SpecPro • Rule 87-90

Rule 87 – Actions By and Against Executors and Administrators

What actions may be brought against an executor or administrator?

No action upon a claim for the recovery of money or debt or interest thereon shall be commenced against the executor or administrator;

• but to recover real or personal property, or an interest therein, from the estate,

• or to enforce a lien thereon,

• and actions to recover damages for an injury to person or property, real or personal, may be commenced against him.

What actions may an executor or administrator bring or defend?

For the recovery or protection of the property or rights of the deceased,

• an executor or administrator may bring or defend,

• in the right of deceased,

• actions for causes which survive.

Under what conditions may an heir sue an executor or administrator?

When an executor or administrator is appointed and assumes the trust,

• no action to recover the title or possession of lands or for damages done to such lands shall be maintained against him by an heir or devisee

• until there is an order of the court assigning such lands to such heir or devisee

• or until the time allowed for paying debts has expired.

What authority does an executor or administrator have regarding debts owed to the estate?

Within the approval of the court,

• an executor or administrator may compound with the debtor of the deceased for a debt due,

• and may give a discharge of such debt on receiving a just dividend of the estate of the debtor.

Can a mortgage belonging to the estate be foreclosed?

A mortgage belonging to the estate of a deceased person,

• as mortgagee or assignee of the right or a mortgage,

• may be foreclosed by the executor or administrator.

What occurs when property is concealed, embezzled, or fraudulently conveyed?

If an executor or administrator, heir, legatee, creditor or other individual interested in the estate of the deceased,

• complains to the court having jurisdiction of the estate that a person is suspected of having concealed, embezzled, or conveyed away any of the money, goods, or chattels of the deceased,

• or that such person has in his possession or has knowledge of any deed, conveyance, bond, contract, or other writing which contains evidence of or tends or discloses the right, title, interest, or claim of the deceased,

• the court may cite such suspected person to appear before it and may examine him on oath on the matter of such complaint;

• and if the person so cited refuses to appear, or to answer on such examination or such interrogatories as are put to him,

• the court may punish him for contempt, and may commit him to prison until he submits to the order of the court.

• The interrogatories put any such person, and his answers thereto, shall be in writing and shall be filed in the clerk's office.

What can the court compel a person entrusted with the estate to do?

The court, on complaint of an executor or administrator,

• may cite a person entrusted by an executor or administrator with any part of the estate of the deceased to appear before it,

• and may require such person to render a full account, on oath,

• of the money, goods, chattels, bonds, account, or other papers belonging to such estate as came to his possession in trust for such executor or administrator,

• and of his proceedings thereon;

• and if the person so cited refuses to appear to render such account,

• the court may punish him for contempt as having disobeyed a lawful order of the court.

What are the consequences for embezzling before letters are issued?

If a person, before the granting of letters testamentary or of administration on the estate of the deceased,

• embezzles or alienates any of the money, goods, chattels, or effects of such deceased,

• such person shall be liable to an action in favor of the executor or administrator of the estate for double the value of the property sold, embezzled, or alienated,

• to be recovered for the benefit of such estate.

When must an executor or administrator bring action for fraudulently conveyed property?

When there is a deficiency of assets in the hands of an executor or administrator for the payment of debts and expenses of administration,

• and the deceased in his lifetime had conveyed real or personal property,

• or a right or interest therein,

• or a debt or credit,

• with intent to defraud his creditors or to avoid any right, debt, or duty;

• or had so conveyed such property, right, interest, debt or credit that by law the conveyance would be void as against his creditors,

• and the subject of the attempted conveyance would be liable to attachment by any of them in his lifetime,

• the executor or administrator may commence and prosecute to final judgment an action for the recovery of such property, right, interest, debt, or credit for the benefit of the creditors;

• but he shall not be bound to commence the action unless on application of the creditors of the deceased,

• not unless the creditors making the application pay such part of the costs and expenses,

• or give security therefor to the executor or administrator, as the court deems equitable.

When may a creditor bring action regarding the deceased's conveyances?

When there is such a deficiency of assets,

• and the deceased in his lifetime had made or attempted such a conveyance, as is stated in the last preceding section,

• and the executor or administrator has not commenced the action therein provided for,

• any creditor of the estate may, with the permission of the court,

• commence and prosecute to final judgment,

• in the name of the executor or administrator, a like action for the recovery of the subject of the conveyance or attempted conveyance for the benefit of the creditors.

But the action shall not be commenced until the creditor has filed in a court 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.

Such creditor shall have a lien upon any judgment recovered by him

• in the action for such costs and other expenses incurred therein as the court deems equitable.

Where the conveyance or attempted conveyance had been made by the deceased in his lifetime in favor of the executor or administrator,

• the action which a creditor may bring shall be in the name of all the creditors,

• and permission of the court and filing of bond as above prescribed, are not necessary.

Rule 88 – Payment of the Debts of the Estate

What are the conditions under which debts of an estate are paid in full?

If, after hearing all the money claims against the estate, and after ascertaining the amount of such claims,

• it appears that there are sufficient assets to pay the debts,

• the executor or administrator pay the same within the time limited for that purpose.

How are debts paid when provisions are made by a will?

If the testator makes provision by his will, or designates the estate to be appropriated for the payment of his debts,

• the expenses of administration, or the family expenses,

• they shall be paid according to the provisions of the will;

• but if the provision made by the will or the estate appropriated, is not sufficient for that purpose,

• such part of the estate of the testator, real or personal, as is not disposed of by will, if any shall be appropriated for that purpose.

What is the priority in payment of debts from estate assets?

The personal estate of the deceased not disposed of by will shall be first chargeable with the payment of debts and expenses;

• and if said personal estate is not sufficient for that purpose,

• or its sale would redound to the detriment of the participants for the estate,

• the whole of the real estate not disposed of by will, or so much thereof as is necessary,

• may be sold, mortgaged, or otherwise encumbered for that purpose by the executor or administrator,

• after obtaining the authority of the court therefor.

• Any deficiency shall be met by contributions in accordance with the provisions of section 6 of this rule.

What does the court do when it finds a contingent claim valid?

If the court is satisfied that a contingent claim duly filed is valid,

• it may order the executor or administrator to retain in his hands sufficient estate to pay such contingent claim when the same becomes absolute,

• or if the estate is insolvent, sufficient to pay a portion equal to the dividend of the other creditors.

What happens when a contingent claim becomes absolute within the specified time?

If such contingent claim becomes absolute and is presented to the court,

• or to the executor or administrator,

• within two (2) years from the time limited for other creditors to present their claims,

• it may be allowed by the court if not disputed by the executor or administrator and,

• if disputed, it may be proved and allowed or disallowed by the court as the facts may warrant.

• If the contingent claim is allowed,

• the creditor shall receive payment to the same extent as the other creditors

• if the estate retained by the executor or administrator is sufficient.

• But if the claim is not so presented, after having become absolute, within said two (2) years, and allowed,

• the assets retained in the hands of the executor or administrator, not exhausted in the payment of claims,

• shall be disturbed by the order of the court to the persons entitled to the same;

• but the assets so distributed may still be applied to the payment of the claim when established,

• and the creditor may maintain an action against the distributees to recover the debt,

• and such distributees and their estates shall be liable for the debt in proportion to the estate they have respectively received from the property of the deceased.

What does the court determine regarding the contributions of devisees, legatees, or heirs?

Where devisees, legalitees, or heirs have entered into possession of portions of the estate before the debts and expenses have been settled and paid,

• and have become liable to contribute for the payment of such debts and expenses,

• the court having jurisdiction of the estate may, by order for that purpose, 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.

What are the requirements when the estate is insufficient to pay debts?

If the assets which can be appropriated for the payment of debts are not sufficient for that purpose,

• the executor or administrator shall pay the debts against the estate,

• observing the provisions of Articles 1059 and 2239 to 2251 of the Civil Code.

How are dividends paid if there are insufficient assets for all creditors?

If there are no assets sufficient to pay the credits of any one class of creditors after paying the credits entitled to preference over it,

• each creditor within such class shall be paid a dividend in proportion to his claim.

• No creditor of any one class shall receive any payment until those of the preceding class are paid.

How is the estate of an insolvent non-resident disposed of in the Philippines?

In case administration is taken in the Philippine of the estate of a person who was at the time of his death an inhabitant of another country,

• and who died insolvent,

• his estate found in the Philippines shall, as far as practicable,

• be so disposed of that his creditors here and elsewhere may receive each an equal share,

• in proportion to their respective credits.

What happens to claims proven outside the Philippines against an insolvent resident's estate?

If it appears to the court having jurisdiction that claims have been duly proven in another country against the estate of an insolvent who was at the time of his death an inhabitant of the Philippines,

• and that the executor or administrator in the Philippines had knowledge of the presentation of such claims in such country and an opportunity to contest their allowance,

• the court shall receive a certified list of such claims,

• when perfected in such country,

• and add the same to the list of claims proved against the deceased person in the Philippines

• so that a just distribution of the whole estate may be made equally among all its creditors according to their respective claims;

• but the benefit of this and the preceding sections shall not be extended to the creditors in another country

• if the property of such deceased person there found is not equally apportioned to the creditors residing in the Philippines and the other creditor, according to their respective claims.

What does the court order regarding payment of debts before time limits?

Before the expiration of the time limited for the payment of the debts,

• the court shall order the payment thereof,

• and the distribution of the assets received by the executor or administrator for that purpose among the creditors,

• as the circumstances of the estate require and in accordance with the provisions of this rule.

What orders can be made if an appeal is taken regarding the payment of debts?

If an appeal has been taken from a decision of the court concerning a claim,

• the court may suspend the order for the payment of the debts or may order the distributions among the creditors whose claims are definitely allowed,

• leaving in the hands of the executor or administrator sufficient assets to pay the claim disputed and appealed.

• When a disputed claim is finally settled,

• the court having jurisdiction of the estate shall order the same to be paid out of the assets retained to the same extent and in the same proportion with the claims of other creditors.

When may subsequent distributions of assets be ordered?

If the whole of the debts are not paid on the first distribution,

• and if the whole assets are not distributed,

• or other assets afterwards come to the hands of the executor or administrator,

• the court may from time to time make further orders for the distributions of assets.

What must be done when an order for the distribution of assets is made?

When an order is made for the distribution of assets among the creditors,

• the executor or administration shall, as soon as the time of payment arrives,

• pay the creditors the amounts of their claims,

• or the dividend thereon,

• in accordance with the terms of such order.

What is the time frame for paying debts and legacies following the granting of letters testamentary or administration?

On granting letters testamentary or administration,

• the court shall allow to the executor or administrator a time for disposing of the estate and paying the debts and legacies of the deceased,

• which shall not, in the first instance, exceed one (1) year;

• but the court may, on application of the executor or administrator and after hearing on such notice of the time and place therefor given to all persons interested as it shall direct,

• extend the time as the circumstances of the estate require not exceeding six (6) months for a single extension not so that the whole period allowed to the original executor or administrator shall exceed two (2) years.

What happens when an executor or administrator dies?

When an executor or administrator dies,

• and a new administrator of the same estate is appointed,

• the court may extend the time allowed for the payment of the debts or legacies beyond the time allowed to the original executor or administrator,

• not exceeding six (6) months at a time and not exceeding six (6) months beyond the time which the court might have allowed to such original executor or administrator;

• and notice shall be given of the time and place for hearing such application, as required in the last preceding section.

Rule 89 – Sales, Mortgages, and Other Encumbrances of Property of Decedent

What authority does the court have regarding the sale of personal estate upon the application of the executor or administrator?

Upon the application of the executor or administrator, and on written notice to the heirs and other persons interested,

• the court may order the whole or a part of the personal estate to be sold,

• if it appears necessary for the purpose of paying debts,

• expenses of administration, or legacies,

• or for the preservation of the property.

Under what circumstances may the court authorize the sale, mortgage, or encumbrance of realty to pay debts and legacies?

When the personal estate of the deceased is not sufficient to pay the debts,

• expenses of administration, and legacies,

• or where the sale of such personal estate may injure the business or other interests of those interested in the estate,

• and where a testator has not otherwise made sufficient provision for the payment of such debts, expenses, and legacies,

• the court, on the application of the executor or administrator and on written notice of the heirs, devisees, and legatees residing in the Philippines,

• may authorize the executor or administrator to sell, mortgage, or otherwise encumber so much as may be necessary of the real estate,

• in lieu of personal estate, for the purpose of paying such debts, expenses, and legacies,

• if it clearly appears that such sale, mortgage, or encumbrance would be beneficial to the persons interested;

• and if a part cannot be sold, mortgaged, or otherwise encumbered without injury to those interested in the remainder,

• the authority may be for the sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is necessary or beneficial under the circumstances.

What provision exists for persons interested to prevent a sale, mortgage, or encumbrance?

No such authority to sell, mortgage, or otherwise encumber real or personal estate shall be granted if any person interested in the estate gives a bond,

• in a sum to be fixed by the court,

• conditioned to pay the debts, expenses of administration, and legacies within such time as the court directs;

• and such bond shall be for the security of the creditors, as well as of the executor or administrator,

• and may be prosecuted for the benefit of either.

When may the court authorize the sale of the estate for the benefit of interested persons?

When it appears that the sale of the whole or a part of the real or personal estate, will be beneficial to the heirs, devisees, legatees, and other interested persons,

• the court may, upon application of the executor or administrator and on written notice to the heirs, devisees, and legatees who are interested in the estate to be sold,

• authorize the executor or administrator to sell the whole or a part of said estate,

• although not necessary to pay debts, legacies, or expenses of administration;

• but such authority shall not be granted if inconsistent with the provisions of a will.

• In case of such sale, the proceeds shall be assigned to the persons entitled to the estate in the proper proportions.

What authority does the court have regarding the sale or encumbrance of the estate to pay debts in other countries?

When the sale of personal estate,

• or the sale, mortgage, or other encumbrance of real estate is not necessary to pay the debts,

• expenses of administration, or legacies in the Philippines,

• but it appears from records and proceedings of a probate court in another country that the estate of the deceased in such other country is not sufficient to pay the debts, expenses of administration, and legacies there,

• the court here may authorize the executor or administrator to sell the personal estate or to sell, mortgage, or otherwise encumber the real estate for the payment of debts or legacies in the other country,

• in same manner as for the payment of debts or legacies in the Philippines.

Under what circumstances may the court authorize an executor or administrator to encumber real estate acquired on execution or foreclosure?

The court may authorize an executor or administrator to sell, mortgage, or otherwise encumber real estate acquired by him on execution or foreclosure sale,

• under the same circumstances and under the same regulations as prescribed in this rule for the sale, mortgage, or other encumbrance of other real estate.

What regulations must be followed for granting authority to sell, mortgage, or otherwise encumber estate?

The court having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell personal estate,

• or to sell, mortgage, or otherwise encumber real estate, in cases provided by these rules

• and when it appears necessary or beneficial under the following regulations.

• (a) The executor or administrator shall file a written petition setting forth the debts due from the deceased,

  • the expenses of administration,

  • the legacies,

  • the value of the personal estate,

  • the situation of the estate to be sold, mortgaged, or otherwise encumbered,

  • and such other facts as show that the sale, mortgage, or other encumbrance is necessary or beneficial.
    

• (b) The court shall thereupon fix a time and place for hearing such petition,

  • and cause notice stating the nature of the petition,

  • the reasons for the same, and the time and place of hearing,

  • to be given personally or by mail to the persons interested,

  • and may cause such further notice to be given, by publication or otherwise, as it shall deem proper;
    

• (c) If the court requires it, the executor or administrator shall give an additional bond,

  • in such sum as the court directs,

  • conditioned that such executor or administrator will account for the proceeds of the sale, mortgage, or other encumbrance;
    

• (d) If the requirements in the preceding subdivisions of this section have been complied with,

  • the court, by order stating such compliance, may authorize the executor or administrator to sell, mortgage, or otherwise encumber,

  • in proper cases, such part of the estate as is deemed necessary,

  • and in case of sale the court may authorize it to be public or private, as would be most beneficial to all parties concerned.

  • The executor or administrator shall be furnished with a certified copy of such order;
    

• (e) If the estate is to be sold at auction,

  • the mode of giving notice of the time and place of the sale shall be governed by the provisions concerning notice of execution sale;
    

• (f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold, mortgage, or otherwise encumbered is situated,

  • a certified copy of the order of the court, together with the deed of the executor or administrator for such real estate,

  • which shall be as valid as if the deed had been executed by the deceased in his lifetime.

How does the court authorize the conveyance of realty which the deceased contracted to convey?

Where the deceased was in his lifetime under contract, binding in law, to deed real property,

• or an interest therein,

• the court having jurisdiction of the estate may, on application for that purpose,

• authorize the executor or administrator to convey such property according to such contract,

• or with such modifications as are agreed upon by the parties and approved by the court;

• and if the contract is to convey real property to the executor or administrator,

• the clerk of court shall execute the deed.

• The deed executed by such executor, administrator, or clerk of court shall be as affectual to convey the property as if executed by the deceased in his lifetime;

• but no such conveyance shall be authorized until notice of the application for that purpose has been given personally or by mail to all persons interested,

• and such further notice has been given, by publication or otherwise, as the court deems proper;

• nor if the assets in the hands of the executor or administrator will thereby be reduced so as to prevent a creditor from receiving his full debt or diminish his dividend.

What authority does the court have regarding conveyances of lands held in trust by the deceased?

Where the deceased in his lifetime held real property in trust for another person,

• the court may after notice given as required in the last preceding section,

• authorize the executor or administrator to deed such property to the person,

• or his executor or administrator, for whose use and benefit it was so held;

• and the court may order the execution of such trust, whether created by deed or by law.

Rule 90 – Distribution and Partition of the Estate

Under what conditions is an order for distribution of the residue made?

• When the debts, funeral charges, and expenses of administration,

• the allowance to the widow,

• and inheritance tax, if any, chargeable to the estate in accordance with law,

• have been paid,

• the court,

  • on the application of the executor or administrator,

  • or of a person interested in the estate,

  • and after hearing upon notice,

• shall assign the residue of the estate to the persons entitled to the same,

• naming them and the proportions, or parts, to which each is entitled,

• and such persons may demand and recover their respective shares from the executor or administrator,

• or any other person having the same in his possession.

If there is a controversy before the court

• as to who are the lawful heirs of the deceased person

• or as the distributive shares to which each person is entitled under the law,

• the controversy shall be heard and decided as in ordinary cases.

No distribution shall be allowed

• until the payment of the obligations above mentioned has been made or provided for,

• unless the distributees, or any of them, give a bond,

• in a sum to be fixed by the court,

• conditioned for the payment of said obligations within such time as the court directs

How are questions regarding advancements to heirs determined?

Questions as to advancement made,

• or alleged to have been made,

• by the deceased to any heir

• may be heard and determined by the court having jurisdiction of the estate proceedings;

• and the final order of the court thereon

  • shall be binding on the person raising the questions and on the heir.

Who is responsible for paying the expenses of partition?

If at the time of distribution

• the executor or administrator has retained sufficient effects in his hands

• which may lawfully be applied for the expenses of partition of the properties distributed,

• such expenses of partition may be paid by such executor or administrator

• when it appears equitable to the court

• and not inconsistent with the intention of the testator;

Otherwise, they shall be paid by the parties

• in proportion to their respective shares or interest in the premises,

• and the apportionment shall be settled and allowed by the court,

• and, if any person interested in the partition does not pay his proportion or share,

• the court may issue an execution

• in the name of the executor or administrator

• against the party not paying the sum assessed.

What must be done with certified copies of final orders and judgments regarding the partition of estate?

Certified copies of final orders and judgments of the court

• relating to the real estate or the partition thereof

• shall be recorded in the registry of deeds of the province

  • where the property is situated.