Pereira vs. Court of Appeals

Judicial administration is unnecessary and letters of administration should not issue where the decedent left no debts, the heirs are all of legal age, and partition is possible, absent good and compelling reasons; the estate should not be burdened with a long and costly administration. The probate court’s determination of what properties form part of the estate is provisional and subject to a separate action.

Andres de Guzman Pereira was a Philippine Air Lines employee married to Victoria Bringas Pereira; Rita Pereira Nagac is his sister. The settlement of his estate implicates the Rules of Court provisions on intestate administration and extrajudicial settlement or partition, particularly the rule that heirs may partition without administration when the decedent left no debts and the heirs are of legal age, and the rule on appointment of an administrator in the absence of a will.

Andres de Guzman Pereira, an employee of Philippine Air Lines, died on January 3, 1983 at Bacoor, Cavite without a will. He was survived by his legitimate spouse of ten months, Victoria Bringas Pereira, and his sister, Rita Pereira Nagac.

On March 1, 1983, Rita instituted before Branch 19 of the Regional Trial Court of Bacoor, Cavite, Special Proceeding No. RTC-BSP-83-4 for the issuance of letters of administration in her favor over the estate of the deceased. In her verified petition, she alleged that she and Victoria were the only surviving heirs; that the deceased left no will; that there were no creditors; and that the deceased left several properties, namely death benefits from Philippine Air Lines (PAL), the PAL Employees Association (PALEA), the PAL Employees Savings and Loan Association, Inc. (PESALA), and the Social Security System (SSS), savings deposits with the Philippine National Bank (PNB) and the Philippine Commercial and Industrial Bank (PCIB), and a 300-square-meter lot located at Barangay Pamplona, Las Pinas, Rizal. She further alleged that Victoria had been working in London as an auxiliary nurse and that one-half of her salary formed part of the estate of the deceased.

On March 23, 1983, Victoria filed an opposition and motion to dismiss, alleging that no estate of the deceased existed for purposes of administration; in the alternative, she prayed that if an estate did exist, letters of administration be issued in her favor as the surviving spouse. According to Victoria, the death benefits from PAL, PALEA, PESALA, and the SSS belonged exclusively to her as sole beneficiary, as shown by letter-replies from those institutions; the savings deposits in the deceased’s name with PNB and PCIB had been used to defray funeral expenses; and the only real property of the deceased had been extrajudicially settled between her and Rita as the only surviving heirs. Rita maintained that it was not for Victoria to decide what properties formed part of the estate and to appropriate them for herself, since that function was vested in the court in charge of the intestate proceedings.

In its resolution dated March 28, 1985, the Regional Trial Court appointed Rita administratrix of the intestate estate upon a bond of P1,000.00 and ordered her to take custody of all real and personal properties of the deceased and to file an inventory within three months. Victoria appealed to the Court of Appeals, which affirmed Rita’s appointment in its decision dated December 15, 1987. The parties admitted that there were no debts of the deceased to be paid, and the record showed that the two surviving heirs, a wife of ten months and a sister, were both of age and not in good terms.

• No Estate for Administration: Petitioner contended that no estate existed for purposes of administration because the death benefits from PAL, PALEA, PESALA, and the SSS belonged exclusively to her as sole beneficiary, as shown by letter-replies from those institutions; the savings deposits in the deceased’s name with PNB and PCIB had been used to defray funeral expenses; and the only real property of the deceased had been extrajudicially settled between her and private respondent as the only surviving heirs.
• Alternative Appointment: Petitioner prayed in the alternative that if an estate did exist, the letters of administration relating to the estate be issued in her favor as the surviving spouse.
• Unnecessary Administration: Petitioner argued that a judicial administration proceeding is unnecessary where there are no debts left by the decedent.

• Court’s Function to Determine Estate Properties: Respondent argued that it is not for petitioner to decide what properties form part of the estate of the deceased and to appropriate them for herself, since this function is vested in the court in charge of the intestate proceedings.

• Existence of Estate: Whether there exists an estate of the deceased Andres de Guzman Pereira for purposes of administration.
• Necessity of Judicial Administration: Whether a judicial administration proceeding is necessary where there are no debts left by the decedent.
• Preference in Appointment: Whether the surviving spouse Victoria Bringas Pereira or the surviving sister Rita Pereira Nagac has the better right to be appointed as administratrix of the estate of the deceased.

• Existence of Estate: Not finally resolved in this proceeding. The question of what properties form part of the estate is factual and within the probate court’s competence; its determination is provisional and subject to a separate action.
• Necessity of Judicial Administration: No. Judicial administration is unnecessary where the decedent left no debts, the heirs are all of legal age, and partition is possible, absent good and compelling reasons; the estate should not be burdened with a long and costly administration.
• Preference in Appointment: Not reached. Because the administration proceeding was unnecessary, the Court found it unnecessary to determine who should be preferred as administratrix.

• Existence of Estate: The Court is not a trier of facts and cannot order an unqualified and final exclusion or non-exclusion of the properties involved from the estate based on bare allegations and a handful of documents. The resolution of this issue is better left to the probate court before which the administration proceedings are pending, as the trial court is in the best position to receive evidence on the discordant contentions of the parties as to the assets of the decedent’s estate, the valuations thereof, and the rights of the transferees of some of the assets, if any. The function of resolving whether a certain property should be included in the inventory or list of properties to be administered by the administrator is clearly within the competence of the probate court, but its determination is only provisional in character, not conclusive, and is subject to the final decision in a separate action which may be instituted by the parties.
• Necessity of Judicial Administration: The general rule is that when a person dies leaving property, the same should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Section 6, Rule 78, in case the deceased left no will, or in case he had left one, should he fail to name an executor therein. An exception is established in Section 1 of Rule 74: when all the heirs are of lawful age and there are no debts due from the estate, they may agree in writing to partition the property without instituting judicial administration or applying for the appointment of an administrator. Section 1, Rule 74 does not preclude the heirs from instituting administration proceedings, even if the estate has no debts or obligations, if they do not desire to resort for good reasons to an ordinary action for partition. However, recourse to an administration proceeding even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to an action for partition. Where partition is possible, either in or out of court, the estate should not be burdened with an administration proceeding without good and compelling reasons. It has been repeatedly held that when a person dies without leaving pending obligations to be paid, his heirs, whether of age or not, are not bound to submit the property to a judicial administration, which is always long and costly, or to apply for the appointment of an administrator by the Court; in such case, judicial administration and the appointment of an administrator are superfluous and unnecessary proceedings. What constitutes “good reason” depends on the circumstances of each case. In this case, there were only two surviving heirs, a wife of ten months and a sister, both of age, and the parties admitted that there were no debts of the deceased to be paid. The two heirs were not in good terms. The only conceivable reason why private respondent sought appointment as administratrix was for her to obtain possession of the alleged properties of the deceased for her own purposes, since these properties were in the hands of petitioner who supposedly disposed of them fraudulently. This was not a compelling reason necessitating judicial administration. Subjecting the estate, which did not appear substantial especially since the only real property left had been extrajudicially settled, to an administration proceeding for no useful purpose would only unnecessarily expose it to the risk of being wasted or squandered. The claims of both parties as to the properties left by the deceased may be properly ventilated in simple partition proceedings where the creditors, should there be any, are protected in any event. Thus, the court below was not justified in issuing letters of administration, there being no good reason for burdening the estate with the costs and expenses of an administration proceeding.
• Preference in Appointment: With the foregoing ruling, it was unnecessary to delve into the issue of who, as between the surviving spouse Victoria Bringas Pereira and the sister Rita Pereira Nagac, should be preferred to be appointed as administratrix.

• Judicial Administration Not Necessary Where No Debts and Partition Is Possible — The general rule is that when a person dies leaving property, the estate should be judicially administered and a qualified administrator appointed. Under Section 1, Rule 74, however, when the decedent left no will and no debts and the heirs are all of legal age, the heirs may partition the estate without judicial administration. Recourse to administration even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to an action for partition; where partition is possible, either in or out of court, the estate should not be burdened with administration without good and compelling reasons. The Court applied this doctrine because the decedent left no debts, the two heirs were both of age, and partition was possible.
• Probate Court’s Determination of Estate Assets Is Provisional — The probate court has competence to resolve whether a certain property should be included in the inventory or list of properties to be administered by the administrator. Its determination is only provisional in character, not conclusive, and is subject to the final decision in a separate action which may be instituted by the parties. The Court applied this doctrine by refusing to make a final exclusion or non-exclusion of the properties from the estate and leaving the matter to the probate court.
• Good and Compelling Reason Requirement — What constitutes “good reason” to warrant judicial administration when the heirs are all of legal age and there are no creditors depends on the circumstances of each case. The mere fact that the heirs are not in good terms, or that one heir seeks appointment as administratrix to obtain possession of the alleged properties for her own purposes, is not a compelling reason. The Court applied this doctrine in holding that private respondent’s purpose did not justify burdening the estate with administration.

• "The function of resolving whether or not a certain property should be included in the inventory or list of properties to be administered by the administrator is one clearly within the competence of the probate court. However, the court's determination is only provisional in character, not conclusive, and is subject to the final decision in a separate action which may be instituted by the parties." — This passage defines the probate court’s competence over estate assets and clarifies that its determination is provisional, which is the basis for the Court’s refusal to resolve the first issue finally.
• "It should be noted that recourse to an administration proceeding even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to an action for partition. Where partition is possible, either in or out of court, the estate should not be burdened with an administration proceeding without good and compelling reasons." — This is the ratio decidendi for the second issue, stating the controlling rule that judicial administration is unnecessary absent good and compelling reasons when partition is possible.
• "Thus, it has been repeatedly held that when a person dies without leaving pending obligations to be paid, his heirs, whether of age or not, are not bound to submit the property to a judicial administration, which is always long and costly, or to apply for the appointment of an administrator by the Court. It has been uniformly held that in such case the judicial administration and the appointment of an administrator are superfluous and unnecessary proceedings ." — This passage states the settled doctrine that judicial administration and appointment of an administrator are superfluous and unnecessary where the decedent left no pending obligations.
• "We, therefore, hold that the court below before which the administration proceedings are pending was not justified in issuing letters of administration, there being no good reason for burdening the estate of the deceased Andres de Guzman Pereira with the costs and expenses of an administration proceeding." — This passage applies the rule to the facts and directly supports the revocation of the letters of administration.

• Ortega vs. Court of Appeals (1987) — Cited for the rule that the probate court’s determination of whether property should be included in the inventory is provisional and subject to a separate action; also cited in support of leaving asset questions to the probate court.
• Sebial vs. Sebial, 64 SCRA 385 (1975) — Cited for the proposition that the trial court is in the best position to receive evidence on the discordant contentions as to the assets, valuations, and rights of transferees.
• Utulo vs. Pasion Vda. de Garcia, 66 Phil. 303 (1938) — Cited for the general rule on judicial administration and for the doctrine that when the decedent left no pending obligations, heirs are not bound to submit the property to judicial administration; administration and appointment are superfluous and unnecessary.
• Intestate Estate of Mercado vs. Magtibay, 96 Phil. 383 (1953) — Cited for the rule that if appointment as administrator is sought merely to avoid multiplicity of suits or to annul transfers, the same objective may be achieved in partition; also cited for ventilating claims in partition proceedings.
• Monserrat vs. Ibanez, G.R. No. L-3369, May 24, 1950 — Cited for the rule that questions as to what property belonged to the deceased may properly be ventilated in partition proceedings, especially where the property is in the hands of one heir.
• Rodriguez vs. Tan, 92 Phil. 273 (1952) — Cited for the rule that recourse to administration even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to partition, and that where partition is possible the estate should not be burdened with administration.

• Section 1, Rule 74, Revised Rules of Court — Extrajudicial settlement by agreement between heirs. The Court cited it as the exception to the general rule of judicial administration: when the decedent left no will and no debts and the heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized, the parties may, without securing letters of administration, divide the estate among themselves by public instrument filed in the office of the register of deeds, and should they disagree, they may do so in an ordinary action of partition. The Court held that this provision does not preclude administration if the heirs have good reasons, but where partition is possible, administration should not be imposed absent good and compelling reasons.
• Section 6, Rule 78, Revised Rules of Court — Order of preference in appointing an administrator. The Court cited it in stating the general rule that when a person dies leaving property, the competent court should appoint a qualified administrator in the order established in Section 6, Rule 78, if the deceased left no will or failed to name an executor. Because the administration proceeding was unnecessary, the Court did not resolve who should be preferred under this provision.

Narvasa, Cruz, Griño-Aquino, and Medialdea, JJ., concur.