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.

FACTS

Jose M. Valero and his wife Beatriz Bautista had no children together. Beatriz adopted Carmen Bautista (Carmen Valero-Rustia). Jose, who had two legitimate children from a prior marriage (Flora and Rosie), could not adopt Carmen but consented to her using his surname. In 1964, Jose donated his one-half share in two conjugal lots to Carmen, with Beatriz’s consent, but the deed was not registered. In his 1966 will, Jose listed these lots among the conjugal properties without mentioning the donation, and bequeathed the remainder of his estate to Flora and Rosie after providing for his wife’s legitime. Shortly after, in February 1966, the Valero spouses sold the same lots to Carmen via a registered absolute sale. Carmen obtained Torrens titles and later mortgaged the properties.
Upon Jose’s death in 1972, his executor included the lots in the estate inventory. Carmen, joined by Flora and Rosie through her lawyer, moved for their exclusion, citing her registered ownership. The executor opposed, alleging the transfer was a donation subject to collation. The probate court initially ordered exclusion “subject to collation,” but later issued a final order unconditionally excluding the lots, declaring them “not subject to collation.” Flora and Rosie challenged this in the Court of Appeals.

ISSUE

Whether the two lots registered in Carmen’s name should be included in Jose Valero’s inventory and considered subject to collation.

RULING

No. The Supreme Court affirmed the Court of Appeals’ decision, upholding the unconditional exclusion of the lots from the estate inventory. The legal logic is twofold. First, the principle of collation under Article 1061 of the Civil Code applies exclusively to compulsory heirs who succeed with other compulsory heirs. Its purpose is to account for lifetime donations in computing each heir’s legitime. Carmen Valero-Rustia is not a compulsory heir of Jose Valero; she is the adopted child of his predeceased wife, Beatriz. Therefore, even if the transfer were gratuitous, the legal requirement of collation does not apply to her as she is a stranger to Jose’s succession.
Second, the probate court’s jurisdiction is limited to matters concerning the settlement and distribution of the estate property. The question of ownership and title to the disputed lots, which are registered under Carmen’s name, falls outside this scope. The executor’s inclusion of the properties based on a claim of simulated sale or donation improperly raised a collateral issue of ownership. If Flora and Rosie believe the sale was a disguised donation prejudicing their legitimes, their proper remedy is a separate civil action for reduction of inofficious donation under Articles 750 and 752 of the Civil Code, not a petition for collation within the testate proceedings. The probate court correctly excluded the properties from the inventory, as the decedent had divested himself of title during his lifetime.