Afan vs De Guzman

Facts:

De Guzman filed a P1,000 claim in the special proceeding for the settlement of
intestate estate of Afan. The administratix objected, that it had been filed long
after the expiration of the period for the presentation of claim against said
estate.

The lower court issued the order refusing to entertain the claim. De Guzman
invokes, in support of his appeal, section 2, Rule 87 of the Rules of Court, he
maintains that his claim was filed prior to the distribution of the estate of the
deceased. Further, he now alleges, for the first time, a “cause” why the lower
court should allegedly have considered his claim, he says, in his brief that he had
no actual knowledge of the fact that the estate of the deceased was then already
in the process of settlement.

Issue:

Whether or not the claim of De Guzman should be granted?

Held:

No, The second sentence thereof clothes the court with authority to permit the
filing of a claim after the lapse of the period stated in the first sentence, but prior
to and distribution, subject to the following conditions, namely (1) there must be
tin application therefor; (2) a cause must be shown why the permission should
be granted; and (3) the extension of time granted for the filing of the claim shall
not exceed one (1) month. In this case, De Guzman has not sought permission to
file the claim. Moreover, the same does not allege any reason why he should be
excused for his failure to file the claim in this proceeding within the period
stated in the Rules of Court.

The period prescribed in the notice to creditors is not exclusive; that money
claims against the estate may be allowed any time before an order of distribution
is entered, at the discretion of the court for cause and upon such terms as are
equitable.

Instead of furnishing a "cause" for the extension of the reglementary period for
the filing of his claim, this omission on the part of De Guzman to file his claim in
such proceeding until, one year and a half after the filing of his aforementioned
"compliance." fully justifies the denial of such extension and the order appealed
from.
During the lifetime of Afan, De Guzman instituted against him to recover the
amount of the promissory note. On appeal, the decision of said court in favor of
De Guzman was set aside. After the records had been remanded to the lower
court, Afan died. That court issued an order requiring counsel for his heirs "to
submit to the court the number of the intestate estate proceedings of the
deceased Afan now pending in the Court of First Instance of Manila." This order
was complied with, a copy of which "notification" was served upon counsel for
De Guzman, as plaintiff. His counsel filed a motion for the appointment of a legal
representative of the deceased Afan, to substitute him as defendant.

Said court gave De Guzman five (5) days within which to submit the names of the
legal heirs of Afan who may be appointed as his legal representative. De Guzman
filed a statement, entitled "compliance", setting forth the names, ages and
addresses of the heirs of the deceased, "as shown by the records in Special
Proceedings, entitled 'Instance estate of Arsenio R. Afan'. Yet, De Guzman choose
not to file his claim in such proceeding until, one year and a half after the filing of
his aforementioned "compliance."

Heirs of Pizarro vs Consolacion

Facts:

Luis Tan filed a verified petition with the CFI of Davao for the issuance of letters
of administration in favor of a certain Alfonso Atilano. The petition alleged,
among others that private respondent is the only surviving son of the deceased
Dominga Garcia who died intestate and that the deceased left a parcel of land 1
located at Davao City; and that the said lot is in the possession of the heirs of
Ramon Pizarro, 2 petitioners herein.

Petitioners filed an opposition claiming that they are the heirs of Ramon Pizarro
who died intestate; and that the deceased was the vendee of one-half (1/2) of
the aforementioned lot by virtue of an extrajudicial settlement of estate and
deed of absolute sale.

Private respondent filed a motion to drop and exclude the petitioners on the
ground that they do not even claim to be the heirs of the deceased Dominga
Garcia and that the extrajudicial deed of partition and deed of absolute sale
allegedly executed in Hongkong in favor of the petitioners' deceased father is
spurious and simulated.

On March 5, 1979, petitioners filed their opposition to said motion. They

likewise filed a claim against the estate of the deceased Garcia in the amount of
P350,000.00 representing services allegedly rendered by their deceased father
in favor of Vicente Tan.

On March 8, 1979, Private respondent filed a reply to petitioners' opposition and

a motion to strike out or dismiss the claim on the ground that it is spurious and
barred for having been filed beyond the six (6) month period set in the notice for
the filing of creditors' claim.

On March 29, 1979, petitioners filed another claim against the estate for
P200,000.00 allegedly advanced by their deceased father for the payment of
realty and income taxes of the said lot sometime in 1936, to which claim private
respondent filed an opposition on the ground that it is barred for having been
filed beyond the six (6) month period and that it was merely intended to delay
the proceedings.

Issue:

Whether or not the period for filing of claims has been complied with?

Held;

No, The trial court set the period for the filing of the claims within six (6) months
from the date of the first publication of the notice. It was obviously short of the
minimum limit of six (6) months provided for by the law. Petitioner correctly
observed that the trial court thereby shortened the period set by the law.

Since the notice issued and the period set by the trial court was not in
accordance with the requirements of Section 2, Rule 86 of the Rules of Court,
what should then apply is the period as provided for by the rules which is not
less than six months nor more than twelve (12) months from the date of first
publication of notice. The first publication of the notice in the Mindanao Times
was on March 30, 1978. Thus the two claims of petitioners against the estate
which were filed on March 5, 1979 and March 29, 1979 respectively were filed
on time.

Guiterrez vs Barretto-Datu

Facts:

Maria Gerardo Vda. de Barretto, owner of hectares of fishpond lands, leased the
same to appellant Gutierrez. Pursuant to a decision of Department of Public
Works, the dikes of the fishponds were opened at several points, resulting in
their destruction and in the loss great quantities of fish inside, to the damage and
prejudice of the lessee.

The lessor having died and the corresponding testate proceeding to settle her
estate having been opened, Gutierrez filed a claim for two items: Advance rentals
he had to the decedent (the possession of the leased property is alleged, having
been returned to her after the open of the dikes ordered by the government);
and damages in the concept of earned profits which the claimant failed to realize
because of the breach of the lease contract allegedly committed by the lessor.

Appellant commenced the instant ordinary civil action against the executrix of
the testate for the recovery of the second item claimed in the administration
proceeding. Appellant amended his claim in the testate proceeding by
withdrawing therefrom the item of P60,000.00, leaving only the one for refund
of advance rentals in the sum of P32,000.00.

After the issues were joined in the present case, the court dismissed the action
for abandonment by both parties. Appellant moved to reconsider; the court
denied the motion on the ground that the claim should have been prosecuted in
the testate proceeding and not by ordinary civil action.

Issue:

Whether or not his claim for damages based on unrealized profits is a money
claim against the estate of the deceased?

Held:

Yes, The word "claims" as used in statutes requiring the presentation of claims
against a decedent's estate is generally construed to mean debts or demands of a
pecuniary nature, which could have been enforced against the deceased in his
lifetime and could have been reduced to simple money judgments; and among
these are those founded upon contract.

The claim in this case is based on contract — specifically, on a breach thereof. It

falls squarely under section 5 of Rule 87 "Upon all contracts by the decedent
broken during his lifetime, even though they were personal to the decedent in
liability, the personal representative is answerable for the breach out of the
assets."

A claim for breach of a covenant in a deed of the decedent must be presented.

The only actions that may be instituted against the executor or administrator are
those to recover real or personal property from the estate, or to enforce a lien
thereon, and actions to recover damages for an injury to person or property, real
or personal.

The instant suit is not one of them. The claim therein, which was filed in the
testate proceeding, was based upon a breach of contract committed by the
executrix herself, in dismissing the claimant as administrator of the hacienda of
the deceased. While the contract was with the decedent, its violation was by the
executrix and hence personal to her.

Aguas vs Llemos

Facts:

Plaintiffs filed an action in the CFI Samar to recover damages from Llemos,
averring that the latter had served them by registered mail with a copy of a
petition for a writ of possession, that in view of the copy and notice served,
plaintiffs proceeded to the court from their residence in Manila accompanied by
their lawyers, only to discover that no such petition had been filed; and that
defendant Llemos maliciously failed to appear in court, so that plaintiffs'
expenditure and trouble turned out to be in vain, causing them mental anguish
and undue embarrassment.

Before he could answer the complaint, the defendant died. Upon leave of court,
plaintiffs amended their complaint to include the heirs of the deceased. The
court below dismissed it, on the ground that the legal representative, and not the
heirs, should have been made the party defendant; and that the action being for
recovery of money, testate or intestate proceedings should be initiated and the
claim filed therein

Issue:

Whether or not the plaintiff’s claim for damages can be recovered?

Held:

Yes, It is apparent that actions for damages caused by tortious conduct of a

defendant survive the death of the latter. Under Rule 87, section 5, the actions
that are abated by death are:
(1) Claims for funeral expenses and those for the last sickness of the decedent;
(2) Judgments for money; and
(3) All claims for money against the decedent, arising from contract express or
implied
None of these includes that of the plaintiffs-appellants. For it is not enough that
the claim against the deceased party be for money, but it must arise from
"contract express or implied", and these words were construed to include all
purely personal obligations other than those which have their source in delict or
tort.

Consequently, a money claim against the estate arising from a crime or a quasi-
delict committed by the decedent is not included in the concept of claims which
have to be filed under this Rule.

It appears from a communication from the Court of First Instance of Samar that
the parties have arrived at an amicable settlement of their differences, and that
they have agreed to dismiss this appeal.

Bank of P.I. vs Concepcion & Hijos, Inc.

Facts:

- CONCEPCION INC executed a promissory note in favor of BPI P342,372.64,

payable on demand, with security of 700 shares of PNB deposited to BPI as
collateral and mortgaged 5,680 sqm of land in R. Hidalgo Street, Manila.
Concepcion defaulted in payment and BPI instituted foreclosure proceedings.
-. 1ST LETTER: Elser entered into negotiations with CONCEPCION INC and
offered to take over the mortgaged property and assume the mortgage debt.
They agreed on the condition that they be relieved of all liability for the debt.
- BPI did not answer the letter and it clearly appears from the allegations in its
amended complaint that BPI was unwilling to release the CONCEPCION INC from
their liability for the mortgage debt and insisted on their confessing a judgment
in the foreclosure proceedings. CONCEPCION INC refused to confess judgment
unless BPI would agree to bid in the mortgaged property for the full amount of
the judgment.
- 2ND LETTER: another letter was sent by Elser wanting to confirm the verbal
agreement that BPI would bid in the land at the foreclosure sale for the full
amount of the judgment and sell it to him for the same price. This proposition is
entirely different from that contained in the 1st letter
- Elser entered into an agreement, in the form of a bilateral deed of sale, with
CONCEPCION INC and Venancio Concepcion that subrogated Elser to the
obligation of CONCEPCION INC to BPI for a consideration of P1
- BPI never gave notice of its conformity with the agreement and petitioned the
court to include Elser as a defendant. Trial court included Elser as a defendant
- Elser died and BPI asked that Rosenstock, administrator of the estate, be
substituted in his place as defendant, and that the action be continued against
Rosenstock in that capacity, on the ground that this action is for foreclosure of a
mortgage. They filed an opposition to have the action continued against
Rosenstock, in substitution of Elser, since this is not a foreclosure action, hence
this action is abated by reason of his death and any claim against him should be
presented to the committee on claims and appraisals of his estate. However, the
court overruled this objection.
TC: absolved the Elser estate and ordered the Concepcions to pay BPI
P342,372.64 with 9% interest

ISSUE
WON BPI is barred by the statute of non-claims from the Elser estate

HELD
YES
- The Concepcions, and not BPI, might have maintained an action against the
Elser estate; but that action is now barred through their failure to present their
claim in time to the committee of claims and appraisal in the probate
proceedings, and BPI cannot successfully invoke A1111 CC, which provides that
after exhausting the property of which the debtor may be in possession, the
creditor may have recourse to the debtor's credits and chooses in action for the
collection of the unpaid portion of the debt.
- Sec 708 of the Code of Civil Procedure provides as follows:
Sec. 708. Mortgage debt due from estate. — A creditor holding a claim against
the deceased, secured by mortgage or other collateral security, may abandon
the security and prosecute his claim before the committee, and share in the
general distribution of the assets of the estate; or he may foreclose his
mortgage or realize upon his security, by ordinary action in court, making the
executor or administrator a party defendant; and if there is a judgment for a
deficiency, after the sale of the mortgaged premises, or the property pledged,
in the foreclosure or other proceeding to realize upon the security, he may
prove his deficiency judgment before the committee against the estate of the
deceased; or he may rely upon his mortgage or other security alone, and
foreclose the same at any time, within the period of the statute of limitations,
and in that event he shall not be admitted as a creditor, and shall receive no
share in the distribution of the other assets of the estate; . . .
- As will be seen, the mortgagee has the election of one out of three courses:
(1) He may abandon his security and share in the general distribution of the
assets of the estate, or
(2) he may foreclose, secure a deficiency judgment and prove his deficiency
judgment before the committee, or
(3) he may rely upon his security alone, in which case he can receive no share
in the distribution of the assets of the estate.
- In this case the bank did not abandon the security and took no steps of any sort
before the committee within the time limit provided for by Sec 689 and 690 of
the Code of Civil Procedure. The committee ceased to function long ago, and the
bank has now nothing to rely on except the mortgage. Intentionally or not, it has
brought itself within the third course provided for in Sec 708; it has no
alternative.
- But BPI says that the amount of the deficiency, if any, could not be proved
before the foreclosure sale had been effected; that Sec 708 expressly provides
for the proof of the deficiency judgment before the committee after the sale of
the mortgaged property; that these provisions must be construed to mean that
the presentation and prosecution of the claim for the deficiency must be made
after, and not before, the sale; and that if the mortgagee presents his claim for
the deficiency before a deficiency judgment has been rendered, he will lose his
rights under the mortgage and be regarded as having abandoned his security.
This is clearly a misconception of the statute. Until the foreclosure sale is made,
the demand for the payment of the deficiency is a contingent claim within the
meaning of Sec 746, 747, and 748 of the Code of Civil Procedure, which sections
read as follows:
Sec. 746. Claims may be presented to committee. — If a person is liable as
surety for the deceased, or has other contingent claims against his estate which
cannot be proved as a debt before the committee, the same may be presented
with the proof, to the committee, who shall state in their report that such claim
was presented to them.
Sec. 747. Estate to be retained to meet claims. — If the court is satisfied form
the report of the committee, or from proofs exhibited to it, that such contingent
claim is valid, it may order the executor or administrator to retain in his hands
sufficient estate to pay such contingent claim, when the same become absolute
or, if the estate is insolvent, sufficient to pay a portion equal to the dividend of
the other creditors.
Sec. 748. Claim becoming absolute in two years, how allowed. — If such
contingent claim becomes absolute and is presented to the court, or tot he
executor or administrator, within two years form the time limited for other
creditor, within two years from the time limited for other creditors to present
their claims, it may be allowed by the court if not disputed by the executor or
administrator, and, if disputed, it may be proves before the committee already
appointed, or before others to be appointed, for that purpose, as if presented
for allowance before the committee had made its report.
- These sections are in entire harmony with section 708; the amount of the
deficiency cannot be ascertained or proven until the foreclosure proceedings
have terminated, but the claim for the deficiency must be presented to the
committee within the period fixed by sections 689 and 690 of the Code. The
committee does not then pass upon the validity of the claim but reports it to the
court. If the court "from the report of the committee" or from "the proofs
exhibited to it" is satisfied that the contingent claim is valid, the executor or
administrator may be required to retain in his possession sufficient assets to pay
the claim when it becomes absolute, or enough to pay the creditor his
proportionate share if the assets of the estate are insufficient to pay the debts.
When the contingent claim has become absolute, its amount may be ascertained
and established in the manner indicated by sections 748 and 749. As will be
seen, the bank both could and should have presented its claim to the committee
within the time prescribed by the law.
Disposition Appeal is without merit and judgment is affirmed

Imperial Insurance vs David

Facts:

Felicisimo V. Reyes and his wife Emelia David executed two (2) indemnity
agreements in favor of Imperial Ins., Inc. jointly and severally to assure
indemnification of the latter for whatever liability it may incur in connection
with its posting the security bonds to lift the attachments in some civil cases
amounting to P60,000 and P40,000 for the benefit of Felicisimo V. Reyes.

Later, the spouses jointly and severally, executed another indemnity agreement
in favor of Imperial Ins., Inc. to assure indemnification of the latter under a
homestead bond for the sum of P7,500.00 it had executed jointly and severally
with them in favor of the Development Bank of the Philippines.

Felicisimo V. Reyes died and an intestate proceeding commenced. Emelia David

became the administratrix of said intestate estate. Meanwhile, judgment was
rendered in the aforesaid two civil cases against the spouses which has become
final and executory. Writs of execution of the decision on the said cases were
returned unsatisfied. As a consequence, judgment was rendered against the
surety bonds. Imperial Ins., Inc. made demands on Emilia David to pay the
amounts under the surety bonds and arrears in premiums thereon. Emilia David
failed to make payments so Imperial Ins., Inc. filed a civil case for collection of
sums of money.

A motion to dismiss was filed by Emilia David on the following grounds. to wit:
(1)the court has no jurisdiction over the nature of the action or suit;
(2) the complaint states no cause of action; and
(3) the plaintiff's causes of action, if there be any, have been barred for its failure
to file its claims against the estate of the deceased Felicisimo V. Reyes in due
time.

The lower court denied the motion for lack of merit and decided in favor of
Imperial Ins. Inc. Hence, the appeal of Emilia David.
Issue:

WON the lower court has jurisdiction over Imperial Ins. Inc.’s causes of action.
She contends that appellee's claim should have been presented according to Rule
86 of the Revised Rules of Court and its failure to do so operates to bar its claim
forever.

Held:

Yes, The Court finds no merit in the appeal. When the obligation is a solidary
one, the creditor may bring his action in toto against any of the debtors obligated
in solidum. Thus, if husband and wife bound themselves jointly and severally, in
case of his death her liability is independent of and separate from her husband’s;
she may be sued for the whole debt and it would be error to hold that the claim
against her as well as the claim against her husband should be made in the
decedent's estate. In the case at bar, appellant signed a joint and several
obligation with her husband in favor of Imperial Ins., Inc., as a consequence, the
latter may demand from either of them the whole obligation.

Stronghold vs Republic

Facts:

Republic-Asahi entered into a contract with Jose Santos, Jr., the proprietor of JDS
Construction, for the construction of roadways and a drainage system in Asahi’s
compound. Asahi was to pay JDS for the construction, which was supposed to be
completed by JDS within 240 days.

To guarantee the performance of its undertaking, JDS shall post a performance

bond. JDS executed solidarily wih Stronghold Insurance Co. the performance
bond. During the construction, asahi called the attention of JDS to the alarmingly
slow pace of the construction, which resulted in the fear that the construction
will not be finished within the stipulated 240-day period. However, said
reminders went unheeded by JDS.

Dissatisfied with the progress of the work undertaken by JDS, Asahi

extrajudicially rescinded the contract. Because of the rescission, Asahi had to
hire another contractor to finish the project, incurring additional expenses.

Asahi sent a letter to SICI filing its claim under the performance bond, but the
letter went unheeded.
Asahi eventually filed a complaint against JDS and Stronghold for damages.
However, Jose D. Santos, Jr. had already died and JDS Construction was no longer
at its registered address, with its whereabouts unknown. In its defense,
Stronghold maintains that Asahi’s money claims against it and JDS have been
extinguished by the death of Jose D. Santos, Jr.

Issue:

Whether or not the death of Santos can be a defense of Stronghold. Whether or

not Stronghold’s liability under the performance bond was automatically
extinguished by the death of Santos, the principal.

Ruling:

No, As a general rule the death of either the creditor or the debtor extinguishes
the obligation. Obligations are transmissible to the heirs, except when the
transmission is prevented by the law, the stipulations of the parties, or the
nature of the obligation. Only obligations that are personal or are identified with
the persons themselves are extinguished by death.

In the present case, whatever monetary liabilities or obligations Santos had

under his contracts with respondent were transmissible by their nature, by
stipulation or by provision of law. Hence, his death did not result in the
extinguishment of those obligations or liabilities, which merely passed on to his
estate. Death is not a defense that he or his estate can set up to wipe out the
obligations under the performance bond. Consequently, petitioner as surety
cannot use his death to escape its monetary obligation under its performance
bond.

MBTC vs Absolute Management Corp

Facts:

Sherwood Holdings Corporation, Inc. (SHCI) filed a complaint for sum of money
against Absolute Management Corporation (AMC). SHCI alleged in its complaint
that it made advance payments to AMC for the purchase of 27,000 pieces of
plywood and 16,500 plyboards covered by Metrobank Checks. These checks
were all crossed, and were all made payable to AMC. They were given to Chua,
AMC’s General Manager.

Chua died and a special proceeding for the settlement of his estate was
commenced. This proceeding was pending at the time AMC filed its answer with
counterclaims and third-party complaint.

SHCI made demands on AMC, after Chua’s death, for allegedly undelivered items.
According to AMC, these transactions could not be found in its records. Upon
investigation, AMC discovered that Chua received from SHCI 18 Metrobank
checks. These were all payable to AMC and were crossed or "for payee’s account
only."

In its answer with counterclaims and third-party complaint, AMC averred that it
had no knowledge of Chua’s transactions with SHCI and it did not receive any
money from the latter. AMC also asked the RTC to hold Metrobank liable for the
subject checks in case it is adjudged liable to SHCI.

Metrobank asserted that AMC gave Chua unbridled control in managing AMC’s
affairs. This measure of control amounted to gross negligence that was the
proximate cause of the loss that AMC must now bear.

Subsequently, Metrobank filed a motion for leave to admit fourth-party

complaint against Chua’s estate. It alleged that Chua’s estate should reimburse
Metrobank in case it would be held liable in the third-party complaint filed
against it by AMC.

AMC, in its comment,31 maintains the line that the CA and the RTC rulings
should be followed, i.e., that Metrobank’s claim is a quasi-contract that should be
filed as a claim under Section 5, Rule 86 of the Rules of Court.

Issue:

Are quasi-contracts included in claims that should be filed pursuant to Rule 86,
Section 5 of the Rules of Court? If so, is Metrobank’s claim against the Estate of
Jose Chua based on a quasi-contract?

Held:

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 Court and, as such, should have been so
filed in Special Proceedings.

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.

Santos vs Manarang

Facts:

Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and
personal property which, by his last will and testament dated July 26, 1906, he
left to his three children. The fourth clause of this will reads as follows: I also
declare that I have contracted the debts detailed below, and it is my desire that
they may be religiously paid by my wife and executors in the form and at the
time agreed upon with my creditors.

Among the debts mentioned are two in favor of the plaintiff, Isidro Santos; one
due on April 14, 1907, for P5,000, and various other described as falling due at
different dates (the dates are not given) amounting to the sum of P2,454.

The will was duly probated and a committee was regularly appointed to hear
and determine such claims against the estate as might be presented.

Isidro Santos presented a petition to the court asking that the committee be
required to reconvene and pass upon his claims against the estate which were
recognized in the will of testator. This petition was denied by the court.

Santos instituted the present proceedings against the administratrix of the estate
to recover the sums mentioned in the will as due him. Relief was denied in the
court below, and now appeals to this court.

ISSUE
1. WON the court erred in refusing to reconvene the committee for the purpose
of considering plaintiff's claim.

2. WON the court erred in dismissing his petition filed on November 21, 1910,
wherein he asks that the administratrix be compelled to pay over to him the
amounts mentioned in the will as debts due him.

HELD
1. NO. If the committee fails to give the notice required, that is a sufficient cause
for reconvening it for further consideration of claims which may not have been
presented before its final report was submitted to the court. But this is not the
case made by the plaintiff, as the committee did give the notice required by law.
Where the proper notice has been given the right to have the committee recalled
for the consideration of a belated claim appears to rest first upon the condition
that it is presented within six months after the time previously limited for the
presentation of claims. In the present case the time previously limited was six
months from July 23, 1907. This allowed the plaintiff until January 23, 1908, to
present his claims to the committee. An extension of this time under section 690
rested in the discretion of the court.

Plaintiff's petition was not presented until July 14, 1909. The bar of the statute of
nonclaims is an conclusive under these circumstances as the bar of the ordinary
statute of limitations would be. It is generally held that claims are not barred as
to property not included in the inventory.

2. NO. -The petition of the plaintiff filed on November 21, 1910, wherein he asks
that the administratrix be compelled to pay over to him the amounts mentioned
in the will as debts due him appears to be nothing more nor less than a
complaint instituting an action against the administratrix for the recovery of the
sum of money. Obviously, the plaintiff is not seeking possession of or title to real
property or specific articles of personal property.

The sum of money prayed for in the complaint must be due the plaintiff either as
a debt of a legacy. If it is a debt, the action was erroneously instituted against the
administratrix. Is it a legacy? No.

Plaintiff's claim is described by the testator as a debt. It must be presumed that

he used this expression in its ordinary and common acceptation; that is, a legal
liability existing in favor of the plaintiff at the time the will was made, and
demandable and payable in legal tender. Had the testator desired to leave a
legacy to the plaintiff, he would have done so in appropriate language instead of
including it in a statement of what he owed the plaintiff.

The testator left the total net assets of his estate, without reservation of any kind,
to his children per capita. There is no indication that he desired to leave anything
by way of legacy to any other person. These considerations clearly refute the
suggestion that the testator intended to leave plaintiff any thing by way of legacy.
His claim against the estate having been a simple debt, the present action was
improperly instituted against the administratrix.

Estate of Olave vs Reyes

Short Summary: Administrators of estate of decedent entered into an amicable

settlement with a creditor company who wanted to collect from the estate of the
decedent in a separate proceeding. This was done w/o prior approval of the
probate court. SC held that prior approval of the probate court needed because
(1) the claim of the creditors is a claim against the estate; and (2) probate court
already acquired exclusive jurisdiction over the case, to the exclusion of the
other court)

Facts

There's already a special proceeding for the settlement of the estate of Amadeo
Matute Olave in the Manila court. There's an order from this court providing that
the co-administrators should first secure the probate court's approval before
entering into any transaction involving the 17 titles of the estate.

Southwest Agricultural Marketing Corporation (SAMCO) filed Civil case for

collection of debt and attorney's fees in Davao court against the co-
administrators of the estate of Amadeo Olave.

Even after order from the probate court to secure first its approval, SAMCO and
the co-administrators entered into an AMICABLE SETTLEMENT wherein one of
the 17 titles of the estate was ceded to SAMCO as payment for its claim. This was
done w/o notice and approval of the probate court.

DAVAO COURT: approved amicable settlement

Issue:

WON SAMCO PROPERLY FILED CLAIM IN A SEPARATE PROCEEDING?

Held:

NO
R87.1: "no action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; . . ."

Claim of Samco could only be pursued by filing it in the administration

proceedings and w/n the prescribed period, or else barred forever.

Why present claims in the probate court: to protect the estate of deceased
persons. That way, the executor or administrator will be able to examine each
claim and determine whether it is a proper one, which should be allowed.

Further, the primary object of the provisions requiring presentation is to apprise

the administrator and the probate court of the existence of the claim so that a
proper and timely arrangement may be made for its payment in full or by pro-
rata portion in the due course of the administration, inasmuch as upon the death
of a person, his entire estate is burdened with the payment of all of his debts and
no creditor shall enjoy any preference or priority; all of them shall share pro-rata
in the liquidation of the estate of the deceased.

4. Manila Probate court already has exclusive jurisdiction over the proceeding
and the properties claimed: R73.1
5. The law is clear that where the estate of the deceased person is already the
subject of a testate or intestate proceeding, the administrator cannot enter into
any transaction involving it without prior approval of the probate court.

The purpose of presentation of claims against decedents of the estate in the

probate court is to protect the estate of deceased persons to enable the executor
or administrator will be able to examine each claim and determine whether it is
a proper one, which should be allowed. Further, the primary object of the
provisions requiring presentation is to apprise the administrator and the
probate court of the existence of the claim so that a proper and timely
arrangement may be made for its payment in full or by pro-rata portion in the
due course of the administration.

Salonga Hernandez vs Pascual

Facts:

Doña Adela died leaving behind a last will and testament executed, designating
Olivia Pascual as the executrix, as well as the principal beneficiary of her estate.
The will also bequeathed several legacies and devises to several individuals and
institutions.

Olivia Pascual then engaged the services of petitioner in connection with the
settlement of the estate of Doña Adela. Their agreement as to the professional
fees due to petitioner is contained in a letter. It is stipulated therein, among
others, that the final professional fee "shall be 3% of the total gross estate as well
as the fruits thereof based on the court approved inventory of the estate. The 3%
final fee shall be payable upon approval by the court of the agreement for the
distribution of the properties to the court designated heirs of the estate.

Private respondent, represented by petitioner, commenced a petition for the

probate of the last will and testament before the Probate Court. Probate Court
allowed probate. Letters testamentary were issued to Olivia Pascual.

Petitioner filed a Notice of Attorney's Lien equivalent to three percent (3%) of

the total gross estate. Petitioner filed a Motion to Annotate Attorney's Lien on
Properties of the Estate of Doña Adela Vda. de Pascual. Petitioner filed a Motion
for Writ of Execution for the partial execution of petitioner's attorney's lien.
Probate Court issued the first assailed order denying the motion for writ of
execution.

Through a petition for certiorari and mandamus, petitioner assailed the order of
the Probate Court denying its motion for the immediate execution, partial or
otherwise, of its claim for attorney's fees. The orders of the RTC were affirmed
by the Court of Appeals, effectively precluding petitioner's attempt to execute on
its attorney's lien.

Issue:

Whether or not a lawyer who renders legal services to the executor or

administrator of an estate can claim attorney's fees against the estate instead of
the executor or administrator.

HELD:

The rule is that when a lawyer has rendered legal services to the executor or
administrator to assist him in the execution of his trust, his attorney's fees may
be allowed as expenses of administration. The estate is, however, not directly
liable for his fees, the liability for payment resting primarily on the executor or
administrator. If the administrator had paid the fees, he would be entitled to
reimbursement from the estate. The procedure to be followed by counsel in
order to collect his fees is to request the administrator to make payment, and
should the latter fail to pay, either to (a) file an action against him in his personal
capacity, and not as administrator, or (b) file a petition in the testate or intestate
proceedings asking the court, after notice to all the heirs and interested parties,
to direct the payment of his fees as expenses of administration. Whichever
course is adopted, the heirs and other persons interested in the estate will have
the right to inquire into the value of the services of the lawyer and on the
necessity of his employment.

It may be so that petitioner, in filing this Notice of Attorney's Lien, initially

intended to hold Olivia Pascual, and not Doña Adela's estate, liable for the
attorney's fees. It did identify itself as the lawyer of Olivia Pascual, and the
Probate Court did note that the lien be satisfied chargeable to the share of the
executor. Yet it must also be noted that such lien, as it is, is only contingent on
the final settlement of the estate of Doña Adela, at such time, since the Retainer
Agreement on which the lien is hinged provides that the final fee "be payable
upon approval by the court of the agreement for the distribution of the
properties to the court designated heirs of the estate." This is also made clear by
the order noting the lien, which qualified that said lien was chargeable only to
the share of Olivia Pascual, hence implying that at the very least, it may be
claimed only after her share to Doña Adela's estate is already determinate.

In rendering its assailed Decision, the Court of Appeals relied on this

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 Attorney's Lien
only seeks to serve notice of the pendency of the claim for attorney's fees, and
not the payment of such fees itself. On its own, the Notice of Attorney's Lien
cannot serve as the basis for the Probate Court to authorize the payment to
petitioner of attorney's fees.

On the other hand, Escueta and its kindred cases do explicitly recognize the
recourse for the lawyer to directly make the claim for attorney's fees against the
estate, not the executor or administrator. The filing of the Notice of Attorney's
Lien and the qualificatory character of the rulings thereon, do not preclude the
resort to the mode of recovery against the estate as authorized by jurisprudence.
Clearly then, we disagree with the opinion of the Court of Appeals that attorney's
fees can be claimed only against the share of Olivia Pascual.

Heirs of Gregoire vs Baker

Facts:

J. H. Ankrom, resident of Prov. of Davao, died. The appellee, A. L. Baker, was

qualified as his administrator. Baker filed his inventory of the assets pertaining
to the estate of his decedent, in which inventory was included a tract of land
covered by Torrens cert. of title and with an area of more than 930 hectares. In
this inventory, said tract of land, with improvements, was estimated at nearly
P60K.

The heirs of Rafael Gregoire, appellants herein, filed a claim against the estate of
Ankrom for P70, 877.56, based upon a judgment rendered in SC of Rep. of
Panama. This claim was allowed by the commissioners in the estate of Ankrom,
and no appeal was at any time taken against the order so allowing it.

As the affairs of the estate stood upon the original inventory, there appeared to
be sufficient assets to pay all claimants; but while these intestate proceedings
were being conducted the administrator discovered that 1 ½ years before his
death, Ankrom had executed a mortgage on the property in question in favor of
the Phil. Trust Co. to secure that company from liability on a note of P20K. 2 days
after this mortgage had been executed Ankrom appears to have made an
assignment of all his interest in the mortgaged property to one J.G. Jung, of Ohio,
for a purported consideration of P1 and other good and valuable considerations.

In view of these conveyances by his intestate, the administrator presented an

amended inventory, omitting the tract of 930 hectares with its improvements
thereon, the same being the land covered by the transfers above mentioned. The
court, however, having its attention called to the fact that the omission of this
property from the inventory would leave the estate insolvent, made an order,
directing the administrator tore store said item to his inventory. But Court made
a new order, approving the omission by the administrator of said property from
the inventory. Hence this appeal.

Appellants’ arguments: [a] assuming that the assignment to Jung by Ankrom of

the equity of redemption of the latter in the tract of land was affected in fraud of
creditors, they have an interest in the payment of the appellant's claim.[b] it was
the duty of the administrator to retain the possession of this tract of land and
thereby place upon Jung, or persons claiming under him, the burden of
instituting any action that may be necessary to maintain the rights of the
transferee under said assignment.

The administrator contends: the assignment is valid and apparently does not
desire to enter into a contest over the question of its validity with the person or
persons claiming under it.

ISSUE
WON the appellants remedy of appeal is proper

HELD

NO. The precise remedy open to appellants (Heirs of Gregoire) is clearly pointed
out in Sec. 713 of Code of Civil Procedure.

Under this provision, when there is a deficiency of assets in the hands of an

executor or administrator to pay debts and expenses, and when the deceased
person made in his lifetime such fraudulent conveyance of such real or personal
estate or of aright or interest therein, as is stated in the preceding section, any
creditor of the estate may, by license of the court, if the executor or
administrator has not commenced such action, commence and prosecute to final
judgment, in the name of the executor or administrator, an action for the
recovery of the same and may recover for the benefit of the creditors, such real
or personal estate, or interest therein so conveyed.
But such action shall not be commenced until the creditor files in court a bond
with sufficient surety, to be approved by the judge, conditioned to indemnify the
executor or appellants’ remedy is to indemnify the administrator against costs
and, by leave of court, to institute an action in the name of the administrator to
set aside the assignment or other conveyance believed to have been made in
fraud of creditors.

Heirs of Gregoire argue that inasmuch as no appeal was taken from the order,
directing the administrator to include the land in question in the inventory, said
order became final, with the result that the appealed order, authorizing the
exclusion of said property from the inventory, should be considered beyond the
competence of the court.

This contention is untenable. Orders made by a court re:inclusion of items of

property in the inventory or the exclusion of items therefrom are manifestly of a
purely discretionary, provisional, and interlocutory nature and are subject to
modification or change at any time during the course of the administration
proceedings. Such order in question NOT final in the sense necessary to make it
appealable. In fact we note that the appealed order was expressly made w/o
prejudice to the rights of creditors to proceed in the manner indicated under Sec.
713 of Code of Civil Procedure.

Disposition Order appealed from not being of an appealable nature, so appeal

must be dismissed, with costs against the appellants

Pascual vs Pascual

Facts:

While the proceedings for the probate of the will of the deceased were pending,
plaintiff, Sinforoso Pascual, instituted against Ponciano S. Pascual and others, an
action for the annulment of a contract of sale of a fishpond situated in Lubao,
Pampanga, supposedly executed without consideration by said deceased in her
lifetime in favor of the defendants. The complaint alleges that plaintiff and
defendants are legitimate children of the testratix, Eduarda de los Santos.

Defendants filed of a motion to dismiss, alleging want of cause of action,

limitation of action, wrong venue and pendency of another action. The trial court
granted the motion on the ground that the action should have been brought by
the executor or administrator of the estate left by the deceased, and directed the
plaintiff to amend his complaint within five days.
The trial court declaring that such amendment did not cure the insufficiency of
the complaint, dismissed the action. It is from this order of dismissal that
plaintiff interposed his appeal.

Issue:

Whether or not the action for recovery of the fishpond will prosper?

Held:

Yes, actions for the recovery or protection of the property or rights of the
deceased for causes which survive may be prosecuted or defended by his
executor or administrator. Upon the commencement of the testate or intestate
proceedings the heirs have no standing in court in actions of the above character,
except when the executor or administrator is unwilling or fails or refuses to act,
in which event to heirs may act in his place.

Here, the fictitious sale is alleged to have been made to the defendants, one of
them, Miguel S. Pascual, being the executor appointed by the probate court. Such
executor naturally would not bring an action against himself for recovery of the
fishpond. His refusal to act may, therefore, be implied. And this brings the case
under the exception. It should be noted that in the complaint the prayer is that
the fishpond be delivered not to the plaintiff but to the executor, thus indicating
that the action is brought in behalf of the estate of the deceased.

Velasquez vs George

FACTS:

Maria Velasquez Vda. De George and her children appealed from the decision of
the CFI of Bulacan, which dismissed their complaint for lack of jurisdiction.
Plaintiffs are the widow and legitimate children of the late Benjamin George
whose estate is under intestate proceedings.

In their complaint, plaintiffs alleged that the 5 defendant-mortgagors (D-Mors)

are officers of the Islan Associates Inc. Andres Munoz, aside from being the
treasurer-director of said corp., was also appointed and qualified as
administrator of the estate of Benjamin George in the above special proceedings.

In life, the latter owned 64.8% or 636 shares out of 980 shares of stock in the
corp. Without prior approval from the probate court and without notice to the
heirs and their counsel, the D-Mors executed a Deed of First Real Estate
Mortgage (DFREM) in favor of the defendant-mortgagee (D-Mee) Erlinda
Villanueva, covering 3 parcels of land owned by Island Assoc. In said Deed, the D-
Mors also expressly waived their right to redeem the said parcels. Subsequently,
a power of atty (POA) was executed by the D-Mors in favor of Villanueva
whereby the latter was given full power and authority to cede, transfer and
convey the parcels of land within the reglementary period provided by law for
redemption. A certificate of sale(CS) was executed in favor of Villanueva after
she submitted the highest bids at the public Auction. This led to the execution of
a Deed of Sale and Affidavit of Consolidation of Ownership (ACO) by virtue of
which TCTs covering the 3 parcels were cancelled and new TCTs were issued in
favor of Villanueva.

Plaintiffs therefore filed a complaint for the annulment of the DFREM, POA, CS,
ACO and the new TCTs. Villanueva contends that the plaintiffs-appellants have
no capacity to file the complaint because the general rule laid down in R87, sec3
of the Rules of Court states that only the administrator or executor of the estate
may bring actions of such nature as the one in the case at bar. The only exception
is when the executor or administrator is unwilling or fails or refuses to act,
which exception does not apply in the present case. TC dismissed the complaint.

ISSUE:

W/N the plaintiffs-appellants have the capacity to file the complaint?

HELD:

Yes. The contention that the proper party to file the complaint is the
administrator of the estate of Benjamin George is without merit. The
administrator, Andres Munoz, is the same person charged by the plaintiffs-
appellants to have voted in the Board of Directors without securing the proper
authority from the probate court to which he is accountable as administrator.

In Ramirez vs Baltazar we ruled that since the ground for the present action to
annul the aforesaid foreclosure proceedings is the fraud resulting from such
insidious machinations and collusion in which the administrator has allegedly
participated, it would be far fetched to expect the said administrator himself to
file the action in behalf of the estate. And who else but the heirs, who have an
interest to assert and to protect, would bring the action?

Inevitably, this case should fall under the exception, rather than the general rule
that pending proceedings for the settlement of the estate, the heirs have no right
to commence an action arising out of the rights belonging to the deceased.” The
case at bar falls under such an exception.
Rioferio vs CA

FACTS:

Alfonso P. Orfinada, Jr. died without a will leaving several personal and real
properties. He also left a widow, respondent Esperanza P. Orfinada, whom he
had seven children who are the herein respondents. Also, the decedent also left
his paramour and their children. They are petitioner Teodora Riofero and co-
petitioners Veronica, Alberto and Rowena. Respondents Alfonso James and
Lourdes (legitimate children of the deceased) discovered that petitioner Teodora
and her children executed an Extrajudicial Settlement of Estate of a Deceased
Person with Quitclaim involving the properties of the estate of the decedent
located in Dagupan City. Respondent Alfonso filed a Petition for Letters of
Administration. Respondents filed a Complaint for the Annulment/Rescission of
Extra Judicial Settlement of Estate. Petitioners raised the affirmative defense that
respondents are not the real parties-in-interest but rather the Estate of Alfonso
O. Orfinada, Jr. in view of the pendency of the administration proceedings.

ISSUE:

Whether or not the heirs may bring suit to recover property of the estate
pending the appointment of an administrator.

HELD:
Yes, pending the filing of administration proceedings, the heirs without doubt
have legal personality to bring suit in behalf of the estate of the decedent in
accordance with the provision of Article 777 of the New Civil Code "that (t)he
rights to succession are transmitted from the moment of the death of the
decedent." The provision in turn is the foundation of the principle that the
property, rights and obligations to the extent and value of the inheritance of a
person are transmitted through his death to another or others by his will or by
operation of law. Even if administration proceedings have already been
commenced, the heirs may still bring the suit if an administrator has not yet been
appointed. This is the proper modality despite the total lack of advertence to the
heirs in the rules on party representation.

Modesto vs Modesto

Facts:

Bruno Modesto died leaving several heirs, among them, Cirilo Modesto and Jesus
Modesto. In the course of the intestate proceedings, Jesus, acting as
administrator of the estate of Bruno, filed a motion to cite and examine under
oath several persons, especially Cirilo Modesto, regarding properties concealed
embezzled or fraudulently conveyed.

Jesus, administrator, filed a motion in court to require Cirilo to turn over to him
as administrator the personal properties belonging to the intestate supposed to
be in Cirilo’s possession. Pursuant to said motion, the trial court, issued an order
requiring Cirilo Modesto to deliver to the administrator personal properties
listed in the order.

Cirilo then filed the present petition for certiorari to annul the proceedings had
before the Court of First Instance of Leyte.

Issue:

Whether or not the court order requiring the delivery of properties is proper?

Held:

No, the trial court committed error because the purpose of the section is merely
to elicit information or to secure evidence from those persons suspected of
having possessed or having knowledge of the properties left by a deceased
person, or of having concealed, embezzled or conveyed any of the said properties
of the deceased.

If an executor or administrator or any individual interested in the estate of the

deceased, complains to the court having jurisdiction of the deceased, complains
to the court having jurisdiction of the estate that a person or persons are
suspected of having concealed, embezzled, or conveyed away any of the
properties, real or personal, of the deceased, the court may cite such suspected
person or persons to appear before it and may examine him or them on oath on
the matter of such complaint. In such proceedings the trial court has no authority
to decide whether or not said properties belong to the estate or to the persons
examined.

If, after such examination there is good reason to believe that said person or
persons examined are keeping properties belonging to the estate, then the
administrator should file an ordinary action to recover the same.