TESTAMENTARIA DE DON AMADEO MATUTE OLAVE, PETITIONER, VS. PATERNO R. CANLAS, ET AL., REPONDENTS.

Amadeo Matute Olave died in the City of Manila on April 4, 1955 and
forthwith testamentary proceedings were instituted before the court of
first instance of said city for the probate of his will and the
settlement of his estate. During his lifetime Matute was made party
defendant in Civil Case No. 14208 of the same court and to defend him
he engaged the services of Atty. Paterno R. Canlas. To this effect,
Matute and Canlas entered into an agreement whereby the former agreed
to pay the latter as attorney’s fees an amount equivalent to 20% of the
market value of the property in litigation payable upon the final
termination of the case. After several days of trial, this case was
decided the court dismissing the complaint on the ground of res judicata. Plaintiffs appealed the case to the Supreme Court where the case was compromised and the appeal was eventually withdrawn.

On August 4, 1953, Atty. Canlas filed in Civil Case No. 14208 of the
Court of First Instance of Manila a motion praying that his claim for
attorney’s fees for the services he has rendered to defendant Matute be
established as a charging lien, which was later supplemented
by another motion, wherein he recited the services he had rendered and
the amount of fees he was entitled to. And on August 22, 1953, the
court granted the motion in an order stating that Atty. Canlas’ claim
for attorney’s fees is thereby established “on the P100,000.00 balance
of the deposit still with the clerk of Court of this Court and on all
the other properties, real and personal, involved in this case.” The
court also ordered the lien to be annotated on the titles of all the
real properties involved in the case.

On May 23, 1955, Atty. Canlas filed in the same Civil Case No. 14208
an urgent motion praying that the amount of P85,000.00 that remained
deposited with the clerk of court be ordered delivered to him in full
settlement of his attorney’s fees stating therein that he almost
completed rendering the professional services he agreed to render to
Matute inasmuch as he had already filed the brief in his behalf in the
case then pending before the Supreme Court. It was at this instance
that the administrator of the estate of Matute filed an opposition to
the motion contending that the court of first instance taking
cognizance of Civil Case No. 14208 had no jurisdiction to act thereon
because, the motion involving a money claim, the same shall be
submitted to the probate court which is the one authorized by law to
settle claims against estates of deceased persons.

In the meantime, the court acting in Civil Case No. 14208 granted
Atty. Canlas authority to withdraw partial payments from said deposit totaling around P50,000.00. Then on April 30, 1957, it issued an order
holding that it had authority to entertain Canlas claim for attorney’s
fees. To nullify this order, the administrator of the estate has
interposed the present petition for certiorari alleging abuse of
discretion on the part of the trial court.

It is not disputed that under date of August 22, 1953 respondent
court in Civil Case No. 14208 issued an order creating a charging lien
for the attorney’s fees of Atty. Canlas not only the P100,000.00
balance of deposit remaining with the clerk of court but also on all
other properties, real and personal, involved in said case. It likewise
appears that Atty. Canlas was able to secure from the court on several
occasions several partial payments on account of his claim for
attorney’s fees which up to the time of this incident amounted to
around P50,000.00. It was only when he filed an urgent motion for the
payment to him of the balance of P85,000.00 remaining in possession of
the clerk of court in full payment of his attorney’s fees in the belief
that his right to it has already been finally determined that the
administrator of the estate of the late Amadeo Matute Olave filed an
opposition thereto alleging lack of jurisdiction on the part of the
trial court and claiming that, it involving money claim, the same
should be submitted to the probate court which under the law has
jurisdiction to act on claims against the estate.

The question that now arises is: Having Amadeo Matute Olave died
before the attorney’s fees he agreed to pay to his counsel Paterno R.
Canlas had been fully paid and after the claim of the latter for
attorney’s fees had been established as a charging lien in the ordinary
civil case, which court shall entertain the payment of the balance of
said claim? Is it the court in the ordinary case or the probate court
that takes cognizance of the estate of the deceased?

Our answer is simple. It is the court taking cognizance of Civil
Case No. 14208 in view of the provisions of Section 7, Rule 87 and
Section 1, Rule 88, of the Rules of Court, which we quote:

“SEC. 7. Mortgage debt due from estate.—A creditor holding a claim against the deceased secured by mortgage or other collateral security,
may abandon the security and prosecute his claim in the manner provided
in this rule, and share in the general distribution of the assets of
the estate; or he may foreclose his mortgage or realize upon his
security, by ordinary action in court, making the executor or
administrator a party defendant, and if there is a judgment for a
deficiency, after the sale of the mortgaged premises, or the property
pledged, in the foreclosure or other proceeding to realize upon the
security, he may claim his deficiency judgment in the manner provided
in the preceding section; or he may rely upon his mortgage or other
security alone, and foreclose the same at any time within the period of
the statute of limitations, and in that event he shall not be admitted
as a creditor, and shall receive no share in the distribution of the
other assets of the estate; but nothing herein contained shall prohibit
the executor or administrator from redeeming the property mortgaged or
pledged, by paying the debt for which it is held as security, under the
direction of the court, if the court shall adjudge it to be for the
best interest of the estate that such redemption shall be made.”
(Italics supplied)

“SECTION 1. Actions which may and which may not be brought against 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
actions to recover real or personal property 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.” (Italics supplied)

It is clear that a creditor holding a claim against the deceased
secured by mortgage or other collateral security may foreclose his
mortgage or realize upon his security by ordinary action in court
making the executor or administrator a party defendant, and need not
file his claim before the probate court to share in the general
distribution of the assets of the estate. Under the same theory, an
action to recover real or personal property from the estate, or to enforce a lien
thereon, may be prosecuted by the interested person against the
executor or administrator independently of the testate or intestate
proceedings. And it cannot be gainsaid that a charging lien
established on the property in litigation to secure the payment of the
attorney’s fees of Atty. Canlas partake of the nature of a collateral
security or of a lien of real or personal property within the meaning
of the provisions of our rules.

The reason behind the rule which exempts money claims covered by a
mortgage or other collateral security or lien from the jurisdiction of
probate courts appears well-stated in the American authorities as
follows:

“According to the weight of authority, a creditor
whose claim is secured by mortgage, pledge, or any specific lien need
not present” his claim for allowance in order to preserve his right to
subject the property covered by the lien to the satisfaction of his
claim, for the reason that such claims cannot in any just sense be
considered claims against the estate, but the right to subject specific
property to the claim arises from the contract of the debtor whereby he
has during life set aside certain property for its payment, and such
property does not, except in so far as its value may exceed the debt,
belong to the estate, and the instrument being of record or the
property being in the possession of the creditor is notice to all the
world of the contract.” (34 C.J.S., 175-177)

Our conclusion is also supported by the principle that a probate
court, being of limited jurisdiction, has no authority to enforce a
lien unless conferred by a statute. The statutory jurisdiction of a
probate court is exclusive (34 C.J.S. 721), and since the lien referred
to in Section 1, Rule 88 is not among those mentioned in Section 5,
Rule 87, it is reasonable to assume that all money claims secured with
a lien are outside the jurisdiction of the probate court.

Wherefore, petition is dismissed, with costs against petitioner.

Bengzon, C. J., Padilla, Labrador, Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon, and De Leon, JJ., concur.