Ignacio vs. Elchico

A probate court may not compel the turnover of property already in custodia legis of another coordinate probate court without the latter's leave or consent, and the proper remedy for compelling heirs who have received distributed property to contribute to estate obligations is a hearing under Section 6, Rule 88 of the Rules of Court to fix the amount and manner of their several liabilities.

The case involves two related intestate proceedings: the intestate estate of Encarnacion Elchico Vda. de Fernando, pending before the Court of First Instance of Manila (Special Proceedings 25256), and the testate and intestate estates of her deceased heir, Jose L. Elchico, pending before the Court of First Instance of Rizal (Special Proceedings 2598 and 2600). The Manila and Rizal courts are coordinate courts of the same level. The partial partition of Encarnacion's estate was approved upon a bond of P150,000.00 to answer for the obligations of the estate, and the three heirs entered into possession of their respective shares.

Encarnacion Elchico Vda. de Fernando died, leaving as major heirs Jose Elchico, Salud Elchico Reyes, and Natividad Elchico Ignacio. In the intestate proceedings for the settlement of her estate before the Manila probate court (Special Proceedings 25256), the three heirs submitted a "joint petition for partial partition and distribution" of the estate on March 19, 1956. The Manila probate court approved the petition on April 3, 1956, upon a bond of P150,000.00 to answer for the obligations of the estate, which bond was filed on May 11, 1956. The three heirs then entered into possession of their corresponding shares. Jose L. Elchico received the Angat transportation business and a parcel of land on Misericordia Street, Manila.

Jose L. Elchico subsequently died, and the settlement of his estate was pending before the Court of First Instance of Rizal in two special proceedings — one testate (Special Proceedings 2598) and one intestate (Special Proceedings 2600). In June 1959, the Angat transportation business was sold by appellees Eduardo Elchico and Florencio Elchico, the co-administrators of Jose L. Elchico's estate, upon authority of the Rizal probate court given in an order of April 29, 1959. The same order also granted authority to sell the Misericordia property, which remained under the administration of Jose L. Elchico's co-administrators.

On March 16, 1961, the administratrices of Encarnacion's estate filed a motion with the Manila probate court, supplemented by subsequent pleadings, praying that the Misericordia lot be turned over to them so that the charges burdening Encarnacion's estate "corresponding to the heir Dr. Jose L. Elchico may be satisfied therefrom, the balance to be returned to his heirs." The administratrices claimed that the estate's obligations — consisting of approved and pending claims — amounted to almost P400,000.00, including a Bureau of Internal Revenue claim for estate and inheritance taxes of approximately P135,000.00 as of February 13, 1961. They alleged that of the P230,000.00 proceeds from the sale of the Angat transportation business, nothing was turned over to Encarnacion's estate; that Jose L. Elchico had no other property except the Misericordia lot; and that if the sale of the lot were finally effected, the proceeds could be hidden and dissipated. They relied on paragraph 3 of the partial partition agreement, which provided that in the event of outstanding or future obligations of the remaining estate, "the heirs shall all be bound to contribute equally in the payment of said obligations and/or expenses of the estate," but noted that the two other heirs were solvent and could meet their respective shares.

The co-administrators of Jose L. Elchico's estate opposed the motion, arguing that the proper procedure was outlined in Section 6, Rule 89 of the 1940 Rules of Court (now Section 6, Rule 88), that the Manila probate court had no jurisdiction over the Misericordia lot which was under the control of the Rizal probate court, and that the P150,000.00 surety bond was sufficient to meet the estate's obligations. On May 12, 1961, the Manila probate court denied the motion, finding the oppositions well-taken, and set the case for hearing on June 1, 1961 "for the purpose of determining how much and in what manner heir Jose L. Elchico (now deceased) shall contribute for the payment of the unsettled and unpaid creditors' claims and taxes." The motion for reconsideration was denied on June 29, 1961, and the administratrices appealed to the Supreme Court.

• Turnover of Property: The administratrices argued that the Misericordia lot should be turned over to them so that the charges burdening the estate of Encarnacion Elchico Vda. de Fernando corresponding to heir Jose L. Elchico may be satisfied therefrom, with the balance to be returned to his heirs.
• Inadequacy of Bond and Other Assets: The administratrices claimed that the estate's obligations amounted to almost P400,000.00, that nothing from the P230,000.00 proceeds of the Angat transportation business sale was turned over to the estate, that Jose L. Elchico had no other property except the Misericordia lot, and that if the sale of the lot were effected, the proceeds could be hidden and dissipated.
• Solvency of Other Heirs: The administratrices maintained that the two other heirs of Encarnacion were solvent "and can meet their respective shares of the obligations as they arise," implying that Jose L. Elchico's share should be satisfied from his distributed properties.

• Proper Procedure: The co-administrators of Jose L. Elchico's estate argued that the proper procedure to be followed was outlined in Section 6, Rule 89 of the 1940 Rules of Court (now Section 6, Rule 88), which provides for a hearing to fix contributive shares.
• Lack of Jurisdiction: The co-administrators averred that the Manila probate court had no jurisdiction over the Misericordia lot, which was under the control of the Rizal probate court in two special proceedings of the deceased Jose L. Elchico.
• Sufficiency of Bond: The co-administrators pointed to the surety bond of P150,000.00 and claimed that it was sufficient to meet the obligations of the estate of Encarnacion Elchico Vda. de Fernando.

• Propriety of the Manila Court's Order: Whether the Manila probate court committed grave abuse of discretion in denying the administratrices' motion and instead setting the case for hearing to determine how much and in what manner Jose L. Elchico shall contribute to the payment of the estate's obligations.
• Jurisdiction over the Misericordia Property: Whether the Manila probate court could compel the turnover of the Misericordia property, which was in custodia legis of the Rizal probate court, a coordinate court.

• Propriety of the Manila Court's Order: No. The Manila probate court acted within its statutory authority under Section 6, Rule 88 of the Rules of Court, and there was no reversible abuse of discretion, as the total liabilities of the estate and Jose L. Elchico's share therein were still indefinite.
• Jurisdiction over the Misericordia Property: No. The Manila probate court could not take the Misericordia property out of the administration proceedings in the Rizal court without leave or consent of the latter, because the Rizal and Manila courts are coordinate courts and the property was in custodia legis of the Rizal court.

• Propriety of the Manila Court's Order: The Court found that Section 6, Rule 88 of the Rules of Court expressly authorizes the probate court, where heirs have entered into possession of portions of the estate before debts and expenses have been settled, to "settle the amount of their several liabilities, and order how much and in what manner each person shall contribute, and may issue execution as circumstances require." The disputed order of May 12, 1961 closely followed this provision, as the court denied the motion to have the Misericordia property turned over and set the proceedings for hearing precisely to determine how much and in what manner Jose L. Elchico shall contribute. The record disclosed nothing definite as to the total liabilities of the estate, and Jose L. Elchico's share in those obligations was unknown and indefinite. The administratrices' allegation that the only remaining property of the estate was a piece of unsurveyed and untitled mineral land of unknown value remained but an allegation. Moreover, there was the P150,000.00 bond to answer for the debts of the estate. Once the share of Jose L. Elchico was finally cleared up after the projected hearing, Section 6, Rule 88 would again come into focus, and the probate court could order execution to compel the three heirs to pay their respective shares to the extent of the properties they received from the estate. Without such hearing, any order for the return of property distributed would be premature. The administratrices could also easily go to the Rizal probate court for the protection of the estate's claim against the estate of the deceased Jose L. Elchico. The Court was therefore unprepared to say that the Manila probate court committed grave abuse of discretion, which is such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.

• Jurisdiction over the Misericordia Property: The Court held that the Misericordia property was in custodia legis of the Court of First Instance of Rizal, acting as a probate court in two special proceedings. The Rizal and Manila courts are coordinate courts standing on the same level. The Manila court could not take that property out of the administration proceedings in the Rizal court without leave or consent of the latter. Should such interference be sanctioned, confusion may ensue and the administration of justice may be seriously impaired. At least out of respect for the prerogatives of the Rizal court, the Manila court should not intermeddle with the authority of the former. This was especially true because the Rizal probate court had already directed the sale of the very same Misericordia property to satisfy, amongst others, the payment of Jose L. Elchico's share in the estate and inheritance taxes due from the estate of the deceased Encarnacion Elchico Vda. de Fernando. The Manila probate court could not nullify this order of the Rizal probate court, directly or indirectly.

• Custodia legis and coordinate court jurisdiction — Property under the control of a court in a judicial proceeding is in custodia legis of that court, and a coordinate court of the same level may not take that property out of the administration proceedings without leave or consent of the former. The Court applied this principle to bar the Manila probate court from compelling turnover of the Misericordia property, which was under the control of the Rizal probate court, noting that interference would cause confusion and seriously impair the administration of justice.

• Probate court's power to fix contributive shares under Section 6, Rule 88 — Where heirs have entered into possession of portions of the estate before debts and expenses have been settled, the court having jurisdiction of the estate may, by order after hearing, settle the amount of their several liabilities and order how much and in what manner each person shall contribute, and may issue execution as circumstances require. The Court held that this provision authorizes the probate court to conduct a hearing to determine the amount and manner of contribution before any order for the return of distributed property may be made, and that such an order would be premature without the hearing.

• Heir's liability limited to value of property received — The heir is not liable beyond the value of the property he received from the decedent, as provided in Article 1311 of the Civil Code. The Court noted that execution under Section 6, Rule 88 may issue to compel heirs to pay their respective shares in the obligation to the extent of the properties that they received from the estate.

• "Concededly, in the situation here presented, where partial partition and distribution were effected, it is within the power of the Manila probate court to issue the order of May 12, 1961 heretofore transcribed. In fact, said disputed order of May 12, 1961 closely hewed the line set forth in Section 6 of Rule 88." — This passage establishes that the probate court's order was a proper exercise of its statutory authority under Section 6, Rule 88, which governs the fixing of contributive shares where heirs have been in possession of distributed estate property.

• "The Rizal and Manila courts are coordinate. They stand on the same level. The Manila court then may not take that property out of the administration proceedings in the Rizal court, without leave or consent of the latter. Should such interference be sanctioned, confusion may ensue; the administration of justice may be seriously impaired." — This passage articulates the principle of comity between coordinate courts and the rule against interference with property in custodia legis, which formed the second ground for affirming the orders appealed from.

• "Without such hearing, any order for the return of property distributed may appear to be premature." — This passage explains why the Manila probate court's denial of the administratrices' motion and its setting of the case for hearing was proper: the total obligations of the estate and Jose L. Elchico's share therein were still indefinite, and the hearing was necessary to determine the amount and manner of contribution.

• Lopez vs. Enriquez, 16 Phil. 336 — Cited in the Court's footnote to support the proposition that once the share in the obligation corresponding to Jose L. Elchico is finally cleared up after the projected hearing, the provisions of Section 6, Rule 88 come into focus and his obligation to contribute becomes definite.
• Espino vs. Rovira, 50 Phil. 152 — Cited alongside Lopez vs. Enriquez for the same proposition regarding the fixing of contributive shares after hearing.
• Government vs. Pamintuan, 55 Phil. 13 — Cited in the Court's footnote to support the rule that the heir is not liable beyond the value of the property received from the decedent.
• Cu Unjieng vs. Tiaoqui, 64 Phil. 566 — Cited for the same proposition regarding the extent of an heir's liability.
• Cabigao vs. Del Rosario, 44 Phil. 182 — Cited in the Court's footnote to support the principle that a court may not interfere with property in custodia legis of another court.
• Montesa vs. Manila Cordage Co., 92 Phil. 25 — Cited for the same principle regarding non-interference with property under the control of another court.
• Philippine National Bank vs. Javellana, 92 Phil. 525 — Cited for the same principle.
• Ongsingco vs. Tan, 97 Phil. 330 — Cited for the same principle.
• Araneta vs. Commonwealth Insurance Co., 55 O.G. No. 3, pp. 431, 432-433 — Cited for the same principle.

• Section 6, Rule 88, Rules of Court (formerly Section 6, Rule 89 of the 1940 Rules of Court) — The provision authorizes the court having jurisdiction of the estate, where heirs have entered into possession of portions of the estate before debts and expenses have been settled, to settle the amount of their several liabilities and order how much and in what manner each person shall contribute, and to issue execution as circumstances require. The Court held that the Manila probate court's order of May 12, 1961 closely followed this provision.
• Article 1311, Civil Code — Provides that the heir is not liable beyond the value of the property he received from the decedent. The Court cited this provision to explain the extent of execution that may issue under Section 6, Rule 88.

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar, and Castro, JJ., concurred.