G.R. No. L-17175




Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-17175 July 31, 1962 RICARDO M. GUTIERREZ, plaintiff-appellant, vs. LUCIA MILAGROS BARRETTO-DATU, Executrix of the Testate Estate of the deceased MARIA GERARDO VDA. DE BARRETTO, defendant-appellee. Teofilo Sison and Mariano G. Bustos and Associates for plaintiff-appellant. Deogracias T. Reyes and Luison and Associates for defendant-appellee. MAKALINTAL, J.: Ricardo M. Gutierrez appeals from the orders of Court of First Instance of Rizal (1) dismissing his complaint against Lucia Milagros Barretto-Datu, as executive of the estate of the deceased Maria Gerardo Vda. de Barreto, and (2) denying his motion for reconsideration the dismissal. The relevant facts alleged by appellant are as follows; In 1940, Maria Gerardo Vda. de Barretto, owner of hectares of fishpond lands in Pampanga, leased the same to appellant Gutierrez for a term to expire on May 1, 1947. On November 1, 1941, pursuant to a decision of Department of Public Works rendered after due investigation the dikes of the fishponds were opened at several points, resulting in their destruction and in the loss great quantities of fish inside, to the damage and prejudice of the lessee. In 1956, the lessor having died in 1948 and the corresponding testate proceeding to settle her estate having been opened (Sp. Proc. No. 5002, C.F.I., Manila), Gutierrez filed a claim therein for two items: first, for the sum of P32,000.00 representing advance rentals he had to the decedent (the possession of the leased property is alleged, having been returned to her after the open of the dikes ordered by the government); and second, the sum of P60,000.00 as damages in the concept of earned profits, that is, profits which the claimant failed to realize because of the breach of the lease contract allegedly committed by the lessor. On June 7, 1957 appellant commenced the instant ordinary civil action in the Court of First Instance of Rizal (Quezon City branch) against the executrix of the testate for the recovery of the same amount of P60,000 referred to as the second item claimed in the administration proceeding. The complaint specifically charges decedent Manila Gerardo Vda. de Barretto, is lessor, was having violated a warranty in the lease contract again any damages the lessee might suffer by reason of the claim of the government that several rivers and creeks of the public domain were included in the fishponds. In July 1957 appellant amended his claim in the testate proceeding by withdrawing therefrom the item of P60,000.00, leaving only the one for refund of advance rentals in the sum of P32,000.00. After the issues were joined in the present case with the filing of the defendant's answer, together with a counterclaim, and after two postponements of the trial were granted, the second of which was in January 1958, the court dismissed the action for abandonment by both parties in an order dated July 31, 1959. Appellant moved to reconsider; appellee opposed the motion; and after considerable written argument the court, on March 7, 1960, denied the motion for reconsideration on the ground that the claim should have been prosecuted in the testate proceeding and not by ordinary civil action. Appellant submits his case on this lone legal question: whether or not his claim for damages based on unrealized profits is a money claim against the estate of the deceased Maria Gerardo Vda. de Barretto within the purview of Rule 87, Section 5. This section states: SEC. 5. Claims which must be filed under the notice. If not filed, barred; exception. — All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and expenses of the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. Where an executor or administrator commences an action, or prosecutes an action already commenced by the deceased in his lifetime, the debtor may set forth by answer the claims he has against the decedent, instead of presenting them independently to the court as herein provided, and mutual claims may be set off against each other in such action; and if final judgment is rendered in favor of the defendant, the amount so determined shall be considered the true balance against the estate, as though the claim had been presented directly before the court in the administration proceedings. Claims not yet due, or contingent, may be approved at their present value. The word "claims" as used in statutes requiring the presentation of claims against a decedent's estate is generally construed to mean debts or demands of a pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments; and among these are those founded upon contract. 21 Am. Jur. 579. The claim in this case is based on contract — specifically, on a breach thereof. It falls squarely under section 5 of Rule 87 "Upon all contracts by the decedent broken during his lifetime, even though they were personal to the decedent in liability, the personal representative is answerable for the breach out of the assets." 3 Schouler on Wills, Executors and Administrators, 6th Ed., 2395. A claim for breach of a covenant in a deed of the decedent must be presented under a statute requiring such presentment of all claims grounded on contract. Id. 2461; Clayton v. Dinwoody, 93 P. 723; James v. Corvin, 51 P. 2nd 689.¹ The only actions that may be instituted against the executor or administrator are those to recover real or personal property from the estate, or to enforce a lien thereon, and actions to recover damages for an injury to person or property, real or personal. Rule 88, section 1. The instant suit is not one of them. Appellant invokes Gavin v. Melliza, 84 Phil. 794, in support of his contention that this action is proper against the executrix. The citation is not in point. The claim therein, which was filed in the testate proceeding, was based upon a breach of contract committed by the executrix herself, in dismissing the claimant as administrator of the hacienda of the deceased. While the contract was with the decedent, its violation was by the executrix and hence personal to her. Besides, the claim was for indemnity in the form of a certain quantity of palay every year for the unexpired portion of the term of the contract. The denial of the claim was affirmed by this Court on the grounds that it was not a money claim and that it arose after the decedent's demise, placing it outside the scope of Rule 87, Section 5. The orders appealed from are affirmed, with costs against appellant. Bengzon, C.J., Labrador, Concepcion, Barrera, Paredes, Dizon and Regala, JJ., concur. Padilla, J., took no part. Footnotes ¹Plaintiff's claim arose from a breach of a covenant in the deed. It is very clearly expressed by the statute that all claims arising on contracts whether due, not due, or contingent, must be presented. The only exception made by the statute is that a mortgage or lien "against the property of the estate subject thereto" may be enforced without first presenting a claim to the executor or administrator "where all recourse against any other property of the estate is expressly waived in the complaint." But this was not an action to enforce a lien. It was not one seeking to have the claim satisfied out of specific property of the estate, or to subject any particular property of the estate to the satisfaction thereof. Clayton v. Dinwoody, 93 P. 723. The claim for damages for the unexpired portion of the lease is not an obligation incurred by the administratrix in the course of her administration of the estate. It arises out of a contractual obligation incurred by Louis Johnson and is governed by the statute of nonclaim. By the terms of the lease, he obligated himself, his heirs, executors, administrators and assigns to pay $4,860 for the premises for a term of five years, covering the time involved in this action. A claim for damages for a breach of that contract arises out of that obligation requiring as prerequisite to a suit thereon, that the claim be served on the administratrix and filed with the clerk of court. James v. Corvin, 51 P (2d) 689. The Lawphil Project - Arellano Law Foundation