal. This counterproject of
partition presented by the oppositor-appellee is the one admitted and
approved by the court.
VILLA-REAL, J.:
The first legal question to be decided in this appeal, which is raised in
This is an appeal taken by the petitioner Felisa Camia de Reyes from the first assignment of alleged error, is whether or not the oppositor-
the resolution of the Court of First Instance of Cavite, the dispositive appellee Juana Reyes de Ilano is still entitled to impugn, by means of
part of which reads as follows: the testimony of the witness Benedicto A. Ilano, the valuation or
appraisal of the properties of the deceased Andres Reyes, made by
In view of the foregoing, the court rejects the project of partition of the the commissioners on claims and appraisal and contained in their
executrix Felisa Camia and approves the counterproject presented by report of May 8, 1933.
the heiress, Reyes. The accounts presented by the executrix are
approved with the above-stated amendments. The balance of The executrix-appellant Felisa Camia de Reyes contends that, as the
P367.11 against the executrix should be reimbursed by her equally to appellee failed to file her objection to said report in due time, all
the heirs of the deceased. It is ordered that the guardian ad litem of evidence presented to impugn it is untimely after the report in question
the minor Bibiano Reyes be paid the sum of P29.40 for services, as has been submitted to the court and declared final and conclusive in
such, rendered to said minor, charging it, as the pensions given to an order of June 19, 1933, which reads as follows:
said minor, to the latters' share. So ordered.
The heiress Juana Reyes has filed a motion to the effect that the
In support of her appeal, the appellant assigns eleven alleged errors administratrix be ordered to present a project of partition as soon as
as committed by the court a quo in its resolution in question, which possible.
will be discussed in the course of this decision.
At the same time and pursuant to the order of this court of the 6th
The following facts have been established during the trial of the case: instant, counsel for Juana Reyes has entered a detailed and specific
opposition to the accounts presented by the administratrix, and the
Andres Reyes and Luciana Farlin were married in the year 1893, committee on claims and appraisal has likewise submitted a final
having had six children, three of whom died without heirs before their report, rejecting, for the reason stated therein, the claims of Albino
parents' death, and two died also without heirs after the death of their Galeca, Rafaela Dominguez, Raymundo Samson, Filomena
mother Luciana Farlin, leaving the herein oppositor-appellee Juana Dominguez and Felisa Camaña, and no appeal having been duly
Reyes de Ilano as their only surviving child. About said year 1893, the taken from the resolution of the committee on claims and appraisal,
parents of Andres Reyes leased certain parcels of land from the said report is final and conclusive.
Spanish government. Upon their death during the Spanish regime,
their son Andres Reyes succeeded them in said lease and the latter Wherefore, the administratrix is ordered to present a project of
afterwards purchased said leased lands as friar lands from the Insular partition within the period of ten (10) days, and as soon as the project
Government in the years 1909, 1910 and 1921, it appearing of record in question is filed, the court will set the final account as well as the
that he was married to Luciana Farlin (Exhibits E, F, G, H, I, J, K, L, said project of partition for hearing.
and M, and Exhibits 22, 23 to 23-I and 30). On October 1, 1910,
Luciana Farlin also acquired by purchase from the Insular The administratrix is ordered to pay to the commissioners on claims
Government certain parcels of friar land described in certificates of and appraisal their lawful fees and expenses.
sale Exhibits A, B, C and D. After the death of Luciana Farlin on
It is inferred from the above-quoted order that what was declared final
November 12, 1922, her surviving spouse, Andres Reyes, contracted
and conclusive was the report of the commissioners on claims and
a second marriage with the herein applicant-appellant Felisa Camia.
appraisal with respect to the claims of Albino Galeca, Rafaela
A son named Bibiano Reyes was born of said second marriage.
Dominguez, Raymundo Samson, Filomena Dominguez and Felisa
During her marriage to Andres Reyes, Felisa Camia also purchased
Camaña, who took no appeal from the resolution of said
a parcel of friar land (Exhibit N) from the Government on June 3, 1930,
commissioners rejecting the claims in question. Section 773 of the
and another on August 2, 1927, from her husband Andres Reyes, who
Code of Civil Procedure grants the creditor of a deceased person the
had, acquired it on May 16, 1927, by purchase from the Insular
right to appeal to the competent Court of First Instance from the
Government, as part of the friar lands (Exhibit O). Andres Reyes died
disallowance, in whole or in part, of his claim by the committee, on
on April 20, 1932, leaving a will (Exhibit A) which was duly probated
claims and appraisal, and failure to exercise this right within the period
on June 21, 1933. He was survived by his wife, the herein executrix
and in the manner prescribed by section 775 of said Code makes the
and appellant Felisa Camia, his only son had with her, named Bibiano
committee's resolution final and prevents the court from acquiring
Reyes, and his daughter by his first marriage, the herein oppositor-
jurisdiction over the matter (Kette vs. Suarez, 55 Phil., 712).
appellee Juana Reyes de Ilano. Felisa Camia qualified on June 25,
1932, as executrix of the estate left by the deceased husband Andres In the case of Siy Chong Keng, vs. Collector of Internal Revenue (60
Reyes. Severo Abellara and Luis Gaerlan were appointed Phil., 493), this court laid down the following doctrine:
commissioners on claims and appraisal and, after having qualified for
their post, they presented their final report on May 8, 1933. The herein 1. DESCENT AND DISTRIBUTION; COMMITTEE ON CLAIMS AND
appellant Felisa Camia filed her first account, as administratrix, on APPRAISALS; COLLECTOR OF INTERNAL REVENUE. — There is
May 13, 1933. The appellee Juana Reyes de Ilano filed her opposition no provision of law which makes it the duty of the Collector of Internal
to this account in her pleadings of June 3 and 12, 1933, claiming that Revenue to take part in the deliberations of the commissioners on
some of the items of expenses stated therein are unnecessary and claims and appraisals nor is he required to take exceptions to the
inaccurate. On October 13, 1933, said executrix-appellant presented report of such a committee and appeal to the court for a revision of its
the second account of her administration which was likewise opposed appraisals. The statute provides that the committee, after being sworn
by the oppositor-appellee Juana Reyes de Ilano on the ground that, to make a true appraisal, shall appraise the value of the estate in
according to her, it is incomplete and that certain items of expenses money and return their warrants with such appraisal to the court and
and income, which are enumerated in her pleading of opposition, are shall deliver a copy of the appraisal to the executor or administrator.
vague, unnecessary and inaccurate. On October 16, 1933, the (Sec. 670, Code of Civil Procedure.)
 27

2. ID.; ID.; ID.; PURPOSE OF INVENTORY AND APPRAISAL OF AN it was natural that she should continue living with her said son in said
ESTATE. — Apparently the statute does not require approval of the house, not only because it is their home but also to watch over and
committee's appraisals by the court; but doubtless exceptions thereto preserve it, as testamentary executrix, and an expense of P3.19 a
might be taken by the executor or administrator upon whom a copy month for electricity for the preservation of the house under
was served. The purpose of the inventory and appraisal of the estate administration, is not excessive and should be approved.
of the decedent is to aid the court in revising the accounts and
determining the liabilities of the executor or administrator and in The item of expenses for the novenary or vigil for the soul of the
making a final and equitable distribution (partition) of the estate and deceased Andres Reyes, as well as for the funeral and religious
otherwise to facilitate the administration of the estate. ceremonies enjoined by the deceased in his will to be celebrated in
accordance with his social standing of the deceased in the Province
It is very clear, therefore, that the committee's appraisal of the estate of Cavite.
of the deceased is not conclusive and the court is not bound to adopt
it. Summarizing all that has been stated in connection with the third,
fourth, fifth and sixth assignments of error, this court believes that all
Therefore, the court a quo committed no error in permitting Benedicto the items rejected by the lower court, which are the subject matter of
A. Ilano to testify for the purpose of impugning the committee's said assignments of error, should be approved with the exception of
appraisal of the estate of the deceased. those of June 23 and 25, 1932, referring to the obtainment of the bond
for the executrix and amounting to P4.20. The total amount of said
The second question to be decided is whether or not the lower court items which should be approved is P1,057.68.
erred in rejecting certain items contained in the two accounts of the
executrix Felisa Camia de Reyes and stated in the third, fourth, fifth The lower court found that the total amount of the disbursements
and sixth assignments of error.lâwphi1.nêt made by the executrix Felisa Camia de Reyes, after deducting all the
expenses rejected by it as improper, is P2,405.42. Adding the
Said items refer to certain expenses for transportation and P1,057.68, which this court found to have been improperly rejected,
subsistence incurred by the executrix, and her mother and minor child to said sum, makes P3,463.10 the total amount of the expenses for
who accompanied her on her trips made for the benefit of the estate which the executrix should be reimbursed by the estate. If the sum of
during the period from the month of May 1932 to the month of April P2,772.53, representing the income, is subtracted from the
1933; for medicine for the minor Bibiano Reyes; for electricity abovestated amount, there is a balance of P690.57 which the estate
consumed in the house of the deceased wherein his widow, the herein of Andres Reyes should pay to said executrix. Furthermore said
executrix, and her minor child continued to live; and for the funeral executrix is entitled to collect P81.94 as commission upon the sum of
and the novenary, commonly called the "vigil", for the soul of the P3,463.10 at the rate of 3 per cent upon the first P2,000 and 1 ½ per
deceased. cent upon the excess, as provided by section 680 of the Code of Civil
Procedure.
The expenses for transportation and subsistence refer to the trips
made by the executrix, accompanied by her mother and son, to the Turning now to the seventh assignment of alleged error, the question
Court of First Instance of Cavite to attend the hearings in connection to be decided is whether the parcels of land designated by the letters
with the testamentary proceedings; to the hacienda belonging to the e, f , g, h, i, j, k, l and m in the inventory of the executrix-appellant
estate under her administration; and to Manila in order to interview her Felisa Camia de Reyes are private properties of the deceased Andres
attorney also in connection with the testamentary proceedings. All Reyes or are properties of his conjugal partnership with his wife by his
these expenses were necessary for the care and administration of the first marriage, Luciana Farlin.
estate and should, therefore, be approved.
It appears uncontroverted from the oral as well as the documentary
To all appearances the company of the mother of the executrix Felisa evidence presented at the trial that said parcels were originally friar
Camia de Reyes, surviving spouse of the deceased whose lands which the parents of Andres Reyes leased from the Government
testamentary estate is under consideration, and that of her minor son during the Spanish regime. Andres Reyes succeeded his parents in
were unnecessary. Taking into consideration, however, that the said lease and later acquired said leased lands by absolute purchase
executrix is only 31 years of age and is the widow of a decedent who, from the Insular Government on different dates, that is, he purchased
in life, had been a good social standing, Philippine idiosyncrasy and one parcel on May 9, 1910 (Exhibit J, transfer certificate of title No.
tradition demand that she be surrounded by every protection and care 1817), another parcel on March 29, 1921, (Exhibit I), and the rest on
needed by a widow of good reputation, in respect of the memory of April 5, 1911 (Exhibits E, F, G, H, K, L and M and 22, 23 to 23-I and
her deceased husband. For these reasons this court is of the opinion 30, and transfer certificates of title Nos. 3230, 3228 [Exhibit 26], 3229
that the company of the mother and son of the executrix during the [Exhibit 27], 3270 [Exhibit 28], 3231 [Exhibit 29], 4324 [Exhibit 30],
trips which she had to make in connection with the affairs of the estate and 3232 [Exhibit 31]). All these parcels were acquired by said Andres
of which she was the testamentary executrix, is justified and, Reyes during the existence of his first marriage to Luciana Farlin, who
consequently , the expenses for transportation and subsistence died on November 12, 1922. It does not appear that a liquidation has
incurred by her and her companions should be approved. been made of the ganancial property belonging to the conjugal
partnership of Andres Reyes and Luciana Farlin.
However, with respect to the items of June 23 and 25, 1932, which
consist of transportation expenses to Cavite of the executrix, her Article 1407 of the Civil Code provides as follows:
mother and son for the purpose of looking for a surety, and the sum
of P1.50 paid for certified copies of the assessed value of the property ART. 1407. All the property of the spouses shall be deemed
of the sureties, which expenses amount to P4.20, they should be partnership property in the absence of proof that it belongs exclusively
rejected in accordance with the doctrine laid down in Sulit vs. Santos to the husband or to the wife.
(56 Phil., 626).
In the case of Guinguing vs. Abuton and Abuton (48 Phil., 144), this
As to the sum of P6 which the executrix paid for medicine used for her court laid down the following doctrine:
minor child, Bibiano Reyes, while it is true that the sum of P25 a
month, chargeable to the estate, is allotted to said minor for his 2. HUSBAND AND WIFE; CONJUGAL PROPERTY; TITLE IN NAME
education and support, this court is of the opinion that the extra OF ONE SPOUSE ONLY. — Property acquired by the spouses during
payment of P6 for medicine is not unwarranted and should, therefore, marriage pertains to the conjugal partnership regardless of the form
be also approved. in which the title is taken; and the fact that a composition title to the
property has been, taken in the name of one of the spouses only,
In the fifth assignment of alleged error, it is claimed that the lower court whether husband or wife, does not change the character of the
erred in having disapproved the sum of P58.40 spent for electricity property.
consumed in the house of the deceased Andres Reyes from April 30,
1932, to the month of October, 1933, or during one year and six In the unpublished case of Espiritu vs. Bernardino (G. R. No. 36371,
months approximately. At the time of the death of Andres Reyes, he promulgated on March 18, 1933 [58 Phil., 902]), one Adriano Espiritu
was living with his wife by his second marriage, Felisa Camia de acquired a lot of the friar lands by assignment from Antonio Gregorio,
Reyes, and his son also by his second marriage, Bibiano Reyes, and with the approval of the Director of Lands. This acquisition took place
 28

during the existence of Adriano Espiritu's marriage to his wife Sotera the second assignment of error. The record shows that the attorney
Ramoy. This court held in a decision of a division of three that said lot for the executrix does not deny but, on the contrary, admits as true
had the nature of conjugal partnership property. the testimony of the attorney for the oppositor during the trial of this
case that three days prior to the day set for the taking of the
Therefore, according to law and jurisprudence, it is sufficient to prove deposition, the executrix had been notified of the date thereof, and
that the property was acquired during the marriage in order that the two days before the date in question she had been served by mail with
same may be deemed conjugal property. In this case the parties admit a copy of the opposition to the second or final account, together with
that the parcels of land under consideration were purchased by the a copy of the opposition to the project of partition and a copy of the
deceased Andres Reyes during his marriage to his first wife Luciana counterproject of partition made by said attorney for the oppositor. On
Farlin. The mere fact that Andres Reyes appears as purchaser in the page 10 of the appellee's brief it is stated that the originals of said
certificates of sale and in the certificates of titles does not change the pleadings were mailed to the office of the clerk of the Court of First
ganacial nature of said lands. In the unpublished case of Benavides Instance of Cavite on October 20, 1933, it being presumed that they
vs. Tordilla and Reyes (G. R. No. 39497, promulgated on March 5, were received by said office on the following day, October 21, 1933.
1934 [59 Phil., 918]), the spouses Jose I. Borja and Sofia Benavides, The deposition in question took place on the 24th and 25th of said
during their marriage. built a house on a lot which was the paraphernal month and year. Furthermore, said deposition contains the statement
property of the wife. This court, in a division of three, held that the of the attorney for the executrix that he received said copies of the
house is presumed to be conjugal property in the absence of oppositor's opposition to the second account and to the project of
conclusive evidence showing that the money spent in the construction partition, and her counterproject of partition at 4.50 p. m. on October
thereof belongs privately to any of the spouses, the testimony of the 23, 1933, or one day before the taking of the deposition which, as
wife, to the effect that said money exclusively belonged to her and that stated, took place on the 24th of said month and year, at 4:30 p. m.
the posts belonged to the old house which she inherited from her The deposition in question was continued on the following day,
deceased father, not being sufficient to destroy said presumption. October 25, 1933, and said attorney for the executrix had opportunity
to cross-examine, and in fact he cross-examined the deponent. In the
Therefore, the court a quo committed no error in declaring that the opinion of this court, these facts are sufficient to show that the
abovestated parcels belong to the conjugal partnership of the admission of said deposition as evidence by the lower court did not
deceased Andres Reyes and his first wife Luciana Farlin. constitute an error inasmuch as in the taking thereof there were no
defects or irregularities that might have affected the rights of any of
With respect the parcels of land described in Exhibits O and N, which
the parties.
are the subject matter of the eighth assignment of alleged error, they
appear to have been purchased by Felisa Camia during her marriage In the case of Lim Cuan Sy vs. Northern Assurance Co. (55 Phil., 248),
to the deceased Andres Reyes, or in the years 1927 and 1930, this court laid down the following doctrine:
respectively. Inasmuch as these parcels were acquired under the
same circumstances as those stated in the seventh assignment of A deposition taken, under the conditions prescribed by law, and upon
alleged error, all that has been said in connection with the latter is due notice, allowing two full days, exclusive of Sunday, to the opposite
applicable to them. Therefore, they are also on conjugal property of party, should not be suppressed merely because the attorney for such
the spouses Andres Reyes and Felisa Camia de Reyes. Furthermore, party may have been unable to attend at the time fixed for the taking
on page 210 of the file of exhibits of this case, there is a copy of an of the deposition.
affidavit of the deceased Andres Reyes, dated September 2, 1927,
wherein the deponent states that he was selling lot No. 6327 to his In the case of Muñiz vs. Muñiz (53 Phil., 782), this court likewise laid
wife Felisa Camia by means of the certificate of sale, Exhibit O, for down the following doctrine:
the sole purpose of transferring said lot in his wife's name because he
had a daughter by his first wife and a son by his second wife, and In the present case, counsel for the adverse party had ample notice
because he had no time to administer it, but that the first installment of the taking of the depositions, and he was present at the taking of
was paid with the money belonging to both (Andres Reyes and Felisa the depositions and cross-examined the deponents. The affidavit,
Camia). This sale is, of course, null and void in accordance with the accompanying the motion for the taking of the depositions, set forth
provisions of article 1458 of the Civil Code, it not appearing that a facts which clearly authorized the taking of the depositions under
separation of property has been agreed upon; but this nullity does not paragraph 4 of section 355 of the Code of Civil Procedure.
change the nature of said lands as conjugal property of the spouses Considering these circumstances and it being evident that the rights
Andres Reyes and Felisa Camia. of the adverse parties were not adversely affected by the fact that no
copy of the affidavit was served on them, the court below did not err
As to the ninth assignment of alleged error, the question whether the in admitting said depositions.
land described on page 2, paragraph 2, letter m, of the will is conjugal
property or private property of Andres Reyes has already been The next question to be decided is that raised in the eleventh and last
decided upon in discussing the seventh assignment of alleged error. assignment of alleged error which consists in whether or not the lower
This land is the same lot No. 1686 and it has been stated that it is court erred in accepting the counterproject of partition presented by
conjugal property of Andres Reyes and his wife by his first marriage, the oppositor-appellee Juana Reyes de Ilano.
Luciana Farlin, having been purchased in his name during his
marriage to Luciana Farlin, as shown by certificate of sale No. 4320 There is nothing in the law imposing upon the executor or
(Exhibits M, 24 and 31). administrator the obligation to present a project of partition for the
distribution of the estate of a deceased person. Section 753 of the
With respect to the house mentioned on page 3 of the inventory, its Code of Civil Procedure authorizes the court to assign ". . . the residue
ganancial nature has been established by Petrona Reyes, younger of the estate to the persons entitled to the same, and in its order the
sister of Andres Reyes, in her deposition of October 24, 1933. This court shall name the persons and proportions, or parts, to which each
witness testified that said house was constructed one year after the is entitled . . ." (See also article 1052, Civil Code.) It is referred from
death of her sister-in-law Luciana Farlin with money left by the latter these legal provisions that it is the Court of First Instance of Cavite
upon her death, which was deposited with said witness; that Andres alone that may make the distribution of his estate and determine the
Reyes took from her the money needed by him for the construction of persons entitled, and it may require the executrix to present a project
the house; and that said house cost P10,000. The executrix-appellant of partition to better inform itself of the condition of the estate to be
does not question the ganancial nature of said house of the spouses distributed and so facilitate the prompt distribution thereof. The project
Andres Reyes and Luciana Farlin but merely alleges that the above- of partition that the executor or administrator might have presented
stated deposition of Petrona Reyes, which is the only evidence upon would not be conclusive and the interested parties could oppose the
which the lower court bases its opinion that it is conjugal property, is approval thereof and enter their counterproject of partition which the
not admissible as evidence because when she was notified of the court might accept and approve, as it did in this case. In adopting the
taking thereof, the only opposition in the case under consideration project of partition of the oppositor-appellee Juana Reyes de Ilano,
was that of the oppositor Juana Reyes de Ilano to the first rendition of said court acted within its discretionary power and committed no error
accounts of said executrix, dated May 13, 1933, and consequently, of law.
every deposition taken not referring exclusively to said account is
impertinent and irrelevant. This question leads us to the discussion of
 29

In view of the foregoing considerations, and with the sole modification

that the estate of the deceased Andres Reyes reimburse the
executrix-appellant in the sum of P690.57, plus the sum of P81.94 as
commission, the resolution appealed from is affirmed in all other
respects, without special pronouncement as to the costs. So ordered.
 30

EN BANC paid for the redemption of promissory note secured by mortgage of

the four buildings.
G.R. No. L-17863 November 28, 1962
It is pertinent to state before discussing the argumentation of counsel
MANUEL H. BARREDO, ET AL., petitioners, that in view of the burning and destruction of the buildings which were
vs. the subject of the mortgage, the petitioners manifested their wish to
THE COURT OF APPEALS, ET AL., respondents. abandon their security and prosecute the claim against the estate as
for a simple money debt, and that when the Barredo heirs filed their
Crispin D. Baizas and Associates for petitioners. claim, no order of distribution had entered in the proceedings.
D. T. Reyes and Luison and Pangalangan and Belesario for
respondents. Section 2, Rule 87, of the Rules of Court reads:
REYES, J.B.L., J.: SEC. 2. Time within which claims shall be filed. — In the notice
provided in section 1, the court shall state the time for the filing of
The present appeal by the heirs of the late Fausto Barredo involves a claims against the estate, which shall not be more than twelve nor less
tardy claim to collect the face value of a promissory note for than six months after the date of the first publication of the notice.
P20,000.00 plus 12% interest per annum from 21 December 1949, However, at any time before an order of distribution is entered, on
the date of its maturity, plus attorney's fees and costs in the sum of application of a creditor who has failed to file his claim within the time
P2,000.00, from the intestate estate of the late Charles A. previously limited, the court may, for cause shown and on such terms
McDonough, represented herein by the administrator, W. I. Douglas. as are equitable, allow such claim to be filed within a time not
exceeding one month.
The promissory note was secured by a mortgage executed on 31
December 1940 in favor of Fausto Barredo over the leasehold rights The probate court previously fixed the period for filing claims at six (6)
of McDonough on the greater portion of a parcel of registered land months reckoned from the date of first publication, and the said notice
located at Dongalo Parañaque, Rizal, owned by Constantino Factor, to creditors was first published on 23 August 1945. The present claim
and over four (4) houses which McDonough had constructed on the was filed on 22 October 1947. There is no doubt, therefore, that the
leased land. The lease contract between Factor and McDonough claim was filed outside of the period previously fixed. But a tardy claim
provided for a term of 10 years from 1 September 1936; but on may be allowed, at the discretion of the court, upon showing of cause
December 1940, the parties extended the term up to 31 August 1961. for failure to present said claim on time.
The original lease, the extension of its term, and the mortgage were
all inscribed at the back of certificate of title of the land. The respondent administrator, relying on the case of the Estate of
Howard J. Edmands, 87 Phil. 405, argues that the one-month period
Upon Fausto Barredo's death on 8 October 1942, his heirs, in a deed for filing late claims mentioned in Section 2, Rule 87, of the Rules of
of extrajudicial partition, adjudicated unto themselves the secured Court should be counted from the expiration of the regular six-month
credit of the deceased, and had the same recorded on the aforesaid period, but this pronouncement was but an obiter dictum that did not
certificate of title. resolve the issue involved in said case. The true ruling appears in the
case of Paulin vs. Aquino, L-11267, March 20, 1958, wherein the
This annotation was, however, cancelled when one day in August
controverted one month period was clarified as follows:
1944 Manuel H. Barredo was ordered to appeal before an officer of
the Japanese Imperial Army at the Army and Navy Club and was The one-month period specified in this section is the time granted
commanded to bring with him all the documents pertaining to the claimants, and the same is to begin from the order authorizing the
mortgage executed by the late McDonough whose private properties, filing of the claims. It does not mean that the extension of one month
because of his enemy citizenship, were, in the words of the Court of starts from the expiration of the original period fixed by the court for
Appeals, "appropriated by the triumphant invader". Manuel H. Barredo the presentation of claims. (Emphasis supplied)
was paid P20,000.00 in Japanese war notes by the occupation
authorities and made to sign, as he did sign, a certification stating "that However, the probate court's discretion in allowing a claim after the
in consideration of P20,000.00 which I have received today, I am regular period for filing claims but before entry of an order of
requested the Register of Deeds to cancel the mortgage of these distribution presupposes not only claim for apparent merit but also that
properties"; and, as requested, the cancellation was inscribed at the cause existed to justify the tardiness in filing the claim. Here,
back of the title. petitioners alleged as excuse for their tardiness the recent recovery of
the papers of the late Fausto Barredo from the possession of his
Charles McDonough died on 15 March 1945; thereupon, Special lawyer who is now deceased. This ground insufficient, due to the
Proceedings No. 70173 of the Court of First Instance of Manila, availability, and knowledge by the petitioners, of the annotation at the
captioned "In re: Intestate Estate of Charles A. McDonough", was back of the certificate of title of the mortgage embodying the instant
instituted; and pursue a court order of 17 August 1945, the claim, as well as the payment of P20,000.00 made by the Japanese
administrator caused to be published in the "Philippine Progress" for military authorities.
three consecutive weeks, on 23 and 30 August 1945 and 6 September
1945, a notice to creditors requiring them to their claims with the clerk The order of the trial court allowing the late claim without justification,
of court within 6 months reckoned from the date of its first publication because under Section 2, Rule 8 of the Rules of Court, said court has
and expiring 23 February 1946. no authority to admit a belated claim for no cause or for an insufficient
cause.1
On 22 October 1947, the heirs of Fausto Barredo filed their belated
claim against the estate of McDonough. This claim was opposed by In view of the conclusions thus arrived at, it becomes unnecessary to
the administrator. After hearing the lower court allowed the claim, but discuss whether the payment by the Japanese was intended as a
the Court of Appeals reversed the order of allowance; hence, the discharge of the promissory note. Suffice it to say that there is no other
Barredo heirs appealed to this Court, assigning the following alleged cogent explanation for the payment made to the mortgagees, who
errors: were not the owners of the encumbered property.
1. That the Court of Appeals erred in holding that the "one month" FOR THE FOREGOING REASONS, the appealed decision is
period referred to in Section 2 of Rule 87 of Rules of Court is to be affirmed, with costs against the petitioners.
counted from and after the expiration of the six-month period fixed in
the published notice to claims, and in further holding that the trial court
had therefore committed a reversible error in admitting and allowing
the claim of herein petitioners; and

2. That the respondent Court of Appeals erred in holding that the only
logical conclusion is that the P20,000.00 in Japanese money paid by
the Japanese military authorities to petitioner Manuel H. Barredo were
 31

EN BANC Palileo under the loan was to be deemed assigned to the insurance
company.
G.R. No. L-18452 May 31, 1965
As earlier stated, this suit was instituted to recover the possession of
AUGUSTO COSIO and BEATRIZ COSIO DE RAMA, petitioners, the house as a consequence of our decision that it had not really been
vs. sold but had merely been given as security for a loan. It was originally
CHERIE PALILEO, respondent. brought against petitioner Cosio who asked that the action be
dismissed on the ground that it was barred by the judgment of the
Recto Law Office for petitioners. Municipal Court which dismissed the ejectment case against him. The
Bengzon, Villegas, Bengzon and Zarraga for respondent. court denied the motion to dismiss. And so petitioner Cosio filed his
answer. He was later joined by petitioner Cosio de Rama who was
REGALA, J.:
allowed to intervene in the action.
This is an action to recover the possession of a house. It was filed
Thereafter, the lower court rendered judgment finding petitioner Cosio
following our decision in Palileo v. Cosio, 51 O.G. 6181, in which We
de Rama to be a possessor in good faith with a right to retain
ruled that the house in question had not been sold out but had merely
possession until reimbursed for her expenses in repairing the house.
been given as security for a debt, the pacto de retro sale between the
The dispositive portion of its decision reads:
parties being in reality a loan with an equitable mortgage. In a sense,
therefore, this case is a sequel to Palileo v. Cosio. The parties are IN VIEW OF THE FOREGOING, the Court hereby renders judgment
here this time to litigate on the issue of possession and its effects. declaring plaintiff Palileo as the lawful owner of the house No. 25
Antipolo Street, Pasay City and entitled to the possession thereof
The house in this case, a two-story building, was formerly owned by
upon her paying to intervenor defendant Beatriz Cosio de Rama the
Felicisima Vda. de Barza. It is located at 25 (formerly 6) Antipolo
sum of TWELVE THOUSAND (P12,000.00) PESOS with interest at
Street, Pasay City, on a lot belonging to the Hospicio de San Juan de
the legal rate from December 22, 1946 which is the date of the filing
Dios. On October 4, 1950, this house and the leasehold right to the
of intervenor-defendant's counterclaim until paid. There is no
lot were bought by respondent Cherie Palileo who paid part of the
judgment for costs.
purchase price and mortgaged the house to secure the payment of
the balance. Not satisfied, respondent Palileo appealed to the Court of Appeals
and succeeded in having the lower court decision modified. The
It appears that respondent Palileo defaulted in her obligation, because
appellate court ruled that —
of which the mortgage was foreclosed and the house was advertised
for sale. Fortunately for her, however, respondent Palileo was able to by virtue of the pacto de retro sale intervenor-appellee (Beatriz Cosio
raise money on December 18, 1951 before the house could be sold de Rama) became the temporary owner of the house and as such she
at public auction. On this date, respondent Palileo received from was entitled to the possession thereof from the date of such
petitioner Beatriz Cosio de Rama the sum of P12,000 in consideration conditional sale although appellant (Cherie Palileo) was its actually
of which she signed a document entitled "Conditional Sale of occupant as intervenor appellee's tenant. ... However, when appellant
Residential Building," purporting to convey to petitioner Cosio de instituted the ejectment case against appellee (Augusto Cosio) and
Rama the house in question. Under this document, the right to intervenor-appellee (Cosio de Rama) as early as December 1952,
repurchase the house within one year was reserved to respondent when the latter had just started to reconstruct the house, and she
Palileo. On the same day, the parties entered into an agreement likewise commenced the action against intervenor-appellee in the
whereby respondent Palileo remained in possession of the house as same month of December, 1952, to have the deed of pacto de retro
tenant, paying petitioner Cosio de Rama a monthly rental of P250. sale declared as one of loan with equitable mortgage, said appellee
and intervenor-appellee's title to the house suffered from a flaw. From
Petitioner Cosio de Rama subsequently insured the house against fire
that time both appellee and intervenor-appellee ceased to be
with the Associated Insurance & Surety Co., Inc. On October 25,
considered possessors in good faith. (Art. 528, new Civil Code; Tacas
1952, fire broke out in the house and partly destroyed the same. For
v. Tobon 53 Phil. 356; Lopez, Inc. v. Phil. Eastern Trading Co., Inc.,
the loss, petitioner Cosio de Rama was paid P13,107 by the insurance
52 Off. Gaz. 1452) And if they chose to continue reconstructing the
company.
house even after they were appraised of a flaw on their title they did
At the instance of his sister, petitioner Cosio de Rama, the other so as builders in bad faith.
petitioner Augusto Cosio entered the premises and began the repair
Accordingly, it rendered judgment as follows:
of the house. Soon after an action was filed by respondent Palileo
against Cosio de Rama for the reformation of the deed of pacto de WHEREFORE, with the modification that appellant (Cherie Palileo) is
retro sale into a loan with an equitable mortgage. This case was filed hereby declared the lawful owner of the house known as No. 25
in the Court of First Instance of Rizal on December 4, 1952. One week Antipolo Street, Pasay City, and entitled to the possession thereof,
after (December 11), respondent Palileo filed another action in the without reimbursing intervenor-appellee (Beatriz Cosio de Rama) the
Municipal Court of Pasay City, this time seeking the ejectment of sum of P12,000 allegedly spent for the reconstruction of the same,
petitioner Cosio who, it was alleged, had entered and occupied the and appellee (Augusto Cosio) and intervenor-appellee (Cosio de
house without the knowledge and consent of respondent Palileo. Just Rama) are hereby ordered to pay appellant a monthly rental of P300
the same, however, repair work went on and although at times during the time they actually occupied the house just mentioned as
interrupted it was finally completed in 1953 at a cost of P12,000. possessors in bad faith, the decision appealed from is hereby affirmed
in all other respects. Without any pronouncement as to
Meanwhile the ejectment suit was dismissed by the Municipal Court.
costs.1äwphï1.ñët
Respondent Palileo appealed to the Court of First Instance of Pasig,
but the case was again dismissed, this time for failure of respondent Petitioners Cosio and Cosio de Rama have appealed to this Court by
Palileo to prosecute. The dismissal of the case was subsequently certiorari, citing Article 526 of the Civil Code which states as follows:
made "without prejudice."
He is deemed a possessor in good faith who is not aware that there
In the other case, respondent Palileo was successful. Both the lower exists in his title or mode of acquisition any flaw which invalidates it.
court and this Court declared the transaction of the parties to be a
loan with an equitable mortgage and not a conditional sale. It was He is deemed a possessor in bad faith who possesses in any case
found that the amount of P12,000, which purported to be the price, contrary to the foregoing.
was in fact a loan; that the amount of P250 paid every month as rent
was in reality interest; and that the house allegedly sold was intended Mistake upon a doubtful or difficult question of law may be the basis
to be a security for the loan. Accordingly, this Court directed petitioner of good faith.
Cosio de Rama to return to respondent Palileo the sum of P810 which
she had collected as interest in excess of that allowed by law. This They contend that they were not only possessors in good faith from
Court likewise ruled that petitioner Cosio de Rama could keep the the beginning but that they continue to be such even after this Court's
proceeds of the fire insurance but that her claim against respondent declaration that their transaction was a loan with a mortgage and not
 32

a sale with a right of repurchase, because, as a matter of fact, this there taken up only in the "preliminary remarks" in the brief. Although
Court did not invalidate, but merely reformed, the supposed deed of petitioners were appellees in the Court of Appeals, they should have
sale. Petitioners likewise aver that neither can the ejectment suit be assigned this alleged error if only to maintain the decision of the lower
considered to be notice of any defect or flaw in their mode of court.
acquisition because that case after all was dismissed.
Apart from this consideration, we believe that this action is not barred
We believe that both the petitioners and the Court of Appeals are in by the prior judgment in the ejectment case. The pertinent provisions
error in saying that the former had a right to the possession of the of the Rules of Court state:
house under the deed of pacto de retro sale. Petitioners did not have
such a right at any time and they knew this. Effect of appeals. — A perfected appeal shall operate to vacate the
judgment of the justice of the peace or the municipal court, and the
In reforming instruments, courts do not make another contract for the action when duly docketed in the Court of First Instance, shall stand
parties (See Civil Code, Arts. 1359-1369 and the Report of the Code for trial de novo upon its merits in accordance with the regular
Commission, p. 56). They merely inquire into the intention of the procedure in that court, as though the same had never been tried
parties and, having found it, reform the written instrument (not the before and had been originally there commenced. If the appeal is
contract) in order that it may express the real intention of the parties withdrawn, or dismissed for failure to prosecute, the judgment shall be
(See Id., Arts. 1365 and 1602). This is what was done in the earlier deemed revived and shall forthwith be remanded to the justice of the
case between the parties. In holding that the document entitled peace or municipal court for execution. (Rule 40, see. 9, Rules of
"Conditional Sale of Residential Building" was in fact a mortgage, this Court.)
Court said: "This document did not express the true intention of the
parties which was merely to place said property (the house) as The following comment answers squarely petitioners' arguments:
security for the payment of the loan." (Palileo v. Cosio, 51 O.G. 6181
at 6184) The case shall stand in the Court of First Instance as though the same
"had been originally there commenced." Thus, if an action is filed in
If that was the intention of the parties (to conform to which their written an inferior court, and the plaintiff fails to appear and the case is
instrument was reformed) then petitioner Cosio de Rama knew from dismissed, may the plaintiff file another complaint for the same cause?
the beginning that she was not entitled to the possession of the house The Supreme Court held that, since the appeal had the effect of
because she was a mere mortgagee. For the same reason, she could vacating the judgment of the inferior court and, therefore, the case,
not have been mistaken as to the true nature of their agreement. when dismissed, was in the Court of First Instance as if the same "had
Hence, in bidding her brother, petitioner Cosio, to enter the premises been originally there commenced" and since dismissals, on the
and make repairs and in later occupying the house herself, petitioner ground aforementioned, of cases coming within the original
Cosio de Rama did so with this knowledge. jurisdiction of the Court of First Instance, are without prejudice, the
conclusion is that plaintiff may file a new complaint for the same
As possessors in bad faith, petitioners are jointly liable for the payment cause. (Marco v. Hashim 40 Phil. 592) This ruling, however, is
of rental, the reasonable value of which, as found by the appellate affected to a certain extent by Rule 17, section 3, which provides that
court is P300 a month. (Art. 549. See Lerma v. De la Cruz, 7 Phil. 581) the dismissal of a case on the ground of plaintiff's failure to appear at
This finding is supported by the evidence and we find no reason to the trial, is a final adjudication upon the merits unless the court
disturb it. otherwise provides." (2 Moran, Comments on the Rules of Court, 344-
345 [1963 ed.])
But even as we hold petitioner Cosio de Rama to be a possessor in
bad faith we nevertheless believe that she is entitled to be reimbursed Here the dismissal of the ejectment case for failure of respondent
for her expenses in restoring the house to its original condition after it Palileo to prosecute was expressly made to be without prejudice. That
had been partly damaged by fire, because such expenses are judgment, therefore, cannot be a bar to the filing of another action like
necessary (Angeles v. Lozada, 54 Phil. 184) and, under Article 546, the present.
are to be refunded even to possessors in bad faith. As already stated,
petitioner Cosio de Rama spent P12,000 for the repair work. WHEREFORE, with the modification that petitioner Cosio de Rama
should be reimbursed her necessary expenses in the amount of
The error of the appellate court lies in its failure to appreciate the P12,000 by respondent Palileo, the judgment of the Court of Appeals
distinction that while petitioner Cosio de Rama is a possessor in bad is affirmed in all other respects, without pronouncements as to, cost.
faith, she is not a builder in bad faith. Thus in describing petitioners as
"builders in bad faith" and, consequently, in holding that they have no
right to be reimbursed, the court obviously applied Article 449 which
states that "he who builds, plants or sows in bad faith on the land of
another loses what is built, planted or sown without right to indemnity."
But article 449 is a rule of accession and we are not here concerned
with accession. There is here no reason for the application of the
principle accesio cedit principali, such as is contemplated in cases of
accession continua of which article 449 is a rule. For what petitioners
did in this case was not to build a new house on the land of another.
Rather, what they did was merely to make repairs on a house that had
been partly destroyed by fire and we are asked whether they have a
right to be refunded for what they spent in repairs. The land on which
the house is built is not even owned by respondent Palileo, that land
being the property of the Hospicio de San Juan de Dios. This case
comes under article 546 which, as we have already indicated,
provides for the refund of necessary expenses "to every possessor."

And now we come to the last point in petitioners' assignment of errors.

It is contended that the present action is barred by the judgment of the
Municipal Court which dismissed the ejectment case filed by
respondent Palileo against petitioner Cosio. It is said that although
that ejectment was vacated when it was appealed to the Court of First
Instance, the subsequent dismissal of the case was equivalent to the
withdrawal of the appeal and therefore to a revival of the judgment of
the Municipal Court. That judgment, to repeat, dismissed the
ejectment case against petitioner Cosio.

We note that this point, though raised in the Court of First Instance,
was not properly assigned as error in the Court of Appeals. It was
 33

EN BANC January 25, 1961. The judgment in the civil case having reached
finality, Pambusco moved in the intestate proceedings that the heirs
G.R. No. L-18936 May 23, 1967 and/or the present joint administratrices, Natividad E. Ignacio and
Leonor E. Almazan, be ordered to pay P46,500.00, the share of the
INTESTATE ESTATE OF ENCARNACION ELCHICO Vda. de deceased in the judgment debt.
FERNANDO, deceased.
NATIVIDAD E. IGNACIO and LEONOR E. ALMAZAN, The administratrices opposed. Ground: Pambusco's claim is time-
administratrices-appellants, barred.
vs.
PAMPANGA BUS COMPANY, INC., claimant appellee. March 13, 1961. Resolving Pambusco's motion, the probate court (in
Sp. Proc. 25256) issued an order, the dispositive part of which is as
Paterno R Canlas for administratrices-appellants. follows:
Manuel O. Chan and A G. Martinez for claimant-appellee.
Wherefore, the Court hereby allows said amount of P46,500.00 to be
SANCHEZ, J.: paid by the heirs and/or the joint administratrices; but no payment
thereof shall be made until after the administratrices shall have
The present case has its roots in the proceedings hereinafter to be informed the Court in writing as to the existence of other unsettled
recited: money claims against the estate and of the sufficiency of the assets
available for payment of all the debts.
August 29, 1951. Pampanga Bus Company, Inc. (referred to herein
as Pambusco) lodged its complaint in the Court of First Instance of In harmony with the foregoing, the Court hereby orders said
Manila against two (2) defendants Valentin Fernando and administratrices to inform the Court, within ten (10) days from the
Encarnacion Elchico Vda. de Fernando. The suit was to collect notice of this order, of the other unsettled money together with the
P105,000.00 upon a contractual obligation.1 amount of each, and of the sufficiency or insufficiency of the assets
available for payment of all the debts.
January 23, 1955. Encarnacion Elchico Vda. de Fernando died. By
this time, Pambusco in the foregoing civil case had already presented By order of May 24, 1961, the probate court denied the motion to
its evidence and submitted its case. reconsider the foregoing order.
March 23, 1955. Intestate proceedings were filed.2 Notice to the The administratrices came to this Court on appeal.
estate's creditors was given for them to file their claims within six (6)
months from this date, the first publication of the notice. Given the facts just recited, was Pambusco's claim properly admitted
by the probate court?
April 16, 1955. On Pambusco's motion, the court in the civil case
ordered Jose Nicolas, then administrator, to substitute for the It will be remembered that at the time Encarnacion Elchico Vda. de
deceased Encarnacion Elchico Vda. de Fernando as one of the Fernando died, the civil case against her and the other defendant
defendants. No objection to this order was registered. Valentin Fernando had not yet been decided by the Court of First
Instance of Manila. That case, however, was prosecuted — with the
July 15, 1955. Pambusco amended its complaint in the civil case assent of the administrator of her estate — to final conclusion.
naming therein administrator Jose Nicolas and original defendant
Valentin Fernando, as defendants. The court, without objection, 1. This situation brings to the fore a consideration of Section 21, Rule
admitted this amended complaint on August 27, 1955. 3 of the Rules of Court,6 which reads:

Jose Nicolas, as such administrator, filed an amended answer with SEC. 21. Where claim does not survive. — When the action is for
counterclaim against Pambusco. The date of filing said answer is not recovery of money, debt or interest thereon, and the defendant dies
of record. In due course, Nicolas presented his evidence. before final judgment in the Court of First Instance, it shall be
dismissed to be prosecuted in the manner especially provided in these
December 11, 1958. After trial on the merits, the Court of First rules.
Instance of Manila rendered judgment in the civil case (Civil Case
14578), as follows: The Philosophy behind the rule which provides for the dismissal of the
civil case is that, upon the death of defendant, all money claims should
Wherefore, judgment is hereby rendered in favor of the plaintiff and be filed in the testate or interstate proceedings "to avoid useless
against the defendants, ordering the latter to pay the former the sum duplicity of procedure."7 Obviously, the legal precept just quoted is
of NINETY-THREE THOUSAND PESOS (P93,000.00) together with procedural in nature. It outlines the method by which an action for
the costs of these proceedings. Defendants' counterclaim is hereby recovery of money, debt or interest may continue, upon the terms
dismissed. therein prescribed. Whether the original suit for the recovery of money
— as here — proceeds to its conclusion, or is dismissed and the claim
The two defendants appealed.
covered thereby filed with the probate court, one thing is certain: no
May 28, 1960. The Court of Appeals affirmed the judgment, thus — substantial rights of the parties are prejudiced.

As plaintiff's complaint is well founded and meritorious and the But is there justification for the civil case to go on in spite of the death
evidence of record justify the award of P93,000.00 in its favor, it of Encarnacion Elchico Vda. de Fernando "before final judgment in
stands to reason that defendants' counterclaims were correctly the Court of First Instance?"
dismissed.
2. At the time of the death of defendant Encarnacion Elchico Vda. de
Wherefore, the judgment appealed from is hereby affirmed without Fernando, plaintiff Pambusco had already closed its evidence and
pronouncement as to costs.3 submitted its case. Her administrator substituted. By this substitution,
the estate had notice of the claim. The estate was thus represented.
Both defendants appealed by certiorari to this Court. Valentin The administrator did not complain of the substitution. At no time did
Fernando's appeal4 was dismissed for having been filed out of time. the estate of the deceased impugn the authority of the regular courts
The appeal of the estate of Encarnacion Elchico Vda. de Fernando,5 to determine the civil case. Much less did it seek abatement of the civil
raising issues of fact, likewise dismissed. suit. On the contrary, its administrator took active steps to protect the
interests of the estate. He joined issue with plaintiff. He filed an
February 25, 1959. We go back to Special Proceeding 25256, amended answer. He counterclaimed. He went to trial. Defeated in
Intestate Estate of Encarnacion Elchico Vda. Fernando. On this day, the Court of First Instance, he appealed to the Court of Appeals. He
while defendants in Civil Case 14576 were perfecting their appeal even elevated that civil case to this Court. Now that the judgment has
from the judgment the Court of First Instance, Pambusco registered become final, the estate cannot be heard to say that said judgment —
its contingent claim in these special proceedings — for whatever reached after a full dress trial on the merits — will now go for naught.
money judgment may be rendered in his favor in the civil suit. The estate has thus waived its right to have Pambusco's claim re-
litigated in the estate proceedings. For, though presentment of
 34

probate claims is imperative, it is generally understood that it may be within the time previously limited, the court may, for cause shown and
waived by the estate's representative.8 And, waiver is to be on such terms as are equitable, allow such claim to be filed within a
determined from the administrator's "acts and conduct."9 Certainly, tune not exceeding one (1) month.
the administrator's failure to plead the statute of nonclaims, his active
participation, and resistance to plaintiff's claim, in the civil suit, amount Here, the claim was filed in the probate court on February 25, 1959,
to such waiver. 10 while the defendants in the civil case were still perfecting their appeal
therein. The record does not show that the administrator objected
3. Courts are loathe to overturn a final judgment. Judicial proceedings thereto upon the ground that it was filed out of time. The pendency of
are entitled to respect. Non quieta movere. 11 Plaintiff's claim has that case, we are persuaded to say, is a good excuse for tardiness in
passed the test in three courts of justice: the Court of First Instance, the filing of the claim. 19 And, the order of final distribution is still to be
the Court of Appeals and this Court. The judgment in plaintiff's favor given.
should be enforced. Appellants' technical objection — after judgment
had become final in the civil case — that plaintiff's claim should have Besides, the order of the lower court of March 18, 1961 allowing
been litigated in the probate court does not impair the validity of said payment of appellee's claim "impliedly granted said appellee an
judgment. For, such objection does not go into the court's jurisdiction extension of time within which to file said claim." 20 The probate court's
over the subject matter. discretion has not been abused. It should not be disturbed. 21

In Laserna vs. Altavas, 68 Phil. 703, suit was started by Jose Altavas For the reasons given, we vote to affirm the order of the lower court
against Jose Laserna Paro to recover P4,500.00 as attorney's fees. of March 13, 1961 and May 24, 1961, under review. Costs against
The Court of First Instance decided in plaintiff's favor. During the appellants. So ordered.
pendency of Laserna's appeal in this Court, he died. Aristona Laserna,
the administratrix of Laserna's estate, substituted. This Court affirmed
the judgment. Altavas subsequently filed in the estate proceedings a
motion to direct the administratrix to pay the judgment for P4,500.00
in his favor. The court granted this motion. On appeal, the
administratrix urged that Altavas' claim "was definitely barred by the
statute of nonclaim," because of his failure "to present it before the
committee on claims and appraisal."12 This Court there stated.13 —

x x x we are of the opinion and so hold that, upon the facts and
circumstances of the present case, the claim of Jose Altavas,
although it did not survive the deceased, need not have to be
presented before the committee on claims and appraisal principally
because that claim is already an adjudicated claim by final
pronouncement by this Court in G.R. No. 40038. To countenance
appellant's theory would be to convert a claim duly passed upon, and
determined not only by the Court of First Instance but by this Court
into a contested claim, once again, . . . and "obliging a creditor whose
claim had already been passed upon by the Court to submit himself
to the committee on claims and to pass over again through the
endless process of presenting his evidence which he had already
done." ... It also appears that the substitution of the defendant in civil
case No. 2961, for the recovery of attorney's fees, was effected at the
instance of the defendant and appellant therein, Aristona Laserna.
She had an opportunity to contest that claim, and when her contention
was overruled she did not impugn the jurisdiction of the Supreme
Court. Neither does it appear that during the pendency of the appeal
in the Supreme Court she moved for the abatement or suspension of
the proceedings because of the provisions of sections 119, 700 and
703 of the Code of Civil Procedure. Under the circumstances it is
unjust to defeat the claim of the appellee and to hold that it had been
barred by the statute of nonclaim.14

4. Of course, it is correct to say that upon the demise a defendant in

a civil action planted on a claim which does not survive, such claim
should be presented to the probate court for allowance, if death
occurs before final judgment in the Court of First Instance. But,
procedural niceties aside, the revival of the civil action against the
administrator, the decedent's representative, "is generally considered
equivalent to presentation" of such claim in probate court, 15
"dispenses with the actual presentation of the claim." 16 The
soundness of this proposition commands assent. Because, the
administrator represent the deceased's estate itself, is an alter ego of
the heirs. More than this, he is an officer of the probate court.17 In the
circumstances, presentment of Pambusco's 1950 claim ad
abundantiorem cautelam was at best reduced to a mere formality.

5. It matters not that Pambusco's said claim was filed with the probate
court without the six-month period from March 25, 1955, set forth in
the notice to creditors. For, Section 2, Rule 86, permits acceptance of
such belated claims. Says Section 2: 18

SEC. 2. Time within which claims shall be filed. — In the notice

provided in the preceding section, the court shall state the time for the
filing of claims against the estate, which shall not be more than twelve
(12) nor less than six (6) months after the date of the first publication
of the notice. However, at any time before an order of distribution is
entered, on application of a creditor who has failed to file his claim