G.R. No. L-39532 - Vda. de Rodriguez vs. Court of Appeals

Spouses Beatriz Bautista and Jose M. Valero had no biological children.
Beatriz adopted Carmen (Carmencita) Bautista in 1951. Jose wanted to adopt her too but was disqualified because of two children from his first marriage: Flora Valero Vda. de Rodriguez and Rosie Valero Gutierrez. Jose consented to Carmen using his surname "Valero" during the adoption.

On September 18, 1964, Jose M. Valero donated his half proindiviso share in two conjugal lots at San Lorenzo Village, Makati, Rizal, to Carmen B. Valero (married to Dr. Sergio Rustia). Beatriz consented. The donation was not registered.
On January 13, 1966, Jose executed his last will and testament, enumerating the conjugal properties including the San Lorenzo lots but did not mention the donation. He devised properties to his wife and remainder to his two legitimate children, Flora and Rosie.
On February 15, 1966, the Valero spouses executed a deed of absolute sale of the same two lots to Carmen for P120,000. The sale was registered the next day; title certificates were issued to Carmen.
December 4, 1967: Carmen mortgaged the lots to Quezon City Development Bank for a loan of P50,000.

Beatriz died intestate on September 12, 1972, survived by husband Jose and adopted child Carmen. Carmen was named administratrix of Beatriz’s estate.
Jose died testate on October 18, 1972, survived by legitimate children Flora and Rosie. His will was probated accordingly.
The executor included the San Lorenzo lots in Jose’s testate estate inventory following the will’s list of conjugal properties. This inclusion triggered a motion by Carmen (through counsel) and the two legitimate daughters to exclude the lots, citing Carmen’s registration as owner since 1966.

August 9, 1973: Probate court excluded the lots from Jose’s estate inventory but indicated they remained “subject to collation.”
December 4, 1973: Carmen moved for reconsideration to exclude the lots unconditionally based on Torrens titles issued to her; no opposition was filed.
December 14, 1973: Probate court ruled the lots were unconditionally excluded from the inventory — “not subject to collation.”
Flora filed a motion for reconsideration alleging the sale was a disguised donation due to low price, quoting the August 9 order as final. Carmen denied this, asserting the sale price reflected circumstances including care provided to Valeros. The probate court denied the motion.

The Court of Appeals held that the August 9, 1973 order was interlocutory and subject to modification during estate administration.
It ruled the question of collation did not apply to Carmen because she was not an heir of Jose Valero and collation was required only of compulsory heirs (Art. 1061, Civil Code).
The Supreme Court later affirmed the Court of Appeals decision, holding that the probate court’s order excluding the lots from the inventory was interlocutory, and the issue of collation was premature and unnecessary at that stage. The Court deleted any ruling regarding collation and stated such issues could only be decided if raised at the proper time.
The Court held that title and ownership issues should be raised in separate actions and were beyond probate court jurisdiction at this stage.

Whether the probate court’s order of August 9, 1973 excluding the San Lorenzo Village lots from the testator’s estate inventory was a final, appealable order or an interlocutory order subject to modification.
Whether the two lots registered in the name of Carmen B. Valero-Rustia were subject to collation in the estate settlement of testator Jose M. Valero.
Whether the probate court and Court of Appeals erred in excluding the lots from the inventory and declaring them not subject to collation.
Whether the sale of the lots to Carmen was a disguised donation subject to collation or a valid sale removing the property from the testate estate.