Abeleda, Ella Rose Ferrer, Princess Vanessa Macatangcal, Ameena

RULE 86 – CLAIMS AGAINST ESTATE

Upon the death of a person, all his property is burdened with all his debts, his death creating an
equitable lien thereon for the benefit of creditors. Such lien continues until the debts are
extinguished either by payment, prescription, or satisfaction in one of the modes recognized by
law.

Notice to creditors (Sec 1)

After granting letters testamentary or of administration, the court shall issue a notice:
1. requiring all persons having money claims against the estate; and
2. to file them in the office of the clerk of court.
A claim against a decedent’s estate need not be in any particular form; it is sufficient if it states
the character and amount of the claim, enables the representative to provide for its payment, and
serves to bar all other claims by reason of its particularity of designation.

Statute of Non-claims (Sec 2)

- the period fixed for the filing of the claims against the estate
Under this rule, certain creditors of a deceased person must present their claims for examination
and allowance within a specified period.
Purpose: to insure a speedy settlement of the affairs of the deceased person and the early delivery
of the property to the person entitled to the same.
Extension of the given period may be allowed. Money claims against the estate may be allowed
any time before an order of distribution is entered, at the discretion of the court for causes and
upon such terms as are equitable.
GUIDELINES:
1. the period fixed by probate court must not be less than six months nor more than 12 months
from the date of first publication of the notice.
2. such period once fixed by the court is mandatory and it cannot be shortened.
3. the statute of non-claims supersedes the statute of limitations.
Publication of Notice to Creditors
Purpose: to serve as constructive notice to all creditors
Effect: a creditor cannot be permitted to file his claim beyond the period fixed in said notice on
the ground that he had no knowledge of the administration proceedings.
HOW NOTICE IS MADE:
1. publication of the notice three weeks successively in a newspaper of general circulation in the
province; and
2. posting of the notice for three weeks successively in the following places:
a. four public places in the province; and
b. two public places in the municipality where the decedent last resided.

Types of Claims to be Filed with the Probate Court

1. All money claims against the decedent arising from contract, express or implied, whether the
same be due, not due, or contingent;
2. All claims for funeral expenses and expenses for the last sickness of the decedent; and
3. Judgment for money against the decedent. The judgment must be presented as a claim against
the estate, where the judgment debtor dies before levy on execution of his properties.
This enumeration is exclusive; claims other than for money, debt or interest thereon, arising from
contract cannot be presented in the estate or intestate proceedings.

Money claims (Sec 5)

- claims for money, debt or interest thereon upon a liability contracted by the decedent before his
death.
GR: Claims contracted after his death cannot be presented anymore
EXC: Funeral expenses and expenses incurred on the last sickness of the decedent are allowed to
be presented as claims

Filing within the Time Limit

GR: claims not filed within the time limit in the notice are forever barred from presenting them
EXC: these claims may be set forth as counterclaims in any action that the executor or
administrator may bring against the claimants
Both claims due and not due or contingent should be filed within the time limit; otherwise, they
are also barred forever.

Contingent claim
- one by which, by its nature is necessarily dependent upon an uncertain event for its existence
and claim, and its validity and enforceability depending upon an uncertain event
Example: deficiency judgment

Remedies available to a Mortgage Creditor upon the Death of the Mortgagor

1. to waive the security mortgage and claim the entire debt from the estate as an ordinary claim
2. to foreclose the mortgagee judicially and prove any deficiency as an ordinary claim
3. to rely solely upon the mortgage and foreclose the same at any time before it is barred by
prescription without right to claim for any deficiency
Note: these are alternative remedies, not cumulative. Therefore, an election of one remedy
operates as a waiver of the other.

Filing of answer (Sec 10)

- within 15 days after service of a copy of the claim on the executor or administrator, he shall file
his answer admitting or denying the claim specifically, and setting forth the admission or denial
- if he has no sufficient knowledge thereof, he shall state such want of knowledge
- he shall allege in offset any claim which the decedent before death had against the claimant
- a copy of the answer shall be served by him on the claimant
GR: a probate court has no jurisdiction to entertain a claim in favor of the estate against a third
person as the same must be the subject of an ordinary action
EXC: an executor or administrator may interpose any counterclaim in offset of a claim against
the estate. Such counterclaim is regarded as a compulsory counterclaim; failure to file the same
shall bar the claim forever.

Note: A judgment of the court approving or disapproving a claim shall be appealable (Sec 13)
CASE: Union Bank vs. Santibañez and Ariola
Issue: Whether Union Bank can hold the heirs liable on the obligation of the deceased after
probate of the will.
Ruling: Well-settled is the rule that a probate court has the jurisdiction to determine all the
properties of the deceased, to determine whether they should or should not be included in the
inventory of the properties to be administered. In our jurisdiction, the rule is that there can be no
valid partition among the heirs until after the will has been probated.
The filing of a money claim against the decedent’s estate in the probate court is mandatory.
This requirement is for the purpose of protecting the estate of the deceased by informing the
executor or administrator of the claims against it, thus enabling him to examine each claim and
to determine whether it is a proper one which should be allowed. The plain and obvious design
of the rule is the speedy settlement of the affairs of the deceased and the early delivery of the
property to the distributes, legatees, or heirs. The law strictly requires the prompt presentation
and disposition of the claims against the decedent’s estate in order to settle the affairs of the
estate as soon as possible, pay off its debts and distribute the residue.

RULE 87 – ACTIONS BY AND AGAINST EXECUTORS AND ADMINISTRATORS

Actions that may be Commenced against the Executor or Administrator (Sec 1)

1. Recovery of real or personal property or any interest therein from the estate
2. Enforcement of a lien thereon
3. Action to recover damages for any injury to person or property, real or personal
Note: these actions survive the death of the decedent

When heirs may file an action in court (Sec 3)

GR: Heirs have no legal standing to sue for recovery or protection of property rights of the
deceased.
EXC:
1. pending the filing of administration proceedings
2. administration proceedings have already been commenced, but an administrator has not yet
been appointed
3. the executor or administrator is unwilling or refuses to bring suit
4. the executor or administrator is alleged to have participated in the act complained of and he is
made a party defendant.
The heir is not entirely precluded from suing the executor or administrator. However, the suit
may only prosper if:
a. there is an order of the court assigning the property to such heir;
b. the time allowed for the payment of a debt has expired.

An administrator has the right to the production and examination of specified documents
believed to be in the possession of another person which tends to show the decedent’s right to
real or personal property (Sec 6).
Rationale: to elicit information or secure evidence from persons suspected of having possession
of, or knowledge or properties suspected of belonging to the estate of the deceased.

Note: A judicial declaration of heirship is not necessary in order for an heir to assert his right to
the property of a deceased. As provided under Article 777 of the Civil Code, the rights to
succession are transmitted from the moment of the death of the decedent.

Action for recovering property fraudulently conveyed by deceased (Sec 9)

An executor or administrator may commence and prosecute to final judgment an action for the
recovery of property, right, interest, debts, or credit for the benefit of creditors when the
following circumstances occur:
1. the deceased in his lifetime had converted real or personal property, right or interest therein, or
debt or credit;
2. such conveyance was:
a. made with intent to defraud his creditors
b. made to avoid any right, debt, or duty or had so conveyed such property, right, interest,
debt or creditors; and
c. the subject of the attempted conveyance would be liable to attachment by any of them
in his lifetime; and
3. there is deficiency of assets in the hands of an executor or administrator for the payment of
debts and expenses of administration.
Action by a creditor (Sec 10)
The creditor may bring an action in the name of the executor or administrator for the recovery of
property fraudulently conveyed by the deceased upon concurrence of the following:
1. there is a deficiency of assets;
2. the deceased in his lifetime had made or attempted such a conveyance with intent to defraud
creditors or to avoid any right, debt, or duty;
3. the executor or administrator has not commenced the action provided in Section 9; and
4. the creditor has filed a bond executed to the executor or administrator in an amount approved
by the judge, conditioned to indemnify the executor or administrator against the costs and
expenses incurred by reason of such action.
If the creditor is successful, he shall have a lien upon any judgment recovered by him for
reasonable costs and expenses.

CASE: Lao vs. Dee, L-3890, June 23, 1952

Ruling: An executor or administrator who assumes the trust, takes possession of the property left
by the decedent for the purpose of paying debts. While his debts are undetermined and unpaid,
no residue may be settled for distribution among the heirs and devisees. Consequently, before
distribution is made, or before any residue is known, the heirs or devisees have no cause of
action against the executor or administrator for recovery of the property left by the deceased.

BAR QUESTIONS
1991
Q: A filed a complaint against Y with the RTC of Argao, Cebu, for payment of a
promissory note in the sum of P50,000.00, for liquidated damages of P5,000 and attorney’s
fees of P5,000. After he filed his answer, Y died, but his lawyer did not file a motion to
dismiss. In the meantime, Y’s widow filed with the above court a special proceeding for the
settlement of the intestate estate of Y. the widow, Z, was appointed administratrix of the
estate. A filed in the civil case a motion to have Y substituted by the administratrix; the
latter did not object. The court granted the motion. Trial on the merits was had. In the time
it was rendered, the period to file claims in the intestate estate of Y had already lapsed. The
administratrix, X, did not appeal from the decision; and after it became final, A moved for
the execution of judgment. Z opposed the motion contending that the decision is void
because the claim does not survive. The case should have been dismissed upon the death of
Y since upon the death, the court lost jurisdiction over the case.
If a writ of execution cannot be validly issued, what is the remedy of A?
A: As expressly provided under Section 2, Rule 8 of the Rules of Court, A may file a money
claim based on the decision rendered against the estate of the deceased at any time before an
order of distribution is entered upon application.

2002
Q: A, B, and C, the only heirs in D’s intestate proceedings, submitted a project of partition,
two lots were assigned to C, who immediately entered into the possession of the lots.
Thereafter, C died and proceedings for the settlement of his estate were filed in the RTC-
Quezon City. D’s administrator then filed a motion in the probate court (RTC-Manila),
praying that one of the lots assigned to C be turned over to him to satisfy debts
corresponding to C’s portion. The motion was opposed by the administrator of C’s estate.
How should the RTC-Manila resolve the motion of D’s administrator?
A: The motion of D’s administrator should be granted. The assignment of the two lots to C was
premature because the debts of the estate had not been fully paid.

2002
Q: X filed a claim in the intestate proceedings of D. D’s administrator denied liability and
filed a counterclaim against X. X’s claim was disallowed.
(1) Does the probate court still have jurisdiction to allow the claim of D’s administrator by
way of offset? Why?
(2) Suppose D’s administrator did not allege any claim against X by way of offset. Can D’s
administrator prosecute the claim in an independent proceeding? Why?
A:
(1) The probate court has no jurisdiction to allow the claims of D’s administrator by way of
offset because it appears that there is no amount against which to offset the claim.
(2) D’s administrator can proceed with the claim in an independent action since the claim of X
was disallowed. Where X had a valid claim and D’s administrator did not allege any claim
against X by way of offset, his failure to do so would bar his claim forever.

2009
Q: Cresencio sued Dioscoro for collection of a sum of money. During the trial, but after the
presentation of plaintiff’s evidence, Dioscoro died. Atty. Cruz, Diosocoro’s counsel, then
filed a motion to dismiss, and instead, directed counsel to furnish the court with the names
and addresses of Diosocoro’s heirs and ordered that the designated administrator of
Diosocoro’s estate be substituted as representative party.
After trial, the court rendered judgment in favor of Cresencio. When the decision had
become final and executory, Cresencio moved for the issuance of a writ of execution against
Diosocoro’s estate to enforce his judgment claim. The court issued the writ of execution.
Was the court’s issuance of the writ of execution proper? Explain.
A: The court’s issuance of the writ of execution was not proper. Under Rule 3 of Section 20, a
favorable judgment in a contractual money claim shall be enforced in the manner especially
provided in the Rules for prosecuting claims against the estate of a deceased person. Under Rule
86 of the Rules of Court, a judgment for money should be filed as a money claim with the
probate court. The Supreme Court has held that a money claim cannot be enforced by a writ of
execution but should instead be filed as a money claim.

2012
Q: The statute of “non-claims” requires that:
(A) claims against the estate be published by the creditors.
(B) money claims be filed with the clerk of court within the time prescribed by the rules.
(C) claims of an executor against the estate be filed with the special administrator.
(D) within two years after settlement and distribution of estate, an heir unduly deprived of
participation in the estate may compel the resettlement of the estate.

QUESTIONS:
1. What is the significance of publication of notice to creditors?
The publication of the notice to creditors is constructive notice to all, hence a creditor cannot be
permitted to file his claim beyond the period fixed in the notice on the bare ground that he had no
knowledge of the administration proceedings.

2. Which rule shall prevail in case of conflict between Section 5 of Rule 86 and Section 11 of
Rule 6?
The specific provisions of Section 5, Rule 86 of the Rules of Court should prevail over the
general provisions of Section 11, Rule 6 of the Rules of Court. The settlement of the estate of
deceased persons (where claims against the deceased should be filed) is primarily governed by
the rules on special proceedings, while the rules provided for ordinary claims, including Section
11, Rule 6 of the Rules of Court, merely apply suppletorily.

3. Is deficiency judgment a contingent claim?

Yes, deficiency judgment is a contingent claim and, therefore, must be filed with the probate
court where the settlement of the estate of the deceased is pending, within the period fixed for the
filing of claims.

4. Is the judgment of the court approving or disapproving a claim appealable?

Yes, as provided under Section 13 of Rule 86, a judgment of the court approving or disapproving
a claim shall be appealable.

5. Does the prohibition to bring suit likewise apply to a done inter vivos?
No, the prohibition expressly stated under this Section applies to heirs and devisees and not to a
donee inter vivos who may sue the administrator for the delivery of the property donated.