De Paula vs. Escay

A money demand against an administratrix arising from a contract executed in the course of administration with court approval may be pursued by motion in the pending probate proceeding, the court having jurisdiction over the administrator and the subject matter, and the claimant having submitted to that jurisdiction. The existence of an independent ordinary action does not bar this remedy, and the administratrix who collected amounts under the court-approved contract cannot later assert that those amounts were received in a personal capacity to escape the court’s authority.

The intestate estate of Victor Gaston had been under administration since 1932, with Rufina C. de Paula serving as administratrix. In the ordinary course of administration and with judicial approval, she entered into a contract of lease with Jose Escay over Hacienda Puyas No. 1 on 12 May 1937, later amended on 29 April 1942. Under the amended terms, the lease terminated after the 1942–1943 agricultural year, with either party entitled to demand a liquidation of accounts one year after the restoration of peace. Escay subsequently sought payment of balances he claimed were due him under that lease.

• Parties and the Lease: Rufina C. de Paula was the duly appointed administratrix of the intestate estate of Victor Gaston, which proceedings had been pending since 1932. With the probate court’s approval, she executed a lease contract on 12 May 1937 in favor of respondent Jose Escay over Hacienda Puyas No. 1. The contract obligated the administratrix to deliver to Escay ten per cent of the sugar, rice, and corn produced from the hacienda beginning 1943 until the sum of P7,000—the estimated cost of property transferred to the estate—was fully covered.
• Amendment and Termination: The contract was amended on 29 April 1942, again with court approval. The amendment declared the lease terminated as of the close of the 1942–1943 harvest and granted either party the right to demand a liquidation of accounts arising from the lease one year after the re-establishment of peace.
• Filing of Claim: On 29 June 1954, Escay presented a claim in the pending administration proceeding, appending a copy of the lease contract and an itemized statement of accounts. The statement particularized the methods by which payments were made and asserted that the administratrix owed P5,418.31 as principal and P2,682.06 as interest. The claim prayed for payment out of estate funds.
• Opposition: The administratrix resisted the claim on two principal grounds: (a) the claim could not be presented under section 5 of Rule 87 of the Rules of Court because the administration proceedings had been initiated as early as 1932 and the obligation was not a debt incurred by the decedent during his lifetime; and (b) the probate court lacked jurisdiction to entertain a money claim that was being controverted. She further contended that any overpayment of rentals would be her personal liability and not chargeable to the estate, and that she had not been afforded an opportunity to contest the correctness of the detailed account.
• Ruling of the Probate Court: The lower court overruled the objections, relying on Moran’s Comments on the Rules of Court and Escueta v. Sy Juilliong, 5 Phil. 405. It held that because the lease contract itself had been approved by the court and the claim was an offshoot of that contract, the administratrix could not repudiate it. The court further noted that the administratrix had not offered to disprove any specific item in the statement of accounts.

• Improper Presentation under Rule 87: Petitioner administratrix argued that the claim was not a debt or money demand incurred by the decedent during his lifetime and therefore could not be presented as a claim under section 5 of Rule 87; the administration proceedings having commenced in 1932, the proper remedy was an independent action, not a motion in the probate case.
• Lack of Probate Court Jurisdiction: Petitioner maintained that the probate court, sitting as a court of limited jurisdiction in special proceedings, had no authority to entertain a contested money claim against the estate, especially where the claim was disputed on its merits.
• Personal Liability and Estoppel: Petitioner contended that any amounts she might be compelled to pay in excess of the rentals actually due under the lease should fall upon her personally and could not be charged against the estate; she asserted that she should not be made to answer in the administration proceeding for a demand that was essentially personal to her.
• Denial of Due Opportunity to Contest: Petitioner insisted she had not been given a sufficient opportunity to disprove the items in the statement of accounts and that the lower court’s summary approval of the claim constituted a denial of due process or, at minimum, an abuse of discretion.

• Enforceability by Motion in Probate Court: Respondent Escay maintained that because the lease contract had been entered into by the administratrix with express judicial approval and in the ordinary course of administration, any demand for payment arising thereunder could properly be enforced by a simple motion in the same administration proceeding; the probate court had direct supervisory authority over the administratrix and the contract.
• Submission to Jurisdiction: Respondent argued that by filing his claim in the administration proceeding, he voluntarily submitted himself to the court’s jurisdiction over the subject matter, and the court could therefore adjudicate the demand without the need for a separate ordinary action.
• Insufficiency of General Denial: Respondent countered that the administratrix’s opposition was a bare general denial that failed to identify any specific erroneous item in the detailed, itemized statement of accounts; the items were therefore deemed admitted, and there was no genuine controversy requiring a full-blown trial.

• Jurisdiction: Enforcement of Administration-Related Claims: Whether the probate court had jurisdiction to receive and adjudicate by motion a money claim arising from a lease contract executed by the administratrix with court approval in the course of administration, despite the claim not being one contemplated by section 5 of Rule 87.
• Abuse of Discretion: Approval of the Account: Whether the lower court gravely abused its discretion in approving the claim in the full amount stated when the administratrix had opposed it and had allegedly been denied the opportunity to contest the correctness of the itemized accounts.

• Jurisdiction: Enforcement of Administration-Related Claims: The probate court possessed jurisdiction to entertain the claim by motion. The demand was not a debt of the decedent under Rule 87 but an obligation arising from a court-approved contract of administration. Philippine courts of first instance are courts of general jurisdiction that exercise probate and civil jurisdiction concurrently and not as separate, watertight compartments; the same court that supervises the administration may, in that proceeding, compel the administrator to comply with obligations incurred in the ordinary course of administration with its consent. The administratrix was under the court’s direct supervision, and the claimant had submitted to that jurisdiction by filing the claim. While the claimant could have filed an independent ordinary action, the availability of that remedy did not bar the more direct remedy by motion. The administratrix was furthermore estopped from denying that amounts collected in excess of rentals were received in her representative capacity; one who contracts in a representative capacity cannot later claim that amounts received in that capacity are due from her in a different capacity. The estate would be liable only for the rentals lawfully due, and any excess would be the personal liability of the administratrix—a matter the probate court could likewise determine.
• Abuse of Discretion: Approval of the Account: No abuse of discretion attended the approval. The claim was accompanied by a highly detailed, itemized statement of accounts. The administratrix interposed only a general denial, not even under oath, and did not point to any specific item whose truth or correctness she wished to dispute. In the absence of a specific denial or an offer of proof, all items were properly deemed admitted. Because the action was one for certiorari, which is confined to questions of jurisdiction or grave abuse of discretion, the failure to make a specific evidentiary challenge left no basis to annul the order.

• Enforcement of Claims Arising from Court-Approved Administration Contracts — A demand for payment grounded on a contract entered into by an administrator or administratrix in the ordinary course of administration and with court approval may be presented and adjudicated by motion in the same special proceeding. The probate court, as a court of general jurisdiction exercising supervision over the administrator and the estate, has the authority to order compliance without requiring the claimant to file an independent ordinary action, although an independent action remains an alternative remedy. The rule rests on the unity of the court’s jurisdiction and the direct control it exercises over the administrator in matters relating to the administration.
• Estoppel of a Representative Who Received Payments — A person who contracts with another in a representative capacity and receives amounts under that contract is estopped from later asserting that the sums were received in a different, personal capacity. Applied to administrators, this prevents an administratrix from disclaiming representative character to defeat the court’s authority over moneys collected under a court-approved lease; she remains accountable in the probate proceeding, with personal liability attaching to any excess over what is properly due to the estate.
• Sufficiency of Denial Against an Itemized Account — Where a claim is supported by a detailed, itemized statement of accounts, a general denial that does not specify which items are contested is insufficient to raise a genuine issue. The items will be deemed admitted for purposes of the proceeding, and a court does not abuse its discretion by approving the claim on that basis.

• “Under our judicial system, there is only one grade of court of general jurisdiction invested with power to take cognizance of all kinds of cases, whether civil or criminal, or all kinds of special proceedings, whether probate, or land registration, or naturalization. … As a result the practice has been for demands against administrators … to be presented in the court of first instance where the special proceeding of administration is pending, if the demand has relation to an act of administration and in the ordinary course thereof.” — This articulates the basis for the probate court’s authority over administration-related claims as an exercise of its general jurisdiction rather than a separate, limited probate jurisdiction.
• “One who contracts with another in a representative capacity cannot claim that amounts received by her in said representative capacity are due from her in another capacity.” — The estoppel principle that prevents an administratrix from escaping the supervisory reach of the probate court by recharacterizing the capacity in which she received funds.

• Escueta v. Sy Juilliong, 5 Phil. 405 — Cited by the lower court and approved on review as authority supporting the propriety of filing a claim by motion in the administration proceeding when it arises from a transaction entered into by the administrator with court approval.
• Arnold v. International Banking Corporation, 50 Phil. 477 — Relied upon for the estoppel rule that a person who contracts in a representative capacity cannot later deny that capacity with respect to amounts received thereunder.
• Kellerman v. Miller (1897) 5 Pa. Super. Ct. 443 and Magee v. Mellon (1852) 23 Miss. 585, cited in 64 A.L.R. 1558–1559 — American authorities cited to reinforce the representative-capacity estoppel applied to the administratrix.

• Section 5, Rule 87 of the Rules of Court — Governs the presentation of claims against an estate for debts incurred by the decedent during his lifetime. The Court distinguished this provision, holding that the claim in question did not fall under it because the obligation arose from a post-death administration contract, not from an act of the deceased. The provision therefore did not bar the motion.

Acting Chief Justice Bengzon, and Justices Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo, Concepcion, and Reyes, J.B.L., concurred.