Case Digest: Quasha vs. LCN Construction, G.R. No. 174873, August 26, 2008
Succession | Attorney's Fees, Distribution of Estate
Section 1. When order for distribution of residue made. - When the debts, funeral charges, and expenses of administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate in accordance with law, have been paid, the court, on the application of the executor or administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of the estate to the persons entitled to the same, naming them and the proportions, or parts, to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession. If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above mentioned has been made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs.
Ponente:
Carpio-Morales, J.:
Facts:
In 1987, Raymond Triviere died.
Attorneys Enrique P. Syquia and William H. Quasha were appointed administrators of the estate.
In 1995, the RTC denied the Motion for Payment of litigation expenses by Attys. Syquia and Quasha, citing failure to submit an accounting of estate assets and liabilities.
In 1996, Atty. Quasha died; Atty. Redentor Zapata took over as counsel for Triviere children.
In 2002, Attys. Syquia and Zapata filed another Motion for Payment.
LCN Construction Corp., the only remaining claimant against the intestate estate, opposed the Motion for Payment, citing the RTC's denial of the first motion due to failure to submit an accounting.
RTC-Makati (2003): Granted the Motion for Payment, stating administrators and counsel are entitled to fees and declaring that there was no need for accounting as estate has minimal assets.
- The court also awarded:
- ₱450,000 as share of the children of the deceased
- ₱150,000 as share for the widow of the deceased
CA: Held that Attys. Syquia and Quasha, were entitled to administrator's fees and litigation expenses. However, they could not claim the same from the funds of the estate but should be borne by their clients, the widow and children of the late Raymond Triviere.
- Deleted the shares awarded to the heirs of the deceased as it violated Section 1, Rule 90 of the Rules of Court, since there still exists its LCN's unpaid claim in the sum of ₱6,016,570.65.
Issues:
WoN the CA erred in ruling that the award in favor of the heirs of the late Raymond Triviere is already a distribution of the residue of the estate. NO
WoN the CA erred in nullifying the award of Attorney's Fees in favor of the co-administrators. NO
Held:
I
The Court of Appeals modified the 12 June 2003 Order of the RTC by deleting the awards of P450,000.00 and P150,000.00 in favor of the children and widow of the late Raymond Triviere, respectively. The appellate court adopted the position of LCN that the claim of LCN was an obligation of the estate which was yet unpaid and, under Section 1, Rule 90 of the Revised Rules of Court, barred the distribution of the residue of the estate.
Petitioners, though, insist that the awards in favor of the petitioner children and widow of the late Raymond Triviere is not a distribution of the residue of the estate, thus, rendering Section 1, Rule 90 of the Revised Rules of Court inapplicable.
Section 1, Rule 90 of the Revised Rules of Court provides:
Section 1. When order for distribution of residue made. - When the debts, funeral charges, and expenses of administration, the allowance to the widow, and inheritance tax, if any, chargeable to the estate in accordance with law, have been paid, the court, on the application of the executor or administrator, or of a person interested in the estate, and after hearing upon notice, shall assign the residue of the estate to the persons entitled to the same, naming them and the proportions, or parts, to which each is entitled, and such persons may demand and recover their respective shares from the executor or administrator, or any other person having the same in his possession. If there is a controversy before the court as to who are the lawful heirs of the deceased person or as to the distributive shares to which each person is entitled under the law, the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above mentioned has been made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs.
According to petitioners, the 12 June 2003 Order of the RTC should not be construed as a final order of distribution. The 12 June 2003 RTC Order granting the second Motion for Payment is a mere interlocutory order that does not end the estate proceedings. Only an order of distribution directing the delivery of the residue of the estate to the proper distributees brings the intestate proceedings to a close and, consequently, puts an end to the administration and relieves the administrator of his duties.
A perusal of the 12 June 2003 RTC Order would immediately reveal that it was not yet distributing the residue of the estate. The said Order grants the payment of certain amounts from the funds of the estate to the petitioner children and widow of the late Raymond Triviere considering that they have not received their respective shares therefrom for more than a decade. Out of the reported P4,738,558.63 value of the estate, the petitioner children and widow were being awarded by the RTC, in its 12 June 2003 Order, their shares in the collective amount of P600,000.00. Evidently, the remaining portion of the estate still needs to be settled. The intestate proceedings were not yet concluded, and the RTC still had to hear and rule on the pending claim of LCN against the estate of the late Raymond Triviere and only thereafter can it distribute the residue of the estate, if any, to his heirs.
While the awards in favor of petitioner children and widow made in the RTC Order dated 12 June 2003 was not yet a distribution of the residue of the estate, given that there was still a pending claim against the estate, still, they did constitute a partial and advance distribution of the estate. Virtually, the petitioner children and widow were already being awarded shares in the estate, although not all of its obligations had been paid or provided for.
Section 2, Rule 109 of the Revised Rules of Court expressly recognizes advance distribution of the estate, thus:
Section 2. Advance distribution in special proceedings. - Notwithstanding a pending controversy or appeal in proceedings to settle the estate of a decedent, the court may, in its discretion and upon such terms as it may deem proper and just, permit that such part of the estate as may not be affected by the controversy or appeal be distributed among the heirs or legatees, upon compliance with the conditions set forth in Rule 90 of these rules.
The second paragraph of Section 1 of Rule 90 of the Revised Rules of Court allows the distribution of the estate prior to the payment of the obligations mentioned therein, provided that "the distributees, or any of them, gives a bond, in a sum to be fixed by the court, conditioned for the payment of said obligations within such time as the court directs."
In sum, although it is within the discretion of the RTC whether or not to permit the advance distribution of the estate, its exercise of such discretion should be qualified by the following:
- only part of the estate that is not affected by any pending controversy or appeal may be the subject of advance distribution (Section 2, Rule 109); and
- the distributees must post a bond, fixed by the court, conditioned for the payment of outstanding obligations of the estate (second paragraph of Section 1, Rule 90).
Petitioners earlier invoked Dael v. Intermediate Appellate Court, where the Court sustained an Order granting partial distribution of an estate.
However, Dael is not even on all fours with the case at bar, given that the Court therein found that:
Where, however, the estate has sufficient assets to ensure equitable distribution of the inheritance in accordance with law and the final judgment in the proceedings and it does not appear there are unpaid obligations, as contemplated in Rule 90, for which provisions should have been made or a bond required, such partial distribution may be allowed.
No similar determination on sufficiency of assets or absence of any outstanding obligations of the estate of the late Raymond Triviere was made by the RTC in this case. In fact, there is a pending claim by LCN against the estate, and the amount thereof exceeds the value of the entire estate.
Furthermore, in Dael, the Court actually cautioned that partial distribution of the decedent's estate pending final termination of the testate or intestate proceeding should as much as possible be discouraged by the courts, and, except in extreme cases, such form of advances of inheritance should not be countenanced. The reason for this rule is that courts should guard with utmost zeal and jealousy the estate of the decedent to the end that the creditors thereof be adequately protected and all the rightful heirs be assured of their shares in the inheritance.
Hence, the Court does not find that the Court of Appeals erred in disallowing the advance award of shares by the RTC to petitioner children and the widow of the late Raymond Triviere.
II
On the second assignment of error, petitioner Quasha Law Office contends that it is entitled to the award of attorney's fees and that the third paragraph of Section 7, Rule 85 of the Revised Rules of Court, which reads:
Section 7. What expenses and fees allowed executor or administrator. Not to charge for services as attorney. Compensation provided by will controls unless renounced. x x x.
x x x x
When the executor or administrator is an attorney, he shall not charge against the estate any professional fees for legal services rendered by him.
is inapplicable to it. The afore-quoted provision is clear and unequivocal and needs no statutory construction. Here, in attempting to exempt itself from the coverage of said rule, the Quasha Law Office presents conflicting arguments to justify its claim for attorney's fees against the estate. At one point, it alleges that the award of attorney's fees was payment for its administration of the estate of the late Raymond Triviere; yet, it would later renounce that it was an administrator.
In the pleadings filed by the Quasha Law Office before the Court of Appeals, it referred to itself as co-administrator of the estate.
In the Comment submitted to the appellate court by Atty. Doronila, the member-lawyer then assigned by the Quasha Law Office to the case, it stated that:
The 12 June 2003 Order granted the Motion for Payment filed by Co-Administrator and counsel Atty. Enrique P. Syquia and the counsel Atty. Cirilo E. Doronila and Co-Administrator for the children of the late Raymond Triviere. x x x.
It would again in the same pleading claim to be the "co-administrator and counsel for the heirs of the late Raymond Triviere."
Finally, the Memorandum it submitted to the Court of Appeals on behalf of its clients, the petitioner-children of the late Raymond Triviere, the Quasha Law Office alleged that:
2. The petition assails the Order of the Honorable Regional Trial Court of Makati, Branch 63 granting the Motion for Payment filed by Co-Administrators Atty. Enrique P. Syquia and the undersigned counsel together with the children of the deceased Raymond Triviere, and the Order dated 29 October 2003 denying Petitioner's Motion for Reconsideration of the First Order.
x x x x
I. Statement of Antecedent Facts
x x x x
4. On 13 May 2004, Atty. Enrique Syquia, co-administrator and counsel for respondent Amy Consuelo Triviere and the undersigned counsel, co-administrator and counsel for the children of the late Raymond Triviere filed their Comment.
Petitioner Quasha Law Office asserts that it is not within the purview of Section 7, Rule 85 of the Revised Rules of Court since it is not an appointed administrator of the estate. When Atty. Quasha passed away in 1996, Atty. Syquia was left as the sole administrator of the estate of the late Raymond Triviere. The person of Atty. Quasha was distinct from that of petitioner Quasha Law Office; and the appointment of Atty. Quasha as administrator of the estate did not extend to his law office. Neither could petitioner Quasha Law Office be deemed to have substituted Atty. Quasha as administrator upon the latter's death for the same would be in violation of the rules on the appointment and substitution of estate administrators, particularly, Section 2, Rule 82 of the Revised Rules of Court. Hence, when Atty. Quasha died, petitioner Quasha Law Office merely helped in the settlement of the estate as counsel for the petitioner children of the late Raymond Triviere.
In its Memorandum before this Court, however, petitioner Quasha Law Office argues that "what is being charged are not professional fees for legal services rendered but payment for administration of the Estate which has been under the care and management of the co-administrators for the past fourteen (14) years."
On the other hand, in the Motion for Payment filed with the RTC on 3 September 2002, petitioner Quasha Law Office prayed for P200,000.00 as "attorney's fees and litigation expenses." Being lumped together, and absent evidence to the contrary, the P200,000.00 for attorney's fees and litigation expenses prayed for by the petitioner Quasha Law Office can be logically and reasonably presumed to be in connection with cases handled by said law office on behalf of the estate. Simply, petitioner Quasha Law Office is seeking attorney's fees as compensation for the legal services it rendered in these cases, as well as reimbursement of the litigation expenses it incurred therein.
The Court notes with disfavor the sudden change in the theory by petitioner Quasha Law Office. Consistent with discussions in the preceding paragraphs, Quasha Law Office initially asserted itself as co-administrator of the estate before the courts. The records do not belie this fact. Petitioner Quasha Law Office later on denied it was substituted in the place of Atty. Quasha as administrator of the estate only upon filing a Motion for Reconsideration with the Court of Appeals, and then again before this Court. As a general rule, a party cannot change his theory of the case or his cause of action on appeal. When a party adopts a certain theory in the court below, he will not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and due process. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage.
This rule, however, admits of certain exceptions. In the interest of justice and within the sound discretion of the appellate court, a party may change his legal theory on appeal, only when the factual bases thereof would not require presentation of any further evidence by the adverse party in order to enable it to properly meet the issue raised in the new theory.
On the foregoing considerations, this Court finds it necessary to exercise leniency on the rule against changing of theory on appeal, consistent with the rules of fair play and in the interest of justice. Petitioner Quasha Law Office presented conflicting arguments with respect to whether or not it was co-administrator of the estate. Nothing in the records, however, reveals that any one of the lawyers of Quasha Law Office was indeed a substitute administrator for Atty. Quasha upon his death.
The court has jurisdiction to appoint an administrator of an estate by granting letters of administration to a person not otherwise disqualified or incompetent to serve as such, following the procedure laid down in Section 6, Rule 78 of the Rules of Court.
Corollary thereto, Section 2, Rule 82 of the Rules of Court provides in clear and unequivocal terms the modes for replacing an administrator of an estate upon the death of an administrator, to wit:
Section 2. Court may remove or accept resignation of executor or administrator. Proceedings upon death, resignation, or removal. x x x.
When an executor or administrator dies, resigns, or is removed the remaining executor or administrator may administer the trust alone, unless the court grants letters to someone to act with him. If there is no remaining executor or administrator, administration may be granted to any suitable person.
The records of the case are wanting in evidence that Quasha Law Office or any of its lawyers substituted Atty. Quasha as co-administrator of the estate. None of the documents attached pertain to the issuance of letters of administration to petitioner Quasha Law Office or any of its lawyers at any time after the demise of Atty. Quasha in 1996. This Court is thus inclined to give credence to petitioner's contention that while it rendered legal services for the settlement of the estate of Raymond Triviere since the time of Atty. Quasha's death in 1996, it did not serve as co-administrator thereof, granting that it was never even issued letters of administration.
The attorney's fees, therefore, cannot be covered by the prohibition in the third paragraph of Section 7, Rule 85 of the Revised Rules of Court against an attorney, to charge against the estate professional fees for legal services rendered by them.
However, while petitioner Quasha Law Office, serving as counsel of the Triviere children from the time of death of Atty. Quasha in 1996, is entitled to attorney's fees and litigation expenses of P100,000.00 as prayed for in the Motion for Payment dated 3 September 2002, and as awarded by the RTC in its 12 June 2003 Order, the same may be collected from the shares of the Triviere children, upon final distribution of the estate, in consideration of the fact that the Quasha Law Office, indeed, served as counsel (not anymore as co-administrator), representing and performing legal services for the Triviere children in the settlement of the estate of their deceased father.
Finally, LCN prays that as the contractor of the house (which the decedent caused to be built and is now part of the estate) with a preferred claim thereon, it should already be awarded P2,500,000.00, representing one half (1/2) of the proceeds from the sale of said house. The Court shall not take cognizance of and rule on the matter considering that, precisely, the merits of the claim of LCN against the estate are still pending the proper determination by the RTC in the intestate proceedings below.
WHEREFORE, premises considered, the Petition for Review on Certiorari is hereby PARTLY GRANTED. The Decision dated 11 May 2006 and Resolution dated 22 September 2006 of the Court of Appeals in CA-G.R. SP No. 81296 are AFFIRMED, with the following MODIFICATIONS:
1) Petitioner Quasha Law Office is entitled to attorney's fees of ONE HUNDRED THOUSAND PESOS (P100,000.00), for legal services rendered for the Triviere children in the settlement of the estate of their deceased father, the same to be paid by the Triviere children in the manner herein discussed; and
2) Attorneys Enrique P. Syquia and William H. Quasha are entitled to the payment of their corresponding administrators' fees, to be determined by the RTC handling Special Proceedings Case No. M-1678, Branch 63 of the Makati RTC, the same to be chargeable to the estate of Raymond Trieviere.
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