G.R. No. L-18089 December 17, 1966
INTESTATE ESTATE OF THE DECEASED VICTORINA ZABALLERO-MILLAR. ESTER ZABALLERO-TADY, administratrix-appellant, vs. RURAL BANK OF LUCENA, INC., claimant-appellee.

FACTS

Victorina Zaballero and Angelina Pansacolo executed a promissory note in favor of Rural Bank of Lucena, Inc., dated October 30, 1957, for P10,000.00 with 5% interest per annum and a stipulation for 10% attorney’s fees “In the event this note is placed in the hands of an attorney for collection.” Victorina Zaballero died in March 1958. The Court of First Instance of Quezon, in the intestate proceedings, ordered creditors to file their claims. On September 17, 1958, the Rural Bank filed its claim based on the note, which was not yet due (maturity date was October 30, 1958). The administratrix acknowledged the principal debt but contested the 12% interest and 10% attorney’s fees charged. The bank reduced the interest to 5% but insisted on the attorney’s fees. To forestall interest, the administratrix made a tender of payment for the debt plus 5% interest on March 25, 1960, offering P200 as a compromise on attorney’s fees. The trial court ordered payment of the principal, 5% interest, and the 10% attorney’s fees. While the record on appeal was pending, the bank accepted the tender for the principal and interest up to March 25, 1960, limiting the appeal solely to the issue of attorney’s fees.

ISSUE

Whether a claim filed against the estate of a deceased person, based on a promissory note not yet due, is equivalent to an action for collection under the terms of the note, thereby justifying the award of the stipulated 10% attorney’s fees.

RULING

No. The award of attorney’s fees is eliminated. The provision for attorney’s fees applies only when the note is placed in the hands of an attorney for collection after it has become due and demandable and the debtor refuses or neglects to pay. The filing of the creditor’s claim in the intestate proceedings, while the note was not yet due, was not an action for collection but a mandatory step under the Rules of Court to inform the estate of a contingent obligation. It was a claim filed pursuant to court order under Rule 87 (now Rule 86) to settle the estate’s debts before distribution. The act of filing the claim through an attorney was not out of necessity for collection but a routine assignment to retained counsel. The estate could not be considered in default, as the debt could only be paid through the proper settlement proceedings and upon court order. The principal having been acknowledged and tendered, there was no default justifying the collection stipulation. The Court cited the American case Shenandoah National Bank v. Marsh, which held that “for collection” means actions taken to secure payment after maturity, not before.