ARANAS V. MERCADO
On January 26, 1993, Thelma again moved to require Teresita to be examined under oath
January 15, 2014| Bersamin | Petition for review on certiorari | Rule 78
PETITIONER: Thelma M. Aranas
RESPONDENT: Teresita V. Mercado, Felimon V. Mercado, Carmencita M. Sutherland,
Richard V. Mercado, Ma. Teresita M. Anderson, And Franklin L. Mercado
SUMMARY: Emigdio inherited several real property. He transferred it to two
corporations in exchange of shares of stocks. Teresita included the parcels of land in the
inventory. Thelma opposed on the ground that these properties were already transferred.
DOCTRINE: 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.
FACTS:
1. Emigdio S. Mercado died intestate on January 12, 1991
a. survived by his second wife, Teresita and their five children: Allan V. Mercado,
Felimon V. Mercado, Carmencita M. Sutherland, Richard V. Mercado, and
Maria Teresita M. Anderson;
b. two children by his first marriage: Franklin and Thelma
2. Emigdio inherited and acquired real properties during his lifetime.
a. corporate shares in Mervir Realty and Cebu Emerson.
b. He assigned his real properties in exchange for corporate stocks of Mervir
Realty, and sold his real property in Badian, Cebu to Mervir Realty.
3. On June 3, 1991, Thelma filed in the RTC in Cebu City a petition for the appointment
of Teresita as the administrator of Emigdios estate (Sp 3094CEB). The RTC granted
the petition.
4.
As the administrator, Teresita submitted an inventory to the RTC. She indicated in the
inventory that at the time of his death, Emigdio had left no real properties but only
personal properties worth P6.6M, consisting of cash; furniture; pieces of jewelry; and
44,806 shares of stock of Mervir Realty worth P6,585,585.80; and 30 shares of stock of
Cebu Emerson worth P22,708.25.
5. Claiming that Emigdio had owned other properties that were excluded from the
inventory, Thelma moved that the RTC direct Teresita to amend the inventory. RTC
granted Thelmas motion.
6.
On Jan 21, 1993, Teresita filed a compliance supporting her inventory with copies of
three certificates of stocks covering the 44,806 Mervir Realty shares of stock; the deed of
assignment executed by Emigdio involving real properties with the market value of
P4,440,651.10 in exchange for 44,407 Mervir Realty shares of stock with total par value
of P4,440,700.00; and the certificate of stock issued on January 30, 1979 for 300 shares
of stock of Cebu Emerson worth P30,000.00.
7.
on the inventory, and that she (Thelma) be allowed 30 days within which to file a
comment on the inventory and the supporting documents Teresita had submitted.
8. 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.
9. On April 19, 1993, Thelma opposed the approval of the inventory, and asked leave of
court to examine Teresita on the inventory.
10. RTC: the inventory submitted by Teresita had excluded properties that should be
included. It ordered Teresita to redo the inventory.
11. CA: RTC committed GAD 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.
ISSUE #1: Was certiorari the proper recourse to assail the questioned orders of the RTC? Yes.
1. 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.
a. A final order 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 interlocutory order
does not completely dispose of the case but leaves something else to be decided
upon.
b. An interlocutory order deals with preliminary matters and the trial on the
merits is yet to be held and the judgment rendered.
2. The order which granted the application for the writ of preliminary injunction, was an
interlocutory order, and should not be the subject of an appeal.
3. The remedy against an interlocutory order not subject of an appeal is an appropriate SCA
under Rule 65
4. The order denying Teresitas motion for the approval of the inventory were interlocutory.
This is because the inclusion of the properties in the inventory was not yet a final
determination of their ownership.
5. In Valero Vda. De Rodriguez v. CA 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
Issue #2: Did the RTC commit GAD in directing the inclusion of the properties
in the estate of the decedent?
1. Rule 83, Sec 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 atrue 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.
2. The usage of the word all in Sec 1, Rule 83 demands the inclusion of all the real and
personal properties of the decedent in the inventory. 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. Sec 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.
3. 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.
4. Hence, 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.
5. Agtarap v. Agtarap:
a. general rule: 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.
b. Exceptions as justified by expediency and convenience.
i. 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.
ii. 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.
6. 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 GAD, its orders must be respected as part
of the regular performance of its judicial duty.