Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 1966 > December 1966 Decisions > G.R. No. L-18089 December 17, 1966 VICTORINA ZABALLERO MILLAR v. RURAL BANK OF LUCENA, INC.:




PHILIPPINE SUPREME COURT DECISIONS

EN BANC

[G.R. No. L-18089. December 17, 1966.]

INTESTATE ESTATE OF THE DECEASED VICTORINA ZABALLERO MILLAR. ESTER ZABALLERO-TADY, administratrix-appellant, v. RURAL BANK OF LUCENA, INC., Claimant-Appellee.

M. A. Millar for administratrix-appellant.

Bonus & Bonus for Claimant-Appellee.


SYLLABUS


1. PROMISSORY NOTE; WORDS AND PHRASES; PHRASE "PLACED IN THE HANDS OF AN ATTORNEY" FOR COLLECTION, INTERPRETED. — The situation contemplated by the phrase "in the event this note is placed in the hands of an attorney for collection" is one wherein the note becomes due and demandable and the debtor refused to pay, or in case where demand is waived, the debtor neglected to pay. For only then is there reason to place the note in the hands of an attorney "for collection."cralaw virtua1aw library

2. ID.; ID.; PHRASE "FOR 10 PER CENT ATTORNEY’S FEES IF PLACED IN ATTORNEY’S HANDS FOR COLLECTION" INTERPRETED. — In Shenandoah National Hands v. Marsh, where a promissory note also provided "for 10 per cent attorney’s fees if placed in attorney’s hands for collection," the words "for collection", as used in the note was held to convey the same meaning as the words "to collect" which in turn, when applied to indebtedness, was defined as "that which may lawfully be done by the holder of the obligation to secure its payment or liquidation after its maturity." Under such a provision, it was held that attorney’s fees or collection fees could not be claimed for securing the services of an attorney to demand payment thereof before it was due.

3. ID.; MATURITY; EFFECT. — Neither can it be argued that when the note matured, and was not paid, the claim was converted to a collection suit, justifying subsequent recovery of attorney’s fees. As afore-stated, the principal debt was acknowledged. But since the debtor died, the debt could not be paid except in the proper course of the settlement of the estate as provided by law, and only upon orders of the court. It may not therefore be properly argued that the debtor, or upon his death, his estate has been in default.

4. CLAIMS AGAINST ESTATE, FILING OF; PURPOSES. — The claim filed pursuant to the court order dated June 12, 1958 implementing Sections 1, 2, 3, 4 and 5, Rule 87 of the old Rules of Court (now Sections 1, 2, 3, 4 & 5 of Rule 86) regarding creditors’ claims on the estate of a deceased person was merely to inform the estate of a contingent obligation that must be settled before distribution of the deceased’s property to the heirs. Any creditor may under the Rules file such a claim. If an attorney filed it for the Rural Bank, it was not out of necessity but merely because the bank, undoubtedly retaining a legal counsel, would naturally assign the matter to the counsel as routine.


D E C I S I O N


BENGZON, J.P., J.:


Victorina Zaballero and Angelina Pansacolo executed a promissory note in favor of Rural Bank of Lucena, Inc., which reads:jgc:chanrobles.com.ph

"PROMISSORY NOTE

October 30, 1957

" — ONE (1) YEAR — after date, for value received, I/We promise to pay jointly and severally to the order of the

RURAL BANK OF LUCENA, INC.

at its office located in Lucena, Quezon, Philippines the sum of TEN THOUSAND PESOS ONLY (P10,000.00), Philippine Currency, with interest at the rate of FIVE (5%) per cent per annum, from date hereof, until paid, according to the following payment schedule:chanrob1es virtual 1aw library

DATE INSTALLMENT AMOUNT

"In case of default of any of the installments the entire balance unpaid shall immediately become due and payable.

"In case of judicial execution of this obligation or any part of it, the debtors waive all their rights under the provisions of Rule 39, Section 12, of the Rules of Court.

"In the event this note is placed in the hands of an attorney for collection, the makers and indorsers shall pay ten (10%) per cent of the amount due on the note as attorney’s fees.

"DEMAND AND DISHONOR WAIVED. Holder may accept partial payment reserving his right of recourse against each and all indorser.

s/ Angelina Pansacolo

t/ ANGELINA PANSACOLO

Signature or thumbmark of

Borrower

Address: Lucena, Quezon

s/ Victorina Zaballero

t/ VICTORINA ZABALLERO (PB)

Address: Lucena, Quezon"

After Victorina Zaballero died in March of 1958, the Court of First Instance of Quezon appointed her husband Fabian Millar, administrator of her estate. Subsequently, Millar died, and Ester Zaballero-Tady, on petition of the heirs, was named administratrix by the same court.

On June 12, 1958 the settlement court ordered all creditors of the estate to file their claims with said court. Pursuant thereto the Rural Bank of Lucena, Inc., on September 17, 1958, filed its claim for P10,000 under the note which was not yet due. The principal debt was acknowledged by the administratrix but not the 12% interest and 10% attorney’s fees charged by the bank in its statement of accounts dated January 31, 1959. The Rural Bank reduced the interest charge to 5% as provided in the note but insisted on charging 10% as attorney’s fees.

Considering that the dispute was only as regards attorney’s fees, the administratrix to forestall the running of interest, on March 25, 1960 made tender of payment, requesting subsequent consignation, of the debt plus 5% interest, and offered P200 as compromise on attorney’s fees.

The tender of payment and offer of compromise not having been accepted, the Court of First Instance ruled on May 20, 1960 "that the collection of the amount of indebtedness has been placed in the hands of Atty. Alfredo Bonus," and ordered the administratrix to pay the Rural Bank P10,000 with interest at 5% per annum from the date of the promissory note until paid, plus 10% of the amount as attorney’s fees.

However, while the record on appeal was before the trial court for approval, the Rural Bank decided to accept only the tender of payment covering the principal plus the 5% interest accumulated up to March 25, 1960.

This has therefore limited the appeal before Us to the consideration of the dispute on the attorney’s fees. And the question is whether or not a claim against the estate of a deceased, based on a promissory note not yet due, is equivalent to an action for collection under the terms of the note.

The situation contemplated by the phrase "In the event this note is placed in the hands of an attorney for collection" where the 10% attorney’s fees may be paid, is one wherein the note becomes due and demandable and the debtor has refused to pay, or in case where demand is waived, the debtor neglected to pay. For only then is there reason to place the note in the hands of an attorney "for collection."cralaw virtua1aw library

At the time of the filing of the claim — September 17, 1958, the note was not yet due, its maturity date being October 30, 1958; hence, not demandable. Such a claim had to be made in pursuance to the court order dated June 12, 1958 implementing Sections 1, 2, 3, 4 & 5, Rule 87 of the old Rules of Court (now Sections 1, 2, 3, 4 & 5 of Rule 86) regarding creditors’ claims on the estate of a deceased person. This claim under the Rules, was merely to inform the estate of a contingent obligation that must be settled before distribution of the deceased’s property to the heirs. Any creditor may under the Rules file such a claim. If an attorney filed it for the Rural Bank, it was not out of necessity but merely because the bank undoubtedly retaining a legal counsel, would naturally assign the matter to the counsel as routine.

A similar case may not be found in our precedents, but in the United States, in Shenandoah National Bank v. Marsh, 1 where a promissory note also provided "for 10 per cent attorney’s fees if placed in attorney’s hands for collection," the words "for collection", as used in the note was held to convey the same meaning as the words "to collect" which in turn, when applied to indebtedness, was defined as "that which may lawfully be done by the holder of the obligation to secure its payment or liquidation after its maturity." Under such a provision, it was held that attorney’s fees or collection fees could not be claimed for securing the services of an attorney to demand payment thereof before it was due.

Neither can it be argued that when the note matured, and was not paid, the claim was converted to a collection suit, justifying subsequent recovery of attorney’s fees. As afore-stated, the principal debt was acknowledged. But since the debtor died, the debt could not be paid except in the proper course of the settlement of the estate as provided by law, and only upon orders of the Court. It may not therefore, be properly argued that the debtor, or upon his death, his estate, had been in default.

Wherefore, the appealed order is hereby modified by eliminating the award of attorney’s fees under the note. Costs against appellee. So ordered.

Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Endnotes:



1. 56 N.W. 458, 459, 89 Iowa 273, 48 Am. St. Rep. 381.




Back to Home | Back to Main




















chanrobles.com





ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com






December-1966 Jurisprudence                 

  • G.R. No. L-21168 December 16, 1966 BACHRACH TRANSPORTATION CO., INC. v. GAVINO CAMUNAYAN

  • G.R. No. L-14441 December 17, 1966 PEDRO R. PALTING v. SAN JOSE PETROLEUM INCORPORATED

  • G.R. No. L-21915 December 17, 1966 GEORGE W. LUFT COMPANY, INC. v. NGO GUAN, ET AL.

  • G.R. No. L-21803 December 17, 1966 BAY VIEW HOTEL, INC. v. MANILA HOTEL WORKERS’ UNION-PTGWO, ET AL.

  • G.R. No. L-21775 December 17, 1966 CO PEK, ET AL. v. MARTINIANO VIVO

  • G.R. No. L-19457 December 17, 1966 VICTORIO MERCADO, ET AL. v. FELIX R. DOMINGO

  • G.R. No. L-18411 December 17, 1966 MAGDALENA ESTATES, INC. v. ANTONIO A. RODRIGUEZ, ET AL.

  • G.R. No. L-16394 December 17, 1966 JOSE STA. ANA, JR., ET AL. v. ROSA HERNANDEZ

  • G.R. No. L-18328 December 17, 1966 DIOSDADA SABINO v. CONRADO CUBA

  • G.R. No. L-21763 December 17, 1966 MUNICIPALITY OF COMPOSTELA, CEBU v. NATIONAL WATERWORKS AND SEWERAGE AUTHORITY

  • G.R. No. L-19740 December 17, 1966 SEVERINO GAGOLA v. COURT OF AGRARIAN RELATIONS, ET AL.

  • G.R. No. L-18630 December 17, 1966 APOLONIO TANJANCO v. COURT OF APPEALS, ET AL.

  • G.R. No. L-17392 December 17, 1966 JOSE SORIANO v. COMPAÑIA GENERAL DE TABACOS DE FILIPINAS

  • G.R. No. L-21335 December 17, 1966 ABOITIZ SHIPPING CORPORATION v. VIVENCIA ANDO PEPITO, ET AL.

  • G.R. No. L-25641 December 17, 1966 RAFAEL M. ABAYA v. ANTONIO J. VILLEGAS, ET AL.

  • G.R. No. L-21601 December 17, 1966 NIELSON & COMPANY, INC. v. LEPANTO CONSOLIDATED MINING COMPANY

  • G.R. No. L-19879 December 17, 1966 CINEMA, STAGE & RADIO ENTERTAINMENT FREE WORKERS v. COURT OF INDUSTRIAL RELATIONS, ET AL.

  • G.R. No. L-18089 December 17, 1966 VICTORINA ZABALLERO MILLAR v. RURAL BANK OF LUCENA, INC.

  • G.R. No. L-16379 December 17, 1966 PEOPLE OF THE PHIL. v. LAO WAN SING

  • G.R. No. L-18393 December 17, 1966 USAFFE VETERANS ASSOCIATION, INC. v. TREASURER OF THE PHILIPPINES, ET AL.

  • G.R. No. L-19797 December 17, 1966 MARCIANA VILLOCINO, ET AL. v. PEDRO DOYON, ET AL.

  • G.R. No. L-20011 December 17, 1966 PEDRO CABALAG, ETC., ET AL. v. ROXAS Y CIA., ET AL.

  • G.R. No. L-17742 December 17, 1966 DON VICENTE NOBLE v. MARIA S. NOBLE

  • G.R. No. L-18159 December 17, 1966 CASINO ESPAÑOL DE MANILA v. COURT OF INDUSTRIAL RELATIONS, ET AL.

  • G.R. No. L-18826 December 17, 1966 ANTONIO Y. MAYUGA v. CESAR. R. MARAVILLA

  • G.R. No. L-23139 December 17, 1966 MOBIL PHILIPPINES EXPLORATION, INC. v. CUSTOMS ARRASTRE SERVICE, ET AL.

  • G.R. No. L-17571 December 17, 1966 HOSPICIA ENCABO, ET AL. v. CEBU PORTLAND CEMENT COMPANY

  • G.R. No. L-22395 December 17, 1966 STATE BONDING INSURANCE COMPANY, INC. v. MANILA PORT SERVICE, ET AL.

  • G.R. No. L-22209 December 17, 1966 PHILIPPINES INTERNATIONAL SURETY CO., INC. v. COMMISSIONER OF CUSTOMS

  • G.R. No. L-25503 December 17, 1966 LEON DEL ROSARIO v. HON. BIENVENIDO CHINGCUANGCO

  • G.R. No. L-16745 December 17, 1966 AURORA CAMARA VDA. DE ZUBIRI v. WENCESLAO ZUBIRI, ET AL.

  • G.R. No. L-19548 December 22, 1966 NICEFORO S. AGATON v. PATRICIO PEREZ, ET AL.

  • G.R. No. L-26723 December 22, 1966 ARTHUR MEDlNA Y YUMUL v. MARCELO F. OROZCO, JR.

  • G.R. No. L-20330 December 22, 1966 ADOLFO RACAZA v. SUSANA REALTY INC.

  • G.R. No. L-19297 December 22, 1966 MARVEX COMMERCIAL CO. INC. v. PETRA HAWPIA & CO., ET AL.

  • G.R. No. L-19173 December 27, 1966 ROSE DESAMITO v. TRINIDAD CASAS-CUYEGKENG

  • G.R. No. L-21278 December 27, 1966 FEATI UNIVERSITY v. JOSE S. BAUTISTA

  • G.R. No. L-21950 December 28, 1966 AMBROCIO DE LA CRUZ, ET AL. v. PRIMITIVA BERROYA, ET AL.

  • G.R. No. L-19460 December 28, 1966 ROQUE BAIRAN v. AGUSTIN TAN SIU LAY, ET AL.

  • G.R. No. L-20406 December 29, 1966 ENRIQUE R. YU KING v. CITY OF ZAMBOANGA

  • G.R. No. L-19945 December 29, 1966 NATIONAL MARKETING CORPORATION v. PRISCO WORKERS UNION, ET AL.

  • G.R. No. L-18210 December 29, 1966 LAURENTIO ARMENTIA v. ERLINDA PATRIARCA, ET AL.

  • G.R. No. L-18735 December 29, 1966 NARCISO DEL ROSARIO v. YATCO, ET AL.