special proceedings

December 30, 2016 | Author: Maris Angelica Ayuyao | Category: N/A
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Intestate Estate of ARSENIO R. AFAN. MARIAN AFAN, petitioner-appellee, vs.APOLINARIO S. DE GUZMAN

long before the filing of his claim therein on July 27, 1957. To be precise, he was aware of its existence as early as August, 1955.

This is an appeal, taken by Apolinario S. de Guzman, from an order of the Court of First Instance of Manila, dated July 27, 1957.

In this connection, it appears that, during the lifetime of Afan, or on May 24, 1950, De Guzman instituted, against him, Civil Case No. 1148 of the Court of First Instance of Rizal, to recover the amount of the promissory note above referred to. On appeal, the decision of said court in favor of De Guzman was set aside, and a trial de novo ordered, by the Court of Appeals, in case CA-G.R. No. 7340-R. Sometime after the records had been remanded to the lower court, Afan died. On August 15, 1955, 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 Arsenio R. Afan now pending in the Court of First Instance of Manila." This order was complied with on August 30, 1955, by the filing with the Court of First Instance of Rizal, in said Case No. 1148, of a "notification" containing the required information, copy of which "notification" was served upon counsel for De Guzman, as plaintiff therein. On January 18, 1956, his counsel filed in said case a motion for the appointment of a legal representative of the deceased Afan, to substitute him as defendant therein. Accordingly, on January 21, 1956, 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. On January 24, 1956 De Guzman filed, therefore, with the aforementioned court, 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 No. 26858, entitled 'Instance estate of Arsenio R. Afan' before the Court of First Instance of Manila," with the prayer that said "heirs be substituted as party defendants" in Case No. 1148, "in place of the deceased Arsenio R. Afan." Yet, De Guzman choose not to file his claim in such proceeding until July 27, 1957, one year and a half after the filing of his aforementioned "compliance."

It appears that, on July 12, 1957, De Guzman filed, in this special proceeding for the settlement of intestate estate of Arsenio R. Afan, a claim for P1,000, allegedly due from the latter, with interest thereon, within 30 days from August 16, 1949, as set forth in a promissory note then issued by Afan. On July 22, 1957, the administratrix of his estate objected to the consideration of the claim upon the ground, among others, that it had been filed long after the expiration of the period for the presentation of claims against said estate. For this reason, the lower court issued the order appealed from, refusing to entertain the aforementioned claim. De Guzman invokes, in support of his appeal, section 2, Rule 87 of the Rules of Court, reading: 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 nor less than six 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 within the time previously limited, the court may, for cause shown and on such terms as are equitable, allow such claims to be filed within a time not exceeding one month. Relying upon this provision, De Guzman maintains that the lower court should have entertained his claim, the same having been filed prior to the distribution of the estate of the deceased. This pretense is not borne out, however, by the rule above quoted. 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. 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. Again, whether or not the reasons given — and none were set forth in De Guzman's claim — are sufficient, rests upon the discretion of the court (Roguera vs. Tanodra, 81 Phil., 404; Umpig, et al. vs. De Gala, et al., 96 Phil., 77; 50 Off. Gaz., 5305), and the record before us does not show that the lower court has abused its discretion in acting as it did in the present case. De Guzman now alleges, for the first time, a "cause" why the lower court should allegedly have considered his claim. He says, in his brief (p. 6, thereof) that "he had no actual knowledge of the fact that the estate of the deceased . . . was then already in the process of settlement . . . . " He did not explain why he refrained from making such averment either in his claim or in the motion, filed by him in the lower court, for a reconsideration of the order appealed from. The reason is, however, not difficult to surmise — he had actual knowledge of the present proceeding

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 fully justifies the denial of such extension and the order appealed from. We have already held that failure to file a claim within the time provided therefor upon the sole ground that the claimant was negotiating with one of the heirs for payment, is not sufficient to justify extension (In Re: Estate of De Dios, 24 Phil., 573, 576; see also Santos vs. Manarang, 27 Phil., 209), and that, where a claimant knew of the death of the decedent and for four (4) or five (5) months thereafter he did nothing to present his claim, this can hardly be considered as a good excuse for such neglect (In Re: Estate of Tiangco, 39 Phil., 967). Wherefore, the order appealed from is hereby affirmed with costs against appellant Apolinario S. de Guzman. It is so ordered.

IN THE MATTER OF THE INTESTATE ESTATE OF THE LATE PORFIRIO VILLARIN, DECEASED. PHILIPPINE NATIONAL BANK, vs. PURIFICACION VDA. DE VILLARIN, PORFIRIO VILLARIN, JR., ASSISTED BY HER MOTHER PURIFICACION Appeal on a question of law from the order dated December 20, 1967 of the Court of First Instance of Ozamis Occidental, denying the claim of claimant-appellant Philippine National Bank against the Intestate Estate of Porfirio Villarin in Special Proceeding No. 530 of the Court of First Instance of Misamis Occidental. It appears that on July 7, 1955, the Philippine National Bank obtained a judgment in its favor and against Porfirio Villarin in Civil Case No. 22360 of the Court of First Instance of Manila, sentencing the latter to pay the Philippine National Bank (a) on the first cause of action, the sum of P13,669.60 as of June 23, 1953, plus a daily interest of P2.84 on P13,000.00 from June 24, 1953 until fully paid, plus 10% of the amount due as attorney's fees; and (b) on the second cause of action, the sum of P31,625.74 as of June 23, 1953, plus a daily interest of P6.57 on P30,000.00 from June 24, 1953 until fully paid, plus 10% of the amount due as attorney's fees, and to pay the costs of this suit. On January 18, 1961, Porfirio Villarin died in Misamis Occidental without leaving any will. The Philippine National Bank claims to have learned of his death only sometime in the middle of 1963. On July 13, 1965, the Philippine National Bank filed a petition in the Court of First Instance of Misamis Occidental for the issuance of letters of administration of the Intestate Estate of Porfirio Villarin for the reason that no proceedings for the settlement of his estate had been instituted up to that time by his widow or any of his heirs. On September 24, 1965, letters of administration were issued in favor of the widow, Mrs. Purificacion Vda. de Villarin, who, thereupon assumed her duties as administratrix. On March 9, 1966, Philippine National Bank filed with the Court of First Instance of Misamis Occidental its claims against the Intestate Estate of the deceased Porfirio Villarin for the amount awarded to it in the aforementioned judgment. 1 On April 25, 1966, Purificacion Vda. de Villarin, the administratrix of the Intestate Estate of Porfirio Villarin filed her answer alleging that the claim of appellant Bank as judgment creditor of the deceased Porfirio Villarin in Civil Case No. 22360 has prescribed under Article 1144, No. (3) of the Civil Code which limits to ten (10) years the prescriptive period within which an action to revive a judgment may be filed. On September 18, 1967, Porfirio Villarin, Jr. assisted by his mother, Purificacion Vda. de Villarin, likewise filed an opposition to the claim of the petitioner-claimant contending that said claim has been barred by the Statute of Limitations; that the money judgment relied upon by claimant Bank could have been enforced by an independent civil action for revival of judgment under Section 6, Rule 39 of the Rules of Court; and that the failure of the claimant Bank to institute such action for revival of judgment within the ten-year period from the time the judgment became

final and executory on August 11, 1965 has watered down its claim to a mere natural obligation which does not grant a right of action to enforce its performance. 2 On December 20, 1967, the Court of First Instance of Misamis Occidental, without receiving any evidence, oral or documentary, and merely allowing counsels of both parties to argue before it, issued the questioned Order which reads as follows: On March 17, 1966 the Philippine National Bank filed a claim against the estate for the amount of P13,669.60 as of June 23, 1953, plus a daily interest of P2.84 on P13,000.00 from June 24, 1953 until fully paid 10% of the amount due as attorney's fees; and the sum of P31,625.74 as of June 23, 1953, plus a daily interest of P6.57 on P30.000.00 from June 24, 1953 until fully paid, plus 10% of the amount due as attorney's fees. This claim is based on a judgment against the deceased in Civil Case No. 22360 of the Court of First Instance of Manila, Branch 5 rendered on July 7, 1967. The administratrix opposed the claim of the Philippine National Bank on the ground that the decision upon which the claim is based is already unenforceable. The Philippine National Bank countered that its claim has not yet prescribed nor barred by the statute of limitations for although admitting more than 10 years have already elapsed counted from the time the judgment became final and executory, the prescriptive period was interrupted by the partial payment made by the judgment debtor after judgment became executory, the last of which was on March 14, 1956. The Philippine National Bank further contended that partial payment before the prescriptive period expired is undoubtedly an implied acknowledgment of the debt, citing Veloso vs. Fontanoza, 13 Phil. 79. Claimant further cited Article 1155 of the New Civil Code which provides that the prescription of action is interrupted when they are filed before the Court; when there is a written extrajudicial demand by the creditors; and when there exists a written acknowledgment of the debt by the debtor. In the course of the presentation of their evidence, claimant Philippine National Bank cited various instances wherein the deceased, during his lifetime and after the decision became final, made representations to it for grace to pay the judgment credit. The administratrix herself likewise made representations to the Philippine National Bank also for terms of payment. In short, acknowledgment of the existence of the debt. The Court believes that the cases cited by the claimant and the instances it enumerated are not the cases in point nor the instances applicable to the present case. It is not disputed that the claim is based on a judgment awarding certain sums of money to claimant Philippine National Bank. It is not likewise disputed that more than 10 years have elapsed since the said judgment became final and executory. Therefore, prescription of action to enforce judgment is the main question. Section 6, Rule 39 provides that a judgment may be executed on motion within 5 years from the date of its entry. After the lapse of

such time and before it is barred by the statute of limitations a judgment may be enforced by action. And Article 1144 of the New Civil Code provides that an action to enforce a judgment or decree must be brought within 10 years from the time the said decree and/or judgment has become final and executory. It appears that the claimant neither filed a motion for execution within 5 years from July 7, 1955 3 nor filed an action to revive judgment within 10 years from July 7,1955. The claimant, Philippine National Bank not having availed of this alternatives has allowed the judgment to prescribe. After the lapse of 10 years the Philippine National Bank thereof lost all its rights based on the said judgment. (Demetriou & Madrid vs. Lesaca and Chuanco 63 Phil. 112, citing General de Tabacos vs. Martinez, 17 Phil. 160; Paterno vs. Aguila, 22 Phil. 427; Compania General de Tabacos vs. Martinez and Nolan, 29 Phil. 515; Arambulo vs. Court of First Instance of Laguna & Municipality of Santa Rosa, 53 Phil. 302). The claimant herein should have (which it did not) filed an action to enforce the judgment before it was barred by the statute of limitation, and any decision on this action should have been the basis of the claim at bar. Premises considered, the claim of the Philippine National Bank having already prescribed, and therefore, without any merit whatsoever, is hereby denied. SO ORDERED. From the foregoing Order, petitioner-claimant Philippine National Bank has taken an appeal to the Court of Appeals assigning the following errors: I. IN DENYING THE CLAIM OF CLAIMANT-APPELLANT PHILIPPINE NATIONAL BANK FILED IN SPECIAL PROCEEDING NO. 530. II. IN DENYING THE CLAIM OF CLAIMANT-APPELLANT PHILIPPINE NATIONAL BANK ON THE GROUND THAT SAID CLAIM HAS PRESCRIBED. On June 30, 1975, the Court of Appeals resolved to certify the appeal to this Court for the reason that no issue of facts be involved and that as certified by the Clerk of Court of the lower court no evidence oral or documentary was presented before the trial court because the case was not tried but merely argued before it. 4 The basic issue posed in this appeal is whether the claim of the appellant Bank consisting of a money judgment obtained in Civil Case No. 22360 of the Court of First Instance of Manila against Porfirio Villarin which has become final and executory on August 11, 1955 could still be filed in the Intestate Estate of Porfirio Villarin after the prescriptive period of ten (10) years for the revival of the judgment has already lapsed. Under Section 6, Rule 39 of the Rules of Court "a judgment may be executed on motion within five (5) years from the date of its entry or from the date it becomes final and executory. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action." Appellant Bank contends that its claim has not yet prescribed because its right to file the action to revive

the aforesaid money judgment was still subsisting when the judgment debtor Porfirio Villarin died on January 18, 1961 and that its right to file an action to revive said money judgment was, after the death of Porfirio Villarin, converted into a claim enforceable only in the settlement of the intestate estate proceedings of the deceased. As such, it maintains that the applicable period of prescription is not the 10-year period for filing an action to revive a judgment but the period of prescription for the filing of creditor's claim against the judgment debtor's estate under Section 2, Rule 86 of the Rules of Court. The records show that on July 13, 1965, the appellant Bank filed a petition for the issuance of letters of administration in the settlement of the intestate estate of Porfirio Villarin and on September 24, 1965, the letters of administration was issued in favor of the widow of Porfirio Villarin, Gregoria Vda. de Villarin. If the money judgment obtained by appellant Bank against Porfirio Villarin became final and executory on August 11, 1955, it has up to August 11, 1965 to file an action to revive the judgment. However, appellant Bank did not actually file an action to revive the money judgment but a claim against the estate of the deceased on March 9, 1966. Now the question is: Was the claim filed on time? We believe it was. When appellant Bank filed a petition for the issuance of letters of administration stating therein that it was one of the creditors of the estate of the deceased, it can be considered for all legal intents and purposes that appellant Bank has made known its claim against it and since the aforesaid petition was filed within the 10-year prescriptive period for the revival of the money judgment in question, appellant Bank may be deemed to have filed its claim on time. In effect, the filing of the petition for the issuance of letters of administration is the first concrete step to take so that the creditors of the estate of the deceased may be known and recognized. Once a creditor has filed a petition for the issuance of letters of administration, the court shall issue letters of administration to a qualified person. 5 Immediately after the granting of the letters of administration, the court shall issue notice requiring all persons having money claims against the decedent to file them with the clerk of court. 6 In the notice, the court shall state the time for the filing of the claims against the estate, which shall not be more than twelve (12) nor less than six (6) months after the date of first publication of the notice ... 7 Immediately after the notice is issued to creditors, the administrator shall cause the notice to be published for three (3) consecutive weeks successively in the newspaper of general circulation in the province, and to be posted for the same period in four public places in the province and in two public places in municipality where the decedent last resided. 8 In the case before Us there is no showing that the lower court has issued a notice requiring all persons having any claim against the decedent to file them with the clerk of court. But even before the lower court could issue such notice to all creditors of the estate, appellant Bank filed on March 9, 1966 its formal claim against the estate of the decedent. At first blush it, would appear that the filing of the claim on March 9, 1966 was already out of time because it was filed more than seven months after the ten-year prescriptive period for reviving the money judgment has

prescribed. However, considering that the appellant Bank has already filed a petition for the issuance of letters of administration in the settlement of the intestate estate of the decedent on July 13, 1965, which is within the 10-year period, the filing of the formal claim on March 9, 1966 can be made to retroact to the date when the petition for letters of administration was filed with the lower court because that was actually the time the appellant bank had made known to the court that it has a claim against the estate of the deceased. And thus having made known on time its claim against the estate of the deceased by means of its petition for the issuance of letters of administration in the settlement of the intestate estate of Porfirio Villarin, this, We believe, has given appellant Bank sufficient cause of action to assert its claim against the estate of the deceased. IN VIEW OF THE FOREGOING, the order appealed from is hereby reversed and set aside and another order entered directing the Clerk of Court to remand the records of Special Proceeding No. 530 to the lower court for further proceedings. SO ORDERED. HEIRS OF RAMON PIZARRO, SR., vs. HON. FRANCISCO Z. CONSOLACION, CFI of Davao and LUIS TAN alias CHEN YEHAN This is a petition for review on certiorari seeking the reversal of the Order of June 1, 1979, of the then Court of First Instance of Davao * dismissing petitioners' claim against the estate of the late Dominga Garcia, and questioning the legality of the Order of the same court dated July 17, 1979 which denied due course to the petitioners' notice of appeal to the Court of Appeals and directed them to file instead a petition for review before this Tribunal. Petitioners are the oppositors in Special Proceeding No. 2116 in the then Court of First Instance (CFI) of Davao City Branch II, for settlement of the estate of the deceased Dominga Garcia, filed by private respondent herein, Luis Tan alias Chen Yeh-An. The records disclose that on August 12,1977, 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 sometime in 1930 in Canton, China; that the deceased left a parcel of land 1 located at C.M. Recto Avenue, Davao City; and that the said lot is in the possession of the heirs of Ramon Pizarro, 2 petitioners herein. On October 4, 1977, petitioners filed an opposition to the said petition claiming that they are the heirs of Ramon Pizarro who died intestate on June 16, 1974; 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 executed by Vicente Tan in Hongkong on May 27, 1966. Petitioners prayed that letters of administration of Dominga Garcia's estate be issued in favor of anyone of them.

The respondent court set the petition for hearing. Said order and the petition were duly published in the Mindanao Times. ** The City of Davao 3 was likewise served with a copy of said petition. On December 6, 1977, after private respondent had begun presentation of evidence in support of his petition, the parties herein entered into a compromise whereby petitioners agreed, among others, to withdraw their opposition to the appointment of private respondent's recommendee and for the intestate proceedings to proceed in due course. Said agreement was approved in the order of respondent court dated December 6,1977. 4 Accordingly, on March 27, 1978, after the judicial administrator had qualified and his inventory of the assets of the late Dominga Garcia was approved, respondent court issued an order requiring the filing of creditors' claim against the said estate within the period of six (6) months from the date of the first publication. 5 Copy of said order was received by petitioners through counsel on March 28, 1979. 6 Meanwhile, on January 23,1979, private respondent and the City of Davao filed a joint motion asking respondent court to take notice of their agreement which in substance provides for an agreement to file a joint motion in the CFI of Davao to proceed with the determination of the heirs of the deceased Domingao Garcia which shall be determinative of their respective claims against the estate. On February 19, 1979, petitioners filed their opposition to the said joint motion on the sole ground that it is without procedural basis. Private respondent filed his reply thereto on February 21, 1979. On February 22, 1979, respondent court issued an order taking note of the agreement between private respondent and the City of Davao. On February 28, 1979, 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. In the Order of June 1, 1979, respondent court dismissed both claims of the petitioners on the ground that they are barred for having been filed out of time. 7 On June 26, 1979, petitioners filed a notice of appeal stating that they are appealing the order of June 1, 1979 to the Court of Appeals in so far as it declared their

claims barred. 8 On July 5, 1979, private respondent filed an opposition to the projected appeal on the ground that the appeal involves a pure question of law and thus, the same should be directed to the Supreme Court. 9 On July 17, 1979, respondent court issued an order dismissing petitioners' appeal and directed petitioners to file instead a petition for review on certiorari before this Court. 10 Hence, the present petition. *** It is the position of the petitioners that the order of June 1, 1979 of the respondent court, which directed that the filing of claims against the estate of the late Dominga Garcia be filed within six (6) months after the first publication of the notice thereof, is null and void in that it is violative of Section 2, Rule 86 of the Revised Rules of Court. They contend that said provision mandates that the filing of such claims should be for a period of six (6) months starting from the sixth month after the date of the first publication of the notice down to the twelfth month. 11 They argue that to require filing of claims within the sixth month from publication of notice will shorten the period in violation of the mandatory provisions of Section 2, Rule 86, which provides: 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 anytime before an order of distribution is entered, on application of a creditor who has failed to file his claim within the time previously limited, the court may, for cause shown and on such terms as are equitable, allow such claim to be filed within a time not exceeding one (1) months. We agree. The range of the period specified in the rule is intended to give the probate court the discretion to fix the period for the filing of claims. The probate court is permitted by the rule to set the period provided it is not less than six (6) months nor more than twelve (12) months from the date of the first publication of the notice thereof. Such period once fixed by the court is mandatory. The purpose of the law, in fixing a period within which claims against an estate must be presented, is to insure a speedy settlement of the affairs of the deceased person and the early delivery of the property to the person entitled to the same. 12 In Sikat vs. Vda. Mafincode Villanueva, 13 this Court ruled that the speedy settlement of the estate of deceased persons for the benefit of creditors and those entitled to the residue by way of inheritance or legacy after the debts and expenses of administration have been paid is the ruling spirit of our probate law. However, in this case 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. The other issue raised in the petition is the authority of the trial court to determine whether the appeal involves a question of law or both questions of law and facts. The petitioners cite Section 3, Rule 50 of the Rules of Court, which provides as follows: Sec. 3. Where appealed case erroneously brought. — Where the appealed case has been erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court, with a specific and clear statement of the grounds therefor. Petitioners contend that it is the Court of Appeals which has the authority to determine whether the issue in the appeal is purely a question of law in which case it shall certify the same to the proper court, which in this case is this Tribunal. In the present case, when the lower court found that the order sought to be appealed was its order of June 1, 1979, wherein it held that the claims filed by petitioners against the estates were barred having been filed beyond the period fixed by the trial court in the notice, which appeal involves an interpretation of Section 2, Rule 86 of the Rules of Court, instead of giving due course to the notice of appeal to the Court of Appeals filed by petitioners, the petitioners were instructed to file a petition for review with this Court as the issue is a pure question of law. We find the action taken by the trial court to be well-taken. Certainly, it is within the competence and jurisdiction of the trial court to determine whether the appeal interposed was based on pure questions of law or involves both questions of law and facts in considering the appeal. 14 The provision of Section 3, Rule 50 of the Rules of Court applies only when the appeal is already brought to the Court of Appeals at which time it may, instead of dismissing the appeal, upon determination that it involves a pure question of law, order that the case be certified to this Court. It must be noted that in the notice of appeal it is not even required that the appellant indicate the court to which its appeal is being interposed. The requirement is merely directory and failure to comply with it or error in the court indicated is not fatal to the appeal. 15 WHEREFORE, the petition is GRANTED and the orders of the respondent court of June 1, 1979 and July 17, 1979 are reversed and set aside in so far as the claims filed by petitioners were found to be barred, the same having been timely filed, without pronouncement as to costs. SO ORDERED.

RICARDO M. GUTIERREZ vs. LUCIA MILAGROS BARRETTODATU, Executrix of the Testate Estate of the deceased MARIA GERARDO VDA. DE BARRETTO

claim against the estate of the deceased Maria Gerardo Vda. de Barretto within the purview of Rule 87, Section 5. This section states:

Ricardo M. Gutierrez appeals from the orders of Court of First Instance of Rizal (1) dismissing his complaint against Lucia Milagros Barretto-Datu, as executive of the estate of the deceased Maria Gerardo Vda. de Barreto, and (2) denying his motion for reconsideration the dismissal.

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exception. — 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 of the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. Where an executor or administrator commences an action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set forth by answer the claims he has against the decedent, instead of presenting them independently to the court as herein provided, and mutual claims may be set off against each other in such action; and if final judgment is rendered in favor of the defendant, the amount so determined shall be considered the true balance against the estate, as though the claim had been presented directly before the court in the administration proceedings. Claims not yet due, or contingent, may be approved at their present value.

The relevant facts alleged by appellant are as follows; In 1940, Maria Gerardo Vda. de Barretto, owner of hectares of fishpond lands in Pampanga, leased the same to appellant Gutierrez for a term to expire on May 1, 1947. On November 1, 1941, pursuant to a decision of Department of Public Works rendered after due investigation 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. In 1956, the lessor having died in 1948 and the corresponding testate proceeding to settle her estate having been opened (Sp. Proc. No. 5002, C.F.I., Manila), Gutierrez filed a claim therein for two items: first, for the sum of P32,000.00 representing 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 second, the sum of P60,000.00 as damages in the concept of earned profits, that is, profits which the claimant failed to realize because of the breach of the lease contract allegedly committed by the lessor. On June 7, 1957 appellant commenced the instant ordinary civil action in the Court of First Instance of Rizal (Quezon City branch) against the executrix of the testate for the recovery of the same amount of P60,000 referred to as the second item claimed in the administration proceeding. The complaint specifically charges decedent Manila Gerardo Vda. de Barretto, is lessor, was having violated a warranty in the lease contract again any damages the lessee might suffer by reason of the claim of the government that several rivers and creeks of the public domain were included in the fishponds. In July 1957 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 with the filing of the defendant’s answer, together with a counterclaim, and after two postponements of the trial were granted, the second of which was in January 1958, the court dismissed the action for abandonment by both parties in an order dated July 31, 1959. Appellant moved to reconsider; appellee opposed the motion; and after considerable written argument the court, on March 7, 1960, denied the motion for reconsideration on the ground that the claim should have been prosecuted in the testate proceeding and not by ordinary civil action. Appellant submits his case on this lone legal question: whether or not his claim for damages based on unrealized profits is a money

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. 21 Am. Jur. 579. 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.” 3 Schouler on Wills, Executors and Administrators, 6th Ed., 2395. A claim for breach of a covenant in a deed of the decedent must be presented under a statute requiring such presentment of all claims grounded on contract. Id. 2461; Clayton v. Dinwoody, 93 P. 723; James v. Corvin, 51 P. 2nd 689. 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. Rule 88, section 1. The instant suit is not one of them. Appellant invokes Gavin v. Melliza, 84 Phil. 794, in support of his contention that this action is proper against the executrix. The citation is not in point. 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. Besides, the claim was for indemnity in the form of a certain quantity of palay every year for the unexpired portion of the term of the contract. The denial of the claim was affirmed by this Court on the grounds that it was not a money

claim and that it arose after the decedent’s demise, placing it outside the scope of Rule 87, Section 5. The orders appealed from are affirmed, with costs against appellant. Maria Aguas, et. al. vs. Hermogenes Llemos Facts: 





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Sometime in March 1960, certain sps. Felix Guardino and Maria Aguas filed an action for recovery of damages before the CFI of Samar against the Hermogenes Llemos. However, the defendant (Llemos), before answering the complaint against him a month after the said complaint was filed. Meanwhile, the plaintiffs amended their complaint and had included the heirs of the deceased and their claims for damages be chargeable against the estate of the deceased. The heirs of the Llemos then filed a Motion to Dismiss the complaint. Thereafter, the court dismissed the complaint on the ground that the heirs should not be a party in the complaint and instead, a legal representative should have been made a party in the same. Plaintiffs filed a Mr. But it was also denied by the court. Hence, an instant appeal before a higher court.

Issue: Do the plaintiffs have legal personalities to file their claims for damages against the estate or can they be parties- in-interest in the settlement of estate proceedings to secure their claim? Ruling: Rule 86, Section 5 of the Rules of Court, which reads: “xxx 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; otherwise they are barred forever xxx” Rule 87, Section 1 of the Rules of Court: “Sec. 1. Actions which may and which may not be brought against executor or administrator. xxx but actions to recover real or personal property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or property, real or personal, may be commenced against him xxx” Thus, the plaintiffs action is not proper to be filed against the estate of the deceased with respect to the above-mentioned rule. Instead, it can be filed against the executor of administrator of the estate as a contingent claim.

E Gaskell Co Inc Vs Tan Sit FACTS: Gaskell and Dy Poco, deceased husband of Tan Sit, were solidarily liable to a certain bonding company. The bonding company demanded payment from Gaskell, while a bankruptcy proceedings was filed by such creditor against Dy Poco. During such proceedings, Gaskell did not prove the solidary liability of Dy Poco. Before termination of the bankruptcy proceedings, Dy Poco died, but the said proceedings continued. There was a life insurance on the life of Dy Poco, Tan Sit was appointed as administrator of the proceeds of such insurance. While the intestate proceedings was pending, the bankruptcy proceedings was decided releasing Dy Poco from any liability. Subsequently, Gaskell presented the claim as a contingency claim against the estate of Dy Poco in the intestate proceedings. It was disallowed by the commissioners and also by the CFI. Hence, this appeal. Issue: Whether or not the disallowance was proper. RULING: Yes. Gaskell did not proved during the solidary liability of Dy Poco during the bankruptcy proceedings. Furthermore Dy Poco was already released from any liability by virtue of the judgment in the said bankruptcy proceedings. THE BANK OF THE PHILIPPINE ISLANDS, vs. V. CONCEPCION E HIJOS, INC., and VENANCIO CONCEPCION. It appears from the record that on July 6, 1921, the defendants Concepcion executed a promissory note in favor of the plaintiff for the sum of P342,372.64, payable on demand, and as security for payment, deposited 700 shares of the Philippine National Bank as collateral with the plaintiff and gave it a mortgage on 5,680 square meters of land, with improvements, situated on R. Hidalgo Street in Manila. The defendants Concepcion defaulted in the payment of the note, and on February 3, 1922, the plaintiff bank instituted the present foreclosure proceedings. Shortly afterwards, Henry W. Elser entered into negotiations with the Concepcions and offered to take over the mortgaged property and assume the mortgage debt. To this the Concepcions agreed on the condition that they be relieved of all liability for the debt. On March 23, 1922, Elser wrote the plaintiff bank the following letter: DEAR SIR: Confirming our conversation of this morning, I take pleasure in advising you that I have made arrangements with Mssrs. Puno & Concepcion to take over their property on Calle R. Hidalgo, consisting of 5,680 square meters, including all improvements thereon, and also 700 shares in the Philippine National Bank mortgaged to you in the total sum of P342,000, and by which arrangement I am to be substituted in the place and stead of Messrs. Puno & Concepcion in the obligation to your bank. I have present prospects of renting the entire property and in consideration thereof I will undertake to pay to the bank on the obligation thus undertaken by me, the sum of not less than five thousand pesos (P5,000) monthly on the principal, together with

interest every six months. I will also reduce the mortgage not less than 25 per cent during the first year, not less than 50 per cent during the second year, and the balance within the third year, without prejudice, however, to my right to mortgage the property to any bonding institution or to take up the mortgage myself at any time during the three years period mentioned above, which I expect that I may be in a position to do. Yours very truly, (Sgd.) H. W. ELSER No answer to this letter was given by the bank, and it clearly appears from the allegations in its amended complaint, and from the evidence, that it was unwilling to release the Concepcions from their liability for the mortgage debt and insisted on their confessing a judgment in the foreclosure proceedings. This the Concepcions refused to do unless the bank would agree to bid in the mortgage property for the full amount of the judgment. After further conversations with the representatives of the plaintiff bank, Elser on April 21, 1922, wrote in the following letter: DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent conversation regarding the R. Hidalgo property belonging to Venancio Concepcion (Puno & Concepcion), I respectfully request that you confirm in writing your verbal agreement that should the property in question become the property of your bank, in the amount of P342,000 plus interest to date, that you will sell the same to me for the same amount. This information is desired by the Attorneys for Venancio Concepcion, Mr. R. M. Calvo, in order to satisfy himself that in case Messrs. Puno & Concepcion accept judgment, turning over the property to you, that you in return will sell the property to me for the above mentioned sum, and not less than that sum. Trusting you will see your way clear to furnish this confirmation, in accordance with our conversation, we are Very truly, (Sgd.) H. W. ELSER It must be inferred from this letter that Elser had been led to understand that the bank 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. It will be readily seen that this proposition is entirely different from that contained in the letter of March 23d. The plaintiff made no direct reply to the letter of April 21st, but Calvo, testifying for the plaintiff, stated that on April 28, Elser invited him to a conference with Nolting, the president of the bank, in regard to the matter; that on meeting Nolting, Elser said: “Mr. Nolting, do you still adhere to your acceptation of the offer I have made you in writing?” to which Nolting answered that he did not think that there was any reason for him to go back on his word. He thereupon referred Elser and Calvo to Zaragoza, who in some matters appears to have acted as counsel for the bank, for further conferences. The negotiations did not lead to any action on the part of the bank, but on May 5, 1922, Elser entered into an agreement in the form of bilateral deed of sale, with V.

Concepcion & Hijos, Inc., and Venancio Concepcion which appears in the record as Exhibit C and reads as follows in translation from Spanish: DEED OF PURCHASE AND SALE This deed of purchase and sale executed in the City of Manila, P.I., this fifth day of May 1922 A. D., by and between V. Concepcion & Hijos, Inc., a domestic corporation duly organized under the laws of Philippine Islands domiciled at No. 861 Calle R. Hidalgo, District of Quiapo, City of Manila, represented herein by the president, Mr. Venancio Concepcion, by virtue of the powers granted him by the Board of Directors of said corporation in a resolution dated May 2, 1922, a copy of which duly certified, is attached hereto and made a part hereof, and Mr. Venancio Concepcion, of age, married with Mrs. Rosario San Agustin and resident of City of Manila, his place of residence being in the municipality of San Juan, Province of Rizal, P.I., as party of the first part, and Mr. Henry W. Elser, of age, married with Mrs. Elaine Childs Elser, and a resident of City of Manila, with her place of residence at No. 600 Calle M. H. del Pilar, District of Malate, as party of the second part, WITNESSETH: Whereas, V. Concepcion e Hijos, Inc., is at present indebted to the Bank of the Philippine Islands, in the sum of P342,372.64, Philippine currency with interest thereon at the rate of 9 per cent per annum from September 30, 1921, to secure the payment of which, the firm of V. Concepcion e Hijos, Inc., and Mr. Venancio Concepcion as joint land several obligors, have executed in favor of the creditor bank on the 6th of July, 1921, a deed of mortgage and one of pledge upon the following properties: A tract of land with the buildings of strong materials erected thereon, situated on Calle Sa n Sebastian, District of Quiapo. Bounded on the N. by Calle San Sebastian; on the E. by property Maximino Paterno and Manuel Zamora; on the S. by property of the City of Manila; and on W. by the Estero de Curtidor; containing an area of 5,686.80 square meters, more or less, of which land, buildings and improvements, the aforesaid Venancio Concepcion is the registered owner in accordance with the Land Registration Act, according to transfer certificate of title No. 14019, issued by the registrar of deeds of the City of Manila. Seven hundred shares of stock of the Philippine National Bank, belonging to Mr. Venancio Concepcion, issued to him and indorsed in the blank in favor of the Bank of the Philippine Islands, described as follows: (Here follows the numbers and amounts of the certificates of shares.) Whereas on January 20, 1922, Mr. Venancio Concepcion, owner of the property above described, in consideration of the fact that they were subject to the payment of the sum of P342,372.64 with interest thereon at the rate of 9 per cent per annum, which was owing from V. Concepcion e Hijos, Inc., to the Bank of Philippine Islands, as per deeds of mortgage and of pledge executed on July 6, 1921, has sold, assigned, and transferred to said firm of V. Concepcion e Hijos, Inc., the aforesaid properties for the sum of P290,000 Philippine currency, the agreed and stipulated price of

the urban property being P220,000, Philippine currency, and that of the 700 shares of stock of the Philippine National Bank, the sum of P70,000 Philippine currency, as per public document executed on said date before Mr. Recaredo Ma. Calvo, a notary public in and for the City of Manila.

On June 23, 1922, the defendants Concepcion answered said petition praying that instead of merely being included, said Elser be substituted in their place as defendants, on the ground that the plaintiff had accepted the substitution of Elser in their place as its debtor.

Whereas, on February 28, 1922 the Bank of the Philippine Islands, filed with the clerk’s office of the Court of First Instance of Manila, under No. 21537, a complaint, against V. Concepcion e Hijos, Inc., and Venancio Concepcion for the recovery of its mortgage credit evidenced by the deeds of mortgage and of pledge executed on July 6, 1921, notwithstanding the offer made by V. Concepcion e Hijos, Inc., to assign absolutely and forever to said creditor entity the properties which are the subject matter of the mortgage and pledge in full and total payment of their obligation.

On June 27, 1922, the trial court entered an order including Henry W. Elser as defendant and one month later, the plaintiff filed an amended complaint against the defendants Concepcion and Elser asking for a joint and several judgment against them in the amount prayed for in the original complaint and for the foreclosure of the mortgage securing the same.

Whereas, Mr. Henry W. Elser is willing to subrogate himself to the obligation of V. Concepcion e Hijos, Inc., and Venancio Concepcion in favor of the Bank of Philippine Islands and release them from the total of said obligation contracted by them on July 6, 1921, as per deeds of mortgage and of pledge executed on said date, in consideration of the sale, assignment and transfer in his favor of all the rights, interest, action or share that they have or may have upon the properties described in said deeds of mortgage and pledge; Now, therefore, we, V. Concepcion e Hijos, Inc., and Venancio Concepcion, in consideration of the sum of one peso (P1) Philippine currency, which we have this day and which we declare was paid to us to our complete satisfaction, and of other important considerations, especially the subrogation into our joint and several obligations in favor of the Bank of the Philippine Islands, amounting to P342,372.64, Philippine currency, with interest thereon at the rate of 9 per cent per annum from September 30, 1921, which said Mr. Henry W. Elser hereby makes, binding himself, moreover, to release us from our obligation contracted in favor of the Bank of the Philippine Islands on July 6, 1921, do hereby sell, assign, and transfer absolutely and forever to said Mr. Henry W. Elser, his heirs and successors in interest the properties described herein with the incumbrances created and existing in favor of the Bank of the Philippine Islands. That I, Henry W. Elser, accept this contract upon the precise terms in which it is executed. In testimony whereof, we sign third presents in place and on the date above-mentioned. V. CONCEPCION E HIJOS, INC. (Sgd.) V. CONCEPCION (Sgd.) V. CONCEPCION (Sgd.) H. W. ELSER Signed in the presence of: (Sgd.) ERNESTO Ma. CALVO GREGORIO BUHAY The bank never gave notice of its conformity with the agreement above quoted but of June 15, 1922, it petitioned the court to include Henry W. Elser as defendant in the complaint, on the strength of the obligations assumed by him in said agreement.

On July 18, 1922, the defendants Concepcion filed a supplemental answer alleging the consent of the plaintiff to the subrogation of Elser in their place with respect to the obligations sued upon and asking for the dismissal of the case as to them on the ground. On October 16, 1922, the defendant Elser demurred to the amended complaint on the ground that it failed to alleged that the plaintiff had consented to the substitution of Elser in place of the Concepcions so as to render Elser personally liable to the plaintiff. This demurrer was sustained by the court and due exception was taken by the plaintiff. On November 1, 1922, the plaintiff presented a second amended complaint, in which it is alleged that the sale from the Concepcions to Elser was with the knowledge and consent of the plaintiff but without waiver of it as right of action against the Concepcions. The defendant Elser demurred on the ground that it did not appear from the amended complaint that the plaintiff had accepted Elser as debtor and on the further ground that there was no showing therein as to the disposition of the collateral security held by the plaintiff for the same debt. This demurrer was sustained on both grounds, on December 1, 1922. On December 6, 1922, the plaintiff presented its third amended complaint, without material change in the averments of the second amended complaint, and a third demurrer thereto was sustained on December 28, 1922. The plaintiff thereupon filed a fourth amended complaint, reiterating the allegations of the third amended complaint, alleging that the defendant Elser entered into possession of the mortgaged premises with plaintiff’s consent; that plaintiff had not sold the shares of the Philippine National Bank held by it as collateral, and asking for judgment decreeing that said shares and the mortgaged property be sold under order of the court, and that the defendants Concepcion and Elser be condemned to pay the deficiency, if any there should be. A demurrer to this complaint was sustained, on the ground that it failed to show a contractual relationship between the plaintiff and the defendant Elser. On March 2, 1923, the plaintiff presented a fifth amended complaint, similar to the foregoing, but containing the additional allegation that the plaintiff accepted the assumption of the mortgage by the defendant Elser “without releasing the liability of the defendants” Concepcion. This complaint was demurred to on the ground that it did not sufficiently state that the plaintiff

had accepted the substitution of Elser in place of the Concepcions, as the contract between them provided. The demurrer was overruled and the defendant Elser excepted.

Elser was of unsound mind; and a statement of willingness to relinquished and abandon any rights Elser might have acquired under said document in favor of the plaintiff.

On April 2, 1923, the defendant Elser answered, denying generally and specifically the allegations of the plaintiff’s complaint. On the same date, C. W. Rosenstock, as guardian of the defendant Elser, filed a cross-complaint alleging that at the time Elser is alleged to have assumed the obligations of the Concepcions to the plaintiff, he was of unsound mind that he had been induced to sign the same by false representations on the part of the Concepcion to the effect that the plaintiff had agreed that he be substituted in place of Concepcions with respect to the obligations set up in the plaintiff’s complaint and that the plaintiff would accept payment of the same in monthly installments on account of the principal of not less than P5,000, with interest payable every six months, and that the mortgage should be reduced not less than 25 per cent the first year, not less than 50 per cent the second year, and the balance within the third year, when, as a matter of fact, the plaintiff had not agreed hereto or accepted said terms of payment, as the Concepcions well knew, and had never accepted Elser’s offer to the plaintiff made pursuant to said representations, and praying for the reasons stated, that the deed from the Concepcions to Elser, wherein he assumed the obligations of the former to the plaintiff be cancelled. These allegations were denied by the plaintiff and the defendants Concepcion in their replies.

After a lengthy trial, the court below, on January 22, 1927, rendered its decision absolving the Elser estate from the complaint, ordering the Concepcions to pay the plaintiff the sum of P342,372.64, with interest of 9 per cent and costs, and providing for the sale of the mortgaged property, in case of nonpayment of the judgment.

Elser died on June 18, 1923, and on January 4, 1924, the plaintiff suggested the death of the defendant Elser, and asked that the administrator of the estate, C. W. Rosenstock, be substituted in his place as defendants, and that the action be continued against Rosenstock in the capacity on the ground that this action is for the foreclosure of a mortgage On January 11, 1924, the attorneys of record for the defendant Elser filed an opposition to the application to have the action continued against Rosenstock, in substitution of Elser, this is not a foreclosure action, and hence this action, as to him, abated by reason of his death, and any claim of the plaintiff against him should be presented to the committee on claims and appraisals of his estate. This objection was overruled and Rosenstock, as Elser’s administrator, was substituted in his place as defendant, by order of the court dated January 14, 1924, and exception thereto was duly taken. Subsequently, Rosenstock became the executor of Elser’s estate, and as such, filed various amended answers and cross-complaints. The last amended cross-complaint was filed by him on August 9, 1924 in case No. 24485 of the Court of First Instance of Manila, in which the estate of the deceased Elser was being administered. He repeated therein the allegations and prayer of his crosscomplaint as guardian filed on April 2, 1923, and referred to above. The last amended answer was filed by him on August 21, 1925. It consisted of denial of the allegations of the complaint and of the authenticity of the document whereby Elser is alleged to have assumed the obligations of the defendants Concepcion to the plaintiff; an allegation that at the time of execution thereof,

Both the plaintiff and the defendants Concepcion excepted to this judgment and moved for a new trial on the usual statutory grounds. The motions were denied and exceptions noted. The case is now before this court on a joint bill of exceptions presented by the plaintiff and the defendants Concepcion pursuant to stipulation. No briefs have been filed by the Concepcions. From the facts stated and from the pleadings it will be readily seen that as far as the defendant Elser is concerned, the plaintiff alleged cause of action rests exclusively on the deed of contract Exhibit C. The well known general rule is that a contract affects only the parties and privies thereto. But there are exceptions to this rule and the plaintiff contends that though it is neither a party nor a privy to the contract here in question, the subrogation of Elser to the obligations of the Concepcions in favor of the plaintiff as provided for in the contract, is a stipulation pour autrui upon which the plaintiff may maintain its action The nature and reach of the doctrine of the stipulations pour autrui is so thoroughly discussed in the case of Uy Tam and Uy Yet vs. Leonard (30 Phil. 471), that no further discussion thereof is here necessary. We wish , however, to emphasize the fact that it was there held that in order to constitute a valid stipulation pour autrui, it must be the purpose and intent of the stipulating parties to benefit the third person may be incidentally benefited by stipulation. This conclusion is supported by numerous authorities and is in complete harmony with the second paragraph of article 1257 of the Civil Code, which reads as follows: Should the contract contain any stipulation in favor of the third person, he may demand its fulfillment, provided he has given notice of his acceptance to the person bound before the stipulation has been revoked. Applying this test, it seems clear that neither Exhibit C nor any other agreement between the Concepcion and the Elser contained any stipulation pour autrui in favor of the plaintiff. As stated in the appellee’s brief: The Concepcion owed the plaintiff a large sum of money and wanted to be relieved of that obligation. Elser wanted the property which he had been mortgaged to secure that obligation, and had to assume the obligation and agree to secure the discharge of the Concepcion therefrom, in order to get the property. Neither of them had any desire to confer any benefit to

the bank. Neither of them entered into the contract for the sake of the bank. It is obvious that each entered into the contract impelled by the advantage accruing to him personally as a result thereof. We may add that the stipulation here in question is not merely for the assumption of the mortgaged debt by Elser, but is a provision for the subrogation of Elser to the Concepcion obligations to the plaintiff. Inasmuch as the mere assumption of the mortgage debt by the purchaser of the mortgaged land does not relieved the mortgagor from his liability, it might be said that some show of reason that by such an arrangement the mortgagee will have two debtors for the same debt instead of only one and that this furnishes additional security and is to the creditor’s advantage and for his benefit. But such is not the case where, as here, the stipulation is for the subrogation of the purchasers to the obligation of the original debtor; if such a stipulation is duly accepted by the creditor, it works a novation of the original agreement and releases the original debtor from further liability. Such subrogation is rarely for the benefit of the creditor and that, in the present case, it was not believed to be of any advantage to the bank is well shown by the fact that the parties were unable to obtain its written consent to the stipulation. But assuming that the stipulation is for the benefit of a third person, the plaintiff is nevertheless not in position to maintain its action against Elser. In order to be enforceable, such stipulations must be accepted by the third person and not has not been done here. The plaintiff asserts that it accepted the stipulations in part, but that is not a sufficient acceptance. The ordinary rules of offer and acceptance are applicable, and it is a cardinal rule of the law of contracts that in order to create a binding agreement, the acceptance must be absolute, unconditional, and identical with the terms of the offer; otherwise there is no meeting of the minds or an expression of one and the same common intention, one of the essential elements of a valid contract (Civil Code, art., 1257; Page on Contracts, sec. 1308, and authorities there cited). But the plaintiff argues that in American jurisprudence, the purchaser of the mortgaged property who assumes the payment of the mortgage debt, may for the reason alone sued for the debt by the creditor and that the rule is applicable in this jurisdiction. Aside from the fact that we are not dealing with a mere assumption of the debt, but with a subrogation, it may be noted that this court has already held that the American doctrine in this respect is not in harmony with the spirit of our legislation and has not been adopted in this country. In the case of E.C. McCullough & Co. vs. Veloso and Serna (46 Phil. 1), the court. speaking through its present Chief Justice, said: The effects of transfer of a mortgaged property to a third person are well determined by the Civil Code. According to article 1879 of this Code, the creditor may demand of the third person in possession of the property mortgaged payment of such part of the debt, as is secured by the property in his possession, in the manner and form established by law. The Mortgage Law in force at the promulgation of the Civil Code and referred to in the latter, exacted, among other conditions, also the circumstance that after judicial or notarial demand, the original debtor had failed to make payment of the debt at maturity. (Art. 135 of the Mortgage

Law of the Philippines of 1889.) According to this, the obligation of the new possessor to pay the debt originated from the right of the creditor to demand payment of him, it being necessary that a demand for payment should have previously been made upon the debtor and the latter should have failed to pay. And even if these requirements were complied with, still the third possessor might abandon the property mortgaged, and in that case it is considered to be in the possession of the debtor. (Art. 136 of the same law.) This clearly shows that the spirit of the Civil Code is to let the obligation of the debtor to pay the debt stand although the property mortgaged to secure payment of said debt may have been transferred to a third person. While the Mortgage Law of 1893 eliminated this provisions, it contained nothing indicating any change in the spirit of the law in this respect. Article 129 of this law, which provides for the substitution of the debtor by the third person in possession of the property, for the purposes of giving notice, does not show this change and has reference to a case where the action is directed only against the property burdened with the mortgage. (Art. 168 of the Regulation.) From what we have said it follows that the plaintiff can have no cause of action against Elser, or rather against his estate. Assuming that Elser was of sound mind at the time of the execution of Exhibit C ? and that is a much debated question ? the Concepcion, and not the plaintiff might have maintained an action against the Elser state; but that action is now barred through their failure to present their claim and appraisal in the probate proceedings, and the plaintiff can therefore, not successfully invoked article 1111 of the Civil Code, which in effect provides that after exhausting the property of which the debtor may be in possession, the creditor may have recourse to the debtor’s credit and choses an action for the collection of unpaid portion of the debt. Counsel for the appellee also argue that the bank, having failed to present its claim to the committee on claims and appraisal, it must be regarded as having elected to rely on its mortgage alone and therefore can have no personal judgment against the Elser estate. That is good law. Section 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 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 pledge, in the foreclosure or other proceedings to realize upon the security, he any 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 statute of limitations, and in that event he shall not be admitted as an 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 by the sections 689 and 690 of the Code of Civil Procedure. The committed ceased to function long ago, and the bank has now nothing to rely on except the mortgage. Internationally or not, it has bought itself within the third course provided for in section 708; it has no alternative. But counsel for the plaintiff say that the amount of the deficiency, if any, could not be proved before the foreclosure sale and had been effected; that section 708 expressly provide for the proof of the deficiency judgment before the committee after the sale of the mortgaged property; that this provisions must be construed to mean that the presentation and prosecution of the claim of the deficiency must be made after, not before, the sale; and that if the mortgagee presents his claim from a deficiency before a deficiency judgment have been rendered, he will loose his rights under the mortgage and be regarded as having abandon his security.

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. The concurring opinion of Justices Malcolm and Fisher in the case of Jaucian vs. Querol (38 Phil. 707), contains a very lucid expositions of the law on the subject and further comment is therefore unnecessary. The appeal is without merit and the judgment of the court below is affirmed with the costs against the plaintiff-appellant. So ordered. IMPERIAL INSURANCE INC. VS. DAVID

This clearly a misconception of the statute, and the cases cited by the appellant in support for its contention are not in point. Until the foreclosure sale is made, the demand for the payment of deficiency is a contingent claim within the meaning of sections 746, 747, and 748 of the Code of Civil Procedure, which sections reads as follows:

FACTS: Felicisimo V. Reyers and his wife Emilia T. David, herein defendant-appellant, executed 2 indemnity agreements in favor of appellee The Imperial Insurance Inc, jointly and severally to assure indemnification of the latter of whatever liability it may incur in connection with its posting the security bonds to lift the attachments in 2 civil cases instituted for the amount of P60, 000 and P40,000, for the benefit of Felicisimo V. Reyes.

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.

The spouses jointly and severally, executed another indemnity agreement in favor of appellee 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.

SEC. 747. Estate to be retained to meet claims. ? If the court is satisfied from 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 retains in his hands sufficient estate to pay such contingent claim, when the same becomes absolute, or if the estate is insolvent, sufficient to pay a portion equal to the dividend of the other creditors. SEC. 748. Claim becoming absolute in two years, how allowed. ? If such contingent claims becomes absolute and is presented to the court, or to the executor or administrator, 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 proved that the committee already appointed, or before others to be appointed, for the 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

Felicisimo later died and Special Proceedings entitled “In the Matter of the Intestate Estate of Felicisimo V. Reyes,” commenced. His wife qualified and took her oath of office as the administratix of the said intestate estate. Meanwhile, judgment was rendered in the two Civil Cases against the spouses. Appellee made demands on Emilia David to pay the amounts of P60,000 and P40, 000 under the surety bonds and arrears in premiums thereon. A motion to dismiss was filed by the appellant on the ground the plaintiff’s cause 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. 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. After trial, the court rendered judgment against the herein appellant Emilia T. David.

ISSUE: Can the creditor choose to proceed against the surviving solidary debtor instead of bringing an action in accordance with Rule 86 (sec. 5) of the Revised Rules of Court? RULING: Yes. Under the law and well-settled jurisprudence, when the obligation is a solidary one, the creditor may bring his action in toto against any of the debtors obligated in solidum. In the case at bar, appellant signed a joint and several obligation with her husband in favor of herein appellee; as a consequence, the latter may demand from either of them the whole obligation. As distinguished from a joint obligation where each of the debtor is entitled only for a proportionate part of the debt and the creditor is entitled only to a proportionate part of the credit, in a solidary obligation the creditor may enforce the entire obligation against one of the debtors. Moreover, in the case of Philippine International Surety vs. Gonzales, “Where the obligation assumed by several persons is joint and several, each of the debtors is answerable for the whole obligation with the right to seek contribution from his co-debtors.” Article 1216 of the Civil Code also states that, “The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.” There is nothing improper, as held in Manila Surety & Fidelity Co. vs. Villarama, in the creditor’s filing of an action against the surviving solidary debtor alone, instead of instituting a proceeding for the settlement of the deceased debtor wherein his claim would be filed. Stronghold Insurance v Republic Asahi Facts: Republic Asahi Glass contracts with JDS for the contruction of roadways and drainage systems in RAG's compound. JDS does so and files the required compliance bond with Stronghold Insurance acting as surety. The contract is 5.3M the bond is 795k. JDS falls woefully behind schedule, prompting RAG to rescind the contract and demand the compliance bond. The owner of JDS dies and JDS disappears. SHI refuses to pay the bond claiming that the death of JDS owner extinguishes the obligation. Is SHI right? Held: As a general rule, the death of either the creditor or the debtor does not extinguish the obligation.[8] 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.[9] Only obligations that are personal[10] or are identified with the persons themselves are extinguished by death.[11] Furthermore, The liability of petitioner is contractual in nature, because it executed a performance bond, As a surety, petitioner is solidarily liable with Santos in accordance with the Civil Code. ISIDRO SANTOS vs. LEANDRA MANARANG Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and personal property which, by his last will and testament dated July 26, 1906, he left to his three children. The fourth clause of this will reads as follows:

I also declare that I have contracted the debts detailed below, and it is my desire that they may be religiously paid by my wife and executors in the form and at the time agreed upon with my creditors. Among the debts mentioned in the list referred to are two in favor of the plaintiff, Isidro Santos; one due on April 14, 1907, for P5,000, and various other described as falling due at different dates (the dates are not given) amounting to the sum of P2,454. The will was duly probated and a committee was regularly appointed to hear and determine such claims against the estate as might be presented. This committee submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff, Isidro Santos, presented a petition to the court asking that the committee be required to reconvene and pass upon his claims against the estate which were recognized in the will of testator. This petition was denied by the court, and on November 21, 1910, the plaintiff instituted the present proceedings against the administratrix of the estate to recover the sums mentioned in the will as due him. Relief was denied in the court below, and now appeals to this court. In his first assignment of error, the appellant takes exception to the action of the court in denying his petition asking that the committee be reconvened to consider his claim. In support of this alleged error counsel say that it does not appear in the committee's report that the publications required by section 687 of the Code of Civil Procedure had been duly made. With reference to this point the record affirmatively shows that the committee did make the publications required by law. It is further alleged that at the time the appellant presented his petition the court had not approved the report of the committee. If this were necessary we might say that, although the record does not contain a formal approval of the committee's report, such approval must undoubtedly have been made, as will appear from an inspection of the various orders of the court approving the annual accounts of the administratrix, in which claims allowed against the estate by the committee were written off in accordance with its report. This is shown very clearly from the court's order of August 1, 1912, in which the account of the administratrix was approved after reducing final payments of some of the claims against the estate to agree with the amounts allowed by the committee. It is further alleged that at the time this petition was presented the administration proceedings had not been terminated. This is correct. In his petition of July 14, 1909, asking that the committee be reconvened to consider his claims, plaintiff states that his failure to present the said claims to the committee was due to his belief that it was unnecessary to do so because of the fact that the testator, in his will, expressly recognized them and directed that they should be paid. The inference is that had plaintiff's claims not been mentioned in the will he would have presented to the committee as a matter of course; that plaintiff was held to believe by this express mention of his claims in the will that it would be unnecessary to present them to the committee; and that he did not become aware of the necessity of presenting them to the committee until after the committee had made its final report.

Under these facts and circumstances, did the court err in refusing to reconvene the committee for the purpose of considering plaintiff's claim? The first step towards the solution of this question is to determine whether plaintiff's claims were such as a committee appointed to hear claims against an estate is, by law, authorized to pass upon. Unless it was such a claim plaintiff's argument has no foundation. Section 686 empowers the committee to try and decide claims which survive against the executors and administrators, even though they be demandable at a future day "except claims for the possession of or title to real estate." Section 700 provides that all actions commenced against the deceased person for the recovery of money, debt, or damages, pending at the time the committee is appointed, shall be discontinued, and the claims embraced within such actions presented to the committee. Section 703 provides that actions to recover title or possession of real property, actions to recover damages for injury to person or property, real and personal, and actions to recover the possession of specified articles of personal property, shall survive, and may be commenced and prosecuted against the executor or administrator; "but all other actions commenced against the deceased before his death shall be discontinued and the claims therein involved presented before the committee as herein provided." Section 708 provides that a claim secured by a mortgage or other collateral security may be abandoned and the claim prosecuted before the committee, or the mortgage may be foreclosed or the security be relied upon, and in the event of a deficiency judgment, the creditor may, after the sale of mortgage or upon the insufficiency of the security, prove such deficiency before the committee on claims. There are also certain provisions in section 746 et seq., with reference to the presentation of contingent claims to the committee after the expiration of the time allowed for the presentation of claims not contingent. Do plaintiff's claims fall within any of these sections? They are described in the will as debts. There is nothing in the will to indicate that any or all of them are contingent claims, claims for the possession of or title to real property, damages for injury to person or property, real or personal, or for the possession of specified articles of personal property. Nor is it asserted by the plaintiff that they do. The conclusion is that they were claims proper to be considered by the committee. This being true, the next point to determine is, when and under what circumstances may the committee be recalled to consider belated claims? Section 689 provides: That court shall allow such time as the circumstances of the case require for the creditors to present their claims the committee for examination and allowance; but not, in the first instance, more than twelve months, or less than six months; and the time allowed shall be stated in the commission. The court may extend the time as circumstances require, but not so that the whole time shall exceed eighteen months. It cannot be questioned that thus section supersedes the ordinary limitation of actions provided for in chapter 3 of the Code. It is strictly confined, in its application, to claims against the estate of deceased persons, and has been almost universally adopted as part of the probate law of the United States. It is commonly termed the statute of nonclaims, and its purpose is to settle the

affairs of the estate with dispatch, so that residue may be delivered to the persons entitled thereto without their being afterwards called upon to respond in actions for claims, which, under the ordinary statute of limitations, have not yet prescribed. The object of the law in fixing a definite period within which claims must be presented is to insure the speedy settling of the affairs of a deceased person and the early delivery of the property of the estate in the hands of the persons entitled to receive it. (Estate of De Dios, 24 Phil. Rep., 573.) Due possibly to the comparative shortness of the period of limitation applying to such claims as compared with the ordinary statute of limitations, the statute of nonclaims has not the finality of the ordinary statute of limitations. It may be safely said that a saving provision, more or less liberal, is annexed to the statute of nonclaims in every jurisdiction where is found. In this country its saving clause is found in section 690, which reads as follows: On application of a creditor who has failed to present his claim, if made within six months after the time previously limited, or, if a committee fails to give the notice required by this chapter, and such application is made before the final settlement of the estate, the court may, for cause shown, and on such terms as are equitable, renew the commission and allow further time, not exceeding one month, for the committee to examine such claim, in which case it shall personally notify the parties of the time and place of hearing, and as soon as may be make the return of their doings to the court. If the committee fails to give the notice required, that is a sufficient cause for reconvening it for further consideration of claims which may not have been presented before its final report was submitted to the court. But, as stated above, this is not the case made by the plaintiff, as the committee did give the notice required by law. Where the proper notice has been given the right to have the committee recalled for the consideration of a belated claim appears to rest first upon the condition that it is presented within six months after the time previously limited for the presentation of claims. In the present case the time previously limited was six months from July 23, 1907. This allowed the plaintiff until January 23, 1908, to present his claims to the committee. An extension of this time under section 690 rested in the discretion of the court. (Estate of De Dios, supra.) In other words, the court could extend this time and recall the committee for a consideration of the plaintiff's claims against the estate of justice required it, at any time within the six months after January 23, 1908, or until July 23, 1908. Plaintiff's petition was not presented until July 14, 1909. The bar of the statute of nonclaims is an conclusive under these circumstances as the bar of the ordinary statute of limitations would be. It is generally held that claims are not barred as to property not included in the inventory. (Waughop vs. Bartlett, 165 III., 124; Estate of Reyes, 17 Phil. Rep., 188.) So also, as indicated by this court in the case last cited, fraud would undoubtedly have the same effect. These exceptions to the operation of the statute are, of course, founded upon the highest principles of equity. But what is the plea of the plaintiff in this case? Simply this: That he was laboring under a mistake of law — a mistake which could easily have been corrected had he sought to inform himself; a lack of information

as to the law governing the allowance of claims against estate of the deceased persons which, by proper diligence, could have been remedied in ample to present the claims to the committee. Plaintiff finally discovered his mistake and now seeks to assert his right when they have been lost through his own negligence. Ignorantia legis neminem excusat. We conclude that the learned trial court made no error in refusing to reconvene the committee for the purpose of considering plaintiff's claims against the estate. In his second assignment of error the appellant insists that the court erred in dismissing his petition filed on November 21, 1910, wherein he asks that the administratrix be compelled to pay over to him the amounts mentioned in the will as debts due him. We concede all that is implied in the maxim, dicat testor et erit lex. But the law imposes certain restrictions upon the testator, not only as to the disposition of his estate, but also as to the manner in which he may make such disposition. As stated in Rood on Wills, sec. 412: "Some general rules have been irrevocably established by the policy of the law, which cannot be exceeded or transgressed by any intention of the testator, be it ever so clearly expressed." It may be safely asserted that no respectable authority can be found which holds that the will of the testator may override positive provisions of law and imperative requirements of public policy. (Page on Wills, sec. 461.) Impossible conditions and those contrary to law and good morals shall be considered as not imposed, . . . (Art. 792, Civil Code.) Conceding for the moment that it was the testator's desire in the present case that the debts listed by him in his will should be paid without referring them to a committee appointed by the court, can such a provision be enforced? May the provisions of the Code of Civil Procedure relating to the settlement of claims against an estate by a committee appointed by the court be superseded by the contents of a will? It is evident from the brief outline of the sections referred to above that the Code of Civil Procedure has established a system for the allowance of claims against the estates of decedents. Those are at least two restrictions imposed by law upon the power of the testator to dispose of his property, and which pro tanto restrict the maxim that "the will of the testator law: (1) His estate is liable for all legal obligations incurred by him; and (2) he can not dispose of or encumber the legal portion due his heirs by force of law. The former take precedence over the latter. (Sec. 640, Code Civ, Proc.) In case his estate is sufficient they must be paid. (Sec, 734, id.) In case the estate is insolvent they must be paid in the order named in section 735. It is hardly necessary to say that a provision in an insolvent's will that a certain debt be paid would not entitle it to preference over other debts. But, if the express mention of a debt in the will requires the administrator to pay it without reference to the committee, what assurance is there, in the case of an insolvent estate, that it will not take precedence over preferred debts? If it is unnecessary to present such claim to the committee, the source of nonclaims is not applicable. It is not barred until from four to ten years, according to its classification in chapter 3 of the

Code of Civil Procedure, establishing questions upon actions. Under such circumstances, when then the legal portion is determined? If, in the meantime the estate has been distributed, what security have the differences against the interruption of their possession? Is the administrator required to pay the amount stipulated in the will regardless of its correctness? And, if not, what authority has he to vise the claim? Section 706 of the Code of Civil Procedure provides that an executor may, with the approval of the court, compound with a debtor of deceased for a debt due the estate, But he is nowhere permitted or directed to deal with a creditor of the estate. On the contrary, he is the advocate of the estate before an impartial committee with quasijudicial power to determine the amount of the claims against the estate, and, in certain cases, to equitably adjust the amounts due. The administrator, representing the debtor estate, and the creditor appear before this body as parties litigant and, if either is dissatisfied with its decision, an appeal to the court is their remedy. To allow the administrator to examine and approve a claim against the estate would put him in the dual role of a claimant and a judge. The law in this jurisdiction has been so framed that this may not occur. The most important restriction, in this jurisdiction, on the disposition of property by will are those provisions of the Civil Code providing for the preservation of the legal portions due to heirs by force of law, and expressly recognized and continued in force by sections 614, 684, and 753 of the Code of Civil Procedure. But if a debt is expressly recognized in the will must be paid without its being verified, there is nothing to prevent a partial or total alienation of the legal portion by means of a bequest under a guise of a debt, since all of the latter must be paid before the amount of the legal portion can be determined. We are aware that in some jurisdictions executors and administrators are, by law, obligated to perform the duties which, in this jurisdiction, are assign to the committee on claims; that in some other jurisdictions it is the probate court itself that performs these duties; that in some jurisdictions the limitation upon the presentment of claims for allowance is longer and, possibly, in some shorter; and that there is a great divergence in the classification of actions which survive and actions which do not survive the death of the testator. It must be further remembered that there are but few of the United States which provide for heirs by force of law. These differences render useless as authorities in this jurisdiction many of the cases coming from the United States. The restriction imposed upon the testator's power to dispose of his property when they are heirs by force of law is especially important. The rights of these heirs by force law pass immediately upon the death of the testator. (Art. 657, Civil Code.) The state intervenes and guarantees their rights by many stringent provisions of law to the extent mentioned in article 818 of the Civil Code. Having undertaken the responsibility to deliver the legal portion of the net assets of the estate to the heirs by force of law, it is idle to talk of substituting for the procedure provided by law for determining the legal portion, some other procedure provided in the will of the testator. The state cannot afford to allow the performance of its obligations to be directed by the will of an individual. There is but one instance in which the settlement of the estate according to the probate procedure provided in the Code of Civil Procedure

may be dispense with, and it applies only to intestate estates. (Sec. 596, Code Civ. Proc.) A partial exemption from the lawful procedure is also contained in section 644, when the executor or administrator is the sole residuary legatee. Even in such case, and although the testator directs that no bond be given, the executor is required to give a bond for the payment of the debts of the testator. The facts of the present case do not bring it within either of this sections. We conclude that the claims against the estate in the case at bar were enforceable only when the prescribed legal procedure was followed. But we are not disposed to rest our conclusion upon this phase of the case entirely upon legal grounds. On the contrary we are strongly of the opinion that the application of the maxim, "The will of the testator is the law of the case," but strengthens our position so far as the present case is concerned. It will ordinarily be presumed in construing a will that the testator is acquainted with the rules of law, and that he intended to comply with them accordingly. If two constructions of a will or a part thereof are possible, and one of these constructions is consistent with the law, and the other is inconsistent, the presumption that the testator intended to comply with the law will compel that construction which is consistent with the law to be adopted. (Page on Wills, sec. 465.) Aside from this legal presumption, which we believe should apply in the present case as against any construction of the will tending to show an intention of the testator that the ordinary legal method of probating claims should be dispensed with, it must be remembered that the testator knows that the execution of his will in no way affects his control over his property. The dates of his will and of his death may be separated by a period of time more or less appreciable. In the meantime, as the testator well knows, he may acquire or dispose of property, pay or assume additional debts, etc. In the absence of anything to the contrary, it is only proper to presume that the testator, in his will, is treating of his estate at the time and in the condition it is in at his death. Especially is this true of his debts. Debts may accrue and be paid in whole or in part between the time the will is made and the death of the testator. To allow a debt mentioned in the will in the amount expressed therein on the ground that such was the desire of the testator, when, in fact, the debt had been wholly or partly paid, would be not only unjust to the residuary heirs, but a reflection upon the good sense of the testator himself. Take the present case for example. It would be absurd to say that the testator knew what the amount of his just debt would be at a future and uncertain date. A mere comparison of the list of the creditors of the testator and the amounts due them as described in his will, with the same list and amounts allowed by the committee on claims, shows that the testator had creditors at the time of his death not mention in the will at all. In other instances the amounts due this creditors were either greater or less than the amounts mentioned as due them in the will. In fact, of those debts listed in the will, not a single one was allowed by the committee in the amount named in the will. This show that the testator either failed to list in his will all his creditors and that, as to those he did include, he set down an erroneous amount opposite their names; or else, which is the only reasonable view

of the matter, he overlooked some debts or contracted new ones after the will was made and that as to others he did include he made a partial payments on some and incurred additional indebtedness as to others. While the testator expresses the desire that his debts be paid, he also expressly leaves the residue of his estate, in equal parts, to his children. Is it to be presumed that he desired to overpay some of his creditors notwithstanding his express instructions that his own children should enjoy the net assets of his estate after the debts were paid? Again, is the net statement of the amount due some of his creditors and the omission all together of some of his creditors compatible with his honorable and commendable desire, so clearly expressed in his will, that all his debts be punctually paid? We cannot conceive that such conflicting ideas were present in the testator's mind when he made his will. Again, suppose the testator erroneously charged himself with a debt which he was under no legal or even moral obligation to pay. The present case suggests, if it does not actually present, such a state of affairs. Among the assets of the estate mentioned in the will is a parcel of land valued at P6,500; while in the inventory of the administratrix the right to repurchase this land from one Isidro Santos is listed as an asset. Counsel for the administratrix alleges that he is prepared to prove that this is the identical plaintiff in the case at bar; that the testator erroneously claimed the fee of this land in his last will and stated Santos' rights in the same as a mere debt due him of P5,000; that in reality, the only asset of the testator regard to this land was the value of the right to repurchase, while the ownership of the land, subject only to that right of redemption, belonged to Santos; that the right to repurchase this land expired in 1907, after the testator's death. Assuming, without in the least asserting, that such are the underlying facts of this case, the unjust consequences of holding that a debt expressly mentioned in the will may be recovered without being presented to the committee on claims, is at once apparent. In this supposed case, plaintiff needed only wait until the time for redemption of the land had expired, when he would acquired an absolute title to the land, and could also have exacted the redemption price. Upon such a state of facts, the one item of P5,000 would be a mere fictitious debt, and as the total net value of the estate was less than P15,000, the legal portion of the testator's children would be consumed in part in the payment of this item. Such a case cannot occur if the prescribed procedure is followed of requiring of such claims be viseed by the committee on claims. The direction in the will for the executor to pay all just debts does not mean that he shall pay them without probate. There is nothing in the will to indicate that the testator in tended that his estate should be administered in any other than the regular way under the statute, which requires "all demands against the estates of the deceased persons," "all such demands as may be exhibited," etc. The statute provides the very means for ascertaining whether the claims against the estate or just debts. (Kaufman vs. Redwine, 97 Ark., 546.)

See also Collamore vs. Wilder (19 Kan., 67); O'Neil vs. Freeman (45 N. J. L., 208). The petition of the plaintiff filed on November 21, 1910, wherein he asks that the administratrix be compelled to pay over to him the amounts mentioned in the will as debts due him appears to be nothing more nor less than a complaint instituting an action against the administratrix for the recovery of the sum of money. Obviously, the plaintiff is not seeking possession of or title to real property or specific articles of personal property. When a committee is appointed as herein provided, no action or suit shall be commenced or prosecute against the executor or administrator upon a claim against the estate to recover a debt due from the state; but actions to recover the seizing and possession of real estate and personal chattels claimed by the estate may be commenced against him. (Sec. 699, Code Civ. Proc.) The sum of money prayed for in the complaint must be due the plaintiff either as a debt of a legacy. If it is a debt, the action was erroneously instituted against the administratrix. Is it a legacy? Plaintiff's argument at this point becomes obviously inconsistent. Under his first assignment of error he alleges that the committee on claims should have been reconvened to pass upon his claim against the estate. It is clear that this committee has nothing to do with legacies. It is true that a debt may be left as a legacy, either to the debtor (in which case it virtually amounts to a release), or to a third person. But this case can only arise when the debt is an asset of the estate. It would be absurd to speak of a testator's leaving a bare legacy of his own debt. (Arts. 866, 878, Civil Code.) The creation of a legacy depends upon the will of the testator, is an act of pure beneficence, has no binding force until his death, and may be avoided in whole or in part by the mere with whim of the testator, prior to that time. A debt arises from an obligation recognized by law (art. 1089, Civil Code) and once established, can only be extinguished in a lawful manner. (Art. 1156, id.) Debts are demandable and must be paid in legal tender. Legacies may, and often do, consist of specific articles of personal property and must be satisfied accordingly. In order to collect as legacy the sum mentioned in the will as due him, the plaintiff must show that it is in fact a legacy and not a debt. As he has already attempted to show that this sum represents a debt, it is an anomaly to urge now it is a legacy. Was it the intention of the testator to leave the plaintiff a legacy of P7,454? We have already touched upon this question. Plaintiff's claim is described by the testator as a debt. It must be presumed that he used this expression in its ordinary and common acceptation; that is, a legal liability existing in favor of the plaintiff at the time the will was made, and demandable and payable in legal tender. Had the testator desired to leave a legacy to the plaintiff, he would have done so in appropriate language instead of including it in a statement of what he owed the plaintiff. The decedent's purpose in listing his debts in his will is set forth in the fourth clause of the will, quoted above. There is nothing contained in that clause which indicates, even remotely, a desire to pay his creditors more than was legally due them.

A construction leading to a legal, just and sensible result is presumed to be correct, as against one leading to an illegal, unnatural, or absurd effect. (Rood on Wills, sec. 426.) The testator, in so many words, left the total net assets of his estate, without reservation of any kind, to his children per capita. There is no indication that he desired to leave anything by way of legacy to any other person. These considerations clearly refute the suggestion that the testator intended to leave plaintiff any thing by way of legacy. His claim against the estate having been a simple debt, the present action was improperly instituted against the administratrix. (Sec. 699, Code Civ. Proc.) But it is said that the plaintiff's claims should be considered as partaking of the nature of a legacy and disposed of accordingly. If this be perfect then the plaintiff would receive nothing until after all debts had been paid and the heirs by force of law had received their shares. From any point of view the inevitable result is that there must be a hearing sometime before some tribunal to determine the correctness of the debts recognized in the wills of deceased persons. This hearing, in the first instance, can not be had before the court because the law does not authorize it. Such debtors must present their claims to the committee, otherwise their claims will be forever barred. For the foregoing reasons the orders appealed from are affirmed, with costs against the appellant. PATRICINIO BAYOT, as administratrix of the intestate estate of Francisco Ma. Bayot vs. LUCAS ZURBITO, as administrator of the intestate estate of Gaspar Zurbito This is an action to recover a sum of money, and the plaintiff appeals from the action of the Court of First Instance sustaining a motion to dismiss, based on the ground that the matter in controversy had been determined in a former action. The plaintiff Patrocinio Bayot, is the administratrix of the estate of her deceased father, Francisco Ma. Bayot, formerly a merchant in Masbate, who died intestate many years ago. The defendant, Lucas Zurbito, is the administrator of the estate of his father, Gaspar Zurbito, who also died several years ago, but subsequent to the death of Francisco Bayot. The claim sued on his this case consists of a debt for P9,694.52, with interest from August 9, 1907. It is alleged to consist of the balance of an account current, as shown upon the books of Francisco Bayot, resulting from mercantile operations sustained between the latter and Gaspar Zurbito, during a period of several years prior to the death of Bayot. The claim in question in this suit was presented by the plaintiff to the committee in the estate of Gaspar Zurbito and was allowed by the committee as a just debt, but upon appeal to the Court of First Instance it was held that the action could not be maintained inasmuch as the plaintiff had previously exhibited this debt by way of set-off against another claim presentee by Zurbito against the estate of the plaintiff’s intestate. In this connection it appears that on April 8, 1907, Gaspar Zurbito presented a claim for P53,602.76 to the committee actin in the estate of Francisco Bayot. The facts concerning this claim need not be set out in detail, it being sufficient to say that, according to

Zurbito, Bayot had become indebted to Zurbito’s father while the former was acting as manager or administrator of a cattle ranch belonging to the latter. Said claim was disallowed by the committee on claims of the Bayot estate as being wholly without any merit whatever. An appeal was promptly taken by Zurbito to the Court of First Instance, which court also disallowed the claim, and upon appeal to the Supreme Court the judgment of the Court of First Instance was affirmed. (Zurbito vs. Bayot, R. G. No. 6567).1 Meanwhile Gaspar Zurbito, the original proponent of the claim above mentioned, had died and had been succeeded by the defendant, Lucas Zurbito, in the character of his administrator. When the claim of Gaspar Zurbito was presented to the committee in the estate of Francisco Bayot, as above stated, the present plaintiff, as administratrix of Bayot, denied liability and asked that judgment be given in favor of the estate of Francisco Bayot upon the indebtedness which is the subject of the present action. The committee, however, considered that, inasmuch as the Zurbito claim was disallowed, it had no jurisdiction to allow the claim in favor of the Bayot estate. The committee accordingly made the following report: With regard to the counterclaim of the administratrix Doña Patrocinio Bayot, this commission understands that it is not authorized by law to take jurisdiction of this counterclaim after the claim presented by Don Gaspar Zurbito has been disallowed. Therefore, it is sent to the Court of First Instance of this subprovince of Masbate for determination. As already stated, an appeal was taken in behalf of Gaspar Zurbito from the action of the committee in rejecting his claim, but not formal appeal was taken in behalf of the administratrix of Francisco Bayot. However, in the Court of First Instance, the administratrix set out in her answer this same indebtedness and asked for judgment thereon. The trial court considered that the action taken by the committee was effect a disallowance of the debt and that by failing to appeal the administratrix had placed herself in a position where judgment could not be given in her favor. The counterclaim was accordingly dismissed, and the administratrix brought the matter by cross-appeal to this court in the same cause in which the appeal of Zurbito was prosecuted; but this court also decided against her. The first observation to be made upon the case as thus presented is that the committee on claims in the estate of Francisco Bayot was in error in assuming that it had no authority to allow the claim which was exhibited by the administratrix by way of set-off. The provision upon which the committee based its action is found in the last clause of section 696 of the Code of Civil Procedure, which declares that “the committee shall have no jurisdiction over claims in favor of the estate, except as offsets to claims presented against the estate.” From this provision the committee evidently inferred that if the principal claim is not allowed the authority to allow the set-off falls to the ground. This cannot be accepted as a correct interpretation of that provision. A creditor who presents a claim against an estate submits himself to the jurisdiction of the committee, and the circumstance that his claim is found to be without merit in no wise defeats the authority of the committee to allow the set-off against him.

In Stars vs. Sterns (30 Vt., 213), the plaintiff exhibited a demand against an estate; and the administrator exhibited notes in offset to them. Upon trial in the court where the case went by appeal nothing was found due the plaintiff upon his demand, yet it was held that the estate was entitled to a judgment upon the offset exhibited by the administrator. In Bliss vs. Little (63 Vt., 86), it was insisted that it is only when there is a valid claim against the estate that the administrator is bound to exhibit claims in favor of the estate. This contention was rejected, the court observing that if the argument in question was sound, it would necessarily follow that an administrator would in no case be bound to exhibit claims of an estate in offset until the validity of the creditor’s demand was established, which clearly is not the meaning of the statute. These decisions are instructive, inasmuch as they have reference to the very provision of the Vermont Statutes from which section 696 of our Code of Civil Procedure has been taken. The next point to be considered is whether the disallowance of the present claim by the committee in the estate of Francisco Bayot and the final disposition made of the matter upon appeal to this Court operate as a bar to the present action. Upon this point it is very plain that the decision in that case does not exhibit the requisites essential to create the bar of res judicata. As was said in Hughes vs. United States (4 Wall., 232; 18 L. ed., 303); “in order that in judgment may constitute a bar to another suit, it must be rendered in a proceeding between the same parties, or their privies, and the point of controversy must be the same in both case, and must be determined on the merits.” In accordance with this doctrine, it was held in Smith vs. McNeal (109 U.S., 426; 27 L. ed., 986), that a judgment dismissing a cause for want of jurisdiction does not conclude the plaintiff’s right of action. Any number of decisions might be cited in support of this proposition; and its applicability to the case before us cannot be doubted. The action of the committee on claims in the estate of Francisco Bayot was expressly based upon the idea that the jurisdiction of the committee to allow the set-off in favor of said estate was destroyed by the disallowance of the principal claim presented by Zurbito against the Bayot estate; and the Court of First Instance merely held, as this court also held, that the claim could not be allowed in the Court of First Instance because no appeal had been taken. In neither tribunal was any consideration paid to the merits of the claim; and not court has ever passed upon this point. But is said that the action of the committee in disallowing the claim for want of jurisdiction was misconceived and that the committee ought to have considered the claim on its merits and given judgment in favor of the Bayot estate if the facts had been found to support the claim. From this it is argued that the action of the committee has the same effect as if the claim had been considered on its merits. In our opinion this suggestion is not well founded. Not only does there appear to be no authority in support of the proposition that a judgment dismissing a case for want of jurisdiction will have the effect of a judgment upon the merits, if it be shown that the tribunal did in fact have jurisdiction; but on the contrary the authorities show that a person who relies on a former judgment as a conclusive adjudication of any controversy must take the prior judgment for

what it appears to be on its face; and if it is not a judgment on the merits, it does not conclude the right of action. This point came under consideration in Wanzer vs. Self (30 Ohio St., 378), where the judgment relied upon as res judicata contained the reservation “without prejudice.” It was argued that the insertion of these words in the judgment was erroneous and unwarranted and that as the case had been in fact tried upon the merits the judgment must be considered as a conclusive bar to another action. Said the court: The actual judgment rendered does not appear to be one that is conclusive of the merits of the case. To give it the effect of such a judgment would not only create that which does not exist, but might work a great wrong to the plaintiff by finally determining a just cause of action which the court did not adjudge against him, and by misleading him to acquiescence in a judgment from which he would have appealed had it been regarded as conclusive . . . The judgment is an entirety, and if it has any validity, it must stand as rendered . . . Upon that judgment the party must stand, and, being without prejudice to a future action, it is not a bar to the action to which it was pleaded (30 Ohio St., 381, 382). What has been said shows that the former proceeding has created n technical bar to the maintenance of the present action. But a further obstacle is supposed to be found in section 696 of the Code of Civil Procedure. The first paragraph of this section makes it the duty of an administrator to exhibit all claims in favor of this decedent as an offset against any claim present by a creditor of the estate. The first part of the second paragraph of the same section reads as follows: Claims in favor of the estate and against a creditor who presents a claim for allowance against the estate shall be barred, unless so presented by the executor or administrator as an offset. This provision undoubtedly means not only that the executor or administrator should present any claim in favor of the estate as offset where a creditor present a claim against the estate but that he should prosecute it with effect. In other words the statute clearly intends that the sole remedy of the executor or administrator shall be in that proceeding. From this it would appear to follow as a necessary consequence that, by failing to appeal from the action of the committee disallowing the claim now sued on, the plaintiff herein has lost all remedy, and cannot now maintain an independent action. This idea seems to be implicit in the opinion written by Justice Moreland in Zurbito vs. Bayot [supra]. Nevertheless, what was really decided in that case is that, by failing to appeal from the action of the committee, the plaintiff was precluded from relying on this claim as an offset in the Court of First Instance in that proceeding. The court was not called upon to decide whether an independent action could be maintained. Now that we are called upon to decide this point, it is necessary to take account of another provision of law the effect of which has not been so far considered. Section 696 of the Code of Civil Procedure, part of which is quoted above, is contained in Chapter XXXVIII of said Code. The final section of this same Chapter, in the part here material to be noted, reads as follows:

SEC. 701. An executor or Administrator may sue. — Nothing in this chapter shall prevent an executor or administrator from commencing and prosecuting an action commenced by the deceased in his lifetime, for the recovery of a debt or claim, to final judgment, . . . Upon examination of the language of this provision, it will be seen that the word “commencing” is interpolated in a rather awkward manner into a statement which deals principally with the continued prosecution of actions already begun by the deceased in his lifetime. Nevertheless, the meaning of the entire provision is clear; and it evidently recognize the right of an executor or administrator, not only to continue the prosecution of an action already begun, but also to institute an action upon a cause which accrued in the lifetime of the deceased but which had not been made the subject of action by him. This of course supposes that the cause of action is such as to have survived to the estate. (Section 703, Code of Civ. Proc.) In other words, it is apparent that there is an ellipsis in the text of section 701 after the word “commencing” in the second line, and the full meaning of the provision can only be brought out when this ellipsis is applied by a process of construction, somewhat as follows: Nothing in this chapter shall prevent an executor or administrator from commencing and prosecuting an action, or from prosecuting an action already commenced by the deceased in his lifetime, for the recovery of a debt or claim to final judgment. No other interpretation could be adopted which would give any effect whatever to the word “commencing,” as used in section 701; and that this is its true meaning is proved by comparing said section with section 2443 of the Statutes of Vermont (1894), from which section 701 was copies almost verbatim by the author of the Code of Civil Procedure. This section, as it exists in the Vermont Statutes, reads as follows: Nothing in this chapter shall prevent an executor or administrator from commencing and prosecuting an action by attachment, or otherwise, or from prosecuting an action commenced by the deceased in his lifetime, for the recovery of a debt or claim to final judgment. The obvious explanation of the ellipsis noted in section 701 is that the eye of the copyist skipped from the word “prosecuting,” at the end of the second line as the section is printed in the Vermont Statutes, to the same word at the end of the next line. Fortunately the error is not such as to destroy the sense of the provisions. It is thus seen that section 701 supplies general authority for the institution of an action by an executor or administrator upon any claim, in the nature of a debt, which accrued in the lifetime of the decedent; and the exception made in the opening words of section 701 is such as to give absolute precedence to the rule therein expressed over anything to the contrary in section 696 or any other part of chapter 38. In other words the provisions of section 701 necessarily overrule so much of section 696 as purports to bar absolutely all claims in favor of an estate which are not made effective as offsets. Of course the provisions that the

executor or administrator shall present all claims in favor of the decedent as offsets to hostile claims presented against the estate is unaffected by this decision, but it remain in force as a directory provisions only.

-DAVAO COURT: approved amicable settlement

The propriety of this conclusion in supported by consideration of the fact that so much of section 696 as purports to operate as an absolute bar is of a highly penal nature. It tends to the destruction of rights and takes away from the executor or administrator a privilege which the law concedes to all other litigants, namely, the right to elect between presenting a claim as an offset and making it the subject of an independent proceeding, that is to say, in those cases where the claim in question constitutes an independent cause of action. This provision should therefore be interpreted in the mildest possible sense: and in case of conflict between sections 696 and 701, it is the duty of the court to apply the more benevolent provision. This consideration is of course entirely apart from the express reservation made in the opening words of section 701.

1. 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; . . ."

Our conclusion is that the claim on which this action is based is not barred by the failure of the plaintiff to prosecute it with effect as an offset in the former proceeding; and inasmuch as the judgment entered in that proceeding cannot, for reasons already stated, be considered binding as res judicata, the result is that the plaintiff is entitled to be heard on the merits in this action. The judgment is accordingly reversed, and the cause is remanded to the court of origin with directions to proceed to a trial of the cause on the merits. No express adjudication of costs will be made. Estate of Olave vs. Reyes (1983) 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

WON SAMCO PROPERLY FILED CLAIM IN A SEPARATE PROCEEDING? NO

2. Claim of Samco could only be pursued by filing it in the administration proceedings and w/n the prescribed period, or else barred forever 3. 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. HEIRS OF ELIAS LORILLA, Namely: FE, ELIAS, JR. and SERVANDO, ALL SURNAMED LORILLA vs. COURT OF APPEALS, COMMERCIAL CREDIT CORPORATION, HON. FRANCISCO VILLANUEVA and SHERIFF HONORIO P. SANTOS, This petition for review assails the decision 1 of the Court of Appeals promulgated on November 29, 1994, which dismissed the petition for annulment of the judgment rendered on April 5, 1989, by the Regional Trial Court, Branch 58, of Makati in Civil Case No. 5262. 2 The motion to reconsider the decision of the Court of Appeals was denied by said Court in a Resolution promulgated on January 11, 1995. 3 The antecedent facts of this case as found by the Court of Appeals are as follows: (1) On September 10, 1983, private respondent Commercial Credit Corporation (now known as Pentacapital Finance Corporation and hereinafter referred to as PENCAPITAL) filed a complaint with the Regional Trial Court of Makati, Metro Manila, (hereinafter referred to as the Makati Court) for a sum of money against Sanyu Machineries Agencies, Inc., Sanyu Chemical Corporation, and several other defendants, among whom was Elias Lorilla, (now deceased) who had acted as sureties for the two corporate debtors. The complaint was docketed as Civil Case No. 5262 and was assigned by raffle to Branch 58 of said court.

(2) PENCAPITAL sought for, and obtained from the Makati Court, a writ of attachment on the real property of defendant Elias L. Lorilla covered by Transfer Certificate of Title No. 298986, and which levy was duly annotated on the certificate of title concerned. (3) Defendant Elias Lorilla, together with four other individual defendants, was initially represented by one Atty. Danny Tablizo, but who later on withdrew his appearance and was substituted by another lawyer, Atty. Alfredo Concepcion. (4) During the pendency of Civil Case No. 5262, Elias L. Lorilla executed a dacion en pago over the property attached in favor of the Joint Resources Management Development Corporation (hereinafter referred to as JRMDC) by reason of which Transfer Certificate of Title No. 298986 in the name of Elias L. Lorilla was cancelled and replaced by Transfer Certificate of Title No. 114067 in the name of JRMDC. But the levy caused to be made by PENCAPITAL over the property was carried over to the new certificate of title. (5) On June 9, 1986, JRMDC filed suit against PENCAPITAL for the cancellation of the latter's levy on the property in question with the Regional Trial Court of Pasig, Metro Manila (hereinafter referred to as the Pasig Court), which was docketed therein as Civil Case No. 63757 and assigned by raffle to its Branch 153. (6) On April 5, 1989, the Makati Court, after due hearing, rendered judgment in Civil Case No. 5262 in favor of PENCAPITAL and against the defendants therein, including Elias L. Lorilla. The dispositive portion of said judgment reads: WHEREFORE, premises considered, judgment is rendered in favor of plaintiff and against defendants who are hereby ordered to pay to plaintiff, jointly and severally, and solidarily the total principal amount of P421,596.28 plus interest at 12% per annum and a penalty of 3% per month of default from the time it became due on July 1, 1981 until fully paid, and 20% of the entire amount due as attorney's fees, plus the costs. SO ORDERED. (7) Despite receipt of a copy of the aforesaid decision by Alfredo Concepcion, then counsel of record of defendant Elias L. Lorilla, no appeal whatsoever was interposed from said judgment by said lawyer in behalf of defendant Lorilla. (8) On March 3, 1993, upon motion of PENCAPITAL, the Makati Court issued a writ of execution in Civil Case No. 5262 and PENCAPITAL thereafter proceeded against the property covered by TCT No. 298986 in the name of defendant Lorilla. (9) On May 26, 1993 the Pasig Court rendered decision in its Civil Case No. 53757 dismissing JRMDC's complaint for the cancellation of the levy on attachment on the Lorilla property, ruling that the dacion en pago executed by defendant Lorilla in favor of JRMDC cannot prevail over the prior writ of attachment duly annotated on the property in favor of PENCAPITAL. No appeal from the decision in Civil Case No. 53757 having been

made by JRMDC, the same became final and executory (Annex "15", Reply Memorandum of PENCAPITAL). (10) On September 15, 1993 petitioners herein as heirs of Elias L. Lorilla, filed a motion in Civil Case No. 5262 to quash the writ of execution issued by the Makati Court, arguing that since defendant Elias L. Lorilla passed away on January 15, 1988, or one year and three months before the Makati Court rendered decision in Civil Case No. 5262 on April 5, 1989, the case should have been dismissed insofar as Elias L. Lorilla is concerned, in keeping with Section 21, Rule 3 of the Rules of Court which provides: Sec. 21. Where claim does not survive. — When the action is for recovery of money, debt, or interest therein, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be presented in the manner especially provided in these rules. (11) On February 8, 1994, the Makati Court, through its Acting Presiding Judge, the Honorable Francisco Donato Villanueva, denied the motion to quash said writ of execution, ruling that the judgment in Civil Case No. 5256 having become final, it is now beyond its authority to amend it by dismissing the same insofar as defendant Elias L. Lorilla is concerned, and that the suggested remedy, if at all, is a petition for its annulment. Petitioners moved to reconsider the denial of their motion to quash the writ of execution, but the Makati Court stood pat on its ruling, hence, petitioners' recourse to this Court for annulment of judgment. 4 Petitioners, thus, filed with the Court of Appeals a Petition for Annulment of Judgment, Writ of Execution, and/or Levy on Execution with Preliminary Injunction and Restraining Order to annul or enjoin enforcement of the judgment dated April 5, 1989 of the Makati Court in Civil Case No. 5262. In its decision promulgated on November 29, 1994, the Court of Appeals resolved to deny the petition, hence petitioners' present recourse to this Court. They assign the following errors: I. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN NOT ANNULLING THE DECISION OF THE TRIAL COURT, DATED 5 APRIL 1989, INSOFAR AS DECEASED DEFENDANT ELIAS LORILLA IS CONCERNED, THEREBY VIOLATION (sic) PETITIONERS RIGHT TO DUE PROCESS OF LAW. II. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN VIOLATING SECTION 21, RULE 3, AND SECTIONS 5 AND 7, RULE 86 OF THE REVISED RULES OF COURT. III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DENYING PETITIONERS THEIR CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW. 5 In our view, the main issue for resolution now is whether the respondent appellate court erred and gravely abused its discretion in denying petitioners' action for annulment of judgment of the RTC of Makati, Branch 58, concerning the deceased defendant Elias Lorilla. Pertinently, we have to consider

whether Section 21 of Rule 3 and Sections 5 and 7 of Rule 86 of the Revised Rules of Court are applicable in the present case. Similarly, we have to inquire whether petitioners, heirs of Elias Lorilla, were deprived of their right to due process of law. Petitioners argue that the cause of action of private respondent Commercial Credit Corp. (now known as Pentacapital Finance Corp. and hereinafter referred to as PENTACAPITAL) did not survive for being in violation of Section 21 of Rule 3 of the Revised Rules of Court. They claim that under this rule, the trial court lost jurisdiction over the person of Elias Lorilla when he died, and consequently the action against him should have been dismissed. Sec. 21 of Rule 3 states: Sec. 21. Where claim does not survive. — Where the action is for recovery of money, debt or interest thereon, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided in these rules. Sec. 21 of Rule 3 provides that upon the defendant's death, the action "shall be dismissed to be presented in the manner especially provided in these rules." Petitioners argue that this manner is provided for in Sections 5 and 7 of Rule 86 of the Revised Rules of Court. 6 As contemplated in Section 21 of Rule 3, the action has to be dismissed without prejudice to the plaintiff thereafter presenting his claim as a money claim in the settlement of the estate of the deceased defendant. 7 The claim becomes a mere incident in the testamentary or intestate proceedings of the deceased where the whole matter may be fully terminated jointly with the settlement and distribution of the estate. 8 In the present case, however, the records do not show if any notice of death was filed by Atty. Alfredo Concepcion, counsel of record of Elias Lorilla in Civil Case No. 5262 before the Makati Court. Thus, neither the Makati Court nor PENTACAPITAL were made aware of the death of Elias Lorilla. The trial court could not be expected to know or take judicial notice of the death of Lorilla, absent such notice. Neither could the petitioners have been made aware of the trial court's judgment adverse to their father, for all notices and orders of the court were sent to Lorilla's counsel of record, who did not bother to inform the parties concerned of Elias Lorilla's death. Apparently, Lorilla's counsel failed in his duty to promptly inform the court of the death of his client, as the Rules require. 9 As far as the Makati Court was concerned, until the Writ of Execution was issued and the levy thereof on August 5, 1993, Lorilla continued to be represented by counsel of record, Atty. Concepcion; and that upon service of a copy of the decision on said counsel at the latter's address, Lorilla was deemed to have been validly served notice of the judgment. 10 The failure of Atty. Concepcion to serve notice on the court and the adverse parties regarding his client's death binds herein petitioners as much as the client himself could be so bound. Jurisprudence teems with pronouncements that a client is bound by the conduct, negligence and mistakes of his counsel. 11

In this case, petitioners claim that their right to due process was violated when the Court of Appeals did not annul the decision of the Makati Court dated April 5, 1989. They claim that as heirs of Elias Lorilla, they would be deprived of their lawful inheritance without due process, as they were not parties to the case where the adverse decision against their father was rendered. Said judgment, they posit, cannot be enforced against them because the court had not acquired jurisdiction over them, nor over the estate of Elias Lorilla. True, a judgment may be annulled for want of jurisdiction or lack of due process of law. 12 But while petitioners were not properly substituted for Elias Lorilla as defendants, absent any notice of his death, it could not be said that petitioners were deprived of due process of law, for as far as the trial court was concerned, they were not parties to the case. To rule otherwise would be, in fact, a more obvious and grievous transgression of due process. Moreover in this case, we find that the property which petitioners claim as their lawful inheritance, was no longer part of the estate of Elias Lorilla at the time of his death. For Elias Lorilla had earlier executed a dacion en pago over this property in favor of the Joint Resources Management Development Corporation (JRMDC). By reason thereof, Lorilla's transfer certificate of title was cancelled, and a new one was issued in favor of JRMDC. 13 The levy of PENTACAPITAL annotated on Lorilla's certificate of title was carried over onto the title of JRMDC. Elias Lorilla's payment of his obligation to JRMDC being one of dation in payment, it is governed by the law on sales. 14 The subject property was validly transferred to JRMDC already. Hence petitioners could not claim that they were deprived of their lawful inheritance without due process of law. Sec. 21 of Rule 3 of the Revised Rules of Court sets out the procedure that should be followed after the death of the defendant in a case. If he died "before final judgment in the Court of First Instance," the action should be dismissed without prejudice to the plaintiff presenting his claim in the settlement of the estate of the deceased in accordance with and as required by Section 5 of Rule 86 of the Revised Rules of Court. 15 Here, however, the property in question had already been taken out of the estate of Elias Lorilla, even before judgment in Civil Case No. 5262 was rendered, and it was transferred to JRMDC by virtue of the dacion en pago executed by Elias Lorilla. For this reason, Section 5 of Rule 86 loses its pertinence to the case at bar. Likewise, Section 7 of Rule 39 of the Revised Rules of Court 16 will not apply to the present case. For it speaks of a situation where a party dies after the entry of the judgment or order of the court. It does not cover a situation where the court was reportedly informed of the death of a party only after final judgment. Since there was no timely appeal taken from the judgment of the Regional Trial Court of Makati dated April 5, 1989, in Civil Case No. 5262, that judgment had properly become final and executory. As well said by respondent appellate court, to adopt a view contrary would ". . . open the floodgates to protracted and endless litigations, because all that counsel for defendant has to do, in an action for recovery of money, in case said defendant dies

before final judgment in a regional trial court, is to conceal such death from the court and thereafter pretend to go through the motions of trial, and, after judgment is rendered against his client, to question such judgment for being violative of Section 21, Rule 3 of the Rules of Court. Thus, counsel for such defendant could unduly delay the rendering of a judgment against his client. It is a fundamental concept in any jural system, that even at the risk of occasional errors, judgments of courts should become final at some definite time fixed by law. Interest rei publicae ut finis sit litim." 17 We see no reason, in the interest of justice, to disturb, much less annul, the aforesaid judgment. WHEREFORE, the assailed decision of the Court of Appeals promulgated on November 29, 1994 and its Resolution promulgated on January 11, 1995 are hereby AFFIRMED. Costs against petitioners. SO ORDERED. SALONGA HERNANDEZ & ALLADO vs. OLIVIA SENGCO PASCUAL and THE HONORABLE COURT OF APPEALS Petitioner, a professional law partnership, brings forth this Petition for Review assailing the Decision1 of the Court of Appeals dated 22 December 1995. The appellate court had affirmed two orders promulgated by the Malabon Regional Trial Court (RTC), Branch 72 (Probate Court), in Sp. Proc. No. 136-MN, entitled "In the Matter of Testate Estate of Doña Adela Pascual, Dr. Olivia S. Pascual, Executrix." The case actually centers on two estate proceedings, that of Doña Adela Pascual (Doña Adela) and the other, her husband Don Andres Pascual's (Don Andres), who predeceased her. Don Andres died intestate, while Doña Adela left behind a last will and testament. The dispute over the intestate estate of Don Andres has spawned at least two cases already settled by this Court.2 On 1 December 1973, an intestate proceeding for the settlement of the estate of Don Andres was commenced by his widow Doña Adela before the then Court of First Instance, now Regional Trial Court of Pasig, Branch 23 (Intestate Court), docketed as Sp. Proc. No. 7554. Apart from his wife, who bore him no children, Don Andres was survived by several nephews and nieces from his full-blood and half-blood brothers.3 This proceeding proved to be the source of many controversies, owing to the attempts of siblings Olivia and Hermes Pascual, acknowledged natural children of Don Andres's brother, Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes Pascual procured the initial support of Doña Adela to their claims. However, on 16 October 1985, the other heirs of Don Andres entered into a Compromise Agreement over the objections of Olivia and Hermes Pascual, whereby three-fourths (3/4) of the estate would go to Doña Adela and one-fourth (1/4) to the other heirs of Don Andres, without prejudice to the final determination by the court or another compromise agreement as regards the claims of Olivia and Hermes Pascual.4 Subsequently, the Intestate Court denied the claims of Olivia and Hermes Pascual. Said denial was eventually affirmed by this Court in 1992 in Pascual v. PascualBautista,5 applying Article 992 of the Civil Code.

In the meantime, Doña Adela died on 18 August 1987, leaving behind a last will and testament executed in 1978, 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 dated 25 August 1987, signed by Atty. Esteban Salonga in behalf of petitioner and Olivia Pascual. 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. Fruits shall be reckoned from the time of [Olivia Pascual's] appointment as executrix 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."6

On 26 August 1987, private respondent, represented by petitioner, commenced a petition for the probate of the last will and testament of Doña Adela before the Probate Court, docketed as Sp. Proc. No. 136-MN and raffled to Branch 72 presided by Judge Benjamin M. Aquino, 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 Doña Adela in their favor. 7 After due trial, on 1 July 1993, the Probate Court rendered a Decision8 allowing probate of the 1978 Last Will and Testament of Doña Adela and disallowing the purported 1985 Will. Letters testamentary were issued to Olivia Pascual.9 Cornejo attempted to appeal this decision of the Probate Court, but his notice of appeal was denied due course by the Probate Court, said notice "not having been accompanied by any record on appeal as required under the Interim Rules and by Rule 109 of the Rules of Court."10 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 S. Pascual as well as the fruits thereof based on the court approved inventory of the estate, pursuant to the retainer agreement signed by and between petitioner and Olivia S. Pascual, on 25 August 1987. In an Order dated 4 November 1993, the Probate Court ruled that petitioner's "notice of attorney's lien, being fully supported by a retainer's contract not repudiated nor questioned by his client Olivia S. Pascual, is hereby noted as a lien that must be satisfied chargeable to the share of Olivia S. Pascual."11 This was followed by another Order, dated 11 November 1993, wherein it was directed "that notice be x x x given, requiring all persons having claims for money against the decedent, Doña Adela S. Vda. de Pascual, arising from contracts, express or implied, whether the same be due, not due, or contingent, for funeral expenses and expenses of the last sickness of the said decedent, and judgment for money against her, to file said claims with the Clerk of Court at Malabon, Metro Manila, within six (6) months from November 4, 1993."12

Accordingly, on 22 November 1993, petitioner filed a Motion to Annotate Attorney's Lien on Properties of the Estate of Doña Adela Vda. de Pascual.13 It was at this stage, on 19 January 1994, that the Intestate Court rendered a Decision in Sp. Proc. No. 7554, finally giving judicial approval to the aforementioned 1985 Compromise Agreement, and partitioning the estate of Don Andres by adjudicating onefourth (1/4) thereof to the heirs of Don Andres and three-fourths (3/4) thereof to the estate of Doña Adela. The Intestate Court also awarded attorney's fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths (3/4) share of the estate of Doña Adela.14 Olivia Pascual filed a petition for annulment of the award of attorney's fees with the Court of Appeals, but the same was denied, first by the appellate court, then finally by this Court in its 1998 decision in Pascual v. Court of Appeals.15 On 26 April 1994, petitioner filed a Motion for Writ of Execution for the partial execution of petitioner's attorney's lien estimated at P1,198,097.02. The figure, characterized as "tentative," was arrived at based on a Motion to Submit Project Partition dated 26 October 1993 filed by Olivia Pascual, which alleged the gross appraised value of Doña Adela's estate at P39,936,567.19. This sum was in turn derived from the alleged value of the total estate of Don Andres, three-fourths (3/4) of which had been adjudicated to Doña Adela. At the same time, petitioner noted that the stated values must be considered as only provisional, considering that they were based on a July 1988 appraisal report; thus, the claim for execution was, according to petitioner, without prejudice to an updated appraisal of the properties comprising the gross estate of Doña Adela.16 On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed her comment and/or opposition to the motion for the issuance of a writ of execution on attorney's fees. She argued that a lawyer of an administrator or executor should charge the individual client, not the estate, for professional fees. Olivia Pascual also claimed, citing jurisprudence17, that the counsel claiming attorney's fees should give sufficient notice to all interested parties to the estate, and that such was not accomplished by petitioner considering that no notices were given to the several legatees designated in Doña Adela's will.18 It was further argued that the motion for execution was premature, considering that the proceedings before the Intestate Court had not yet been terminated; that the computation of the figure of P1,198,097.02 was erroneous; and that the enforcement of the writ of execution on the undivided estate of Don Andres would prejudice his other heirs entitled to one-fourth (1/4) thereof. On 2 June 1994, the Probate Court issued the first assailed order 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 tied-up with the estate of the late Don Andres Pascual, the proceedings over which and the final disposition thereof with respect to the partition and segregation of what is to form part of the estate of the late Doña Adela S. Vda. De Pascual is pending with another court sitting in Pasig, Metro Manila, and for having been prematurely filed."19

On 14 November 1994, Olivia Pascual, filed with the Probate Court a Motion to Declare General Default and Distribution of Testamentary Dispositions with Cancellation of Administrator's Bond. It was noted therein that no creditor had filed a claim against the estate of Doña Adela despite due notice published pursuant to Section 1, Rule 86 of the Rules of Court. The Probate Court was also informed of the fact that the proceedings before the Intestate Court had already been terminated by reason of the 14 January 1994 Decision rendered by the latter court. It was also stated "that the corresponding estate taxes had been paid as evidenced by the Estate Tax Return filed with the Bureau of Internal Revenue, and of the Certificate of Authority issued by the said agency."20 Interestingly, it was also manifested that two of the properties that formed part of the estates of the spouses, "the Ongpin Property" and "the Valenzuela Property," had in fact already 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), respectively. In response, petitioner filed a Comment/Manifestation praying that an order be issued: (1) ordering the annotation of the attorney's lien on the properties comprising the estate of Doña Adela Pascual; (2) a writ of partial execution be issued for the satisfaction of the attorney's lien of the undersigned counsel [herein petitioner] in relation to the Ongpin and Valenzuela properties for the amount of P635,368.14,without prejudice to the issuance of a writ of execution 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; (3) ordering the appointment of a reputable appraisal company to re-appraise the present market value of the estate of Doña Adela Pascual including the fruits thereof for the purpose of determining the value of the attorney's fees of [petitioner]; and (4) after the re-appraisal of the estate of Doña Adela Pascual a writ of execution be issued for the full satisfaction and settlement of the attorney's lien of [petitioner].21 On 17 March 1995, the Probate Court issued an order which denied petitioner's motion for a re-appraisal of the property and the issuance of a partial writ of execution "for being prematurely filed as there is no exact estate yet to be inventoried and reappraised, assuming re-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 over to the executrix or to the court itself."22 Through a petition for certiorari and mandamus, petitioner assailed the two orders of the Probate Court denying its motion for the immediate execution, partial or otherwise, of its claim for attorney's fees: the 2 June 1994 Order and the 17 March 1995 Order. Nonetheless, the twin orders of the RTC were affirmed by the Court of Appeals, effectively precluding petitioner's attempt to execute on its attorney's lien. The appellate court noted that the attorney's lien issued by the Probate Court was chargeable only to the share of Olivia Pascual, and not to the estate of Doña

Adela, since it was Olivia Pascual who entered into the agreement with petitioner for the payment of attorney's fees in connection with the settlement of the 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 fees for the necessary expenses he has incurred but he may not recover attorney's fees from the estate. The Court of Appeals likewise noted that in the retainer agreement between petitioner and Olivia Pascual, it is stipulated that "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."24 On this score, the Court of Appeals ruled that as the petition before it did not show "that an agreement on the distribution of properties of the estate of Doña Adela S. Pascual has been submitted and approved by the probate court,"25 the filing of the motion for execution and that of the motion for re-appraisal of the market value of the estate were both premature. Petitioner sought to reconsider the Decision of the Court of Appeals, but in vain.26 Hence this petition. 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 administrator is authorized to 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.28 Lacson, it is alleged, was inappropriately cited, since that case involved an executor who concurrently was a lawyer who subsequently claimed attorney's fees as part of the expenses of administration. Petitioner also claims that the decision of the probate court admitting Doña Adela's will to probate sufficiently satisfies the condition in the Retainer Agreement 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," the courtapproved will comprising the agreement referred to in the contract. Petitioner also takes exception to the Probate Court's finding that "the 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 itself," on which the appellate court predicated its ruling that the motion for a writ of execution was premature. Petitioner submits that the Probate Court ineluctably has jurisdiction over the estate of Doña Adela, and has necessarily assumed control over the properties belonging to the said estate. Thus, petitioner continues, there is no longer need to await the turnover of the properties involved in the intestate estate of Don Andres which constitute part of the testate estate of Doña Adela since the Probate Court and the Intestate Court have concurrent jurisdiction over these properties as they have not yet been physically divided. Petitioner refers to the averment made by Olivia Pascual before the Probate Court that the proceedings before the Intestate Court had already been terminated, and that the proceeds of the sale of the Ongpin Property and the Valenzuela Property had in fact

been already divided based on the three-fourths (3/4) to onefourth (1/4) ratio between the estate of Doña Adela and the heirs of Don Andres. Petitioner further points out that the Probate Court had authorized and approved the sale of the Ongpin Property, yet refused to allow the partial execution of its claim for attorney's fees. Finally, petitioner asserts that the Probate Court erred in refusing to grant the prayer seeking the re-appraisal of the property of Doña Adela's estate. Such re-appraisal, so it claims, is necessary in order to determine the three percent (3%) share in the total gross estate committed to petitioner by reason of the Retainer Agreement. It appears that the thrust of the assailed Decision of the Court of Appeals is along these lines: that petitioner may directly claim attorney's fees only against Olivia Pascual and not against the estate of Doña Adela; and that petitioner's claim is also premature since contrary to the requisite stipulated in the Retainer Agreement, there is no court-approved agreement for the distribution of the properties of the estate of Doña Adela as yet. As an initial premise, we consider whether 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. Petitioner correctly cites Occeña v. Marquez29 as providing the governing rule on that matter as previously settled in the 1905 case of Escueta v. Sy-Juilliong,30 to wit: 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.31 We reiterate that as a general rule, it is the executor or administrator who is primarily liable for attorney's fees due to the lawyer who rendered legal services for the executor or administrator in relation to the settlement of the estate. The executor or administrator may seek reimbursement from the estate for the sums paid in attorney's fees if it can be shown that the services of the lawyer redounded to the benefit of the estate.32 However, if the executor or administrator refuses to pay the attorney's fees, the lawyer has two modes of recourse. First, the lawyer may file an action against the executor or administrator, but in his/her personal capacity and not as administrator or executor. Second, the lawyer may file a petition

in the testate or intestate proceedings, asking the court to direct the payment of attorney's fees as an expense of administration. If the second mode is resorted to, it is essential that notice to all the heirs and interested parties be made so as to enable these persons to inquire into the value of the services of the lawyer and on the necessity of his employment. Lacson v. Reyes,33 cited by the appellate court, involved an executor who also happened to be the lawyer for the heirs who had filed the petition for probate. For that reason, that case is not squarely in point to the case at bar. It was pronounced therein that the administrator or executor of the estate cannot charge professional fees for legal 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 direct recovery of professional legal fees from the estate by the lawyer who is not the executor or administrator of the said estate. The limitations on such direct recovery are nonetheless established by jurisprudence, as evinced by the rulings in Escueta and Occeña. The character of such claim for attorney's fees bears reiteration. As stated in Escueta, it partakes the nature of an administration expense. Administration expenses include attorney's fees incurred in connection with the administration of the estate.35 It is an expense attending the accomplishment of the purpose of administration growing out of the contract or obligation entered into by the personal representative of the estate, and thus the claim for reimbursement must be superior to the rights of the beneficiaries.36 Notwithstanding, there may be instances wherein the estate should not be charged with attorney's fees. If the costs of counsel's fees arise out of litigation among the beneficiaries thereof themselves or in the protection of the interests of particular persons, the estate generally cannot be held liable for such costs, although when the administrator employs competent counsel on questions which affect his/her duties as the administrator and on which he/she is in reasonable doubt, 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 an administrator who brings on litigation for the deliberate purpose of defrauding the legitimate heirs and for his own benefit is not entitled to reimbursement for counsel's fees incurred in such litigation.381avvphil.net Clearly then, while the direct recovery of attorney's fees from the estate may be authorized if the executor refuses to pay such fees, and claimed through the filing of the proper petition with the probate court, such claim remains controvertible. This is precisely why Escueta and its progenies require that the petition be made with notice to all the heirs and interested parties. It is these perspectives that we apply to the case at bar. Notably, petitioner had filed both a Notice of Attorney's Lien and a Motion for Writ of Execution. These two pleadings have distinct character and must be treated as such. After Doña Adela's will had been admitted to probate, petitioner had initially filed a Notice of Attorney's Lien wherein it identified itself as "the attorney for the executrix named in the said will,

Dra. Olivia S. Pascual", and sought to file its "claim and/or lien for attorney's fees equivalent to Three Percent (3%) of the total gross estate," pursuant to the 1987 Retainer Agreement. Copies of this Notice of Attorney's Lien were furnished Attys. Fortunato Viray, Jr. and Crisanto Cornejo, who appear on record to have served as counsels for the various oppositors to the probate of the 1978 will of Doña Adela. This Notice of Attorney's Lien was noted by the Probate Court in its Order of 4 November 1993, "as a lien that must be satisfied chargeable to the share of Olivia S. Pascual." 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."39 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. The instant case is rooted in an incomplete attempt to resort to the second mode of recovery of attorney's fees as authorized in Escueta, originating as it did from the denial of petitioner's Motion for Writ of Execution, and not the Notice of Attorney's Lien. The Motion did expressly seek the payment of attorney's fees to petitioner. Escueta and Occeña, among other cases, did clearly lay down the manner under which such fees may be paid out even prior to the final settlement of the estate as an administration expense directly chargeable to the estate itself. The critical question in the present petition is thus whether this Motion for Writ of Execution satisfies the requisites set in Escueta for a claim for attorney's fees directly chargeable against the estate. It does not.

The fact that the prayer for attorney's fees was cast in a motion and not a petition should not impede such claim, considering that the motion was nonetheless filed with the Probate Court. However, the record bears that the requisite notice to all heirs and interested parties has not been satisfied. Doña Adela's will designated 19 other individuals apart from Olivia Pascual, and four (4) different institutions as recipients of devises or legacies consisting of real properties, jewelries, and cash amounts. Yet only Olivia Pascual was served with a copy of the Motion for Writ of Execution, the motion which effectively sought the immediate payment of petitioner's attorney's fees. As early as 29 April 1994, Olivia Pascual, in opposing the Motion for Writ of Execution, already pointed out that petitioner had failed to give sufficient notice to all interested parties to the estate, particularly the several devisees and legatees so named in Doña Adela's will. 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 gross estate as sought for by petitioner, substantially diminishes the estate of Doña Adela and may consequently cause the diminution of their devises and legacies. Since these persons were so named in the very will itself and the action for probate which was filed by petitioner itself, there is no reason why petitioner could not have given due notice to these persons on its claim for attorney's fees. The requisite notice to the heirs, devisees, and legatees is anchored on the constitutional principle that no person shall be deprived of property without due process of law.40 The fact that these persons were designated in the will as recipients of the testamentary dispositions from the decedent establishes their rights to the succession, which are transmitted to them from the moment of the death of the decedent.41 The payment of such attorney's fees necessarily diminishes the estate of the decedent, and may effectively diminish the value of the testamentary dispositions made by the decedent. These heirs, devisees, and legatees acquire proprietary rights by reason of the will upon the moment of the death of the decedent, incipient or inchoate as such rights may be. Hence, notice to these interested persons of the claims for attorney's fees is integral, so as to allow them to pose any objections or oppositions to such claim which, after all, could lead to the reduction of their benefits from the estate. The failure to notify the other heirs, devisees or legatees, to the estate of Doña Adela likewise deprives these interested persons of the right to be heard in a hearing geared towards determining whether petitioner was entitled to the immediate payment of attorney's fees. Notably, petitioner, in filing its Motion for Writ of Execution, had initially set the hearing on the motion on 29 April 1994, but one day prior to the scheduled hearing, gave notice instead that the motion was being submitted for the consideration of the Probate Court without further 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 the claim for attorney's fees is hardly incontrovertible. That the Retainer Agreement set the attorney's fees at three percent (3%) of the gross estate does not imply that the basis for attorney's fees is beyond controversy. Attorney's fees in this case are in the nature of administration expenses, or necessary

expenses in the first place. Any party interested in the estate may very well, in theory, posit a myriad of objections to the attorney's fees sought, such as for example, that these fees were not necessary expenses in the care, management, and settlement of the estate. Whether or not such basis 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 devisees and legatees, were deprived of the opportunity to raise such objections as they were not served notice of the Motion for Writ of Execution. The instant claim for attorney's fees is thus precluded by the absence of the requisite notices by petitioner to all the interested persons such as the designated heirs, devisees, legatees, as required by the jurisprudential rule laid down in Escueta. However, the Court of Appeals held that it was the prematurity of the claim for attorney's fees that served as the fatal impediment. On this point, the Court does not agree. Again, the remaining peripheral questions warrant clarification. Escueta itself provides for two alternative approaches through which counsel may proceed with his claim for attorney's fees. The first involves a separate suit against the executor or administrator in the latter's personal capacity. The second approach is a direct claim against the estate itself, with due notice to all interested persons, filed with the probate court. In the same vein, the existence of the Retainer Agreement between petitioner and Olivia Pascual allows petitioner two possible causes of action on which to claim attorney's fees in connection with the administration of the estate of Doña Adela. The first possible cause of action pivots on the Retainer Agreement, which establishes an obligation on the part of Olivia Pascual to pay the final fee of 3% of the gross total estate of Doña Adela, payable upon approval by the Probate Court of the agreement for the distribution of the properties to the courtdesignated heirs of the estate. Necessarily, since the recovery of attorney's fees is premised on the Retainer Agreement any award thereupon has to await the final ascertainment of value of the gross total estate of Doña Adela, as well as the approval by the Probate Court of the agreement for the distribution of the properties. The Retainer Agreement makes it clear that the final payment of attorney's fees is contingent on these two conditions,43 and the claim for attorney's fees based on the Retainer Agreement cannot ripen until these conditions are met. Moreover, it cannot be escaped that the Retainer Agreement was entered into between petitioner and Olivia Pascual prior to the filing of the probate petition, and that at such time, she had no recognized right to represent the estate of Doña Adela yet. This circumstance further bolsters our opinion that if petitioner insists on the judicial enforcement of the Retainer Agreement, its proper remedy, authorized by law and jurisprudence, would be a personal action against Olivia Pascual, and not against the estate of Doña Adela. If this were the recourse pursued by petitioner, and Olivia Pascual is ultimately held liable under the Retainer Agreement for attorney's fees, she may nonetheless seek reimbursement from the estate of Doña Adela if she were able to

establish that the attorney's fees paid to petitioner were necessary administration expenses.

pursue such claim for attorney's fees as the right to which is affirmed by law and jurisprudence.

The second or alternative recourse is the direct claim for attorney's fees against the estate, as authorized under Escueta. The character of this claim is not contractual in nature, but rather, as a reimbursement for a necessary expense of administration, and it will be allowed if it satisfies the criteria for necessary expenses of administration. Its entitlement can be established by the actual services rendered by the lawyer necessary to the accomplishment of the purposes of administration, and not necessarily by the contract of engagement of the attorney's services.

Hence, in order not to unduly protract further the settlement of the estate of Doña Adela, the Court deems it proper instead to mandate the Probate Court to treat the Motion for Writ of Immediate Execution 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 petitioner give due notice to the other designated devisees and legatees so designated in the will of the claim prior to the requisite hearing thereon. Petitioner may as well seize such opportunity to 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.

By filing their claim directly against the estate of Doña Adela, petitioner has clearly resorted to this second cause of action. There are consequent advantages and disadvantages to petitioner. Since the claim arises irrespective of the contingencies as stipulated in the Retainer Agreement, the attorney's fees may be collected against the estate even before the final determination of its gross total value or the final approval of the project of partition. As earlier stated, such claim for reimbursement is superior to the right of the beneficiaries to the estate, and as such, there is need to finally determine the respective shares of the beneficiaries before attorney's fees in the nature of administration expenses may be paid out. The one distinct disadvantage, however, is that the Retainer Agreement cannot be deemed binding on the estate or the Probate Court since the estate is not a party to such contract. This would not preclude the Probate Court from enforcing the provisions of the Retainer Agreement if, in its sound discretion, the terms of payment therein are commensurate to the value of the actual services necessary to the administration of the estate actually rendered by petitioner. Yet if the Probate Court does choose to adopt the Retainer Agreement as binding on the estate of Doña Adela, petitioner may again be precluded from immediate recovery of attorney's fees in view of the necessity or precondition of ascertaining the gross total value of the estate, as well as the judicial approval of the final agreement of partition. In any event, whether the claim for attorney's fees was pursued through a separate suit against Olivia Pascual (in her personal capacity) for the enforcement of the Retainer Agreement, or against the estate of Doña Adela as reimbursement for necessary administration expenses, it remains essential that a hearing be conducted on the claim. In either case too, the hearing will focus on the value of the services of the petitioner and the necessity of engaging petitioner as counsel. We reiterate that the direct claim against the estate for attorney's fees must be made with due notice to the heirs, devisees, and legatees. The failure of petitioner to give such notice renders its present claim inefficacious for now. Indeed, there is sufficient cause to dismiss outright petitioner's Motion for Writ of Immediate Execution filed with the Probate Court, for its failure to notify therein the other persons interested in the estate of Doña Adela. Nonetheless, to authorize said outright denial at this stage could unduly delay the settlement of the estate of Doña Adela, considering the likelihood that petitioner would again

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. In the matter of the estate of J. H. Ankrom, deceased. HEIRS OF RAFAEL GREGOIRE vs. ALBERT L. BAKER, This appeal has been brought to set aside an order entered on March 5, 1926, by Hon. Pedro J. Rich, Judge of the Court of First Instance of Davao, authorizing the administrator of J. H. Ankrom, deceased, to exclude a large tract of land, with improvements, from the inventory of assets of the decedent. It appears that J. H. Ankrom, resident of the Province of Davao, died on September 18, 1922; and on September 25, thereafter, the appellee, A. L. Baker, qualified as his administrator. On December 13 of the same year, the administrator 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 certificate of title and containing an area of more than 930 hectares. In this inventory, said tract of land, with the improvements thereon, was estimated at nearly P60,000. On September 24, 1924, the heirs of Rafael Gregoire, appellants herein, filed a claim against the estate of Ankrom for the sum of $35,438.78, U. S. currency, or P70, 877.56, based upon a judgment rendered in the Supreme Court of the Republic 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. It appears that the total recognized claims against the estate amounted originally to P76,645.13, but four of the creditors, having claims in the amount of P1,639.82, have been paid in full, leaving a balance owing by the estate of P75,005.31, the greater part of which is comprised of the claim of the appellants. 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 on April 22, 1920, or about a year and a half before his death, Ankrom had executed a mortgage on the property here in question in favor of the Philippine Trust Company to secure that company from liability on a note in the amount of P20,000.00, of the same date, upon which it had made itself contigently liable. Two 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 Cincinnati, Ohio, for a purported consideration of the sum of P1 and other good and valuable considerations. In view of these conveyances by his intestate, the administrator presented an amended inventory, omitting therefrom 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 on October 7, 1925, directing the administrator to restore said item to his inventory. Nevertheless, upon a later motion of the administrator accompanied by authenticated copies of the documents of transfer, the court made a new order, dated march 5, 1926, approving of the omission by the administrator of said property from the inventory; and its is from this order that the present appeal is here being prosecuted. From the foregoing statement it will be collected that the appellants have an undeniable credit in a large amount against the estate of the decedent, and that upon the showing of the last approved inventory the estate is insolvent. In view of these facts that appellants, assuming apparently that the assignment to Jung by Ankrom of the equity of redemption of the latter in the tract of land above mentioned was affected in fraud of creditors, are desirous of reaching and subjecting this interest to the payment of the appellant’s claim. The appellants also insist that 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, on the other hand, supposes the assignment to be 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. The precise remedy open to the appellants in the predicament above described is clearly pointed pout in section 713 of our Code of Civil Procedure, which reads as follows: 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 life-time such fraudulent conveyance of such real or personal estate or of a right 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 administrator against the costs of such action. Such creditor shall have a lien upon the judgment by him so recovered for the costs incurred and such other expenses as the court deems equitable. The remedy of the appellants is, therefore, 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. For the appellants it is contended that, inasmuch as no appeal was taken from the order of October 7, 1925, directing the administrator to include the land in question in the inventory, said order became final, with the result that the appealed order of March 5, 1926, 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 with reference to the 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 without prejudice to the rights of the creditors to proceed in the manner indicated in the provision above quoted from the Code of Civil Procedure. The order appealed from not being of an appealable nature, it results that this appeal must be dismissed, and it is so ordered, with costs against the appellants. SINFOROSO PASCUAL vs. PONCIANO S. PASCUAL, ET AL., On September 14, 1940, while the proceedings for the probate of the will of the deceased Eduarda de los Santos were pending in the Court of First Instance of Rizal plaintiff, Sinforoso Pascual, instituted in the Court of First Instance of Pampanga 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 all residents of Malabon, Rizal, and 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. Plaintiff filed an amended complaint, the amendment consisting in that "el demandado Miguel S. Pascual ha sido nombrado por el Juzgado de Primera Instancia de Rizal albacea testamentario de los bienes de la finada Eduarda de los Santos. en el asunto de la testamentaria de dicha finada." 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.

general rule is that questions as to title to property cannot be passed upon in testate proceedings. (Bauermann vs. Casas, 10 Phil., 386; Devesa vs. Arbes, 13 Phil., 273; Guzman vs. Anog, 37 Phil., 61; Lunsod vs. Ortega, 46 Phil., 664; Adapon vs. Maralit, 40 Off. Gaz., 6th Sup., p. 84.) The court is, however, of the opinion and so holds that, when as in the instant case, the parties interested are all heirs of the deceased claiming title under him, the question as to whether the transfer made by the latter to the former is or is not fictitious, may properly be brought by motion in the testate or intestate proceedings on or before the distribution of the estate among the heirs. This procedure is optional to the parties concerned who may choose to bring a separate action as a matter of convenience in the preparation or presentation of evidence, and accordingly, the action brought by the appellant is not improper.

Under Rule 86, section 1, of the new Rules of Court, 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. (Pomeroy on Code Remedies, p. 158, 11 R C. L. p. 262; 21 Am. Jur., 940) 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.

GLICERIA C. LIWANAG, Special Administratrix of the Estate of Pio D. Liwanag, vs. HON. Luis B. REYES, Judge of the Court of First Instance of Manila and ROTEGAAN FINANCING, INC.

Appellees contend that there is here a wrong venue. They argue that an action for the annulment of a contract of sale is a personal action which must be commenced at the place of residence of either the plaintiff or the defendant, at the election of the plaintiff (Rule 5, sec. 1, Rules of Court), and, in the instant case, both plaintiff and defendants are residents of Malabon, Rizal, but the action was commenced in the Court of First Instance of Pampanga. It appearing, however, that the sale is alleged to be fictitious, with absolutely no consideration, it should be regarded as a non-existent, not merely null, contract. (8 Manresa, Comentarios al Codigo Civil Español, 2nd ed., pp. 766-770.) And there being no contract between the deceased and the defendants, there is in truth nothing to annul by action. The action brought cannot thus be for annulment of contract, but is one for recovery of a fishpond, a real action that should be, as it has been, brought in Pampanga, where the property is located (Rule 5, sec. 3, Rules of Court.) Appellees argue further that the action brought by the plaintiff is unnecessary, the question involved therein being one that may properly be raised and decided in the probate proceedings. The

Order is reversed, and the case is remanded the trial court for further proceedings, with costs against appellees.

This is a petition for certiorari to annul the orders of the Court of First Instance of Manila appointing a receiver and deferring action on the motion to dismiss in Civil Case No. 48154. A preliminary injunction was issued upon the filing of this petition. On July 14, 1960, the late Pio D. Liwanag executed in favor of the Rotegaan Financing, Inc., a real estate mortgage on a parcel of residential land with the building and improvements thereon, at M. H. del Pilar Street, Manila, to secure the payment of a loan in the amount of one hundred and eighty thousand pesos (P180,000.00), Philippine Currency, with interest at the rate of 12% per annum on said loan. It was stipulated in the mortgage contract that the total amount of mortgage debt be fully paid a year thereafter, or on or before July 14, 1961. Before the one year period expired, the mortgagor Pio D. Liwanag died intestate. As the total mortgage obligation of the deceased was not fully paid within the stipulated period, the mortgagee Rotegaan Financing, Inc., on September 21, 1961, instituted in the Court of First Instance of Manila, a complaint for foreclosure against the Estate of Pio D. Liwanag and Gliceria Liwanag as administratrix of the estate. The action also prayed for the appointment of a receiver. The defendant Gliceria Liwanag filed a motion to dismiss the complaint for foreclosure, on the theory that she may not be sued as special administratrix. The said defendant also filed opposition to the prayer for the issuance of a writ of receivership, on the theory that the property subject of the foreclosure proceeding’s is in custodia legis, since administration proceedings had already been instituted for the settlement of the estate of the deceased. In two separate orders, the writ of receivership was issued, despite opposition, and action on the motion to dismiss was deferred “until after the trial of this case on the merits because

there is a possibility that the estate of the deceased may be in a position to pay the amounts claimed by the plaintiff, in which case the latter may choose to file its claim against the decedent in the office of the Clerk of Court, and waive the mortgage.”

shall be fifteen per cent (15%) of the total indebtedness then unpaid, exclusive of all costs and fees allowed by law, shall be applied first to the payment of the interest and then to the capital of the indebtedness secured hereby. (Emphasis supplied)

Motion for reconsideration filed by the defendant having been denied, the latter filed this petition for certiorari, alleging abuse of discretion on the part of the lower court in issuing the questioned orders. As prayed for, a writ of preliminary injunction was issued upon the filing of the petition.

It was therefore, the will of the deceased himself that, in case of foreclosure, the property be put into the hands of a receiver, and this provision should be respected by the administratrix of the estate. The cases cited by petitioner in favor of the theory that property in custodia legis can not be given to a receiver is not applicable, considering that this is an action to enforce a superior lien on certain property of the estate and the appointment of a receiver, which is a very convenient and feasible means of preserving and administering the property, has been agreed upon by the contracting parties.

The case raises the following fundamental issues: first, the correctness of the action for foreclosure against the special administratrix, and second, the propriety of the appointment of a receiver. Section 7 of Rule 86 of the New Rules of Court provides that a creditor holding a claim against the deceased, secured by a mortgage or other collateral security, may pursue any of these remedies: (1) abandon his security and prosecute his claim in the testate or intestate proceeding and share in the general distribution of the assets of the estate; (2) foreclose his mortgage or realize upon his security by an action in court, making the executor or administrator a party defendant, and if there is a deficiency after the sale of the mortgaged property, he may prove the same in the testate or intestate proceedings; and (3) rely exclusively upon his mortgage and foreclose it any time within the ordinary period of limitations, and if he relies exclusively upon the mortgage, he shall not be admitted as creditor of the estate, and shall not share in the distribution of the assets.

Wide latitude of discretion is usually given to the trial courts in the matter of receivership and unless that discretion is exercised arbitrarily, We are not to interfere. (See Motoomull v. Arieta, et al., G.R. No. L-15972, May 31, 1963.)

Obviously, the herein respondent has chosen the second remedy, having filed his action for foreclosure against the administratrix of the property.

MARTINIANO O. DE LA CRUZ vs. EMILIO CAMON

Now the question arises as to whether the petitioner herein can be sued as special administratrix. The Rules of Court do not expressly prohibit making the special administratrix a defendant in a suit against the estate. Otherwise, creditors would find the adverse effects of the statute of limitations running against them in cases where the appointment of a regular administrator is delayed. So that if We are now to deny the present action on this technical ground alone, and the appointment of a regular administrator will be delayed, the very purpose for which the mortgage was constituted will be defeated. The next point to be considered is whether or not there was abuse of discretion on the part of the lower court in the issuance of its order for the appointment of a receiver. This should be answered in the negative. It is to be noted that the contract of mortgage between the deceased and the Rotegaan Financing, Inc., provides: … In case of judicial foreclosure, the Mortgagor hereby consents to the appointment of the president of the mortgagee corporation or any of its officers as receiver, without any bond, to take charge of the mortgaged property at once, and to hold possession of the same, and the rents and profits derived from the mortgaged property, before the sale, less the costs and expenses of the receivership, the expenses of collection and attorney’s fees, which

IN VIEW OF THE FOREGOING, the two orders complained of are affirmed. The petition is hereby dismissed and the preliminary injunctive writ heretofore issued dissolved. With costs against petitioner. IN THE MATTER OF THE INTESTATE, ESTATE OF THOMAS FALLON, and ANNE FALLON MURPHY, deceased, IGNATIUS HENRY BEZORE, ET AL., petitioners.

The estate of Thomas Fallon and Anne Fallon Murphy1 was owner of two-fourths (2/4) share pro-indiviso of Hacienda Rosario in Negros Occidental. That whole hacienda was held in lease by Emilio Camon since long before the present intestate proceedings were commenced. On October 23, 1962 the administrator of the estate moved the court for an order to direct Emilio Camon to pay the estate's twoforths share of the rentals on Hacienda Rosario for the crop years 1948-1949 through 1960-1961, viz: on the sugar land, P62,065.00; and on the rice land, P2,100.00. On December 3, 1962, Emilio Camon challenged the probate court's jurisdiction over his person. The court ruled that the demand for rentals cannot be made "by mere motion by the administrator but by independent action." The administrator appealed. The jurisdiction of the Court of First Instance of Negros Occidental over the subject matter herein is beyond debate. The organic act creating courts of first instance, amongst others, allocates within its jurisdictional boundaries "all cases in which the demand, exclusive of interest, or value of property in controversy, amounts to more than ten thousand pesos."2 But here, the court sits as a probate court. Said court is primarily concerned with the administration, liquidation and distribution of the estate. For these purposes, property in the hands of the estate's administrator comes within the power of the probate court.

With the foregoing as parting point, let us look at the administrator's claim for rentals allegedly due. The amount demanded is not, by any means, liquidated. Conceivably, the lessee may interpose defenses. Compromise, payment, statute of limitations, lack of cause of action and the like, may be urged to defeat the administrator's case. Here, appellee's opposition to the motion served a warning that at the proper time he will set up the defense that the administrator, as attorney-in-fact of the declared heirs, had theretofore sold the estate's two-fourths share in Hacienda Rosario together with "all the rights, title and interest (including all accrued rents) that said heirs had inherited from the said deceased." Appellant administrator in his reply to the opposition admits the fact of sale of the land, but not of the rentals due. Accordingly, the right to collect the rentals is still in a fluid state. That right remains to be threshed out upon a fulldress trial on the merits. Because of all of these, the money (rentals) allegedly due is not property in the hands of the administrator; it is not thus within the effective control of the probate court. Neither does it come within the concept of money of the deceased "concealed, embezzled, or conveyed away", which would confer upon the court incidental prerogative to reach out its arms to get it back and, if necessary, to cite the possessor thereof in contempt.3 At best that money is debt to the estate — not against the estate. Recovery thereof, we are persuaded to say, should be by separate suit commenced by the administrator.4 With reason, because of the absence of express statutory authorization to coerce the lessee debtor into defending himself in the probate court.5 And, we are confronted with the unyielding refusal of appellee to submit his person to the jurisdiction of the probate court. By no means may it be said that this is untrodden ground. Paula vs. Escay, et al., teaches that: "When the demand is in favor of the administrator and the party against whom it is enforced is a third party, not under the court's jurisdiction, the demand can not be by mere motion by the administrator, but by an independent action against the third person."6 The line drawn in the Escay case gives us a correct perspective in the present. The demand is for money due allegedly for rentals. Camon is a third person. Hence, the administrator may not pull him against his will, by motion, into the administration proceedings. We are fortified in our view by the more recent pronouncement of this court7 that even "matters affecting property under judicial administration" may not be taken cognizance of by the court in the course of intestate proceedings, if the "interests of third persons are prejudiced" (Cunanan vs. Amparo, 80 Phil. 229, 232).1äwphï1.ñët The appealed order is in accord with the law. It is hereby affirmed. Costs against appellant. So ordered.

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.

Velasquez vs. William 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

CIRILO MODESTO, vs. JESUS MODESTO, ET AL., ETC., This is a petition for certiorari and for a writ of preliminary injunction filed by Cirilo Modesto to set aside the order of the Court of First Instance of Leyte dated March 8, 1954, the writ of execution dated April 27, 1954 as well as the alias writ of execution dated November 10, 1955.

The facts in this case are not in dispute. It would appear that Bruno Modesto died leaving several heirs, among them, Cirilo Modesto and Jesus Modesto. In the course of the intestate proceedings, Jesus Modesto, acting as administrator of the estate of Bruno, filed on November 7, 1953, in the Court of First Instance of Tacloban, Leyte, a motion to cite and examine under oath several persons, especially Cirilo Modesto, regarding properties concealed, embezzled or fraudulently conveyed. On December 7, 1953 the court issued an order appointing the Provincial Sheriff of Leyte and the Chief of Police of Tanawan, Leyte, as joint commissioners, to verify and ascertain persons who were holding, claiming or possessing properties belonging to the estate of the deceased Bruno Modesto. In said motion of Jesus Modesto he listed said properties supposed to belong to the estate, classified as follows: jewels under items 1, 2 and 3; furniture and other personal properties under items 4-10; the 11th item is supposed to be cash taken from a deposit in the Office of the Chief of Police of Tanawan, Leyte, after taking funeral and other expenses, in the amount of P1,700; and real properties under items 12-26. On January 12, 1954, the joint commissioners submitted their report. On March 1, 1954 Jesus Modesto, administrator filed a motion in court to require Cirilo Modesto 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, on March 8, 1954, issued an order requiring Cirilo Modesto to deliver to the administrator personal properties listed in the order, such as one narra aparador, 1 desk, 1 looking glass 5 x 3 ft., 1 trunk containing clothes, 1 bicycle, 11 pieces of steel matting and money said to have been taken from a deposit made with the Chief of Police in the amount of P1,700.00. Thereafter, on April 27, 1954, a writ of execution was issued and on May 10, 1955 as alias writ of execution was also issued by the trial court. By virtue of said writ of execution the provincial Sheriff issued a Notice of Attachment against the real property described in Certificate of Title no. 30167 of the Register of Deeds of Leyte and under Tax Assessment in the name of Cirilo Modesto. On June 2, 1955 Cirilo Modesto filed an Urgent Motion to Set Aside the Writ of Execution and for a Writ of Preliminary Injunction, which motion was opposed by Jesus. On June 4, 1955 the Provincial Sheriff sold at public auction the real property above-mentioned to the highest and only bidder Jesus Modesto for P2,454 and on June 6, 1956, the Provincial Sheriff issued a Sheriff’s Certificate of Final Sale in favor of Jesus. On June 29, 1956 Jesus Modesto filed a motion for a writ of Possession. On July 11, 1956 Cirilo filed his Motion for Reconsideration of the order dated June 4 which the trial court denied. On August 3, 1956, in pursuance of the motion for a Writ of Possession, the Provincial Sheriff issued a notification to Cirilo placing Jesus in possession of the real property sold to him. Cirilo then filed the present petition for certiorari to annul the proceedings had before the Court of First Instance of Leyte. The trial court, in issuing its order of March 8, 1954 requiring Cirilo to deliver the properties listed therein to Jesus as

administrator, supposedly acted under the provisions of Section 6, Rule 88 of the Rules of Court which reads as follows: SEC. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed. — If an executor or administrator, heir, legatee, creditor, or other individual interested in the estate of the deceased, complains to the court having jurisdiction of the estate that a person is suspected of having concealed, embezzled, or conveyed away any of the money, goods or chattels of the deceased, or that such person has in his possession or has knowledge of any deed, conveyance, bond, contract, or other writing which contains evidence of or tends to disclose the right, title, interest, or claim of the deceased to real or personal estate, or the last will and testament of the deceased, the court may cite such suspected person to appear before it and may examine him on oath on the matter of such complaint; and if the person so cited refused to appear, or to answer on such examination or such interrogatories as are put to him, the court may punish him for contempt, and may commit him to prison until he submits to the order to the court. The interrogatories put to any such person, and his answers thereto, shall be in writing and shall be filed in the clerk’s office. In this trial court committed error because the purpose of the section above-reproduced, which section was taken from Section 709 of Act 190, 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. In such proceedings the trial court has no authority to decide whether or not said properties, real or personal, 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 next step to be taken should be for the administrator to file an ordinary action in court to recover the same (Alafriz vs. Mina, 28 Phil. 137; Cui vs. Piccio, 91 Phil. 713; 48 O.G. [7] 2769; Changco vs. Madrelejos, 12 Phil. 543; Guanco vs. PNB, 54 Phil. 244, cited in Moran’s Rules of Court, Vol. 2 1957 Edition, pp. 443-444). The order requiring Cirilo to deliver the properties and cash stated in the order, as belonging to the estate, said that Cirilo was supposed to have admitted having received or taken possession of said properties after the death of Bruno. This statement or findings of the lower court is not supported by the evidence on record. As a matter of fact, in the answer of Cirilo to the motion of the administrator, he claimed that although he held the aparador mentioned in Item 4 in the list properties, nevertheless, said furniture belonged to their parents and so Bruno Modesto had only 1/6 share; that he, Cirilo, did not have the looking glass mentioned in the motion because the same had been taken by Jesus himself, neither did he have the desk in question; that though he held a trunk, it was empty and only contained clothes which were torn; that the bicycle in question was in the possession of Mauricio Modesto, the nephew of Bruno; that he, Cirilo, did not keep the 11 pieces of steel matting; neither did he ever receive the amount of P1,700.00 supposed to have been deposited in the office of the Chief of Police. But, even if Cirilo had

admitted possession of the properties which he was required by the court to deliver to Jesus, still it was necessary for the ordinary courts, not the probate court, to determine the title and ownership of said properties. In view of the foregoing, the petition for certiorari is hereby granted and the order of the trial court of March 8, 1954, the Writ of Execution of April 27, 1954 and the alias Writ of Execution of May 10, 1955, and of course the sale made by the Sheriff of the real property covered by Certificate of Title No. 30167 are set aside. Respondent Jesus Modesto will pay the costs. VALERA V. INSERTO Facts: Rafael Valera was granted leasehold rights over an 18 hectare fishpond in Iloilo by the government to last during his lifetime. He transferred it by “fictitious sale” to his daughter Teresa to support her children with the agreement that when the children finishes schooling, the fishpond will be returned to him. Valera and his spouse Consolacion Sarosa and their child Teresa died. The heirs of Teresa – her husband Jose Garin and their children bought the fishpond from the government, acquiring title thereto. The administrators of the spouses Rafael Valera and Consolacion Sarrosa claim that the fishpond should be returned to the spouses’ estates. The Probate Court presided by Judge Adil held that there has been an implied trust created, therefore the fishpond should be restored to the estate of the spouses pursuant to Arts. 1453 and 1455 of the Civil Code . Pursuant thereto, he directed the sheriff to enforce reconveyance of the fishpond to the estate. The fishpond was leased by the Garin Heirs to Fabiana, who although willingly surrendered it to the sheriff, later filed a complaint-in-intervention. This was dismissed so he instituted a separate action for injunction and damages. Court of Appeals reversed (fishpond to be returned to Garin Heirs and their lessee Fabiana) saying that: (1) Probate Court had no jurisdiction; (2) that the Title of the Garin Heirs is a stronger claim that rebuts the presumption that the estate owns the fishpond; and (3) that assuming the Probate Court had competence to resolve ownership, a separate action has to be filed. Issue: WON Probate Court had authority to order reconveyance of the fishpond? Held: NO. Ratio:

The CFI (now RTC), acting as Probate Court, exercises but limited jurisdiction, and thus has no power to take cognizance of and determine the issue of title to property claimed by a third person adversely to the decedent, unless the claimant and all the Other parties having legal interest in the property consent, expressly or impliedly, to the submission of the question to the Probate Court for adjudgment, or the interests of third persons are not thereby prejudiced. This is issue is not a jurisdictional, but procedural, involving a mode of practice which may be waived. The facts obtaining in this case, however, do not call for the application of the exception to the rule. It was at all times clear to the Court as well as to the parties that if cognizance was being taken of the question of title over the fishpond, it was not for the purpose of settling the issue definitely and permanently, and writing "finis" thereto, the question being explicitly left for determination "in an ordinary civil action," but merely to determine whether it should or should not be included in the inventory. This function of resolving whether or not property should be included in the estate inventory is, to be sure, one clearly within the Probate Court's competence, although the Court's determination is only provisional in character, not conclusive, and is subject to the final decision in a separate action that may be instituted by the parties. Since the determination by the Probate Court of the question of title to the fishpond was merely provisional, the fishpond cannot be the subject of execution, as against its possessor who has set up title in himself (or in another) adversely to the decedent, and whose right to possess has not been ventilated and adjudicated in an appropriate action. These considerations assume greater cogency where, as here, the Torrens title to the property is not in the decedents' names but in others. A separate action must be instituted by the administrator to recover the property. Decision of the CA AFFIRMED. ABS-CBN BROADCASTING CORPORATION, EUGENIO LOPEZ, JR., AUGUSTO ALMEDA-LOPEZ, and OSCAR M. LOPEZ vs. OFFICE OF THE OMBUDSMAN, ROBERTO S. BENEDICTO, EXEQUIEL B. GARCIA, MIGUEL V. GONZALES, and SALVADOR (BUDDY) TAN, Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and Augusto Almeda, all surnamed Lopez, in their capacity as officers and on behalf of petitioner ABS-CBN Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No. 133347, dismissing their petition for certiorari because of the absence of grave abuse of discretion in the Ombudsman Resolution which, in turn, found no probable cause to indict respondents for the following violations of the Revised Penal Code (RPC): (1) Article 298 – Execution of Deeds by Means of Violence or Intimidation; (2) Article 315, paragraphs 1[b], 2[a], and 3[a] – Estafa; (3) Article 308 – Theft; (4) Article 302 – Robbery; (5) Article 312 – Occupation of Real Property or Usurpation of Real Rights in Property; and (6) Article 318 – Other Deceits.

The assailed Decision disposed of the case on two (2) points: (1) the dropping of respondents Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this case due to their death, consistent with our rulings in People v. Bayotas1 and Benedicto v. Court of Appeals;2 and (2) our finding that the Ombudsman did not commit grave abuse of discretion in dismissing petitioners’ criminal complaint against respondents. Undaunted, petitioners ask for a reconsideration of our Decision on the following grounds: I. WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-AGREEMENT DATED 8 JUNE 1973 ARE PLAINLY IRRELEVANT TO ASCERTAINING THE CRIMINAL LIABILITY OF THE RESPONDENTS AND, THEREFORE, THE ISSUE AS TO WHETHER SAID AGREEMENT WAS RATIFIED OR NOT IS IMMATERIAL IN THE PRESENT CASE. II. WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD NOT BE DROPPED AS RESPONDENTS SIMPLY BECAUSE THEY MET THEIR UNTIMELY DEMISE DURING THE PENDENCY OF THE CASE.3 Before anything else, we note that petitioners filed a Motion to Refer the Case to the Court en banc.4 Petitioners aver that the arguments contained in their Motion for Reconsideration, such as: (1) the irrelevance of the civil law concept of ratification in determining whether a crime was committed; and (2) the continuation of the criminal complaints against respondents Benedicto and Tan who have both died, to prosecute their possible civil liability therefor, present novel questions of law warranting resolution by the Court en banc. In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification of the June 8, 1973 letter-agreement is immaterial to the determination of respondents’ criminal liability for the aforestated felonies in the RPC; and (2) the very case cited in our Decision, i.e. People v. Bayotas,5 allows for the continuation of a criminal case to prosecute civil liability based on law and is independent of the civil liability arising from the crime. We disagree with petitioners. The grounds relied upon by petitioners in both motions, being intertwined, shall be discussed jointly. Before we do so, parenthetically, the counsel for respondent Miguel V. Gonzales belatedly informed this Court of his client’s demise on July 20, 2007.6 Hence, as to Gonzales, the case must also be dismissed.1avvphi1 Contrary to petitioners’ assertion, their motion for reconsideration does not contain a novel question of law as would merit the attention of this Court sitting en banc. We also find no cogent reason to reconsider our Decision. First and foremost, there is, as yet, no criminal case against respondents, whether against those who are living or those otherwise dead. The question posed by petitioners on this long-settled procedural issue does not constitute a novel question of law. Nowhere in People v. Bayotas7 does it state that a criminal complaint may

continue and be prosecuted as an independent civil action. In fact, Bayotas, once and for all, harmonized the rules on the extinguished and on the subsisting liabilities of an accused who dies. We definitively ruled: From this lengthy disquisition, we summarize our ruling herein: 1. Death of an accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore." 2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission: a) Law b) Contracts c) Quasi-contracts d) xxx xxx xxx e) Quasi-delicts 3. Where the civil liability survives, as explained in Number 2 above, an action for recovery thereof may be pursued but only by filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation upon which the same is based as explained above. 4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code, that should thereby avoid any apprehension on a possible [de]privation of right by prescription. From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all died during the pendency of this case, should be dropped as party respondents. If on this score alone, our ruling does not warrant reconsideration. We need not even delve into the explicit declaration in Benedicto v. Court of Appeals.8 Second, and more importantly, we dismissed the petition for certiorari filed by petitioners because they failed to show grave abuse of discretion on the part of the Ombudsman when he dismissed petitioners’ criminal complaint against respondents for lack of probable cause. We reiterate that our inquiry was limited to a determination of whether the Ombudsman committed grave abuse of discretion when he found no probable cause to indict respondents for various felonies under the RPC.

The invocation of our certiorari jurisdiction over the act of a constitutional officer, such as the Ombudsman, must adhere to the strict requirements provided in the Rules of Court and in jurisprudence. The determination of whether there was grave abuse of discretion does not, in any way, constitute a novel question of law. We first pointed out in our Decision that the complaint-affidavits of petitioners, apart from a blanket charge that remaining respondents, Gonzales (who we thought was alive at that time) and Exequiel Garcia, are officers of KBS/RPN and/or alter egos of Benedicto, are bereft of sufficient ground to engender a wellfounded belief that crimes have been committed and that respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be held for trial. Certainly, no grave abuse of discretion can be imputed to the Ombudsman that would warrant a reversal of his Resolution. The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against respondents, Gonzales and Garcia, contained in their respective complaint-affidavits simply consisted of the following: 1. Complaint-affidavit of Eugenio, Jr. 32.1. I was briefed that Senator Estanislao Fernandez in representation of Benedicto, met with Senator Tañada at the Club Filipino in June 1976. Discussions were had on how to arrive at the "reasonable rental" for the use of ABS-CBN stations and facilities. A second meeting at Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Miguel Gonzales, a close associate and lawyer of Benedicto and an officer of KBS. xxxx 38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or damages caused to our assets occurred while Benedicto, Exequiel Garcia, Miguel Gonzales, and Salvador Tan were in possession, control and management of our network. Roberto S. Benedicto was the Chairman of the Board of KBS-RPN and its Chief Executive Officer (CEO), to whom most of the KBS-RPN officers reported while he was in Metro Manila. Miguel Gonzales, the Vice-President of KBS, and Exequiel Garcia, the Treasurer, were the alter egos of Benedicto whenever the latter was out of the country; x x x.9 2. Complaint-affidavit of Oscar 25. All the illegal activities as complained of above, were done upon the orders, instructions and directives of Roberto S. Benedicto, the Chairman of the Board and Chief Executive Officer of the KBS/RPN group; Miguel Gonzales and Exequiel Garcia, close colleagues and business partners of Benedicto who were either directors/officers KBS/RPN and who acted as Benedicto’s alter egos whenever the latter was out of the country; x x x. xxxx 38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Tañada at the Club Filipino on June 1976.

Discussions were had on how to arrive at the "reasonable rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Mike Gonzales, a close associate and friend of Benedicto and an officer of KBS.10 3. Complaint-affidavit of Augusto Almeda 21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel started making unauthorized withdrawals from the ABS Stock Room. All these withdrawals of supplies and equipment were made under the orders of Benedicto, Miguel Gonzales, Exequiel Garcia, and Salvador Tan, the Chairman, the Vice-President, Treasurer, and the General Manager of KBS, respectively. No payment was ever made by either Benedicto or KBS for all the supplies and equipment withdrawn from the ABS Broadcast Center. xxxx 31. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Tañada at the Club Filipino on June 1976. Discussions were had on how to arrive at the "reasonable rental" for the use of ABS stations and facilities. A second meeting at Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Mike Gonzales, a close associate and friend of Benedicto and an officer of KBS.11 From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy of non-interference with the Ombudsman’s finding of probable cause or lack thereof. On the strength of these allegations, we simply could not find any rational basis to impute grave abuse of discretion to the Ombudsman’s dismissal of the criminal complaints. Third, we did not state in the Decision that ratification extinguishes criminal liability. We simply applied ratification in determining the conflicting claims of petitioners regarding the execution of the letter-agreement. Petitioners, desperate to attach criminal liability to respondents’ acts, specifically to respondent Benedicto, alleged in their complaint-affidavits that Benedicto forced, coerced and intimidated petitioners into signing the letter-agreement. In other words, petitioners disown this letter-agreement that they were supposedly forced into signing, such that this resulted in a violation of Article 298 of the RPC (Execution of Deeds by means of Violence or Intimidation). However, three elements must concur in order for an offender to be held liable under Article 298: (1) that the offender has intent to defraud another. (2) that the offender compels him to sign, execute, or deliver any public instrument or document. (3) that the compulsion is by means of violence or intimidation.12

The element of intent to defraud is not present because, even if, initially, as claimed by petitioners, they were forced to sign the letter-agreement, petitioners made claims based thereon and invoked the provisions thereof. In fact, petitioners wanted respondents to honor the letter-agreement and to pay rentals for the use of the ABS-CBN facilities. By doing so, petitioners effectively, although they were careful not to articulate this fact, affirmed their signatures in this letter-agreement. True, ratification is primarily a principle in our civil law on contracts. Yet, their subsequent acts in negotiating for the rentals of the facilities ― which translate into ratification of the letteragreement ― cannot be disregarded simply because ratification is a civil law concept. The claims of petitioners must be consistent and must, singularly, demonstrate respondents’ culpability for the crimes they are charged with. Sadly, petitioners failed in this regard because, to reiterate, they effectively ratified and advanced the validity of this letter-agreement in their claim against the estate of Benedicto. Finally, we take note of the conflicting claim of petitioners by filing a separate civil action to enforce a claim against the estate of respondent Benedicto. Petitioners do not even specifically deny this fact and simply sidestep this issue which was squarely raised in the Decision. The Rules of Court has separate provisions for different claims against the estate of a decedent under Section 5 of Rule 86 and Section 1 of Rule 87: RULE 86. SECTION 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; otherwise they are barred forever, except that they may be set forth as counter claims in any action that the executor or administrator may bring against the claimants. Xxx Claims not yet due, or contingent, may be approved at their present value. RULE 87. SECTION 1. Actions which may and which may not be brought against executor or administrator. – No action upon a claim for the recovery of money or debt or interest thereon shall be commenced against the executor or administrator; but actions to recover real or personal property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or property, real or personal, may be commenced against him. If, as insisted by petitioners, respondents committed felonies in forcing them to sign the letter-agreement, petitioners should have filed an action against the executor or administrator of Benedicto’s estate based on Section 1, Rule 87 of the Rules of Court. But they did not. Instead they filed a claim against the estate based on contract, the unambiguous letter-agreement, under Section 5, Rule 86 of the Rules of Court. The existence of this claim against the estate of Benedicto as opposed to the filing of an action against the executor or administrator of Benedicto’s estate forecloses all issues on the circumstances surrounding the execution of this letter- agreement.

We are not oblivious of the fact that, in the milieu prevailing during the Marcos years, incidences involving intimidation of businessmen were not uncommon. Neither are we totally unaware of the reputed closeness of Benedicto to President Marcos. However, given the foregoing options open to them under the Rules of Court, petitioners’ choice of remedies by filing their claim under Section 5, Rule 86 ― after Marcos had already been ousted and full democratic space restored ― works against their contention, challenging the validity of the letter-agreement. Now, petitioners must live with the consequences of their choice. WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the Court en banc and the Motion for Reconsideration are DENIED. SO ORDERED. In the case of Aldamiz vs. Judge of the Court of First Instance of Mindoro, it was already held that the writ of execution was not the proper procedure for the payment of debts and expenses of the administration. The proper procedure is for the court to order the administratrix to make the payment; and if there is no sufficient cash on hand, to order the sale of the properties and out of the proceeds to pay the debts and expenses of the administration. GAVINO ALDAMIZ, as administrator of the estate of the deceased Santiago Rementeria y Aldamizcogeascoa, vs. THE JUDGE OF THE COURT OF FIRST INSTANCE OF MINDORO, THE PROVINCIAL SHERIFF OF MINDORO and JUAN L. LUNA, This is a petition for certiorari filed by Gavino Aldamiz, administrator of the testate of the deceased Santiago Rementeria y Aldamizcogeascoa, to set aside the order of the Court of First Instance of Mindoro issued in the said testate estate proceedings, fixing the amount of fees for respondent Juan L. Luna, as attorney for said administrator. The facts material to the issues raised in the petition are as follows: Santiago Rementeria y Aldamizcogeascoa, the decedent was a Spaniard and member of the commercial partnership "Aldamiz y Rementeria." The other members were the brothers, Gavino and Jose, surnamed Aldamiz. Santiago Rementeria died in Spain in 1937, and probate proceeding No. 705 was instituted in the same year in the Court of First Instance of Mindoro by Gavino Aldamiz represented by Atty. Juan L. Luna. Gavino Aldamiz was appointed administrator and as such was represented by respondent Atty. Juan Luna up to January 21, 1947, when the order complained for was issued. In that order it is said that "said attorney is the one who instituted this testate proceeding ten years ago and has from its incipiency to the present stage of the proceedings actively intervened in the same."lawphi1.net On January 15, 1947, After ten years from the date of his appointment, Gavino Aldamiz, as administrator, through his attorney, Juan L. Luna, submitted his accounts for the years 1944, 1945 and 1946 and also a project of partition with a view to closing the proceedings. On said date, the court approved the accounts by refused to approve the project of partition unless all debts including attorney's fees be first paid. In the project of

partition, it was expressly stated that attorney's fees, debts and incidental expenses would be proportionately paid by the beneficiaries after the closure of the testate proceedings, but the court refused to sanction this clause of the project. It is for this reason that right then and there, Attorney Luna, to comply with the wishes of the court, without previously preparing and filing a written petition to have his professional fees fixed, and without previous notice to all the interested parties, submitted evidence of his services and professional standing so that the court might fix the amount of his compensation and the administrator may make payment thereof. This failure to file a written claim and to notify the interested parties thereof was not due to bad faith or fraudulent purpose but to an honest belief on the part of the respondent attorney that such requirements were not necessary under the circumstance. In this connection, it must be stated, in justice to Attorney Luna, that during the ten years he served as attorney for the administrator and during the 25 years as legal consultants to Santiago Rementeria, Gavino Aldamiz and Jose Aldamiz individually and as commercial partnership under the firm name "Aldamiz y Rementeria," he never took the trouble of charging them for his professional services, thus showing disinterested and extreme liberality on his part due to friendship and other personal considerations toward his clients. And it is to be observed further that even after ten years of active work in the testate proceedings, when he wanted to close the same and it was then time for him to demand payment for his services, he showed no interest in demanding preferring to leave the matter to the future negotiation or understanding with the interested parties. And when the amount of his fees was fixed by the court and Gavino Aldamiz asked him for a substantial reduction, he answered that it was not he who had fixed the amount but the court, and advised his client to file a motion for reconsideration, with the assurance that he would offer no objection to any reduction in amount and to any extension of the time for paying what might be granted by the court. And again, when Gavino Aldamiz paid him P5,000 on account, respondent attorney told him that he would be satisfied with any additional amount that Gavino might later desire to pay him. Only subsequent occurrences which proved distasteful to the parties, led them to take steps which culminated in the filing of the instant civil action. At the time respondent's evidence was submitted to the court, the interested parties who were residing in the Philippines were Gavino Aldamiz and his brother Jose Aldamiz. The others were then residing in Spain. No written claim had ever been filed for respondent's fees, and the interested parties had not been notified thereof nor of the hearing, not even Gavino Aldamiz who did not know when he was called to testify that he would testify in connection with respondent's fees. The Court, after considering the whole evidence presented, issued its order of January 21, 1947, awarding respondent Attorney Luna, in payment of his professional services, an aggregate sum of P28,000 in the following manner.

1. For the institution, preparation of the pleadings in the voluminous probate case, allowance of the will, project of partition and the final closing of this proceeding, — P15,000; 2. For the registration of a parcel of land of seventy-eight hectares in favor of the testate, — P5,000; 3. For three naturalization cases at the rate of P1,000 each, — P3,000; and 4. For services rendered in the deduction of inheritance tax from P28,000 to P433.40 — P5,000. The Court ordered payment of these amounts within thirty days. Petitioner Gavino Aldamiz received copy of this order on February 21,1948. Out of the total amount of P28,000, petitioner was able to pay P5,000 only, and upon his failure to pay the balance of P23,000 after several demands made upon him by respondent attorney, the latter on April 17, 1948, filed an exparte motion for execution which was granted by the respondent Court on April 19,1948. Pursuant to the order of execution on two parcels of land belonging, not to the testate estate of Santiago Rementeria y Aldamizcogeascoa, but to the commercial partnership "Aldamiz y Rementeria" with a total area of three hundred fifty seven(357) hectares, more or less, assessed at one hundred eighty-two thousand, three hundred and sixty pesos (P182,360), which was sold at a public auction on July 20,1948, in favor of respondent attorney for only twenty thousand pesos(P20,000). This sale was made after preliminary injunction had been issued by this court in the instant case. We believe and so hold that the order of the respondent court issued on January 21,1948, fixing the amount of respondent attorney's fees is null and void. The correct procedure for the collection of attorney's fees, is for the counsel to request the administrator to make payment and file an actin against him in his personal capacity and not as an administrator should he fail to pay (Palileo vs. Mendoza, G.R. No. 47106, 40 Off. Gaz. [8th Supp.], 132.) 1 If the judgment is rendered against the administrator and he pays, he may include the fees so paid in his account to the court. (Uy Tioco vs. Imperial, 53 Phil., 802.) The attorney also may, instead of bringing such an action, file a [petition in the testate or intestate proceeding "asking that the court, after notice to all persons interested, allow his claim and direct the administrator to pay it as an expense of administration." (Emphasis ours.) (Escueta vs. Sy Juilliong, 5 Phil., 405.) In the instance case, as above stated, no written petition for the payment of attorney's fees has ever been filed by the respondent attorney and the interested parties had not been previously notified thereof nor of the hearing held by the court. Consequently, the order issued by the respondent court on January 21, 1947, and all subsequent orders implementing it, are null and void, as having been issued an excess of jurisdiction. We also hold that the order of execution issued on April 19,1948, is null and void, not only because it was intended to implement the order of January 21, 1947, which in itself was null and void, but because a writ of execution is not the proper procedure

allowed by the Rules of the Court for the payment of debts and expenses of administration. The proper procedure is for the court to order the sale of personal estate or the sale of mortgaged of real property of the deceased and all debts or expenses of administration should be paid out of the proceeds of the sale or mortgage. The order for the sale or mortgage should be issued upon motion of the administrator and with the written notice to all the heirs, legatees and devisees residing in the Philippines, according to Rule 89, section 3, and Rule 90, section 2. And when sale or mortgage of real estate is to be made, the regulations contained in Rule 90, section 7, should be complied with. Execution may issue only where the devisees, legatees or heirs have entered into possession of their respective portions in the estate prior to settlement and payment of the debts and expenses of administration and it is later ascertained that there are such debts and expenses to be paid, in which case "the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of their several liabilities, and order how much and in what manner each person shall contribute, and may issue execution if circumstances require" (Rule 89, section 6; see also Rule 74, section 4; Emphasis ours). And this is not the instant case. It is alleged by respondent that petitioner is guilty of laches. True that petitioner failed to appeal from the order of January 21, 1947, within the time provided by the Rules and the instant petition for certiorari was filed one (1) year, four (4) months and fourteen (14) days after petitioner had received a copy of said order. And we have held in Prifeta vs. David, 40 Off. Gaz., 14th Supp., p. 152, 2 that orders issued without previous notice to parties will be deemed cured if said parties fail to appeal within time provided by the rules and their appeal is lost due to their own negligence. But here, aside from petitioner, there are interested parties who have never been notified of the order complained of, and as to them, said order has not become final and executory . And with respect to petitioner, he has not lost his appeal through his own negligence. When he received the notice of the order of the Court fixing respondent's fees in the amount of P28,000, he immediately wrote his lawyer a letter asking for a substantial reduction and extension of time to pay. The lawyer answered advising him to file his motion for reconsideration within thirty days, but he received his lawyer's letter after said period had expired. And petitioner had no other attorney to advice him except respondent who was his adversary on the matter now in dispute. After receiving said letter, he again sought equitable compromise with respondent attorney and later paid him P5,000, and respondent then told him that he would be satisfied with whatever additional amount petitioner might desire to pay him. And petitioner would perhaps have taken no action were it not because without previous notice to him, the respondent attorney asked authority from the court to sell two parcels of land totalling 13 hectares, for the payment of said professional fees and later, on July 26, 1947, respondent attorney, again without previous notice to petitioner, filed a motion for execution for the same purpose. Both motions were, however, abandoned. But a second motion for execution was filed by respondent without petitioner's knowledge, which was granted by the Court on April 19, 1948. Respondent Sheriff levied

on two parcels of land belonging to the partnership "Aldamiz y Rementeria" with a total area of 357 hectares and assessed at P182,360 and the sale was announced by the sheriff for July 20, 1948. Two motions for consideration were filed by petitioner, one on June 16,1948, and the other on June 28, 1948, asking that the order of January 21, 1947, and the order of execution of April 19,1948 be set aside, but both motions were denied and the last order of denial is dated July 1,1948. The petition in the instant case was filed on July 17, 1948. We hold that under the circumstances, particularly the fiduciary relation between petitioner and respondent attorney, the former is not guilty of laches. Respondents maintain that the case for the petitioner is one of pure technicality, premised upon a supposed failure of the respondent attorney to follow a supposed procedure. It is said that the amount of P28,000 fixed and allowed by the respondent court as professional fees of the respondent attorney is not unconscionable or unreasonable because the entire estate was worth P315,112 and now it is worth about half a million pesos because of many improvements existing thereon. It appears, however, that due to lack of notice upon the interested parties mistakes have been committed by but the court which could have been avoided. For instance, the court awarded fees for services rendered not to the estate but to the other persons, such as the supposed services in connection with the petitions for naturalization filed in behalf of Gavino Aldamiz and Jose Aldamiz and the application for registration of a parcel of land of 78 hectares filed not in favor of the testate estate but of the partnership "Aldamiz y Rementeria." These services evidently could not be charged against the estate of Santiago Rementeria. And furthermore, due to lack of preparation on the part of respondent attorney, it appears that while he was testifying to his professional services he was apparently not sure of being able to recite them all for at the end of his testimony he said: "Son los servicios que me acuerdo ahora. . . ." Had he been afforded ample time to recollect the nature and details of his long and continuos services, considering his high professional standing as recited by the respondent court in its disputed order and the increased value of the estate then, perhaps, a more reasonable compensation would have been fixed, or at least, the court could have rendered a decision with full knowledge of all the facts and with justice to all the parties concerned. For all the foregoing, the order of the respondent court of January 21,1947, and all the subsequent orders implementing it, particularly the order of execution issued by the court on April 19, 1948, and the sale made by the sheriff on July 20,1948, in favor of respondent attorney, are null and void and are hereby set aside, with costs against respondents. It is so ordered. Intestate Estate of the late Florencio P. Buan and Rizalina Paras Buan, deceased. BIENVENIDO P. BUAN and A. NATIVIDAD PARAS, vs. SYLVINA C. LAYA, ET AL., Appeal from a decision of the Court of First Instance of Tarlac dated January 7, 1954, setting aside the previous Order dated December 16, 1953, which had admitted a contingent claim filed by petitioners-appellants but denied a petition to set aside an amount to answer the contingent claim.

The record discloses that on December 15, 1953, petitioners herein filed a contingent claim for more than P500,000 against the intestate estate of the deceased spouses Florencio P. Buan and Rizalina Paras Buan. The contingent claim was based on the fact that on August 3, 1952, a Philippine Rabbit Bus, owned and operated by the deceased spouses Buan, collided with a car in which Juan C. Laya, Rodolfo Escosa, Jose S. Palma, and Juan de Leon, were riding; that the collision was caused by the fact that the driver of the bus managed and drove the vehicle in a negligent manner; that as a consequence of the collision Juan C. Laya was killed and his companions suffered physical injuries. The driver of the bus was Ernesto Triguero, and he was charged with homicide and serious physical injuries through reckless imprudence and was sentenced therefor. The heirs of Juan C. Laya, petitioners herein, reserved the civil action for damages, and on October 12, 1953, they filed an independent civil action in the Court of First Instance of Manila against the administrator of the deceased spouses Buan. The petition for the admission of a contingent claim was accompanied with a copy of the complaint filed in the civil case above-mentioned (No. 20867, CFI Manila) and a sentence in the criminal case filed against Ernesto Triguero, driver of the Philippine Rabbit Bus. When the administrators learned of the filing of the contingent claim in the Court of First Instance of Tarlac, they filed an opposition thereto on the ground that the same was not filed before the death of the spouses Florencio Buan and Rizalina Paras Buan, which took place on January 3, 1953, and that it was also not filed within the period prescribed by Rule 89, Section 4 of the Rules of Court. The Court of First Instance of Tarlac admitted the claim in an order dated December 16, 1953, but denied the prayer that a portion of the estate be set aside to respond for the amount of the contingent. Counsel for the administrators then moved to set aside the order. In an order dated November 25, 1953, Judge Agustin P. Montesa, sitting as Judge for the Court of First Instance of Manila, held that the civil action filed in Manila by the heirs of Laya, petitioners herein, Civil Case No. 20867, was premature because the sentence of conviction of the driver of the bus had not become final. The court also ordered the plaintiffs to amend their complaint within 10 days. Thereupon, the plaintiffs in said civil case (C.F.I. Manila, No. 20867) filed an amended complaint, dated December 18, 1953.lawphi1.net In the meantime and on January 7, 1954, the Court of First Instance of Tarlac, on a motion for reconsideration filed by the administrators dated January 2, 1954, set aside its previous order of December 16, 1953, admitting the contingent claim of petitioners. The reason for the admission of the claim, according to the court, had ceased to exist and even the plaintiffs had filed the amended complaint in the Court of First Instance of Manila, the same has not yet been acted upon by the said court. A motion to reconsider this order of the Court of First Instance of Tarlac having been denied, petitioners have prosecuted this appeal to Us. A consideration of the facts and the proceedings set forth above will readily show that the order of the Court of First Instance of Tarlac dismissing the contingent claim is based on incorrect and

erroneous conception of a contingent claim. A contingent claim is one which, by its nature, is necessarily dependent upon an uncertain event for its existence or validity. It may or may not develop into a valid and enforceable claim, and its validity and enforceability depending upon an uncertain event. (E. Gaskell & Co. vs. Tan Sit, 43 Phil. 810, 813; 2 Moran, Comments on the Rules of Court, 1957 edition, pp. 425-426.). A 'contingent claim' against an estate within the statute providing for the settlement hereof, as one where the absolute liability depends on some future event which may never happen, and which therefore renders such liability uncertain and indeterminable. . . It is where the liability depends on some future event after the debtor's death which may or may not happen, and therefore makes Words and Phrases, p. 113.). A 'contingent claim' against an estate is one in which liability depends on some future event which may or may not occur, so that duty to pay may never become absolute. (In Re Flewell, 276 N. W. 732, 733; 9 Words and Phrases, p. 114.). Whether or not the heirs of the deceased, Juan C. Laya, would succeed in the action brought in Manila against the administrators of the estate of the deceased spouses Florencio Buan and Rizalina P. Buan, is the uncertain event or contingency upon which the validity of the claim presented in the administration proceedings depends. While the said action has not yet been finally decided or determined to the effect that the petitioners herein, heirs of the deceased Juan C. Laya, have no right of action against the estate of the deceased spouses Florencio P. Buan and Rizalina P. Buan, the contingent claim that petitioners have filed in the Court of First Instance of Tarlac in the proceedings for the administration of the deceased spouses Florencio P. Buan and Rizalina P. Buan, may not be dismissed. The order of the court dismissing the claim and declaring that the same may again be entertained if another valid complaint by the petitioners herein is filed in the Court of First Instance of Manila, is inconsistent with the nature and character of a contingent claim. A contingent claim does not follow the temporary orders of dismissal of an action upon which it is based; it awaits the final outcome thereof and only said final result can cause its termination. The rules provide that a contingent claim is to be presented in the administration proceedings in the same manner as any ordinary claim, and that when the contingency arises which converts the contingent claim into a valid claim, the court should then be informed that the claim had already matured. (Secs. 5. 9, Rule 87.) The order of the court subject of the appeal should, therefore, be set aside. The first order of the court admitted the claim but denied the petition for the setting aside of a certain amount from the estate to respond therefor. The validity of the contingent claim is apparent; as the driver of the bus belonging to the deceased spouses, Florencio P. Buan and Rizalina P. Buan, was found guilty of negligence, as a result of which Juan C. Laya died, the said deceased spouses—the employers of the driver—can be made responsible, as masters of a servant, for damages for the death of the petitioner's father. A portion of the estate should therefore, be set aside to respond for such damages as petitioners herein may subsequently recover in the action they have brought in the

Court of First Instance of Manila. This amount should be fixed in the court below. For the foregoing considerations, the order of the court dismissing the contingent claim filed by petitioners is hereby set aside. It is hereby ordered that the claim be allowed to continue, and it is further ordered that the court fix an amount that may be set aside to respond for the damages that the petitioners herein may ultimately recover. Costs against the respondents. Intestate Estate of the deceased Lee Liong. RAFAEL A. DINGLASAN, ET ALS. vs. ANG CHIA, as Administratrix of the above intestate, LEE BING HOO alias CLARO LEE, and LEE BUN TING FACTS: - Rafael Dinglasan et al. filed a civil case (no. V-331) in the Court of First Instance of Capiz on February 16, 1948, against Ang Chia, her son Claro Lee and one Lee Bun Ting to recover the ownership and possession of a parcel of land located in Capiz. They also filed a motion for the appointment of a receiver. - The counsel for defendants objected on the basis that there was a pending case in the same court concerning the intestate estate of Lee Liong. - The plaintiffs withdrew the motion and they filed an amended complaint seeking the inclusion as party-defendant of the administratix of the estate, who is the widow Ang Chia. The plaintiffs also filed in the intestate proceedings a verified claim in intervention and a motion praying that a co-administrator of the estate be appointed and the bond of the administratrix be increased. The plaintiffs made of record the pendency of the civil case and prayed that the intestate proceedings be not closed until said civil case shall have been terminated. - Thereafter, the administratrix filed a motion to dismiss the claim in intervention and objected to the abovementioned motions made by the plaintiffs. - On August 4, 1948, the trial court : (a) issued an order denying the petition for a co-administrator but increasing the bond to P5,000, (b) stated that it would act thereon if a motion to close the intestate proceedings is presented in due time and is objected to by petitioners, and (c) took cognizance of the pendency of said civil case No. V-331. - The administratrix did not appeal from said order nor file a new bond and instead moved for the closing of the proceedings and her discharge as administratrix on the ground that the heirs had already entered into an extrajudicial partition of the estate. The petitioners objected. - On July 15, 1949, CFI of Capiz issued in the intestate estate proceedings an order holding in abeyance the approval of their petition for an extra-judicial partition the closing of said proceedings until after the final termination of Civil Case No. V331 of the same court. Hence, this appeal.

Issues: WON the lower court erred: 1. in taking cognizance of and being guided by the supposed "claim" of petitioners-appellees and in ordering the administratrix to file an increased bond of P5,000. [It did not err in view of the fact that the appellants did not appeal from the court’s order of August 4. Moreover, an order requiring the filing of a new bond by the administratrix is interlocutory in nature and is solely addressed to the sound discretion of the court. ] 2. in holding in abeyance the closing of the intestate proceedings pending the termination of the separate civil action filed by the petitioners-appellees. [It did not err because a probate case may be held in abeyance pending determination of ordinary case because to hold otherwise would render some rules in the ROC nugatory.] Ratio: 1. It really appears from the record that the order increasing the bond of the administratrix to P5,000 was issued on August 4, 1948, and from said order no appeal has been taken by the appellants which has become final long ago and that the present appeal is only from the order of the lower court dated July 15, 1949. The act of the lower court in taking cognizance of civil case No. V331 is not tantamount to assuming jurisdiction over said case nor does it violate the ruling of this court in Guzaman vs Anog and Anog which says that "when questions arise as to the ownership of property, alleged to be part of the estate of a deceased person, but claimed by some other person to be his property, not by virtue of any right of inheritance from the deceased, but by title adverse to that of the deceased and his estate, such questions cannot be determined in the course of administration proceedings. The Court of First Instance, acting as probate court, has no jurisdiction to adjudicate such contentions, which must be submitted to the court in the exercise of its general jurisdiction as a Court of First Instance to try and determine ordinary actions. . . ." The court is justified in taking cognizance of said civil case because of the unavoidable fact that whatever is determined in said civil case will necessarily reflect and have a far reaching consequence in the determination and distribution of the estate. In so taking cognizance of civil case No. V-331 the court does not assume general jurisdiction over the case but merely makes of record its existence because of the close interrelation of the two cases and cannot therefore be branded as having acted in excess of its jurisdiction. 2. Appellants' claim that the lower court erred in holding in abeyance the closing of the intestate proceedings pending determination of the separate civil action for the reason that there is no rule or authority justifying the extension of administration proceedings until after the separate action pertaining to its general jurisdiction has been terminated, cannot entertained. Section 1, Rule 88, of the Rules of Court, expressly provides that "action to recover real or personal property from the estate or to enforce a lien thereon, and actions to recover

damages for an injury to person or property, real or personal, may be commenced against the executor or administrator". This rule is but a corollary to the ruling which declares that questions concerning ownership of property alleged to be part of the estate but claimed by another person should be determined in a separate action and should be submitted to the court in the exercise of its general jurisdiction. Another rule of court provides that "after a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased." (Section 17, Rule 3.) Order AFFIRMED. Doctrine: A probate court’s jurisdiction is limited and special. But by taking cognizance of civil case, the court does not assume general jurisdiction over the case but merely makes of record its existence because of the close interrelation of the two cases.

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