Inherent power

Has the probate court the inherent power to determine what properties, rights and credits of the deceased should be included or excluded in the inventory of the administrator? This is one of the questions resolved in this case of Tita, the duly appointed administrator of the estate of her late husband Nardy.

After Tita submitted to the probate court an inventory of all the real and personal properties of Nardy, AMC, one of the creditors of the deceased Nardy, filed a claim against his estate in the amount of P63.6 million. Tita accepted said claim subject to reduction or adjustment as additional evidence may warrant.

When AMC however noticed that the shares of stocks of Nardy in two corporations engaged in sales and distribution of construction materials were not included in the inventory of the assets, it filed a motion to require Tita why she did not report these shares of stocks in the inventory. In reply, Tita alleged that these shares had already been assigned and transferred to other parties prior to the death of Nardy. She attached in her reply the deeds of assignment which allegedly constituted proofs of the transfer.

But AMC was not satisfied with Tita’s explanation. It suspected that the deeds were spurious and simulated. So it filed a motion for examination of the supposed assignees of said shares pursuant to Section 6 Rule 87 of the Rules of Court which gives the court the power to require persons suspected to have concealed, embezzled or conveyed away any properties of the deceased, to appear before it and be examined under oath regarding such embezzlement, concealment or conveyance.

The trial court denied AMC’s motion. But through a petition for certiorari filed by AMC, the CA set aside the order of the trial court and ordered it to give due course to the motion for examination and thereafter to dispose of the claim accordingly. The CA issued the ruling after receiving the evidence of AMC showing that the transfer of shares appeared to be spurious particularly the certifications of the Clerk of Court that the notary public who notarized the deeds and the secretary’s certificate is not listed in the roll of attorneys and that said deeds and certificate were not included in the notarial report of another lawyer.

Was the court correct?

Yes.

Section 6, Rule 87 of the Rules of Court seeks to secure evidence from persons suspected of having possession or knowledge of properties left by a deceased person, or of having concealed, embezzled or conveyed any of the properties of the deceased.

The court which acquires jurisdiction over the properties of a deceased person through the filing of the corresponding proceedings has supervision and control over these properties. The trial court has the inherent duty to see to it that the inventory of the administrator lists all the properties, rights or credits which the law requires the administrator to include in his inventory. In compliance with this duty, the court also has the inherent power to determine what properties, rights and credits of the deceased the administrator should include or exclude in the inventory.

In case the transferees of these properties, like the shares of stocks in this case, are heirs of the decedent and appear to be parties to the intestate proceedings, then the court has the authority to decide whether the properties belong to the estate or to the persons examined. However, if the transferees of the shares do not appear to be heirs of the decedent, neither do they appear to be parties to the intestate proceedings but third persons to whom the decedent’s assets had been conveyed, they may be cited to appear in court and be examined under oath as to how they came into possession of the decedent’s assets. In case of fraudulent conveyances, a separate action is necessary to recover these assets.

Taken in this light, there is no reason the trial court should disallow the examination of the alleged transferees of the shares of stocks. This is only for eliciting information or securing evidence from persons suspected of concealing or conveying some of the decedent’s properties to the prejudice of creditors (Chua et al. vs. Absolute Management Corp. G.R. 144881 October 16, 2003).

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