IN RE INTESTATE OF THE DECEASED ROMAN LAZO. JACOBE LAZO, ADMINISTRATRIX AND APPELLEE, VS. MAURO LAZO, SPECIAL ADMINISTRATOR AND APPELLANT.

Roman
Lazo having died intestate in San Vicente, Ilocos Sur, the Court of
First Instance of the province, on April 25, 1925, appointed Mauro Lazo
as administrator of the estate of his deceased uncle. Thereafter, the
court reconsidered its order and, on May 9, 1925, appointed Jacobe
Lazo, widow of the deceased, instead. Difficulties haying arisen in
connection with the administration of the properties; the court, on
August 28, 1926, appointed Mauro Lazo as special administrator. After
various incidents which are not necessary to mention, the
administratrix presented her final account showing expenses and
disbursements amounting to P6,098, but the court reduced the amount to
P4,619.73. (Pp. 40-47, Record on Appeal.) The order of the lower court
allowing this amount was affirmed by this court on appeal. (Lazo vs.
Lazo, G. R. No. 41031, 60 Phil., 1043.) On October 29, 1934, Mauro Lazo
presented his account as special administrator and sought the approval
of the court of the expenses incurred by him as such special
administrator, totalling P1,288.07. The court, in its order of November
27, 1935, reduced this amount to P738.07.

The special
administrator claimed preference of his credit over that of the
administratrix. The lower court, however, declared preferential the
claim of the administratrix. Its resolution dated August 6,1936, is as
follows:

“RESOLUCION

“Resolviendo
la cuestion planteada por los abogados Sres. Jose Singson Tongson y B.
Quitoriano del administrador especial Mauro Lazo, y la oposicion
presentada por el abogado Sr. Juan Amor de la administradora Jacobe
Lazo en su escrito del 8 de julio de 1935, sobre la preferencia de
creditos de ambos administradores, el Juzgado cree que es mas
preferente el credito de la administradora Jacobe Lazo ya aprobado por
este Juzgado en su orden de fecha 15 de agosto de 1933, la cual fue
confirmada por la Honorable Corte Suprema en su decision promulgada el
17 de septiembre de 1934. Es preferente dicho credito de Jacobe Lazo,
puesto que el mismo goza del derecho de relacion, en virtud de una
sentencia firme de este Juzgado, que asi quedo, antes aun de la
aprobacion de la cuenta del administrador especial Mauro Lazo, que
otorgo este Juzgado solamente el 27 de noviembre de 1935. Dichas
aprobaciones a las cuentas de autos tienen el caracter de sentencias
firmes.

“Los creditos o deudas que constan en escritura
publica o por sentencia firme tendran preferencia entre si por el orden
de antiguedad de sus respectivas fechas. Un credito obrante en
eseritura publica otorgada el 9 de mayo de 1909, goza de preferencia
con relacion a una sentencia firme fechada en primero de agosto del
mismo año. (Martinez contra Holliday, Wise & Co., 1 Jur. Fil., 198; Art. 1924, par. 13, Cod. Civ.)

“Por
tanto, se deniega la peticion del administrador especial Mauro Lazo,
por medio de su abogado, pidiendo que su credito sea declarado
preferente, y, en su lugar, se declara preferente el credito de la
administradora Jacobe Lazo.”

* * * * * * *

From the foregoing order, special administrator Lazo appeals and assigns the following error:

“El Juzgado a quo
incurrio en error al no declarar que el credito de P738.07 del
administrador especial Mauro Lazo es preferente al credito de la viuda
Jacobe Lazo y que ha de ser pagado antes que cualquier otro credito.”

Section 735 of the Code of Civil Procedure, as amended by Act No. 3960, provides as follows:

“SEC. 735. Order of payment if estate insolvent.—If
the assets which can be appropriated for the payment of debts are not
sufficient for that purpose, the executor or administrator shall, after
paying the necessary expenses of administration, pay the debts against
the estate in the following order:

“1. The necessary funeral expenses;

“2. The expenses of the last sickness;

“3. What is owing to the laborer for salaries and wages earned and for indemnities due to him, for the last year;

“4. Debts due to the United States;

“5. Taxes and assessments due to the Government, or any branch or subdivision thereof;

“6. Debts due to the province;

“7. Debts due to other creditors.”

It should be observed that necessary expenses of administration have
preference over the debts against the estate. The lower court was of
the opinion that the credit of Jacobe Lazo is entitled to preference,
for the reason that the same was approved by the lower court long
before the approval of the account of Mauro Lazo. The aforecited
section 735, as amended, of the Code of Civil Procedure, however, does
not establish any preference as between the necessary expenses of
administration. Preferences and priorities in cases of this nature are
a matter of statutory regulation. (11 R. C. L., par. 288, p. 254.) In
our case, the expenses of administration are on the same level and
entitled to the same priority of payment. Examining the account
presented by the administratrix, shown on pages 29 to 32 of the Record
on Appeal, none of the items appearing under paragraphs I (expenses of
the last illness) and II (expenses of family mourning) can be
considered as expenses of administration. The amounts, therefore, of
P320 and P115 thereunder should have been disallowed. Under paragraph
III the amount of P325 for the purchase and transportation of maguey
shoots are properly chargeable as administration expenses. Under
paragraph IV (miscellaneous), the item of P3,300 was properly allowed
for general expenses of administration at the rate of P25 per month
during the period indicated. Under paragraph V, only the item of P308
for real property taxes should be allowed. All in all, the
administratrix should be credited with the total amount of P3,933.

With reference to the claim of the special administrator, he should be
credited with the amount of P738.07 for expenses of his administration.

As the properties under administration appear to have been sold at
public auction and the amount of some P900 is all that has been
realized, which amount is even insufficient to defray the expenses of
administration, the amount realized from the sale ordered by the lower
court on August 18, 1936, should be divided between the administratrix,
Jacobe Lazo, and the special administrator, Mauro Lazo, pro rata, or in proportion to the amount hereinabove indicated and with which each of them is credited.

The judgment of the lower court is accordingly modified, without pronouncement regarding costs. So ordered.

Avanceña, C. J., Villa-Real, Abad Santos, Imperial, Diaz, and Concepcion, JJ., concur.