MARIA G. AGUAS v.

HERMOGENES LLEMOS +
DECISION
116 Phil. 112

REYES, J.B.L., J.:

On 14 March 1960, Francisco Salinas and the spouses Felix Guardino and Maria Aguas jointly filed an action in the Court of First
Instance of Catbalogan, Samar (Civil Case No. 4824), to recover damages from Hermogenes Llemos, averring that the latter served
them by registered mail with a copy of a petition for a writ of possession, with notice that the same would be submitted to the said court
of Samar on February 23, 1960 at 8:00 a. m.; that in view of the copy and notice served, plaintiffs proceeded to the court from their
residence in Manila accompanied by their lawyers, only to discover that no such petition had been filed; and that defendant Llemos
maliciously failed to appear in court, so that plaintiffs' expenditure and trouble turned out to be in vain, causing them mental anguish
and undue embarrassment.
On 1 April 1960, before he could answer the complaint, the defendant died. Upon leave of court, plaintiffs amended their complaint to
include the heirs of the deceased.
On 21 July 1960, the heirs filed a motion to dismiss, and by order of 12 August 1960, the court below dismissed it, on the ground that
the legal representative, and not the heirs, should have been made the party defendant; and that anyway the action being for recovery of
money, testate or intestate proceeding should be initiated and the claim filed therein (Rec. on Appeal, pp. 26-27).
Motion for reconsideration having been denied, the case was appealed to us on points of law.
Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the Rules of Court, those concerning claims that
are barred if not filed in the estate settlement proceedings (Rule 87, sec. 5) and those defining actions that survive and may be
prosecuted against the executor or administrator (Rule 88, sec. 1), it is apparent that actions for damages caused by tortious conduct of
defendant (as in the case at bar) survive the death of the latter. Under Rule 87, section 5, the actions that are abated by death are: (1)
claims for funeral expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money
against the decedent, arising from contract express or implied". None of these includes that of the plaintiffs-appellants; for it is not
enough that the claim against the deceased party be for money, but it must arise from "contract express or implied", and these words
(also used by the Rules in connection with attachments and derived from the common law) were construed in Leung Ben vs. O'Brien, 38
Phil. 182, 189-194,
"to include all purely personal obligations other than those which have their source in delict or tort"
Upon the other hand, Rule 88, section 1, enumerates actions that survive against a decedent's executors or administrators, and they are:
(1) actions to recover real and personal property from the estate; (2) actions to enforce a lien thereon; and (3) actions to recover
damages for an injury to person or property. The present suit is one for damages under the last class, it having been held that "injury to
property" is not limited to injuries to specific property, but extends to other wrongs by which personal estate is injured or diminished
(Baker vs. Crandall, 47 Am. Rep. 126; also 171 A. L. R. 1395). To maliciously cause a party to incur unnecessary expenses, as charged in
this case, is certainly injury to that party's property (Javier vs. Araneta, 90 Phil., 287).
Be that as it may, it now appears from a communication from the Court of First Instance of Samar that the parties have arrived at an
amicable settlement of their differences, and that they have agreed to dismiss this appeal. The settlement has been approved and
embodied in an order of the Court of First Instance.
The case having thus become moot, it becomes unnecessary to resolve the questions raised therein. This appeal is, therefore, ordered
dismissed, without special pronouncement as to costs.
 BANK OP PHILIPPINE ISLANDS v. V. CONCEPCION E HIJOS +
DECISION
53 Phil. 806

OSTRAND, J.:
It appears from the record that on July 6, 1921, the defendants Coneepcion 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 Messrs.
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 (F5,000) 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 mortgaged
property for the full amount of the judgment.
After further conversation with the representatives of the plaintiff bank, Elser on April 21, 1922, wrote it the following letter:
"DEAR SIRS (Attention of Mr. Zaragoza): With reference to our recent conversation regarding the R. Hidajgo 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 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 a 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 the Philippine Islands domiciled at No. 861 Calle R. Hidalgo,
District of Quiapo, City of Manila, represented herein by its 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 the 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 resident of the 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 Ooncepcion as joint and 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 San Sebastian, District of Quiapo. Bounded on
the N. by Calle San Sebastian; on the E. by property of Maximino Paterno and Manuel Zamora; on the S. by property of the City of
Manila; and on the W. by the Estero de Curtidor; containing an area of 5,686.30 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
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 the 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.
"Whereas, on February 8,1922 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.
"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 the 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, interests, 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 received 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 these presents in the 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 on June 15, 1922, it petitioned the court to include
Henry W. Elser as a defendant in the complaint, on the strength of the obligations assumed by him in said agreement.
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.
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.
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 that ground.
On October 16, 1922, the defendant Elser demurred to the amended complaint on the ground that it failed to allege 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 was alleged that the sale from the Concepcions to
Elser was with the knowledge and consent of the plaintiff but without waiver of its 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 a
debtor and on the further ground that there was no showing therein as to the disposition of the collateral security held by 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.
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, Henry W. 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 and that he had been induced to
sign the same by false representations on the part of the Concepcions to the effect that the plaintiff had agreed that he be substituted in
place of the 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 would 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 thereto 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. :
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 defendant, and that the action be continued against
Rosenstock in that 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, on the ground that, as to 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 cross-complaint 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 a
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 the execution thereof, Elser was of unsound
mind; and a statement of willingness to relinquish and abandon any rights Elser might have acquired under said document in favor of
the plaintiff.
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 at 9 per cent and costs, and providing for the sale of the
mortgaged property, in case of non-payment of the judgment.
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's 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 stipulations pour autrui is so thoroughly discussed in the case of Uy Tarn 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 and that it is not sufficient that the third person may be incidentally benefited by the 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 a 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 Concepcions and Elser contained any
stipulation pour autrui in favor of the plaintiff. As stated in the appellee's brief:
The Concepcions owed the plaintiff a large sum of money and wanted to be relieved of that obligation. Elser wanted the property which
had been mortgaged to secure that obligation, and had to assume the obligation and agree to secure the discharge of the Concepcions
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 mortgage debt by Elser, but is a provision for
the subrogation of Elser to the Concepcions obligation to the plaintiff. Inasmuch as the mere assumption of the mortgage debt by the
purchaser of mortgaged land does not relieve the mortgagor from his liability, it might be said with 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
purchaser 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 that has not been done here. The
plaintiff asserts that it accepted the stipulation 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 mortgaged property who assumes the payment of the mortgage
debt, may for that reason alone be sued for the debt by the creditor and that that rule is applicable in this jurisdiction. Aside from the
fact we are not here 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 a 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 the 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 only 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 the payment of said debt may have been transferred to a third person. While the Mortgage Law of 1893 eliminated these
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 the giving of 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 Concepcions, and not the
plaintiff, might have maintained an action against the Elser estate; but that action is now barred through their failure to present their
claim in time to the committee of claims and appraisal in the probate proceedings, and the plaintiff can therefore, not successfully
invoke 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 credits and choses in action for the collection of the 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 his security, by ordinary action in court, making the executor or
administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property
pledged, in the foreclosure or other proceeding to realize upon the security, he may prove his deficiency judgment before the committee
against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within
the period of the statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the
distribution of the other assets of the estate; * * * "
As will be seen, the mortgagee has the election of one out of three courses: (1) He may abandon his security and share in the general
distribution of the assets of the estate, or (2) he may foreclose, secure a deficiency judgment and prove his deficiency judgment before
the committee, or (3) he may rely upon his security alone, in which case he can receive no share in the distribution of the assets of the
estate.
In this case the bank did not abandon the security and took no steps of any sort before the committee within the time limit provided for
by sections 689 and 690 of the Code of Civil Procedure. The committee ceased to function long ago, and the bank has now nothing to
rely on except the mortgage. Intentionally or not, it has brought itself within the third course provided for in 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 had been
effected; that section 708 expressly provides for the proof of the deficiency judgment before the committee after the sale of the
mortgaged property; that these provisions must be construed to mean that the presentation and prosecution of the claim for the
deficiency must be made after, and not before, the sale; and that if the mortgagee presents his claim for the deficiency before a
deficiency judgment has been rendered, he will lose his rights under the mortgage and be regarded as having abandoned his security.
This is clearly a misconception of the statute, and the cases cited by the appellant in support of its contention are not in point. Until the
foreclosure sale is made, the demand for the payment of the deficiency is a contingent claim within the meaning of sections 746, 747,
and 748 of the Code of Civil Procedure, which sections read as follows:
"SEC. 746. Claims may be presented to committee. If a person is liable as surety for the deceased, or has other contingent claims against
his estate which cannot be proved as a debt before the committee, the same may be presented with the proof, to the committee, who
shall state in their report that such claim was presented to them.
"SEC. 747. Estate to be retained to meet claims. If the court is satisfied 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 retain 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 claim 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 before the committee already
appointed, or before others to be appointed, for that purpose, as if presented for allowance before the committee had made its report."
These sections are in entire harmony with section 708; the amount of the deficiency cannot be ascertained or proven until the
foreclosure proceedings have terminated, but the claim for the deficiency must be presented to the committee within the period fixed by
sections 689 and 690 of the Code. The committee does not then pass upon the validity of the claim but reports it to the court. If the
court "from the report of the committee" or from "the proofs exhibited to it" is satisfied that the contingent claim is valid, the executor
or administrator may be required to retain in his possession sufficient assets to pay the claim when it becomes absolute, or enough to
pay the creditor his proportionate share if the assets of the estate are insufficient to pay the debts. When the contingent claim has
become absolute, its amount may be ascertained and established in the manner indicated by sections 748 and 749. As will be seen, the
bank both could and should have presented its claim to the committee within the time prescribed by the law. The concurring opinion of
Justices Malcolm and Fisher in the case of Jaucian vs. Querol (38 Phil., 707), contains a very lucid exposition 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 plaintiffappellant. So ordered.
THE IMPERIAL INSURANCE, INC., plaintiff-appellee,
vs.
EMILIA T. DAVID, defendant-appellant.

RELOVA, J.:
Petition for review on certiorari of the decision rendered by the then Court of First Instance of Manila in Civil Case No. 67713, sustaining
the money claims of plaintiff-appellee, The Imperial Insurance, Inc. against defendant-appellant Emilia T. David, based on three (3)
different causes of action in the complaint.
The first two causes of action involve the indemnity agreements which defendant-appellant and her deceased husband, Felicisimo V.
Reyes, jointly and severally, executed in favor of herein appellee, for and in consideration of two (2) surety bonds underwritten by it to
lift the lift the writs of attachment in Civil Case No. 5213 of the Rizal Court of First Instance for the amount of P60,000.00, and in Civil
Case No. Q-5214, also with the same court for the amount of P40,000.00
The third cause of action involves accrued premiums and documentary stamps for four (4) years with legal interest therein from the
filing of the complaint also underwritten by appellee.
Records show that Felicisimo V. Reyes and his wife, herein appellant, executed two (2) indemnity agreements in favor of appellee
jointly and severally to assure indemnification of the latter for whatever liability it may incur in connection with its posting the security
bonds to lift the attachments in Civil Case No. Q-5213 for the amount of P60,000.00, and in Civil Case No. Q-5214 for the amount of
P40,000.00, for the benefit of Felicisimo V. Reyes.
Later, Felicisimo V. Reyes and his wife, 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. On the same date, Felicisimo V. Reyes and his wife paid to appellee the sum of P153.33
covering the premium and other expenses for the homestead bond on the first year.
Felicisimo V.Reyes died and Special Proceedings No. 12948 of the then Court of First Instance of Bulacan, entitled "In the Matter of the
Instestate of Felicisimo V. Reyes," was commenced. His wife, herein appellant, qualified and took her oath of office as the administratrix
of said intestate estate. Corresponding notices to creditors were issued and published for three (3) consecutive weeks in the "Manila
Chronicle" and were duly posted in the required places.
Meanwhile, judgment was rendered in the aforesaid two cases (Civil Cases Nos. Q-5213 and Q-5214) against the spouses Felicisimo
V. Reyes and appellant Emilia T. David which has become final and executory. Writs of execution of the decision on the said cases
were returned unsatisfied. As a consequence, judgment was rendered against the surety bonds for the sum of P60,000.00 in Civil Case
No. Q-5213 and for the sum of P40,000.00 in Civil Case No. Q-5214.
Appellee made demands on Emilia T. David to pay the amounts of P60,000.00 and P40,000.00 under the surety bonds and arrears in
premiums thereon. When appellant David failed to make payments, appellee filed Civil Case No. 67713 in the then Court of First
Instance of Manila, Branch 1, for collection of sums of money under three (3) different causes of action.
A motion to dismiss was filed by herein appellant on the following grounds. to wit: (1) the court has no jurisdiction over the nature of the
action or suit; (2) the complaint states no cause of action; and (3) the plaintiff's causes of action, if there be any, have been barred for
its failure to file its claims against the estate of the deceased Felicisimo V. Reyes in due time.
The lower court denied the motion for lack of merit. Thereafter, appellant, as defendant in said Civil Case No. 67713, filed her answer.
After trial, the court rendered judgment ordering defendant Emilia T. David (herein appellant)
1. to pay the plaintiff under the first cause of action, the amount of P60,000.00 with interest at legal rate from the filing
of the complaint until fun payment shall be effected; and a further sum of P1,522.50 annually from June 20, 1961 until
termination of this case, said amount representing premiums and documentary stamps in the surety bond, Exh. "B",
with interest at legal rate from the filing of the complaint until full payment is made;
2. to pay the plaintiff under the second cause of action, the amount of P40,000.00 with interest at the legal rate from
the filing of the complaint until full payment shag be made; and a further sum of P1,105.00 annually from June 20,
1961 until termination of this case, said amount representing premiums and documentary stamps on the surety bond
Exh. "B", with interest at the legal rate from the filing of the complaint until full payment is made;
3. to pay the plaintiff under the third cause of action the amount of P153.33 annually for a period of 4 years from June
29, 1962 representing premiums and documentary stamps on the Homestead Bond Exh. "C-1" with interest at the
legal rate from the filing of the complaint until full payment is made;
4. to pay the plaintiff in concept of attorney's fees the sum of P20,000.00, representing 20% of the principal claim of
plaintiff; plus cost. (pp. 39-40, Rollo)
The principal issue raised by appellant Emilia T. David in this appeal is whether or not the lower court has jurisdiction over plaintiff's
causes of action. She contends that appellee's claim should have been presented according to Rule 86 of the Revised Rules of Court
and its failure to do so operates to bar its claim forever; that the complaint failed to state a cause of action; that the writ of attachment
was improvidently issued; and, that the lower court should have discharged the writs. Further, she argues that the judgment on
attorney's fees has neither legal nor factual basis.
We find no merit in this appeal. 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. Thus, if husband and wife bound themselves jointly and
severally, in case of his death her liability is independent of and separate from her husband s; she may be sued for the whole debt and
it would be error to hold that the claim against her as well as the claim against her husband should be made in the decedent's estate.
(Agcaoili vs. Vda. de Agcaoili, 90 Phil. 97)
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 liable
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.
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. (Philippine International Surety Co., Inc. vs.
Gonzales, 3 SCRA 391)
 And, in Manila Surety and Fidelity Co., Inc. vs. Villarama, et al., 107 Phil. 891, this Court ruled that the Rules of Court
provide the procedure should the creditor desire to go against the. deceased debtor, "but there is noting in the aid
provision making compliance with such procedure a condition precedent an ordinary action against the solidary
debtors. should the creditor choose to demand payment from the latter, could be entertained to the extent that failure
to observe the same would deprive the court jurisdiction to make cognizance of the action against the surviving
debtors. Upon lie other hand, the Civil Code expressly allows the creditor to proceed against any one of the solidary
debtors or some or all of them simultaneously. Hence, there is nothing improper in the creditor's filing of an action
against the surviving solidary debtors alone, instead of instituting a proceeding for the settlement of the estate of the
deceased debtor wherein his claim could be filed.
ACCORDINGLY, the decision of the court a quo is hereby AFFIRMED in toto with costs against appellant.
SO ORDERED.
Santos vs. Manarang Facts: Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and personal property
which, by his last will and testament, he left to his three children. The fourth clause of this will reads as follows: I also declare that I have
contracted the debts detailed below, and it is my desire that they may be religiously paid by my wife and executors in the form and at
the time agreed upon with my creditors. Among the debts mentioned in the list referred to are two in favor of the plaintiff, Isidro Santos;
one due on April 14, 1907, for P5,000, and various other described as falling due at different dates (the dates are not given) amounting
to the sum of P2,454. The will was duly probated and a committee was regularly appointed to hear and determine such claims against
the estate as might be presented. This committee submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff,
Isidro Santos, presented a petition to the court asking that the committee be required to reconvene and pass upon his claims against
the estate which were recognized in the will of testator. This petition was denied by the court, and on November 21, 1910, the plaintiff
instituted the present proceedings against the administratrix of the estate to recover the sums mentioned in the will as due him. Relief
was denied in the court below, and now appeals to this court. Issue: Whether or not petitioner’s claim is within the purview of the
committee’s jurisdiction. Ruling: YES 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.) It is evident from the brief outline of the sections referred to above that the Code of Civil
Procedure has established a system for the allowance of claims against the estates of decedents. Those are at least two restrictions
imposed by law upon the power of the testator to dispose of his property, and which pro tanto restrict the maxim that "the will of the
testator law: (1) His estate is liable for all legal obligations incurred by him; and (2) he can not dispose of or encumber the legal portion
due his heirs by force of law. The former take precedence over the latter. (Sec. 640, Code Civ, Proc.) In case his estate is sufficient
they must be paid. (Sec, 734, id.) In case the estate is insolvent they must be paid in the order named in section 735. It is hardly
necessary to say that a provision in an insolvent's will that a certain debt be paid would not entitle it to preference over other debts. But,
if the express mention of a debt in the will requires the administrator to pay it without reference to the committee, what assurance is
there, in the case of an insolvent estate, that it will not take precedence over preferred debts? If it is unnecessary to present such claim
to the committee, the source of nonclaims is not applicable. It is not barred until from four to ten years, according to its classification in
chapter 3 of the Code of Civil Procedure, establishing questions upon actions. Under such circumstances, when then the legal portion
is determined? If, in the meantime the estate has been distributed, what security have the differences against the interruption of their
possession? Is the administrator required to pay the amount stipulated in the will regardless of its correctness? And, if not, what
authority has he to vise the claim? Section 706 of the Code of Civil Procedure provides that an executor may, with the approval of the
court, compound with a debtor of deceased for a debt due the estate, But he is nowhere permitted or directed to deal with a creditor of
the estate. On the contrary, he is the advocate of the estate before an impartial committee with quasi-judicial power to determine the
amount of the claims against the estate, and, in certain cases, to equitably adjust the amounts due. The administrator, representing the
debtor estate, and the creditor appear before this body as parties litigant and, if either is dissatisfied with its decision, an appeal to the
court is their remedy. To allow the administrator to examine and approve a claim against the estate would put him in the dual role of a
claimant and a judge. The law in this jurisdiction has been so framed that this may not occur. The most important restriction, in this
jurisdiction, on the disposition of property by will are those provisions of the Civil Code providing for the preservation of the legal
portions due to heirs by force of law, and expressly recognized and continued in force by sections 614, 684, and 753 of the Code of
Civil Procedure. But if a debt is expressly recognized in the will must be paid without its being verified, there is nothing to prevent a
partial or total alienation of the legal portion by means of a bequest under a guise of a debt, since all of the latter must be paid before
the amount of the legal portion can be determined. 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 anasset 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. 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. Gotamco vs. Chan Seng Facts: Antonio Tanpoco died in the year
1920 and left a will dividing his estate of over P300,000 among four sons, one-half of which he bequeathed to Tan Kim Hong, the
claimant, whom he described in his will as his legitimate son, and the other half he left in equal shares to his three adopted sons, Tan
Kimco. Tan Kimbio and Tan Kim Choo, and appointed Go Siu San, a resident of Manila, as executor of his will, which provided that no
bond should be required. Two Chinese named Tan Kim Lay and Te Sue, one of Tarlac and the other of Manila, were appointed and
qualified as commissioners, and later they published the usual notice to creditors to present their claims within six months at the office
of Attorney M. G. Goyena, of Manila. The commissioners presented their report to the court in which, among others, they reported the
allowance of the claim here in question. At the time all of the heirs, including Tan Kim Hong, were minors and had lived in China since
the death of Antonio Tanpoco, as also had the widow of the deceased. When such report has been filed, the executor filed a motion
asking for the appointment of an attorney of his own choice as curador ad litem for the minor heirs which, among other things, that the
heirs who are interested in the estate of the above entitled action are all minors, to wit: Tan Kimco, age 20; Tan Kim Hong, age 12; Tan
Kimbio, age 11; and Tan Kim Choo, age 4; and that all the above heirs are now in China, and the day of their return to the Islands is
unknown to the administrator of the estate which court ignored but appointed Mr. Canillas who considered such appointment as only
formality such that he did not make any investigations thereof and hence, the report was approved. In September, 1922, they arrived in
Manila and employed counsel to represent and protect their interest, and it was then that Chan Seng learned for the first time of the
allowance of the claim in favor of Tan Kim Hong. Upon her motion, on November 27, 1922, Judge Harvey ordered an investigation of
the administration of Go Siu San as executor, which was made by Mr. Felipe Canillas, who still held the position of curador ad litem of
all the minor heirs, including the claimant, who made a written report to the court. The report concluded with a recommendation for the
removal of the executor for gross misconduct and fraud, and the annulment of the claim of Tan Kim Hong. After the report was filed, a
hearing was had and testimony was taken, and Judge Harvey removed Go Siu San as executor, and in his order of removal, among
other things, said that commissioners Te Sue and that he had not received any claim; that the claims which appears in the report were
taken from the books of the business of the deceased, Antonio Tanpoco; nevertheless, the claim of Tan Peng Sue does not appear in
the report of these commissioners on claims although it appears in the books and was afterwards accepted by the commissioners last
appointed. After such proceedings, nothing was further done until November 14, 1923, when the present administrator applied to the
court for authority, among other things, to pay the claim in question, to which the appellee appeared and objected. The court denied the
application of the present guardian to the claimant to require the administrator to pay the claim in question upon the ground that it was
void and fictitious, from which Tan Kim Hong appeals, contending that the lower court erred in hearing and sustaining the objections to
the allowance of the claim, and in denying the motion of the administrator for authority to pay the claim, alleging that the report of the
committee allowing the claim was made and filed on June 29, 1921, and contends that it became automatically final on July 14, 1921;
that the opponent should have made her opposition within the time specified in the Code, and that her failure to take the statutory
appeal is a bar to all defenses, citing and relying upon the case of De los Santos vs. Reyes. Issue: Whether or not the claim was timely
filed and presented and that such filing became final. Held: NO. The court found as a fact that in the De los Santos vs. Reyes case,
supra, there was a substantial compliance with all of the statutory requirements, and the decision in that case was based upon that fact.
But there is a marked distinction between the facts there and those in the instant case. Here, all of the parties in interest were minors.
The evidence is conclusive that at the time the alleged claim was allowed, Tan Kim Hong was only twelve years of age, and that all of
the other parties were minors. There is no claim or pretense that Tan Kim Hong had a guardian or that anyone had the legal authority to
appear for and present his claim or to represent him, or that his claim was ever presented. There is no claim or pretense that any of the
parties in interest had any knowledge of the fact that the claim was presented and allowed before they came to Manila from China in
September, 1922. As a matter of fact, there is no evidence that the claim in question in any manner, shape or form was ever presented
to the commissioners by anyone. For aught that appears in the record, the claim was allowed by the commissioners on their own
motion and of their own volition. It also appears that the entries which were made in the books of the deceased were made by his
bookkeeper, and there is nothing to show that they were made by the authority of the deceased. It is very significant that the will of the
deceased was made sometime after the entries were made, and that no reference whatever is made in the will to the claim in question.
A judgment is the law's last word in a judicial controversy. It may therefore be defined as the final consideration and determination of a
court of competent jurisdiction upon the matters submitted to it in an action or proceeding. A more precise definition is that a judgment
is the conclusion of the law upon the matters contained in the record, or the application of the law to the pleadings and to the facts, as
found by the court or admitted by the parties, or deemed to exist upon their default in a course of judicial proceedings. It should be
noted that only is a judgment which is pronounced between the parties to an action upon the matters submitted to the court for decision.
. . . In the instant case there was not claim made, filed or presented by anyone. Legally speaking, the allowance of the claim would be
like rendering a judgment without the filing of a complaint, or even the making or presentment of a claim. Upon the facts shown, to
legalize the allowance of the claim with all of the formalities and requisites of a final judgment, would be a travesty upon justice. It
appears from the record before us that the commissioners did not have any jurisdiction to allow the claim; that as to the claim in
question their proceedings were null and void ab initio, and hence they were not res judicata, and in addition to that, it clearly appears
that the allowance of the claim was a fraud upon the appellee. Affirmed. Sheker vs. Sheker Facts: The RTC admitted to probate the
holographic will of Alice O. Sheker and thereafter issued an order for all the creditors to file their respective claims against the estate. In
compliance therewith, petitioner filed a contingent claim for agent's commission due him amounting to approximately P206,250.00 in
the event of the sale of certain parcels of land belonging to the estate, and the amount of P275,000.00, as reimbursement for expenses
incurred and/or to be incurred by petitioner in the course of negotiating the sale of said realties. The executrix of the Estate of Alice O.
Sheker (respondent) moved for the dismissal of said money claim against the estate on the grounds that (1) the requisite docket fee, as
prescribed in Section 7(a), Rule 141 of the Rules of Court, had not been paid; (2) petitioner failed to attach a certification against non-
forum shopping; and (3) petitioner failed to attach a written explanation why the money claim was not filed and served personally.
Petitioner still contends that the RTC erred in strictly applying to a probate proceedingthe rules requiring a certification of non-forum
shopping, a written explanation for non-personal filing, and the payment of docket fees upon filing of the claim.He insists that Section 2,
Rule 72 of the Rules of Court provides that rules in ordinary actions are applicable to special proceedings only in a suppletory manner.
Issue: Did the RTC err in dismissing petitioner's contingent money claim against respondent estate for failure of petitioner to attach to
his motion a certification against non-forum shopping? Held: YES. The certification of non-forum shopping is required only for
complaints and other initiatory pleadings.The RTC erred in ruling that a contingent money claim against the estate of a decedent is an
initiatory pleading. In the present case, the whole probate proceeding was initiated upon the filing of the petition for allowance of the
decedent's will.Under Sections 1 and 5, Rule 86 of the Rules of Court, after granting letters of testamentary or of administration, all
persons having money claims against the decedent are mandated to file or notify the court and the estate administrator of their
respective money claims; otherwise, they would be barred, subject to certain exceptions. Such being the case, a money claim against
an estate is more akin to a motion for creditors' claims to be recognized and taken into consideration in the proper disposition of the
properties of the estate.In Arquiza v. Court of Appeals, the Court explained thus: x x x The office of a motion is not to initiate new
litigation, but to bring a material but incidental matter arising in the progress of the case in which the motion is filed. A motion is not an
independent right or remedy, but is confined to incidental matters in the progress of a cause. It relates to some question that is
collateral to the main object of the action and is connected with and dependent upon the principal remedy. A money claim is only an
incidental matter in the main action for the settlement of the decedent's estate; more so if the claim is contingent since the claimant
cannot even institute a separate action for a mere contingent claim .Hence, herein petitioner's contingent money claim, not being an
initiatory pleading, does not require a certification against non-forum shopping. On the issue of filing fees, the Court ruled in Pascual v.
Court of Appeals,[8] that the trial court has jurisdiction to act on a money claim (attorney's fees) against an estate for services rendered
by a lawyer to the administratrix to assist her in fulfilling her duties to the estate even without payment of separate docket fees because
the filing fees shall constitute a lien on the judgment pursuant to Section 2, Rule 141 of the Rules of Court, or the trial court may order
the payment of such filing fees within a reasonable time.[9]After all, the trial court had already assumed jurisdiction over the action for
settlement of the estate. Clearly, therefore, non-payment of filing fees for a money claim against the estate is not one of the grounds for
dismissing a money claim against the estate. The RTC should have relaxed and liberally construed the procedural rule on the
requirement of a written explanation for non-personal service, again in the interest of substantial justice. WHEREFORE, the petition is
GRANTED.The Orders of the Regional Trial Court of IliganCity, Branch 6 dated January 15, 2003 and April 9, 2003, respectively, are
REVERSED andSET ASIDE.The RegionalTrialCourtofIliganCity, Branch 6, is hereby DIRECTED to give due course and take
appropriate action on petitioner's money claim in accordance with Rule 82 of the Rules of Court. No pronouncement as to costs. SO
ORDERED. Quisumbing vs. Guison Facts: The deceased, Consuelo Syyap, during her life time executed a promissory note dated
November 9, 1940 for P3,000 in favor of Leonardo Guison payable sixty (60) days from the date thereof, with interest at the rate of 12
per cent per annum. The debtor Consuelo Syyap died thereafter. And on the same year, intestate proceedings were instituted and
notice given to creditors to file their claim within six (6) months, which period for filing claims expired on August 31, 1941. In the
inventory filed on April 30, 1941, by the administrator of the estate of the deceased, the said obligation of P3,000 was acknowledged as
one of the liabilities of the decedent. However, the creditor Leonardo Guison died in 1941, and his son Mariano Guison, who was
appointed as administrator of the intestate estate of his deceased father, filed the claim of P3,000 against the estate in 1943. Claimant
in his reply to the answer of the estate of Syyap, stated that he believed in good faith that he was relieved of the obligation to file a claim
with the court, because said administrator had assured him that he should not worry about it, since the debt was in the inventory and he
would pay it soon as he was authorized by the court to do so. The administrator later on, in contrary, contends that the court erred or
abused its discretion in allowing the appellee’s claim under Sec.2 Rule 87, eighteen months after the expiration of the time previously
limited for the filing of claims and without previous application for extension of time having been filed by the claimant. Issue: (1) whether
the claim filed by the claimant may be allowed by the court after hearing both parties, without necessity on the part of the claimant to file
a previous application for, and on the part of the court to grant, an extension of time not exceeding one month within which the claim
may be filed; and (2) Whether cause was shown by the claimant why he did not file the claim within the time previously limited Held: (1)
After a careful consideration of this case, we hold that the claim filed by the appellee may be considered as implying an application for
time within which to file said claim, and the order of the lower court allowing such claim impliedly granted said appellee an extension of
time within which to file said claim. It would have been a waste of time on the part of the court and the parties in this case, if the court
had dismissed the claim and required the appellee to file, first, an application for a period not exceeding one month within which to file
his claim, and then to file his claim within the time granted by the court, when the latter would allow the claim after all. Strict compliance
with the said requirement of section 2 of Rule 87 would be necessary if a claim had to be presented to and passed upon by the
committee on claims according to the old law; but now as it is to be filed with and passed upon by the court itself, no harm would be
caused to the adverse party by such a procedure as was followed in the present case. Moreover, the appellant, in his answer to the
claim filed by the appellee, did not object to it on the ground that the former had not previously applied for an extension of time not
exceeding one month within which to present his claim. It is to be presumed that both the attorneys for the appellant as well as for the
appellee knew that the claim was being filed under the provisions of section 2, Rule 87, of the Rules of Court, because the time
previously limited had then already expired, and had appellant objected to the claim on the above-mentioned ground and the court
considered it necessary for the appellee to do so, the latter would have complied literally with the law. (2) The last sentence of section
2, Rule 87, provides that 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 month. As it does not state what cause shall be considered sufficient for the purpose, it is clear that it is left to the
discretion of the court to determine the sufficiency thereof; and when the court allows a claim to be filed for cause or causes which it
considers as sufficient, on appeal this court can not reverse or set aside the action of the court below unless the latter has abused its
discretion, which has not been shown by the appellant in this case. That nothing is more equitable than what was done by the lower
court in this case, is evident. Appellant does not only acknowledge in the inventory the existence of the debt, but does not deny it in his
answer to the claim filed by the appellee in the court below, and had been paying interest due thereon up to January, 1943, that is, two
months before the filing of the claim. Attorney for appellant, in opposing the claim and appealing to this court from the decision of the
court below, relies only on the technicality that no previous application for extension of time has been filed by the claimant-appellee. In
view of the foregoing, the decision appealed from is affirmed, with costs against the appellant. So ordered.
 ESTATE OF AMADEO MATUTE OLAVE v. MANASES G. REYES +
DECISION
208 Phil. 678

RELOVA, J.:
In this petition for certiorari, the estate of Amadeo Matute Olave, represented by Jose S. Matute, Judicial Administrator in Sp. Proc. No.
25876, of the then Court of First Instance of Manila, assails the Order, dated November 10, 1967, of the respondent judge, approving the
"Amicable Settlement" submitted by the parties in Civil Case No. 4623 of the then Court of First Instance of Davao, 16th Judicial
District, Branch III, and prays that the said Order be set aside.
The petition alleged that the estate of Amadeo Matute Olave is the owner in fee simple of a parcel of land containing an area of 293,578
square meters, situated in sitio Tibambam, barrio Tibambam, municipality of Sigaboy (now Governor Generoso), province of Davao,
and covered by Original Certificate of Title No. 0-27 of the Registry of Deeds of Davao Province; that in April 1965 herein private
respondent Southwest Agricultural Marketing Corporation (SAMCO), as plaintiff, filed Civil Case No. 4623 with the respondent Court of
First Instance of Davao against respondents, Carlos V. Matute and Matias S. Matute, as defendants, in their capacities as co-
administrators of the estate of Amadeo Matute Olave, for the collection of an alleged indebtedness of P19,952.11 and for attorney's fees
of P4,988.02; that on May 8, 1965, defendants Carlos V. Matute and Matias S. Matute in said Civil Case No. 4623, filed an answer
denying their lack of knowledge and questioning the legality of the claim of SAMCO; that on October 25, 1966 in Sp. Proc. No. 25876,
the then Court of First Instance of Manila, Branch IV, issued an order directing the administrators to secure the probate court's
approval before entering into any transaction involving the seventeen (17) titles of the estate, of which the property described in OCT
No. 0-27 is one of them; that on October 20, 1967, the parties (plaintiff and defendants) in Civil Case No. 4623 of the Court of First
Instance of Davao, submitted to the respondent court an Amicable Settlement whereby the property of the estate covered by OCT No. 0-
27 of Davao was conveyed and ceded to SAMCO as payment of its claim; that the said Amicable Settlement signed by the herein
respondents was not submitted to and approved by the then Court of First Instance of Manila, Branch IV, in Sp. Proc. No. 25876, nor
notice thereof made to the beneficiaries and heirs in said special proceedings; that on November 10, 1967, respondent court, despite the
opposition of the other parties who sought to intervene in Civil Case No. 4623 and despite the utter lack of approval of the probate court
in Manila, approved the said Amicable Settlement and gave the same the enforceability of a court decision which, in effect, ceded the
property covered by OCT No. 0-27, containing an area of 293,578 square meters and with an assessed value of P31,700.00 to SAMCO in
payment of its claim for only P19,952.11; and, that if the said Order of respondent dated November 10, 1967 is not set aside, the same
will operate as a judgment that "conveys illegally and unfairly, the property of petitioner-estate without the requisite approval of the
probate court of Manila, which has the sole jurisdiction to convey this property in custodia legis of the estate. (par. 16, Petition).
Made to answer, herein respondent SAMCO and respondent judge, among others, contend that the Amicable Settlement need not be
approved by the probate court, "the same having been entered into in another independent action and in another court of co-equal rank.
Article 2032 of the Civil Code applies only to extrajudicial compromise entered into by the administrators of the estate. In the
alternative, lack of approval of the probate court of the Amicable Settlement does not render it null and void, but at most voidable,
which must be the subject matter of a direct proceeding in the proper Court of First Instance." (p. 60, Rollo)
In said Civil Case No. 4623 for sum of money, plaintiff SAMCO and defendants Carlos V. Matute and Matias S. Matute, in their
capacities as judicial administrators of the estate of Amadeo Matute Olave in Special Proceeding No. 25876, Court of First Instance of
Manila, Branch IV, submitted the following Amicable Settlement:
"1. That defendants in their capacity as judicial administrators of the Estate of Amadeo Matute, hereby submit and acknowledge that the
said Estate of Amadeo Matute is justly indebted to plaintiff in the total sum of P28,403.02 representing the principal account of
P19,952.11 and in the sum of P8,450.91 as attorney's fees, damages, interest and costs;
"2. That at present the defendant estate is devoid of or does not have any funds with which to pay or settle the aforestated obligation in
favor of the plaintiff, and that being so, the defendant estate through the undersigned administrators, decides to pay the plaintiff by way
of conveying and ceding unto the plaintiff the ownership of a certain real property owned by the defendant estate now under the
administration of the said undersigned administrators;
"3. That plaintiff hereby accepts the offer of defendants of conveying, transferring and ceding the ownership of the above-described
property as full and complete payment and satisfaction of the total obligation of P28,403.02;
"4. That the defendant estate, through the undersigned administrators hereby agree and bind the defendant estate to pay their counsel
Atty. Dominador Zuño, of the Zuño Law Offices the sum of Eight Thousand, (P8,000.00) Pesos by way of Attorney's Fee;
"5. That the parties herein waive all other claims which they might have against one another.
"WHEREFORE, premises considered, it is respectfully prayed that this Honorable Court approves the foregoing settlement and that
judgment be rendered transferring the said real property covered by Original Certificate of Title No. 0-27 to plaintiff Southwest
Agricultural Marketing Corporation and that a new transfer certificate of title be issued to said plaintiff." (pp. 25-26, Rollo)
Section 1, Rule 87 of the Rules of Court, provides that "no action upon a claim for the recovery of money or debt or interest thereon shall
be commenced against the executor or administrator; . . .." The claim of private respondent SAMCO being one arising from a contract
may be pursued only by filing the same in the administration proceedings in the Court of First Instance of Manila (Sp. Proc. No. 25876)
for the settlement of the estate of the deceased Amadeo Matute Olave; and the claim must be filed within the period prescribed,
otherwise, the same shall be deemed "barred forever." (Section 5, Rule 86, Rules of Court)
The purpose of presentation of claims against decedents of the estate in the probate court is 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 appraise 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.
It is clear that the main purpose of private respondent SAMCO in filing Civil Case No. 4623 in the then Court of First Instance of Davao
was to secure a money judgment against the estate which eventually ended in the conveyance to SAMCO of more than twenty-nine (29)
hectares of land belonging to the estate of the deceased Amadeo Matute Olave in payment of its claim, without prior authority of the
probate court of Manila, in Sp. Proc. No. 25876, which has the exclusive jurisdiction over the estate of Amadeo Matute Olave. It was a
mistake on the part of respondent court to have given due course to Civil Case No. 4623, much less issue the questioned Order, dated
November 10, 1967, approving the Amicable Settlement.
Section 1, Rule 73 of the Rules of Court, expressly provides that "the court first taking cognizance of the settlement of the estate of a
decedent, shall exercise jurisdiction to the exclusion of all other courts." (italics supplied). 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.
WHEREFORE, the petition for certiorari is GRANTED, and the Order, dated November 10, 1967, of the respondent court approving
the Amicable Settlement of the parties in Civil Case No. 4623 of the then Court of First Instance of Davao, is hereby SET ASIDE.
CASTRO, REMY B.Salonga-Hernandez vs Pascual Facts: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 lastwill and testament.On 1 December 1973, an intestate proceeding for the settlement of the estateof Don Andres was commenced by
his widow Doña Adela before the then Court of FirstInstance. Apart from his wife, who bore him no children, Don Andres was survived byseveral
nephews and nieces from his full-blood and half-blood brothers. This proceedingproved 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 initialsupport of Doña Adela to their claims.However, on 16 October 1985, the other heirs of Don
Andres entered into aCompromise Agreement over the objections of Olivia and Hermes Pascual, wherebythree-fourths (3/4) of the estate would go
to Doña Adela and one-fourth (1/4) to the otherheirs of Don Andres, without prejudice to the final determination by the court or
anothercompromise agreement as regards the claims of Olivia and HermesPascual. Subsequently, the Intestate Court denied the claims of Olivia
and HermesPascual. Said denial was eventually affirmed by this Court in 1992 in Pascual v.Pascual-Bautista , applying Article 992 of the Civil
Code.Doña Adela died on 18 August 1987, leaving behind a last will and testamentexecuted in 1978, designating Olivia Pascual as the executrix, as
well as the principalbeneficiary of her estate. The will also bequeathed several legacies and devises to severalindividuals and institutions.Olivia
Pascual then engaged the services of petitioner in connection with thesettlement of the estate of Doña Adela. Their agreement as to the
professional fees due topetitioner is contained in a letter dated 25 August 1987, signed by Atty. Esteban Salongain 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”. On 26 August 1987, private respondent, represented by petitioner, commenceda petition for the probate of the last will and
testament of Doña Adela. The petition wasopposed by a certain Miguel Cornejo, Jr. and his siblings, who in turn presented apurported will
executed in 1985 by Doña Adela in their favor. After due trial, on 1 July1993, the Probate Court rendered a decision allowing probate of the 1978
Last Will andTestament of Doña Adela and disallowing the purported 1985 Will. Letters testamentarywere issued to Olivia Pascual. On 27 July 1993,
petitioner filed a Notice of Attorney’s Lien equivalent to
SALONGA HERNANDEZ & G.R. No. 127165
ALLADO,
Petitioner, Present:

QUISUMBING, J.,
Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
OLIVIA SENGCO PASCUAL Promulgated:
and THE HONORABLE COURT
OF APPEALS, May 2, 2006
Respondents.
x----------------------------------------------------------------------------x

DECISION

TINGA, J.:

Petitioner, a professional law partnership, brings forth this Petition for Review assailing the Decision [1] 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 Doa Adela Pascual, Dr. Olivia S. Pascual, Executrix.

The case actually centers on two estate proceedings, that of Doa Adela Pascual (Doa Adela) and the other, her husband Don

Andres Pascuals (Don Andres), who predeceased her. Don Andres died intestate, while Doa 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 Doa 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 Andress brother, Eligio, to be recognized as heirs of Don Andres. Olivia and Hermes Pascual procured the

initial support of Doa 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 Doa 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. Pascual-Bautista,[5] applying Article 992 of the Civil Code.

In the meantime, Doa 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 Doa 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 Pascuals] 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 Doa 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 Doa Adela in

their favor. [7]

After due trial, on 1 July 1993, the Probate Court rendered a Decision[8] allowing probate of the 1978 Last Will and Testament

of Doa 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 Attorneys Lien equivalent to three percent (3%) of the total gross estate of the

late Doa 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

petitioners notice of attorneys lien, being fully supported by a retainers 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, Doa 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 Attorneys Lien on Properties of the Estate of Doa 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 one-fourth (1/4) thereof to the

heirs of Don Andres and three-fourths (3/4) thereof to the estate of Doa Adela. The Intestate Court also awarded attorneys fees to Atty. Jesus I.

Santos, equivalent to 15% of the three-fourths (3/4) share of the estate of Doa Adela.[14] Olivia Pascual filed a petition for annulment of the award

of attorneys 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 petitioners attorneys 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 Doa Adelas 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 Doa 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 Doa 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 attorneys 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 jurisprudence[17], that the counsel claiming attorneys 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 Doa Adelas 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 Doa 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 Doa 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 Administrators Bond. It was noted therein that no creditor had filed a claim against the estate of Doa 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 Doa 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 attorneys lien on the properties comprising the estate of Doa Adela Pascual;

(2) a writ of partial execution be issued for the satisfaction of the attorneys 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 attorneys fees;

(3) ordering the appointment of a reputable appraisal company to re-appraise the present market value of the estate
of Doa Adela Pascual including the fruits thereof for the purpose of determining the value of the attorneys fees of [petitioner];
and

(4) after the re-appraisal of the estate of Doa Adela Pascual a writ of execution be issued for the full satisfaction and settlement
of the attorneys lien of [petitioner].[21]

On 17 March 1995, the Probate Court issued an order which denied petitioners 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 re-appraised, 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 attorneys 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 petitioners attempt to execute on its attorneys lien. The

appellate court noted that the attorneys lien issued by the Probate Court was chargeable only to the share of Olivia Pascual, and not to the estate

of Doa Adela, since it was Olivia Pascual who entered into the agreement with petitioner for the payment of attorneys fees in connection with the

settlement of the estate of Doa 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 attorneys 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 Doa 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 Occea v. Marquez,[27] the counsel seeking to recover attorneys 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 attorneys fees as part of the expenses of administration. Petitioner also claims that the

decision of the probate court admitting Doa Adelas 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 court-
approved will comprising the agreement referred to in the contract.

Petitioner also takes exception to the Probate Courts 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 Doa 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 Doa 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 one-fourth (1/4) ratio between the estate of Doa 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

attorneys fees.

Finally, petitioner asserts that the Probate Court erred in refusing to grant the prayer seeking the re-appraisal of the property

of Doa Adelas 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 attorneys

fees only against Olivia Pascual and not against the estate of Doa Adela; and that petitioners 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 Doa 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
attorneys fees against the estate instead of the executor or administrator. Petitioner correctly cites Occea v. Marquez[29] 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 attorneys 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 attorneys 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 attorneys 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 attorneys 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 Occea.

The character of such claim for attorneys fees bears reiteration. As stated in Escueta, it partakes the nature of an administration expense.

Administration expenses include attorneys 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 attorneys fees. If the costs of counsels 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 counsels fees incurred in such litigation. [38]

Clearly then, while the direct recovery of attorneys 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 withnotice 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 Attorneys Lien and a Motion for Writ

of Execution. These two pleadings have distinct character and must be treated as such.

After Doa Adelas will had been admitted to probate, petitioner had initially filed a Notice of Attorneys 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 attorneys fees equivalent to

Three Percent (3%) of the total gross estate, pursuant to the 1987 Retainer Agreement. Copies of this Notice of Attorneys 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 Doa Adela. This Notice of Attorneys 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 Attorneys Lien, initially intended to hold Olivia Pascual, and not Doa Adelas estate, liable

for the attorneys 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 Doa 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 Doa Adelas 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 attorneys

fees was chargeable only to the share of Olivia Pascual. Yet the Notice of Attorneys Lien only seeks to serve notice of the pendency of the claim for

attorneys fees, and not the payment of such fees itself. On its own, the Notice of Attorneys Lien cannot serve as the basis for the Probate Court
to authorize the payment to petitioner of attorneys fees.

On the other hand, Escueta and its kindred cases do explicitly recognize the recourse for the lawyer to directly make the claim for

attorneys fees against the estate, not the executor or administrator. The filing of the Notice of Attorneys 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 attorneys 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 attorneys fees as authorized in Escueta,

originating as it did from the denial of petitioners Motion for Writ of Execution, and not the Notice of Attorneys Lien. The Motion did expressly seek

the payment of attorneys fees to petitioner. Escueta and Occea, 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 attorneys fees directly

chargeable against the estate. It does not.

The fact that the prayer for attorneys 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. Doa Adelas 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 petitioners attorneys 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 Doa Adelas will.

Such notice is material to the other heirs to Doa Adelas estate. The payment of attorneys fees, especially in the amount of 3% of the total

gross estate as sought for by petitioner, substantially diminishes the estate of Doa 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 attorneys 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 attorneys 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 attorneys 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 Doa 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 attorneys 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 attorneys fees. Yet the

claim for attorneys fees is hardly incontrovertible.

 That the Retainer Agreement set the attorneys fees at three percent (3%) of the gross estate does not imply that the basis for attorneys

fees is beyond controversy. Attorneys 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 attorneys 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 attorneys 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 attorneys 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 attorneys fees. The first

involves a separate suit against the executor or administrator in the latters 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 attorneys fees in connection with the administration of the estate of Doa 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 Doa Adela, payable upon approval by the Probate Court of the agreement for the distribution of the properties to the court designated heirs of

the estate. Necessarily, since the recovery of attorneys fees is premised on the Retainer Agreement any award thereupon has to await the final

ascertainment of value of the gross total estate of Doa 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 attorneys fees is contingent on these two conditions,[43] and the

claim for attorneys 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 Doa 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 Doa Adela. If this were the

recourse pursued by petitioner, and Olivia Pascual is ultimately held liable under the Retainer Agreement for attorneys fees, she may nonetheless

seek reimbursement from the estate of Doa Adela if she were able to establish that the attorneys fees paid to petitioner were necessary

administration expenses.

The second or alternative recourse is the direct claim for attorneys 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 attorneys services.
 By filing their claim directly against the estate of Doa 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 attorneys 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 attorneys 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 Doa Adela,

petitioner may again be precluded from immediate recovery of attorneys 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 attorneys 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 Doa 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 attorneys 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

petitioners 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 Doa Adela. Nonetheless, to authorize said outright denial at this stage could unduly delay the settlement of the estate of Doa Adela,

considering the likelihood that petitioner would again pursue such claim for attorneys fees as the right to which is affirmed by law and

jurisprudence.

Hence, in order not to unduly protract further the settlement of the estate of Doa 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 attorneys 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 attorneys fees. Once this step is accomplished, there should be no impediment to petitioners claim for

recovery of attorneys fees as reimbursement for necessary administration expenses, within the terms established by law, jurisprudence, and this

decision.

One final note. Petitioners 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 attorneys 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 Doa Adela. Still, we do not doubt that

the Probate Court, within its discretion, is capacitated to render the award of attorneys fees as administration expenses either partially or

provisionally, depending on the particular circumstances and its ultimate basis for the determination of the appropriate attorneys 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 petitioners

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 Doa Adela Pascual. The Regional

Trial Court is directed to treat petitioners aforesaid motion as a PETITION for the payment of attorneys 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.
G.R. No. L-62376 October 27, 1983
MARIA VELASQUEZ, MARY GEORGE, NELLIE GEORGE, NOBLE GEORGE, and MAYBELLE GEORGE, plaintiffs-appellants,
vs.
WILLIAM GEORGE, ROBERT GEORGE, ANDRES MUÑOZ, ISAGANI BRIAS and CIRILO ASPERILLA defendants-appellees,
ERLINDA VILLANUEVA, mortgagee-defendant-appellee.
Moises B. Ramos for plaintiffs-appellants.
Teresita G. Oledan for defendants-appellees W. George, R. George and Andres Munoz
Isagani Brias and Rogel Atienza for defendant-appellee Briñas
Eladio B. Samson for mortgagee-defendant-appellee Erlinda Villanueva.

GUTIERREZ, JR., J:
Plaintiffs-appellants Maria Velasquez Vda. de George and her children, Mary, Nellie, Noble and Maybelle, all surnamed George,
appealed from the decision of the Court of First Instance of Bulacan, which dismissed their complaint for lack of jurisdiction. According
to the trial court, the case falls within the original and exclusive jurisdiction of the Securities and Exchange Commission. The appeal
was certified to us by the Court of Appeals as one involving a pure question of law.
The plaintiffs-appellants are the widow and legitimate children of the late Benjamin B. George whose estate is under intestate
proceedings. The case is docketed as Special Proceedings Nos. 18820 before the then Court of First Instance of Rizal at Quezon City,
Branch XVIII.
In their complaint, the plaintiffs-appellants alleged that the five defendants- mortgagors are officers of the Island Associates Inc. Andres
Muñoz, aside from being the treasurer-director of said corporation, 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 percent or 636 shares out of the outstanding 980
shares of stock in the corporation. Without the proper approval from the probate court and without notice to the heirs and their counsel,
the defendants-mortgagors executed a Deed of First Real Estate Mortgage in favor of the defendant-mortgagee Erlinda Villanueva,
covering three parcels of land owned by Island Associates. In said Deed, the defendants-mortgagors also expressly waived their right
to redeem the said parcels. Subsequently, a power of attorney was executed by the defendants-mortgagors in favor of Villanueva
whereby the latter was given the 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 was executed in favor of Villanueva by the Provincial Sheriff of Bulacan 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 by virtue of which Transfer
Certificates of Titles Nos. T-16717 and T-39162, covering the three parcels of land, were cancelled and in lieu thereof, Transfer
Certificates of Titles Nos. T239675 and T-239674 were issued in favor of Villanueva. The plaintiffs-appellants, therefore, filed the
complaint for the annulment of the — 1.) Deed of First Real Estate Mortgage; 2.) Power of Attorney; 3.) Certificate of Sale; 4.) Amended
Certificate of Sale; 5.) Affidavit of Consolidation of Ownership; and 6.) Transfer Certificates of Title Nos. T-239674 and T-239675.
A motion to dismiss was filed by William George, Robert George, and administrator Andres Muñoz on the ground that the trial court had
no jurisdiction over the case. The movants contended that the subject matter of the complaint referred to the corporate acts of the
Board of Directors of Island Associates, and, therefore, falls within the exclusive jurisdiction of the Securities and Exchange
Commission. The trial court agreed with the movants and dismissed the complaint. The plaintiffs-appellants contend that the resolution
of the validity of a mortgage contract is within the original and exclusive jurisdiction of civil courts, and certainly not within the jurisdiction
of the Securities and Exchange Commission and that once jurisdiction of the civil court whether in a civil or a criminal case, has
properly attached, the same cannot be ousted, divested or removed. The appellants state that the questioned composition of the board
of directors, is merely incidental to the determination of the main issue and is insufficient cause for the trial court to divest itself of its
original and exclusive jurisdiction that has already been acquired.
The defendants-appellees, on the other hand maintain that since the complaint questions the validity of a corporate contract which the
appellants contend to have been entered into as a fraudulent and surreptitious scheme and devise to defraud them, this issue places
the entire case outside the jurisdiction of the civil courts. According to them, Presidential Decree No. 902-A gives the SEC exclusive
jurisdiction over such a controversy. The relevant provision reads:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws
and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
a) Devices or schemes employed by any acts of the board of directors, business associations, its
officers or partners amounting to fraud and misrepresentation which may be detrimental to the
interest of the public and/or of the stockholder, partner, members of associations or organizations
registered with the Commission ...
Villanueva further contends that the plaintiffs-appellants have no capacity to file the complaint because the general rule laid down in
Rule 87, Section 3 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 according to the mortgagee-appellee does not apply in the present case.
We agree with the plaintiffs-appellants. What the complaint sought to annul were documents of title which vested ownership over the
three parcels of land in question to defendant-mortgagee Villanueva, who is neither an officer, a stockholder nor a director of the
corporation, but a third party. Clearly, the lower court had jurisdiction over the controversy. The fact that the plaintiffs-appellants
subsequently questioned the legality of the constitution of the board of directors of the corporation did not divest the court of its
jurisdiction to take cognizance of the case. What determines jurisdiction of the court are the allegations in the complaint. If from the
same, the court has already acquired jurisdiction over the subject-matter, jurisdiction is retained up to the end of the litigation. (See Lat
v. Phil. Long Distance Co., 67 SCRA 425).
Whether or not the mortgage contract, with an unusual provision whereby the mortgagors waived their right to redeem the mortgaged
property, could be executed without proper approval of the probate court and without notice to the widow and legitimate children of the
deceased is a matter clearly within the authority of a trial court to decide. If in the course of trial, the court believes that the validity of the
composition of the board of directors is absolutely necessary for resolution of the issues before it, the remedy is, at most, to require that
one issue to be threshed out before the Securities and Exchange Commission and to hold in abeyance, the trial on the merits of the
principal issues in the meantime. Certainly, the solution is not for the lower court to surrender its judicial questions to an administrative
agency for resolution.
We also find without merit the defendant-mortgagee's contention that the proper party to file the complaint is the administrator of the
estate of Benjamin George. The administrator, Andres Muñoz, 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 v. Baltazar (24 SCRA 918), 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.
WHEREFORE, the order of the Court of First Instance of Bulacan, dated June 16, 1980, dismissing the complaint and the order dated
December 1, 1980 denying the motion for reconsideration are SET ASIDE. The said court is hereby ordered to set the case for trial on
the merits as above indicated.
SO ORDERED.
 Rioferio v. CA
G.R. No. 129008. January 13, 2004
On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City
leaving several personal and real properties located in Angeles City, Dagupan City and
Kalookan City.He also left a widow, respondent Esperanza P. Orfinada, whom he
married on July 11, 1960 and with whom he had seven children who are the herein
respondents.
Apart from the respondents, the demise of the decedent left in mourning his
paramour, Teodora Rioferio and their children.
On November 14, 1995, respondents Alfonso James and Lourdes Orfinada,
legitimate children of Alfonso, discovered that on June 29, 1995, petitioner Teodora
Rioferio and her children executed an Extrajudicial Settlement of Estate of a
Deceased Person with Quitclaim involving the properties of the estate of the decedent
located in Dagupan City.
On December 4, 1995, respondents filed a Complaint for the
Annulment/Rescission of Extra Judicial Settlement of Estate of a Deceased Person with
Quitclaim, Real Estate Mortgage and Cancellation of Transfer Certificate of Titles.
Petitioners filed their Answer to the aforesaid complaint interposing the defense that the property subject of the contested deed of extra-
judicial settlement pertained to the
properties originally belonging to the parents of Teodora Riofero and that the titles
thereof were delivered to her as an advance inheritance but the decedent had managed
to register them in his name.
ISSUE: Whether or not the heirs have legal standing to prosecute the rights belonging
to the deceased subsequent to the commencement of the administration proceedings
YES. Pending the filing of administration proceedings, the heirs without doubt
have legal personality to bring suit in behalf of the estate of the decedent in accordance
with the provision of Article 777 of the New Civil Code “that (t)he rights to succession
are transmitted from the moment of the death of the decedent.” The provision in turn is
the foundation of the principle that the property, rights and obligations to the extent and value of the inheritance of a person are
transmitted through his death to another or
others by his will or by operation of law.
Even if administration proceedings have already been commenced, the heirs
may still bring the suit if an administrator has not yet been appointed.
The above-quoted rules, while permitting an executor or administrator to
represent or to bring suits on behalf of the deceased, do not prohibit the heirs from
representing the deceased. These rules are easily applicable to cases in which an
administrator has already been appointed. But no rule categorically addresses the
situation in which special proceedings for the settlement of an estate have already been
instituted, yet no administrator has been appointed.
Even if there is an appointed administrator, jurisprudence recognizes two
exceptions,
1. If the executor or administrator is unwilling or refuses to bring suit; and
2. When the administrator is alleged to have participated in the act complained of
and he is made a party defendant
Note: Ma’am pointed out that property fraudulently registered in favor of another (like
when paramour registered a land owned by decedent in her favor) still forms part of the
estate of the decedent.