INTESTATE ESTATE OF ENCARNACION ELCHICO VDA. DE FERNANDO, DECEASED, NATIVIDAD E. IGNACIO AND LEONOR E. ALMAZAN, ADMINISTRATRICES-APPELLANTS, VS. EDUARDO ELCHICO AND FLORENCIO EL…

Elchico versus Elchico

The Case

This is an appeal by the administratrices of the intestate estate of Encarnacion Elchico Vda. de Fernando from two orders of the Manila probate court denying their motion to have a parcel of land on Misericordia Street in Manila turned over to that estate. The land had passed, under an approved partial partition, to the heir Jose L. Elchico, whose own estate is now being settled in the Rizal probate court. The case matters because it fixes the remedy a probate court must use when heirs have taken possession of their shares before the debts of the estate are paid, and because it marks the boundary between two coequal probate courts, each holding property in custodia legis, meaning property in the custody of the law.

Procedural History

In the intestate proceedings for the settlement of the estate of Encarnacion Elchico Vda. de Fernando in the Court of First Instance of Manila, three heirs submitted a joint petition for partial partition and distribution, which the Manila probate court approved in April 1956 upon a bond of 150,000 pesos. The heirs then entered into possession of their respective shares. After the heir Jose L. Elchico died, the administratrices of the Encarnacion estate filed a motion in March 1961 asking that the Misericordia lot be turned over to them. The administrators of the Jose L. Elchico estate opposed. The Manila probate court denied the motion in its order of May 12, 1962, and set the proceedings for hearing to determine how much and in what manner the late Jose L. Elchico should contribute to the unsettled and unpaid creditors' claims and taxes. The motion for reconsideration was rejected in the order of June 29, 1961. The administratrices appealed directly to the Supreme Court.

Facts

When the estate of Encarnacion Elchico Vda. de Fernando was partially partitioned, the Angat transportation business and the Misericordia Street lot in Manila were assigned to the heir Jose L. Elchico. The partial partition carried a commitment in its paragraph three, letter d, that the distribution would not affect the sufficiency or insufficiency of the remaining estate for the payment of outstanding and future obligations, and that in the remote event such contingencies arise, the heirs shall all be bound to contribute equally in the payment of those obligations and expenses.

Jose L. Elchico later died, and his estate is being settled in the Court of First Instance of Rizal in two special proceedings, one testate and one intestate. In June 1959, his co-administrators, Eduardo Elchico and Florencio Elchico, sold the Angat transportation business upon authority of the Rizal probate court given in an order of April 1959. That same order also authorized the sale of the Misericordia property, which remained under the administration of Jose L. Elchico's co-administrators.

The administratrices of the Encarnacion estate then moved in the Manila probate court for the return of the Misericordia lot. They claimed that the obligations of the estate, approved and pending, amounted in round figures to almost 400,000 pesos, including a claim of the Bureau of Internal Revenue for estate and inheritance taxes of more or less 135,000 pesos as of February 1961. They said that of the 230,000 pesos proceeds of the sale of the Angat business, nothing was turned over to the Encarnacion estate for the payment of Jose L. Elchico's obligations, that he had no other property except the Misericordia lot, and that if that lot were sold the proceeds could be hidden and dissipated. The administrators of the Jose L. Elchico estate opposed, invoking the procedure in Section 6 of Rule 89 of the 1940 Rules of Court, now Section 6 of Rule 88, and asserting that the Manila court had no jurisdiction over property under the control of the Rizal probate court.

Issues

• Whether or not the Manila probate court had statutory authority, after a partial partition and distribution, to order the heirs to contribute to the debts and expenses of the estate.
• Whether or not the Manila probate court committed a grave abuse of discretion in denying the motion for the turnover of the Misericordia property and instead setting the case for hearing on the contributive shares of the heir Jose L. Elchico.
• Whether or not the Manila probate court may take the Misericordia property out of the administration of the coordinate Rizal probate court.

Applicable Provisions

Section 6 of Rule 88 of the Rules of Court, formerly Section 6 of Rule 89 of the 1940 Rules of Court, provides:

Section 6. Court to fix contributive shares where devisees, legatees or heirs have been in possession. Where devisees, legatees, 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.

This is the very provision the Manila probate court followed when it denied the turnover and set the case for hearing, and it supplies the remedy of execution against the heirs to the extent of the property they received.

Article 1311 of the Civil Code, cited in the decision, provides:

The heir is not liable beyond the value of the property he received from the decedent.

This limits any execution against the heirs to the value of what they received from the estate.

Ruling

On the first issue, the Court held that the Manila probate court had the power to issue the disputed order. Where a partial partition and distribution have been effected, the probate court may settle the amount of the heirs' several liabilities and order how much and in what manner each shall contribute. The Court observed that the order of May 12, 1961 closely hewed the line set forth in Section 6 of Rule 88, because the court denied the turnover and set the proceedings for hearing precisely to determine how much and in what manner the heir Jose L. Elchico should contribute to the unsettled and unpaid creditors' claims and taxes.

On the second issue, the Court found no reversible abuse of discretion. Nothing definite appeared as to the total liabilities of the estate, so Jose L. Elchico's share was unknown and indefinite. The claim that the only remaining property was an unsurveyed and untitled mineral land of unknown value remained a mere allegation, and there was the 150,000 peso bond to answer for the debts. Once the share of Jose L. Elchico is cleared up after the projected hearing, his obligation to contribute becomes definite, and the probate court may then order a writ of execution to compel the three heirs to pay their respective shares, to the extent of the properties they received from the estate. Without such hearing, any order for the return of property already distributed may appear premature. The Court defined grave abuse of discretion as a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, and found none.

On the third issue, the Court held that the motion could not be granted for another reason. The Misericordia property was in custodia legis of the Rizal probate court. The Rizal and Manila courts are coordinate and stand on the same level. The Manila court may not take that property out of the administration proceedings in the Rizal court without the leave or consent of the latter, lest confusion ensue and the administration of justice be seriously impaired. This was especially true because the Rizal probate court had already directed the sale of the very same property to satisfy, among others, Jose L. Elchico's share in the estate and inheritance taxes due from the Encarnacion estate, and the Manila court may not nullify that order directly or indirectly.

Doctrine

Where heirs have entered into possession of portions of the estate before the debts and expenses are settled and paid, the probate court having jurisdiction of the estate may, after hearing, fix their contributive shares and issue execution as circumstances require, under Section 6 of Rule 88. Any execution is limited by Article 1311 of the Civil Code, for the heir is not liable beyond the value of the property he received from the decedent. An order for the return of distributed property, issued before the total obligation is determined by hearing, is premature. Finally, courts of coordinate jurisdiction stand on the same level, and one may not take property in custodia legis out of the administration of the other without the latter's leave or consent.

Disposition

The Supreme Court affirmed the orders appealed from, with costs against the appellants, so the administratrices lost and the denial of the turnover stood.

Remember This

Memorize the rule that a probate court fixes the heirs' contributive shares by hearing and may issue execution, but only up to the value of what each heir received. Examiners use this case on the remedy against heirs who took their shares early, and on the prohibition against one probate court taking property in custodia legis from a coordinate court.