G.R. No. 127920.
August 9, 2005 inherited properties to Miguelita on condition that both of
EMILIO B. PACIOLES, JR., IN HIS CAPACITY AS
ADMINISTRATOR AND HEIR OF THE INTESTATE
ESTATE OF MIGUELITA CHING-
PACIOLES, Petitioners,
vs.
MIGUELA CHUATOCO-CHING, Respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Oftentimes death brings peace only to the person who
dies but not to the people he leaves behind. For in death,
a person’s estate remains, providing a fertile ground for
discords that break the familial bonds. Before us is
another case that illustrates such reality. Here, a husband
and a mother of the deceased are locked in an
acrimonious dispute over the estate of their loved one.
This is a petition for review on certiorari filed by Emilio B.
Pacioles, Jr., herein petitioner, against Miguela Chuatoco-
Ching, herein respondent, assailing the Court of Appeals
Decision1 dated September 25, 1996 and Resolution 2dated
January 27, 1997 in CA-G.R. SP No. 41571. 3 The Appellate
Court affirmed the Order dated January 17, 1996 of the
Regional Trial Court (RTC), Branch 99, Quezon
City denying petitioner’s motion for partition and
distribution of the estate of his wife, Miguelita Ching-
Pacioles; and his motion for reconsideration.
The facts are undisputed.
On March 13, 1992, Miguelita died intestate, leaving real
properties with an estimated value of ₱10.5 million, stock
investments worth ₱518,783.00, bank deposits amounting
to ₱6.54 million, and interests in certain businesses. She
was survived by her husband, petitioner herein, and their
two minor children.
Consequently, on August 20, 1992, petitioner filed with
the RTC a verified petition4 for the settlement of
Miguelita’s estate. He prayed that (a) letters of
administration be issued in his name, and (b) that the net
residue of the estate be divided among the compulsory
heirs.
Miguelita’s mother, Miguela Chuatoco-Ching, herein
respondent, filed an opposition, specifically to petitioner’s
prayer for the issuance of letters of administration on the
grounds that (a) petitioner is incompetent and unfit to
exercise the duties of an administrator; and (b) the bulk
of Miguelita’s estate is composed of
"paraphernalproperties." Respondent prayed that the
letters of administration be issued to her instead. 5  opposition to the instant petition is necessary to
Afterwards, she also filed a motion for her appointment as
special administratrix.6
Petitioner moved to strike out respondent’s opposition,
alleging that the latter has no direct and material interest
in the estate, she not being a compulsory heir, and that
he, being the surviving spouse, has the preferential right
to be appointed as administrator under the law.7
Respondent countered that she has direct and material
interest in the estate because she gave half of her
1
them "would undertake whatever business
endeavor they decided to, in the capacity of
business partners."8
In her omnibus motion9 dated April 23, 1993,
respondent nominated her son Emmanuel Ching to
act as special administrator.
On April 20, 1994, the intestate court issued an order
appointing petitioner and Emmanuel as joint regular
administrators of the estate.10 Both were issued letters of
administration after taking their oath and posting the
requisite bond.
Consequently, Notice to Creditors was published in the
issues of the Manila Standard on September 12, 19, and
26, 1994. However, no claims were filed against the
estate within the period set by the Revised Rules of Court.
Thereafter, petitioner submitted to the intestate court an
inventory of Miguelita’s estate. 11 Emmanuel did not
submit an inventory.
On May 17, 1995, the intestate court declared petitioner
and his two minor children as the only compulsory heirs
of Miguelita.12
On July 21, 1995, petitioner filed with the intestate court
an omnibus motion13 praying, among others, that an
Order be issued directing the: 1) payment of estate
taxes; 2) partition and distribution of the estate
among the declared heirs; and 3) payment of
attorney’s fees.
Respondent opposed petitioner’s motion on the ground
that the partition and distribution of the estate is
"premature and precipitate," considering that there is
yet no determination "whether the properties specified in
the inventory are conjugal, paraphernal or owned in a
joint venture."14 Respondent claimed that she owns
the bulk of Miguelita’s estate as an "heir and co-
owner." Thus, she prayed that a hearing be
scheduled.
On January 17, 1996, the intestate court allowed the
payment of the estate taxes and attorney’s fees but
denied petitioner’s prayer for partition and distribution of
the estate, holding that it is indeed "premature." The
intestate court ratiocinated as follows:
"On the partition and distribution of the deceased’s
properties, among the declared heirs, the Court finds the
prayer of petitioner in this regard to be premature. Thus,
a hearing on oppositor’s claim as indicated in her
determine ‘whether the properties listed in the
amended complaint filed by petitioner are entirely
conjugal or the paraphernal properties of the
deceased, or a co-ownership between the
oppositor and the petitioner in their partnership
venture.’"
Petitioner filed a motion for reconsideration but it was
denied in the Resolution dated May 7, 1996.
Forthwith, petitioner filed with the Court of Appeals a
petition for certiorari seeking to annul and set aside the
intestate court’s Order dated January 17, 1996 and
Resolution dated May 7, 1996 which denied petitioner’s
prayer for partition and distribution of the estate for being
premature, indicating that it (intestate court) will first
resolve respondent’s claim of ownership.
The Appellate Court dismissed the petition for certiorari,
holding that in issuing the challenged Order and
Resolution, the intestate court did not commit grave
abuse of discretion.
The Appellate Court ruled:
"Regarding the second issue raised, respondent judge did
not commit grave abuse of discretion in entertaining
private respondent’s unsupported claim of ownership
against the estate. In fact, there is no indication that the
probate court has already made a finding of title or
ownership. It is inevitable that in probate proceedings,
questions of collation or of advancement are involved for
these are matters which can be passed upon in the course
of the proceedings. The probate court in exercising its
prerogative to schedule a hearing, to inquire into the
propriety of private respondent’s claim, is being extremely
cautious in determining the composition of the estate.
This act is not tainted with an iota of grave abuse of
discretion."
Petitioner moved for a reconsideration but it was likewise
denied. Hence, this petition for review
on certiorari anchored on the following assignments of
error:
"I
RESPONDENT COURT’S DECISION WHICH AFFIRMS THE
INTESTATE COURT’S ORDER IS A GRAVE ERROR FOR
BEING CONTRARY TO THE SETTLED JURISPRUDENCE
AND POLICY OF THE LAW THAT ESTATE PROCEEDINGS
MUST BE SETTLED EXPEDITIOUSLY.
II
RESPONDENT COURT COMMITTED GRAVE ERROR IN
SUSTAINING THE INTESTATE COURT’S ORDER TO
CONDUCT HEARING ON THE ISSUE OF OWNERSHIP
CLAIM AGAINST THE ESTATE, AS SAID FUNCTION IS
OUTSIDE AND BEYOND THE JURISDICTION OF THE
INTESTATE COURT.
III
RESPONDENT COURT GRAVELY ERRED IN AFFIRMING
THE INTESTATE COURT’S ORDER AND RESOLUTION
NOTWITHSTANDING THAT RESPONDENT CHING’S
OWNERSHIP CLAIMS ARE CONFLICTING, FRIVOLOUS
AND BASELESS."
The fundamental issue for our resolution is: May a trial
court, acting as an intestate court, hear and pass upon
questions of ownership involving properties claimed to be
part of the decedent’s estate?
The general rule is that the jurisdiction of the trial court
either as an intestate or a probate court relates only to
matters having to do with the settlement of the estate
2
and probate of will of deceased persons but does not
extend to the determination of questions of
ownership that arise during the proceedings.15 The
patent rationale for this rule is that such court exercises
special and limited jurisdiction.16
A well-recognized deviation to the rule is the principle that
an intestate or a probate court may hear and pass upon
questions of ownership when its purpose is to determine
whether or not a property should be included in the
inventory. In such situations the adjudication is merely
incidental and provisional. Thus, in Pastor, Jr. vs. Court of
Appeals,17 we held:
"x x x As a rule, the question of ownership is an
extraneous matter which the probate court cannot resolve
with finality. Thus, for the purpose of determining
whether a certain property should or should not be
included in the inventory of estate properties, the
probate court may pass upon the title thereto, but
such determination is provisional, not conclusive,
and is subject to the final decision in a separate
action to resolve title."
The Court of Appeals relied heavily on the above principle
in sustaining the jurisdiction of the intestate court to
conduct a hearing on respondent’s claim. Such reliance
is misplaced. Under the said principle, the key
consideration is that the purpose of the intestate or
probate court in hearing and passing upon questions of
ownership is merely to determine whether or not a
property should be included in the inventory. The
facts of this case show that such was not the purpose of
the intestate court.
First, the inventory was not disputed. In fact, in her
Manifestation and Opposition18 dated September 18,
1995, respondent expressly adopted the inventory
prepared by petitioner, thus:
"6. She adopts the inventory submitted by the
petitioner in his Amended Compliance dated
October 6, 1994, and filed only on November 4, 1994
not October 5, 1995 as erroneously asserted in Par. 12 of
the Omnibus Motion. Oppositor, however, takes exception
to the low valuation placed on the real estate properties
and reserves her right to submit a more accurate and
realistic pricing on each."
Respondent could have opposed petitioner’s inventory
and sought the exclusion of the specific properties
which she believed or considered to be hers. But
instead of doing so, she expressly adopted the inventory,
taking exception only to the low valuation placed on the
real estate properties.
And second, Emmanuel, respondent’s son and
representative in the settlement of Miguelita’s estate, did
not submit his own inventory. His mandate, as co-
administrator, is "to submit within three (3) months after
his appointment a true inventory and appraisal of all the
real and personal estate of the deceased which have
come into his possession or knowledge."19 He could
have submitted an inventory, excluding therefrom
those properties which respondent considered to
be hers. The fact that he did not endeavor to
submit one shows that he acquiesced with
petitioner’s inventory.
Obviously, respondent’s purpose here was not to obtain
from the intestate court a ruling of what properties should
or should not be included in the inventory. She wanted
something else, i.e., to secure from the intestate
court a final determination of her claim of
ownership over properties comprising the bulk of
Miguelita’s estate. The intestate court went along with
respondent on this point as evident in its Resolution 20  Hence, respondent’s recourse is to file a separate action
dated May 7, 1996, thus:
"On petitioner’s motion for partition and distribution of the
estate of the late Miguelita Ching Pacioles, it is believed
that since oppositor had interposed a claim against the
subject estate, the distribution thereof in favor of the
heirs could not possibly be implemented as there is still a
need for appropriate proceedings to determine the
propriety of oppositor’s claim. It must be mentioned that
if it is true that oppositor owns the bulk of the properties,
which she allegedly placed/registered in the name of the
deceased for convenience, Oppositor, therefore, has a
material and direct interest in the estate and hence,
should be given her day in Court."
It is apparent from the foregoing Resolution that the
purpose of the hearing set by the intestate court was
actually to "determine the propriety of oppositor’s
(respondent’s) claim." According to the intestate court,
"if it is true that the oppositor (respondent) owns
the bulk of (Miguelita’s) properties," then it means
that she has a "material and direct interest in the
estate" and, hence, "she should be given her day in
court." The intended "day in court" or hearing is geared
towards resolving the propriety of respondent’s contention
that she is the true owner of the bulk of Miguelita’s
estate.
Surely, we cannot be deluded by respondent’s ingenious
attempt to secure a proceeding for the purpose of
resolving her blanket claim against Miguelita’s estate.
Although, she made it appear that her only intent was to
determine the accuracy of petitioner’s inventory, however,
a close review of the facts and the pleadings reveals her
real intention.
Clearly, the RTC, acting as an intestate court, had
overstepped its jurisdiction. Its proper course should have
been to maintain a hands-off stance on the matter. It is
well-settled in this jurisdiction, sanctioned and reiterated
in a long line of decisions, that when a question arises as
to ownership of property alleged to be a part of the estate
of the deceased person, but claimed by some other
person to be his property, not by virtue of any right of
inheritance from the deceased but by title adverse to that
of the deceased and his estate, such question cannot be
determined in the course of an intestate or probate
proceedings. The intestate or probate court has no
jurisdiction to adjudicate such contentions, which
must be submitted to the court in the exercise of
its general jurisdiction as a regional trial court.21 
Jurisprudence teaches us that:
"[A] probate court or one in charge of proceedings
whether testate or intestate cannot adjudicate or
determine title to properties claimed to be a part
of the estate and which are claimed to belong to
outside parties. All that the said court could do as
regards said properties is to determine whether they
should or should not be included in the inventory or list of
properties to be administered by the administrator. If
3
there is no dispute, well and good, but if there is,
then the parties, the administrator, and the
opposing parties have to resort to an ordinary
action for a final determination of the conflicting
claims of title because the probate court cannot do
so."22
with a court of general jurisdiction. The intestate court is
not the appropriate forum for the resolution of her
adverse claim of ownership over properties ostensibly
belonging to Miguelita's estate.
Now, even assuming that the intestate court merely
intended to make a provisional or prima
facie determination of the issue of ownership, still
respondent’s claim cannot prosper. It bears stressing that
the bulk of Miguelita’s estate, as stated in petitioner’s
inventory, comprises real estates covered by the Torrens
System which are registered either in the name of
Miguelita alone or with petitioner. As such, they are
considered the owners of the properties until their
title is nullified or modified in an appropriate
ordinary action. We find this Court’s pronouncement
in Bolisay vs. Alcid23 relevant, thus:
"It does not matter that respondent-administratrix has
evidence purporting to support her claim of ownership,
for, on the other hand, petitioners have a Torrens title in
their favor, which under the law is endowed with
incontestability until after it has been set aside in the
manner indicated in the law itself, which, of course, does
not include, bringing up the matter as a mere
incident in special proceedings for the settlement
of the estate of deceased persons. x x x
x x x In regard to such incident of inclusion or exclusion,
We hold that if a property covered by Torrens Title is
involved, the presumptive conclusiveness of such title
should be given due weight, and in the absence of strong
compelling evidence to the contrary, the holder thereof
should be considered as the owner of the property
in controversy until his title is nullified or modified
in an appropriate ordinary action, particularly,
when as in the case at bar, possession of the
property itself is in the persons named in the title.
x x x"
Corrolarily, P.D. 1529, otherwise known as, "The Property
Registration Decree," proscribes collateral attack against
Torrens Title, hence:
"Section 48. Certificate not subject to collateral attack.
A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified or
cancelled except in a direct proceeding in
accordance with law."
Significantly, a perusal of the records reveals that
respondent failed to present convincing evidence to
bolster her bare assertion of ownership. We quote her
testimony, thus:
"Q: I now direct your attention to paragraph (5)
appearing on page 1 of this sworn statement of yours
which I quote:" In accordance with the Chinese tradition
and culture in the distribution of properties to the legal
heirs, we decided to give only a token to our daughter
Miguelita and leave the rest to our only son Emmanuel,
with the undertaking that being the son he will take full
responsibility of the rest of the family despite his
marriage. Madame witness, do you recall having stated
that in your sworn statement?
xxxxxx
Q Ang tanong ko po sa inyo ay ganito, ito po ba
ang inyong iminungkahi kay Emil? Ito po ba ang
inyong paghahatian or hindi?

A: Yes sir, but it was not carried out. A: Iyo akin talaga na hindi nila pinaghirapan, sir." 25

Q What was actually given to your daughter Miguelita is
only a token, is that right?
A: Not a token, sir, but one half of the share of the estate
was given to Lita and the other half was given to
Emmanuel.
Q: What went to Emmanuel was also ½, is that right?
A: Yes, sir.
Q: What makes up the one half share of Lita, if you
recall?
A: What was given to her were all checks, sir, but I
cannot remember any more the amount.
Unfortunately, respondent could not even specify which of
the properties listed in petitioner’s inventory belong to
her. Neither could she present any document to prove her
claim of ownership. The consistently changing basis of her
claim did nothing to improve her posture. Initially, she
insisted that the bulk of Miguelita’s estate is composed of
paraphernal properties.26 Sensing that such assertion
could not strengthen her claim of ownership, she opted to
change her submission and declare that she and Miguelita
were "business partners" and that she gave to the latter
most of her properties to be used in a joint business
venture.27 Respondent must have realized early on that if
the properties listed in petitioner’s inventory are
paraphernal, then Miguelita had the absolute title and
ownership over them and upon her death, such properties
would be vested to her compulsory heirs, petitioner herein
and their two minor children.28

xxxxxx At any rate, we must stress that our pronouncements

Q: Summing up your testimony, Madame, you
cannot itemize the one half share of the estate of
Miguelita, is that right?
A: Yes, sir.
herein cannot diminish or deprive respondent of whatever
rights or properties she believes or considers to be
rightfully hers. We reiterate that the question of
ownership of properties alleged to be part of the estate
must be submitted to the Regional Trial Court in the
exercise of its general jurisdiction.29

Q: Was there any document covering this partition WHEREFORE, the instant petition is GRANTED. The
of the estate among you, Emmanuel and Miguelita assailed Decision and Resolution of the Court of Appeals
with respect to the estate of your late husband? in CA-G.R. SP No. 41571 are hereby REVERSED.

A: If I only knew that this will happen… SO ORDERED.

Q: Samakatuwid po ay walang dokumento? Panganiban, (Chairman), Carpio-Morales, and Garcia, JJ.,

concur.
A: Wala po."24
Corona, J., on leave.
She further testified as follows:

"Q: Among the properties listed like the various

parcels of land, stocks, investments, bank accounts
and deposits both here and abroad, interests and
participation in IFS Pharmaceuticals and Medical
Supplies, Inc. and various motor vehicles, per your
pleasure, Madam Witness, how should these
properties be partitioned or what should be done
with these properties? According to you earlier,
you are agreeable for the partition of the said
properties with Emil on a 50-50 basis, is that right?

A: Kung ano po ang sa akin, iyon ang dapat na bumalik sa

akin, sir.

Q Halimbawa ay ano po iyon? Real estate

properties, parcels of land located in Pag-Asa, in
Silangan, in San Lazaro, in Sta. Cruz, in San
Francisco del Monte and shares of stock. Alinsunod
sa inyo, paano po ang dapat na partihan o hatian
ninyo ni Emil?

A: Kung ano ang sa akin…

4

G.R. No. 156407 January 15, 2014
THELMA M. ARANAS, Petitioner,
vs.
TERESITA V. MERCADO, FELIMON V. MERCADO,
CARMENCITA M. SUTHERLAND, RICHARD V.
MERCADO, MA. TERESITA M. ANDERSON, and
FRANKLIN L. MERCADO, Respondents.
DECISION
BERSAMIN, J.:
The probate court is authorized to determine the issue of
ownership of properties for purposes of their inclusion or
exclusion from the inventory to be submitted by the
administrator, but its determination shall only be
provisional unless the interested parties are all heirs of
the decedent, or the question is one of collation or
advancement, or the parties consent to the assumption of
jurisdiction by the probate court and the rights of third
parties are not impaired. Its jurisdiction extends to
matters incidental or collateral to the settlement and
distribution of the estate, such as the determination of the
status of each heir and whether property included in the
inventory is the conjugal or exclusive property of the
deceased spouse.
Antecedents
Emigdio S. Mercado (Emigdio) died intestate on January
12, 1991, survived by his second wife, Teresita V.
Mercado (Teresita), and their five children, namely: Allan
V. Mercado, Felimon V. Mercado, Carmencita M.
Sutherland, Richard V. Mercado, and Maria Teresita M.
Anderson; and his two children by his first marriage,
namely: respondent Franklin L. Mercado and petitioner
Thelma M. Aranas (Thelma).
Emigdio inherited and acquired real properties during his
lifetime. He owned corporate shares in Mervir Realty
Corporation (Mervir Realty) and Cebu Emerson
Transportation Corporation (Cebu Emerson). He assigned
his real properties in exchange for corporate stocks of
Mervir Realty, and sold his real property in Badian, Cebu
(Lot 3353 covered by Transfer Certificate of Title No.
3252) to Mervir Realty.
On June 3, 1991, Thelma filed in the Regional Trial Court
(RTC) in Cebu City a petition for the appointment of
Teresita as the administrator of Emigdio’s estate (Special
Proceedings No. 3094-CEB).1 The RTC granted the
petition considering that there was no opposition. The
letters of administration in favor of Teresita were issued
on September 7, 1992.
As the administrator, Teresita submitted an inventory of
the estate of Emigdio on December 14, 1992 for the
consideration and approval by the RTC. She indicated in
5
the inventory that at the time of his death, Emigdio had
"left no real properties but only personal properties"
worth ₱6,675,435.25 in all, consisting of cash of
₱32,141.20; furniture and fixtures worth ₱20,000.00;
pieces of jewelry valued at ₱15,000.00; 44,806 shares of
stock of Mervir Realty worth ₱6,585,585.80; and 30
shares of stock of Cebu Emerson worth ₱22,708.25.2
Claiming that Emigdio had owned other properties that
were excluded from the inventory, Thelma moved that the
RTC direct Teresita to amend the inventory, and to be
examined regarding it. The RTC granted Thelma’s motion
through the order of January 8, 1993.
On January 21, 1993, Teresita filed a compliance with the
order of January 8, 1993,3 supporting her inventory with
copies of three certificates of stocks covering the 44,806
Mervir Realty shares of stock;4 the deed of assignment
executed by Emigdio on January 10, 1991 involving real
properties with the market value of ₱4,440,651.10 in
exchange for 44,407 Mervir Realty shares of stock with
total par value of ₱4,440,700.00;5 and the certificate of
stock issued on January 30, 1979 for 300 shares of stock
of Cebu Emerson worth ₱30,000.00.6
On January 26, 1993, Thelma again moved to require
Teresita to be examined under oath on the inventory, and
that she (Thelma) be allowed 30 days within which to file
a formal opposition to or comment on the inventory and
the supporting documents Teresita had submitted.
On February 4, 1993, the RTC issued an order expressing
the need for the parties to present evidence and for
Teresita to be examined to enable the court to resolve the
motion for approval of the inventory.7
On April 19, 1993, Thelma opposed the approval of the
inventory, and asked leave of court to examine Teresita
on the inventory.
With the parties agreeing to submit themselves to the
jurisdiction of the court on the issue of what properties
should be included in or excluded from the inventory, the
RTC set dates for the hearing on that issue.8
Ruling of the RTC
After a series of hearings that ran for almost eight years,
the RTC issued on March 14, 2001 an order finding and
holding that the inventory submitted by Teresita had
excluded properties that should be included, and
accordingly ruled:
WHEREFORE, in view of all the foregoing premises and
considerations, the Court hereby denies the
administratrix’s motion for approval of inventory. The
Court hereby orders the said administratrix to re-do the
inventory of properties which are supposed to constitute
as the estate of the late Emigdio S. Mercado by including
therein the properties mentioned in the last five
immediately preceding paragraphs hereof and then
submit the revised inventory within sixty (60) days from
notice of this order.
The Court also directs the said administratrix to render an
account of her administration of the estate of the late
Emigdio S. Mercado which had come to her possession.
She must render such accounting within sixty (60) days
from notice hereof.
SO ORDERED.9
On March 29, 2001, Teresita, joined by other heirs of
Emigdio, timely sought the reconsideration of the order of
March 14, 2001 on the ground that one of the real
properties affected, Lot No. 3353 located in Badian, Cebu,
had already been sold to Mervir Realty, and that the
parcels of land covered by the deed of assignment had
already come into the possession of and registered in the
name of Mervir Realty.10 Thelma opposed the motion.
On May 18, 2001, the RTC denied the motion for
reconsideration,11 stating that there was no cogent reason
for the reconsideration, and that the movants’ agreement
as heirs to submit to the RTC the issue of what properties
should be included or excluded from the inventory already
estopped them from questioning its jurisdiction to pass
upon the issue.
Decision of the CA
Alleging that the RTC thereby acted with grave abuse of
discretion in refusing to approve the inventory, and in
ordering her as administrator to include real properties
that had been transferred to Mervir Realty, Teresita,
joined by her four children and her stepson Franklin,
assailed the adverse orders of the RTC promulgated on
March 14, 2001 and May 18, 2001 by petition for
certiorari, stating:
I Code, to the effect that the sale made through a public
THE HONORABLE RESPONDENT JUDGE
HAS COMMITTED GRAVE ABUSE OF
JURISDICTION (sic) AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN
HOLDING THAT THE REAL PROPERTY
WHICH WAS SOLD BY THE LATE
EMIGDIO S. MERCADO DURING HIS
LIFETIME TO A PRIVATE CORPORATION
(MERVIR REALTY CORPORATION) BE
INCLUDED IN THE INVENTORY OF THE
ESTATE OF THE LATE EMIGDIO S.
MERCADO.
II
THE HONORABLE RESPONDENT JUDGE
HAS COMMITTED GRAVE ABUSE OF
JURISDICTION (sic) AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN
HOLDING THAT REAL PROPERTIES
WHICH ARE IN THE POSSESSION OF
AND ALREADY REGISTERED IN THE
NAME (OF) PRIVATE CORPORATION
(MERVIR REALTY CORPORATION) BE
INCLUDED IN THE INVENTORY OF THE
ESTATE OF THE LATE EMIGDIO S.
MERCADO.
III
THE HONORABLE RESPONDENT JUDGE
HAS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR
6
EXCESS OF JURISDICTION IN HOLDING
THAT PETITIONERS ARE NOW
ESTOPPED FROM QUESTIONING ITS
JURISDICTION IN PASSING UPON THE
ISSUE OF WHAT PROPERTIES SHOULD
BE INCLUDED IN THE INVENTORY OF
THE ESTATE OF THE LATE EMIGDIO
MERCADO.12
On May 15, 2002, the CA partly granted the petition for
certiorari, disposing as follows:13
WHEREFORE, FOREGOING PREMISES CONSIDERED, this
petition is GRANTED partially. The assailed Orders dated
March 14, 2001 and May 18, 2001 are hereby reversed
and set aside insofar as the inclusion of parcels of land
known as Lot No. 3353 located at Badian, Cebu with an
area of 53,301 square meters subject matter of the Deed
of Absolute Sale dated November 9, 1989 and the various
parcels of land subject matter of the Deeds of Assignment
dated February 17, 1989 and January 10, 1991 in the
revised inventory to be submitted by the administratrix is
concerned and affirmed in all other respects.
SO ORDERED.
The CA opined that Teresita, et al. had properly filed the
petition for certiorari because the order of the RTC
directing a new inventory of properties was interlocutory;
that pursuant to Article 1477 of the Civil Code, to the
effect that the ownership of the thing sold "shall be
transferred to the vendee" upon its "actual and
constructive delivery," and to Article 1498 of the Civil
instrument was equivalent to the delivery of the object of
the sale, the sale by Emigdio and Teresita had transferred
the ownership of Lot No. 3353 to Mervir Realty because
the deed of absolute sale executed on November 9, 1989
had been notarized; that Emigdio had thereby ceased to
have any more interest in Lot 3353; that Emigdio had
assigned the parcels of land to Mervir Realty as early as
February 17, 1989 "for the purpose of saving, as in
avoiding taxes with the difference that in the Deed of
Assignment dated January 10, 1991, additional seven (7)
parcels of land were included"; that as to the January 10,
1991 deed of assignment, Mervir Realty had been "even
at the losing end considering that such parcels of land,
subject matter(s) of the Deed of Assignment dated
February 12, 1989, were again given monetary
consideration through shares of stock"; that even if the
assignment had been based on the deed of assignment
dated January 10, 1991, the parcels of land could not be
included in the inventory "considering that there is
nothing wrong or objectionable about the estate planning
scheme"; that the RTC, as an intestate court, also had no
power to take cognizance of and determine the issue of
title to property registered in the name of third persons or
corporation; that a property covered by the Torrens
system should be afforded the presumptive
conclusiveness of title; that the RTC, by disregarding the
presumption, had transgressed the clear provisions of law
and infringed settled jurisprudence on the matter; and
that the RTC also gravely abused its discretion in holding
that Teresita, et al. were estopped from questioning its
jurisdiction because of their agreement to submit to the
RTC the issue of which properties should be included in
the inventory.
The CA further opined as follows:
In the instant case, public respondent court erred when it
ruled that petitioners are estopped from questioning its
jurisdiction considering that they have already agreed to
submit themselves to its jurisdiction of determining what
properties are to be included in or excluded from the
inventory to be submitted by the administratrix, because
actually, a reading of petitioners’ Motion for
Reconsideration dated March 26, 2001 filed before public
respondent court clearly shows that petitioners are not
questioning its jurisdiction but the manner in which it was
exercised for which they are not estopped, since that is
their right, considering that there is grave abuse of
discretion amounting to lack or in excess of limited
jurisdiction when it issued the assailed Order dated March
14, 2001 denying the administratrix’s motion for approval
of the inventory of properties which were already titled
and in possession of a third person that is, Mervir Realty
Corporation, a private corporation, which under the law
possessed a personality distinct and separate from its
stockholders, and in the absence of any cogency to shred
the veil of corporate fiction, the presumption of
conclusiveness of said titles in favor of Mervir Realty
Corporation should stand undisturbed.
Besides, public respondent court acting as a probate court
had no authority to determine the applicability of the
doctrine of piercing the veil of corporate fiction and even
if public respondent court was not merely acting in a
limited capacity as a probate court, private respondent
nonetheless failed to adjudge competent evidence that
would have justified the court to impale the veil of
corporate fiction because to disregard the separate
jurisdictional personality of a corporation, the wrongdoing
must be clearly and convincingly established since it
cannot be presumed.14
On November 15, 2002, the CA denied the motion for
reconsideration of Teresita, et al.15
Issue
Did the CA properly determine that the RTC committed
grave abuse of discretion amounting to lack or excess of
jurisdiction in directing the inclusion of certain properties
in the inventory notwithstanding that such properties had
been either transferred by sale or exchanged for
corporate shares in Mervir Realty by the decedent during
his lifetime?
Ruling of the Court
The appeal is meritorious.
I
Was certiorari the proper recourse
to assail the questioned orders of the RTC?
The first issue to be resolved is procedural. Thelma
contends that the resort to the special civil action for
certiorari to assail the orders of the RTC by Teresita and
her co-respondents was not proper.
Thelma’s contention cannot be sustained.
The propriety of the special civil action for certiorari as a
remedy depended on whether the assailed orders of the
RTC were final or interlocutory in nature. In Pahila-
7
Garrido v. Tortogo,16 the Court distinguished between final
and interlocutory orders as follows:
The distinction between a final order and an interlocutory
order is well known. The first disposes of the subject
matter in its entirety or terminates a particular proceeding
or action, leaving nothing more to be done except to
enforce by execution what the court has determined, but
the latter does not completely dispose of the case but
leaves something else to be decided upon. An
interlocutory order deals with preliminary matters and the
trial on the merits is yet to be held and the judgment
rendered. The test to ascertain whether or not an order or
a judgment is interlocutory or final is: does the order or
judgment leave something to be done in the trial court
with respect to the merits of the case? If it does, the
order or judgment is interlocutory; otherwise, it is final.
The order dated November 12, 2002, which granted the
application for the writ of preliminary injunction, was an
interlocutory, not a final, order, and should not be the
subject of an appeal. The reason for disallowing an appeal
from an interlocutory order is to avoid multiplicity of
appeals in a single action, which necessarily suspends the
hearing and decision on the merits of the action during
the pendency of the appeals. Permitting multiple appeals
will necessarily delay the trial on the merits of the case for
a considerable length of time, and will compel the adverse
party to incur unnecessary expenses, for one of the
parties may interpose as many appeals as there are
incidental questions raised by him and as there are
interlocutory orders rendered or issued by the lower
court. An interlocutory order may be the subject of an
appeal, but only after a judgment has been rendered,
with the ground for appealing the order being included in
the appeal of the judgment itself.
The remedy against an interlocutory order not subject of
an appeal is an appropriate special civil action under Rule
65, provided that the interlocutory order is rendered
without or in excess of jurisdiction or with grave abuse of
discretion. Then is certiorari under Rule 65 allowed to be
resorted to.
The assailed order of March 14, 2001 denying Teresita’s
motion for the approval of the inventory and the order
dated May 18, 2001 denying her motion for
reconsideration were interlocutory. This is because the
inclusion of the properties in the inventory was not yet a
final determination of their ownership. Hence, the
approval of the inventory and the concomitant
determination of the ownership as basis for inclusion or
exclusion from the inventory were provisional and subject
to revision at anytime during the course of the
administration proceedings.
In Valero Vda. De Rodriguez v. Court of Appeals, 17 the
Court, in affirming the decision of the CA to the effect that
the order of the intestate court excluding certain real
properties from the inventory was interlocutory and could
be changed or modified at anytime during the course of
the administration proceedings, held that the order of
exclusion was not a final but an interlocutory order "in the
sense that it did not settle once and for all the title to the
San Lorenzo Village lots." The Court observed there that:
The prevailing rule is that for the purpose of determining
whether a certain property should or should not be
included in the inventory, the probate court may pass
upon the title thereto but such determination is not
conclusive and is subject to the final decision in a
separate action regarding ownership which may be
instituted by the parties (3 Moran’s Comments on the
Rules of Court, 1970 Edition, pages 448-9 and 473;
Lachenal vs. Salas, L-42257, June 14, 1976, 71 SCRA 262,
266).18 (Bold emphasis supplied)
To the same effect was De Leon v. Court of
Appeals,19 where the Court declared that a "probate court,
whether in a testate or intestate proceeding, can only
pass upon questions of title provisionally," and reminded,
citing Jimenez v. Court of Appeals, that the "patent
reason is the probate court’s limited jurisdiction and the
principle that questions of title or ownership, which result
in inclusion or exclusion from the inventory of the
property, can only be settled in a separate action."
Indeed, in the cited case of Jimenez v. Court of
Appeals,20 the Court pointed out:
All that the said court could do as regards the said
properties is determine whether they should or should not
be included in the inventory or list of properties to be
administered by the administrator. If there is a dispute as
to the ownership, then the opposing parties and the
administrator have to resort to an ordinary action for a
final determination of the conflicting claims of title
because the probate court cannot do so. (Bold emphasis
supplied)
On the other hand, an appeal would not be the correct
recourse for Teresita, et al. to take against the assailed
orders. The final judgment rule embodied in the first
paragraph of Section 1, Rule 41, Rules of Court, 21 which
also governs appeals in special proceedings, stipulates
that only the judgments, final orders (and resolutions) of
a court of law "that completely disposes of the case, or of
a particular matter therein when declared by these Rules
to be appealable" may be the subject of an appeal in due
course. The same rule states that an interlocutory order
or resolution (interlocutory because it deals with
preliminary matters, or that the trial on the merits is yet
to be held and the judgment rendered) is expressly made
non-appealable.
Multiple appeals are permitted in special proceedings as a
practical recognition of the possibility that material issues
may be finally determined at various stages of the special
proceedings. Section 1, Rule 109 of the Rules of Court
enumerates the specific instances in which multiple
appeals may be resorted to in special proceedings, viz:
Section 1. Orders or judgments from which appeals may
be taken. - An interested person may appeal in special
proceedings from an order or judgment rendered by a
Court of First Instance or a Juvenile and Domestic
Relations Court, where such order or judgment:
(a) Allows or disallows a will;
(b) Determines who are the lawful heirs of a deceased
person, or the distributive share of the estate to which
such person is entitled;
(c) Allows or disallows, in whole or in part, any claim
against the estate of a deceased person, or any claim
presented on behalf of the estate in offset to a claim
against it;
8
(d) Settles the account of an executor, administrator,
trustee or guardian;
(e) Constitutes, in proceedings relating to the settlement
of the estate of a deceased person, or the administration
of a trustee or guardian, a final determination in the lower
court of the rights of the party appealing, except that no
appeal shall be allowed from the appointment of a special
administrator; and
(f) Is the final order or judgment rendered in the case,
and affects the substantial rights of the person appealing,
unless it be an order granting or denying a motion for a
new trial or for reconsideration.
Clearly, the assailed orders of the RTC, being
interlocutory, did not come under any of the instances in
which multiple appeals are permitted.
II
Did the RTC commit grave abuse of discretion
in directing the inclusion of the properties
in the estate of the decedent?
In its assailed decision, the CA concluded that the RTC
committed grave abuse of discretion for including
properties in the inventory notwithstanding their having
been transferred to Mervir Realty by Emigdio during his
lifetime, and for disregarding the registration of the
properties in the name of Mervir Realty, a third party, by
applying the doctrine of piercing the veil of corporate
fiction.
Was the CA correct in its conclusion?
The answer is in the negative. It is unavoidable to find
that the CA, in reaching its conclusion, ignored the law
and the facts that had fully warranted the assailed orders
of the RTC.
Under Section 6(a), Rule 78 of the Rules of Court, the
letters of administration may be granted at the discretion
of the court to the surviving spouse, who is competent
and willing to serve when the person dies intestate. Upon
issuing the letters of administration to the surviving
spouse, the RTC becomes duty-bound to direct the
preparation and submission of the inventory of the
properties of the estate, and the surviving spouse, as the
administrator, has the duty and responsibility to submit
the inventory within three months from the issuance of
letters of administration pursuant to Rule 83 of the Rules
of Court, viz:
Section 1. Inventory and appraisal to be returned within
three months. – Within three (3) months after his
appointment every executor or administrator shall return
to the court a true inventory and appraisal of all the real
and personal estate of the deceased which has come into
his possession or knowledge. In the appraisement of such
estate, the court may order one or more of the
inheritance tax appraisers to give his or their assistance.
The usage of the word all in Section 1, supra, demands
the inclusion of all the real and personal properties of the
decedent in the inventory.22 However, the word all is
qualified by the phrase which has come into his
possession or knowledge, which signifies that the
properties must be known to the administrator to belong
to the decedent or are in her possession as the
administrator. Section 1 allows no exception, for the
phrase true inventory implies that no properties appearing
to belong to the decedent can be excluded from the
inventory, regardless of their being in the possession of
another person or entity.
The objective of the Rules of Court in requiring the
inventory and appraisal of the estate of the decedent is
"to aid the court in revising the accounts and determining
the liabilities of the executor or the administrator, and in
making a final and equitable distribution (partition) of the
estate and otherwise to facilitate the administration of the
estate."23Hence, the RTC that presides over the
administration of an estate is vested with wide discretion
on the question of what properties should be included in
the inventory. According to Peralta v. Peralta, 24 the CA
cannot impose its judgment in order to supplant that of
the RTC on the issue of which properties are to be
included or excluded from the inventory in the absence of
"positive abuse of discretion," for in the administration of
the estates of deceased persons, "the judges enjoy ample
discretionary powers and the appellate courts should not
interfere with or attempt to replace the action taken by
them, unless it be shown that there has been a positive
abuse of discretion."25 As long as the RTC commits no
patently grave abuse of discretion, its orders must be
respected as part of the regular performance of its judicial
duty.
There is no dispute that the jurisdiction of the trial court
as an intestate court is special and limited. The trial court
cannot adjudicate title to properties claimed to be a part
of the estate but are claimed to belong to third parties by
title adverse to that of the decedent and the estate, not
by virtue of any right of inheritance from the decedent. All
that the trial court can do regarding said properties is to
determine whether or not they should be included in the
inventory of properties to be administered by the
administrator. Such determination is provisional and may
be still revised. As the Court said in Agtarap v. Agtarap: 26
The general rule is that the jurisdiction of the trial court,
either as a probate court or an intestate court, relates
only to matters having to do with the probate of the will
and/or settlement of the estate of deceased persons, but
does not extend to the determination of questions of
ownership that arise during the proceedings. The patent
rationale for this rule is that such court merely exercises
special and limited jurisdiction. As held in several cases, a
probate court or one in charge of estate proceedings,
whether testate or intestate, cannot adjudicate or
determine title to properties claimed to be a part of the
estate and which are claimed to belong to outside parties,
not by virtue of any right of inheritance from the
deceased but by title adverse to that of the deceased and
his estate. All that the said court could do as regards said
properties is to determine whether or not they should be
included in the inventory of properties to be administered
by the administrator. If there is no dispute, there poses
no problem, but if there is, then the parties, the
administrator, and the opposing parties have to resort to
an ordinary action before a court exercising general
jurisdiction for a final determination of the conflicting
claims of title.
However, this general rule is subject to exceptions as
justified by expediency and convenience.
9
First, the probate court may provisionally pass upon in an
intestate or a testate proceeding the question of inclusion
in, or exclusion from, the inventory of a piece of property
without prejudice to final determination of ownership in a
separate action. Second, if the interested parties are all
heirs to the estate, or the question is one of collation or
advancement, or the parties consent to the assumption of
jurisdiction by the probate court and the rights of third
parties are not impaired, then the probate court is
competent to resolve issues on ownership. Verily, its
jurisdiction extends to matters incidental or collateral to
the settlement and distribution of the estate, such as the
determination of the status of each heir and whether the
property in the inventory is conjugal or exclusive property
of the deceased spouse.27 (Italics in the original; bold
emphasis supplied)
It is clear to us that the RTC took pains to explain the
factual bases for its directive for the inclusion of the
properties in question in its assailed order of March 14,
2001, viz:
In the first place, the administratrix of the estate admitted
that Emigdio Mercado was one of the heirs of Severina
Mercado who, upon her death, left several properties as
listed in the inventory of properties submitted in Court in
Special Proceedings No. 306-R which are supposed to be
divided among her heirs. The administratrix admitted,
while being examined in Court by the counsel for the
petitioner, that she did not include in the inventory
submitted by her in this case the shares of Emigdio
Mercado in the said estate of Severina Mercado. Certainly,
said properties constituting Emigdio Mercado’s share in
the estate of Severina Mercado should be included in the
inventory of properties required to be submitted to the
Court in this particular case.
In the second place, the administratrix of the estate of
Emigdio Mercado also admitted in Court that she did not
include in the inventory shares of stock of Mervir Realty
Corporation which are in her name and which were paid
by her from money derived from the taxicab business
which she and her husband had since 1955 as a conjugal
undertaking. As these shares of stock partake of being
conjugal in character, one-half thereof or of the value
thereof should be included in the inventory of the estate
of her husband.
In the third place, the administratrix of the estate of
Emigdio Mercado admitted, too, in Court that she had a
bank account in her name at Union Bank which she
opened when her husband was still alive. Again, the
money in said bank account partakes of being conjugal in
character, and so, one-half thereof should be included in
the inventory of the properties constituting as estate of
her husband.
In the fourth place, it has been established during the
hearing in this case that Lot No. 3353 of Pls-657-D
located in Badian, Cebu containing an area of 53,301
square meters as described in and covered by Transfer
Certificate of Title No. 3252 of the Registry of Deeds for
the Province of Cebu is still registered in the name of
Emigdio S. Mercado until now. When it was the subject of
Civil Case No. CEB-12690 which was decided on October
19, 1995, it was the estate of the late Emigdio Mercado
which claimed to be the owner thereof. Mervir Realty
Corporation never intervened in the said case in order to
be the owner thereof. This fact was admitted by Richard
Mercado himself when he testified in Court. x x x So the
said property located in Badian, Cebu should be included
in the inventory in this case.
Fifthly and lastly, it appears that the assignment of
several parcels of land by the late Emigdio S. Mercado to
Mervir Realty Corporation on January 10, 1991 by virtue
of the Deed of Assignment signed by him on the said day
(Exhibit N for the petitioner and Exhibit 5 for the
administratrix) was a transfer in contemplation of death.
It was made two days before he died on January 12,
1991. A transfer made in contemplation of death is one
prompted by the thought that the transferor has not long
to live and made in place of a testamentary disposition
(1959 Prentice Hall, p. 3909). Section 78 of the National
Internal Revenue Code of 1977 provides that the gross
estate of the decedent shall be determined by including
the value at the time of his death of all property to the
extent of any interest therein of which the decedent has
at any time made a transfer in contemplation of death.
So, the inventory to be approved in this case should still
include the said properties of Emigdio Mercado which
were transferred by him in contemplation of death.
Besides, the said properties actually appeared to be still
registered in the name of Emigdio S. Mercado at least ten
(10) months after his death, as shown by the certification
issued by the Cebu City Assessor’s Office on October 31,
1991 (Exhibit O).28
Thereby, the RTC strictly followed the directives of the
Rules of Court and the jurisprudence relevant to the
procedure for preparing the inventory by the
administrator. The aforequoted explanations indicated
that the directive to include the properties in question in
the inventory rested on good and valid reasons, and thus
was far from whimsical, or arbitrary, or capricious.
Firstly, the shares in the properties inherited by Emigdio
from Severina Mercado should be included in the
inventory because Teresita, et al. did not dispute the fact
about the shares being inherited by Emigdio.
Secondly, with Emigdio and Teresita having been married
prior to the effectivity of the Family Code in August 3,
1988, their property regime was the conjugal partnership
of gains.29 For purposes of the settlement of Emigdio’s
estate, it was unavoidable for Teresita to include his
shares in the conjugal partnership of gains. The party
asserting that specific property acquired during that
property regime did not pertain to the conjugal
partnership of gains carried the burden of proof, and that
party must prove the exclusive ownership by one of them
by clear, categorical, and convincing evidence. 30 In the
absence of or pending the presentation of such proof, the
conjugal partnership of Emigdio and Teresita must be
provisionally liquidated to establish who the real owners
of the affected properties were,31 and which of the
properties should form part of the estate of Emigdio. The
portions that pertained to the estate of Emigdio must be
included in the inventory.
Moreover, although the title over Lot 3353 was already
registered in the name of Mervir Realty, the RTC made
findings that put that title in dispute. Civil Case No. CEB-
12692, a dispute that had involved the ownership of Lot
3353, was resolved in favor of the estate of Emigdio, and
Transfer Certificate of Title No. 3252 covering Lot 3353
was still in Emigdio’s name.1âwphi1 Indeed, the RTC
10
noted in the order of March 14, 2001, or ten years after
his death, that Lot 3353 had remained registered in the
name of Emigdio.
Interestingly, Mervir Realty did not intervene at all in Civil
Case No. CEB-12692. Such lack of interest in Civil Case
No. CEB-12692 was susceptible of various interpretations,
including one to the effect that the heirs of Emigdio could
have already threshed out their differences with the
assistance of the trial court. This interpretation was
probable considering that Mervir Realty, whose business
was managed by respondent Richard, was headed by
Teresita herself as its President. In other words, Mervir
Realty appeared to be a family corporation.
Also, the fact that the deed of absolute sale executed by
Emigdio in favor of Mervir Realty was a notarized
instrument did not sufficiently justify the exclusion from
the inventory of the properties involved. A notarized deed
of sale only enjoyed the presumption of regularity in favor
of its execution, but its notarization did not per se
guarantee the legal efficacy of the transaction under the
deed, and what the contents purported to be. The
presumption of regularity could be rebutted by clear and
convincing evidence to the contrary.32 As the Court has
observed in Suntay v. Court of Appeals:33
x x x. Though the notarization of the deed of sale in
question vests in its favor the presumption of regularity, it
is not the intention nor the function of the notary public to
validate and make binding an instrument never, in the
first place, intended to have any binding legal effect upon
the parties thereto. The intention of the parties still and
always is the primary consideration in determining the
true nature of a contract. (Bold emphasis supplied)
It should likewise be pointed out that the exchange of
shares of stock of Mervir Realty with the real properties
owned by Emigdio would still have to be inquired into.
That Emigdio executed the deed of assignment two days
prior to his death was a circumstance that should put any
interested party on his guard regarding the exchange,
considering that there was a finding about Emigdio having
been sick of cancer of the pancreas at the time. 34 In this
regard, whether the CA correctly characterized the
exchange as a form of an estate planning scheme
remained to be validated by the facts to be established in
court.
The fact that the properties were already covered by
Torrens titles in the name of Mervir Realty could not be a
valid basis for immediately excluding them from the
inventory in view of the circumstances admittedly
surrounding the execution of the deed of assignment.
This is because:
The Torrens system is not a mode of acquiring titles to
lands; it is merely a system of registration of titles to
lands.1âwphi1However, justice and equity demand that
the titleholder should not be made to bear the
unfavorable effect of the mistake or negligence of the
State’s agents, in the absence of proof of his complicity in
a fraud or of manifest damage to third persons. The real
purpose of the Torrens system is to quiet title to land and
put a stop forever to any question as to the legality of the
title, except claims that were noted in the certificate at
the time of registration or that may arise subsequent
thereto. Otherwise, the integrity of the Torrens system
shall forever be sullied by the ineptitude and inefficiency
of land registration officials, who are ordinarily presumed WHEREFORE, the Court GRANTS the petition for review
to have regularly performed their duties.35 on certiorari; REVERSES and SETS ASIDE the decision
promulgated on May 15, 2002; REINSTATES the orders
Assuming that only seven titled lots were the subject of issued on March 14, 2001 and May 18, 2001 by the
the deed of assignment of January 10, 1991, such lots Regional Trial Court in Cebu; DIRECTS the Regional Trial
should still be included in the inventory to enable the Court in Cebu to proceed with dispatch in Special
parties, by themselves, and with the assistance of the Proceedings No. 3094-CEB entitled Intestate Estate of the
RTC itself, to test and resolve the issue on the validity of late Emigdio Mercado, Thelma Aranas, petitioner, and to
the assignment. The limited jurisdiction of the RTC as an resolve the case; and ORDERS the respondents to pay the
intestate court might have constricted the determination costs of suit.
of the rights to the properties arising from that
deed,36 but it does not prevent the RTC as intestate court SO ORDERED.
from ordering the inclusion in the inventory of the
properties subject of that deed. This is because the RTC LUCAS P. BERSAMIN
as intestate court, albeit vested only with special and Associate Justice
limited jurisdiction, was still "deemed to have all the
necessary powers to exercise such jurisdiction to make it WE CONCUR:
effective."37
MARIA LOURDES P. A. SERENO
Lastly, the inventory of the estate of Emigdio must be Chief Justice
prepared and submitted for the important purpose of
resolving the difficult issues of collation and advancement
TERESITA J.
to the heirs. Article 1061 of the Civil Code required every MARTIN S.
LEONARDO-DE
compulsory heir and the surviving spouse, herein Teresita VILLARAMA, JR.
CASTRO
herself, to "bring into the mass of the estate any property Associate Justice
Associate Justice
or right which he (or she) may have received from the
decedent, during the lifetime of the latter, by way of
donation, or any other gratuitous title, in order that it may BIENVENIDO L. REYES
be computed in the determination of the legitime of each Associate Justice
heir, and in the account of the partition." Section 2, Rule
90 of the Rules of Court also provided that any CERTIFICATION
advancement by the decedent on the legitime of an heir
"may be heard and determined by the court having Pursuant to Section 13, Article VIII of the Constitution, I
jurisdiction of the estate proceedings, and the final order certify that the conclusions in the above Decision had
of the court thereon shall be binding on the person raising been reached in consultation before the case was
the questions and on the heir." Rule 90 thereby expanded assigned to the writer of the opinion of the Court's
the special and limited jurisdiction of the RTC as an Division.
intestate court about the matters relating to the inventory
of the estate of the decedent by authorizing it to direct MARIA LOURDES P. A. SERENO
the inclusion of properties donated or bestowed by Chief Justice
gratuitous title to any compulsory heir by the decedent. 38

The determination of which properties should be excluded

from or included in the inventory of estate properties was
well within the authority and discretion of the RTC as an
intestate court. In making its determination, the RTC
acted with circumspection, and proceeded under the
guiding policy that it was best to include all properties in
the possession of the administrator or were known to the
administrator to belong to Emigdio rather than to exclude
properties that could turn out in the end to be actually
part of the estate. As long as the RTC commits no patent
grave abuse of discretion, its orders must be respected as
part of the regular performance of its judicial duty. Grave
abuse of discretion means either that the judicial or quasi-
judicial power was exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, or that
the respondent judge, tribunal or board evaded a positive
duty, or virtually refused to perform the duty enjoined or
to act in contemplation of law, such as when such judge,
tribunal or board exercising judicial or quasi-judicial
powers acted in a capricious or whimsical manner as to be
equivalent to lack of jurisdiction.39

In light of the foregoing, the CA's conclusion of grave

abuse of discretion on the part of the RTC was
unwarranted and erroneous.

11

G.R. No. 160556 August 3, 2007
TEOFILO BAUTISTA, represented by FRANCISCO
MUÑOZ, Attorney-in-Fact, Petitioner,
vs.
ALEGRIA BAUTISTA, ANGELICA BAUTISTA,
PRISCILLA BAUTISTA, GILBERT BAUTISTA, JIM
BAUTISTA, GLENDA BAUTISTA, GUEN BAUTISTA,
GELACIO BAUTISTA, GRACIA BAUTISTA, PEDRO S.
TANDOC and CESAR TAMONDONG, Respondents.
DECISION
CARPIO MORALES, J.:
During her lifetime, Teodora Rosario was the owner of a
211.80-square meter parcel of land (the property) in
Poblacion, San Carlos City, Pangasinan, covered by
Transfer Certificate of Title (TCT) No. 12951. She died
intestate on January 19, 1970, leaving behind her spouse
Isidro Bautista (Isidro) and five children, namely: Teofilo
Bautista (Teofilo), Alegria Bautista (Alegria), Angelica
Bautista (Angelica), Pacita Bautista (Pacita) and Gil
Bautista (Gil).
On April 21, 1981, Isidro and four of his five children –
Pacita, Gil, Alegria, and Angelica – executed a Deed of
Extra-Judicial Partition1 of the property in which Isidro
waived his share in favor of his said four children. Teofilo
was excluded from the partition.
Alegria and Angelica, who, under the Deed of Extra-
Judicial Partition, acquired ½ of the property, sold the
same, by Deed of Absolute Sale dated May 14, 1981, to
their sibling Pacita and her common-law husband Pedro
Tandoc (Pedro).2
Pacita and Pedro soon obtained tax declarations 3 and TCT
No. 187774 in their names over 209.85 square meters of
12
the property including the shares they purchased from
Angelica and Alegria.
Pacita, with Pedro’s conformity, later conveyed via Deed
of Absolute Sale5 dated April 13, 1993 ½ of the property
in favor of Cesar Tamondong, Pedro’s nephew.
On January 24, 1994, herein petitioner Teofilo,
represented by his attorney-in-fact Francisco Muñoz, filed
a Complaint6 against his siblings Alegria and Angelica,
along with Pedro (the common-law husband of his already
deceased sister Pacita), Priscilla Bautista (wife of his
already deceased brother Gil), Pricilla’s children Gilbert,
Jim, Glenda, Guen, and Gelacio and Cesar Tamondong
before the Regional Trial Court (RTC) of San Carlos City,
for annulment of documents, partition, recovery of
ownership, possession and damages.
In his complaint, petitioner claimed that his co-heirs
defrauded him of his rightful share of the property and
that the deed of sale executed by Pacita in favor of Cesar
Tamondong was fictitious as it was impossible for her to
have executed the same in Manila, she being already
seriously ill at the time.7
In their Answer,8 the defendants-herein respondents
sisters Alegria and Angelica, who were joined therein by
their co-defendants-respondents Priscilla, Gilbert, Jim,
Glenda, Guen, Gelacio, and Gracia, claimed that it was
Pacita who caused the execution of the Deed of Extra-
Judicial Partition and because they trusted Pacita, they
signed the document without scrutinizing it; and that they
learned about the contents of the partition only upon
Teofilo’s filing of the Complaint.
By way of cross-claim9 against Pedro and Cesar
Tamondong, the answering defendants-respondents
claimed that a few weeks after the partition, Pacita
approached Angelica and Alegria to borrow their share in
the property on her representation that it would be used
as security for a business loan; and that agreeing to
accommodate Pacita, Angelica and Alegria signed a
document which Pacita prepared which turned out to be
the deed of absolute sale in Pacita’s favor.
In their Answer with Counterclaim,10 Pedro and Cesar
Tamondong claimed that they were buyers in good
faith.11 In any event, they contended that prescription had
set in, and that the complaint was a mere rehash of a
previous complaint for falsification of public document
which had been dismissed by the prosecutor’s office.12
By Decision13 of June 24, 1999, Branch 57 of the RTC of
San Carlos City rendered judgment in favor of Teofilo,
disposing as follows:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered:
1) Declaring as null and void and of no force and effect
the following documents:
a) Deed of Extra-Judicial Partition dated April 21, 1981;
b) Deed of Absolute Sale [d]ated May 14, 1981;
c) Transfer Certificate of Title No. 18777;
d) Tax Declaration Nos. 59941, 45999, and 46006; was registered and inscribed on Transfer Certificate of
Title 12951, on 21 December 1981. Clearly, the complaint
e) Deed of Absolute Sale dated April 13, 1993; was filed twelve (12) years and twenty-seven (27) days
after the inscription of the deed of extra-judicial partition
2) Ordering the partition of the land in question among on TCT 12951. Hence, even if We consider defendant-
the compulsory heirs of the late Spouses Isidro Bautista appellee’s complaint as an action for reconveyance
and Teodora Rosario against plaintiff-appellants on the basis of implied trust,
we find and so hold that his remedy for reconveyance has
also prescribed.20 (Underscoring supplied)
3) Ordering defendants Cesar Tamondong and Pedro
Tandoc to vacate the premises.
As gathered from the above-quoted portion of its
decision, the Court of Appeals applied the prescriptive
14
No pronouncement[s] as to cost. (Underscoring
periods for annulment on the ground of fraud and for
supplied)
reconveyance of property under a constructive trust.
On appeal by Pedro and Cesar Tamondong, the Court of
The extra-judicial partition executed by Teofilo’s co-heirs
Appeals, by Decision15 of February 21, 2003, reversed and
was invalid, however. So Segura v. Segura21 instructs:
set aside the trial court’s decision and dismissed Teofilo’s
complaint on the ground of prescription. 16 His Motion for
Reconsideration17 having been denied,18 Teofilo filed the x x x The partition in the present case was invalid
present Petition for Review on Certiorari.19 because it excluded six of the nine heirs who were
entitled to equal shares in the partitioned property. Under
the rule, "no extra-judicial settlement shall be binding
The petition is impressed with merit.
upon any person who has not participated therein or had
no notice thereof." As the partition was a total nullity and
The Court of Appeals, in holding that prescription had set did not affect the excluded heirs, it was not correct for the
in, reasoned: trial court to hold that their right to challenge the partition
had prescribed after two years x x x22 (Underscoring
Unquestionably, the Deed of Extra-judicial Partition is supplied)
invalid insofar as it affects the legitimate share pertaining
to the defendant-appellee in the property in The deed of extra-judicial partition in the case at bar
question.1avvphi1 There can be no question that the being invalid, the action to have it annulled does not
Deed of Extra-judicial Partition was fraudulently obtained. prescribe.23
Hence, an action to set it aside on the ground of fraud
could be instituted. Such action for the annulment of the
Since the deed of extra-judicial partition is invalid, it
said partition, however, must be brought within four years
transmitted no rights to Teofilo’s co-heirs.24 Consequently,
from the discovery of the fraud. Significantly, it cannot be
the subsequent transfer by Angelica and Alegria of ½ of
denied, either, that by its registration in the manner
the property to Pacita and her husband Pedro, as well as
provided by law, a transaction may be known actually or
the transfer of ½ of the property to Cesar Tamondong is
constructively.
invalid, hence, conferring no rights upon the transferees
under the principle of nemo dat quod non habet.25
In the present case, defendant-appellee is deemed to
have been constructively notified of the extra-judicial
WHEREFORE, the petition is GRANTED. The decision of
settlement by reason of its registration and annotation in
the court a quo is SET ASIDE and the Decision of the
the certificate of title over the subject lot on December
Regional Trial Court of San Carlos City, Pangasinan,
21, 1981. From the time of its registration, defendant-
Branch 57 is REINSTATED.
appellee had four (4) years or until 21 December 1985,
within which to file his objections or to demand the
appropriate settlement of the estate. Unfortunately, SO ORDERED.
defendant-appellee failed to institute the present civil
action within said period, having filed the same only on 17 CONCHITA CARPIO MORALES
January 1994 or more than twelve (12) years from the Associate Justice
registration of the deed of extra-judicial partition. Hence,
defendant-appellee’s right to question the deed of extra- WE CONCUR:
judicial partition has prescribed.
LEONARDO A. QUISUMBING
Even on the extreme assumption that defendant- Associate Justice
appellee’s complaint in Civil Case No. SC-1797 is an action Chairperson
for reconveyance of a portion of the property which
rightfully belongs to him based upon an implied trust ANTONIO T. CARPIO DANTE O. TINGA
resulting from fraud, said remedy is already barred by Associate Justice Associate Justice
prescription. An action of reconveyance of land based
upon an implied or constructive trust prescribes after ten
PRESBITERO J. VELASCO, JR.
years from the registration of the deed or from the
Associate Justice
issuance of the title.
ATTESTATION
xxxx
I attest that the conclusions in the above Decision had
The complaint of defendant-appellee was filed only on 17
been reached in consultation before the case was
January 1994, while the deed of extra-judicial partition
13
assigned to the writer of the opinion of the Court’s
Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution,

and the Division Chairperson’s Attestation, I certify that
the conclusions in the above decision had been reached in
consultation before the case was assigned to the writer of
the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

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