International Humanitarian Law as an Evolving Field of Law

RULE 88

PAYMENT OF THE DEBTS OF THE ESTATE

1Sec.1-DEBTS IS PAID IN FULL IF THE ESTATE IS SUFFICIENTA writ of execution is not the proper procedure to satisfy the debts. The court shall order the SALE OR MORTGAGE of the properties of the decedent. The proceeds of which will satisfy the debts and expenses.

Q- ls the remedy of execution available in favor of a creditor against the estate of a decedent? Why?Ans: No, because the procedure outlined by law is the sale of personal property or the sale of mortgage of real property of the decedent and the proceeds shall be paid out of said proceeds. (Aldamiz vs. CFI of Mindoro, 85 Phil. 228).GEN. RULE: Payment of the debts of the estate must be taken in the ff. order of preference:From the portion or property designated in the will,From the personal property, andFrom the real propertyException: The court, on petition of interested parties may modify such order of disposition.

Sec.2-PART OF ESTATE FROM WHICH DEBT PAID WHEN PROVISION MADE BY WILLIf the testator makes a provision in his will or designates the estate to be appropriated for the payment of his debts that will be followed.

But if it not sufficient, such part of the estate is not disposed of by will, if any, shall be appropriated for that purpose.Sec.3. PERSONALITY FIRST CHARGEABLE FOR DEBTS, THEN REALTYTWO (2) INSTANCES WHEN REALTY IS LIABLE FOR DEBTS AND EXPENSES1. When the personal estate of the decedent is not sufficient for that purpose,2. When the sale of such personalty would be for the detriment of the participants of the estate.Sec. 4- ESTATE TO BE RETAINED TO MEET CONTINGENT CLAIMSIf the court is satisfied that the contingent claim duly filed is valid. It may order the executor or administrator to retain in his hands a sufficient part of the estate to pay a portion equal to the dividend of the creditors.Requisites:1. Contingent Claim is duly filed;2. Court is satisfied that the claim is valid; and 3. The claim has become absolute.

Sec.5-HOW CONTINGENT CLAIM BECOMING ABSOLUTE IN TWO YEARS ALLOWED AND PAID1. If such contingent claim becomes absolute and is presented to the court as an absolute claim within two years from the time allowed for the presentation of claims, it will be paid in the same manner as the other absolute claims.2. If the contingent claim matures after the expiration of two years, the creditors may sue distributees, who are liable in proportion to the shares in the estate respectively received by them.Note: The contingent claims must first have been established and allowed in the probate court before the creditors can file an action directly against the distributees.Sec.6- COURT TO FIX CONTRIBUTIVE SHARES WHERE DEVISEES, LEGATEES OR HEIRS HAVE BEEN IN POSSESSION

The heirs and distributees are liable individually for payment of all lawful outstanding claims against he estate in proportion to the amount or value of the property they have respectively received from the estate.

Sec.7-ORDER OF PAYMENT IF ESTATE IS INSOLVENTIf estate is insolvent, as in liabilities are more than the assets, Sec.7 in relation to Art. 1059 and 2239 to 2251 of the Civil Code (Concurrence and Preference of Credits) must apply.

Sec. 8- DIVIDENDS TO BE PAID IN PROPORTION TO CLAIMSIf there are no assets sufficient to pay the credits of any once class of creditors after paying the credits entitled to preference over it, each creditor within such class shall be paid a dividend in proportion to his claim. No creditor of any one class shall receive any payment until those of the preceding class are paid.

Sec.9- Estate of insolvent non-resident, how disposed of. In case administration is taken in the Philippine of the estate of a person who was at the time of his death an inhabitant of another country, and who died insolvent, hi estate found in the Philippines shall, as far as practicable, be so disposed of that his creditors here and elsewhere may receive each an equal share, in proportion to their respective credits Section 10. When and how claim proved outside the Philippines against insolvent resident's estate paid

Claims proven outside the Philippines where the executor had knowledge and opportunity to contest its allowance therein may be added to the list of the claims in the Philippines against the estate of an INSOLVENT RESIDENT and the estate will be distributed equally among those creditors.Principle of Reciprocity_ the benefits of Sections 9 and 10 cannot be extended to the creditors in another country if the property of such deceased there found is not equally apportioned to the creditors residing in the Philippines.

Sec.11-Order for payment of debtsBefore the expiration of the time limited for the payment of the debts, the court shall order the payment thereof, and the distribution of the assets received by the executor or administrator for that purpose among the creditors, as the circumstances of the estate require and in accordance with the provisions of this rule.

Sec. 12. Orders relating to payment of debts where appeal is taken.If an appeal has been taken from a decision of the court concerning a claim, the court may suspend the order for the payment of the debts or may order the distributions among the creditors whose claims are definitely allowed, leaving in the hands of the executor or administrator sufficient assets to pay the claim disputed and appealed. When a disputed claim is finally settled the court having jurisdiction of the estate shall order the same to be paid out of the assets retained to the same extent and in the same proportion with the claims of other creditors.

Sec. 13. When subsequent distribution of assets orderedCONDITIONS:1. Whole of the debts are not paid;2. Whole assets are not distributed, or other assets afterwards come to the hands of the executor or administrator.Sec. 14. Creditors to be paid in accordance with terms of orderWhen an order is made for the distribution of assets among the creditors, the executor or administration shall, as soon as the time of payment arrives, pay the creditors the amounts of their claims, or the dividend thereon, in accordance with the terms of such order.

Sec. 15. Time for paying debts and legacies fixed,or extended after notice,within what periodsShall not exceed 1 year in the first instance;But the court may extend period on application or executor or administrator and after hearing and notice on the following conditions:

1. The extension must not exceed 6 months for single extension.2. The whole period allowed to the original executor or administrator shall not exceed 2 years.Note: The extension may be granted by the court taking into account to the distribution of the estateSec 16. Successor of dead executor or administrator may have time extended on notice within certain period

Successor of deceased executor or administrator may be given an extension not to exceed 6 months.Santos vs. Manarang

Facts: Don Lucas de Ocampo died on November 18, 1906, possessed of certain real and personal property which, by his last will and testament, he left to his three children. The fourth clause of this will reads as follows:I also declare that I have contracted the debts detailed below, and it is my desire that they may be religiously paid by my wife and executors in the form and at the time agreed upon with my creditors.

Among the debts mentioned in the list referred to are two in favor of the plaintiff, Isidro Santos; one due on April 14, 1907, for P5,000, and various other described as falling due at different dates (the dates are not given) amounting to the sum of P2,454. The will was duly probated and a committee was regularly appointed to hear and determine such claims against the estate as might be presented. This committee submitted its report to the court on June 27, 1908. On July 14, 1908, the plaintiff, Isidro Santos, presented a petition to the court asking that the committee be required to reconvene and pass upon his claims against the estate which were recognized in the will of testator. This petition was denied by the court, and on November 21, 1910, the plaintiff instituted the present proceedings against the administratrix of the estate to recover the sums mentioned in the will as due him. Relief was denied in the court below, and now appeals to this court.

Issue: WON the lower court erred in denying the petition of the plaintiff.Ruling.Yes.