UP Law F2021 092 Estate of Ruiz v CA

Tax 2 ROC Rule 83 §3, Rule 84 §3, Rule 1996 Puno

109, §2 and Rule 90

SUMMARY

The Estate of Ruiz represented by the Executor Edmond Ruiz questioned the validity of the probate court’s
order in (1) providing allowance for the granddaughters of the testator; (2) issuance of title to the properties
of the estate during the proceeding, and in effect (3) undermining his right to possess all of the properties of
the Estate. The SC annulled the provision of the order with respect to items 1 and 2, but sustained the validity
of #3, stating that the right of executor/administrator is to possess is not absolute, citing Rule 84 §3.

FACTS

 June 27, 1987 – Hilario Ruiz executed a holographic will;

 He named his (1) son, Edmond Ruiz, (2) his adopted daughter, Maria Pilar Ruiz Montes, and (3) his
three grandchildren, Maria Cathryn, Candice Albertine, and Maria Angeline (daughters of Edmond).
 April 12, 1988 – Hilario died. Cash component was divided amongst the heirs. Aside from this,
however, Edmond did not take any action to proceed with the probate of Hilario’s will;
 June 29, 1992 - Pilar filed with the RTC of Pasig a petition for probate, and approval of issuance of
letters testamentary to Edmond;
 Edmond initially opposed the petition averring that the will was issued under undue influence.
However, he withdrew his opposition, and the will was later admitted and the letters testamentary
were issued to him;
 One of the properties (located in Valle Verde, Pasig) bequeathed by Hilario to his graddaughters, were
leased out by Edmond to third persons;
 The probate court ordered Edmond to deposit the rental income derived from the lease arrangement;
 Total income: P540K; Edmond turned over P348.58K after deducting the expenses incurred for
repairs and maintenance expenses of the estate;
 Edmond filed with the Court an ex-parte motion for release of funds (rent payments previously
depositied). This was opposed by Pilar, and prayed that the same be released to the granddaughters
and that the properties be distributed in accordance with the will;
 Probate court denied Edmond’s motion and granted Pilar’s. He filed for an MR;
 He subsequently withdrew his motion for release of fund because the lease arrangement was extended
for another month;
 Probate Court released the funds to him, nevertheless, subject to condition that it would be limited to
such amount necessary to cover the expenses of administration and allowances for support of the
testator's three granddaughters subject to collation and deductible from their share in the inheritance;
 Probate Court held in abeyance the release of the titles to Pilar and the granddaughters of the
properties after lapse of six months from the date of first publication of notice to creditors;
 The Estate of Hilario thru Edmond questioned the decision before the CA
 CA upheld RTC’s decision.
 Hence this petition before the SC.
RATIO

W/N before payment of the Estates obligations and debts, the probate court has the power to…
1. Grant an allowance for the support of the granddaughters from the funds of the estate
No.

Rule 83 §31 provides that only the (1) widow and (2) the children, even those who are not minor or
incapacitated, of the deceased have the right to receive allowance; grandchildren are not included. It is
limited to the two mentioned heirs.

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Sec. 3. Allowance to widow and family. — The widow and minor or incapacitated children of a deceased person, during the settlement
of the estate, shall receive therefrom under the direction of the court, such allowance as are provided by law
2. To order release of the titles to certain heirs
No.

An order releasing titles of the properties of the estate to the heir amounts to an advance distribution
of the estate and is sanctioned only on two instances under Rule 109 §22 in relation to Rule 90 §13:
(1) after all the debts, funeral charges, expenses of administration, allowance to the widow, and
estate tax have been paid; or (2) before payment of said obligations only if the distributees or
any of them gives a bond in a sum fixed by the court conditioned upon the payment of said
obligations within such time as the court directs, or when provision is made to meet those
obligations.

The Probate Court’s order directed that the titles of some properties in the estate be released to the
heirs after six months from the date of first publication of ‘notice’ to creditors is not tantamount to
‘payment’ as prescribed in the first instance. The estate tax is one of those obligations that must be paid
before distribution of the estate. If not yet paid, the rule requires that the distributees post a bond or
make such provisions as to meet the said tax obligation in proportion to their respective shares in the
inheritance. Notably, at the time the order was issued the properties of the estate had not yet been
inventoried and appraised. It was also too early in the day for the probate court to order the release of
the titles six months after admitting the will to probate.

W/N the Order deprives the Executor of his right to take possession of all the real and personal
properties of the estate
No.

Citing Rule 84 §34, the Court stated that the right of the Executor to possess the properties of the estate is
not absolute. Petitioner must be reminded that his right of ownership over the properties of his
father is merely inchoate as long as the estate has not been fully settled and partitioned. As executor,
he is a mere trustee of his father's estate. The funds of the estate in his hands are trust funds and he is held
to the duties and responsibilities of a trustee of the highest order. He cannot unilaterally assign to himself
and possess all his parents' properties and the fruits thereof without first submitting an inventory and
appraisal of all real and personal properties of the deceased, rendering a true account of his administration,
the expenses of administration, the amount of the obligations and estate tax, all of which are subject to a
determination by the court as to their veracity, propriety and justness.

FALLO

IN VIEW WHEREOF, the decision and resolution of the Court of Appeals in CA-G.R. SP No. 33045 affirming the
order dated December 22, 1993 of the Regional Trial Court, Branch 156, Pasig in SP Proc. No. 10259 are
affirmed with the modification that those portions of the order granting an allowance to the testator's
grandchildren and ordering the release of the titles to the private respondents upon notice to creditors are
annulled and set aside. Respondent judge is ordered to proceed with dispatch in the proceedings below. SO
ORDERED.

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Sec. 2. Advance distribution in special proceedings. — Notwithstanding a pending controversy or appeal in proceedings to settle the
estate of a decedent, the court may, in its discretion and upon such terms as it may deem proper and just, permit that such part of the
estate as may not be affected by the controversy or appeal be distributed among the heirs or legatees, upon compliance with the
conditions set forth in Rule 90 of these Rules
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Sec. 1 xxx
No distribution shall be allowed until the payment of the obligations above mentioned has been made or provided for unless the
distributees or any of them give a bond in a sum fixed by the court, conditioned for the payment of said obligations with such time as
the court directs.
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Sec. 3. Executor or administrator to retain whole estate to pay debts, and to administer estate not willed— An executor or administrator
shall have the right to the possession and management of the real as well as the personal estate of the deceased so long as it is necessary
for the payment of the debts and expenses for administration.