Testate Estate of the Late Felix J. de Guzman. VICTORINO G. DE GUZMAN, administratorappellee, vs.

CRISPINA DE GUZMAN-CARILLO, ARSENIO DE GUZMAN and HONORATA DE GUZMAN-MENDIOLA, oppositors-appellants. G.R. No. L-29276 May 18, 1978 This case is about the propriety of allowing as administration expenses certain disbursements made by the administrator of the testate estate of the late Felix J. de Guzman of Gapan, Nueva Ecija. The deceased testator was survived by eight children named Victorino, Librada, Severino, Margarita, Josefina, Honorata, Arsenio and Crispina. His will was duly probated. Letters of administration were issued to his son, Doctor Victorino G. de Guzman, pursuant to the order dated September 17, 1964 of the Court of First Instance of Nueva Ecija in Special Proceeding No. 1431. One of the properties left by the dent was a residential house located in the poblacion. In conformity with his last will, that house and the lot on which it stands were adjudicated to his eight children, each being given a one-eighth proindiviso share in the project of partition dated March 19, 1966, which was signed by the eight heirs and which was approved in the lower court's order of April 14, 1967 but without prejudice to the final outcome of the accounting. The administrator submitted four accounting reports for the period from June 16, 1964 to September, 1967. Three heirs Crispina de Guzmans-Carillo Honorata de Guzman-Mendiola and Arsenio de Guzman interposed objections to the administrator's disbursements in the total sum of P13,610.48, broken down as follows: I. Expense for the improvement and renovation of the decedent's residential house. 1. Construction of fence P3,082.07 2. Renovation of bathroom P1,389.52 3. Repair of terrace and interior of house P5,928.00 P10,399.59 II. Living expenses of Librada de Guzman while occupying the family home without paying rent: 1. For house helper P1,170.00 2. Light bills 227.41 3. Water bills 150.80 4. Gas oil, floor wax and switch nail 54.90 P 1,603.11 III. Other expenses: 1. Lawyer's subsistence P 19.30 2. Gratuity pay in lieu

of medical fee 144.00 3. For stenographic notes 100.00 4. For food served on decedent's first death anniversary 166.65 5. Cost of publication of death anniversary of decedent 102.00 6. Representation expenses 26.25 P558.20 IV. Irrigation fee P1.049.58 TOTAL P13,610.48 It should be noted that the probate court in its order of August 29, 1966 directed the administrator "to refrain from spending the assets of the estate for reconstructing and remodeling the house of the deceased and to stop spending (sic) any asset of the estate without first during authority of the court to do so" (pp. 26-27, Record on Appeal). The lower court in its order of April 29, 1968 allowed the d items as legitimate expenses of administration. From that order, the three oppositors appealed to this Court. Their contention is that the probate court erred in approving the utilization of the income of the estate (from rice harvests) to defray those expenditures which allegedly are not allowable under the Rules of Court. An executor or administrator is allowed the necessary expenses in the care, management, and settlement of the estate. He is entitled to possess and manage the decedent's real and personal estate as long as it is necessary for the payment of the debts and the expenses of administration. He is accountable for the whole decedent's estate which has come into his possession, with all the interest, profit, and income thereof, and with the proceeds of so much of such estate as is sold by him, at the price at which it was sold (Sec. 3, Rule 84; Secs. 1 and 7, Rule 85, Rules of Court). One of the Conditions of the administrator's bond is that he should render a true and just account of his administration to the court. The court may examine him upon oath With respect to every matter relating to his accounting 't and shall so examine him as to the correctness of his account before the same is allowed, except when no objection is made to the allowance of the account and its correctness is satisfactorily established by competent proof. The heirs, legatees, distributes, and creditors of the estate shall have the same privilege as the executor or administrator of being examined on oath on any matter relating to an administration account." (Sec. 1[c] Rule 81 and secs. 8 and 9, Rule 85, Rules of Court).

A hearing is usually held before an administrator's account is approved, especially if an interested Party raises objections to certain items in the accounting report (Sec. 10, Rule 85). At that hearing, the practice is for the administrator to take the witness stand, testify under oath on his accounts and Identify the receipts, vouchers and documents evidencing his disbursements which are offered as exhibits. He may be interrogated by the court and crossed by the oppositors's counsel. The oppositors may present proofs to rebut the ad. administrator's evidence in support of his accounts. I. Expenses for the renovation and improvement of the family residence P10,399.59. As already shown above, these expenses consisted of disbursements for the repair of the terrace and interior of the family home, the renovation of the bathroom, and the construction of a fence. The probate court allowed those expenses because an administrator has the duty to "maintain in tenantable repair the houses and other structures and fences belonging to the estate, and deliver the same in such repair to the heirs or devises" when directed to do so by the court (Sec. 2, Rule 84, Rules of Court). On the other hand, the oppositors-appellants contend that the trial court erred in allowing those expenses because the same did not come within the category of necessary expenses of administration which are understood to be the reasonable and necessary expenses of caring for the property and managing it until the debts are paid and the estate is partitioned and distributed among the heirs (Lizarraga Hermanos vs. Abada, 40 Phil. 124). As clarified in the Lizarraga case, administration expenses should be those which are necessary for the management of the estate, for protecting it against destruction or deterioration, and, possibly, for the production of fruits. They are expenses entailed for the preservation and productivity of the estate and its management for purposes of liquidation, payment of debts, and distribution of the residue among the persons entitled thereto. It should be noted that the family residence was partitioned proindiviso among the decedent's eight children. Each one of them was given a one-eighth share in conformity with the testator's will. Five of the eight co-owners consented to the use of the funds of the estate for repair and improvement of the family home. It is obvious that the expenses in question were incurred to preserve the family home and to maintain the family's social standing in the community. Obviously, those expenses redounded to the benefit of an the co- owners. They were necessary for the preservation and use of the family residence. As a result of those expenses, the co-owners, including the three oppositors, would be able to use the family home in comfort, convenience and security. We hold that the probate court did not err in approving the use of the income of the estate to defray those ex II. Expenses incurred by Librada de Guzman as occupant of the family residence without paying rent P1 603.11 The probate court allowed the income of the estate to be used for those expenses on the theory that the occupancy of the house by one heir did not deprive the other seven heirs from living in it. Those expenses consist of the salaries of the house helper, light and water bills, and the cost of gas, oil floor wax and switch nail We are of the opinion that those expenses were personal expenses of Librada de Guzman, inuring y to her benefit. Those expenses, not being reasonable administration expenses incurred by the administrator, should not be charged against the income of the estate.

Librada de Guzman, as an heir, is entitled to share in the net income of the estate. She occupied the house without paying rent. She should use her income for her living expenses while occupying the family residence. The trial court erred in approving those expenses in the administrator's accounts. They should be, as they are hereby, disallowed (See 33 C.J.S 1239-40). III. Other expenses P558.20. Among these expenses is the sum of P100 for stenographic notes which, as admitted by the administrator on page 24 of his brief, should be disallowed. Another item, "representation expenses" in the sum of P26.25 (2nd accounting), was not explained. it should likewise be disallowed. The probate court erred in allowing as expenses of ad. administration the sum of P268.65 which was incurred during the celebration of the first death anniversary of the deceased. Those expenses are disallowed because they have no connection with the care, management and settlement of the decedent's estate (Nicolas vs. Nicolas 63 Phil 332). The other expenses, namely, P19.30 for the lawyer's subsistence and P144 as the cost of the gift to the physician who attended to the testator during his last s are allowable expenses. IV. Irrigation fee P1,049.58. The appellants question the deductibility of that expense on the ground that it seems to be a duplication of the item of P1,320 as irrigation fee for the same 1966-67 crop-year. The administrator in his comment filed on February 28, 1978 explained that the item of P1,320 represented the "allotments" for irrigation fees to eight tenants who cultivated the Intan crop, which allotments were treated as "assumed expenses" deducted as farming expenses from the value of the net harvests. The explanation is not quite clear but it was not disputed by the appellants. The fact is that the said sum of P1,049.58 was paid by the administrator to the Penaranda Irrigation System as shown in Official Receipt No. 3596378 dated April 28, 1967. It was included in his accounting as part of the farming expenses. The amount was properly allowed as a legitimate expense of administration. WHEREFORE, the lower court's order of April 29, 1968 is affirmed with the modifications that the sum of (a) P1,603.11 as the living expenses of Librada de Guzman. (b) P100 for stenographic notes, (c) P26.25 as representation expenses, and (d) P268.65 as expenses for the celebration of the first anniversary of the decedent's death are disallowed in the administrator's accounts. No costs.
ANA LIM KALAW, Petitioner, v. THE HONORABLE INTERMEDIATE APPELLATE COURT, THE HONORABLE RICARDO B. DIAZ and ROSA LIM KALAW, Respondents. [G.R. No. 74618. September 2, 1992.]

SYLLABUS

1. REMEDIAL LAW; SPECIAL PROCEEDINGS; ACCOUNTABILITY OF ADMINISTRATOR, WHEN TO RENDER ACCOUNTS; RULE AND EXCEPTION. The rendering of an accounting by an administrator of his administration within one year from his appointment is mandatory, as shown by the use of the word "shall" in said rule. The only exception is when the Court otherwise directs because of extensions of time for

presenting claims against the estate or for paying the debts or disposing the assets of the estate, which do not exist in the case at bar. 2. ID.; ID.; REMOVAL OF ADMINISTRATOR; JUSTIFIED, FOR NEGLIGENCE TO RENDER AN ACCOUNTING OF HIS ADMINISTRATION AS REQUIRED BY LAW. subsequent compliance in rendering an accounting report did not purge her of her negligence in not rendering an accounting for more than six years, which justifies petitioners removal as administratrix and the appointment of private respondent in her place as mandated by Section 2 of Rule 82 of the Rules of Court. As correctly stated by the appellate court: "The settled rule is that the removal of an administrator under Section 2 of Rule 82 lies within the discretion of the Court appointing him. As aptly expressed by the Supreme Court in the case of Degala v. Ceniza and Umipig, 78 Phil. 791, the sufficiency of any ground for removal should thus be determined by said court, whose sensibilities are, in the first place, affected by any act or omission on the part of the administrator not comfortable to or in disregard of the rules or the orders of the court. Consequently, appellate tribunals are disinclined to interfere with the action taken by a probate court in the matter of the removal of an executor or administrator unless positive error or gross abuse of discretion is shown. (Borromeo v. Borromeo, 97 Phil. 549; Matute v. Court of Appeals, 26 SCRA 768.) In the case at bar, the removal of petitioner as administratrix was on the ground of her failure for 6 years and 3 months from the time she was appointed as administratrix to render an accounting of her administration as required by Section 8 of Rule 85 of the Rules of Court."

DECISION

NOCON, J.:

This is a petition for certiorari, prohibition and mandamus with preliminary injunction to annul and set aside the decision dated December 27, 1985 of the then Intermediate Appellate Court 1 affirming the decision of the Regional Trial Court of Manila, Branch 27 in Special Proceeding No. 84520 removing petitioner Ana Lim Kalaw as administratrix and appointing private respondent Rosa Lim Kalaw in her stead as the administratrix of the estate of their late father Carlos Lim Kalaw. It appears on record that Carlos Lim Kalaw died intestate on July 8, 1970.
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On June 8, 1972, Victoria Lim Kalaw filed an amended petition for the issuance of Letters of Administration with the then Court of First Instance of Manila in Special Proceeding No. 84520 naming Ana Lim Kalaw (63 years old), Victoria Lim Kalaw (57 years old), Pura Lim Kalaw (53 years old) and Rosa Lim Kalaw (43 years old) as the surviving heirs of the late Carlos Lim Kalaw. On April 25, 1974, the trial court issued an order appointing petitioner Ana Lim Kalaw as special administratrix. Consequently, petitioner filed a preliminary inventory of all the properties which came into her possession as special administratrix of the estate of her late father on June 3, 1974. On October 6, 1977, the trial court issued another order appointing petitioner as the judicial administratrix of said estate and a Letter of Administration was issued to the petitioner after the latter took her oath of office on November 11, 1977. Thereafter, Jose Lim filed a motion to require petitioner to render an accounting of her administration of said estate which was granted by respondent Judge Ricardo Diaz in an order dated December 8, 1982.
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On July 1, 1983, respondent judge issued another order requiring petitioner to render an accounting of her administration with the express instruction that said order be personally served upon the petitioner since the order dated December 8, 1982 was returned to the Court unserved. However, said order was also not received by the petitioner. On January 31, 1984, private respondent Rosa Lim Kalaw together with her sisters Victoria and Pura Lim Kalaw filed a motion to remove petitioner as administratrix of their fathers estate and to appoint instead private respondent on the ground of negligence on the part of petitioner in her duties for failing to render an accounting of her administration since her appointment as administratrix more than six years ago in violation of Section 8 of Rule 85 of the Revised Rules of Court. The motion was set for hearing on February

10, 1984. On February 21, 1984, respondent judge issued another order requiring petitioner to render an accounting within 30 days from receipt thereof which she did on March 22, 1984. She likewise filed on the same date, her Opposition to the motion praying for her removal as administratrix alleging that the delay in rendering said accounting was due to the fact that Judge Carlos Sundiam, who was the judge where the intestate proceeding was assigned, had then been promoted to the Court of Appeals causing said sala to be vacated for a considerable length of time, while newly-appointed Judge Joel Tiongco died of cardiac arrest soon after his appointment to said vacancy, so much so that she did not know to whom to render an accounting report. In their Rejoinder and Manifestation, private respondent and her co-movant alleged that the ground relied upon for petitioners removal was not the delay but her failure or neglect to render an accounting of all the properties which came into her possession as required under Section 1 of Rule 83 of the Revised Rules of Court.
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On January 4, 1985, the trial court rendered a decision, the dispositive portion of which reads:

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"From the foregoing, the Court finds that Administratrix Ana Lim Kalaw violated the provisions of Section 8, Rule 85 of the Rules of Court for not rendering an account of her administration within one (1) year from date of receipt of the letters of administration and this constitutes negligence on her part to perform her duty as Administratrix and under Section 2, Rule 82 of the Rules of Court, neglect on the part of the administratrix to render her account is a ground for her removal as an administratrix. Finding the instant motion to remove Administratrix to be meritorious and well-taken, the same is, as it is hereby, GRANTED. WHEREFORE, Administratrix Ana Lim Kalaw is hereby REMOVED as such Administratrix of the Estate of the late Carlos Lim Kalaw." 2 On September 2, 1985, Petitioner, without waiting for the resolution of the motion for reconsideration with the trial court, filed a Petition for Certiorari with Preliminary Injunction or Restraining Order with the then Intermediate Appellate Court to annul and set aside the following Orders issued by respondent Judge Diaz, as follows:
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"a. Order dated January 4, 1985 removing the Petitioner as Administratrix of the estate of the late Carlos Lim Kalaw; b. Order dated April 30, 1985 denying Petitioners Motion for Reconsideration of the Order of January 4, 1985; c. Order dated May 13, 1985 appointing private Respondent Rosa Lim Kalaw, as Administratrix of said Estate;
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d. Order dated June 19, 1985 directing the tenants and/or lessees of the Carlos Lim Kalaw building to deposit the rentals in court and authorizing private respondent to break open the premises in said building." 3 On December 27, 1985, the appellate court rendered a decision, the dispositive portion of which reads:
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"WHEREFORE, the petition for certiorari is DENIED. However, respondent Judge is directed to require private respondent Rosa Lim Kalaw to post the appropriate administrators bond within ten (10) days from notice hereof. With costs against petitioner." 4 On January 21, 1986, petitioner filed a motion for reconsideration of said decision which was however denied for lack of merit on May 12, 1986. Hence, this petition alleging grave abuse of discretion on the part of the appellate court in sustaining respondent Judge Diaz order removing her as judicial administratrix considering that she had already submitted an accounting report covering the period from December, 1977 to December, 1983 in compliance with respondents Judge order. Section 8 of Rule 85 of the Revised Rules of Court provides that:
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"SEC. 8. When executor or administrator to render account. Every executor or administrator shall render

an account of his administration within one (1) year from the time of receiving letters testamentary or of administration, unless the court otherwise directs because of extensions of time for presenting claims against, or paying the debts of, the estate, or for disposing of the estate; and he shall render such further accounts as the court may require until the estate is wholly settled."
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The rendering of an accounting by an administrator of his administration within one year from his appointment is mandatory, as shown by the use of the word "shall" in said rule. The only exception is when the Court otherwise directs because of extensions of time for presenting claims against the estate or for paying the debts or disposing the assets of the estate, which do not exist in the case at bar. Furthermore, petitioners excuse that the sala where the intestate proceeding was pending was vacant most of the time deserves scant consideration since petitioner never attempted to file with said court an accounting report of her administration despite the fact that at one time or another, Judge Sundiam and Judge Tiongco were presiding over said sala during their incumbency. Likewise, her subsequent compliance in rendering an accounting report did not purge her of her negligence in not rendering an accounting for more than six years, which justifies petitioners removal as administratrix and the appointment of private respondent in her place as mandated by Section 2 of Rule 82 of the Rules of Court. 5 As correctly stated by the appellate court:
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"The settled rule is that the removal of an administrator under Section 2 of Rule 82 lies within the discretion of the Court appointing him. As aptly expressed by the Supreme Court in the case of Degala v. Ceniza and Umipig, 78 Phil. 791, the sufficiency of any ground for removal should thus be determined by said court, whose sensibilities are, in the first place, affected by any act or omission on the part of the administrator not comfortable to or in disregard of the rules or the orders of the court. Consequently, appellate tribunals are disinclined to interfere with the action taken by a probate court in the matter of the removal of an executor or administrator unless positive error or gross abuse of discretion is shown. (Borromeo v. Borromeo, 97 Phil. 549; Matute v. Court of Appeals, 26 SCRA 768.)
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In the case at bar, the removal of petitioner as administratrix was on the ground of her failure for 6 years and 3 months from the time she was appointed as administratrix to render an accounting of her administration as required by Section 8 of Rule 85 of the Rules of Court." 6 As to petitioners contention that she was denied due process when she was removed as administratrix since no hearing was held on the motion for her removal, this does not deserve serious consideration. The appellate courts disposal of this issue is in accordance with the law and evidence. Said the Court:
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"Petitioners contention that her removal was without due process is certainly not borne out by the records. There has been a hearing and, in fact, several pleadings had been filed by the parties on the issue before the order of removal was issued. Thus, the motion to remove petitioner as administratrix was filed on January 3, 1984, which motion was set for hearing on February 10, 1984. Petitioner filed an opposition to the motion on March 22, 1984. This was followed by a Rejoinder and Manifestation filed on April 6, 1984 by private Respondent. The order for petitioners removal was issued on January 4, 1985, or after almost a year from the time the motion to remove her was filed. Not satisfied with this order, petitioner filed a motion for reconsideration on January 14, 1985, to which motion private respondent filed an opposition on January 25, 1985. Petitioner filed a rejoinder to the opposition on February 18, 1985. Respondent Judge issued his order denying the motion for reconsideration on April 30, 1985. This recital of events indubitably disproves petitioners allegation that she was not afforded due process." 7 WHEREFORE, finding no merit in the petition for certiorari, prohibition and mandamus with preliminary injunction, the same is hereby DENIED. Costs against petitioner.
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SO ORDERED.