RULE 86

Claims Against Estate

What should be issued by the Court upon issuance of Letters Testamentaryor

of administration?

Section 1. Notice to creditors to be issued by court. —Immediatelyafter granting letters

testamentary or of administration, the court shall issueanotice requiring all persons having
money claims against the decedentto file them in the office of the clerk of said court.

Within what time must these claims be filed?

Section 2. Time within which claims shall be filed. —In the notice providedin the preceding
section, the court shall state the time for the filing of claimsagainst the estate, which shall
not be more than twelve (12) not less thansix (6) months after the date of the first
publication of the notice. However, at any time before an order of distribution is entered,
onapplication of a creditor who has failed to file his claimwithinthepreviously limited, the
court may, for cause shown and on such terms as areequitable, allow such claim to be filed
within a time not exceeding one(1)month.

This is known as the Statute of non-claims.

What is the purpose of the fixing of the period of claims?

The purpose of the law, in fixing a period within which claims against anestate must be
presented, is to insure a speedy settlement of the affairs of thedeceased person and the
early discovery of the property to person entitledtothe same. (Heirs of Pizarro vs.
Consolacion, GR No. L-51278, May9, 1988)

What is the purpose of the presentation of the claims against the estate?

The purpose of presentation of claims against decedents of the estate intheprobate court is
to protect the estate of deceased persons to enabletheexecutor or administrator will be able
to examine each claimand determinewhether it is a proper one which should be allowed.
Further, the primaryobject of the provisions requiring presentation is to apprise the
administratorand the probate court of the existence of the claim so that a proper andtimely
arrangement may be made for its payment in full or by prorataportion in due course of the
administration. (Estate of Olave vs. Reyes, GRNo. L-29407)

What does the word “claims” connotes?

The word “claims” as used in statutes requiring the presentation of claimsagainst a

decedent’s estate is generally construed to mean debts or demandsof a pecuniary nature
which could have been enforced against the deceased

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in his lifetime and could have been reduced to simple money judgments; andamong
these are those founded upon contract. (Gutierrez vs. Baretto-Datu, GR No. L-17175,
July 31, 1962)

Do money claims arising from contract against the estate survive?

Generally, death of either the creditor or the debtor does not extinguishtheobligation and
only obligations that are personal or are identified withthepersons themselves are
extinguished by death. Section 5, Rule 86of theRules of Court expressly allows the
prosecution of money claims arisingfrom a contract against the estate of a deceased debtor
as these claims arenot actually extinguished.(Stronghold Insurance vs. Republic-Asahi,
GRNo. 147561, June 22, 2006)

Can claims against a deceased surety on the performance bond surviveupon his death?

The Supreme Court in the 2006 case of Stronghold Insurancevs. Republic-Asahi, GR No.
147561, June 22, 2006, ruled that death is not adefense that he or his estate can set up to
wipe out the obligations under theperformance bond. Consequently, petitioner as surety
cannot use his deathtoescape its monetary obligations under its performance bond,

Can these claims include the quasi-contract and contingent claims against the estate?

Yes. (See the case of Metropolitan Bank & Trust Company vs.
AbsoluteManagement Corporation, GR No. 170498, January 9, 2013)

How are claims of executor or administrator agains the estate treated?The rules

provide these remedies of a creditor:

The contract made between the administrator and the lawyer does not bindthe estate to such
an extent that the lawyer can maintain an action against it and recover a judgment which is
binding upon it. In such a case, the creditor has two remedies:

1. He can prosecute an action against the administrator as an individual. If judgment is

rendered against the administrator and it is paid by him, whenhe presents his final action to
the Court of First Instance as suchadministrator he can include the amount so paid as an
expenseof administration.
2. The creditor can also present a petition in the proceeding relatingtothesettlement of the
estate, asking that the court, after notice to all personsinterested, allow his claim and direct
the administrator to pay it as anexpense of administration. Whichever course is adopted, the
heirs andother persons interested in the estate will have a right to inquire into the
necessityfor making the contract and the value of hte work performed by the attorney.
(Ramos vs. Bidin, GR No. L-53560, May 28, 1988)

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When can a creditor bring an action against a distributee of the debtor’sassets?

The only instance wherein a creditor can file an action against a distributeeof the debtor’s
asset is under Section 5, Rule 86 of the Rules of Court. Thecontingent claims must first be
established and allowed in the probate court before the creditors can file an action directly,
against the distributees. (DeBautista vs, De Guzman, GR No. L-28298, November 25,
1983)

Are there instances when the probate court can issue writ of execution?

The circumstances that the Rules of Court expressly specifies that theprobate court
may issue execution:

(1) To satisfy (debts of the estate out of) the contributive shares of devisees, legatees and
heirs in possession of the decedent’s assets (Section 6, Rule86) (2) To enforce payment of
 the expenses of partition (Section 3, Rule 90) (3) To satisfy the costs when a person is cited
for examination in probateproceedings. (Section 13, Rule 142)

Under the rule of inclusio unius est exclusion alterius, above citedcircumstances are the
only circumstances when probate court can issuewrit of execution. (Pastor, Jr., vs. CA, GR
No. L-56340, June 24, 1983)

What should the executor or administrator do upon issuance of the noticeto creditors?

Section 3. Publication of notice to creditors. —Every executor or administrator shall,

immediately after the notice to creditors is issued, causethe same to be published three (3)
weeks successively in a newspaperofgeneral circulation in the province, and to be
posted for the same periodin four public places in the province and in two public places
inthemunicipality where the decedent last resided.

After the publication of the notice, what else must the executor oradministrator do?

Section 4. Filing of copy of printed notice. —Within ten (10) days after thenotice has been
published and posted in accordance with the precedingsection, the executor or administrator
shall file or cause to be filedinthecourt a printed copy of the notice accompanied with
an affidavit settingforth the dates of the first and last publication thereof and the
nameof the newspaper in which the same is printed.

What is the purpose of this notice?

Section 5. Claims which must be filed under the notice. If not filed, barred; exceptions. —
All claims for money against the decent, arisingfrom contract, express or implied, whether
the same be due, not due, or contingent, all claims for funeral expenses and expense for the
last sickness

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of the decedent, and judgment for money against the decent, must be filedwithin the time
limited in the notice; otherwise they are barredforever, except that they may be set forth
as counterclaims in any actionthat theexecutor or administrator may bring against the
claimants. Whereanexecutor or administrator commences an action, or prosecutes
anactionalready commenced by the deceased in his lifetime, the debtor may set forthby
answer the claims he has against the decedent, instead of presentingthemindependently to the
court as herein provided, and mutual claims maybeset off against each other in such action;
and if final judgment is renderedinfavor of the defendant, the amount so determined shall be
consideredthetrue balance against the estate, as though the claim had been presenteddirectly
before the court in the administration proceedings. Claims not yet due, or contingent, may be
approved at their present value.

What is the rule on the solidary obligation of a decedent?

Section 6. Solidary obligation of decedent. —Where the obligationof thedecedent is

solidary with another debtor, the claim shall be filed against thedecedent as if he were
the only debtor, without prejudice to the right of theestate to recover contribution from
the debtor. In a joint obligationof thedecedent, the claim shall be confined to the portion
belonging to him.

This section is not applicable where no proceedings for administrationof theestate of the
deceased has been filed despite the lapse of more than 2yearsafter the latter’s death.
(Reason: Section 1, Rule 74)
What may be the remedy of a mortgagee on debt due fromthe estate?

Section 7. Mortgage debt due from estate. —A creditor holding a claimagainst the deceased
secured by mortgage or other colateral security, mayabandon the security and prosecute his
claim in the manner providedinthisrule, and share in the general distribution of the assets of
the estate; or hemay foreclose his mortgage or realize upon his security, by action incourt,
making the executor or administrator a party defendant, and if thereisajudgment for a
deficiency, after the sale of the mortgaged premises, or theproperty pledged, in the
foreclosure or other proceeding to realize uponthesecurity, he may claim his deficiency
judgment in the manner providedinthe preceding section or he may rely upon his mortgage
or other securityalone, and foreclosure the same at any time within the period of the
statuteof limitations, and in that event he shall not be admitted as a creditor, andshall receive
no share in the distribution of the other assets of estate; but nothing herein contained shall
prohibit the executor or administrator fromredeeming the property mortgaged or pledged,
by paying the debt for whichit is held as security, under the direction of the court, if the
court shall adjudge it to be for the best interest of the estate that such redemptionshall be
made.

Illustration:

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Rey borrowed from Abe P150,000.00 secured by a real estate mortgage. Thedebt was now
due and Abe has the option to foreclose the mortgage by an action; or to file an ordinary
action to collect a sumof money, thusabadoning the mortgage. Suppose before Abe can file
either action, Reydied.

1. Since this is a money claim arising from contract, Abe may choose tofileit as a money
claim agains the estate, and he thus abandons the securityor the action to foreclose the
mortgage. If HE COLLECTS NOTHINGout of his claim against the estate. HE CAN NO
LONGER FILE ANDACTIONTO FORECLOSE on the mortgage, as when he fails in one,
he fails intheother. He cannot have both.
2. He may foreclose on the mortgage BY ACTIOn and makingtheadministrator the
defendant. If the proceeds of the foreclosure are short of the obligation, he may secure a
deficiency judgment, and then enforcethesame by filing it as a claim against the estate.
(Section 5, Rule 86, statuteofnon-claims)
3. He may rely on the security or mortgage alone by filing an action for foreclosure on the
mortgage where he makes the administrator the defendant (without securing a deficiency
judgment even if the proceeds of the foreclosure sale are short of the obligation).

IN ALL THESE THREE REMEDIES, the creditor can only choose one and if he
chooses any of these three, he abandons the others, and if he fails in his choice, he fails
in all.

But while the creditor can choose his course of action, this is without prejudice ob the part
of the administrator to redeem the mortgaged property.

How can an executor or administrator file his claim against the estate?

Section 8. Claim of executor or administrator against an estate. —If theexecutor or

administrator has a claim against the estate he represents, heshall give notice thereof, in
writing, to the court, and the court shall appoint a special administrator, who shall, in
the adjustment of suchclaim, have the same power and be subject to the same liability as the
general administrator or executor in the settlement of other claims. The court mayorder the
executor or administrator to pay to the special administrator necessary funds to defend such
claim.

How can one file a claim against the estate?

Section 9. How to file a claim. Contents thereof. Notice to executor oradministrator. — A

claim may be filed by delivering the same withthenecessary vouchers to the clerk of court
and by serving a copy thereof ontheexecutor or administrator. If the claim be founded on a
bond, bill, note, or any other instrument, the original need not be filed, but a copy thereof
withall indorsements shall be attached to the claim and filed therewith. Ondemand, however,
of the executor or administrator, or by order of the court or judge, the original shall be
exhibited, unless it be list or destroyed, in

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which case the claimant must accompany his claimwith affidavit or affidavits containing a
copy or particular description of the instrument andstating its loss or destruction. When the
claim is due, it must be supportedbyaffidavit stating the amount justly due, that no payments
have beenmadethereon which are not credited, and that there are no offsets to the same, tothe
knowledge of the affiant. If the claim is not due, or is contingent, whenfiled, it must also be
supported by affidavits stating the particulars thereof. When the affidavit is made by a
person other than the claimant, he must set forth therein the reason why it is not made by the
claimant. The claimoncefiled shall be attached to the record of the case in which the
letterstestamentary or of administration were issued, although the court, initsdiscretion, and
as a matter of convenience, may order all the claims tobecollected in a separate folder.

What is the duty of the executor or administrator when a claimhadbeenfiled?

Section 10. Answer of executor or administrator. Of sets —Withinfifteen(15) days after

service of a copy of the claim on the executor or administrator, he shall file his answer
admitting or denying the claimspecifically, and setting forth the admission or denial. If he
has noknowledge sufficient to enable him to admit or deny specifically, he shall state such
want of knowledge. The executor or administrator in his answer shall allege in offset any
claim which the decedent before death hadagainst the claimant, and his failure to do so shall
bar the claimforever. Acopyof the answer shall be served by the executor or administrator on
the claimant. The court in its discretion may extend the time for filing such answer.

How are admitted claims acted upon?

Section 11. Disposition of admitted claim. —Any claimadmitted entirelyby the executor or
administrator shall immediately be submitted by the clerkto the court who may approve the
same without hearing; but the court, initsdiscretion, before approving the claim, may order
that known heirs, legatees, or devisees be notified and heard. If upon hearing, an heir,
legatees, or devisee opposes the claim, the court may, in its discretion, allowhimfifteen(15)
days to file an answer to the claim in the manner prescribedinthepreceding section.

How are contested claims proceeded upon?

Section 12. Trial of contested claim. — Upon the filing of an answer toaclaim, or upon the
expiration of the time for such filing, the clerk of court shall set the claim for trial with
notice to both parties. The court mayreferthe claim to a commissioner.

Is the judgment or claims against the estate appealable?

Section 13. Judgment appealable. — The judgment of the court approvingor
disapproving a claim, shall be filed with the record of the administration

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proceedings with notice to both parties, and is appealable as in ordinarycases. A judgment
against the executor or administrator shall be that hepay, in due course of administration,
the amount ascertained to be due, andit shall not create any lien upon the property of the
estate, or give tothejudgment creditor any priority of payment.

What is the rule on the payment of the costs of litigation?

Section 14. Costs. — When the executor or administrator, in his answer, admits and offers
to pay part of a claim, and the claimant refuses toaccept the amount offered in satisfaction of
his claim, if he fails to obtain a morefavorable judgment, he cannot recover costs, but must
pay to the executor or administrator costs from the time of the offer. Where an action
commencedagainst the deceased for money has been discontinued and the claimembraced
therein presented as in this rule provided, the prevailingpartyshall be allowed the costs of his
action up to the time of its discontinuance.

RULE 87
Actions By and Against Executors and Administrators What actions

may be brought against executors and administrators?

Section 1. Actions which may and which may not be brought against executor or
administrator. — No action upon a claimfor the recoveryof money or debt or interest
thereon shall be commenced against the executor or administrator; but to recover real or
personal property, or an interest therein, from the estate, or to enforce a lien thereon, and
actions to recover damages for an injury to person or property, real or personal,
maybecommenced against him.

Action to recover damages for breach of contract entered into bythedecedent, but committed
by the administrator, which is personal tohim. (Gutierrez vs. Baretto-Datu, GR No. L-
17175, July 31, 1962)

What actions may be brought by the executors or administrators?

Section 2. Executor or administrator may bring or defend actions whichsurvive. — For the
recovery or protection of the property or rights of thedeceased, an executor or administrator
may bring or defend, in the right of deceased, actions for causes which survive.

What are the actions that survive?

In general, executors or administrators may bring or defend actions that survive. Actions that
survive are those actions to recover real or personal property, or an interest therein, from the
estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or
property, real or personal. (Section 1, Rule 87, ROC) Civil actions for tort or quasi-delict do
not fall within the class of claims to be filed under the notice to creditors required under
Rule 86 of the Rules of Court as these actions, being civil in

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nature, survive the death of the decedent and may be commenced against
theadministrator, pursuant to Rule 87 of the ROC. (Hilado vs. CA, GRNo. 164108, May
8, 2009)

What are actions that do not survive? Inig kamatay sa person responsible sa obligation,
adto e file against the estate. So ang mga utang dili ma survive, but adto ma singil sa
estate.
1st- identify if mo survive ba na nga action

Claims that do not survive are claims that are filed in the estate proceedingsor any of
the following:

(a) Claims arising from contract, express or implied, whether due, not dueor
contingent;
(b) All claims for funeral expenses;
(c) Expenses for the sickness of the decedent;
(d) Judgment for money against the decedent, which should be presentedinthe form
of claims against the estate.

How can a claim by the administrator against third person be prosecuted?

When the demand is in favor of the administrator and the party against whom it is enforced
is a third party, not under the court’s jurisdiction, thedemand cannot be by mere motion by
the administrator, but byanindependent action against the third person. Matters affecting
propertyunder judicial administration may not be taken cognizance of by the court
inthecourse of intestate proceedings, if the interests of third persons areprejudiced. (Dela
Cruz vs. Camon, GR No. L-21034, April 30, 1966)

When does the liability of an administrator for tax payment begin?

That the assessment is deemed made when the notice to this effect isreleased, mailed or
sent to the taxpayer for the purpose of giving effect tosaid assessment. It appearing that the
person liable for the payment of thetax, in this case the administrator, did not receive the
assessment, the assessment could not become final and executory. (RP vs. Dela Rama,
GRNo. L-21108, November 29, 1966) damages arising from torts would survive- file
separate action. If mo survive-file against the estate via special proceeding as estate is
artificial person

It is not enough that the claim agains the deceased party be for money, but it must arise from
contract express or implied, and these words were construedto include all purely personal
obligations other than those which have their source in delict or tort. (Aguas vs. Llemos, GR
No. L-18107, August 30, 1962)

When may the heirs act in place of administrator? 1. No appointed

administrator yet

When no administrator has been appointed, as in this case, there is all themore reason to
recognize the heirs as the proper representatives. (GoChanvs. Young, GR No. 131889,
March 12, 2001)

2. If the executor or administrator is unwilling or refuses to bring suit; and

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3. When the administrator is alleged to have participated in theact complained of and he is
made a party defendant.

All told, therefore, the rule that the heirs have no legal standing to suefor the recovery of
property of the estate during the pendency of administrationproceedings has three
exceptions, the third being when there is no appointedadministrator such as in this case.
(Rioferio vs. CA, GRNo. 129008, January 13, 2004)

What does jurisdiction over the estate convey to the Court?

The court which acquires jurisdiction over the properties of a deceasedperson through the
filing of the corrresponding proceedings has supervisionand control over these properties
and in compliance with this duty, the court also has the inherent power to determine what
properties, rights andcreditsof the deceased the administrator should include or exclude in
the inventory. (Chua vs. Absolute Management Corp., GR No. 144881, October 16, 2003)

Who has the power to recover properties from third persons?

The trial court has no authority to decide whether the properties, real or personal, belong to
the estate or to the persons examined. If after suchexamination there is good reason to
believe that the person examinediskeeping properties belonging to the estate, then the
administrator shouldfilean ordinary action in court to recover the same. (Chua vs.
AbsoluteManagement Corp., GR No. 144881, October 16, 2003)

What must be the purpose of the issuance of a writ of attachment

intheenforcement of judgment?

Any writ of attachment necessary to secure the judgment must be relatedtothe protection
of the estate. The writ may not issue if only to protect thepersonal interests of the private
respondent as a creditor of that estate. (Gruenberg vs. CA, GR No. L-45948, September
10, 1985)

NOTE:

1. If during the lifetime of the deceased, an action against himaccrued, andthe same relates
to a money claim arising from contract, express or implied, but before the action could be
filed against the decedent [during his lifetime] he dies, it is not proper to file the said action
against the administrator of theestate. The remedy is to file it in the form of a money
claimunder the statuteof non-claims.
2. But if, during the lifetime of the deceased, an action against himaccrued, and the same
relates to actions -
(a) To recover real or personal property, or an interest therein; or (b) To enforce
a lien on real or personal property of said deceased, sucha mortgage; or

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(c) An action to recover damages for an injury to person or property, real or
personal.

AND HE DIES BEFORE COMMENCEMENT OF ACTIONAGAINSTHIM,

The plaintiff may file the action, making the administrator or executor of theestate of
such deceased person, as the defendant.
3. Also, if during the lifetime of the deceased, he was made a defendant inan action -

(a) To recover real or personal property, or interest therein; or (b) To enforce a

lien on real or personal property of said deceased, sucha mortgage; or
(c) To recover damage for an injury to person or property, real or personal,

BUT DURING THE PENDENCY OF SUCH ACTION THE DEFENDANTDIES -

The action survives and must not be dismissed; instead, the administrator ofhis estate
should be substituted in his stead and the action continuedagainst such administrator;

Summons is not necessary on said administrator who was substitutedfor thedeceased

defendant.

4. Again, if the deceased was the plaintiff in an action commenced byhimin court, but during
the pendency of such action he dies, the action generallysurvives, the only exception being
those actions which are purely personal tosuch plaintiff (which do not survive).

If the action brought by such deceased plaintiff during his lifetime is onenot purely personal
to him (and therefore it survives) and during the pendencyof such action where he was
plaintiff, HE DIES-

The administrator or his estate shall be susbtituted in place of the deceasedplaintiff and
the action continues.

5. Thus, it has been held that the above-provision recognizes the right of anexecutor or
administrator to sue upon any cause of action which accruedtothe decedent during his
lifetime. (Bayot vs. Zurbito, 39 Phil. 650)

6. Also, under the above-provision, the administrator may file an actionfor partition which
could have been done by the deceased had he beenalive. (Albano vs. Agtarap, 22 Phil. 345)

But if the administrator would have to be made defendant, it must be anyof the actions
enumerated in section 1 which survives.

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ILLUSTRATIVE CASES:

1. Mike, thru his negligent acts, caused physical injuries on the personof Marvin. Marvin
thus filed a civil action against Mike, seeking payment for damages in consequence of said
physical injuries. While the case waspending, Mike died.

The issue is whether or not it is proper for the case to continue against theadministrator of
Mike’s estate. It was held that this is a proper case whichsurvives, to be continued against
the administrator. (Belamal vs. Polinar, November 18, 1967)

2. Siy Uy maliciously charged Climaco with Estafa, and uponbeingacquitted from such
malicious charge, Climaco filed against Siy Uya civil action for damages due to malicious
prosecution. While the case against SiyUy was pending, he died. The issue is whether or not
the case must becontinued or at least commenced anew against the administrator of the
estateof deceased defendant Siy Uy. It was held that the same could not bemaintained
against the administrator because it is not an action to recover property, nor to enforce a lien
thereto. It is not also an action to recover damages for an injury to persons or property. The
damages which Climacosought to recover did not spring from any injury caused to his
person. (Climaco vs. Siy Uy, November 27, 1967)

3. An action for the manual delivery and possesion of specific articles of personal property is
one which survives death of a decedent and which, accordingly, may be prosecuted against
the latter’s administrator or executor. (Oppus vs. San Gil, 74 Phil. 1)

4. Rigo obligated himself to deliver property to Lailanee in the latter’scapacity as natural

guardian or representative of minor Brent. The onlyperson who can compel Rigo to deliver
such property is Lailanee, sincebynature of such right, only Lailanee can compel
performance. If, beforedelivery, Lailanee dies, the administrator of the estate of the
deceasedLailanee cannot compel Rigo to make delivery on the ground that the
actionpertaining to the deceased Lailanee was exclusively personal and is thusextinguished
by her death.

5. Pending the application of the deceased which he filed before the PublicService
Commission, may be prosecuted and continued by the administrator of his estate, to its final
conclusion. (Limjoco vs. Intestate of Fragrante, 80Phil. 776)

GENERAL RULE:

Unless expressly provided by law, any action affecting property or rights of a deceased
person which might have been brought by himor against him

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during the lifetime of the deceased, will be instituted and prosecutedbyor against the
executor or administrator.

EXCEPTION TO THE RULE:

Actions for recovery for money, debt or interest or fromthe nature of theaction which do
not survive by reason of the death of the decedent extinguished the right.

When may an heir or devisee sue the administrator or executor?

Section 3. Heir may not sue until shall assigned —When an executor or administrator is
appointed and assumes the trust, no action to recover thetitle or possession of lands or for
damages done to such lands shall bemaintained against him by an heir or devisee until there
is an order of thecourt assigning such lands to such heir or devisee or until the time
allowedfor paying debts has expired.

May an executor or administrator compound with debtor?

Section 4. Executor or administrator may compound with debtor. —Withinthe approval

of the court, an executor or administrator may compoundwiththe debtor of the deceased
for a debt due, and may give a discharge of suchdebt on receiving a just dividend of the
estate of the debtor.

Can the executor or administrator act on foreclosure on mortgage duetothe estate?

Section 5. Mortgage due estate may be foreclosed. —Amortgagebelonging to the estate of

a deceased person, as mortgagee or assignee of theright or a mortgage, may be foreclosed
by the executor or administrator.

What proceedings should be undertaken on concealed,

embezzledorfraudulently conveyed property?

Section 6. Proceedings when property concealed, embezzled, orfraudulently conveyed. — If

an executor or administrator, heir, legatee, creditor or other individual interested in the estate
of the deceased, complains to the court having jurisdiction of the estate that a
personissuspected of having concealed, embezzled, or conveyed away anyof themoney,
goods, or chattels of the deceased, or that such person has inhispossession or has knowledge
of any deed, conveyance, bond, contract, or other writing which contains evidence of or
tends or discloses the right, title, interest, or claim of the deceased, the court may cite such
suspectedpersonto appear before it any may examine him on oath on the matter of
suchcomplaint; and if the person so cited refuses to appear, or to answer onsuchexamination
or such interrogatories as are put to him, the court maypunishhim for contempt, and may
commit him to prison until he submits totheorder of the court. The interrogatories put any
such person, and his answersthereto, shall be in writing and shall be filed in the clerk's office.

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1. The purpose of the examination as provided in this section is to elicit information or
secure evidence from the person (to notify persons who has interest)

(a) Suspcted of having possession or knowledge of propertyof thedeceased; or

(b) The will of the deceased;

who concealed, embezzled or conveyed away any property of the deceased.

Under this proceeding, the probate court has no authority to decide whether such property
belongs to the deceased or to the person examined.

2. If, after the examination, there is good reason for believing that the person examined
HAS PROPERTY IN HIS POSSESSIONBELONGINGTO THE DECEASED, the
procedure would be for the administrator torecover the same by filing an ordinary action to
recover the same fromsaidpossessor. (Alafriz vs. Mina, 28 Phil. 137; Cui vs. Picio, GRNo.
L-5131, July 31, 1952; Modesto vs. Modesto, GR No. L-11801, June 30, 1959)

3. And if the administrator desires to obtain possession of documentsbelonging to the estate

which the person examined is supposed to have inhispossession, the administrator may
secure from the court a subpoena ducestecum. (Changco vs. Madrilejos, 9 Phil. 356)

4. AND SO, in one case, the Supreme Court held that the probate court cannot order the
person cited as possessor of pawn ticket andjewel purportedly belonging to the estate, to
turnover the same to the administrator which such possessor alleges to be his. The proper
procedure is for theadministrator to file an ORDINARY ACTION FOR RECOVERYagainst
the person. (Alafriz vs. Mina, supra; Guanco vs. National Bank, 54Phil. 244)

Can a person entrusted with any part of the estate be compelled torenderan account?

Section 7. Person entrusted with estate compelled to render account. —Thecourt, on

complaint of an executor or administrator, may cite a personentrusted by an executor or
administrator with any part of the estate of thedeceased to appear before it, and may require
such person to render afull account, on oath, of the money, goods, chattels, bonds, account,
or other papers belonging to such estate as came to his possession in trust for suchexecutor
or administrator, and of his proceedings thereon; and if the personso cited refuses to appear
to render such account, the court may punishhimfor contempt as having disobeyed a lawful
order of the court.

Can a person who comitted acts of embezzlement prior to the issuanceofletters of

administration still be sued?

Section 8. Embezzlement before letters issued —If a person, beforethegranting of letters

testamentary or of administration on the estate of the

Page 13 of 29
deceased, embezzles or alienates any of the money, goods, chattels, or effects of such
deceased, such person shall be liable to an action in favor of the executor or administrator of
the estate for double the value of theproperty sold, embezzled, or alienated, to be recovered
for the benefit of such estate.

Can an action be brought for the recovery of property fraudulentlyconveyed by

the deceased?

Section 9. Property fraudulently conveyed by deceased may be recovered. When executor or

administrator must bring action. —When there isadeficiency of assets in the hands of an
executor or administrator for thepayment of debts and expenses of administration, and the
deceasedinhislifetime had conveyed real or personal property, or a right or interest therein,
or an debt or credit, with intent to defraud his creditors or to avoid anyright, debt, or duty; or
had so conveyed such property, right, interest, debt or credit that by law the conveyance
would be void as against his creditors, andthesubject of the attempted conveyance would be
liable to attachment byanyof them in his lifetime, the executor or administrator may
commenceandprosecute to final judgment an action for the recovery of such property, right,
interest, debt, or credit for the benefit of the creditors; but he shall not bebound to commence
the action unless on application of the creditors of thedeceased, not unless the creditors
making the application pay suchpart of the costs and expenses, or give security therefor to
the executor or administrator, as the court deems equitable.

When may a creditor bring such action?

Section 10. When creditor may bring action. Lien for costs. —Whenthereis such a
deficiency of assets, and the deceased in his lifetime had madeor attempted such a
conveyance, as is stated in the last preceding section, andthe executor or administrator has
not commenced the action therein providedfor, any creditor of the estate may, with the
permission of the court, commence and prosecute to final judgment, in the name of the
executor or administrator, a like action for the recovery of the subject of the conveyanceor
attempted conveyance for the benefit of the creditors. But the actionshall not be commenced
until the creditor has filed in a court a bond executedtothe executor or administrator, in an
amount approved by the judge, conditioned to indemnify the executor or administrator
against the costs andexpenses incurred by reason of such action. Such creditor shall have
alienupon any judgment recovered by him in the action for such costs andother expenses
incurred therein as the court deems equitable. Wheretheconveyance or attempted
conveyance had been made by the deceasedinhislifetime in favor of the executor or
administrator, the action which a credit may bring shall be in the name of all the creditors,
and permissionof thecourt and filing of bond as above prescribed, are not necessary.

What remedy can be availed of for fraudulent conveyance by the deceasedduring his
lifetime?
 Page 14 of 29

institute
By an executor or administrator Leave o
nameexecutor or administrator executo
Herrer
In case of fraudulent conveyance,executor or of fraudulent conveyance,
In case 2005Ed
administrator mayaction as when there is a
deficiencyof assets to pay the debts,
butdeceased during his lifetimeconveyed
property withdefraud his creditors, the RULE 88
conveyancewould by law be void as Payment of the Debts of the Estate
againstcreditors, and the subject ofattempted
conveyance wouldliable to attachment by anyin orWhen may debts
administrator be paid
subject in full?
tothe
of the a
his lifetime, unless thepay for the costs following requirements: intent to
andthereof or give security as thedeems uponthe
equitable. (Section87) bythe
and

of an executor or administrator

the hands
for
of
administration;

madeor in his lifetime

2. Deceased

property
intentortoa right or interest therein,
avoidany
or debt or credit, withdefraud his creditors or
toright, debt
debt or duty or hadsoconveyed such
property, right,or credit that by law, the
conveyancewould
his be void as
againstcreditors;
tofile
3. Subject of the attemptedconveyance
would be liabletoattachment by any of
or
theminhislifetime;
4. The executor or administratorhave shown
to have no desirethe action or failed to
Section 1. Debts paid in full if estate suf icient. —If, after hearingall themoney claims
against the estate, and after ascertaining the amount of suchclaims, it appears that there
are sufficient assets to pay the debts, the

Page 15 of 29
executor or administrator pay the same within the time limited for that purpose.

Can a debt be paid out of part of estate only?

Section 2. Part of estate from which debt paid when provision made bywill. — If the testator
makes provision by his will, or designates the estate tobeappropriated for the payment of his
debts, the expenses of administration, or the family expenses, they shall be paid according to
the provisions of thewill; but if the provision made by the will or the estate appropriated, is
not sufficient for that purpose, such part of the estate of the testator, real or personal, as is
not disposed of by will, if any shall be appropriated for that purpose.

What is the order of preference in the payment of debts out of the estate?

Section 3. Personalty first chargeable for debts, then realty. —The personal estate of the
deceased not disposed of by will shall be first chargeable withthe payment of debts and
expenses; and if said personal estate is not sufficient for tat purpose, or its sale would
redound to the detriment of theparticipants for the estate, the whole of the real estate not
dispose of bywill, or so much thereof as is necessary, may be sold, mortgaged, or
otherwiseencumbered for that purpose by the executor or administrator, after obtaining the
authority of the court therefor. Any deficiency shall be met bycontributions in accordance
with the provisions of section 6 of this rule.

What is the rule on contingent claims?

Section 4. Estate to be retained to meet contingent claims. —If the court issatisfied that a
contingent claim duly filed is valid, it may order the executoror 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.

How are contingent claim paid?

Section 5. How contingent claim becoming absolute in two years allowedand paid. Action
against distributees later. —If such contingent claimbecomes absolute and is presented to
the court, or to the executor or administrator, within two (2) years from the time limited for
other creditorsto present their claims, it may be allowed by the court if not
disputedbytheexecutor or administrator and, if disputed, it may be proved and allowedor
disallowed by the court as the facts may warrant. If the contingent claimisallowed, the
creditor shall receive payment to the same extent as the other creditors if the estate retained
by the executor or administrator is sufficient. But if the claim is not so presented, after
having become absolute, within

Page 16 of 29
said two (2) years, and allowed, the assets retained in the hands of theexecutor or
administrator, not exhausted in the payment of claims, shall bedisturbed by the order of the
court to the persons entitled to the same; but theassets so distributed may still be applied to
the payment of the claimwhenestablished, and the creditor may maintain an action against
the distributeesto recover the debt, and such distributees and their estates shall be
liableforthe debt in proportion to the estate they have respectively received
fromtheproperty of the deceased.

Can the court fix the contributive shares of devisees, legatees or heirs?

Section 6. Court to fix contributive shares where devisees, legalitees, orheirs have been
possession. — Where devisees, legalitees, or heirs haveentered into possession of portions of
the estate before the debts andexpenses have been settled and paid, and have become liable
to contributefor the payment of such debts and expenses, the court having jurisdictionof the
estate may, by order for that purpose, after hearing, settle the amount of their several
liabilities, and order how much and in what manner eachpersonshall contribute, and may
issue execution as circumstances require.

What is the order of payment if the estate is insolvent?

Section 7. Order of payment if estate insolvent —If the assets

whichcanbeappropriated for the payment of debts are not sufficient for that purpose,
theexecutor or administrator shall pay the debts against the estate,
observingtheprovisions of Articles 1059 and 2239 to 2251 of the Civil Code.

How are debts paid if the assets of the estate are insufficient?

Section 8. Dividends to be paid in proportion to claims. —If there arenoassets sufficient to

pay the credits of any once class of creditors after payingthe credits entitled to preference
over it, each creditor within such class shall be paid a dividend in proportion to his claim.
No creditor of any one classshall receive any payment until those of the preceding class are
paid.

How are the estate of an insolvent nonresident disposed of?

Section 9. Estate of insolvent non-resident, how disposed of. —Incaseadministration is

taken in the Philippine of the estate of a person whowasat the time of his death an
inhabitant of another country, and whodiedinsolvent, hi estate found in the Philippines
shall, as far as practicable, besodisposed of that his creditors here and elsewhere may
receive each anequal share, in proportion to their respective credits.

How are claims proven abroad against insolvent resident’s estate paid?

Section 10. When and how claim proved outside the Philippines against insolvent
resident's estate paid. — If it appears to the court havingjurisdiction that claims have been
duly proven in another country against theestate of an insolvent who was at the time of his
death an inhabitant of the

Page 17 of 29
Philippines, and that the executor or administrator in the Philippines hadknowledge of the
presentation of such claims in such country andanopportunity to contest their allowance, the
court shall receive a certifiedlist of such claims, when perfected in such country, and add
the same tothelist of claims proved against the deceased person in the Philippines so that
ajust distribution of the whole estate may be made equally among all its creditorsaccording
to their respective claims; but the benefit of this and the precedingsections shall not be
extended to the creditors in another countryif theproperty of such deceased person there
found is not equally apportionedtothe creditors residing in the Philippines and the other
creditor, accordingtotheir respective claims.

When are payments of debts due and demandable?

Section 11. Order for payment of debts. — Before the expiration of thetimelimited for the
payment of the debts, the court shall order the payment thereof, and the distribution of the
assets received by the executor or administrator for that purpose among the creditors, as the
circumstances of the estate require and in accordance with the provisions of this rule.

Can payment of debts be made even during appeal of the judgment?

Section 12. Orders relating to payment of debts where appeal is taken. —If an appeal has
been taken from a decision of the court concerning a claim, the court may suspend the order
for the payment of the debts or mayorder the distributions among the creditors whose claims
are definitely allowed, leaving in the hands of the executor or administrator sufficient assets
topaythe claim disputed and appealed. When a disputed claimis finally settledthecourt
having jurisdiction of the estate shall order the same to be paidout of the assets retained to
the same extent and in the same proportion withtheclaims of other creditors.

Can there be subsequent distribution of assets?

Section 13. When subsequent distribution of assets ordered. —If the wholeof the debts are
not paid on the first distribution, and if the whole assets arenot distributed, or other assets
afterwards come to the hands of the executor or administrator, the court may from time to
time make further orders for thedistributions of assets.

When may creditors be paid?

Section 14. Creditors to be paid in accordance with terms of order. —When an

order is made for the distribution of assets among the creditors, theexecutor or
administration shall, as soon as the time of payment arrives, pay
the creditors the amounts of their claims, or the dividend thereon, inaccordance with the
terms of such order.

What is the timeframe for the payment of debts and legacies?

Page 18 of 29
Section 15. Time for paying debts and legacies fixed, or extendedafternotice, within what
periods. — On granting letters testamentaryor administration the court shall allow to the
executor or administrator a timefor disposing of the estate and paying the debts and legacies
of the deceased, which shall not, in the first instance, exceed one (1) year; but the court may,
on application of the executor or administrator and after hearing onsuchnotice of the time
and place therefor given to all persons interested as it shall direct, extend the time as the
circumstances of the estate requirenot exceeding six (6) months for a single extension not so
that the whole periodallowed to the original executor or administrator shall exceed two (2)
years.

When may this timeframe be extended?

Section 16. Successor of dead executor or administrator may have timeextended on notice
within certain period. —When an executor or administrator dies, and a new administrator of
the same estate is appointed, the court may extend the time allowed for the payment of the
debts or legacies beyond the time allowed to the original executor or administrator, not
exceeding six (6) months at a time and not exceeding six (6) monthsbeyond the time which
the court might have allowed to such original executor or administrator; and notice shall be
given of the time and placefor hearing such application, as required in the last preceding
section.

RULE 89
Sales, Mortgages, and Other Encumbrances of Property of Decedent When may the

court order sale of personal property?

Section 1. Order of sale of personalty. —Upon the applicationof theexecutor or

administrator, and on written notice to the heirs andother persons interested, the court may
order the whole or a part of the personal estate to be sold, if it appears necessary for the
purpose of payingdebts, expenses of administration, or legacies, or for the preservation of
theproperty.

The approval by the probate court is necessary where specific properties of the estate are
sold, but not only ideal and indivisible shares of an heir aredisposed of. (Heirs of Pedro
Escanlar vs. Court of Appeals, GRNo. 119777, October 23, 1997)

Under this section, a power of attorney, executed by the heirs, grantingtheadministrator

authority to sell the property for and in behalf of the heirsisvoid and has no legal effects,
because the court has exclusive power toauthorize the sale of the property of the estate of
the deceased in satisfactionof claims.

Thus, a sale by an administrator of the personal property of the estate, without the authority
of the court or if a will, or under an order of the court which is void for want of jurisdiction,
does not confer title on the purchaser against a succeeding administrator. (Godoy vs.
Arellano et. al., 42 Phil. 347)

Page 19 of 29
When may the court authorize such conveyance?

Section 2. When court may authorize sale, mortgage, or other encumbranceof realty to pay
debts and legacies through personalty not exhausted. —When the personal estate of the
deceased is not sufficient to pay the debts, expenses of administration, and legacies, or
where the sale of such personal estate may injure the business or other interests of those
interestedintheestate, and where a testator has not otherwise made sufficient provisionfor the
payment of such debts, expenses, and legacies, the court, ontheapplication of the executor or
administrator and on written notice of the heirs, devisees, and legatees residing in the
Philippines, may authorizetheexecutor or administrator to sell, mortgage, or otherwise
encumber somuchas may be necessary of the real estate, in lieu of personal estate, for
thepurpose of paying such debts, expenses, and legacies, if it clearly appearsthat such sale,
mortgage, or encumbrance would be beneficial to the personsinterested; and if a part cannot
be sold, mortgaged, or otherwise encumberedwithout injury to those interested in the
remainder, the authority maybefor the sale, mortgage, or other encumbrance of the whole of
such real estate, or so much thereof as is necessary or beneficial under the circumstances.

The mortgage of property of the estate without authority of the court is void, thus, the
purchaser at public auction acquires no title over the property. Thereal estate mortgage
contracts, as well as the correlative extrajudicial foreclosure and the sale of the property
described therein at public auction, can be attacked directly and collaterally. (Orola vs.
Pontevedra, GRNo. 158566, September 20, 2005)

The mortgage of real property of the estate must be to pay debts, expenses of the
administration and to pay legacies but not otherwise. To do so wouldbecontrary to the
purpose of administration, that is, to close an estate, andnot to continue such estate.
(Lizarraga vs. Abada, 40 Phil. 124)

A sale made without notice to the heirs, legatees or devisees is void. (Estateof
Gamboa vs. Floranza, 12 Phil. 191)

Likewise, a sale after the partition has already been made without noticetothe
distributees is of no legal effect. (Santos vs. Roman Catholic Church, 45 Phil. 895)

Although the court is authorized to sell mortgage or encumber the estateof the deceased in
settlement of debts of the deceased, the court is not empowered to sell a mortgaged property
for the sole purpose of payingspecifically the mortgaged debt, for this would be tantamount
totheforeclosure of the property in the same proceeding. (Estate of Gamboavs. Floranza,
supra)

How may interested persons prevent such conveyance?

Section 3. Persons interested may prevent such sale, etc., by giving bond. —No such
authority to sell, mortgage, or otherwise encumber real or personal

Page 20 of 29
estate shall be granted if any person interested in the estate gives a bond, inasum to be fixed
by the court, conditioned to pay the debts, expenses of administration, and legacies within
such time as the court directs; andsuchbond shall be for the security of the creditors, as well
as of the executor or administrator, and may be prosecuted for the benefit of either.

When may the court authorize the sale of a part or the whole estate?

Section 4. When court may authorize sale of estate as beneficial tointerested persons.
Disposal of proceeds. — When it appears that the saleofthe whole or a part of the real or
personal estate, will be beneficial totheheirs, devisees, legatees, and other interested persons,
the court may, uponapplication of the executor or administrator and on written notice to the
heirs, devisees, and legatees who are interested in the estate to be sold, authorizethe executor
or administrator to sell the whole or a part of saidestate, although not necessary to pay debts,
legacies, or expenses of administration; but such authority shall not be granted if inconsistent
with the provisions of a will. In case of such sale, the proceeds shall be assigned to the
personsentitled to the estate in the proper proportions.

Under this section, assent or written consent of the heirs and legatees anddevisees is not
necessary. All that is required is notice in writing uponthem.

But even if without notice to the heirs, if they gave their consent to suchsale, the sale is
valid. (Vda. De Cruz vs. Ilagan, 81 Phil. 554)

What if the decedent incurred debts abroad?

Section 5. When court may authorize sale, mortgage, or other encumbranceof estate to pay
debts and legacies in other countries. —When the saleof personal estate, or the sale,
mortgage, or other encumbrance of real estateisnot necessary to pay the debts, expenses of
administration, or legacies inthePhilippines, but it appears from records and proceedings of a
probate court in another country that the estate of the deceased in such other countryis not
sufficient to pay the debts, expenses of administration, and legacies there, the court here may
authorize the executor or administrator to sell thepersonal estate or to sell, mortgage, or
otherwise encumber the real estatefor the payment of debts or legacies in the other country,
in same manner as for the payment of debts or legacies in the Philippines.

When may the court authorizes the conveyance on realty acquiredonexecution or

foreclosure?

Section 6. When court may authorize sale, mortgage, or other encumbranceof realty
acquired on execution or foreclosure. —The court may authorizean executor or
administrator to sell mortgage, or otherwise encumber real estate acquired by him on
execution or foreclosure sale, under the samecicumstances and under the same regulations as
prescribed in this rulefor the sale, mortgage, or other encumbrance of other real estate.

Page 21 of 29
What are the regulations on authority to sell, mortgage, or encumber theestate?

Section 7. Regulation for granting authority to sell, mortgage, or otherwiseencumber

estate. — The court having jurisdiction of the estate of thedeceased may authorize the
executor or administrator to sell personal estate, or to sell, mortgage, or otherwise
encumber real estate, in cases providedbythese rules and when it appears necessary or
beneficial under the followingregulations.

(a) The executor or administrator shall file a written petition setting forththedebts due from
the deceased, the expenses of administration, the legacies, the value of the personal estate,
the situation of the estate to be sold, mortgaged, or otherwise encumbered, and such other
facts as showthat thesale, mortgage, or other encumbrance is necessary or beneficial.

(b) The court shall thereupon fix a time and place for hearing such petition, and cause
notice stating the nature of the petition, the reasons for the same, and the time and place of
hearing, to be given personally or by mail tothepersons interested, and may cause such
further notice to be given, bypublication or otherwise, as it shall deem proper;

(c) If the court requires it, the executor or administrator shall giveanadditional bond, in
such sum as the court directs, conditioned that suchexecutor or administrator will account
for the proceeds of the sale, mortgage, or other encumbrance;

(d) If the requirements in the preceding subdivisions of this sectionhavebeen complied with,
the court, by order stating such compliance, mayauthorize the executor or administrator to
sell, mortgage, or otherwiseencumber, in proper cases, such part of the estate as is deemed
necessary, and in case of sale the court may authorize it to be public or private, aswould be
most beneficial to all parties concerned. The executor or administrator shall be furnished
with a certified copy of such order;

(e) If the estate is to be sold at auction, the mode of giving notice of thetimeand place
of the sale shall be governed by the provisions concerningnoticeof execution sale;

(f) There shall be recorded in the registry of deeds of the province inwhichthe real estate
thus sold, mortgage, or otherwise encumbered is situated, acertified copy of the order of the
court, together with the deedof theexecutor or administrator for such real estate, which shall
be as validasif the deed had been executed by the deceased in his lifetime.

NOTES:

1. The filing of petition by the administrator is essential to the trial court’sauthority or

jurisdiction to authorize sale or encumbrance of the estate. (21Am. Jur., 711)

Page 22 of 29
2. The following must be averred:

(a) Debts of the deceased;

(b) Expenses of administration;
(c) Legacies;
(d) Value of personal estate;
(e) Situation of estate to be sold or encumbered;
(f) Other circumstances to show that the sale or encumbranceisnecessary
and beneficial.

The averment as to the value is jurisdictional. If there is no averment as tothe value, the sale
is null and void under an order of the court issuedwherethe value is not stated. (De la Cruz
vs. De la Cruz, 60 Phil. 577)

3. The lack of verification on the petition is not a jurisdictional defect as thesame can be
cured. (Pardo de Tavera vs. El Hogar Filipino, et. al., 98Phil. 481)
4. Hearing and notice is to be given personally or by mail to the personsinterested, even
by publication if the court deems proper. Without noticeissued, the authority to sell given
by the court, or the sale itself, is null andvoid. (Avecilla vs. de la Santa, 93 Phil. 809)
5. Additional bond may be required of the administrator, conditionedthat hewill
account for the proceeds of the sale or encumbrance.
6. The recording of the sale of realty, together with a certified copyof theorder of the court,
plus the deed executed by the administrator must be madein the registry of deeds in the
province where the realty is located.

NOTE: These regulations are mandatory. Failure to complu with themwill render the
order authorizing the sale as well as the sale itself, as void. (Gabriel vs. Encarnacion, 50
OG 2440)

CASE:

The reference to judicial approval in Section 7, Rule 89 of the Rules of Court cannot
adversely affect the substantive rights of surviving spousetodispose of his/her ideal (not
inchoate, for the conjugal partnershipendedwith the deceased spouse’s death, and the
surviving spouse’s hereditaryrights accrued from the moment of the death of the decedent)
share intheco-heirship and/or co-ownership formed between her and the other heirs/co-
owners. (Article 493, NCC)

Section 7, Rule 89 of the Rules of Court applies in a case where, judicial approval has to be
sought in connection with, for instance, the saleor mortgage of property under administration
for the payment, and hereditaryshares of the wife are excluded from the requisite judicial
approval, providedof course no prejudice is caused others, including the government.
(GoOngvs. CA, et. al., GR No. 75884, September 24, 1987)
 Page 23 of 29
Can conveyances of realty executed by the deceased in his lifetimebeconsummated
after his death?

Section 8. When court may authorize conveyance of realty which deceasedcontracted to

convey. Notice. Ef ect of deed. —Where the deceasedwas inhis lifetime under contract,
binding in law, to deed real property, or aninterest therein, the court having jurisdiction of
the estate may, onapplication for that purpose, authorize the executor or administrator
toconvey such property according to such contract, or with such modificationsas are agreed
upon by the parties and approved by the court; andif thecontract is to convey real property to
the executor or administrator, the clerkof court shall execute the deed. The deed executed by
such executor, administrator, or clerk of court shall be as affectual to convey the propertyasif
executed by the deceased in his lifetime; but no such conveyance shall beauthorized until
notice of the application for that purpose has beengivenpersonally or by mail to all persons
interested, and such further noticehasbeen given, by publication or otherwise, as the court
deems proper; nor if theassets in the hands of the executor or administrator will thereby be
reducedso as to prevent a creditor from receiving his full debt or diminishhisdividend.

Can lands held in trust by the deceased be conveyed?

Section 9. When court may authorize conveyance of lands which deceasedheld in trust. —
Where the deceased in his lifetime held real propertyintrust for another person, the court
may after notice given as required in thelast preceding section, authorize the executor or
administrator to deedsuchproperty to the person, or his executor or administrator, for whose
useandbenefit it was so held; and the court may order the execution of suchtrust, whether
created by deed or by law.

RULE 90
Distribution and Partition of the Estate

When may an order of distribution of the residue of the estate be issued?

Section 1. When order for distribution of reside made. —When the debts, funeral charges,
and expenses of administration, the allowance to the widow, and inheritance tax, if any,
chargeable to the estate in accordance withlaw, have been paid, the court, on the application
of the executor or administrator, or of a person interested in the estate, and after hearing
upon notice, shall assign the residue of the estate to the persons entitled to the same,
namingthem and the proportions, or parts, to which each is entitled, andsuchpersons may
demand and recover their respective shares fromthe executor or administrator, or any other
person having the same in his possession. If there is a controversy before the court as to who
are the lawful heirs of thedeceased person or as the distributive shares to which each person
is entitledunder the law, the controversy shall be heard and decided as in ordinarycases.

Page 24 of 29
No distribution shall be allowed until the payment of the obligations abovementioned has
been made or provided for, unless the distributees, or anyof them, give a bond, in a sum to
be fixed by the court, conditioned for thepayment of said obligations within such time as the
court directs.

What is the rule when an advanced distribution is questioned?

Section 2. Questions as to advancement to be determined. —Questions asto advancement

made, or alleged to have been made, by the deceasedtoanyheir may be heard and determined
by the court having jurisdictionof theestate proceedings; and the final order of the court
thereon shall be bindingon the person raising the questions and on the heir.

Who shall shoulder the expenses of partition?

Section 3. By whom expenses of partition paid. —If at the timeof distribution the executor
or administrator has retained sufficient effects inhis hands which may lawfully be applied for
the expenses of partitionof theproperties distributed, such expenses of partition may be paid
bysuchexecutor or administrator when it appears equitable to the court andnot inconsistent
with the intention of the testator; otherwise, they shall bepaidby the parties in proportion to
their respective shares or interest inthepremises, and the apportionment shall be settled and
allowed by the court, and, if any person interested in the partition does not pay his
proportionor share, the court may issue an execution in the name of the executor or
administrator against the party not paying the sum assessed.

When must the order of partition be recorded?

Section 4. Recording the order of partition of estate. —Certified copies of final orders and
judgments of the court relating to the real estate or thepartition thereof shall be recorded in
the registry of deeds of the provincewhere the property is situated.

What is the purpose of administration?

Administration is for the purpose of liquidation of the estate and distributionof the residue
among the heirs and legatees. And liquidation means thedetermination of all the assets of
the estate and payment of all the debts andexpenses. (Luzon Surety vs. Quebrar, GR No.
L-40517, January 31, 1984)

When can distribution of the estate be done?

No distribution shall be allowed until the payment of the obligationsabove-mentioned has

been made or provided for, unless the distributees, or any of them, give a bond, in a sum to
be fixed by the court, conditionedfor the payment of said obligations within such time as the
court directs. (Estateof Ruiz vs. CA, GR No. 118671, January 29, 1996)

How will the distribution of the estate properties be done?

Page 25 of 29
In settlement of estate proceedings, the distribution of the estate propertiescan only be
made:
(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 anyof them gives a bond in a sum fixed by the court conditioned upon the
payment of the said obligations within such time as the court directs, or whenprovision is
made to meet those obligations. (Castillo vs. Castillo, 124Phil. 485 (1996))

What must be paid before the distribution of estate properties?

The estate tax is one of those obligations that must be paid beforethedistribution of the
estate. If not yet paid, the rule requires that thedistributees post a bond to make such
provisions as to meet the saidtaxobligation in proportion to their respective shares in the
inheritance. (Estateof Ruiz vs. CA, GR No. 118671, January 19, 1996)
Can a declaration of heirs be made even before the satisfactionof theobligation
chargeable to the estate?

What the court is enjoined from doing is the assignment or distributionof the residue of the
deceased’s estate before the above-mentioned obligationschargeable to the estate are first
paid. Nowhere from said section mayit beinferred that the court cannot make a declaration of
heirs prior tothesatisfaction of these obligations. (Ngo The Hua vs. Chung Kiat Hua,
GRNo. L-17091, September 30, 1963)

What must be determined before the distribution of legal share of theheirs?

Before any conclusion about the legal share due to a compulsory heir maybe reached, it is
necessary that the net estate of the decedent must beascertained, by deducting all payable
obligations and charges fromthe valueof the property owned by the deceased at the time of
his death; then, all donations subject to collation would be added to it, fromthere, the
legitimeof the compulsory heir or heirs can be established; and it is only thencanit be
ascertained whether or not a donation had prejudiced the legitimes. (Natcher vs. CA, GR
No. 133000, October 2, 2001)

May claim of the creditor of the heirs of the deceased be collected fromtheshare of the
heir?

The creditor of the heirs of a deceased person is entitled to collect his claimout of the
property which pertains by inheritance to said heirs, only after thedebts of the estate or
intestate succession have been paid and whenthenet assets that are divisible among the
heirs are known, because the debts of the

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deceased must first be paid before his heirs can inherit. (Litonjuavs. Montilla, GR No.
L-4170, January 31, 1952)

Does the probate court have the power to determine share of eachdistributee in a
project of partition?

The probate court, in the exercise of its jurisdiction to distribute the estate, has the power
to determine the proportion of parts to which each distributeeis entitled. A project of
partition is merely a proposal for the distributionofthe hereditary estate which the court
may accept or reject. It is the court that makes that distribution of the estate and determines
the persons entitledthereto. (Vda. De Kilayko vs. Tengco, GR No. 45425, March 27,
1992)

Is the administration proceeding terminated by the approval of the project of partition?

In the case of Montemayor vs. Gutierrez (114 Phil. 95). an estate maybepartitioned even
before the termination of the administration proceedings. Hence, the approval of the
project of partition did not necessarily terminatethe administration proceedings. (Luzon
Surety vs. Quebrar, GRNo. L-40517, January 31, 1984)

What must be taken into consideration in order to consider settlement proceeding as

closed?
In order that a proceeding for the settlement of the estate of a deceasedmaybe
deemed ready for final closure:

(1) There should have been issued already an order of distributionor assignment of the estate
of the decedent among or to those entitledtheretoby will or by law, but
(2) Such order shall not be issued until after it is shown that the “debts, funeral expenses,
expenses of administration, allowances, taxes, etc., chargeable to the estate have been paid,
which is but logical and proper. (3) Besides, such an orde is usally issued upon proper and
specificapplication for the purpose of the interested party or parties, and not of thecourt.
(Palicte vs. Ramolete, GR No. L-55076, September 21, 1987)

When will the heirs be entitled to residue of the estate?

It is only after, and not before, the payment of all debts, funeral expenses, expenses of
administration, allowances to the widow, and inheritancetaxshall have been affected that the
court should make a declaration of heirs or of such persons as are entitled by law to the
residue. (Jimoga-Onvs. Belmonte, 84 Phil. 545, GR No. L-1605, September 13, 1949)

What closes the settlement proceeding?

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What brings an intestate (or testate) proceeding to a close is the order of distribution
directing delivery of the residue to the persons entitledtheretoafter paying the indebtedness,
if any, left by the deceased. (PCIBvs. Escolin, GR Nos. L-27860 and L-27896, March 29,
1974)

What are the grounds to set aside a final liquidation?

The only instance where a party interested in a probate proceeding mayhavea final
liquidation set aside is when he is left out by reason of circumstancesbeyond his control or
through mistake or inadvertence not imputabletonegligence. Even then, the better practice
to secure relief is reopeningof thesame case by proper motion within the reglementary
period, insteadof anindependent action. (Vda. De Alberto vs. CA, GR No. L-29759,
May18, 1989)

What is the effect of approval of partition and distribution and receipt ofshare of the
distributee on the judgment of partition?

Where a partition had not only been approved and thus become a judgment of the court,
but distribution of the estate in pursuance of such partitionhadfully been carried out, and
the heirs had received the property assignedtothem, they are precluded from subsequently
attacking its validity or anypart of it. (Ralla vs. Judge Untalan, GR No. L-63253-54,
April 27, 1989)

What is the so-called “doctrine of non-interference”?

We hold that the separate action was improperly filed for it is the probatecourt that has
the exclusive jurisdiction to make a just and legal distributionof the estate. In the interest
of orderly procedure and to avoid confusingandconflicting dispositions of a decedent’s
estate, a court should not interferewith probate proceedings pending in a co-equal court.
(Solivio vs. CA, GRNo. 83484, February 12, 1990)

Would non-compliance of the order of distribution of estate terminateprobate

proceedings?

As long as the order of the distribution of the estate has not been compliedwith, the
probate proceedings cannot be deemed closed and terminatedbecause a judicial partition is
not final and conclusive and does not prevent the heirs from bringing an action to obtain
his share, providedtheprescriptive period therefore has not elapsed. (Mari vs. Bonilia,
GRNo. L-852, March 19, 1949)

Can an heir who has not receive his share of the estate still file his claimthereto?

As a general rule, the better practice, however, for the heir who has not received his share,
is to demand his share through a proper motioninthesame probate or administration
proceedings, or for reopening of the probate

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or administrative proceedings if it had already been closed, and not throughan
independent action. (Solivio vs. CA, GR No. 83484, February 12, 1990)
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