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MANUELA AZUCENA MAYOR v. EDWIN TIU

FACTS:

The case involves a dispute over the ownership and administration of properties and assets comprising the estate of the decedent, Rosario Rosales. There were two separate petitions filed in different Regional Trial Courts (RTC) for the probate of the decedent's holographic will and the issuance of letters of administration. The first petition was filed by Remedios Tiu and Manuela Azucena Mayor, claiming to be named as executors in the holographic will. The second petition was filed by Damiana Charito Marty, claiming to be the adopted daughter of Rosario. The RTC-Br. 9 granted Marty's motion and appointed the OIC Clerk of Court as special administrator, and subsequently denied Remedios and Manuela's motion for reconsideration. Remedios and Manuela filed a petition for certiorari with the Court of Appeals (CA), which reversed the RTC's orders, except for the appointment of a special administrator. The case records were then referred to another RTC branch. Eventually, Atty. Blanche A. Sallino was appointed as special administrator. Marty filed an omnibus motion requesting various orders regarding accounting, deposit of rental payments, and disbursement of funds, which was granted by the RTC. Manuela filed a separate petition with the CA, challenging the RTC's orders on accounting and deposit of rental payments. The CA dismissed the petition due to procedural infirmities, but Manuela filed a motion for reconsideration before the Court, arguing that there was actual compliance with the rules on service, and the lack of proper certification should not invalidate the verification and certification. Marty argued that the petitioners did not comply with procedural requirements.

ISSUES:

  1. Whether the estate of a deceased person is a separate juridical person distinct from the decedent and any other corporation.

  2. Whether the doctrine of piercing the corporate veil applies in this case.

  3. Whether a probate court has the authority to determine title to properties claimed to be part of the estate but which are also claimed to belong to outside parties.

  4. Whether the probate court erred in not recognizing the incontestability of the Torrens title of Primrose over the decedent's arguments of possible dissipation of properties.

  5. Whether the probate court had jurisdiction over Primrose and its properties in the probate proceedings.

  6. Whether the probate court erred in ordering the remittance of rental payments to the estate of the decedent.

RULING:

  1. The estate of a deceased person is a separate juridical person distinct from the decedent and any other corporation.

  2. The doctrine of piercing the corporate veil does not apply in this case.

  3. A probate court does not have the authority to determine title to properties claimed to be part of the estate but which are also claimed to belong to outside parties.

  4. The Supreme Court held that the probate court erred in not recognizing the incontestability of the Torrens title of Primrose. The Court stressed that the existence of a Torrens title may not be discounted as a mere incident in special proceedings for the settlement of the estate of deceased persons. The holder of a property covered by a Torrens title should be considered the owner of the property until his title is nullified or modified in an appropriate ordinary action.

  5. The Supreme Court ruled that the probate court did not have jurisdiction over Primrose and its properties since the doctrine of piercing the veil of corporate fiction can only be applied after the court has acquired jurisdiction over the corporation. A corporation not impleaded in a suit cannot be subject to the court's process of piercing its corporate veil.

  6. The Supreme Court held that the probate court erred in ordering the remittance of rental payments to the estate of the decedent. The Court stated that although the probate court's intention to protect the decedent's shares of stock in Primrose was laudable, it was still an error to order the corporation's tenants to remit their rental payments to the estate of the decedent.

PRINCIPLES:

  • Artificial persons include a collection or succession of natural persons forming a corporation or a collection of property, recognized only to a limited extent in Philippine law.

  • The doctrine of piercing the corporate veil is used to remove the barrier between a corporation and the persons comprising it to thwart fraudulent and illegal schemes.

  • Mere ownership of all or nearly all of the capital stocks of a corporation is not sufficient reason to disregard the separate corporate personalities.

  • A probate court has limits in determining the scope of property covered in probate proceedings, and cannot adjudicate or determine title to properties claimed by outside parties. The probate court's determination of ownership is provisional and subject to the final decision in a separate action to resolve title.

  • The incontestability of a Torrens title must be given due weight, and in the absence of strong compelling evidence to the contrary, the holder thereof should be considered the owner of the property until his title is nullified or modified in an appropriate ordinary action.

  • The doctrine of piercing the veil of corporate fiction can only be applied after the court has acquired jurisdiction over the corporation and is used to determine established liability, not jurisdiction.

  • A corporation not impleaded in a suit cannot be subject to the court's process of piercing its corporate veil, as it would infringe on its right to due process.

  • The probate court should not order the remittance of rental payments to the estate of the decedent if the corporation is a separate and distinct entity from the estate.