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Rule 85

G.R. No. 127165 May 2, 2006 Held:

SALONGA HERNANDEZ & ALLADO, Petitioner, Petitioner correctly cites Occeña v. Marquez29 as providing the
vs. governing rule on that matter as previously settled in the 1905 case
OLIVIA SENGCO PASCUAL and THE HONORABLE COURT OF of Escueta v. Sy-Juilliong,30 to wit:
APPEALS, Respondents.
The rule is that when a lawyer has rendered legal services to the
TINGA, J.: executor or administrator to assist him in the execution of his
trust, his attorney's fees may be allowed as expenses of
Facts: 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
Doña Adela died on 18 August 1987, leaving behind a last will and
entitled to reimbursement from the estate. The procedure to be
testament executed in 1978, designating Olivia Pascual as the
followed by counsel in order to collect his fees is to request the
executrix, as well as the principal beneficiary of her estate. The will
administrator to make payment, and should the latter fail to pay,
also bequeathed several legacies and devises to several individuals
either to (a) file an action against him in his personal capacity, and
and institutions.
not as administrator, or (b) file a petition in the testate or intestate
proceedings asking the court, after notice to all the heirs and
Olivia Pascual then engaged the services of petitioner in connection interested parties, to direct the payment of his fees as expenses of
with the settlement of the estate of Doña Adela. Their agreement as administration. Whichever course is adopted, the heirs and other
to the professional fees due to petitioner is contained in a letter persons interested in the estate will have the right to inquire into
dated 25 August 1987, signed by Atty. Esteban Salonga in behalf of the value of the services of the lawyer and on the necessity of his
petitioner and Olivia Pascual. It is stipulated therein, among others, employment.31
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
We reiterate that as a general rule, it is the executor or
of the estate. The 3% final fee shall be payable upon approval by the
administrator who is primarily liable for attorney's fees due to the
court of the agreement for the distribution of the properties to the
lawyer who rendered legal services for the executor or administrator
court designated heirs of the estate."6
in relation to the settlement of the estate. The executor or
administrator may seek reimbursement from the estate for the sums
On 26 August 1987, private respondent, represented by petitioner, paid in attorney's fees if it can be shown that the services of the
commenced a petition for the probate of the last will and testament lawyer redounded to the benefit of the estate.32 However, if the
of Doña Adela before the Probate Court. executor or administrator refuses to pay the attorney's fees, the
lawyer has two modes of recourse. First, the lawyer may file an
After due trial, on 1 July 1993, the Probate Court rendered a action against the executor or administrator, but in his/her personal
Decision8 allowing probate of the 1978 Last Will and Testament of capacity and not as administrator or executor. Second, the lawyer
Doña Adela. Letters testamentary were issued to Olivia Pascual. may file a petition in the testate or intestate proceedings, asking the
court to direct the payment of attorney's fees as an expense of
On 27 July 1993, petitioner filed a Notice of Attorney's Lien administration. If the second mode is resorted to, it is essential that
equivalent to three percent (3%) of the total gross estate of the late notice to all the heirs and interested parties be made so as to enable
Doña Adela S. Pascual. these persons to inquire into the value of the services of the lawyer
and on the necessity of his employment.

Accordingly, on 22 November 1993, petitioner filed a Motion to

Annotate Attorney's Lien on Properties of the Estate of Doña Adela It may be so that petitioner, in filing this Notice of Attorney's Lien,
Vda. de Pascual.13 initially intended to hold Olivia Pascual, and not Doña Adela's estate,
liable for the attorney's fees. It did identify itself as the lawyer of
Olivia Pascual, and the Probate Court did note that the lien be
On 26 April 1994, petitioner filed a Motion for Writ of Execution for satisfied chargeable to the share of the executor. Yet it must also be
the partial execution of petitioner's attorney's lien. noted that such lien, as it is, is only contingent on the final
settlement of the estate of Doña Adela, at such time, since the
On 2 June 1994, the Probate Court issued the first assailed order Retainer Agreement on which the lien is hinged provides that the
denying the motion for writ of execution. final fee "be payable upon approval by the court of the agreement
for the distribution of the properties to the court designated heirs of
Through a petition for certiorari and mandamus, petitioner assailed the estate."39 This is also made clear by the order noting the lien,
the order of the Probate Court denying its motion for the immediate which qualified that said lien was chargeable only to the share of
execution, partial or otherwise, of its claim for attorney's fees. The Olivia Pascual, hence implying that at the very least, it may be
orders of the RTC were affirmed by the Court of Appeals, effectively claimed only after her share to Doña Adela's estate is already
precluding petitioner's attempt to execute on its attorney's lien. determinate.

Issue: WON a lawyer who renders legal services to the executor or In rendering its assailed Decision, the Court of Appeals relied on this
administrator of an estate can claim attorney's fees against the qualification made by the Probate Court that the lien for attorney's
estate instead of the executor or administrator. fees was chargeable only to the share of Olivia Pascual. Yet the
Notice of Attorney's Lien only seeks to serve notice of the In Special Proceeding No. 1953 involving the estate of the late
pendency of the claim for attorney's fees, and not the payment of Dominador Tumang and pending before the Court of First Instance
such fees itself. On its own, the Notice of Attorney's Lien cannot of Pampanga, the widow of the deceased, namely Magdalena A.
serve as the basis for the Probate Court to authorize the payment Tumang, administratrix and executrix of the will, filed a petition to
to petitioner of attorney's fees. declare the testate proceedings definitely terminated and closed
with respect to herself and two of her children — Melba Tumang
On the other hand, Escueta and its kindred cases do explicitly Ticzon and Nestor A. Tumang. The petition was opposed by
recognize the recourse for the lawyer to directly make the claim for appellee's daughter, Guia T. Laguio and her children on the ground
attorney's fees against the estate, not the executor or that appellee, as administratrix and executrix, had not yet delivered
administrator. The filing of the Notice of Attorney's Lien and the all properties adjudicated to them.
qualificatory character of the rulings thereon, do not preclude the
resort to the mode of recovery against the estate as authorized by Resolving the foregoing, the court a quo issued the first questioned
jurisprudence. Clearly then, we disagree with the opinion of the Order on February 5, 1971, stating in part, the following:
Court of Appeals that attorney's fees can be claimed only against
the share of Olivia Pascual. Considering the opposition well founded, the
court hereby considers the motion to require
Moreover, it cannot be escaped that the Retainer Agreement was administratrix to render an accounting
entered into between petitioner and Olivia Pascual prior to the filing untenable, as the final accounting of the
of the probate petition, and that at such time, she had no administratrix was already approved and
recognized right to represent the estate of Doña Adela yet. This therefore denies the motion of oppositor and
circumstance further bolsters our opinion that if petitioner insists on counter-petitioner dated Jan. 25, 1971. 2
the judicial enforcement of the Retainer Agreement, its proper
remedy, authorized by law and jurisprudence, would be a personal A motion for reconsideration of the foregoing Order was filed by
action against Olivia Pascual, and not against the estate of Doña Guia T. Laguio and her minor children. On August 16, 1971, the
Adela. If this were the recourse pursued by petitioner, and Olivia court a quo issued the second questioned Order denying the motion
Pascual is ultimately held liable under the Retainer Agreement for for reconsideration in the following manner:
attorney's fees, she may nonetheless seek reimbursement from the
estate of Doña Adela if she were able to establish that the attorney's
After a careful consideration of the grounds
fees paid to petitioner were necessary administration expenses.
relied upon by the movant counter-petitioner,
this Court resolves to deny the motion for
The second or alternative recourse is the direct claim for attorney's reconsideration for the reason that in view of
fees against the estate, as authorized under Escueta. The character said counter-petitioner's receipt of the cash
of this claim is not contractual in nature, but rather, as a dividends in question without first requiring the
reimbursement for a necessary expense of administration, and it administratrix the accounting now being sought
will be allowed if it satisfies the criteria for necessary expenses of to be rendered for purposes of determining the
administration. Its entitlement can be established by the actual correctness of the cash dividends constitutes
services rendered by the lawyer necessary to the accomplishment of already a waiver on her part to question such
the purposes of administration, and not necessarily by the contract correctness of the aforesaid cash dividends. The
of engagement of the attorney's services. counter-petitioner is being assisted by counsel in
the person of her own husband, and who being
In any event, whether the claim for attorney's fees was pursued well-versed in such legal process, could have
through a separate suit against Olivia Pascual (in her personal rejected receipt of the said cash dividends on the
capacity) for the enforcement of the Retainer Agreement, or against shares of stock if the correctness of the same
the estate of Doña Adela as reimbursement for necessary was at that time being doubted. To say the least,
administration expenses, it remains essential that a hearing be therefore, the grounds for the motion for
conducted on the claim. In either case too, the hearing will focus on reconsideration are, in the honest opinion of this
the value of the services of the petitioner and the necessity of Court, unmeritorious, and all the motion, in
engaging petitioner as counsel. effect, is hereby denied. 3

G.R. No. L-50277 February 14, 1980 Issue: whether or not the court should have required the executrix
to render an accounting of the cash and stock dividends received
TESTATE ESTATE OF THE LATE DOMINADOR TUMANG, after the approval of her final accounts.
MAGDALENA A. TUMANG, administratrix-appellee,
vs. Held:
Section 8 of Rule 85 provides that the "executor or administrator
shall render an account of his administration within one (1) year
from the time of receiving letters testamentary or of
ANTONIO, J.: administration ..., and he shall render such further accounts as the
court may require until the estate is wholly settled."
In the instant case, further accounts by the executrix appear to be in
order, in view of the fact that the dividends sought to be accounted
for are not included in the final accounts rendered by the executrix. agreed to pay, as and for his legal services rendered, the sum of
It appears that the interests of all the parties will be better served P68,000.00.
and the conflict between petitioners and respondent will be
resolved if such additional accounting is made. Further, "it has been The heirs filed their answer and denied the claim for P68,000.00
held that an executor or administrator who receives assets of the alleging that the sum agreed upon was only P7,000.00, a sum they
estate after he has filed an account should file a supplementary had allegedly already paid.
account thereof, and may be compelled to do so, but that it is only
with respect to matters occuring after the settlement of final
Issue: WON a lawyer acting as administrator and executor may be
account that representatives will be compelled to file
allowed to collect attorney’s fee.
supplementary account." 4 It is only in a case where the petition to
compel an executor to account after he has accounted and has been
discharged fails to allege that any further sums came into the hands Held:
of the executor, and the executor specifically denies the receipt of
any further sums that the accounting should be denied. 5 It is pointed out that an attorney who is concurrently an executor of
a will is barred from recovering attorney's fees from the estate. The
There is no question that in the instant case, the fact that the Rule is specifically as follows:
executrix received funds of the estate after the approval of her final
accounts and before the issuance of an order finally closing the SEC. 7. What expenses and fees allowed executor
proceedings is admitted. She must, therefore, account for the same, or administrator. Not to charge for services as
in consonance with her duty to account for all the assets of the attorney. Compensation provided by will controls
decedent's estate which have come into her possession by virtue of unless renounced. — An executor or
her office. 6 An executor should account for all his receipts and administrator shall be allowed the necessary
disbursements since his last accounting. 7 expenses in the care, management and
settlement of the estate, and for his services,
We disagree with the lower court's finding that petitioners, by four pesos per day for the time actually and
receiving the dividends without requiring an accounting, had waived necessarily employed, or a commission upon the
their right to do so. The duty of an executor or administrator to value of so much of the estate as comes into his
render an account is not a mere incident of an administration possession and is finally disposed of by him in
proceeding which can be waived or disregarded. It is a duty that has the payment of debts, expenses, legacies, or
to be performed and duly acted upon by the court before the distributive shares, or by delivery to heirs or
administration is finally ordered closed and terminated, 8 to the end devisees, of two per centum of the first five
that no part of the decedent's estate be left unaccounted for. The thousand pesos of such value, one per centum of
fact that the final accounts had been approved does not divest the so much of such value as exceeds five thousand
court of jurisdiction to require supplemental accounting for, aside pesos and does not exceed thirty thousand
from the initial accounting, the Rules provide that "he shall render pesos, one-half per centum of so much of such
such further accounts as the court may require until the estate is value as exceeds thirty thousand pesos and does
wholly settled." 9 not exceed one hundred thousand pesos, and
one-quarter per centum of so much of such
value as exceeds one hundred thousand pesos.
G.R. No. 86250 February 26, 1990
But in any special case, where the estate is large,
and the settlement has been attended with
ALBERTO F. LACSON, EDITHA F. LACSON, ROMEO F. LACSON and great difficulty, and has required a high degree
ZENA F. VELASCO, petitioners, of capacity on the part of the executor or
vs. administrator, a greater sum may be allowed. If
HON. LUIS R. REYES, in his capacity as presiding judge of Branch 22 objection to the fees allowed be taken, the
of the Regional Trial Court of Cavite, Branch 22, and/or Multiple allowance may be reexamined on appeal.
Sala, Imus, Cavite, and EPHRAIM J. SERQUINA, respondents.
If there are two or more executors or
SARMIENTO, J.: administrators, the compensation shall be
apportioned among them by the court according
Facts: to the services actually rendered by them
On August 26, 1987, the private respondent, Ephraim Serquina,
petitioned the respondent court for the probate of the last will and When the executor or administrator is an
testament of Carmelita Farlin. He also petitioned the court in his attorney, he shall not charge against the estate
capacity as counsel for the heirs, the herein petitioners, and as any professional fees for legal services rendered
executor under the will. by him.

The petition was not opposed and hence, on November 17, 1987, When the deceased by will makes some other
the respondent court issued a "certificate of allowance. provision for the compensation of his executor,
that provision shall be a full satisfaction for his
On March 14, 1988, Atty. Ephraim Serquina filed a "motion for services unless by a written instrument filed in
attorney's fees" 3 against the petitioners, alleging that the heirs had the court he renounces all claim to the
compensation provided by the will. 17
The rule is therefore clear that an administrator or executor may estate," 27 to entitle him to a bigger compensation. He did not
be allowed fees for the necessary expenses he has incurred as exactly achieve anything out of the ordinary.
such, but he may not recover attorney's fees from the estate. His
compensation is fixed by the rule but such a compensation is in the The records also reveal that Atty. Serquina has already been paid the
nature of executor's or administrator's commissions, and never as sum of P6,000.00. 28 It is our considered opinion that he should be
attorney's fees. In one case, 18 we held that "a greater sum [other entitled to P15,000.00 for his efforts on a quantum meruit basis.
than that established by the rule] may be allowed 'in any special Hence, we hold the heirs liable for P9,000.00 more.
case, where the estate is large, and the settlement has been
attended with great difficulty, and has required a high degree of
capacity on the part of the executor or administrator.'" 19 It is also
left to the sound discretion of the court. 20 With respect to
attorney's fees, the rule, as we have seen, disallows them.
Accordingly, to the extent that the trial court set aside the sum of
P65,000.00 as and for Mr. Serquina's attorney's fees, to operate as a Rule 86 Case 1
"lien on the subject properties," 21 the trial judge must be said to
have gravely abused its discretion (apart from the fact that it never G.R. No. 147999 February 27, 2004
acquired jurisdiction, in the first place, to act on said Mr. Serquina's
"motion for attorney's fees"). SUI MAN HUI CHAN and GONZALO CO, petitioners
The next question is quite obvious: Who shoulders attorney's fees? HON. COURT OF APPEALS and OSCAR D. MEDALLA, respondents.
We have held that a lawyer of an administrator or executor may not
charge the estate for his fees, but rather, his client. 22 Mutatis QUISUMBING, J.:
mutandis, where the administrator is himself the counsel for the
heirs, it is the latter who must pay therefor.
In that connection, attorney's fees are in the nature of actual
damages, which must be duly proved. 23 They are also subject to On March 30, 1999, private respondent Oscar Medalla filed a
certain standards, to wit: (1) they must be reasonable, that is to say, complaint before the RTC of Mandaluyong City, for collection of a
they must have a bearing on the importance of the subject matter in sum of money arising from breach of a contract of lease and
controversy; (2) the extent of the services rendered; and (3) the damages, against petitioners Sui Man Hui Chan and Gonzalo Co.
professional standing of the lawyer. 24 In all cases, they must be
addressed in a full-blown trial and not on the bare word of the Napoleon C. Medalla as lessor and Ramon Chan as lessee entered
parties. 25 And always, they are subject to the moderating hand of into a Lease Contract3 over a hotel building located at No. 29
the courts. Abanao Street, Baguio City. Chan would use the leased premises as a
restaurant named "Cypress Inn". Pertinently, the parties agreed on
The records show that Atty. Ephraim Serquina, as counsel for the the following:
heirs, performed the following:
1. The period of lease shall be for ten (10) years or from 15
xxx xxx xxx July 1988 to 15 July 1998.

5. That after the order of allowance for probate 2. The payment of the realty taxes due to the government
of the will, the undersigned counsel assisted the on the leased premises shall be for the account of the
heirs to transfer immediately the above- Lessee.
mentioned real estate in their respective names,
from (sic) the payment of estate taxes in the 3. The agreement is binding upon the heirs and/or
Bureau of Internal Revenue to the issuance by successors-in-interest of the Lessor and the Lessee.
the Registry of Deeds of the titles, in order for
the heirs to sell the foregoing real estate of Petitioner Gonzalo Co was employed by Ramon Chan as the general
10,683 sq. cm (which was also the subject of sale manager of "Cypress Inn" and acted as his agent in all his dealings
prior to the death of the testator) to settle with Napoleon Medalla.
testator's obligations and day-to-day subsistence
being (sic) that the heirs, except Zena F. Velasco,
On August 5, 1989, Ramon Chan died. He was survived by his wife,
are not employed neither doing any business; 26
petitioner Sui Man Hui Chan, who continued to operate the
The Court is not persuaded from the facts above that Atty. Serquina
is entitled to the sum claimed by him (P68,000.00) or that awarded
On July 17, 1996, Napoleon Medalla died. Among his heirs is private
by the lower court (P65,000.00). The Court observes that these are
respondent Oscar Medalla, who succeeded him as owner and lessor
acts performed routinely since they form part of what any lawyer
of the leased premises. Petitioners Chan and Co, the latter, in his
worth his salt is expected to do. The will was furthermore not
capacity as agent and general manager, continued to deal with
contested. They are not, so Justice Pedro Tuason wrote, "a case
private respondent Medalla in all transactions pertaining to the
[where] the administrator was able to stop what appeared to be an
improvident disbursement of a substantial amount without having
to employ outside legal help at an additional expense to the
Petitioners failed to pay the monthly rentals due on the leased
premises. Despite several Statements of Accounts sent by Medalla,
petitioners failed to pay the rentals due but, nonetheless, continued
to use and occupy the leased premises.

Medalla then sent demand letters to petitioners, but the latter still
failed to pay the unpaid rentals. He also found out that petitioners
had not paid the realty taxes due on the leased premises since 1991,
amounting to ₱610,019.11. Medalla then asked petitioners to settle
the unpaid rentals, pay the unpaid real estate taxes, and vacate the
leased premises.

On January 1999, petitioners vacated the premises but without

paying their unpaid rentals and realty taxes. Aggrieved by
petitioners’ refusal to pay the amounts owing, which had reached
₱4,147,901.80 by March 1999, private respondent Medalla
instituted Civil Case No. MC99-666.

Issue: WON any claim for unpaid rentals should be made against the
estate of Ramon Chan pursuant to Section 5, Rule 86 of the Revised
Rules of Court.


At any rate, we find no merit to petitioners’ contention that they are

not real parties-in-interest since they are not parties nor signatories
to the contract and hence should not have been impleaded as
defendants. It is undeniable that petitioner Chan is an heir of Ramon
Chan and, together with petitioner Co, was a successor-in-interest to
the restaurant business of the late Ramon Chan. Both continued to
operate the business after the death of Ramon. Thus, they are real
parties-in-interest in the case filed by private respondent,
notwithstanding that they are not signatories to the Contract of

A lease contract is not essentially personal in character. Thus, the

rights and obligations therein are transmissible to the heirs.11 The
general rule, therefore, is that heirs are bound by contracts entered
into by their predecessors-in-interest except when the rights and
obligations arising therefrom are not transmissible by (1) their
nature, (2) stipulation or (3) provision of law.12 In the subject
Contract of Lease, not only were there no stipulations prohibiting
any transmission of rights, but its very terms and conditions
explicitly provided for the transmission of the rights of the lessor
and of the lessee to their respective heirs and successors. The
contract is the law between the parties. The death of a party does
not excuse nonperformance of a contract, which involves a property
right, and the rights and obligations thereunder pass to the
successors or representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the
other party has a property interest in the subject matter of the

Finally, as to petitioners’ contention that any claim should have

been filed before the estate proceeding of Ramon Chan pursuant
to Section 5 of Rule 86, the trial court found that the unpaid rentals
sought to be claimed were for the period April 1993 to December
1998. Note that Ramon Chan, the original lessee, died on August 5,
1989. In other words, as the unpaid rentals did not accrue during
the lifetime of Ramon Chan, but well after his death, his estate
might not be held liable for them. Hence, there is no indubitable
basis to apply Section 5, Rule 86, of the Revised Rules of Court as
petitioners urge respondents to do.