INTESTATE ESTATE OF ENCARNACION ELCHICO VDA. DE FERNANDO, DECEASED, NATIVIDAD E. IGNACIO AND LEONOR E. ALMAZAN, ADMINISTRATRICES-APPELLANTS, VS. PAMPANGA BUS COMPANY, INC., CLAI…

Intestate Estate of Encarnacion Elchico Vda. de Fernando versus Pampanga Bus Company

The Case

This is a probate appeal. The joint administratrices of the intestate estate of Encarnacion Elchico Vda. de Fernando ask the Supreme Court to overturn two orders of the probate court allowing Pampanga Bus Company to collect from the estate the deceased's share of a money judgment already final in a separate civil suit. The estate's objection is technical: the claim, it says, was never presented in the estate proceedings within the period fixed by the notice to creditors, and so it is time-barred. The case matters because it fixes the relationship between an ordinary civil action for money and the settlement of a decedent's estate, and because it teaches when the estate's representative may be deemed to have waived the presentment of claims.

Procedural History

Pampanga Bus Company sued Valentin Fernando and Encarnacion Elchico Vda. de Fernando in the Court of First Instance of Manila to collect a contractual obligation. After the defendant died, the administrator of her estate was substituted, the complaint was amended, and the administrator answered, counterclaimed, and went to trial. The Court of First Instance of Manila rendered judgment for the bus company, and the Court of Appeals affirmed. Both defendants appealed by certiorari to the Supreme Court; the appeal of Valentin Fernando was dismissed for having been filed out of time, and the appeal of the estate, raising issues of fact, was likewise dismissed. The civil judgment thus became final.

Meanwhile, in the intestate proceedings before the same Court of First Instance of Manila, the bus company had registered a contingent claim for whatever judgment might be rendered in the civil suit. After finality, it moved that the heirs and the joint administratrices be ordered to pay the deceased's share of the judgment debt. The administratrices opposed on the ground of prescription. The probate court allowed the amount, subject to the administratrices first informing it in writing of other unsettled claims and of the sufficiency of the assets, and denied reconsideration. The administratrices then came to the Supreme Court on appeal.

Facts

In August 1951, Pampanga Bus Company sued Valentin Fernando and Encarnacion Elchico Vda. de Fernando in the Court of First Instance of Manila to collect a hundred and five thousand pesos upon a contractual obligation. In January 1955, while that case was pending and after the bus company had already presented its evidence and submitted its case, Encarnacion died. In March 1955, intestate proceedings were opened, and notice was given to creditors to file their claims within six months from the first publication of the notice.

In April 1955, upon the bus company's motion, the court in the civil case ordered the administrator of the estate to substitute for the deceased as one of the defendants, and no objection was registered. In July 1955, the bus company amended its complaint to name the administrator and the original defendant Valentin Fernando, and the amended complaint was admitted without objection. The administrator filed an amended answer with a counterclaim, presented his evidence, and fought the case through the trial court, the Court of Appeals, and the Supreme Court.

In December 1958, the trial court rendered judgment for the bus company, ordering the defendants to pay ninety three thousand pesos, and dismissing the counterclaim. The Court of Appeals affirmed in May 1960. In February 1959, while the defendants were perfecting their appeal, the bus company registered a contingent claim in the intestate proceedings. After the civil judgment became final, it moved that the administratrices be ordered to pay forty six thousand five hundred pesos, the deceased's share of the judgment debt. The administratrices opposed, claiming the claim was time-barred, but the probate court allowed it, and denied reconsideration.

Issues

• Whether or not the bus company's money claim was properly admitted by the probate court notwithstanding that the civil action for its recovery was not dismissed upon the defendant's death before final judgment in the Court of First Instance.
• Whether or not the estate waived the presentment of the claim in the probate proceedings by the acts and conduct of its administrator in the civil case.
• Whether or not the claim, filed in the probate court beyond the six-month period fixed in the notice to creditors, may still be allowed.

Applicable Provisions

Section 21, Rule 3 of the Rules of Court provides:

SEC. 21. Where claim does not survive. - When the action is for recovery of money, debt or interest thereon, and the defendant dies before final judgment in the Court of First Instance, it shall be dismissed to be prosecuted in the manner especially provided in these rules.

This is the rule the estate invokes, and the Court holds it to be procedural, outlining the method by which a money claim may continue after the defendant's death.

Section 2, Rule 86 of the Rules of Court provides:

SEC. 2. Time within which claims shall be filed. - In the notice provided in the preceding section, 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, at any time before an order of distribution is entered, on application of a creditor who has failed to file his claim within the time previously limited, the court may, for cause shown and on such terms as are equitable, allow such claim to be filed within a time not exceeding one (1) month.

This provision answers the objection of tardiness, because it permits the acceptance of belated claims before an order of distribution is entered.

Ruling

On the first issue, the Court held that the claim was properly admitted. Section 21, Rule 3 is procedural; whether the civil suit proceeds to its conclusion or is dismissed and the claim filed with the probate court, no substantial rights are prejudiced. Here the bus company had already closed its evidence when the defendant died; the administrator substituted without complaint, joined issue, filed an amended answer, counterclaimed, went to trial, and appealed. The estate never impugned the authority of the regular courts nor sought abatement of the civil suit.

On the second issue, the Court held that the estate had waived its right to have the claim relitigated in the estate proceedings. Though presentment of probate claims is imperative, it may be waived by the estate's representative, and waiver is determined from his acts and conduct. The administrator's failure to plead the statute of nonclaims, his active participation, and his resistance to the claim in the civil suit amount to such waiver. The Court also invoked the principle that courts are loathe to overturn a final judgment, and that the objection does not go into the court's jurisdiction over the subject matter. It added that the revival of the civil action against the administrator is generally considered equivalent to presentation of the claim in the probate court, since the administrator represents the estate itself and is an officer of the probate court.

On the third issue, the Court held that the belated filing did not bar the claim. Section 2, Rule 86 permits acceptance of such claims before an order of distribution is entered; the pendency of the civil case was a good excuse for tardiness; and the probate court's order allowing payment impliedly granted an extension of time. No abuse of discretion was shown.

Doctrine

A money claim against a decedent that does not survive may be prosecuted in the probate proceedings, but the rule requiring dismissal of the civil action is procedural, and no substantial right is prejudiced whether the suit continues or the claim is filed with the probate court. The estate's representative may waive the presentment of claims, and waiver is determined from his acts and conduct, such as his failure to plead the statute of nonclaims and his active participation in the civil suit. The revival of the civil action against the administrator is generally considered equivalent to presentation of the claim in the probate court. Finally, under Section 2, Rule 86, a belated claim may be allowed at any time before an order of distribution is entered, for cause shown and on equitable terms.

Disposition

The Supreme Court affirmed the probate court's orders of March 13, 1961 and May 24, 1961, with costs against the administratrices.

Remember This

The single line worth memorizing: the revival of a money action against the administrator is equivalent to presentment of the claim in the probate court, and the estate's active participation in that suit waives the statute of nonclaims. Examiners use this case on the interplay between Section 21, Rule 3 and the settlement of estates, and on the waiver of presentment of claims by the administrator's acts and conduct.