GR 156407; (January, 2014) (Digest)

G.R. No. 156407; January 15, 2014
THELMA M. ARANAS, Petitioner, vs. TERESITA V. MERCADO, et al., Respondents.

FACTS

Emigdio S. Mercado died intestate. His second wife, Teresita V. Mercado, was appointed as the judicial administrator of his estate. In the submitted inventory, Teresita listed only personal properties, primarily shares of stock in Mervir Realty Corporation and Cebu Emerson Transportation Corporation. She claimed Emigdio had left no real properties at his death. Petitioner Thelma M. Aranas, a child from Emigdio’s first marriage, opposed the inventory. She moved to include several real properties she alleged were owned by the decedent, arguing they had been wrongfully excluded. These included parcels of land that had been assigned to Mervir Realty in exchange for shares and a specific lot allegedly sold to the corporation.
The parties agreed to submit the issue of what properties should be included in the inventory to the jurisdiction of the probate court. After lengthy hearings, the Regional Trial Court (RTC), acting as a probate court, issued an order directing Teresita to amend the inventory to include the contested real properties. The respondents sought reconsideration, arguing the probate court lacked jurisdiction to determine ownership of properties already registered in the name of a third-party corporation, Mervir Realty. The RTC denied the motion, prompting respondents to file a petition for certiorari with the Court of Appeals (CA).

ISSUE

Whether the probate court, in the course of intestate proceedings, has jurisdiction to determine with finality the ownership of properties claimed to be part of the estate but already registered in the name of a third-party corporation.

RULING

The Supreme Court ruled that the probate court exceeded its jurisdiction. While a probate court has authority to provisionally determine ownership of properties for purposes of inclusion in or exclusion from the estate inventory, this determination is not final and binding when it affects the rights of third parties not heirs to the estate. The legal logic is anchored on the limited jurisdiction of probate courts, which is primarily to settle the estate of the deceased. Its power to resolve questions of title is merely incidental and provisional to this core function.
In this case, the contested properties were already registered under the name of Mervir Realty Corporation, a distinct juridical entity. The corporation’s rights, acquired through alleged deeds of assignment and sale executed by the decedent during his lifetime, were directly impaired by the probate court’s order to include the properties in the inventory. Since the corporation was not a party to the intestate proceedings and its interests were adversely affected, the probate court’s determination of ownership overstepped its jurisdiction. The proper remedy for the petitioner, who claims these assets rightfully belong to the estate, is to institute a separate ordinary action for reconveyance against the corporation. Consequently, the Supreme Court affirmed the CA’s decision annulling the RTC’s orders for having been issued with grave abuse of discretion.