29.

ANTONIO QUIRINO, as Special Administrator, Testate Estate of Natividad C. Raquiza, and

Intestate Estate of Carmen M. Castellvi, petitioner,
vs.
HON. NATHANAEL M. GROSPE, in his capacity as Presiding Judge, Branch VI, Court of
First Instance of Pampanga, Fifth Judicial District, and WILFREDO M. GOINGCO,
Administrator, Testate Estate of Don Alfonso

G.R. No. L-58797 January 3l,1989

To allow intervenors instead of the estate of the instituted heir to receive the residue of the
estate would be not only prejudicial to the creditors of the instituted heir but also to the government
in the form of non-payment of taxes required by law.

Separate motions for reconsideration, motion for intervention, motion for clarificatory order
and omnibus motion for early resolution and immediate release of funds were filed.

Motion for Reconsideration of Juan F. Gomez.

Gomez’ claims are for attorney's fees equivalent to 12% of one-third (1/3) of the estate of
Don Alfonso Castellvi and P30,000.00 representing transportation and representation expenses, for
services admittedly rendered to the heirs of Don Juan Castellvi. These claims may not be properly
charged against the estate of Don Alfonso Castellvi.

As held in Gabin v. Malleja (84 Phil. 794), the term "claims" required to be presented
against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature
which could have been enforced against the deceased in his lifetime or liability contracted by the
deceased before his death. It is important to note that movant’s claims for attorney's fees and
transportation as well as representation expenses are for services rendered to the alleged substituted
heirs of Don Juan Castellvi and such services did not inure to the benefit of Don Alfonso Castellvi or
his estate. The court charged with the settlement of the estate of Don Alfonso Castellvi is bound to
protect the estate from any disbursements based on claims not chargeable to the estate.

Motion for Reconsideration of Jesus T. David.

The claim for attorney's fees of intervenor Jesus T. David is for services rendered for the
benefit of Doña Carmen Castellvi, and not for the benefit of Don Alfonso Castellvi or his estate. As
discussed earlier, only claims which could have been enforced against the deceased in his lifetime are
allowed to be presented against his estate, with the exception of funeral expenses, expenses for the
last sickness and administration expenses in the ordinary course thereof.

As to the alleged attachment and levy of Doña Carmen's alleged administratrix' fees and share
in the estate of Don Alfonso Castellvi, the same cannot be given force and effect in the special
proceedings for the settlement of Don Alfonso's estate. It must be stressed that the subject of
settlement in this case is not the estate of Doña Carmen Castellvi. For intervenor to insist on
enforcing in this proceeding his claim against Doña Carmen's alleged fees as administratrix and share
in the estate of Don Alfonso Castellvi, would be irregular and untenable. It should be borne in mind
that the respondent court is one of limited jurisdiction, and it has no authority to determine as to who
are the heirs of Don Juan Castellvi and/or decide the claims or demands which may be properly paid
out of the funds of the estate of Doña Carmen Castellvi. Such issues have to be determined in separate
proceedings.

Motion for Reconsideration of the Raquiza children

Movants would like to impress upon this Court that the award of attorney's fees to Atty.
Mendoza equivalent to 12% of the gross value of the estate of Don Alfonso Castellvi is not valid on
the ground that they never gave their consent thereto, nor did Doña Carmen Castellvi, then
administratix of the estate of Don Alfonso Castellvi. However, the record of this case shows that
Natividad Castellvi-Raquiza, the instituted heir to two- third (2/3) of the estate of Don Alfonso
Castellvi, gave her conformity to such award of attorney's fees in favor of Atty. Mendoza. Moreover,
movants, through their father and general guardian Atty. Antonio V. Raquiza, had agreed to grant said
attorney's fees. In fact, separate manifestations were filed by Atty. Raquiza and Carmen Castellvi
with the court aquo stating that they were withdrawing their oppositions to said claim.

With regard to Floro's claim for payment for services rendered to the estate of Don Alfonso Castellvi,
the rule is that where the monetary claim against the administrator has a relation to his acts of
administration in the ordinary course thereof, such claims can be presented for payment with the court
where a special proceeding for the settlement of the estate is pending, although said claims were not
incurred by the deceased during his lifetime and collectible after his death. This is so, because the
administration is under the direct supervision of the court and the administrator is subject to its
authority.

Motion for Reconsideration of Antonio Quirino

As discussed earlier, Natividad Castellvi-Raquiza and Doña Carmen Castellvi (as

administratrix of the estate of Don Alfonso Castellvi) had given their conformity to the award of
attorney's fees to Atty. Mendoza. Petitioner who now is acting as special administrator of the estates
of Natividad Castellvi-Raquiza and Carmen Castellvi is estopped from questioning said award.

Insofar as payment of service fees to Exequiel Floro, the same was allowed for services
rendered by claimant for the benefit of the estate of Don Alfonso Castellvi and the same falls under
the category of "administration expense" which may be paid out of the finds of the estate. Moreover,
the heirs of Don Alfonso Castellvi had dropped their opposition to said claim, thus, they are barred
from questioning the same at this stage.

Motion for Intervention of Carmen Castellvi, et al.

Intervenors (as alleged substituted heirs of Don Juan Castellvi) seek clarification of the term
"instituted heirs' and a modification of the decision dated 25 April 1988, so that the term "instituted
heirs' would include the substituted heirs of Don Juan Castellvi. They likewise move for the setting
aside of the portion of the decision which provides for the final settlement and distribution of the
estate of Don Alfonso to the instituted heirs or their respective estates, if it would mean that delivery
of the one third (1/3) share of the estate of Don Alfonso is to be made only to Don Juan Castellvi or
his estate.

They further claim that for this Court to order the delivery of the residue of the estate of Don
Alfonso to the 'estate of Don Juan Castellvi (to the extent of (1/3 as decreed in Don Alfonso's last
will) instead of his substituted heirs, will result in the latter re-litigating among themselves and/or
with other parties for their respective shares over the estate of Don Juan Castellvi, when they had
already ventilated the issue of heirship over the same before the court a quo, and they were declared
heirs of Don Juan Castellvi and substituted heirs to his one-third (1/3) share in the estate of Don
Alfonso Castellvi.

ISSUE:

Whether or not the intervenors, instead of the instituted heirs, should be allowed to receive
the residue of the estate.

RULING:

No, the intervenors should not be allowed to receive the residue of the estate. To allow
intervenors instead of the estate of the instituted heir, Don Juan Castellvi to receive the residue of the
estate of Don Alfonso would be not only prejudicial to the creditors of Don Juan but also to the
government in the form of non-payment of taxes required by law. The transfer of the estate of Don
Alfonso Castellvi to his instituted heirs (Natividad Castellvi-Raquiza and Don Juan Castellvi) is
subject to payment of estate taxes. Before the estates of Don Juan Castellvi (and Natividad Castellvi-
Raquiza) can be transferred to their heirs, again, estate taxes must first be paid to the government. To
allow intervenors, as substituted heirs of Don Juan Castellvi, to receive directly from the estate of
Don Alfonso, the share pertaining to Don Juan, could result in a single transfer of property and a
single payment of estate taxes, in fraud of the government.

Moreover, the court a quo has no jurisdiction to determine who are the heirs of Don Juan Castellvi;
said issue has to be ventilated in a separate proceeding.

Motion for Clarificatory Order of Juan F. Gomez

Movant seeks clarification of the decision of this Court, dated 25 April 1988, denying his claim for
attorney's fees, as to whether or not it is meant to annul not only the order fixing his fees but also the
contract for services approved in the order issued by the court a quo, dated 5 October 1981.

Movant's claim is chargeable to the heirs of Don Juan Castellvi, his clients, and the court a quo has no
jurisdiction to fix such fees for services rendered not to the estate of Don Alfonso, but to the heirs of
Don Juan. It follows that the court a quo has no jurisdiction to approve a contract of legal services
between claimant and the heirs of Don Juan. The court a quo is of limited jurisdiction, empowered to
settle only the estate of Don Alfonso Castellvi: any act done in excess of such limits may not be given
force and effect.

30.

Testate estate of the deceased Raymundo Melliza y Angulo.

LAUREANA GABIN, claimant-appellant,
vs.
MARIA MELLIZA, ET AL., oppositors-appellees.

G.R. No. L-1849 October 25, 1949

By money claims, is meant any claim for "money, debt, or interest thereon," according to
section 21 of Rule 3 and section 1 of Rule 88. Not all money claims may, however, be presented, but
only those which are proper against the decedent, that is, claim upon a liability contracted by the
decedent before his death. Accordingly, claims arising after his death cannot thus presented, except
funeral expenses." (Moran on the Rules of Court, Volume 2, second edition, p. 347.)

On January 19, 1944, Raymundo Melliza and Laureana Gabin entered into a written
agreement whereby the former contracted the personal services of the latter to administer certain
haciendas owned by Raymundo Melliza for a period of thirty years from said date, at the option of
Laureana Gabin. As compensation for said personal services Melliza agreed to pay Gabin 350 cavans
of palay every agricultural year. It was further stipulated that Laureana Gabin cannot be dismissed
from the service without just and legal cause during the time she cared to serve within the said period
of thirty years, and in case of dismissal she shall have the right to be indemnified for the rest of the
period at the rate of 150 cavans of palay for each agricultural year.

Raymundo Melliza died on December 11, 1945, and testamentary proceedings were
thereafter instituted in t he Court of First Instance of Iloilo for the administration and distribution of
his estate. Having been deprived by the executrix Remedios S. de Villanueva of the administration of
the haciendas in question, Laureana Gabin presented to the probate court a claim against the estate of
the deceased Raymundo Melliza for the payment to her by the executrix of 150 cavans of palay
beginning the agricultural year 1945-1946 until the termination of the testamentary proceedings, and
that thereafter the heir or heirs to whom the haciendas may be adjudicated be ordered to pay the
claimant the same amount of palay every year until the expiration of thirty years from the agricultural
year 1945-1946.

ISSUE:

Whether or not appellant’s claim is a proper claim which may be allowed in the testamentary
proceedings.

RULE:

No, the claim may not be allowed since Rule 87, provides that immediately after the granting
of letters testamentary or of administration the court shall issue a notice requiring all person
having money claims against the decedent to file them in the office of the clerk of said court; and
section 5 provides that all claims for money against the decedent arising from contract, express or
implied, whether the same be due, not due, or contingent, all claims for funeral expenses and
expenses of the last sickness of the decedent, and judgment for money against the decedent, must be
filed within the time limited in the notice. "'By money claims, is meant any claim for "money, debt, or
interest thereon," according to section 21 of Rule 3 and section 1 of Rule 88. Not all money claims
may, however, be presented, but only those which are proper against the decedent, that is, claim upon
a liability contracted by the decedent before his death. Accordingly, claims arising after his death
cannot thus presented, except funeral expenses." (Moran on the Rules of Court, Volume 2, second
edition, p. 347.)

Upon the facts and the law involved in this case, we find no valid reason to reverse the order
appealed from.
 In the first place, the claim in question arose after the death of the decedent. Assuming
without deciding that the contract on which the claim is based is valid, the decedent appears to have
complied with it up to the time of his death. It was the executrix who dismissed the claimant from the
service as administratrix or manager of the haciendas of the deceased.

In the second place, the claim is not for money, debt, or interest thereon but for 150 cavans of
palay a year for twenty-nine agricultural years (one agricultural year having elapsed before the death
of Raymundo Melliza). Even if it wanted to, the probate court could not determine in advance the
value of the palay in money because the price of palay varies from year to year.

It appears from the record that before presenting the claim in question the claimant filed a
motion in the probate court praying that she be appointed coadministratrix of the estate of the
deceased on the strength of the contract of service hereinabove mentioned. But Judge Blanco denied
said motion without prejudice to the right of the claimant to present a claim in due form against the
estate. Appellant now contends in her third assignment of error that said order of Judge Blanco not
having been appealed from, "the lower court erred in not holding that the question of the presentation
and admission of the claimant's claim has become res judicata." This assignment of error is without
merit because the mere reservation by Judge Blanco to the claimant of her right to present the claim
in question in lieu of her appointment as coadministratrix of the estate of the deceased did not
preclude the court from denying said claim if, after hearing, it found the same to be improper or not
allowable in these proceedings.

31.

In re estate of the deceased DIEGO DE LA VIÑA.

JOSE MA. DE LA VIÑA Y DE LA ROSA, ex-administrator-appellant,
vs.
THE COLLECTOR OF INTERNAL REVENUE, creditor-appellee.

G.R. No. 46242 October 20, 1939

The necessary expenses of administration whose payment is given preference in the said
section 735 of the Code of Civil Procedure are those which the administrator may have incurred in
the care, administration and liquidation of the properties of the estate and the commissions due to
him for collections and disbursements which he may have made, and not those which he could or
might have wished to make out of his own pocket or but of the funds of the estate.

"Administration expenses," says Corpus Juris, volume 24, page 424, "include expenditures in
discovering and preserving assets, attorneys fees incurred in connection with the administration of
the estate, incurred in connection with the administration of the estate, cost recovered against the
representative in an action to recover assets, to established a claim against the estate, to try title to
land, and insurance premiums expended for the protection of the property and it has even been
considered that expenditures in carrying on decedent's business may be regarded as expenses of
administration."
 On April 8, 1920, after the death of Diego de la Viña, his brother, Dr. Jose Ma. de la Viña,
was appointed by the Court of First Instance of Negros Oriental as special administrator of the estate
of the deceased; and on the 20th of the same month and year he was appointed executor.

On January 23, 1926, this Court issued an order approving the accounts of the said Dr. Jose
de la Viña, as outgoing administrator of the estate of Diego de la Viña. It appears from the decision of
this Court rendered in said Civil Case G.R. No. 23747 that the following items were approved:

Special per diems of Jose de la Viña

as former adminstrator
.............................. P12,552.00

Legal Commission
............................... 4,141.33

Total
............................................................ 16,693.33

In the bill of exceptions in said case it also appears that the following expenses of Jose de la Viña
were approved:

Balance in his favor as executor

.................... P1,165.86

Balance on his aparceria

................................ 7,528.64

Total
...................................................................... 8,694.50

On July 16, 1927, the said Court of First Instance of Negros Oriental ordered in the present
case the payment to Dr. Jose de la Viña of the amount of 146.025 piculs of sugar belonging to him,
which product was applied to the payment of the administration expenses of the estate of Diego de la
Viña. The price of said sugar was fixed at P20 per picul by a subsequent order. Adding the sum of
P2,925, the value of said 146.025 piculs of sugar, to the sum of P25,387.83, the result is a total of
P28,312.83. As the amount of P9,228.65 has been paid on account, there remains a balance of
P19,048.18 in favor of the appellant.

It also appears that on February 23, 1932, this Court rendered judgment in G.R. No. 33870,
entitled "The Collector of Internal Revenue vs. Espiridion Villegas, as administrator of the estate of
Diego de la Viña", ordering the said administrator to pay the Insular Government, by way of income
tax for the year 1925, the sum of P18,420.93, with interest from August 20, 1939 until fully paid, and
the costs.
 The estate of Diego de la Viña does not have sufficient funds or property to pay fully both
judgments. When the Insular Government attempted to collect the amount of the said judgment in its
favor, Dr. Jose de la Viña objected on the ground that the judgments obtained by him are preferred
under section 735 of Act No. 190, and should first be paid. After the corresponding trial, the trial
court overruled the opposition and entered the above-quoted order.

ISSUE:

Whether or not the income tax which an estate owes the Insular Government partakes of the
nature of administration expenses for purposes of the order of payment established by section 735 of
Act No. 190

RULING:

No, the income tax which an estate owes the insular Government did not partake of the nature
of administration expenses for purposes of the order of payment established by section 735. Section
735 of the Code of Civil Procedure, as amended by Act No. 3960, provides as follows:

SEC. 735. Order of payment if estate insolvent. — If the assets which can be appropriated for the
payment of debts are not sufficient for that purpose, the executor or administrator shall, after pay the
debts against the estate in the following order:

1. The necessary funeral expenses;

2. The expenses of the last sickness;

3. What is owing to the laborer for salaries and wages earned and for indemnities due to him, for the
last year;

4. Debts due to the United States;

5. Taxes and assessments due to the Government, or any branch or subdivision thereof;

6. Debts due to the province;

7. Debts due to other creditors.

Section 680 of the same code of Civil Procedure provides as follows:

SEC. 680. — How allowed for services. — The executor or administrator shall be allowed necessary
expenses in the care, management, and settlement of the estate, and for his services, two dollars per
day for the time actually and necessarily employed, and a commission of three per cent upon all sums
disbursed in the payment of debts, expenses, and distributive shares, if the amount of such
disbursements does not exceed one thousand dollars. If the amount exceeds one thousand dollars and
does not exceed five thousand dollars and one-half per cent upon the excess, if the whole amount
does not exceed five thousand dollars, then the percentage as above provided, and one per cent on the
excess above five thousand dollars. But in any special 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, a greater sum may be allowed. But if objection to the fees
allowed be taken, the allowance may be re-examined by the Supreme Court on appeal.

When the administrator or executor is a lawyer, he shall not be allowed to charge against the
estate any professional fees, as such, for services rendered by himself. When the deceased by will
makes some other provision for compensation to his executor, the provision shall be full satisfaction
for his services, unless by a written instrument filed in the court he renounces all claim to the
compensation provided by the will.

The legal provision just quoted enumerates the services for which the administrator should be
paid and the commission to which he is entitled for collections and disbursement made by him.
Among these payments, which constitutes the expenses of administration, are not included pending
debts of the estate, whatever may be their nature. According to the said legal provision, only
payments which the executor or administration may have made in the discharge of his office and the
commissions to which he may be entitled, partakes of the nature of administration expenses. The
expenses of administration are due only to the executor or administrator, and he alone, and no other,
may collect them.

As we have said, the necessary expenses of administration whose payment is given

preference in the said section 735 of the Code of Civil Procedure are those which the administrator
may have incurred in the care, administration and liquidation of the properties of the estate and the
commissions due to him for collections and disbursements which he may have made, and not those
which he could or might have wished to make out of his own pocket or but of the funds of the estate.

"Administration expenses," says Corpus Juris, volume 24, page 424, "include expenditures in
discovering and preserving assets, attorneys fees incurred in connection with the administration of the
estate, incurred in connection with the administration of the estate, cost recovered against the
representative in an action to recover assets, to established a claim against the estate, to try title to
land, and insurance premiums expended for the protection of the property and it has even been
considered that expenditures in carrying on decedent's business may be regarded as expenses of
administration." And Woerner, volume 2, page 1197, paragraph 362, third edition, of his work
entitled "The American Law of Administration of the Estate," says the following:

It has already been stated, that for the expenses attending the accomplishment of the purpose
of administration growing out of the contract or obligation entered into by the personal representative
he is to be reimbursed out of the estate, and that his claim to reimbursed must be superior to the rights
of the beneficiaries. They are subject only to the lien of a mortgage executed on specific property by
the deceased in his lifetime. The expenses under this category include those paid for probate of the
will, as well in the Probate court as on appeal, or other proceeding in a contest, if carried on in good
faith; and the executor nominated in such will is entitled to a settlement of his account, and
reimbursement for his expenses in preserving the estate and for the funeral, although the will be
finally pronounced invalid; and, generally, all expenses necessary in the protection and preservation
of the estate, which have been held to include the costs of establishing a claim against the estate. But
the general rule seems rather to be that costs incurred by the administrator in defense of claims
against the estate, or in prosecuting claims in favor of it, pertain to the administration, and are to be
allowed in full; but costs incurred by claimants in establishing their claims stand on the same footing
with the claims themselves. The allowance of counsel fees and costs is discussed in connection with
the subject of accounting. Repairs necessary upon real estate of which the executor or administrator
has lawful possession also constitute expenses of administration; if the expenses incurred is general,
affecting all the property of the estate, it should be charged generally, but if attaching to a specific
portion or piece of property, it should be charged against such portion or piece.

The liability of the administrator as such cannot be treated as a continuation of a running

account with the deceased in his lifetime; nor can the defendant in an action by an administrator upon
a contract made by him as such, or to recover assets of the estate, set off or counterclaim a debt due
him from the deceased. And it is held that one who renders services for a trust has no recourse against
the trust, except to subject an equitable demand of the trustee to the payment of the debt.

The mere fact, therefore, that the income tax claimed by the Collector of Internal Revenue
had been imposed upon the profits obtained by the administrator of the estate in the sale of certain
properties of the deceased Diego de la Viña, after the latter's death, does not make the said tax a
necessary expense of administration, unless the administrator had paid it either from his own pocket
or out of the funds of the estate: in the first case the tax paid is converted into an expense of
administration which the administrator may fully recover, plus his commission; in the second case, he
may only collect his commission, which partakes of the nature of an expense of administration.

In view of the foregoing consideration, we are of the opinion and so hold: (1) that the income
tax which an estate owes to the insular government for profits obtained in the sale of properties
belonging to it, after the death of the testator, does not partake of the nature of necessary expenses of
administration; (2) that the lien created by section 1588 of the Revised Administrative Code for
internal revenue tax on properties subject to it, being general in character, yields to the preference
established by section 735 of the Code of Civil Procedure, as amended by Act No. 3960, in favor of
the necessary expenses of administration of the estate of a deceased person; and, (3) that the claim of
an administrator for the necessary expenses of administration enjoys preference over the claim for
payment of income tax.

Wherefore, the remedy prayed for is granted, the appealed decision is reversed, and it is held
that the claim of the appellant, Dr. Jose Ma. de la Viña y de la Rosa, as ex-administrator of the estate
of the deceased Diego de la Viña has preference over that of the Collector of Internal Revenue for
income tax.