Dalisay vs. Consolacion

A judicial administrator may not be removed on the sole ground that he owes money to the estate and has failed to produce receipts for payment, where the evidence does not indubitably show bad faith or fraudulent intent in his claim of having already paid. Such removal constitutes grave abuse of discretion, though the court may proceed against the administrator on other duly substantiated grounds.

Amado Dalisay y Bangoy died intestate on September 1, 1975 in Davao City, a bachelor without descendants, ascendants, or any apparent forced heir, leaving personal and real properties worth approximately one million pesos. Petitioner Facundo A. Dalisay, who had managed the decedent's affairs under a Special Power of Attorney dated August 15, 1963, was appointed judicial administrator of the estate in Special Proceeding No. 1986 before the Court of First Instance of Davao, Branch II. Private respondent Aniceto S. Dalisay claimed to be the nearest of kin of the deceased and contested the appointment.

Amado Dalisay y Bangoy died intestate on September 1, 1975 in Davao City. He was a bachelor without descendants or ascendants, whether legitimate or otherwise, and apparently left no forced heir. His estate, consisting principally of income-producing urban and agricultural lands together with some personal properties, was valued at approximately one million pesos. A petition for the issuance of letters of administration was filed below, praying that the Clerk of Court, Atty. Eriberto A. Unson, be appointed administrator.

After due notice and hearing, respondent Judge Francisco Consolacion selected and appointed petitioner Facundo A. Dalisay from among several nominees of the parties as judicial administrator. The appointment was based on the finding that Facundo enjoyed the confidence of the decedent — evidenced by a Special Power of Attorney dated August 15, 1963 and an Affidavit dated June 2, 1974 — and had been managing and overseeing the affairs of the estate up to the decedent's death. Corresponding letters of administration were issued on March 15, 1976. Private respondent Aniceto S. Dalisay, claiming to be the nearest of kin of the deceased, moved for reconsideration but was denied; his subsequent attempt to appeal was withdrawn.

Because certain properties were in the possession of private respondent, petitioner moved for their delivery to him, but this was denied by the vacation judge then acting in place of respondent judge. An inventory submitted by Aniceto Dalisay revealed a promissory note executed by petitioner on August 18, 1973 in the amount of P10,000 in favor of the late Amado Dalisay, with no record of payment. On May 31, 1976, the court directed petitioner to appear and explain or produce receipts of payment. At the hearing, petitioner admitted signing the promissory note after the execution of a deed of sale of two motor vehicles in his favor, and admitted he had not paid the installments in the manner set forth in the note but claimed he had paid the full amount. When asked to produce receipts, he claimed he obtained none because he and the decedent were like brothers. The court found this explanation unconvincing and, on June 14, 1976, ordered petitioner to pay the estate P10,000 within sixty days.

Petitioner sought reconsideration, explaining that he had already paid the amount but was precluded from testifying on the matter under the rule against testimony of survivors, and proposed instead to pay in monthly installments of P500. Private respondent countered with a motion asking that petitioner be removed or allowed to resign, arguing that his failure to pay may be considered evidence of abuse of trust and confidence. Petitioner filed a rejoinder contending there was no legal ground for removal. On August 16, 1976, respondent judge relieved petitioner as judicial administrator, reasoning that he had not measured up to the standard of integrity and character required, that his explanation regarding the promissory note did not speak well of his character, and that his continuance in the position would work to the disadvantage of the estate. It was this order, and the order denying reconsideration, that petitioner impugned in the present petition.

• Grave Abuse of Discretion: Petitioner argued that respondent judge acted in grave abuse of discretion in relieving him as judicial administrator. He pointed out that it was actually he who revealed the existence of the promissory note — an allegation not denied by respondents — and that his claim of having already paid, even if unconvincing to the court, was not so entirely and totally incredible as to justify the conclusion that he lacked the integrity and character required of a judicial administrator.
• No Legal Ground for Removal: Petitioner contended that there was no legal ground for his removal, as he had not refused to pay the amount owed but merely proposed to pay in installments, which could not have converted him into a debtor in bad faith.

• Discretionary Appointment and Removal: Respondent argued that petitioner, not being related to the deceased, was appointed merely in the exercise of the court's discretion and could not claim any proprietary or pecuniary right to insist on administering the properties under custodia legis; accordingly, the court should have wide discretion in removing him as well.
• Abuse of Trust and Confidence: Respondent maintained that petitioner's failure to pay the P10,000 obligation could be considered evidence of abuse of trust and confidence, warranting his removal.
• New Grounds for Removal: In a motion dated May 10, 1979, private respondent sought leave to file a motion with the probate court for petitioner's removal on grounds different from those on which he was originally removed, including neglect of court orders, unauthorized cash advances, failure to collect estate income, failure to collect rentals from relatives occupying estate properties, failure to protect the estate from spurious claims, padded expenses, and perjury.

• Grave Abuse of Discretion: Whether the respondent judge committed grave abuse of discretion in removing petitioner as judicial administrator on the ground that his explanation regarding the promissory note demonstrated a lack of integrity.
• Sufficiency of Ground for Removal: Whether the mere existence of a debt to the estate and the inability to produce receipts for payment, without indubitable evidence of bad faith or fraudulent intent, constitutes a sufficient ground for removal of a judicial administrator.

• Grave Abuse of Discretion: Yes. The orders removing petitioner were set aside, the ground relied upon being precipitate and constituting grave abuse of discretion.
• Sufficiency of Ground for Removal: No. The mere fact that an administrator owes money to the decedent is not in itself a ground for removal, and where the evidence does not indubitably show that the claim of payment was made in bad faith or in an obvious attempt to defraud the estate, removal is not justified.

• Grave Abuse of Discretion: The Court examined the sequence of events leading to petitioner's removal and found the ground relied upon by respondent judge to be "quite flimsy." The court below had itself noted that it was not definite that petitioner's explanation was malicious and inherently unfounded. Petitioner had not refused to pay the obligation; he only asked for liberality to pay in installments. Such a proposal could not have converted him into a debtor in bad faith. The Court characterized the integrity point raised by respondent court as "a little harsh" and the removal as "rather precipitate." Because the ground was insufficient, the assailed orders constituted grave abuse of discretion and were set aside.

• Sufficiency of Ground for Removal: The Court articulated that the mere fact that an administrator happens to owe money to the decedent is not in itself a ground for removal. In this case, the evidence did not seem indubitable that petitioner's claim of payment was made in bad faith or in an obvious attempt to defraud the estate. The Court noted that petitioner was the one who revealed the existence of the promissory note, which undercut any inference of concealment or fraudulent intent. However, the Court recognized that the new charges raised by private respondent — including neglect of court orders, unauthorized disbursements, failure to collect estate income, failure to protect the estate from spurious claims, padded expenses, and perjury — if sufficiently substantiated after appropriate proceedings, would legally justify removal. The matter was thus remanded without prejudice to the probate court acting on those new grounds.

• Grounds for Removal of a Judicial Administrator — A judicial administrator may be removed for causes provided under the Rules of Court, such as neglect of court orders and duties expressly provided by the Rules. However, the mere existence of a debt owed by the administrator to the decedent, without indubitable evidence of bad faith or fraudulent intent in the administrator's claim of payment, is not a sufficient ground for removal. Removal on such a basis constitutes grave abuse of discretion.

• Standard of Integrity for Judicial Administrators — While a judicial administrator must possess utmost integrity and be "like Caesar's wife, above suspicion," the Court must not apply this standard in a precipitate or harsh manner. The standard cannot be invoked to remove an administrator whose explanation, though unconvincing, is not shown to be malicious, inherently unfounded, or made in bad faith.

• "the mere fact that an administrator happens to owe money to the decedent is not in itself a ground for his removal, and in this case the evidence does not seem indubitable that petitioner's claim of payment was made in bad faith or in an obvious attempt to defraud the estate" — This passage articulates the ratio decidendi: the controlling rule that a debt to the estate, without proof of bad faith, does not justify removal of a judicial administrator.

• "We find the ground for which petitioner has been removed to be rather precipitate. From which, it results that the orders herein assailed constitute grave abuse of discretion and should be set aside." — This is the dispositive reasoning connecting the insufficiency of the ground to the legal conclusion of grave abuse of discretion, warranting the setting aside of the probate court's orders.

• "it would be fairer for all concerned for respondents to proceed against petitioner on the basis of the above-quoted charges against him" — This passage reflects the Court's pragmatic approach of remanding the matter to allow the probate court to act on more substantial, substantiated grounds for removal rather than the flimsy basis originally invoked.

• Section 2, Rule 82, Rules of Court — Cited by private respondent in the motion seeking leave to file a new removal proceeding, as the basis for removing an administrator who neglects to perform an order of the court or duties expressly provided by the Rules. The Court acknowledged that if the charges predicated on this provision were sufficiently substantiated, removal would be legally justified.
• Section 1, Rule 85, Rules of Court — Cited by private respondent for the proposition that the administrator is accountable for the income of the estate, in support of charges that petitioner failed to collect substantial income from tenants and lessees. The Court referenced this in the context of the new grounds that could justify removal if proven.

Antonio, Aquino, Concepcion, Jr., and Abad Santos, JJ., concurred. Santos, J., was on leave.