Aranas v. Mercado
REITERATIONFacts
The Antecedents: Emigdio S. Mercado died intestate on January 12, 1991, survived by his second wife, Teresita V. Mercado, and their five children, as well as his two children from his first marriage, petitioner Thelma M. Aranas and respondent Franklin L. Mercado. Emigdio had acquired and inherited various real and personal properties during his lifetime, including corporate shares in Mervir Realty Corporation and Cebu Emerson Transportation Corporation. He also assigned some real properties in exchange for Mervir Realty stocks and sold a property in Badian, Cebu, to Mervir Realty. Procedural History: On June 3, 1991, Thelma filed a petition for the appointment of Teresita as administrator of Emigdio's estate, which was granted. Teresita submitted an inventory of the estate, listing only personal properties and corporate shares, but excluding real properties. Thelma moved to amend the inventory, asserting that Emigdio owned other properties. After several hearings and Teresita's compliance with the court's order to submit supporting documents, the Regional Trial Court (RTC) denied the approval of the inventory on March 14, 2001, ordering Teresita to re-do the inventory to include excluded properties and to render an accounting. The RTC denied Teresita's motion for reconsideration on May 18, 2001. Teresita, joined by other heirs, then filed a petition for certiorari with the Court of Appeals (CA), assailing the RTC's orders. The Petition: The Court of Appeals, in a decision promulgated on May 15, 2002, partially granted the petition for certiorari, reversing and setting aside the RTC's orders concerning the inclusion of certain real properties and Mervir Realty shares in the inventory, and affirming the orders in all other respects. The CA opined that the RTC committed grave abuse of discretion by including properties already transferred to Mervir Realty and by disregarding the titles in the corporation's name. Thelma M. Aranas filed a petition for review on certiorari with the Supreme Court, arguing that the CA erred in finding grave abuse of discretion by the RTC and in reversing the RTC's orders regarding the inclusion of properties in the inventory.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court committed grave abuse of discretion amounting to lack or excess of jurisdiction in directing the inclusion of certain properties in the inventory of the estate of the decedent. Whether certiorari was the proper recourse to assail the questioned orders of the RTC.
Ruling
The Supreme Court GRANTED the petition for review on certiorari, REVERSED and SET ASIDE the decision of the Court of Appeals, and REINSTATED the orders of the Regional Trial Court dated March 14, 2001 and May 18, 2001. The RTC was directed to proceed with dispatch in the intestate estate proceedings.
Ratio Decidendi
On whether the RTC committed grave abuse of discretion: The Court ruled in the negative, finding the CA's conclusion to be erroneous. The RTC, as an intestate court, has wide discretion in determining what properties should be included in the inventory to aid in the settlement and distribution of the estate. The Court found that the RTC had valid factual bases for directing the inclusion of the properties, including: (a) Emigdio's inherited shares from Severina Mercado, which were admitted by the administratrix to have been excluded; (b) shares in Mervir Realty paid for by conjugal funds, which should be provisionally liquidated; (c) a bank account opened during the marriage, also partaking of conjugal character; (d) Lot No. 3353, which remained registered in Emigdio's name and was the subject of a previous case where the estate claimed ownership; and (e) the assignment of several parcels of land to Mervir Realty two days before Emigdio's death, which the RTC considered a transfer in contemplation of death, subject to estate tax. The Court emphasized that the RTC's determination of inclusion was provisional and subject to final determination in a separate action, but the RTC acted within its authority in ordering inclusion to facilitate the proceedings. The Court also noted that Mervir Realty, being a family corporation, did not intervene in a previous case concerning Lot 3353, and the deed of sale's notarization did not guarantee its legal efficacy, especially given the circumstances of Emigdio's illness and proximity to death when the assignment was made. The Torrens system's integrity does not preclude inquiry into the validity of transfers, especially when fraud or damage to third parties is not proven, and the RTC, even with limited jurisdiction, has the power to make its jurisdiction effective. On the propriety of certiorari: The Court held that certiorari was the proper recourse. The orders of the RTC denying the approval of the inventory and the motion for reconsideration were interlocutory because they did not finally determine the ownership of the properties. An appeal would not be the correct remedy against such orders. However, an interlocutory order may be the subject of a special civil action for certiorari under Rule 65 if it was rendered without or in excess of jurisdiction or with grave abuse of discretion. The Court cited Pahila-Garrido v. Tortogo and Valero Vda. De Rodriguez v. Court of Appeals to distinguish between final and interlocutory orders and the remedies available against them.
Main Doctrine
A probate court, in the exercise of its limited jurisdiction, may provisionally pass upon the issue of ownership of properties for purposes of inclusion or exclusion from the inventory of an estate. Its determination is not conclusive and is subject to final adjudication in a separate action, unless all interested parties are heirs, or the question involves collation or advancement, or the parties consent to its jurisdiction without impairing third-party rights. Resort to certiorari is proper against an interlocutory order issued with grave abuse of discretion.