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[G.R. No. 124715.

January 24, 2000] As to the power and authority of the probate court, petitioner
relies heavily on the principle that a probate court may pass upon
RUFINA LUY LIM petitioner, vs. COURT OF APPEALS, AUTO title to certain properties, albeit provisionally, for the purpose of
TRUCK TBA CORPORATION, SPEED DISTRIBUTING, INC., determining whether a certain property should or should not be
ACTIVE DISTRIBUTORS, ALLIANCE MARKETING included in the inventory.
CORPORATION, ACTION COMPANY, INC. respondents.
Resolving the issue at hand, a perusal of the records would reveal
that no strong compelling evidence was ever presented by
petitioner to bolster her bare assertions as to the title of the
BUENA, J.:
deceased Pastor Y. Lim over the properties. Even so, P.D. 1529,
FACTS: otherwise known as, "The Property Registration Decree", proscribes
collateral attack on Torrens Title, hence:
Petitioner Rufina Luy Lim is the surviving spouse of the late Pastor
Y. Lim whose estate is the subject of probate proceedings. Inasmuch as the real properties included in the inventory of the
estate of the late Pastor Y. Lim are in the possession of and
Private respondents are corporations formed, organized and are registered in the name of private respondent corporations,
existing under Philippine laws and which owned real properties which under the law possess a personality separate and distinct
covered under the Torrens system. from their stockholders, and in the absence of any cogency to
shred the veil of corporate fiction, the presumption of
On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as conclusiveness of said titles in favor of private respondents should
surviving spouse filed a petition for the administration of the stand undisturbed.
estate of Pastor Y. Lim before the Regional Trial Court.
Accordingly, the probate court was remiss in denying private
Private respondent corporations, whose properties were included respondents motion for exclusion. While it may be true that the
in the inventory of the estate of Pastor Y. Lim, then filed a motion Regional Trial Court, acting in a restricted capacity and exercising
for the lifting of lis pendens and motion for exclusion of certain limited jurisdiction as a probate court, is competent to issue orders
properties from the estate of the decedent. involving inclusion or exclusion of certain properties in the
inventory of the estate of the decedent, and to adjudge, albeit,
RTC= granted the respondents motion but thereafter reversed the
provisionally the question of title over properties, it is no less true
same upon motion by petitioner. The probate court appointed
that such authority conferred upon by law and reinforced by
Rufina Lim as special administrator and Miguel Lim and Lawyer
jurisprudence, should be exercised judiciously, with due regard and
Donald Lee, as co-special administrators of the estate of Pastor Y.
caution to the peculiar circumstances of each individual case.
Lim, after which letters of administration were accordingly issued.
The court denied anew private respondents motion for exclusion Notwithstanding that the real properties were duly registered
under the Torrens system in the name of private respondents, and
CA= ruled in favor of private respondents
as such were to be afforded the presumptive conclusiveness of
title, the probate court obviously opted to shut its eyes to this
Petitioner’s Contention= argues that the parcels of land covered
gleamy fact and still proceeded to issue the impugned orders.
under the Torrens system and registered in the name of private
respondent corporations should be included in the inventory of
ISSUE (2): Whether or not the doctrine of piercing the veil of
the estate of the decedent Pastor Y. Lim, alleging that after all the
corporate entity is applicable to be able to include in the probate
determination by the probate court of whether these properties
proceedings the company formed by deceased Pastor Y. Lim.
should be included or not is merely provisional in nature, thus, not
conclusive and subject to a final determination in a separate action RULING: No. It is settled that a corporation is clothed with
brought for the purpose of adjudging once and for all the issue of personality separate and distinct from that of the persons
title. composing it. It may not generally be held liable for that of the
persons composing it. It may not be held liable for the personal
ISSUE: Whether or not the subject real properties should be
indebtedness of its stockholders or those of the entities connected
included in the inventory of the estate of the Late Pastor Y. Lim.
with it.

RULING: NO
The corporate mask may be lifted and the corporate veil may be
pierced when a corporation is just but the alter ego of a person or
Before delving into the merits of the case, take note that the
of another corporation. Where badges of fraud exist, where public
determination of which court exercises jurisdiction over matters of
convenience is defeated; where a wrong is sought to be justified
probate depends upon the gross value of the estate of the
thereby, the corporate fiction or the notion of the legal entity
decedent.
should come to naught.
Further, the test in determining the applicability of the doctrine of
piercing the veil of corporate fiction is as follows:

1.) Control, not merely the majority or complete stock control, but
complete domination, not only of finances but of policy and
business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time so separate
mind, will or existence of its own;

2.) Such control must have been used by the defendant to commit
fraud on wrong to perpetuate the violation of a statutory or other
positive legal duty, on dishonest and unjust act in contravention of
plaintiffs legal right; and

3.) The aforesaid control and breach of duty must proximately


cause the injury or unjust loss complained of. The absence of any
of these elements prevent “piercing the corporate veil.”

Mere ownership by a single stockholder or by another corporation


of all or nearly all of the capital stock of a corporation is not of
itself a sufficient reason for disregarding the fiction of separate
personalities.

Moreover, to disregard the separate juridical personality of a


corporation, the wrong doing must be clearly and convincingly
established, it cannot be presumed.

Granting arguendo that the Regional Trial Court in this case was
not merely acting in a limited capacity as a probate court,
petitioner nonetheless failed to adduce competent evidence that
would have justified the court to impale the veil of corporate
fiction. Truly, the reliance reposed by petitioner on the affidavits
executed by Teresa Lim and Lani Wenceslao is unavailing
considering that the aforementioned documents possess no
weighty probative value pursuant to the hearsay rule. Besides it is
imperative for us to stress that such affidavits are inadmissible in
evidence inasmuch as the affiants were not at all presented during
the course of the proceedings in the lower court.
G.R. No. 156407, January 15, 2014 January 30, 1979 for 300 shares of stock of Cebu Emerson worth
P30,000.00.[6]
THELMA M. ARANAS, Petitioner, v. TERESITA V. MERCADO,
FELIMON V. MERCADO, CARMENCITA M. SUTHERLAND,
RICHARD V. MERCADO, MA. TERESITA M. ANDERSON, AND RTC= the RTC issued an order finding and holding that the
FRANKLIN L. MERCADO, Respondents. inventory submitted by Teresita had excluded properties that
should be included.

CA= Partly granted the petition for certiorari. It concluded that the
BERSAMIN, J.: RTC committed grave abuse of discretion for including properties
in the inventory notwithstanding their having been transferred to
The probate court is authorized to determine the issue of
Mervir Realty by Emigdio during his lifetime
ownership of properties for purposes of their inclusion or exclusion
from the inventory to be submitted by the administrator, but its Issue: Did the CA properly determine that the RTC committed
determination shall only be provisional unless the interested grave abuse of discretion amounting to lack or excess of
parties are all heirs of the decedent, or the question is one of jurisdiction in directing the inclusion of certain properties in the
collation or advancement, or the parties consent to the assumption estate of decedent.
of jurisdiction by the probate court and the rights of third parties
are not impaired. Its jurisdiction extends to matters incidental or Ruling: NO
collateral to the settlement and distribution of the estate, such as
the determination of the status of each heir and whether property It is unavoidable to find that the CA, in reaching its conclusion,
included in the inventory is the conjugal or exclusive property of ignored the law and the facts that had fully warranted the assailed
the deceased spouse. orders of the RTC.

Under Section 6(a), Rule 78 of the Rules of Court, the letters of


FACTS: administration may be granted at the discretion of the court to the
surviving spouse, who is competent and willing to serve when the
Emigdio S. Mercado (Emigdio) died intestate. He inherited and person dies intestate. Upon issuing the letters of administration to
acquired real properties during his lifetime. He owned corporate the surviving spouse, the RTC becomes duty-bound to direct the
shares in Mervir Realty Corporation (Mervir Realty) and Cebu preparation and submission of the inventory of the properties of
Emerson Transportation Corporation (Cebu Emerson). He assigned the estate, and the surviving spouse, as the administrator, has the
his real properties in exchange for corporate stocks of Mervir duty and responsibility to submit the inventory within three
Realty, and sold his real property in Badian, Cebu to Mervir Realty. months from the issuance of letters of administration pursuant to
Rule 83 of the Rules of Court, viz:
Thelma, his child from his first marriage, filed in the Regional Trial
Court a petition for the appointment of Teresita (the second wife) Section 1. Inventory and appraisal to be returned within three
as the administrator of Emigdio's estate. The RTC granted the months. Within three (3) months after his appointment every
petition and the letters of administration in favor of Teresita were executor or administrator shall return to the court a true
thereafter issued. 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
As the administrator, Teresita submitted an inventory of the estate order one or more of the inheritance tax appraisers to give his or
of Emigdio indicating therein that at the time of his death, Emigdio their assistance.
had "left no real properties but only personal properties".
The usage of the word all in Section 1, supra, demands the
Claiming that Emigdio had owned other properties that were inclusion of all the real and personal properties of the decedent in
excluded from the inventory, Thelma moved that the RTC direct the inventory.[22] However, the word all is qualified by the phrase
Teresita to amend the inventory, and to be examined regarding it. which has come into his possession or knowledge, which signifies
The RTC granted Thelma's motion. 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
On January 21, 1993, Teresita filed a compliance with the order that no properties appearing to belong to the decedent can be
supporting her inventory with copies of three certificates of stocks excluded from the inventory, regardless of their being in the
covering the 44,806 Mervir Realty shares of stock;[4] the deed of possession of another person or entity.
assignment executed by Emigdio involving real properties in
exchange for 44,407 Mervir Realty shares of stock with total par The objective of the Rules of Court in requiring the inventory and
value of P4,440,700.00;[5] and the certificate of stock issued on appraisal of the estate of the decedent is "to aid the court in
revising the accounts and determining the liabilities of the regime was the conjugal partnership of gains.29 For purposes of
executor or the administrator, and in making a final and equitable the settlement of Emigdio’s estate, it was unavoidable for Teresita
distribution (partition) of the estate and otherwise to facilitate the to include his shares in the conjugal partnership of gains. The party
administration of the estate." [23]
Hence, the RTC that presides over asserting that specific property acquired during that property
the administration of an estate is vested with wide discretion on regime did not pertain to the conjugal partnership of gains carried
the question of what properties should be included in the the burden of proof, and that party must prove the exclusive
inventory. 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
There is no dispute that the jurisdiction of the trial court as an provisionally liquidated to establish who the real owners of the
intestate court is special and limited. The trial court cannot affected properties were,31 and which of the properties should
adjudicate title to properties claimed to be a part of the estate but form part of the estate of Emigdio. The portions that pertained to
are claimed to belong to third parties by title adverse to that of the the estate of Emigdio must be included in the inventory.
decedent and the estate, not by virtue of any right of inheritance
from the decedent. All that the trial court can do regarding said Moreover, It was found that in Civil Case No. CEB–12692, a dispute
properties is to determine whether or not they should be included for the ownership of Lot 3353, was resolved in favor of the estate
in the inventory of properties to be administered by the of Emigdio, and the TCT covering the said lot was still in Emigdio’s
administrator. Such determination is provisional and may be still name even 10 years after his death.
revised.
Assuming that only seven titled lots were the subject of the deed
of assignment, such lots should still be included in the inventory to
However, this general rule is subject to exceptions as justified by enable the parties, by themselves, and with the assistance of the
expediency and convenience. RTC itself, to test and resolve the issue on the validity of the
assignment. The limited jurisdiction of the RTC as an intestate
court might have constricted the determination of the rights to the
First, the probate court may provisionally pass upon in an
properties arising from that deed,[36] but it does not prevent the
intestate or a testate proceeding the question of inclusion in,
RTC as intestate court from ordering the inclusion in the inventory
or exclusion from, the inventory of a piece of property without
of the properties subject of that deed. This is because the RTC as
prejudice to final determination of ownership in a separate
intestate court, albeit vested only with special and limitd
action. Second, if the interested parties are all heirs to the estate,
jurisdiction, was still "deemed to have all the necessary powers to
or the question is one of collation or advancement, or the parties
exercise such jurisdiction to make it effective."[37]
consent to the assumption of jurisdiction by the probate court
and the rights of third parties are not impaired, then the
The determination of which properties should be excluded from or
probate court is competent to resolve issues on ownership.
included in the inventory of estate properties was well within the
Verily, its jurisdiction extends to matters incidental or collateral to
authority and discretion of the RTC as an intestate court. In making
the settlement and distribution of the estate, such as the
its determination, the RTC acted with circumspection, and
determination of the status of each heir and whether the
proceeded under the guiding policy that it was best to include all
property in the inventory is conjugal or exclusive property of
properties in the possession of the administrator or were known to
the deceased spouse.[27] (Italics in the original; bold emphasis
the administrator to belong to Emigdio rather than to exclude
supplied)
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
It is clear to us that the RTC took pains to explain the factual bases discretion, its orders must be respected as part of the regular

for its directive for the inclusion of the properties in question in its performance of its judicial duty.
assailed order of March 14, 2001. 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.

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
G.R. No. 198680 July 8, 2013 RTC, in an ordinary action for cancellation of title and
reconveyance, from granting the same.
HEIRS OF MAGDALENO YPON, NAMELY, ALVARO YPON,
ERUDITA Y. BARON, CICERO YPON, WILSON YPON, VICTOR In the case of Heirs of Teofilo Gabatan v. CA,21 the Court, citing
YPON, AND HINIDINO Y. PEÑALOSA, PETITIONERS, several other precedents, held that the determination of who are
vs. the decedent’s lawful heirs must be made in the proper special
GAUDIOSO PONTERAS RICAFORTE A.K.A. "GAUDIOSO E. proceeding for such purpose, and not in an ordinary suit for
YPON," AND THE REGISTER OF DEEDS OF TOLEDO recovery of ownership and/or possession, as in this case:
CITY, RESPONDENTS.
Jurisprudence dictates that the determination of who are the legal
heirs of the deceased must be made in the proper special
proceedings in court, and not in an ordinary suit for recovery of
PERLAS-BERNABE, J.: ownership and possession of property.This must take precedence
over the action for recovery of possession and ownership. The
Court has consistently ruled that the trial court cannot make a
FACTS: On July 29, 2010, petitioners, together with some of their declaration of heirship in the civil action for the reason that such a

cousins, filed a complaint for Cancellation of Title and declaration can only be made in a special proceeding. Under
Reconveyance with Damages against respondent Gaudioso Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is

Ponteras Ricaforte. They alleged that Magdaleno Ypon died defined as one by which a party sues another for the enforcement
intestate and childless on June 28, 1968, leaving behind several or protection of a right, or the prevention or redress of a wrong
lots. Claiming to be the sole heir of Magdaleno, Gaudioso executed while a special proceeding is a remedy by which a party seeks to
an Affidavit of Self-Adjudication and caused the cancellation of the establish a status, a right, or a particular fact. It is then decisively

aforementioned certificates of title, leading to their subsequent clear that the declaration of heirship can be made only in a special
transfer in his name to the prejudice of petitioners who are proceeding inasmuch as the petitioners here are seeking the
Magdaleno’s collateral relatives and successors-in-interest establishment of a status or right.

In his Answer, Gaudioso alleged that he is the lawful son of By way of exception, the need to institute a separate special
Magdaleno as evidenced by: (a) his certificate of Live Birth; (b) two proceeding for the determination of heirship may be dispensed

(2) letters from Polytechnic School; and (c) a certified true copy of with for the sake of practicality, as when the parties in the civil case
his passport. Further, by way of affirmative defense, he claimed
9 had voluntarily submitted the issue to the trial court and already

that: (a) petitioners have no cause of action against him; (b) the presented their evidence regarding the issue of heirship, and the

complaint fails to state a cause of action; and (c) the case is not RTC had consequently rendered judgment thereon, or when a
prosecuted by the real parties-in-interest, as there is no showing special proceeding had been instituted but had been finally closed

that the petitioners have been judicially declared as Magdaleno’s and terminated, and hence, cannot be re-opened.

lawful heirs. 10
In this case, none of the foregoing exceptions, or those of similar

RTC= ruled in favor of respondent, finding that the subject nature, appear to exist. Hence, there lies the need to institute the

complaint failed to state a cause of action against Gaudioso. It proper special proceeding in order to determine the heirship of the
observed that while the plaintiffs therein had established their parties involved.
relationship with Magdaleno in a previous special proceeding for
Thus, concordant with applicable jurisprudence, since a
the issuance of letters of administration this did not mean that
determination of heirship cannot be made in an ordinary action for
they could already be considered as the decedent’s compulsory
recovery of ownership and/or possession, the dismissal of the
heirs. Quite the contrary, Gaudioso satisfactorily established the
complaint for cancellation of title and reconveyance was altogether
fact that he is Magdaleno’s son through the evidences he
proper. In this light, it must be pointed out that the RTC erred in
presented
ruling on Gaudioso’s heirship which should, as herein discussed, be
ISSUE: whether or not the RTC’s dismissal of the case on the threshed out and determined in the proper special proceeding. As
ground that the subject complaint failed to state a cause of action such, the foregoing pronouncement should therefore be devoid of
was proper. any legal effect.

RULING: YES

While the foregoing allegations, if admitted to be true, would


consequently warrant the reliefs sought for in the said complaint,
the rule that the determination of a decedent’s lawful heirs should
be made in the corresponding special proceeding precludes the