Case Digest: Vizconde vs. Court of Appeals, G.R. No. 118449, February 11, 1988

Succession | Donation Inter Vivos, Collation

Art. 908. To determine the legitime, the value of the property left at the death of the testator shall be considered, deducting all debts and charges, which shall not include those imposed in the will.

To the net value of the hereditary estate, shall be added the value of all donations by the testator that are subject to collation, at the time he made them.

Art. 1061. Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition.

Ponente:

Francisco, J.:

Facts:

Lauro G. Vizconde and Estrellita Nicolas-Vizconde had two daughters: Carmela and Jennifer.

Estrellita is one of five children of Rafael Nicolas and Salud Gonzales-Nicolas.

Their other children are;

1. Antonio Nicolas; 
2. Ramon Nicolas; 
3. Teresita Nicolas de Leon; and 
4. Ricardo Nicolas, an incompetent. 

Antonio predeceased his parents and is now survived by his widow, Zenaida, and their four children.

In 1979, Estrellita bought land from Rafael in Valenzuela, Bulacan.

In 1990, Estrellita sold the property to Amelia Lim and Maria Natividad Balictar Chiu.

Using a portion of the proceeds of sale, she then bought a car and a property in Parañaque.

In 1991, Estrellita and her daughters were tragically killed in the incident popularly known as the "Vizconde Massacre", leaving Lauro as the sole heir after their succession.

Lauro entered into an extra-judicial settlement of Estrellita's estate with Rafael and Salud. 

Lauro received the Parañaque property and the car with Rafael and Salud waiving all their claims in the said properties.

In 1992, Rafael died.

Teresita initiated an intestate estate proceeding, listing as heirs Salud, Ramon, Ricardo, and Antonio's widow and children.

Ramon filed an opposition alleging that Rafael gave Estrellita the Valenzuela property and pleaded for the court's intervention to determine the legality and validity of the inter vivos distribution.

RTC: Rendered an order excluding Lauro in the slate of Rafael's heirs. Neither was the Parañaque property listed in its list of properties to be included in the estate.

Ramon moved to include Lauro in the intestate estate proceeding and asked that the Parañaque property, as well as the car and the balance of the proceeds of the sale of the Valenzuela property, be collated.

Court of Appeals: Held that the transfer of the property at Valenzuela in favor of Estrellita by her father was gratuitous and the subject property in Parañaque is subject to collation as there is no sufficient evidence to show that the acquisition of the property from Rafael Nicolas was for a valuable consideration.

Issue: WoN the transfer of the Valenzuela property from Rafael to Estrellita is void and declaring the Parañaque property as subject to collation. NO

Held: 

Basic principles of collation need to be emphasized at the outset. Article 1061 of the Civil Code speaks of collation. It states:

Art. 1061. Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition.

Collation is the act by virtue of which descendants or other forced heirs who intervene in the division of the inheritance of an ascendant bring into the common mass, the property which they received from him, so that the division may be made according to law and the will of the testator. Collation is only required of compulsory heirs succeeding with other compulsory heirs and involves property or rights received by donation or gratuitous title during the lifetime of the decedent. The purpose is to attain equality among the compulsory heirs in so far as possible for it is presumed that the intention of the testator or predecessor in interest making a donation or gratuitous transfer to a forced heir is to give him something in advance on account of his share in the estate, and that the predecessor's will is to treat all his heirs equally, in the absence of any expression to the contrary. Collation does not impose any lien on the property or the subject matter of collationable donation. What is brought to collation is not the property donated itself, but rather the value of such property at the time it was donated, the rationale being that the donation is a real alienation which conveys ownership upon its acceptance, hence any increase in value or any deterioration or loss thereof is for the account of the heir or donee.

The attendant facts herein do not make a case of collation. We find that the probate court, as well as respondent Court of Appeals, committed reversible errors.

First: The probate court erred in ordering the inclusion of petitioner in the intestate estate proceeding. Petitioner, a son-in-law of Rafael, is not one of Rafael's compulsory heirs. Article 887 of the Civil Code is clear on this point:

Art. 887. The following are compulsory heirs:

(1) Legitimate children and descendants, with respect to their legitimate parents and ascendants;

(2) In default of the following, legitimate parents and ascendants, with respect to their legitimate children and ascendants;

(3) The widow or widower;

(4) Acknowledged natural children, and natural children by legal fiction;

(5) Other illegitimate children referred to in article 287.

Compulsory heirs mentioned in Nos. 3, 4 and 5 are not excluded by those in Nos. 1 and 2; neither do they exclude one another.

In all cases of illegitimate children, their filiation must be duly proved.

The father or mother of illegitimate children of the three classes mentioned, shall inherit from them in the manner and to the extent established by this Code.

With respect to Rafael's estate, therefore, petitioner who was not even shown to be a creditor of Rafael is considered a third person or a stranger. As such, petitioner may not be dragged into the intestate estate proceeding. Neither may he be permitted or allowed to intervene as he has no personality or interest in the said proceeding, which petitioner correctly argued in his manifestation. 

Second: As a rule, the probate court may pass upon and determine the title or ownership of a property which may or may not be included in the estate proceedings. Such determination is provisional in character and is subject to final decision in a separate action to resolve title. In the case at bench, however, we note that the probate court went beyond the scope of its jurisdiction when it proceeded to determine the validity of the sale of the Valenzuela property between Rafael and Estrellita and ruled that the transfer of the subject property between the concerned parties was gratuitous. The interpretation of the deed and the true intent of the contracting parties, as well as the presence or absence of consideration, are matters outside the probate court's jurisdiction. These issues should be ventilated in an appropriate action. We reiterate:

. . . we are of the opinion and so hold, that a court which takes cognizance of testate or intestate proceedings has power and jurisdiction to determine whether or not the properties included therein or excluded therefrom belong prima facie to the deceased, although such a determination is not final or ultimate in nature, and without prejudice to the right of the interested parties, in a proper action, to raise the question bearing on the ownership or existence of the right or credit.

Third: The order of the probate court subjecting the Parañaque property to collation is premature. Records indicate that the intestate estate proceedings is still in its initiatory stage. We find nothing herein to indicate that the legitime of any of Rafael's heirs has been impaired to warrant collation. We thus advert to our ruling in Udarbe v. Jurado, 59 Phil. 11, 13-14, to wit:

We are of the opinion that this contention is untenable. In accordance with the provisions of article 1035 of the Civil Code, it was the duty of the plaintiffs to allege and prove that the donations received by the defendants were inofficious in whole or in part and prejudiced the legitime or hereditary portion to which they are entitled. In the absence of evidence to that effect, the collation sought is untenable for lack of ground or basis therefor.

Fourth: Even on the assumption that collation is appropriate in this case the probate court, nonetheless, made a reversible error in ordering collation of the Parañaque property. We note that what was transferred to Estrellita, by way of deed of sale, is the Valenzuela property. The Parañaque property which Estrellita acquired by using the proceeds of the sale of the Valenzuela property does not become collationable simply by reason thereof. Indeed, collation of the Parañaque property has no statutory basis. The order of the probate court presupposes that the Parañaque property was gratuitously conveyed by Rafael to Estrellita. Records indicate, however, that the Parañaque property was conveyed for and in consideration of P900,000.00, by Premier Homes, Inc., to Estrellita. Rafael, the decedent, has no participation therein, and petitioner who inherited and is now the present owner of the Parañaque property is not one of Rafael's heirs. Thus, the probate court's order of collation against petitioner is unwarranted for the obligation to collate is lodged with Estrellita, the heir, and not to herein petitioner who does not have any interest in Rafael's estate. As it stands, collation of the Parañaque property is improper for, to repeat, collation covers only properties gratuitously given by the decedent during his lifetime to his compulsory heirs which fact does not obtain anent the transfer of the Parañaque property. Moreover, Rafael, in a public instrument, voluntarily and willfully waived any "claims, rights, ownership and participation as heir" in the Parañaque property.

Fifth: Finally, it is futile for the probate court to ascertain whether or not the Valenzuela property may be brought to collation. Estrellita, it should be stressed, died ahead of Rafael. In fact, it was Rafael who inherited from Estrellita an amount more than the value of the Valenzuela property. Hence, even assuming that the Valenzuela property may be collated collation may not be allowed as the value of the Valenzuela property has long been returned to the estate of Rafael. Therefore, any determination by the probate court on the matter serves no valid and binding purpose.

WHEREFORE, the decision of the Court of Appeals appealed from is hereby REVERSED AND SET ASIDE.

SO ORDERED.

Notes: 

On Art. 902: Manner of Computing the Hereditary Estate

The process has three steps: 

1. Inventory of all the existing assets—
• This will involve an appraisal/valuation of these existing assets at the time of the decedent’s death.
• These assets include only those properties that survive the decedent; le., those which are not extinguished by his death. 
• The value determined by this inventory will constitute the gross assets. 
2. Deducting unpaid debts and charges— 
• All unpaid obligations of the decedent should be deducted from the gross assets. 
• Only those obligations with monetary value which are not extinguished by death are considered here. Thus, those obligations which are purely personal are not taken into account. 
• The difference between the gross assets and the unpaid obligations will be the available assets. 
3. Adding the value of donations inter vivos— 
• To the available assets should be added all the inter vivos donations made by the decedent.
• The donations inter vivos shall be valued as of the time they were respectively made. Any increase or decrease in value from the time they were made to the time of the decedent’s death shall be for the donee’s account, since donation transfers ownership to the donee. 
• The sum of the available assets and all the donations inter vivos is the net hereditary estate.

Net Hereditary Estate = (Gross Assets - Unpaid Obligations) + Inter Vivos Donations

On Collation, Art. 1061:

• Value to be computed—Only the value of the property donated at the time the donation was made is to be computed, since in donations ownership transfers at the time the donation is perfected. Thus, any subsequent increase in value is for the donee’s benefit, and any decrease is for his account.
• Purpose of article—To determine the amount of the net estate so as to ensure that the legitimes are not impaired.