Below is a comprehensive, structured discussion of Rule 86 of the Rules of Court (Philippines), which governs Claims Against the Estate in Judicial Settlement of the Estate of Deceased Persons. While the primary framework is Rule 86, other related rules and jurisprudence are also integrated to give you a meticulous overview.

I. Overview and Purpose of Rule 86

A. Definition and Scope

Rule 86 of the Rules of Court lays down the procedure for filing and adjudicating claims against the estate of a deceased person that is under settlement in a judicial proceeding.
The rule ensures that all creditors of the decedent are afforded a fair opportunity to present and substantiate their claims, while also ensuring the orderly payment of liabilities and distribution of assets to the heirs.

B. Rationale

Protection of the Estate: Protect the estate from stale or fraudulent claims by requiring claimants to file within a fixed period (the so-called statute of non-claims).
Efficient Settlement: Facilitate the settlement and distribution of the estate by identifying and quantifying debts and liabilities.
Equitable Payment: Ensure that all creditors get their due, subject to preferences established by law (e.g., funeral expenses, expenses of administration, taxes, claims of the State, etc.).

II. Types of Claims Cognizable Under Rule 86

Generally, all monetary claims and liabilities of the decedent that existed at the time of death can be filed under Rule 86. These include but are not limited to:

Contractual Obligations (e.g., unpaid loans, promissory notes, lease obligations).
Tort Liabilities (e.g., damages arising from quasi-delict, as long as action survived the death of the decedent).
Unpaid Services (claims by caregivers, medical services, domestic help, etc.).
Funeral Expenses (including the decedent’s funeral and burial expenses).
Judgments against the decedent rendered prior to death (money judgments).
Taxes due to the Government (though tax obligations also have separate statutory frameworks).
Other Liabilities not extinguished by death (such as certain claims for damages).

Claims NOT Covered:

Obligations Extinguished by Death: Certain personal obligations or actions that do not survive the decedent’s death (e.g., purely personal or penal in nature).
Contingent Claims that have not yet accrued unless they are within the scope of “claims contingent at the time of death” (these may be governed by special rules but generally must still be presented within the claims period).

III. The Statute of Non-Claims

A. Publication and Mailing of Notice

After the issuance of letters testamentary or letters of administration, the court directs the executor or administrator to:
1. Cause a notice to be published in a newspaper of general circulation (or as ordered by the court).
2. Mail or otherwise serve notice to creditors known to the executor or administrator.

B. Period for Filing

The court fixes a period not less than six (6) months nor more than twelve (12) months from the date of the first publication of the notice for creditors to present their claims (Rule 86, Section 2).
Extension: The court may grant an extension under extraordinary circumstances, but it may not exceed six months (Section 2). This extension request must be made before the original period expires.

C. Effect of Failure to File Claims On Time

General Rule: Claims not filed within the period fixed by the court are barred forever.
Exceptions (Rule 86, Section 5):
1. Those covered by a mortgage or other lien (the creditor may opt to rely on the lien and foreclose it, but any deficiency claim against the estate must be presented on time).
2. Claims arising after the distribution of the estate if discovered or occurs later (special rules apply).
3. Claims of the Government for taxes (the Government is not bound by the ordinary statute of non-claims in the same manner as private individuals).

IV. How Claims Are Filed and Prosecuted

A. Form and Contents of the Claim

Written: The claim must be in writing, stating the nature and the amount of the claim.
Verification: It must be sworn to by the claimant, affirming that the claim is just, due, and that all payments or set-offs have been properly credited (Rule 86, Section 9).
Supporting Documents: Attach relevant documentation (e.g., promissory note, contract, judgment).

B. Filing with the Court

The claim is filed in the same probate court (the court administering the estate).
A copy must be served on the executor or administrator or his/her counsel.

C. Opposition or Contest by Executor/Administrator

The executor or administrator may file an answer or opposition to contest the validity or amount of the claim.
If the claim is contested, it is set for hearing and the court receives evidence.

D. Summary Settlement vs. Ordinary Trial

Small claims or those where there is no contest may be allowed summarily by the court.
Contested claims are heard much like a civil case: the claimant presents evidence, and the administrator/executor rebuts. The court then renders an order allowing or disallowing the claim in whole or in part.

V. Classification, Payment, and Preference of Claims

A. Classification of Claims (Rule 86, Sections 7-8)

Expenses of Administration (costs of the probate proceedings, administrator’s fees, attorney’s fees, etc.).
Funeral Expenses (to a reasonable amount, subject to the court’s discretion).
Last Sickness Expenses (medical and hospital bills for the decedent’s last illness).
Judgments for the payment of money (rendered against the decedent during his/her lifetime).
All Other Claims of creditors.

B. Preferred Claims

Certain claims have statutory preference (e.g., taxes due to the Government) that may precede other liabilities, depending on laws outside of the Rules of Court (e.g., the Civil Code, the National Internal Revenue Code).
If the estate’s assets are insufficient, the court follows the order of preference in paying claims.

C. Partial Payments

If the estate can pay some creditors partially, payments must be made in accordance with the prescribed priority.

D. Allowance or Disallowance

The court’s order allowing or disallowing a claim is final as to the estate; however, it may be appealed by the aggrieved party in the same probate proceedings.

VI. Effects of Mortgages, Liens, and Encumbrances

A. Secured Claims

Mortgage or Security: A creditor with a mortgage or other security interest on property belonging to the estate may choose:
1. Rely on the mortgage/ lien (and foreclose it). The creditor need not file a claim for the entire debt if he or she only seeks to enforce the security. However, if the foreclosure sale yields a deficiency, that deficiency claim must be presented within the claims period.
2. Waive the security and file as an ordinary creditor.
If the secured creditor does not file a deficiency claim on time, the deficiency cannot be claimed from the estate after foreclosure.

VII. Special Situations and Additional Rules

A. Contingent Claims

Claims that are not yet due or are contingent at the time of death must still be presented within the period set by the court. The court may allow or disallow them depending on evidence showing they will likely mature or become absolute in time.

B. Claims Arising After Death

Strictly speaking, liabilities arising after death are generally not covered by the statute of non-claims. However, if they are connected to the administration of the estate, they may be considered as part of administration expenses (e.g., obligations contracted by the administrator for the estate’s benefit).

C. Heir’s Liability for Claims

If the estate assets prove insufficient or if distribution is made before claims are satisfied, creditors may enforce certain liabilities against the heirs up to the value of the property received. This is allowed under Rule 89, subject to special procedures.

VIII. Procedure After Claims Are Approved or Disapproved

Allowance of Claims: Once a claim is allowed (approved by the court), it becomes an enforceable claim within the probate proceedings.
Payment: The executor or administrator pays the claim out of the estate’s funds in accordance with the priority of claims and upon court approval of the project of partition or partial distribution.
Disallowance of Claims: If disallowed, the claimant may appeal if provided by law. Upon finality of the disallowance, the claim can no longer be enforced against the estate.
Inventory and Distribution: The executor/administrator periodically files an inventory of the estate’s assets and liabilities, reflecting the court-allowed claims.

IX. Procedural Nuances and Jurisprudential Guidelines

Strict Construction: Courts typically construe the statute of non-claims strictly to promote the swift settlement of estates.
Equitable Exceptions: Although the rule is rigid, courts sometimes recognize equitable exceptions where there is fraud, accident, mistake, or other reasons beyond the creditor’s control, provided the motion for extension or similar relief is filed timely.
Effects on Pending Civil Cases: If a civil case was pending against the decedent before death, the action is generally dismissed as to the deceased defendant; the claimant must file a claim in the probate. The only exception is if the action is one that can be continued against the estate representative (e.g., actions in rem against property).
Appeal: Orders allowing or disallowing a claim are appealable in the same special proceeding and must follow the procedural steps for appeal within the Reglementary Period.

X. Practical Tips and Legal Ethics Considerations

Timely Notice: Executors/administrators must promptly cause the publication and mailing of notice to creditors. Deliberate or negligent failure may expose them to personal liability.
Attorney’s Role:
- For the Estate: Counsel must diligently examine the claims and, if warranted, contest dubious or excessive demands.
- For the Claimant: Counsel must ensure compliance with form, verification, and timeliness to avoid fatal technicalities.
Candor and Good Faith: Falsely inflated claims or attempts to conceal assets/ liabilities can lead to sanctions (administrative, civil, or criminal).
Documentation: Proper record-keeping of receipts, contracts, loan instruments, etc., is crucial. An unsubstantiated claim often fails during hearing.

XI. Conclusion

Rule 86 of the Rules of Court is central to ensuring the orderly, equitable, and efficient settlement of a deceased person’s estate with respect to creditors’ claims. It operates under a strict timeframe (the statute of non-claims) to protect both the estate and the creditors. The judicial process involves careful filing, notice, and adjudication procedures, culminating in the court’s approval or disapproval of each claim.

Understanding the hierarchy of claims, the rules on secured obligations, and the interplay with other aspects of estate settlement (publication, inventory, distribution) is essential for any lawyer, executor, or claimant in Philippine probate proceedings. Ultimately, meticulous compliance with Rule 86 ensures the rights of creditors are balanced with the estate’s goal of prompt and fair distribution to the heirs.