file:spcpro_part2b.htm

6.   General
Powers and Duties of Executors and Administrators

An executor and administrator has the following
powers and duties:

6.1 To maintain the estate in
‘tenantable repair’ and deliver the same in such repair to the heirs or
devisees when directed by the court;74

6.2 To possess and manage the
estate of the deceased for the payment of the debts and expenses of
administration;75

6.3 To have access to
partnership books and property where the deceased was a partner, under pain of
contempt by the probate court;76

6.4 With
the approval of the court, to compound or compromise with a debtor of the
deceased.77

 

7.   Inventory
And Appraisal

Within three (3) months after his appointment, an
executor or administrator shall file a true inventory and appraisal of all the
real and personal estate of the deceased, with the assistance of one or more
inheritance tax appraisers, as may be ordered by the court.

7.1 Exclusions from the
inventory

The articles that should not
be inventoried are: (a) the wearing apparel of the surviving spouse and minor
children, (b) the marriage bed and bedding, and (c) such provisions and other
articles as will necessarily be consumed in the subsistence of the family of
the deceased. They shall not be considered as assets, nor administered as such.78

7.2 Allowance to widow and
family

The widow and minor or
incapacitated children of the deceased, during the settlement of the estate,
shall receive such allowance as are provided by law.79

7.3 Questions of title

A probate court can resolve
questions of title only provisionally. All that the court can do is to
determine whether the properties should or should not be included in the
inventory or list of properties to be administered by the administrator. If
there is no dispute, well and good, but if there is, then the parties, the
administrator and the opposing parties have to resort to an ordinary action for
a final determination of the conflicting claims of title because the probate
court cannot do so.80

8.   Sales And
Mortgages

The need for approval by the probate court exists
only where specific properties of the estate are sold and not when only ideal
and indivisible shares of an heir are disposed of.81
The sale or mortgage of specific estate property may be approved by the court
under the following circumstances:

8.1 For the payment of debts

The sale or encumbrance of
real property to pay the obligations of the estate, if beneficial, may be
approved when personal property is not enough to pay for the obligations of the
estate, or where its sale or mortgage may be injurious to those interested and
where the testator has not otherwise provided.

Note: If a part of the
real property cannot be sold, or otherwise encumbered without injury to those
interested in the remainder, the disposition may be of the whole of the
property, or so much as is necessary or beneficial under the circumstances.82

8.2 If beneficial

The court may authorize the
sale of the whole or a part of said estate, although it is not necessary to pay
the obligations of the estate so long as it is beneficial but such authority
should not be inconsistent with the provisions of a will. The proceeds shall be
given to the persons entitled to the estate in the proper proportions.83

8.3 Bond to prevent sale, etc.

Persons interested may prevent
a sale, mortgage or encumbrance by giving a bond in a sum to be fixed by the
court, conditioned to pay the obligations of the estate. Such bond shall be for
the security of the creditors, as well as the executor or administrator.84

8.4 Regulations for granting
authority to sell, mortgage, or otherwise encumber estate.

8.4.1 The executor or
administrator shall file a written petition, setting forth (i) the debts due
from the deceased, (ii) the expenses of administration, (iii) the legacies,
(iv) the value of the personal estate, (v) the situation of the estate to be
sold, mortgaged, or otherwise encumbered, and (vi) such other facts as will
show that the sale, mortgage, or other encumbrance is necessary or beneficial.

8.4.2 The court shall then
cause notice to the persons interested, stating the nature of the petition, the
reason for the same, and the time and place of hearing. The court may cause
further notice by publication or otherwise.

8.4.3 The court may direct the
executor or administrator to give an additional bond to account for the
proceeds of the sale, mortgage, or other encumbrance.

8.4.4 The court may then grant
the petitions in proper cases, such part of the estate as is deemed necessary.
The court may authorize the sale to be public or private, as would be most
beneficial to all parties concerned.

8.4.5 If the property 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.85

8.4.6 The transaction and the
court order shall be recorded in the registry of deeds.86

9.   Actions
By And Against Executors And Administrators

In general, executors and administrators may
bring or defend actions that survive. Claims that do not survive are money
claims that have to be filed in the estate proceedings.

9.1 Actions that survive are
those actions 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.87

9.2 Actions that do not
survive are the money claims or (a) all claims for money arising from contract,
express or implied, due, not due or contingent;88
(b) all claims for funeral expenses; (c) expenses for the last sickness of the
decedent; and (d) judgment for money against the decedent, which should be
presented in the form of claims against the estate.89

9.3 Mortgage due estate may be
foreclosed

If the deceased was a
mortgagee or assignee of the right of a mortgagee, the mortgage may be
foreclosed by the executor or administrator.90

9.4 Proceedings when property
concealed, embezzled, or fraudulently conveyed

9.4.1 When a person is
suspected of having concealed, embezzled, or conveyed away any of the money or
chattels of the deceased, or such person possesses or knows of a document which
contains evidence of or tends to disclose the right of the deceased to real or
personal estate, or his last will and testament, the court may cite such
suspected person to appear or to answer, and may examine him on oath91

9.4.2 If the person so cited
refuses to appear and give rogatories, the court may punish him for contempt
and may commit him to prison until he submits to the order of the court. The
interrogatories, if any, and his answers thereto, shall be in writing and shall
be filed in court.92

9.5 Rendition of account

A person entrusted by the
executor or administrator with property of the deceased, may be compelled to
render a full account on oath before the court.93

9.6 Embezzlement before
letters issued

A person who embezzles or
alienates property of the deceased before issuance of letters testamentary or
of administration, is liable for double the value of the property embezzled. 94

9.7 Remedy for fraudulent
conveyance by the deceased during his lifetime

The remedy may be by action of
the executor or administrator or by a creditor under the following
circumstances.

9.7.1 Action by executor or
administrator

When there is a deficiency of
assets to pay its debts, but the deceased during his lifetime conveyed property
with intent to defraud his creditors, the conveyance would by law be void as
against his creditors, and the subject of the attempted conveyance would be
subject to attachment in his lifetime. The executor or administrator may file
an action to recover such property but is not be bound to do so, unless the creditors
pay for the costs and expenses thereof or give security as the court deems
equitable.95

9.7.2 Action by the creditor

On the other hand, a creditor
may file such an action in the name of the executor or administrator upon the
filing by the creditor of a bond approved by the court to indemnify the
executor or administrator. The creditor shall have a lien on the judgment
recovered for costs and expenses as the court deems equitable.96

Note: Where the conveyance or attempted
conveyance was made by the deceased in his lifetime in favor of the executor or
administrator, the action of the creditor shall be filed in the name of all the
creditors without need of court permission or the court and the filing of a
bond.97

10.  Money Claims
Against The Estate; Notice To Creditors

Immediately after granting letters testamentary
or of administration, the court shall issue a notice requiring all persons
having money claims against the decedent to file them in the office of the
clerk of court.98

10.1 Time within which claims
shall be filed

In said notice, the court
shall state the time for the filing of claims against the estate, which shall
not be more than twelve (12) nor less than six (6) months after the date of the
first publication of the notice. However, before an order of distribution is
issued, the court may, for cause shown and on such terms as are equitable,
allow a claim to be filed within a time not exceeding one (1) month.99

10.2 Publication of notice to
creditors

The executor or administrator
shall immediately cause the notice to be published three (3) weeks successively
in a newspaper of general circulation in the province, and to be posted for the
same period in four (4) public places in the province and in two (2) public
places in the municipality where the decedent last resided.100

10.3 Filing copy of printed
notice

Within ten (10) days after the
publication and the posting, the executor or administrator shall file in court
a printed copy of the notice, accompanied with an affidavit of publication
setting forth the dates of the first and last publication thereof and the name
of the newspaper in which the same was printed.101

10.4 Filing of claims

The claims which must be filed
under the notice are:

10.4.1 all claims for money
against the decedent, arising from contract, express or implied, whether the
same be due, not due, or contingent;

10.4.2 all claims for funeral
expenses and expenses for the last sickness of the decedent; and

10.4.3 judgment for money
against the decedent.102

Note: Under the 1997
Rules of Civil Procedure, an action for a contractual money claim against a
defendant who dies before entry of final judgment, must proceed until entry of
final judgment. A favorable judgment obtained by the plaintiff shall be
enforced as a money claim against the estate of the defendant which shall be
filed in the estate proceeding.103

10.5 Time bar

Claims that are not filed
within the time limited in the notice, are barred forever, except that they may
be set forth as counterclaims in any action that the executor or administrator
may bring against the claimants.

10.6 Set off

Where an executor or
administrator commences an action, or prosecutes an action already commenced by
the deceased in his lifetime.- A debtor may set forth in an action by the
executor or administrator against him, by answer the claims he has against the
decedent, instead of presenting them independently as a claim against the
estate, and mutual claims may be set off against each other in such action.
Claims not yet due, or contingent, may be approved at their present value.104

10.7 How to file a claim105

A claim may be filed with the
clerk of court with the necessary vouchers and supporting affidavits, serving a
copy thereof on the executor or administrator.

10.7.1 If the claim is not
due, or is contingent, it must also be supported by affidavit stating the
particulars thereof. When the affidavit is made by a person other than the
claimant, he must set forth therein the reason why it is not made by the
claimant.106

10.7.2 The court, in its
discretion, and as a matter of convenience, may order all the claims to be
collected in a separate folder.107

10.8 Disposition of admitted
claim

Any claim admitted by the
executor or administrator shall immediately be submitted by the clerk to
the court who may approve the same without hearing; but the court may order
that known heirs, legatees, or devisees be notified and heard.108

10.9 Trial of contested claim

If an heir, legatee, or
devisee opposes the claim, the court may allow him fifteen (15) days to answer
the claim. Upon the filing of an answer or upon the expiration of the time for
such filing, the clerk of court shall set the claim for trial with notice to
both parties. The court may refer the claim to a commissioner.109

10.10 Judgment appealable

The judgment of the court
approving or disapproving a claim, is appealable. A judgment against the
executor or administrator that he pay shall not create any lien upon the
property of the estate, or give to the judgment creditor any priority of
payment.110

11.   Payment
Of Debts

If there are sufficient assets to pay the debts,
the executor or administrator shall pay the same within the time limited for
that purpose.111

11.1 Source of payment as
designated by the testator

The debts of the testator,
expenses or administration, or family expenses, shall be paid according to the
provisions of the will; but if the provisions are not sufficient, such part of
the estate not disposed of by will, if any, shall be appropriated for that
purpose.112

11.2 Personalty first
chargeable for debts, then realty

The personal property of the
deceased shall first be chargeable with the payment of debts and expenses; but
if it is not sufficient, or its sale would be detrimental to the participants
of 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 by the
executor or administrator, after obtaining the authority of the court therefor.113

11.3 Preference of payment if
estate insolvent

If the assets are not
sufficient for the payment of debts, they shall be paid in accordance with the
provisions of Articles 1059 and 2239 to 2251 of the Civil Code on concurrence
and preference of credits.114

11.4 When and how claim proved
outside the Philippines against insolvent resident’s estate paid

If 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 local executor
or administrator knew of such claims and an opportunity to contest their
allowance, the court shall add a certified list of such claims to the list of
claims proved in the Philippines so that a just distribution of the whole
estate may be made, but the benefit of this and the preceding sections shall
not be extended to the creditors in another country if the property of the
deceased there found is not equally apportioned to the creditors residing in
the Philippines and the other creditors, according to their respective claims.115

11.5 Time for paying debts and
legacies

The executor or administrator
shall pay the debts and legacies of the deceased within a period of time fixed
by the court, which shall not exceed one (1) year, but the court may, on motion
of the executor or administrator and after hearing, extend the time as the
circumstances of the estate require not exceeding six (6) months for a single
extension, but the whole period allowed to the original executor or
administrator shall not exceed two (2) years.116

12.  
Accountability And Compensation Of Executors And Administrators

Except as otherwise expressly provided in the
following sections, every executor or administrator is chargeable (a) with the
whole of the estate of the deceased which has come into his possession, at the
value of the appraisement contained in the inventory; (b) with all the
interest, profit, and income of such estate; and (c) with the proceeds of so
much of the estate as is sold by him, at the price at which it was sold.117

12.1 Increase or decrease in
value

No executor or administrator
shall profit by the increase, or suffer loss by the decrease or destruction,
without his fault, of any part of the estate.

12.1.1 He must account for the
excess when he sells any part of the estate for more than the appraised value,
and if any is sold for less than the appraisement, he is not responsible for
the loss, if the sale has been justly made.

12.1.2 If he settles any claim
against the estate for less than its nominal value, he is entitled to charge in
his account only the amount he actually paid on the settlement.118

12.2 Accountable for income
from realty used by him

If the executor or
administrator uses or occupies any part of the real estate himself, he shall
account for it as may be agreed upon between him and the parties interested, or
adjusted by the court with their assent. If the parties do not agree, the
amount may be ascertained by the court, whose determination shall be final.119

12.3 Accountable for delay

When an executor or
administrator unreasonably delays to collect the debts, sell estate of the
deceased, or neglects to pay over the money he has in his hands, and the value
of the estate is thereby lessened or unnecessary cost or interest accrues, or
the persons interested suffer loss, the damage sustained may be charged against
him, and he shall be liable therefor on his bond.120

12.4 Expenses and fees allowed
executor or administrator121

An executor or administrator
shall be allowed the necessary expenses in the care, management, and settlement
of the estate, and for his services, four pesos per day for the time actually
and necessarily employed, or a commission upon the value of so much of the
estate as comes into his possession and is finally disposed of by him in the
payment of debts, expenses, legacies, or distributive shares, or by delivery to
heirs or devisees, of :

12.4.1     
2% of the first Php 5,000;

12.4.2     
1% of more than Php 5,000 but less than Php 30,000;

12.4.3     
1/2% of more than Php 30,000, but less than Php 100,000; and

12.4.4     
1/4% of more than Php 100,000.

Note: But in any
special case, where the estate is large, and the settlement has been attended
with great difficulty, and has required a high degree of capacity on the part
of the executor or administrator, a greater sum may be allowed. If objection to
the fees allowed to be taken, the allowance may be re-examined on appeal.

12.5 Two or more executors or
administrators

If there are two or more
executors or administrators, the compensation shall be apportioned among them
by the court according to the services actually rendered by them respectively.122

12.6 Attorney’s fees
prohibited

When the executor or
administrator is an attorney, he shall not charge against the estate any
professional fees for legal services rendered by him,123 but he may employ counsel.124

12.7 Compensation provided in
the will

When the deceased by will
makes some other provision for the compensation of his executor, it shall be a
full satisfaction for his services unless by a written instrument filed in the
court he renounces all claim to the compensation provided by the will.125

12.8 When executor or
administrator to render account

Every executor or administrator
shall render an account of his administration within one (1) year from the time
of receiving letters testamentary or of administration, unless the court
otherwise directs because of extensions of time for presenting claims against,
or paying the debts of, the estate, or for disposing of the estate. He shall
render such further accounts as the court may require until the estate is
wholly settled.126

12.9 Examinations on oath with
respect to account

The heirs, legatees,
distributees, and creditors of the estate and the executor or administrator may
be examined on oath on any matter relating to an administration account.127

12.10 Notice to examine the
account of the executor or administrator

Before the account of an
executor or administrator is allowed, notice shall be given to persons
interested of the time and place of examining and allowing the same; and such
notice may be given personally or by advertisement in a newspaper or
newspapers, or both, as the court directs.128
A person liable as surety in respect to such account may, upon application, be
admitted as party to such accounting.129

4.  Distribution and
Partition130

The distribution of the estate can only be made
after strict compliance with the provisions in Rule 90, Rules of Court.

1.   When Distribution
Is Made

1.1
Payment of obligations required

The estate
may be distributed only if the debts, funeral charges, and expenses of
administration, the allowance to the widow, and inheritance tax, if any, have
been paid. (Note: What is provided in the law is only an estate tax payable by
the heir has already been abrogated.)

1.1.1 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.

1.1.2 If
there is a controversy as to who are the lawful heirs of the deceased person or
as to the distributive shares to which each person is entitled under the law,
the controversy shall be heard and decided as in ordinary cases.131

1.2
Advance distribution

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.132

2.  Partial
distribution, without paying estate taxes

A judge commits a grave abuse of discretion when
he orders a partial distribution of the estate without the payment of estate
taxes.133

3.   Expenses of
partition

Expenses of partition may be paid by the 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, enforceable by
execution.134

4.   Project
of Partition

The practice in this jurisdiction is to prepare
and present a project of partition to the court. It is merely a proposal for
the distribution of the hereditary estate and determine the persons entitled
thereto.135

5.   Final
order of partition; recording the order of partition of the estate

Certified copies of final orders and judgments of
the court relating to the real estate or partition thereof shall be recorded in
the registry of deeds.136