CA nullifies QC judge’s order on estate of late industrialist

FILE PHOTO

MANILA, Philippines–The Court of Appeals has nullified an order of a Quezon City judge in September 2013 to include companies and real properties in the disputed estate of the late industrialist Jose Marcelo Sr.

In a 25-page decision dated June 30, the appellate court’s Ninth Division ruled that Quezon City regional trial court Branch 76 Judge Alexander Balut, who has been hearing the inheritance case, committed grave abuse of discretion when he issued a writ of execution without basis and to the detriment of the rights of the other heirs.

The appeals tribunal castigated Balut for including in the writ assets that did not actually belong to the Marcelo estate by relying solely on the partial inventory submitted by the court-appointed administrator, Marcelo’s son Jose Jr.

The court, in the decision written by Justice Francisco Acosta, declared that the inventory, “on its face, included properties not registered in the name of Jose Sr.”

“A plain reading of the partial inventory submitted by Jose Jr. reveals that the shares of stock of the Marcelo Group of Companies are owned by several other corporations along with Jose Sr., and the real properties are owned by corporations and not by Jose Sr.,” the decision stated.

The court pointed out that “it was grossly irregular for Jose Jr. to include in the inventory such properties which are strongly presumed to belong to someone else.”

The other division members–Justices Fernanda Lampas Peralta and Myrna Garcia-Fernandez–concurred in the ruling.

A native of Malabon City, Marcelo died intestate, or without a last will testament, in August 1987. Aside from real properties from all over the country, he set up rubber, chemical, tire, fertilizer, steel, agro-industrial, marketing and investment firms, collectively known as the Marcelo Group of Companies.

A petition for the settlement of his estate was filed at the Quezon City RTC the following year. Jose Jr., the youngest of the four Marcelo siblings, was designated as the estate administrator after his elder brother and the original administrator, Edward, died in 2009.

Jose Jr. later submitted a partial inventory of the estate’s assets. In June 2010, the RTC ordered all shares of stocks, property titles and all other documents of the estate to him and gave him the right to vote upon the shares of stock in the Marcelo Group.

The turnover was opposed by Edward’s children Katherine, John Steven and Anna Melinda, the liquidator of the Marcelo Group. They elevated the case all the way to the Court of Appeals and later to the Supreme Court but failed to get a reversal of the judge’s order due to a technicality—failing to file a motion for reconsideration of the RTC decision before appealing it to a higher court.

In December 2010, however, the judge ordered hearings conducted to determine if the assets in Jose Jr.’s inventory were really part of the Marcelo estate. The determination was referred to mediation, which, upon termination, prompted Jose Jr. to ask the RTC to execute its June 2010 order.

The judge issued a writ of execution in favor of Jose Jr. in September 2013, prompting the other heirs to seek intervention from the Court of Appeals.

Also in December 2010, Anna sued Jose Jr. before the Malabon RTC to stop him, among others, from taking possession of the Marcelo Group financial papers and interfering in her task as liquidator. The RTC ruling in her favor was stopped by the Court of Appeals in December last year.

Last February, the Quezon City RTC, acting on a motion filed by Jose Jr., ordered Anna, John Steven and other Marcelo Group officers arrested for contempt for failing to turn over the companies’ papers. The arrest order was nullified by the Court of Appeals last May.

In its latest ruling, the appeals court ruled that Balut erred when he issued the June 2010 order and the writ of execution without determining the truthfulness of the inventory of assets filed by Jose Jr., merely because he was the administrator of the estate.

It also chided Balut for concluding that those who opposed the inventory have the burden of showing that the list was erroneous, noting that “it is the duty of the probate court to determine whether or not said properties should indeed be included in the inventory or list of the properties to be administered.”

“However, instead of discharging said duty, the [Quezon City RTC] merely relied on the presumption of regularity in the performance of duty of Jose Jr. as administrator. In doing so, we find that the [RTC] gravely abused its discretion,” the Court of Appeals said.

The court also ruled that a writ of execution “can only be issued to enforce a final judgment” and that it “cannot modify the final judgment or order it seeks to enforce.”