Echaus vs. Blanco

A final and executory money judgment against a decedent’s estate cannot be enforced by execution or by mandamus compelling the probate court to order immediate payment; the claim must be filed in the estate proceedings and paid in due course of administration, and mandamus lies only where the creditor has a clear legal right and the respondent has an imperative duty. The non-dismissal of the civil action after the defendant’s death, though contrary to Section 21, Rule 3, does not nullify the judgment where the administrator actively participated, failed to object, and is estopped from assailing jurisdiction.

Angelina Puentevella Echaus, in her own behalf and as administratrix of the intestate estate of her deceased father Luis Puentevella, had sued Charles Newton Hodges in Civil Case No. 6628 for an accounting of their Ba-Ta Subdivision business and for her share in its profits and remaining assets. Hodges died during the litigation, and the Philippine Commercial and Industrial Bank (PCIB) became administrator of his testate estate in Special Proceedings No. 1672; Avelina A. Magno administered the separate estate of Hodges’s wife, Linnie Jane Hodges. The dispute implicated Section 21, Rule 3 of the Rules of Court, which requires money claims against a deceased defendant to be prosecuted in estate proceedings, and the probate court’s jurisdiction over property in custodia legis. It also implicated the rules on claims against estates, execution, attachment, and the extraordinary writ of mandamus.

On May 30, 1962, Angelina Puentevella Echaus, in her own behalf and as administratrix of the intestate estate of her deceased father Luis Puentevella, assisted by her husband Rene Echaus, filed a complaint against Charles Newton Hodges in the Court of First Instance of Negros Occidental. The complaint, docketed as Civil Case No. 6628, sought an accounting of the business covering the Ba-Ta Subdivision, recovery of her share in the profits and remaining assets of the business, and payment of expenses and moral and exemplary damages. Hodges filed his answer on July 20, 1962, and trial on the merits commenced on December 7, 1962 with Angelina’s testimony. Sometime thereafter, Hodges’s counsel manifested that Hodges had died on December 25, 1962; no motion to dismiss was filed by his counsel. On February 14, 1964, the trial court ordered the substitution of the Philippine Commercial and Industrial Bank (PCIB), as administrator of Hodges’s estate, as party defendant, and PCIB interposed no objection. A petition for settlement of Hodges’s estate had been instituted before the Court of First Instance of Iloilo, docketed as Special Proceedings No. 1672, and a notice to creditors was published in the newspaper Yuhum on March 13, 20, and 27, 1963.

On November 12, 1966, the parties in Civil Case No. 6628 submitted a stipulation of facts and submitted the case for decision on the basis thereof. They agreed to be bound by the commissioners’ findings on questions of fact if accepted by the court, and, with a view to the speedy settlement and termination of both Hodges’s estate and the estate of Luis Puentevella, they agreed to accept the court’s decision as final. On December 5, 1966, the trial court rendered judgment in favor of Angelina, ordering the defendant, in its capacity as administrator of the estate of Charles Newton Hodges, to pay her P851,472.83 with legal interest from the date of judgment until paid; all other claims arising from the counterclaim and third-party complaint were dismissed, with costs against the defendant.

On January 21, 1967, the same trial court granted Angelina’s motion for the issuance of a writ of execution against PCIB. The writ, however, was not enforced because Angelina opted to file a motion dated February 20, 1967 in Special Proceedings No. 1672 for payment of the judgment. Avelina A. Magno, as administratrix of the estate of the late Linnie Jane Hodges, opposed the motion. Meanwhile, in Civil Case No. 6628, Magno filed a petition for relief from judgment on March 27, 1967 and a motion to intervene dated April 24, 1967; on June 6, 1967, the heirs of C.N. Hodges also filed a motion to intervene. On July 20, 1967, Judge Ramon Blanco, presiding judge of the Court of First Instance of Iloilo, Branch V, taking cognizance of Special Proceedings No. 1672, issued an order holding in abeyance the resolution of Angelina’s motion for payment until after the resolution of the petition for relief from judgment filed by Magno in Civil Case No. 6628.

On November 23, 1967, the petition for relief from judgment was denied on the ground that Magno, as administratrix of the estate of Linnie Jane Hodges, was not a party to the case. The twin motions to intervene filed by the heirs of C.N. Hodges and by Magno were likewise denied because pleadings in intervention are allowed only before or during trial and not after a final and executory judgment had been rendered. On November 25, 1968, Angelina prayed for resolution of her previous motion to direct payment, stating that the petition for relief had been dismissed and had become final and executory because Magno failed to file a record on appeal on time. On February 26, 1969, Judge Blanco issued an order reiterating that the motion to direct payment could not yet be resolved and holding it in abeyance in view of the writ of preliminary injunction issued by the Supreme Court in G.R. Nos. L-27860 and L-27896 (PCIB vs. Blanco), enjoining him from hearing Special Proceedings Nos. 1307 and 1672. The same order noted that the writ had been clarified on October 4, 1967 to the effect that he was not restrained from approving final deeds of sale executed by the administrator PCIB covering properties of the respective estates and could act on other routinary administrative matters necessary for the gathering and preservation of the estate. Judge Blanco stated that he could not act on the motions and oppositions because they involved substantive and mandatory procedural requirements, considering that the decision in Civil Case No. 6628 was being questioned as a money claim that should have been prosecuted in the probate court, and held the resolution in abeyance unless allowed by the Supreme Court.

On February 28, 1969, Angelina manifested that Magno’s petition for certiorari and mandamus in G.R. No. L-30013, questioning the validity of the decision in Civil Case No. 6628, had been dismissed for lack of merit on January 15, 1969. Still, she failed to obtain an affirmative response to her motion. On April 21, 1969, she filed the instant petition for mandamus seeking to set aside Judge Blanco’s order of February 26, 1969 and to order PCIB to pay the judgment credit in Civil Case No. 6628. The trial court had found, and the record showed, that PCIB had been substituted as administrator of Hodges’s estate without objection and had actively participated in the civil case.

• Finality and Execution as a Matter of Right: Petitioner contended that the judgment in Civil Case No. 6628 was final and executory and that its execution became a matter of right under Rule 39, Section 1 of the Rules of Court; the duty to order execution was ministerial, and respondent judge’s failure to issue such an order was a proper case for mandamus.
• Reaching Properties Under Custodia Legis: Petitioner argued that properties under custodia legis may be reached for the satisfaction of a judgment, citing Reganon vs. Imperial, Fores vs. Santos, and De Borja vs. De Borja.
• Payment of the Judgment Credit: Petitioner sought to set aside respondent judge’s February 26, 1969 order and to compel PCIB, as administrator of Hodges’s estate, to pay the judgment credit of P851,472.83 with legal interest.

• Nullity for Lack of Jurisdiction: Private respondents contended that the judgment in Civil Case No. 6628 was null and void for having been rendered without jurisdiction; because C.N. Hodges died before judgment, the money claim should have been dismissed and prosecuted as a claim in the estate proceedings under Section 21, Rule 3 of the Rules of Court, which procedure was not followed.
• Bar by the Statute of Non-Claims: Private respondents argued that even if the judgment were valid, the claim presented in the estate proceedings was already barred by the statute of non-claims.
• Improper Procedure and Injunction: Respondent judge held in abeyance the motion for payment because the decision in Civil Case No. 6628 was being questioned as a money claim that should have been prosecuted in the probate court, and because the writ of preliminary injunction in G.R. Nos. L-27860 and L-27896 restrained him from hearing Special Proceedings Nos. 1307 and 1672.

• Validity of the Judgment Despite Death of Defendant: Whether the final judgment in Civil Case No. 6628 is null and void because, after C.N. Hodges died before final judgment, the money claim should have been dismissed and prosecuted in the estate proceedings under Section 21, Rule 3 of the Rules of Court.
• Statute of Non-Claims: Whether petitioner’s judgment credit is barred by the statute of non-claims for having been presented in Special Proceedings No. 1672 only on February 20, 1967, more than four years after publication of the notice to creditors.
• Proper Remedy for Enforcing the Judgment: Whether execution is the proper remedy to enforce the final judgment against the estate of C.N. Hodges, or whether the claim must be presented and paid in the probate proceedings.
• Custodia Legis: Whether properties under custodia legis may be attached or reached for the satisfaction of a judgment against the decedent.
• Mandamus: Whether mandamus lies to compel respondent judge to order PCIB, as administrator of Hodges’s estate, to pay petitioner’s judgment credit.

• Validity of the Judgment Despite Death of Defendant: No. The judgment is not null and void; the dismissal requirement under Section 21, Rule 3 is procedural, and PCIB’s active participation, failure to object, and failure to appeal estop it from assailing jurisdiction.
• Statute of Non-Claims: No. The period in the notice to creditors is not exclusive; a claim may be allowed before an order of distribution is entered for cause and on equitable terms, and no distribution order had been issued.
• Proper Remedy for Enforcing the Judgment: No. Execution is not the proper remedy; the claim must be presented in the probate court, which has jurisdiction over the estate in custodia legis, and the administrator may be ordered to pay in due course of administration.
• Custodia Legis: No. Properties under custodia legis may not be attached for a claim against the decedent; only the interest of an heir, legatee, or devisee may be attached under Rule 57, Section 7(f).
• Mandamus: No. Mandamus will not issue because payment of the judgment credit is not a matter of right and no showing exists that the probate court had allowed the administrator to dispose of estate property and pay debts.

• Validity of the Judgment Despite Death of Defendant: Section 21, Rule 3 of the Rules of Court provides that when the action is for recovery of money, debt, or interest thereon, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided in the rules. The civil case should therefore have been dismissed and instituted as a money claim in Special Proceedings No. 1672. Non-compliance, however, did not render the judgment null and void. Ignacio vs. Pampanga Bus Co., Inc. held that the rule is procedural in nature; whether the original suit proceeds to its conclusion or is dismissed and the claim is filed with the probate court, no substantial rights of the parties are prejudiced. In Ignacio, the administrator was substituted without objection and actively participated; the estate was held to have waived its right to have the claim re-litigated in the estate proceedings. Waiver is determined from the administrator’s acts and conduct, and the administrator’s failure to plead the statute of non-claims, active participation, and resistance to the claim in the civil suit amounted to waiver. Here, PCIB was substituted as administrator without objection and actively participated in Civil Case No. 6628; it did not appeal and did not raise the issue of jurisdiction at any stage. Although lack of jurisdiction may be assailed at any stage, active participation in proceedings before a court without jurisdiction estops a party from assailing such lack of jurisdiction, as held in Tajonera vs. Lamaroza, Nieta vs. Manila Banking Corp., and Sps. Antonio Martinez and Benedicta Balatbat vs. The Hon. Judge de la Merced, et al. Moreover, the validity of the decision in Civil Case No. 6628 had been passed upon with finality in G.R. No. L-30013 (PCIB vs. Blanco), which was dismissed for lack of merit on January 15, 1969. The judgment was therefore not null and void.

• Statute of Non-Claims: Private respondent argued that the claim was barred under the Rules of Court because the estate proceedings were opened in 1962 and the notice to creditors was published in 1963, while petitioner filed her motion to direct payment only on February 20, 1967, more than four years from publication. The argument was rejected. Rule 86, Section 2 allows a creditor who failed to file a claim within the time previously limited to apply at any time before an order of distribution is entered; the court may, for cause shown and on such terms as are equitable, allow the claim to be filed within a time not exceeding one month. The period prescribed in the notice to creditors is not exclusive; money claims against the estate may be allowed any time before an order of distribution is entered, at the discretion of the court for cause and upon equitable terms, as held in Quisumbing vs. Guison, Edmands vs. Phil. Trust Co., Paulin vs. Aquino, and Afan vs. de Guzman. At the time petitioner’s motion to direct payment was filed, no order of distribution had been issued. A similar situation was considered a good excuse for late filing: the claim was filed in the probate court while the defendants in the civil case were still perfecting their appeal, and the record did not show that the administrator objected on the ground that it was filed out of time; the pendency of the case was a good excuse for tardiness, as stated in De Rama vs. Palileo and Ignacio vs. Pambusco. The order of final distribution was still to be given. The claim was therefore not barred.

• Proper Remedy for Enforcing the Judgment: While the judgment in Civil Case No. 6628 had become final and executory, execution was not the proper remedy to enforce payment. The ordinary procedure by which to settle claims of indebtedness against the estate of a deceased person is for the claimant to present a claim before the probate court so that the court may order the administrator to pay the amount thereof, as held in Domingo vs. Garlitos. This was the procedure correctly chosen by petitioner. In Aldamiz vs. Judge of the Court of First Instance of Mindoro, the Court held that a writ of execution is not the proper procedure allowed by the Rules of Court for the payment of debts and expenses of administration; the proper procedure is for the court to order the sale of personal estate or the sale or mortgage of real property of the deceased, with debts and expenses paid out of the proceeds, upon motion of the administrator and with written notice to all heirs, legatees, and devisees residing in the Philippines, according to Rule 89, Section 3, and Rule 90, Section 2; for real estate, Rule 90, Section 7 must be complied with. Domingo vs. Garlitos further explained that in testate or intestate proceedings, the properties of the estate are under the jurisdiction of the court until distributed; during the pendency of the proceedings, the estate is in custodia legis, and the proper procedure is not to allow the sheriff to seize the properties but to ask the court for an order requiring the administrator to pay the amount due. Execution was therefore not the proper remedy.

• Custodia Legis: Petitioner cited Reganon vs. Imperial, Fores vs. Santos, and De Borja vs. De Borja for the proposition that properties under custodia legis may be reached for the satisfaction of a judgment. A reading of those cases shows that what was involved was the attachment for purposes of execution of the interest of an heir, to answer for claims against such heir, in the estate of the decedent, which is allowed by the Rules; not the attachment of the estate itself or any property therein for the satisfaction of a claim against the decedent. Rule 57, Section 7(f) allows the attachment of the interest of the party against whom attachment is issued in property belonging to the estate of the decedent, whether as heir, legatee, or devisee, by serving the executor, administrator, or other personal representative with a copy of the order and notice that the interest is attached. Properties under custodia legis may not therefore be attached for a claim against the decedent.

• Mandamus: While the judgment credit should be admitted as a claim against the estate of C.N. Hodges, the question of whether an order to direct payment thereof is compellable by mandamus is doubtful. At the time the second motion for payment was filed by petitioner, respondent judge’s hands were tied by an existing writ of preliminary injunction issued in G.R. Nos. L-27860 and L-27896 (PCIB vs. Blanco), restraining him from hearing Special Proceedings Nos. 1307 and 1672. Although the writ was clarified on October 4, 1967 to the effect that respondent judge was not restrained from approving final deeds of sale executed by the administrator PCIB covering properties of the estate and from acting on other routinary administration matters for the gathering and preservation of the estate, an order to direct payment is not embraced under the clarificatory resolution. Even if petitioner’s judgment credit were allowed as a claim against the estate, immediate payment thereof by the administrator is not a matter of right. A judgment against the executor or administrator shall be that he pay, in due course of administration, the amount ascertained to be due, and it shall not create a lien upon the property of the estate or give the judgment creditor any priority in payment under Section 13, Rule 86. The time for paying debts and legacies is to be fixed by the probate court having jurisdiction over the estate under Section 15, Rule 18, as cited in the decision. In the absence of any showing that respondent judge, who was taking cognizance of the estate proceedings, had already allowed the administrator to dispose of the estate and to pay the debts and legacies of the deceased, a writ of mandamus will not issue to compel him to order payment of petitioner’s claim. It is essential to the issuance of the writ of mandamus that the plaintiff should have a clear legal right to the thing demanded and that it must be the imperative duty of the defendant to perform the act required, as held in Province of Pangasinan vs. Reparations Commission. No such clear legal right or imperative duty was shown.

• Money Claims Against a Deceased Defendant; Procedural Nature of Section 21, Rule 3 — When a defendant in a money claim dies before final judgment, the action should be dismissed and prosecuted in the estate proceedings. The rule, however, is procedural; non-compliance does not nullify the judgment where the estate’s administrator actively participates, fails to object, and does not appeal. In this case, PCIB’s substitution and active participation without objection estopped it from later assailing the judgment.
• Waiver of the Statute of Non-Claims — Although presentment of claims against an estate is imperative, the estate’s representative may waive the objection by failing to plead the statute of non-claims and by actively participating in the civil suit. The Court applied this doctrine through Ignacio vs. Pampanga Bus Co., Inc., holding that PCIB’s conduct waived the estate’s right to relitigate the claim in the estate proceedings.
• Non-Exclusivity of the Period in the Notice to Creditors — The period stated in the notice to creditors is not exclusive. Under Rule 86, Section 2, a creditor who failed to file within the period may be allowed to file before an order of distribution is entered, for cause shown and on equitable terms. The Court applied this to hold that petitioner’s claim was not barred, especially since no order of distribution had been issued and the pendency of the civil case excused the delay.
• Custodia Legis and the Proper Procedure for Paying Estate Debts — Properties of a decedent’s estate are in custodia legis and under the probate court’s jurisdiction until distributed. A judgment creditor may not enforce payment by execution or by seizing estate property; the proper procedure is to present the claim in the probate court so that the court may order the administrator to pay in due course of administration. The Court relied on Domingo vs. Garlitos and Aldamiz vs. Judge of the Court of First Instance of Mindoro.
• Attachment of an Heir’s Interest Only — Under Rule 57, Section 7(f), only the interest of a party in property belonging to a decedent’s estate, as heir, legatee, or devisee, may be attached to answer for claims against that heir. The estate itself or its property may not be attached for a claim against the decedent. The Court distinguished Reganon vs. Imperial, Fores vs. Santos, and De Borja vs. De Borja on this ground.
• Mandamus: Clear Legal Right and Imperative Duty — Mandamus issues only when the petitioner has a clear legal right to the thing demanded and the respondent has an imperative duty to perform the act required. Because the immediate payment of a judgment credit against an estate is not a matter of right and is subject to the probate court’s discretion and the due course of administration, mandamus will not issue to compel it. The Court cited Province of Pangasinan vs. Reparations Commission.

• "The philosophy behind the rule which provides for the dismissal of the civil case is that, upon the death of a defendant, all money claims should be filed in the testate or intestate proceedings 'to avoid useless duplicity of procedure.' Obviously, the legal precept just quoted is procedural in nature. It outlines the method by which an action for recovery of money, debt or interest may continue, upon the terms therein prescribed. whether the original suit for the recovery of money as here-proceeds to its conclusion, or is dismissed and the claim covered thereby filed with the probate court, one thing is certain: no substantial rights of the parties are prejudiced." — This passage states the ratio for holding that Section 21, Rule 3 is procedural and that non-compliance does not nullify the judgment.
• "The estate has thus waived its right to have Pambusco's claim re-litigated in the estate proceedings. For, though presentment of probate claims is imperative, it is generally understood that it may be waived by the estate's representative. And, waiver is to be determined from the administrator's 'acts and conduct.' Certainly, the administrator's failure to plead the statute of non-claims, his active participation, and resistance to plaintiff's claim, in the civil suit, amount to such waiver." — This passage defines the waiver doctrine applied to PCIB’s active participation and failure to object.
• "It is clear from the foregoing (Section 2 of Rule 87 [now Rule 86]) that the period prescribed in the notice to creditors is not exclusive; that money claims against the estate may be allowed any time before an order of distribution is entered, at the discretion of the court for cause and upon such terms as are equitable..." — This passage is the Court’s canonical statement that the statute of non-claims does not absolutely bar a late claim before distribution.
• "It is essential to the issuance of the writ of mandamus that the (plaintiffs) should have a clear legal right to the thing demanded and it must be the imperative duty of the defendant to perform the act required" — This passage states the controlling requisites for mandamus, which the Court found absent because immediate payment of the estate claim was not a matter of right.

• Ignacio vs. Pampanga Bus Co., Inc., L-18936, May 23, 1967, 20 SCRA 126 — Controlling precedent; held that Section 21, Rule 3 is procedural, that the estate may waive the statute of non-claims, and that a final judgment is not nullified by the failure to pursue the claim in the probate court.
• Domingo vs. Garlitos, L-18994, June 29, 1963 — Cited for the rule that the proper procedure to enforce a claim against a decedent’s estate is to ask the probate court for an order requiring the administrator to pay, not to allow execution or seizure of estate property.
• Aldamiz vs. Judge of the Court of First Instance of Mindoro, L-2360, December 29, 1949 — Cited to hold that a writ of execution is not the proper procedure for payment of debts and expenses of administration; the estate court must order sale or mortgage of estate property under the rules.
• Quisumbing vs. Guison, 76 Phil. 730; Edmands vs. Phil. Trust Co., G.R. No. L-2670, September 29, 1950, 48 O.G. 139; Paulin vs. Aquino, G.R. No. L-11267, March 20, 1958; Afan vs. de Guzman, G.R. No. L-14715, April 28, 1960 — Cited to establish that the period in the notice to creditors is not exclusive and that money claims may be allowed before distribution for cause and on equitable terms.
• De Rama vs. Palileo, L-18935, February 26, 1965 — Cited as in pari materia for the rule that the pendency of a civil case is a good excuse for the tardy filing of a claim against the decedent’s estate.
• Tajonera vs. Lamaroza, (1981), 110 SCRA 438; Nieta vs. Manila Banking Corp., (1983), 124 SCRA 455; Sps. Antonio Martinez and Benedicta Balatbat vs. The Hon. Judge de la Merced, et al., G.R. No. 82039, June 20, 1989 — Cited for the doctrine that active participation in proceedings before a court without jurisdiction estops a party from assailing that jurisdiction.
• Reganon vs. Imperial, G.R. No. 24434, January 17, 1968; Fores vs. Santos, G.R. No. L-24538, May 4, 1968; De Borja, et al. vs. De Borja, et al., L-14951, August 31, 1961 — Distinguished; these cases involved attachment of an heir’s interest in the estate, not attachment of the estate itself for a claim against the decedent.
• Province of Pangasinan vs. Reparations Commission, 80 SCRA 376 — Cited for the requisites of mandamus: a clear legal right to the thing demanded and an imperative duty on the respondent to perform the act required.
• PCIB vs. Blanco, G.R. No. L-30013 — Prior final resolution dismissing the petition for lack of merit on January 15, 1969; the validity of the Civil Case No. 6628 decision had been passed upon with finality.
• PCIB vs. Blanco, G.R. Nos. L-27860 and L-27896 — Cited for the writ of preliminary injunction restraining respondent judge from hearing Special Proceedings Nos. 1307 and 1672, and its October 4, 1967 clarification.

• Section 21, Rule 3, Rules of Court — Provides that when the action is for recovery of money, debt, or interest thereon, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided in the rules. The Court held that the provision is procedural and that non-compliance did not nullify the judgment because PCIB actively participated and was estopped from assailing jurisdiction.
• Section 2, Rule 86 (cited in the decision as Section 2, Rule 87 [now Rule 86]), Rules of Court — Provides that a creditor who failed to file a claim within the time previously limited may, at any time before an order of distribution is entered, apply to have the claim allowed for cause shown and on equitable terms, within a time not exceeding one month. The Court applied this to hold that petitioner’s claim was not barred by the statute of non-claims.
• Section 13, Rule 86, Rules of Court — Provides that a judgment against the executor or administrator shall be that he pay, in due course of administration, the amount ascertained to be due, and it shall not create a lien upon the property of the estate or give the judgment creditor any priority in payment. The Court used this to deny immediate payment and mandamus.
• Section 15, Rule 18 (as cited in the decision), Rules of Court — Provides that the time for paying debts and legacies is to be fixed by the probate court having jurisdiction over the estate. The Court cited this to show that payment was not yet compellable by mandamus.
• Section 7(f), Rule 57, Rules of Court — Allows the attachment of the interest of the party against whom attachment is issued in property belonging to the estate of the decedent, whether as heir, legatee, or devisee, by serving the executor or administrator with a copy of the order and notice. The Court applied this to distinguish petitioner’s cited cases and to hold that the estate itself cannot be attached for the decedent’s debt.
• Section 3, Rule 89 and Sections 2 and 7, Rule 90, Rules of Court — Cited in Aldamiz vs. Judge of the Court of First Instance of Mindoro for the procedure for sale or mortgage of estate property to pay debts and expenses of administration. The Court used these provisions to show that execution was not the proper remedy.
• Rule 39, Section 1, Rules of Court — Invoked by petitioner for the proposition that execution of a final and executory judgment is a matter of right. The Court rejected its application against the estate, holding that the claim had to be settled in the probate proceedings.

Justices Narvasa, Gancayco, and Griño-Aquino concurred. Justice Cruz was on leave.