2/23/2021 PHILIPPINE REPORTS ANNOTATED VOLUME 90

[No. L-3677. November 29, 1951]

In the Matter of the Testate Estate of BASIL GORDON

BUTLER; MERCEDES LEON, petitioner and appellant,
and ADA LOGGEY GHEZZI, administratrix and appellant,
vs. MANUFACTURERS LIFE INSURANCE Co., thru
Philippine Branch, oppositor and appellee.

1. EXECUTORS AND ADMINISTRATORS; EXTENT OF

POWER OF ADMINISTRATION.—The general rule
universally recognized is that ad

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460 PHILIPPINE REPORTS ANNOTATED

Leon and Ghezzi vs. Manufacturers Life Ins. Co.

ministration extends only to the assets of a decedent found

within the state or country where it was granted, so that an
administrator appointed in one state or country has no
power over property in another state or country.

2. ID.; ANNUITIES; PROCEEDS NO LONGER FORM PART

OF DECEDENT'S ESTATE; FUNDS BEYOND THE
CONTROL OF PROBATE COURT.—The entire amount
invested in a contract of annuity by virtue of which the
beneficiary receives a periodical sum during her lifetime, no
longer forms part of a decedent's estate and is beyond the
control of a probate court. It has passed completely into the
hands of the company from which the annuity was
purchased in accordance with contract duly authorized and
validly executed. Whether considered as a trust or as a
simple consideration for the company's assumed obligation,
the proceeds of the sale can not be withdrawn without the
consent of the company, except where upon the death of the
annuitant, the residuary legatee claims the remainder, if
there be any. Neither the domiciliary or ancillary executor
of the decedent's will, nor the trustee, nor the annuitant has
disposition of any of these funds beyond the amount and

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except upon the conditions agreed upon in the contract of

annuity.

APPEAL from an order of the Court of First Instance of

Manila. Amparo, J.
The facts are stated in the opinion of the Court.
Juan S. Rustia for petitioner and appellant.
Peralta & Agrava for oppositor and appellee.

TUASON, J.:

This is an appeal from the Court of First Instance of Manila

which denied a motion of the administratrix in the matter of
the testate estate of Basil Gordon Butler (Special
Proceedings No. 6218). The motion prayed for the citation of
the Manager of the Manila Branch of the Manufacturers
Life Insurance Co. of Toronto, Canada to appear and render
a complete accounting of certain funds the said Branch
allegedly has in its possession and claimed to belong to the
estate. His Honor, Judge Rafael Amparo of the court below,
held that these funds "came into the possession of the
Manufacturers Life Insurance Co
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VOL. 90, NOVEMBER 29, 1951 461

Leon and Ghezzi vs. Manufacturers Life Ins. Co.

Inc., regularly and in due course and, therefore, sees no

justifiable ground to require said company to render an
accounting thereon."
The essential facts are that Basil Gordon Butler,
formerly a resident of the Philippines, died in Brooklyn,
New York City, in 1945, leaving a will which was duly
probated in the Surrogate's Court of New York County on
August 3 of the same year, and of which James Ross, Sr.,
James Madison Ross, Jr. and Ewald E. Selph were named
executors. The estate having been settled, the proceedings
were closed on July 17, 1947.
The will contained this residuary clause:

"After payment of these legacies and my just debts, including

funeral expenses, I devise, give and bequeath all of my remaining
estate and personal effects of which I may die possessed to Mercedes
de Leon, of Maypajo, Caloocan, Rizal, to wit: the personal effects to
be delivered to her for her use and profit; the moneys, securities and
other valuable property, not personal effects, to be held in trust for
her benefit by my executors, at their absolute discretion, to be
administered for her permanent benefit in whatever way they may
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consider most advantageous in the circumstances existing. Since the

said Mercedes de Leon is not of sound judgment, and discretion in
the handling of money, it is not my wish that she be given any
suma of money other than for her current needs, except as my
executors in their judgment deem advantageous to her. In case the
amount available for this bequest be sufficient to purchase an
adequate annuity, the executors in their discretion may do so. And I
attest and direct that I do not wish to intend that the action of my
executors upon their discretion in this matter be questioned by
anyone whatsoever."

For the purpose of carrying out that testamentary provision,

James Madison Ross was appointed trustee by the New York
County Surrogate's Court on February 4, 1948. Once
appointed, and with the beneficiary signing the application
with him, Ross bought an annuity from the Manufacturers
Life Insurance Co. at its head office in Toronto, Canada,
paying in advance $17,091.03 as the combined premiums.
The contract stipulates for a monthly payment of $57.60 to
Mercedes de Leon during her lifetime, with the proviso that
in the event of her death,

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462 PHILIPPINE REPORTS ANNOTATED

Leon and Ghezzi vs. Manufacturers Life Ins. Co.

the residue, if any, of the capital sum shall be paid in one

sum to James Madison Ross or his successor as trustee. And
beginning May 27, 1948, Mercedes de Leon has been
receiving the stipulated monthly allowance through the
Insurance Company's Manila Office.
With the object, so it would seem, of getting hold at once
of the entire amount invested in the annuity, Mercedes de
Leon on September 4, 1948, presented Butler's will for
probate in the Court of First Instance of Manila, and
secured the appointment of Ada Loggey Ghezzi as
administratrix with the will annexed early in 1949. (James
Madison Ross and Ewald E. Selph had expressly declined
appointment as executors "on the ground that the probate
proceedings of the above estate were terminated by the
Surrogate's Court of the County of New York, New York
City, U. S. A., and that there are no properties of the estate
left to be administered.") After having qualified, the
administratrix filed the motion which Judge Amparo has
denied; and as the party most if not solely interested in that
motion, Mercedes de Leon has joined Ghezzi in this appeal.

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The administration of Butler's estate granted in New

York was the principal or domiciliary administration
(Johnannes vs. Harvey, 43 Phil., 175), while the
administration taken out in the Philippines is ancillary.
However, the distinction serves only to distinguish one
administration from the other, for the two proceedings are
separate and independent. (34 C. J. S., 1232, 1233)
The important thing to inquire into is the Manila court's
authority with respect to the assets herein involved. The
general rule universally recognized is that administration
extends only to the assets of a decedent found within the
state or country .where it was granted so that an
administrator appointed in one state or country has no
power over property in another state or country (Keenan vs.
Toury, 182 A. L. R. 1362; Nash vs. Benari, 3 A. L. R. 61;
Michigan Trust Co. vs. Chaffee, 149 A L R

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VOL. 90, NOVEMBER 29, 1951 463

Leon and Ghezzi vs. Manufacturers Life Ins. Co.

1078). This principle is specifically embodied in section 4 of

Rule 78 of the Rules of Court:

"Estate, how administered.—When a will is thus allowed, the court

shall grant letters testamentary, or letters of administration with
the will annexed, and such letters testamentary or of
administration, shall extend to all the estate of the testator in the
Philippines. Such estate, after the payment of just debts and ex-
penses of adminitration, shall be disposed of according to such will,
so far as such will may operate upon it; and the residue, if any,
shall be disposed of as is provided by law in cases if estates in the
Philippines belonging to persons who are inhabitants of another
state of country."

It is manifest from the facts before set out the funds in

question are outside the jurisdiction of the probate court of
Manila. Having been invested in an annuity in Canada
under a contract executed in that country, Canada is the
situs of the money. The party whose appearance of appellant
seeks is only a branch or agency of the company which holds
the funds in its possession, the agency 's intervention being
limited to delivering to the annuitant the checks made out
and issued from the home office. There is no showing or
allegation that the funds have been transferred or removed
to the Manila Branch.

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Even if the money were in the hands of the Manila

Branch, yet it no longer forms part of Butler's estate and is
beyond the control of the court. It has passed completely
into the hands of the company in virtue of a contract duly
authorized and validly executed. Whether considered as a
trust or as simple consideration for the company's assumed
obligation, which it has been religiously performing, of
paying periodical allowances to the annuitant, the proceeds
of the sale can not be withdrawn without the consent of the
company, except, upon the death of the annuitant, the
residuary legatee may claim the remainder, if there be any.
Neither the domiciliary or ancillary executor of Butler's of
will, nor the trustee, nor the annuitant disposition of any of
these funds beyond

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464 PHILIPPINE REPORTS ANNOTATED

Leon and Ghezzi vs. Manufacturers Life Ins. Co.

the amounts and except upon the conditions agreed upon in

the contract for annuity.
In the third place, the power of the court to cite a person
for the purpose stated in the administratrix's motion is
defined in section 7 of Rule 88, which provides.

"Person entrusted with estate compelled to render account.—The

court, on complaint of an executor or administrator, may cite a
person entrusted by an executor or administrator with any part of
the estate of the deceased to appear before it, and may require such
person to render a full account, on oath, of the money, goods,
chattels, bonds, accounts, or other papers belonging to such estate
as came to his possession in trust for such executor or administrator,
and of his proceedings thereon; and if the person so cited refuses to
appear to render such account, the court may punish him for
contempt as having disobeyed a lawful order of the court."

The appellant administratrix did not entrust to the appellee

the money she wants the latter to account for, nor did the
said money come to the appellee's possession in trust for the
administratrix. In other words, the administratrix is a
complete stranger to the subject of the motion and to the
appellee. There being no creditors, the only subject of the
motion, we incline to believe, is to enable Mercedes de Leon
to get the legacy'in a lump sum in complete disregard of the
wishes of the testator, who showed deep concern for her
welfare, and of the annuity contract which the annuitant
herself applied for iti conjunction with the trustee.

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All in all, from every standpoint, including that of the

annuitant's financial well-being, the motion and the appeal
are utterly groundless and ill-advised.
The appealed order therefore is affirmed with costs
against the appellants.

Paras, C. J., Feria, Pablo, Bengzon, Padilla, Reyes, Jugo

and Bautista, Angelo, JJ., concur.

Order affirmed.

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VOL. 90, NOVEMBER 29, 1951 465

People vs. Peregil and Mondido

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