G.R. No. 6626 - De la Pena vs. Hidalgo

Jose de la Pena y de Ramon acted in his capacity as the administrator of the estate of the deceased Jose de la Pena y Gomiz.
The main action was instituted in the Court of First Instance by the administrator against Federico Hidalgo for the payment of various sums with interest that Hidalgo allegedly owed to the deceased testator’s estate.
In his answer, Federico Hidalgo filed a counterclaim seeking the collection of a sum (P9,000 with legal interest) that the deceased testator reportedly owed him.

The trial court rendered a judgment that was later appealed to the Supreme Court.
The Supreme Court, in its decision rendered on August 17, 1910, ordered:

Federico Hidalgo to pay Jose de la Pena y de Ramon (as administrator) the sum of P6,774.50, with legal interest from a specified date.
Simultaneously, the counterclaim was upheld by ordering the administrator to pay Hidalgo an amount of P9,000, with legal interest from the date of the counterclaim.

On remand, the judge of the Court of First Instance, by order of October 14, 1910, decreed that the amounts for which Hidalgo and the administrator were mutually liable be set off against each other.

This order required that only the difference, amounting to P2,274.93 (with interest), be paid by the administrator.

On October 18, 1910, another order was issued concerning the intervention of the attorneys.

Attorneys Chicote & Miranda, Frederick G. Waite, and C. W. O’Brien intervened in the proceedings.
They alleged that they held a valid lien, under section 37 of the Code of Civil Procedure, upon the amount awarded in the final decision.

Their contention was that the lien pertained to the judgment rendered in favor of the plaintiff (administering the estate) against the defendant.
They contended that this lien should prevent the set-off decreed by the trial judge.

The intervening counsel argued that the counterclaim, as stated in the decision, was presented in the administrator’s capacity and not against him personally, and that their lien should thus have priority.

The record clearly showed that the suit comprised a complaint and a counterclaim brought within a single action where both parties were mutually suing each other.
It was demonstrated that:

The administrator’s claim was in his capacity as estate representative, not as a private individual.
The counterclaim’s object pertained solely to the testator’s debt, with the administrator having no personal liability beyond his representative role.

The decision underscored that a mere omission of the title “administrator” in certain paragraphs did not transform the nature of the claims or the execution of the set-off mandated by the final judgment.

Whether it was proper to set-off the two reciprocal debts—the claim awarded to the administrator and the counterclaim awarded for Hidalgo—under the applicable provisions of the Civil Code.
Whether the order of October 14, directing a set-off and requiring the administrator to pay the resultant difference (P2,274.93), was in accordance with the final decision.

Whether the counterclaim against Jose de la Pena y de Ramon was made in his personal capacity or solely in his capacity as administrator of the estate, and the implications arising therefrom regarding liability.

Whether the lien claimed by the intervening attorneys, based on section 37 of the Code of Civil Procedure, could override or prevent the set-off mechanism established by the court.
Whether the lien was intended to be applied to the amount awarded to the administrator in a manner that would give preference over the counterclaim and the estate’s obligations.

Whether the execution order (including the set-off and the application of professional fees) complied with the legal principles governing reciprocal claims and counterclaims.
The appropriateness of ordering the return of P8,500 to Federico Hidalgo in light of the claims of the intervening attorneys.