Case Summary (G.R. No. 203770)
CA Decision and RTC Enforcement
In October 2009, the Court of Appeals reversed the RTC’s orders except for the appointment of a special administrator over properties specifically belonging to the estate. The CA ruled that Primrose had a separate juridical personality, that the probate court lacked jurisdiction to adjudicate ownership or apply veil-piercing, and that Torrens-registered properties remained vested in Primrose until set aside in an ordinary action. RTC-Branch 6 partially revoked RTC-Branch 9’s orders in November 2009, removing day-to-day oversight of Primrose but sustaining directives on estate inventory and accounting.
Petition for Certiorari and Procedural Grounds
Oppositors filed an Omnibus Motion in September 2010 seeking further accounting, consignment of rental income, and prohibition of disbursements without court approval. RTC-Branch 6 granted these motions in January 2011 and denied reconsideration in June 2011. Remedios and Manuela filed a Rule 65 petition with the CA, which dismissed it (October 2011; September 2012) for procedural defects: improper proof of service, failure to indicate material dates, uncertified copies of orders, and defective verification and certification against forum-shopping.
Issuance of Injunctive Relief
Petitioner Manuela sought injunctive relief before the Supreme Court to halt the implementation of the January 20 and June 10, 2011 orders insofar as they affected Primrose’s corporate properties. A Temporary Restraining Order was issued in October 2013 upon finding material and substantial rights at risk, clear entitlement, and urgency to prevent irreparable damage to the corporation.
Juridical Separateness of Estate and Corporation
Under the 1987 Constitution, estates of deceased persons are artificial juridical persons distinct from other entities. Likewise, corporations such as Primrose possess separate legal personality from their stockholders and connected estates. The decedent’s interest was limited to shares in Primrose, not ownership of corporate assets. The probate court’s directive to treat corporate property as estate property ignored this fundamental separation.
Inapplicability of Corporate Veil Piercing
The doctrine of piercing the corporate veil applies only to determine liability where equity demands disregard of corporate fiction. It cannot justify extending probate jurisdiction over a non-party corporation. Mere common control or allegation of fraudulent incorporation does not warrant veil piercing unless wrongful acts are clearly and convincingly proven. Here, no such evidence was presented to override Primrose’s separate identity.
Jurisdictional Limits of the Probate Court
A probate court may provisionally determine title only to decide whether property should be included in the estate inventory; such determination is not final and must yield to ordinary actions on title disputes. It lacks authority to adjudicate ownership against third-party claimants. Torrens-registered properties vest conclusively in the named owner, subject only to direct proceedings under Presidential Decree No. 1529, §48, which prohibits collateral attack on the certificate of title.
Conclusive Character of Torrens Title
Properties registered under the Torrens system are presumed incontestable. In the absence of direct action to cancel or modify the certificate of title,
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Facts
- On May 25, 2008, Rosario Guy-Juco Villasin Casilan (the decedent) died, leaving a holographic last will naming her sister Remedios Tiu and niece Manuela Azucena Mayor as executors.
- The will purportedly covered real properties and corporate shareholdings valued at approximately ₱2.5 million.
- Remedios and Manuela filed a petition for probate of the will and for issuance of letters testamentary, docketed as Sp. Proc. No. 2008-05-30 before RTC-Br. 9, Tacloban City.
- Damiana Charito Marty, claiming to be the adopted daughter of the decedent, sought letters of administration in a separate probate docket (Sp. Proc. No. 2008-05-32) but was dismissed for lack of due course.
Procedural Antecedents
- June 12, 2008: RTC-Br. 9 found the probate petition sufficient in form and substance and set it for hearing.
- June 23, 2008: Marty filed an urgent motion alleging waste and dissipation of estate assets, praying for inventory, deposit of rentals by Mercury Drug and Chowking, freeze of bank accounts, and lock-up of Primrose Hotel.
- July 8, 2008: Remedios and Manuela opposed, disputing Marty's adoption claim and contesting jurisdiction over corporate properties titled in Primrose Development Corporation.
- July 15, 2008: Marty replied, invoking piercing the corporate veil based on a 1981 Leyte ruling and impugning the will’s authenticity.
RTC-Br. 9 Orders
- January 14, 2009: RTC-Br. 9 granted Marty's motion, appointed the OIC Clerk of Court as special administrator, ordered tenants to deposit rentals with the court, froze bank accounts, and applied piercing the corporate veil to preserve assets.
- January 22, 2009: Remedios and Manuela moved for inhibition of Judge Sescon and for reconsideration, arguing limited estate rights (shares only) and executor designation per will.
- March 27, 2009: RTC-Br. 9 denied reconsideration, granted inhibition, and re-raffled the case to RTC-Br. 6.
Court of Appeals’ October 16, 2009 Decision
- CA reversed the January 14, 2009 and March 27, 2009 RTC-Br. 9 orders except as to appointment of special administrator over estate-specific assets.
- Held Primrose Development Corporation has a separate legal personality; probate court had no jurisdiction to apply piercing veil or adjudicate ownership of corporate properties.
- Emphasized that Torrens-titled properties remain owned by title holders until adjudicated in an appropriate ordinary action.