Remedial Law

Oscar Reyes vs Makati RTC, Branch 142

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G.R. No. 165744 – 561 SCRA 593 – 583 Phil. 591 – Remedial Law – Special Proceedings – Settlement of Estate – Jurisdiction of Probate Court – Probate court may resolve issue of ownership provisionally ; if no third party rights are impaired, resolution may be with finality

In 1993, Anastacia Reyes died. At the time of her death, she holds about Php7M in shares in Zenith Insurance. In 2000, Zenith and Rodrigo Reyes filed an intra-corporate suit before the Securities and Exchange Commission against Oscar Reyes as the latter allegedly appropriated unto himself the shares of Anastacia to the exclusion of other heirs. Oscar and Rodrigo were sons of Anastacia.

By operation of law (RA 8799), the SEC transferred the case to the RTC. The case was raffled to RTC 142 in Makati.

In 2002, Oscar moved for the dismissal of the case on the ground that the case is not an intra-corporate suit but a settlement of estate case which should be filed in a probate court and the RTC sitting as a commercial court has no jurisdiction over the case.

ISSUE: Whether or not RTC 142 sitting as a commercial court has jurisdiction over the case.

HELD: No. A scrutiny of the allegations in the complaint filed by Rodrigo and Zenith Corporation reveals that the case is really a settlement of estate case. What is material in resolving the issues of this case under the allegations of the complaint is Rodrigo’s interest as an heir since the subject matter of the present controversy centers on the shares of stocks belonging to Anastacia, not on Rodrigo’s personally-owned shares nor on his personality as shareholder owning these shares. In this light, all reference to shares of stocks in this case shall pertain to the shareholdings of the deceased Anastacia and the parties’ interest therein as her heirs.

Article 777 of the Civil Code declares that the successional rights are transmitted from the moment of death of the decedent. Accordingly, upon Anastacia’s death, her children acquired legal title to her estate (which title includes her shareholdings in Zenith), and they are, prior to the estate’s partition, deemed co-owners thereof. This status as co-owners, however, does not immediately and necessarily make them stockholders of the corporation. Unless and until there is compliance with Section 63 of the Corporation Code on the manner of transferring shares, the heirs do not become registered stockholders of the corporation.

SIDE ISSUE: Rodrigo alleged that Oscar appropriated unto himself the shares of Anastacia to the exclusion of the other heirs. Meanwhile, Oscar alleged that he validly purchased the shares. If the estate of Anastacia is subjected to probate, may the probate court decide on who is the owner of the disputed shares?

HELD: Yes. Although generally, a probate court may not decide a question of title or ownership, yet if the interested parties are all heirs, or the question is one of collation or advancement, or the parties consent to the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, the probate court is competent to decide the question of ownership.

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