Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-39532 July 20, 1979

Testate Estate of Jose M. Valero, FLORA VALERO VDA. DE RODRIGUEZ and ROSIE
VALERO DE GUTIERREZ, petitioners-appellants,
vs.
COURT OF APPEALS and CARMEN VALERO-RUSTIA, respondents-appellees.

Amboriso Padilla Law Office and Iglesia & Associates for appellants.

Angel P. Purisima for appellees.

AQUINO, J.:1äwphï1.ñët

This is supposedly a case about collation. As factual background, it should be stated that the
spouses, Beatriz Bautista and Jose M. Valero, did not beget any child during their marriage In
1951 Beatriz adopted Carmen (Carmencita) Bautista. Jose wanted also to adopt her but
because, by his first marriage, he had two children named Flora Valero Vda. de Rodriguez and
Rosie Valero Gutierrez. he was disqualified to adopt Carmen. Jose manifested in the adoption
proceeding that he consented to the use by Carmen of his surname Valero. (See Civil Case No.
12475, Manila CFI; Art. 338[1], Civil Code and art. 28, Child and Youth Welfare Code.)

On September 18, 1964, Jose M. Valero donated to Carmen B. Valero (who was already
married to Doctor Sergio Rustia) his one-half proindiviso share (apparently his inchoate share)
in two conjugal lots, with the improvements thereon, located at San Lorenzo Village, Makati,
Rizal, with an area of 1,500 square meters. His wife, Beatriz, consented to the donation.
However, the deed of donation was not registered.

On January 13, 1966, Jose M. Valero, who was then seventy-three years old, executed his last
will and testament wherein he enumerated the conjugal properties of himself and his wife,
including the two San Lorenzo Village lots. In that will, he did not mention the donation. He
devised to his wife properties sufficient to constitute her legitime and bequeathed the remainder
to his two children, Mrs. Rodriguez and Mrs. Gutierrez.

About a month later, or on February 15, 1966, the Valero spouses, by means of a deed of
absolute sale, conveyed the San Lorenzo Village lots and the improvements thereon to Carmen
B. Valero-Rustia for the sum of one hundred twenty thousand pesos. The sale was registered
on the following day. Transfer Certificates of Title Nos. 163270 and 163271 were issued to the
vendee, Mrs. Rustia.

On December 4, 1967 she mortgaged the two lots to the Quezon City Development Bank as
security for a loan of fifty thousand pesos (page 204, Rollo).
Beatriz B. Valero died intestate on September 12, 1972, survived by her husband and her
adopted child. Her estate is pending settlement in Special Proceeding No. 88896 of the Court of
First Instance of Manila. Mrs. Rustia was named administratrix of her adopted mother's estate.

More than a month later, or on October 18, 1972, Jose M. Valero died testate, survived by his
two children, Mrs. Rodriguez and Mrs. Gutierrez. His will was duly probated in Special
Proceeding No. 88677, also of the Court of First Instance of Manila. Lawyer Celso F. Unson, the
executor, submitted an inventory wherein, following the list of conjugal assets in the testator's
will, the two San Lorenzo Village lots were included as part of the testate estate.

That inclusion provoked Mrs. Rustia, the adopted child of Mrs. Valero, and Mrs. Rodriguez and
Mrs. Gutierrez, the legitimate children of the testator, Jose M. Valero, to file (through Mrs.
Rustia's lawyer) in the testate proceeding a motion for the exclusion of the two San Lorenzo
Village lots from the testator's inventoried estate.

Adduced as reason for the exclusion is the fact that since February 16, 1966 Mrs. Rustia has
been the registered owner of the lots as shown by two Torrens titles, copies of which were
attached to the motion.

The executor opposed the motion on the ground that the two lots were donated to Mrs. Rustia
and the donation would allegedly involve collation and the donee's title to the lots. The executor
revealed that he was informed by Mrs. Gutierrez and Mrs. Rodriguez (supposed movants) that
the two lots should be included in the inventory. Thus, the issue of collation was prematurely
raised.

The probate court in its order of August 9, 1973 excluded the two lots from the inventory of the
testator's estate but with the understanding "that the same are subject to collation".

On December 4, 1973 or one hundred twelve days after Mrs. Rustia was served with a copy of
that order, she filed a motion for its reconsideration. She insisted that she is the owner of the
two San Lorenzo Village lots as indicated in the Torrens titles. No one opposed that motion. At
the hearing of that motion, Mrs. Rustia's lawyer apprised the court that the executor informed
him over the phone that he was not opposing the motion.

The probate court in its order of December 14, 1973 ruled that the two lots were unconditionally
excluded from the inventory of Jose M. Valero's estate, meaning "that they are not subject to
collation". That order is the bone of contention in this case.

Mrs. Rodriguez (without being joined by her sister, Mrs. Gutierrez) filed a motion for the
reconsideration of the order of December 14, 1973. She alleged that the two San Lorenzo
Village lots were really conveyed to Mrs. Rustia by way of donation because the consideration
for the sale was allegedly only one-fifth of the true value of the lots. Mrs. Rodriguez further
contended that the order of August 9, 1973 was final in character.

In reply, Mrs. Rustia countered that the prior order was interlocutory and that in 1966 the true
value of the two lots was around P120,000 and that their value increased considerably in 1973
or 1974. Moreover, the relatively low price of the sale could be attributed to the fact that Mrs.
Rustia and her husband lived with the Valeros and were taking care of them.

The probate court denied the motion for reconsideration. Mrs. Rodriguez and Mrs. Gutierrez, in
their petition for certiorari in the Court of Appeals, assailed the probate court's order declaring
that the two lots were not subject to collation.

The Court of Appeals held that the order of exclusion dated August 9, 1973 was interlocutory
and that it could be changed or Modified at anytime during the course of the administration
proceedings.

It further held that it was immaterial whether the two lots were donated or sold to Mrs. Rustia as
"a mere subterfuge to avoid payment of the donor's and donee's taxes". According to the
Appellate Court, it was immaterial because under article 1061 of the Civil Code, only
compulsory heirs are required to make collation for the determination of their legitimes and,
under section 2, Rule 90 of the Rules of Court, only heirs are involved in questions as to
advancement and Mrs. Rustia is not an heir of the testator, Jose M. Valero (Vda. de Rodriguez
vs. Valero Rustia, CA-G. R. No. SP- 02944, August 28, 1974, per G. S. Santos, Gaviola, Jr. and
De Castro, JJ.).

From that decision, an appeal was made to this Court. The appeal was not given due course.
However, upon motion for reconsideration and over Mrs. Rustia's opposition, the appeal was
later allowed.

The appellants' only assignment of error is that the Court of Appeals should have held that the
probate court's order of exclusion dated August 9, 1973 was not interlocutory but was a final
and appealable order valid that the order of December 14, 1973 modifying the order of August 3
is void.

We hold that the order of exclusion dated August 9, 1973 was not a final order. It was
interlocutory in the sense that it did not settle once and for all the title to the San Lorenzo Village
lots. The probate court in the exclusion incident could not determine the question of title.

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).

We hold further that the dictum of the Court of Appeals and the probate court that the two
disputed lots are not subject to collation was a supererogation and was not necessary to the
disposition of the case which merely involved the issue of inclusion in, or exclusion from, the
inventory of the testator's estate. The issue of collation was not yet justifiable at that early stage
of the testate proceeding. It is not necessary to mention in the order of exclusion the
controversial matter of collation.

Whether collation may exist with respect to the two lots and whether Mrs. Rustia's Torrens titles
thereto are indefeasible are matters that may be raised later or may not be raised at all. How
those issues should be resolved, if and when they are raised, need not be touched upon in the
adjudication of this appeal.

The intestate and testate proceedings for the settlement of the estates of the deceased Valero
spouses were consolidated, as ordered by the lower court on November 21, 1974, so that the
conjugal estate of the deceased spouses may be properly liquidated, as contemplated in section
2, Rule 73 of the Rules of Court and Act No. 3176 (Pages 223 and 235-6, Rollo).

We have examined the expedientes of the two cases. We found that the proceedings have not
yet reached the stage when the question of collation or advancement to an heir may be raised
and decided. The numerous debts of the decedents are still being paid. The net remainder
(remanente liquido) of their conjugal estate has not yet been determined. On the other hand, up
to this time, no separate action has been brought by the appellants to nullify Mrs. Rustia's
Torrens titles to the disputed lots or to show that the sale was in reality a donation.

In this appeal, it is not proper to pass upon the question of collation and to decide whether Mrs.
Rustia's titles to the disputed lots are questionable. The proceedings below have not reached
the stage of partition and distribution when the legitimes of the compulsory heirs have to be
determined.

WHEREFORE, we affirm the decision of the Court of Appeals and the orders of the, lower court
dated August 9 and December 14, 1973, excluding from the inventory of Jose M. Valeros estate
the two San Lorenzo Village lots now registered in the name of Carmen B. Valero-Rustia, but
we delete from that decision and the two orders any ruling regarding collation which is a matter
that may be passed upon by the probate court at the time when it is seasonably raised by the
interested parties, if it is ever raised at all. No costs.

SO ORDERED.

Fernando, C.J., Makasiar, Antonio, Concepcion, Jr., Fernandez, Guerrero, Abad Santos and
Melencio-Herrera, JJ., concur.1äwphï1.ñët

Santos and De Castro, JJ., took no part.

Separate Opinions

BARREDO, J., concurring:

For even assuming that the order of exclusion had become final insofar as the inventory is
concerned, said order could not have any final binding effect on the issue of collation.

TEEHANKEE, J., dissenting:

I vote for the unqualified affirmance of respondent appellate court's decision sustaining the
exclusion from the inventory of Jose M. Valeros estate of the two San Lorenzo Village lots
registered in the name of respondent Carmen B. Valero-Rustia by virtue of the deed of absolute
sale thereof executed by him in his lifetime on February 15, 1966 in her favor.
The question of collation of said lots is immaterial insofar as respondent and the deceased Jose
M. Valeros estate and petitioners are concerned, since respondent is not even an heir of his
estate (which he had willed to his two legitimate children, herein petitioners, his second wife
Beatriz Bautista having predeceased him in September, 1972). Under Article 1061 of the Civil
Code, only a compulsory heir succeeding with other compulsory heirs is required to collate
whatever property he/she may have received from the decedent during the decedent's lifetime
by way of donation or any other gratuitous title in order that it may be computed in the
determination of the legitime of each heir, and in the account of the partition." There can
therefore be no collation here because from the documents of record, respondent Carmen B.
Valero-Rustia is not a compulsory heir who received property by donation or gratuitous title from
the deceased that would be subject to collation.

The properties in question had been transferred by deed of absolute sale to said respondent-
vendee more than six years before the vendor Jose M. Valero died in, October, 1972. The
deceased having long divested himself of title to the said properties, they were properly
excluded from the inventory of his estate.

The real question between petitioners (Children of the deceased vendor) and respondent-
vendee (a stranger to the deceased's estate) is not collation, but a question of title and
ownership of the properties. The probate court has no jurisdiction over this question and
petitioners must bring a separate action if they wish to question respondent's title and
ownership. Even granting their claim that the deed of sale should be considered a donation or
gratuitous transfer, (because of the allegedly excessively low price), their only recourse would
be not collation, but a separate action for reduction of the donation to the extent that they may
show it to be inofficious (exceeding that which the deceased may give by will) under the
provisions of Articles 750 and 752 of the Civil Code.

# Separate Opinions

BARREDO, J., concurring:

For even assuming that the order of exclusion had become final insofar as the inventory is
concerned, said order could not have any final binding effect on the issue of collation.

TEEHANKEE, J., dissenting:

I vote for the unqualified affirmance of respondent appellate court's decision sustaining the
exclusion from the inventory of Jose M. Valeros estate of the two San Lorenzo Village lots
registered in the name of respondent Carmen B. Valero-Rustia by virtue of the deed of absolute
sale thereof executed by him in his lifetime on February 15, 1966 in her favor.

The question of collation of said lots is immaterial insofar as respondent and the deceased Jose
M. Valeros estate and petitioners are concerned, since respondent is not even an heir of his
estate (which he had willed to his two legitimate children, herein petitioners, his second wife
Beatriz Bautista having predeceased him in September, 1972). Under Article 1061 of the Civil
Code, only a compulsory heir succeeding with other compulsory heirs is required to collate
whatever property he/she may have received from the decedent during the decedent's lifetime
by way of donation or any other gratuitous title in order that it may be computed in the
determination of the legitime of each heir, and in the account of the partition." There can
therefore be no collation here because from the documents of record, respondent Carmen B.
Valero-Rustia is not a compulsory heir who received property by donation or gratuitous title from
the deceased that would be subject to collation.

The properties in question had been transferred by deed of absolute sale to said respondent-
vendee more than six years before the vendor Jose M. Valero died in, October, 1972. The
deceased having long divested himself of title to the said properties, they were properly
excluded from the inventory of his estate.

The real question between petitioners (Children of the deceased vendor) and respondent-
vendee (a stranger to the deceased's estate) is not collation, but a question of title and
ownership of the properties. The probate court has no jurisdiction over this question and
petitioners must bring a separate action if they wish to question respondent's title and
ownership. Even granting their claim that the deed of sale should be considered a donation or
gratuitous transfer, (because of the allegedly excessively low price), their only recourse would
be not collation, but a separate action for reduction of the donation to the extent that they may
show it to be inofficious (exceeding that which the deceased may give by will) under the
provisions of Articles 750 and 752 of the Civil Code.

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