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, RESPONDEN…

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 and 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 justiciable 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. Valero’s 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.

Teehankee, J., files a separate opinion.

Barredo, J., concurs, for even assuming that the order of execution had become final
insofar as the inventory is concerned, said order could not have any final
binding effect on the issue of collation.

Santos and De Castro, JJ., did not take part.