c. Intestate – Letters of Administration (Rules 78–79)

Administration

Administration extends only to the assets of the decedent found in the State where the letters of administration was granted. (Leon &Ghezzi v. Manufacturer Life Ins., G.R. No. L-3677, 1951)

Two Kinds of Administrator

• Principal Administrator: granted to the person(s) in the jurisdiction of the decedent’s last domicile;
• Ancillary Administrator: granted in any other jurisdiction. It is the general theory that the ancillary administrator must remit the balance of the estate in his territorial jurisdiction to the principal administrator. (Johannes v. Harvey, G.R. No. 18600, 1992; Tayag v. Benguet, G.R. No. L-23145, 1968).

These two proceedings are separate and independent of each other. (CIR v. Fisher, et al., G.R. No. L-11668, 1968)

Administrator

The person appointed by the court to administer the estate. Where the decedent died intestate, or where the will was void and not allowed to probate, or where no executor was named in the will, or the executor named therein is incompetent to serve as such.

Letters of Administration

The authority issued by the court to a competent person when:

• The decedent died intestate; or
• Although there is a will, the will does not appoint any executor; or
• Executor named in the will is incompetent, refuses the trust or fails to give a bond.

Order of Preference in Granting Letters of Administration

• Surviving spouse or
• next of kin or
• both in the discretion of the court,
• or to such person as the abovementioned requests to have appointed, if competent and willing to serve.

Next of Kin

Next of kin are those persons who are entitled under the statute of distribution to the decedent’s property. (Angeles v. Maglaya, G.R. No. 153798, 2005)

It is generally said that the nearest of kin, whose interest in the estate is more preponderant, is preferred in the choice of administrator. Among members of a class the strongest ground for preference is the amount or preponderance of interest. As between next of kin, the nearest of kin is to be preferred. (In re Testate Estate of the Late Gregorio Ventura, G.R. No. L-26306, 1988)

To determine next of kin, the probate court may pass upon the question of filiation especially when the application for letters of administration claims to the decedent’s heir. (Angeles v. Maglaya, G.R. No. 153798, 2005)

Even assuming that Felicisimo was not capacitated to marry respondent in 1974, nevertheless, we find that the latter has the legal personality to file the subject petition for letters of administration, as she may be considered the co-owner of Felicisimo as regards the properties that were acquired through their joint efforts during their cohabitation. (San Luis v. San Luis, G.R. No. 133743, 2007)

When Principal Creditor Can Administer Estate

If the surviving spouse, next of kin or their nominee be incompetent or unwilling to serve or if the surviving spouse or next of kin neglects for 30 days after the death of the decedent to apply for administration by them or their nominee, anyone or more of the principal creditors, if competent and willing to serve;

Strangers or Any Qualified Applicant

If there is no such creditor competent and willing to serve, it may be granted to such other person as the court may select (stranger) even if it appears that there are other competent persons having better right to the administration if the latter fail to appear when notified and claim the issuance of letter themselves.

Paramount Consideration of Appointment

Prospective administrator’s interest in the estate.

Rationale: Those who will reap the benefit of a wise, speedy and economical administration of the estate, or, in the alternative, suffer the consequences of waste, improvidence or mismanagement, have the highest interest and most influential motive to administer the estate correctly.

The underlying assumption is that those who will reap the benefits of a wise / speedy / economical administration of the estate or those who will most suffer the consequences of waste / improvidence / mismanagement have the higher interest and most influential motive to administer the estate correctly.

The person to be appointed administrator of a decedent’s estate must demonstrate not only an interest in the estate, but an interest therein greater than any other candidate. (Suntay III v. Cojuangco-Suntay, G.R. No. 183053, 2012)

Period: NOT Mandatory

Just as the order of preference is not absolute and may be disregarded for valid cause despite the mandatory tenor in the opening sentence of Rule 78 for its observance, so may the thirty (30) day period be likewise be waived under the permissive tone which merely provides that said letters as an alternative “may” be granted to one or more of the principal creditors. (Gabriel v. CA, G.R. No. 101512, 1992)

Letters of administration may be granted to any person or any other applicant even if there are other competent persons with a better right to the administration if such persons fail to appear when notified and claim the letters to themselves. (R79, S6)

Administration may be granted to such other person as the court may appoint in case the persons who have preferential right to be appointed are not competent or are unwilling to serve. It is proper to command the court below to appoint a regular administrator (hence, mandamus lies) but it is not proper to tell whom to appoint. (Reynoso v. Santiago, 85 Phil 268, G.R. No. L-3039, 1949)

A probate court cannot arbitrarily and without sufficient reason disregard the preferential rights of the surviving spouse to the administration of the estate of the deceased spouse. But, if the person enjoying such preferential rights is unsuitable, the court may appoint another person. The determination of a person's suitability for the office of administrator rests, to a great extent, in the sound judgment of the court exercising the power of appointment and such judgment will not be interfered with on appeal unless it appears affirmatively that the court below was in error. (Sioca v. Garcia, G.R. No. L-20080, 1923)

Co-Administrators are Allowed

• To have the benefits of their judgment and perhaps at all times to have different interests represented (Suntay III v. Cojuangco-Suntay, G.R. No. 183053, 2012);
• Where justice and equity demand that opposing parties / factions be represented in the management of the estate of the deceased (Id.);
• Where the estate is large, or from any cause, an intricate and perplexing one to settle (Id.)
• To have all interested persons satisfied and the representatives to work in harmony for the best interest of the estate (Gabriel v. CA, G.R. No. 101512, August 7, 1992); and
• When a person entitled to the administration of an estate desires to have another competent person associated with him in the office (Suntay, citing In re: Fichter’s Estate, 279 N.Y.S. 597)

Note: It is desirable that the administration of the deceased's estate be marked with harmonious relations between co-administrators. But for mere disagreements between such joint fiduciaries, without misconduct, one's removal is not favored. (Gonzales v. Aguinaldo, G.R. No. 74769, 1990)

Effect of Appeal Appointing New Administrator

Where the order of the court appointing a new administrator in substitution of the original administrator is pending appeal, and in the absence of any order for the immediate execution of the order of substitution, the old administrator has the right to continue as such until the appeal is finally disposed of. (Herrera, Remedial Law III-A Special Proceedings and Special Rules Implementing the Family Courts Act of 1997, 2005)

Administrator’s Bond

It is a statutory bond. Conditions prescribed by the statute form part of bond agreement.

Terms and effectivity of bond do not depend on payment of premium and do not expire until the administration is closed. As long as the probate court retains jurisdiction of the estate, the bond contemplates a continuing liability. (Herrera, Remedial Law III-A Special Proceedings and Special Rules Implementing the Family Courts Act of 1997, 2005)

Restrictions on the Power of an Administrator/Executor

• Cannot acquire by purchase, even at public or judicial auction, either in person or mediation of another, the property under administration
• Cannot borrow money without authority of the court
• Cannot speculate with funds under administration
• Cannot lease the property under administration for more than one (1) year
• Cannot continue the business of the deceased unless authorized by the court
• Cannot profit by the increase/decrease in the value of the property under administration

Where estate of a deceased is already the subject of a testate or intestate proceeding, the administrator cannot enter into any transaction involving it without approval of the court. (Herrera, Remedial Law III-A Special Proceedings and Special Rules Implementing the Family Courts Act of 1997, 2005)

Objectives; Broad Basis for Appointment of Special Administrator

The principal objective of the appointment is to preserve the estate until it can pass to the hands of a person full authorized to administer it for the benefit of creditors and heirs, pursuant to SEC. 2, RULE 80. (Ocampo v. Ocampo, G.R. No. 187879, 2010).

The appointment of a special administrator is w/in court’s discretion, but [it] must be exercised with reason, guided by the directives of equity, justice, and legal principles. (Manungas v. Loreto, G.R. No. 193161, 2011).

The order of preference in the appointment of regular administrators does not apply to the appointment of a special administrator but such order of preference may be followed by the judge in the exercise of sound discretion. (Matias v. Gonzales, G.R. No. L-10907, 1957)

The position of special administrator is one of trust and confidence. It is a fiduciary position and, therefore, requires a comprehensive determination of the suitability of the applicant to such position. Under Philippine jurisprudence, the same fundamental and legal principles governing the choice of a regular administrator should be taken in choosing the special administrator. It is essential that the suitability of the applicant be ascertained in a hearing with due notice to all oppositors who may object precisely to the applicant's suitability to the trust. (De Guzman v. Angeles, G.R. No. 78590, 1988)

Even if special administrators had already been appointed, once the probate court finds the appointees no longer entitled to its confidence, it is justified in withdrawing the appointment and giving no valid effect thereto. (Ocampo v. Ocampo, G.R. No. 187879, 2010)

The selection or removal of special administrators is not governed by the rules regarding the selection or removal of regular administrators. Courts may appoint or remove special administrators based on grounds other than those enumerated in the Rules, at their discretion. (Co v. Rosario, G.R. No. 160671, 2008)

Order of Preference Under Rule 78, Sec. 6 Not Applicable to Special Administrators

The preference under Sec. 6, Rule 78, for the next of kin refers to the appointment of a regular administrator, and not of a special administrator, as the appointment of the latter lies entirely in the discretion of the court, and is not appealable. (Tan v. Geodorio, G.R. No. 166520, 2008)

Notice requirement under Rule 79, Sec. 3, is essential

The requirement of a hearing and the notification to all the known heirs and other interested parties as to the date thereof is essential to the validity of the proceeding for the appointment of a special administrator. Notice through publication of the petition is a jurisdictional requirement even in the appointment of a special administrator. (De Guzman v. Angeles, G.R. No. 78590, 1988)

Special Administrator’s Bond

A special administrator, before entering upon the duties of his trust shall give a bond, in such sum as the court directs. It is conditioned upon the following: He will make and return a true inventory of the goods, chattels, rights, credits and estate of the deceased which come to his possession and knowledge; and

He will truly account for such as are received by him when required by the court, and will deliver the same to the person appointed executor or administrator, or to such other person as may be authorized to receive them. (R81, S4)

Distinguish Regular from Special Administrator

When administration may be revoked

• If the letters of administration have been granted because of the belief that the decedent had died intestate; and
• Subsequently, a will is discovered and allowed by the court

The revocation of administration produces the following consequences:

• All powers under letters of administration cease;
• The Administrator shall surrender the letters to the court;
• The administrator must render his account within the time given by the court; and
• Proceeding for issuance of letters testamentary or administration shall be followed

It is within the court’s discretion to decide whether or not the intestate proceeding should be discontinued and a new proceeding should be constituted.

The discovery of a will does not ipso facto nullify the administration unless the will has been proved and allowed. (De Parreño v. Aranzanso, G.R. No. L26940, 1982)

Remedy of a Preterited Heir

The intestate proceedings, although closed and terminated, can still be opened within the prescriptive period upon petition by the preterited heir. (Solivio v CA, G.R. No. 83484, 1990)