Facts :
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. 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.
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 in the
CFI 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 also in the CFI 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".
Mrs.
Rustia filed a motion for reconsideration. 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 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 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.
Issue
: WON the properties are subject to collation.
Held
:
No.
The SC found that the proceedings have not yet reached the stage when the
question of collation or advancement to an heir maybe raised and decided. The
numerous debts of the decedents are still being paid. The net remainder of
their conjugal estate has not yet been determined. No separate action has been
brought by appellants (two sisters) to nullify Mrs. Rustia's Torrens titles to
the disputed lots or to show that the sale was in reality a donation. 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.
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