G.R. No. 20956. October 13, 1923

STATEMENT

During his lifetime Francisco Atilano was the owner of Lots Nos. 209-A, 209-B
and 214 of the cadastral plan of the municipality and Province of Zamboanga, of
the western extension, record 8695, certificates of title Nos. 4231, 5468 and
4371.

June 1, 1920, in consideration of P9,662.20, he executed, as a widower, a
mortgage on this land, in which Pio Atilano and Toribio Atilano, as married
persons, joined, to and in favor of Lim Jua, also a married person. Among other
things, the mortgage recites the delivery of the money, and that “the amount of
forty (40) piculs on the 15th day of September, 1920, and the amount of forty
(40) piculs of copra after each quarter, counting after said date until the
complete payment of the sum mentioned in this mortgage. Each delivery should be
completed on or before the dates mentioned.” It also provides that for the
failure to pay any of the specified amounts or the taxes on the land as they
become due, that the mortgagee may declare the whole amount due and payable. The
mortgage was duly signed by Francisco Atilano, Toribio Atilano and Pio Atilano,
and duly witnessed and acknowledged before a notary public, and was duly filed
for record. Francisco Atilano died on September 4, 1920, and a petition was duly
filed in the Court of First Instance of Zamboanga praying for the appointment of
Toribio Atilano as administrator of his estate. August 7, 1921, by an order of
the court, Toribio Atilano was duly appointed as administrator of the estate of
the deceased, qualified and entered upon the discharge of his duties. In the
ordinary course of business, commissioners on claims and appraisal were also
appointed. Acting through Yap Seng, its attorney-in-fact, the claim of Lim Jua
& Co. was presented to the commissioners on August 26, 1921, in the sum of
P9,439.70 against the estate of the deceased, and it was duly accepted, approved
and allowed by the commissioners as a valid claim against the estate. No appeal
was ever taken from the allowance of the claim by anyone. March 3, 1922, Toribio
Atilano, as administrator, filed a petition for the sale of the lands
above-described, the only real property of the estate, to pay the full amount of
the claim of Lim Jua & Co., and some other small claims against the estate,
amounting to about P1,000. March 30, 1922, the appellants here filed objections
to the allowance of such petition, on the ground that the alleged indebtedness
against the estate was obtained through fraud, falsification and connivance by
Toribio Atilano and Lim Jua, a creditor, and asked leave to contest the claim
upon those grounds.

August 10, 1922, they filed supplemental objections, alleging that the
indebtedness was not a joint and several debt of the deceased, and that the
estate is only liable for one-third of the whole indebtedness.

August 18, 1922, another petition for an order of sale was filed, to which
the appellants filed like objections on August 23, 1922.

January 15, 1923, the administrator filed another petition for the same
purpose, to which the appellants again filed their objections.

After a hearing on the final petition and the objections on February 5, 1923,
the lower court ordered and decreed the sale of the real property belonging to
the estate of the deceased, for the purpose of applying the proceeds to the
payment of the debt of Lim Jua & Co. in the sum of P9,439.70. From the entry
of this judgment the appellants prosecute this appeal, specifying the following
assignments of error:

“1. The court a quo erred in not permitting the herein opponents and
appellants to question the validity of the claim of P9,439.70 which is
originally in the sum of P9,662.20, presented by Lim Jua & Co. in any stage
of the proceeding upon the application of the administrator to sell the real
property of the estate for the payment thereof.

“2. The court erred in holding and ordering that the claim presented by Lim
Jua & Co. for the sum of P9,439.70, before the Commissioners is the joint
and several obligation of the deceased, Francisco Atilano, with the present
administrator Toribio and Pio Atilano.

“3. The court a quo erred in ordering the sale of the real properties
known as Lots Nos. 209-A, 209-B, and 214, Case No. 8695, belonging to the
dissolved conjugal partnership of the deceased spouses, Francisco Atilano and
Maria Acevedo.

“4. The court a quo erred and, therefore, abused its discretion in not
dismissing the herein administrator and appellee Toribio Atilano, in spite of
the application of the opponents and appellants.

“5. The court a quo committed an error in entering its order of
February 5, 1923, ordering the sale of Lots Nos. 209-A, 209-B and 214, of the
property of the spouses Francisco Atilano and Maria Acevedo, both
deceased.”

JOHNS, J.:

The appellants are the heirs of Francisco Atilano, deceased, and prosecute
this appeal as paupers.

It is conceded that commissioners on claims were duly appointed; that the
claim in question was duly presented and allowed by the commissioners; that no
objections were filed; and that no appeal was taken from the order of allowance.
It does not appear that the heirs of the deceased are minors, and there is no
claim or pretense that they were not legally notified, or that they were
deprived of their right to object or to appeal.

Among other things, section 773 of the Code of Civil Procedure provides:

“An Appeal from Allowance or Disallowance of Claim.—Any executor or
administrator may appeal to the Court of First Instance from the allowance of
any claim against the estate by the committee appointed for the purpose of
allowing claims against the estate of deceased persons, etc.

“SEC. 774. If Administrator Does Not Appeal, Heir or Creditor May.—If
the executor or administrator does not appeal from the allowance of any claim
against the estate by the committee, or the disallowance in whole or in part by
it of any offset in behalf of the estate against such claim, any heir or
creditor may appeal to the Court of First Instance from such allowance or
disallowance, and prosecute the appeal in the name of the executor or
administrator, etc.”

Section 775 provides:

“Perfecting Appeal.—The appeal provided in the two preceding sections
shall be perfected by filing with the clerk of the Court of First Instance that
has jurisdiction of the estate, within twenty-five days after the committee’s
report is filed therein, a statement that the person so appealing is
dissatisfied with the action of the committee in respect to the item or items
complained of, and appeals therefrom to the court.”

Section 776 provides:

“Proceedings in Court of First Instance on Such Appeal.—Upon the
lodging of such appeal with the clerk, the disputed claim shall stand for trial
in the same manner as any other action in the Court of First Instance, the
creditor being deemed to be the plaintiff, and the estate the defendant, and
pleadings as in other actions shall be filed.”

It is claimed by the respondents [petitioner] that, because no objections
were filed or an appeal taken from the order of allowance of the claim, the
appellants are now barred and have no right to object to the order of
allowance.

In a well-reasoned, able and exhaustive brief, the attorney for the
appellants contends that where, as in this case, the administrator was a party
to the mortgage, and there was fraud and collusion between him and the creditor,
that in a petition to sell the real estate covered by the mortgage, the heirs
have a right to object and to allege and prove the fraud, even though no
objections were filed to the allowance of the claim. In the opinion of the
writer, the legal principle for which the appellants contend is sound and well
sustained by the authorities and, in a proper case, the heirs are not barred by
the above provisions of the Code of Civil Procedure, even though no objections
were made to the allowance of the claim, or an appeal was not taken from the
order of allowance.

Be that as it may, there is no proof of fraud in the record. It is conceded
that Francisco Atilano was the owner of, and held the record title to, the land
described in the mortgage, and that Pio Atilano and Toribio Atilano, who signed
the mortgage with him, did not have any right, title or interest in the land.
Neither is there any evidence as to whom any part of P9,662.20 was paid, or that
any portion of it was paid to Pio Atilano or Toribio Atilano, or that either of
them had any use or benefit of the money.

Assuming, without deciding, that the question could now be raised, and that
fraud would be a valid objection, there is no proof in the record that Pio
Atilano or Toribio Atilano received any part of the P9,622.20, or that the
mortgage was fraudulent. Without such allegation and proof, the appellants have
no legal right to contend that the debt was a joint liability between the
parties, or that the proceeds of the mortgage were shared equally between them.
The fact that the deceased was the sole owner of the land, which is mortgaged,
and that Pio Atilano and Toribio Atilano, although joining in the mortgage, did
not have or claim any interest in the land, plus the fact that the mortgage
provides that the products of the land shall be applied in payment of the
mortgage, and the parties contemplated that the products would be sufficient to
pay the debt, would clearly indicate that Francisco Atilano was the sole
beneficiary of the mortgage, and would create at least a presumption of that
fact. In the absence of any testimony to overcome that presumption, it must
prevail. In other words, there is nothing in the record tending to show fraud,
or that either Pio Atilano or Toribio Atilano personally had or received any
portion of the original mortgage debt.

Fraud is never presumed. It must be both alleged and proven. In this case,
there is a failure of proof. If it be a fact that Pio Atilano and Toribio
Atilano did share in the proceeds of the mortgage loan, upon the payment of the
debt, the estate of Francisco Atilano would have the right of contribution from
them for the respective amounts which they received.

The petition of the appellants to discharge the administrator was overruled
by the lower court. That was a matter largely in its discretion.

We have given this case very careful consideration. Notwithstanding the able
brief of the attorney for the appellants upon the legal principles involved, for
a failure of proof, the judgment of the lower court must be affirmed, without
costs to either party. So ordered.

Johnson, Street, Malcolm, Avanceña,
Villamor, and Romualdez, JJ., concur.