SPECIAL PROCEEDINGS (Atty.

Geraldine Quimosing-Tiu) 1
COMPILATION OF CASES

SALE, MORTGAGE, ENCUMBRANCE OF ASSETS The Facts

REGULATIONS FOR GRANTING AUTHORITY

The facts of the case, as narrated by the Court of Appeals (CA), are
as follows:4
SANDEJAS v. LINA

"On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition

THIRD DIVISION (Record, SP. Proc. No. R-83-15601, pp. 8-10) in the lower court
praying that letters of administration be issued in his favor for the
G.R. No. 141634 February 5, 2001 settlement of the estate of his wife, REMEDIOS R. SANDEJAS, who
died on April 17, 1955. On July 1, 1981, Letters of Administration
[were issued by the lower court appointing Eliodoro Sandejas, Sr. as
Heirs of Spouses REMEDIOS R. SANDEJAS and ELIODORO P.
administrator of the estate of the late Remedios Sandejas (Record,
SANDEJAS SR. -- ROBERTO R. SANDEJAS, ANTONIO R.
SP. Proc. No. R-83-15601, p. 16). Likewise on the same date,
SANDEJAS, CRISTINA SANDEJAS MORELAND, BENJAMIN
Eliodoro Sandejas, Sr. took his oath as administrator (Record, SP.
R. SANDEJAS, REMEDIOS R. SANDEJAS, and heirs of SIXTO S.
Proc. No. R-83-15601, p. 17). x x x.
SANDEJAS II, RAMON R. SANDEJAS, TERESITA R. SANDEJAS,
and ELIODORO R. SANDEJAS JR., all represented by
ROBERTO R. SANDEJAS, petitioners, "On November 19, 1981, the 4th floor of Manila City Hall was burned
vs. and among the records burned were the records of Branch XI of the
ALEX A. LINA, respondent. Court of First Instance of Manila. As a result, [A]dministrator Eliodoro
Sandejas, Sr. filed a [M]otion for [R]econstitution of the records of
the case on February 9, 1983 (Record, SP. Proc. No. R-83-15601,
pp. 1-5). On February 16, 1983, the lower court in its [O]rder granted
the said motion (Record, SP. Proc. No. R-83-15601, pp. 28-29).
PANGANIBAN, J.:

"On April 19, 1983, an Omnibus Pleading for motion to intervene and
A contract of sale is not invalidated by the fact that it is subject to petition-in-intervention was filed by [M]ovant Alex A. Lina alleging
probate court approval. The transaction remains binding on the among others that on June 7, 1982, movant and [A]dministrator
seller-heir, but not on the other heirs who have not given their Eliodoro P. Sandejas, in his capacity as seller, bound and obligated
consent to it. In settling the estate of the deceased, a probate court himself, his heirs, administrators, and assigns, to sell forever and
has jurisdiction over matters incidental and collateral to the exercise absolutely and in their entirety the following parcels of land which
of its recognized powers. Such matters include selling, mortgaging formed part of the estate of the late Remedios R. Sandejas, to wit:
or otherwise encumbering realty belonging to the estate. Rule 89,
Section 8 of the Rules of Court, deals with the conveyance of real
1. 'A parcel of land (Lot No.22 Block No. 45 of the subdivision plan
property contracted by the decedent while still alive. In contrast with
Psd-21121, being a portion of Block 45 described on plan Psd-
Sections 2 and 4 of the same Rule, the said provision does not limit
19508, G.L.R.O. Rec. No. 2029), situated in the "Municipality of
to the executor or administrator the right to file the application for
Makati, province of Rizal, containing an area of TWO HUNDRED
authority to sell, mortgage or otherwise encumber realty under
SEVENTY (270) SQUARE METERS, more or less, with TCT No.
administration. The standing to pursue such course of action before
13465;
the probate court inures to any person who stands to be benefited or
injured by the judgment or to be entitled to the avails of the
suit.1âwphi1.nêt 2. 'A parcel of land (Lot No. 21 Block No. 45 of the subdivision plan
Psd-21141, being a portion of Block 45 described on plan Psd-
19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of
The Case
Makati, Province of Rizal, containing an area of TWO HUNDRED
SEVENTY (270) SQUARE METERS, more or less, with TCT No.
Before us is a Petition for Review under Rule 45 of the Rules of 13464;'
Court, seeking to reverse and set aside the Decision1 dated April 16,
1999 and the Resolution2 dated January 12, 2000, both promulgated
3. 'A parcel of land (Lot No. 5 Block No. 45 of the subdivision plan
by the Court of Appeals in CA-GR CV No. 49491. The dispositive
Psd-21141, being a portion of Block 45 described on plan Psd-
portion of the assailed Decision reads as follows: 3
19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of
Makati, Province of Rizal, containing an area of TWO HUNDRED
"WHEREFORE, for all the foregoing, [w]e hereby MODIFY the EIGHT (208) SQUARE METERS, more or less, with TCT No.
[O]rder of the lower court dated January 13, 1995, approving the 13468;'
Receipt of Earnest Money With Promise to Buy and Sell dated June
7, 1982, only to the three-fifth (3/5) portion of the disputed lots
4. 'A parcel of land (Lot No. 6, Block No. 45 of the subdivision plan
covering the share of [A]dministrator Eliodoro Sandejas, Sr. [in] the
Psd-21141, being a portion of Block 45 described on plan Psd-
property. The intervenor is hereby directed to pay appellant the
19508 G.L.R.O. Rec. No. 2029), situated in the Municipality of
balance of the purchase price of the three-fifth (3/5) portion of the
Makati, Province of Rizal, containing an area of TWO HUNDRED
property within thirty (30) days from receipt of this [O]rder and x x x
EIGHT (208) SQUARE METERS, more or less, with TCT No.
the administrator [is directed] to execute the necessary and proper
13468;'
deeds of conveyance in favor of appellee within thirty (30) days
thereafter."
"The [R]eceipt of the [E]arnest [M]oney with [P]romise to [S]ell and to
[B]uy is hereunder quoted, to wit:
The assailed Resolution denied reconsideration of the foregoing
disposition.
'Received today from MR. ALEX A. LINA the sum of ONE
HUNDRED THOUSAND (P100,000.00) PESOS, Philippine

Currency, per Metropolitan Bank & Trust Company Chec[k]
No. 319913 dated today for P100,000.00, x x x as additional earnest
money for the following:
xxx xxx xxx
all registered with the Registry of Deeds of the [P]rovince of Rizal
(Makati Branch Office) in the name of SELLER 'EL!ODORO
SANDEJAS, Filipino Citizen, of legal age, married to Remedios
Reyes de Sandejas;' and which undersigned, as SELLER, binds and
obligates himself, his heirs, administrators and assigns, to sell
forever and absolutely in their entirety (all of the four (4) parcels of
land above described, which are contiguous to each other as to form
one big lot) to said Mr. Alex A. Lina, who has agreed to buy all of
them, also binding on his heirs, administrators and assigns, for the
consideration of ONE MILLION (P1,000,000.00) PESOS, Philippine
Currency, upon such reasonable terms of payment as may be
agreed upon by them. The parties have, however, agreed on the
following terms and conditions:
'1. The P100,000.00 herein received is in addition to the P70,000.00
earnest money already received by SELLER from BUYER, all of
which shall form part of, and shall be deducted from, the purchase
price of P1,000,000.00, once the deed of absolute [sale] shall be
executed;
'2. As a consideration separate and distinct from the price,
undersigned SELLER also acknowledges receipt from Mr. Alex A.
Lina of the sum of ONE THOUSAND (P1,000.00) PESOS, Philippine
Currency, per Metropolitan Bank & Trust Company Check
No. 319912 dated today and payable to SELLER for P1,000.00;
'3. Considering that Mrs. Remedios Reyes de Sandejas is already
deceased and as there is a pending intestate proceedings for the
settlement of her estate (Spec. Proc. No.138393, Manila CFI,
Branch XI), wherein SELLER was appointed as administrator of said
Estate, and as SELLER, in his capacity as administrator of said
Estate, has informed BUYER that he (SELLER) already filed a
[M]otion with the Court for authority to sell the above parcels of land
to herein BUYER, but which has been delayed due to the burning of
the records of said Spec. Pro. No. 138398, which records are
presently under reconstitution, the parties shall have at least ninety
(90) days from receipt of the Order authorizing SELLER, in his
capacity as administrator, to sell all THE ABOVE DESCRIBED
PARCELS OF LAND TO HEREIN BUYER (but extendible for
another period of ninety (90) days upon the request of either of the
parties upon the other), within which to execute the deed of absolute
sale covering all above parcels of land;
'4. In the event the deed of absolute sale shall not proceed or not be
executed for causes either due to SELLER'S fault, or for causes of
which the BUYER is innocent, SELLER binds himself to personally
return to Mr. Alex A. Lina the entire ONE HUNDRED SEVENTY
THOUSAND ([P]170,000.00) PESOS In earnest money received
from said Mr. Lina by SELLER, plus fourteen (14%) percentum
interest per annum, all of which shall be considered as liens of said
parcels of land, or at least on the share therein of herein SELLER;
'5. Whether indicated or not, all of above terms and conditions shall
be binding on the heirs, administrators, and assigns of both the
SELLER (undersigned MR. ELIODORO P. SANDEJAS, SR.) and
BUYER (MR. ALEX A. LINA).' (Record, SP. Proc. No. R-83-15601,
pp. 52-54)
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 2
COMPILATION OF CASES
"On July 17, 1984, the lower court issued an [O]rder granting the
intervention of Alex A. Lina (Record, SP. Proc. No. R-83-15601, p.
167).
"On January 7, 1985, the counsel for [A]dministrator Eliodoro P.
Sandejas filed a [M]anifestation alleging among others that the
administrator, Mr. Eliodoro P. Sandejas, died sometime in November
1984 in Canada and said counsel is still waiting for official word on
the fact of the death of the administrator. He also alleged, among
others that the matter of the claim of Intervenor Alex A. Lina
becomes a money claim to be filed in the estate of the late Mr.
Eliodoro P. Sandejas (Record, SP. Proc. No. R-83-15601, p. 220).
On February 15, 1985, the, lower court issued an [O]rder directing,
among others, that the counsel for the four (4) heirs and other heirs
of Teresita R. Sandejas to move for the appointment of [a] new
administrator within fifteen (15) days from receipt of this [O]rder
(Record, SP. Proc. No. R-83-15601, p. 227). In the same manner,
on November 4, 1985, the lower court again issued an order, the
content of which reads:
'On October 2, 1985, all the heirs, Sixto, Roberto, Antonio, Benjamin
all surnamed Sandejas were ordered to move for the appointment of
[a] new administrator. On October 16, 1985, the same heirs were
given a period of fifteen (15) days from said date within which to
move for the appointment of the new administrator. Compliance was
set for October 30, 1985, no appearance for the aforenamed heirs.
The aforenamed heirs are hereby ordered to show cause within
fifteen (15) days from receipt of this Order why this Petition for
Settlement of Estate should not be dismissed for lack of interest and
failure to comply with a lawful order of this Court.
'SO ORDERED.' (Record, SP. Proc. No. R-83-15601, p. 273).
"On November 22, 1985, Alex A. Lina as petitioner filed with the
Regional Trial Court of Manila an Omnibus Pleading for (1) petition
for letters of administration [and] (2) to consolidate instant case with
SP. Proc. No. R-83-15601 RTC-Branch XI-Manila, docketed therein
as SP. Proc. No. 85- 33707 entitled 'IN RE: INTESTATE ESTATE
OF ELIODORO P. SANDEJAS, SR., ALEX A. LINA PETITIONER",
[for letters of administration] (Record, SP. Proc. No.85-33707, pp. 1-
7). On November 29, 1985, Branch XXXVI of the Regional Trial
Court of Manila issued an [O]rder consolidating SP. Proc. No. 85-
33707, with SP. Proc. No. R-83-15601 (Record, SP. Proc. No. 85-
33707, p. 13). Likewise, on December 13, 1985, the Regional Trial
Court of Manila, Branch XI, issued an [O]rder stating that 'this Court
has no objection to the consolidation of Special proceedings No. 85-
331707, now pending before Branch XXXVI of this Court, with the
present proceedings now pending before this Branch' (Record, SP.
Proc. No. R-83- 15601, p. 279).
"On January 15, 1986, Intervenor Alex A. Lina filed [a] Motion for his
appointment as a new administrator of the Intestate Estate of
Remedios R. Sandejas on the following reasons:
'5.01. FIRST, as of this date, [i]ntervenor has not received any
motion on the part of the heirs Sixto, Antonio, Roberto and
Benjamin, all surnamed Sandejas, for the appointment of anew
[a]dministrator in place of their father, Mr. Eliodoro P. Sandejas, Sr.;
'5.02. SECOND, since Sp. Proc. 85-33707, wherein the [p]etitioner is
herein Intervenor Alex A. Lina and the instant Sp. PROC. R-83-
15601, in effect are already consolidated, then the appointment of
Mr. Alex Lina as [a]dministrator of the Intestate Estate of Remedios
R. Sandejas in instant Sp. Proc. R-83-15601, would be beneficial to
the heirs and also to the Intervenor;

'5.03. THIRD, of course, Mr. Alex A. Lina would be willing to give
way at anytime to any [a]dministrator who may be proposed by the
heirs of the deceased Remedios R. Sandejas, so long as such
[a]dministrator is qualified.' (Record, SP. Proc. No. R-83-15601, pp.
281-283)
"On May 15, 1986, the lower court issued an order granting the
[M]otion of Alex A. Lina as the new [a]dministrator of the Intestate
Estate of Remedios R. Sandejas in this proceedings. (Record, SP.
Proc. No. R-83-15601, pp. 288- 290)
"On August 281 1986, heirs Sixto, Roberto, Antonio and Benjamin,
all surnamed Sandejas, and heirs [sic] filed a [M]otion for
[R]econsideration and the appointment of another administrator Mr.
Sixto Sandejasl in lieu of [I]ntervenor Alex A. Lina stating among
others that it [was] only lately that Mr. Sixto Sandejas, a son and
heir, expressed his willingness to act as a new administrator of the
intestate estate of his mother, Remedios R. Sandejas (Record, SP.
Proc. No. 85-33707, pp. 29-31). On October 2, 1986, Intervenor Alex
A. Lina filed his [M]anifestation and [C]ounter [M]otion alleging that
he ha[d] no objection to the appointment of Sixto Sandejas as
[a]dministrator of the [i]ntestate [e]state of his mother Remedios R.
Sandejas (Sp. Proc. No.85-15601), provided that Sixto Sandejas be
also appointed as administrator of the [i]ntestate [e]state of his
father, Eliodoro P . Sandejas, Sr. (Spec. Proc. No. 85-33707), which
two (2) cases have been consolidated (Record, SP. Proc. No. 85-
33707, pp. 34-36). On March 30, 1987, the lower court granted the
said [M]otion and substituted Alex Lina with Sixto Sandejas as
petitioner in the said [P]etitions (Record, SP. Proc. No. 85-33707, p.
52). After the payment of the administrator's bond (Record, SP.
Proc. No. 83-15601, pp. 348-349) and approval thereof by the court
(Record, SP. Proc. No. 83-15601, p. 361), Administrator Sixto
Sandejas on January 16, 1989 took his oath as administrator of the
estate of the deceased Remedios R. Sandejas and Eliodoro P.
Sandejas (Record, SP. Proc. No. 83-15601, p. 367) and was
likewise issued Letters of Administration on the same day (Record,
SP. Proc. No. 83-15601, p. 366).
"On November 29, 1993, Intervenor filed [an] Omnibus Motion (a) to
approve the deed of conditional sale executed between Plaintiff-in-
lntervention Alex A. Lina and Elidioro [sic] Sandejas, Sr. on June 7,
1982; (b) to compel the heirs of Remedios Sandejas and Eliodoro
Sandejas, Sr. thru their administrator, to execute a deed of absolute
sale in favor of [I]ntervenor Alex A. Lina pursuant to said conditional
deed of sale (Record, SP. Proc. No. 83-15601, pp. 554-561) to
which the administrator filed a [M]otion to [D]ismiss and/or
[O]pposition to said omnibus motion on December 13, 1993
(Record, SP. Proc. No.83-15601, pp. 591-603).
"On January 13, 1995, the lower court rendered the questioned
order granting intervenor's [M]otion for the [A]pproval of the Receipt
of Earnest Money with promise to buy between Plaintiff-in-
lntervention Alex A. Lina and Eliodoro Sandejas, Sr. dated June 7,
1982 (Record, SP. Proc. No. 83-15601, pp. 652-654 ). x x x."
The Order of the intestate courts disposed as follows:
"WHEREFORE, [i]ntervenor's motion for the approval of the Receipt
Of Earnest Money With Promise To Sell And To Buy dated June 7,
1982, is granted. The [i]ntervenor is directed to pay the balance of
the purchase price amounting to P729,000.00 within thirty (30) days
from receipt of this Order and the Administrator is directed to
execute within thirty (30) days thereafter the necessary and proper
deeds of conveyancing."6
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 3
COMPILATION OF CASES
Ruling of the Court of Appeals
Overturning the RTC ruling, the CA held that the contract between
Eliodoro Sandejas Sr. and respondent was merely a contract to sell,
not a perfected contract of sale. It ruled that the ownership of the
four lots was to remain in the intestate estate of Remedios Sandejas
until the approval of the sale was obtained from the settlement court.
That approval was a positive suspensive condition, the nonfulfillment
of which was not tantamount to a breach. It was simply an event that
prevented the obligation from maturing or becoming effective. If the
condition did not happen, the obligation would not arise or come into
existence.
The CA held that Section 1, Rule 897 of the Rules of Court was
inapplicable, because the lack of written notice to the other heirs
showed the lack of consent of those heirs other than Eliodoro
Sandejas Sr. For this reason, bad faith was imputed to him, for no
one is allowed to enjoyed a claim arising from one’s own
wrongdoing. Thus, Eliodoro Sr. was bound, as a matter of justice
and good faith, to comply with his contractual commitments as an
owner and heir. When he entered into the agreement with
respondent, he bound his conjugal and successional shares in the
property.
Hence, this Petition.8
Issues
In their Memorandum, petitioners submit the following issues for our
resolution:
"a) Whether or not Eliodoro P. Sandejas Sr. is legally obligated to
convey title to the property referred to in the subject document which
was found to be in the nature of a contract to sell - where the
suspensive condition set forth therein [i.e.] court approval, was not
complied with;
"b) Whether or not Eliodoro P. Sandejas Sr. was guilty of bad faith
despite the conclusion of the Court of Appeals that the respondent
[bore] the burden of proving that a motion for authority to sell ha[d]
been filed in court;
"c) Whether or not the undivided shares of Eliodoro P. Sandejas Sr.
in the subject property is three-fifth (3/5) and the administrator of the
latter should execute deeds of conveyance therefor within thirty days
from receipt of the balance of the purchase price from the
respondent; and
"d) Whether or not the respondent's petition-in-intervention was
converted to a money claim and whether the [trial court] acting as a
probate court could approve the sale and compel the petitioners to
execute [a] deed of conveyance even for the share alone of Eliodoro
P. Sandejas Sr."9
In brief, the Petition poses the main issue of whether the CA erred in
modifying the trial court's Decision and in obligating petitioners to
sell 3/5 of the disputed properties to respondent, even if the
suspensive condition had not been fulfilled. It also raises the
following collateral issues: (1) the settlement court's jurisdiction; (2)
respondent-intervenor's standing to file an application for the
approval of the sale of realty in the settlement case, (3) the
decedent's bad faith, and (4) the computation of the decedent's
share in the realty under administration.

This Court’s Ruling
The Petition is partially meritorious.
Main Issue:
Obligation With a Suspensive Condition
Petitioners argue that the CA erred in ordering the conveyance of
the disputed 3/5 of the parcels of land, despite the nonfulfillment of
the suspensive condition -- court approval of the sale -- as contained
in the "Receipt of Earnest Money with Promise to Sell and to Buy"
(also referred to as the "Receipt"). Instead, they assert that because
this condition had not been satisfied, their obligation to deliver the
disputed parcels of land was converted into a money claim.
We disagree. Petitioners admit that the agreement between the
deceased Eliodoro Sandejas Sr. and respondent was a contract to
sell. Not exactly. In a contract to sell, the payment of the purchase
price is a positive suspensive condition. The vendor's obligation to
convey the title does not become effective in case of failure to pay. 10
On the other hand, the agreement between Eliodoro Sr. and
respondent is subject to a suspensive condition -- the procurement
of a court approval, not full payment. There was no reservation of
ownership in the agreement. In accordance with paragraph 1 of the
Receipt, petitioners were supposed to deed the disputed lots over to
respondent. This they could do upon the court's approval, even
before full payment. Hence, their contract was a conditional sale,
rather than a contract to sell as determined by the CA.
When a contract is subject to a suspensive condition, its birth or
effectivity can take place only if and when the condition happens or
is fulfilled.11 Thus, the intestate court's grant of the Motion for
Approval of the sale filed by respondent resulted in petitioners'
obligation to execute the Deed of Sale of the disputed lots in his
favor. The condition having been satisfied, the contract was
perfected. Henceforth, the parties were bound to fulfil what they had
expressly agreed upon.
Court approval is required in any disposition of the decedent's estate
per Rule 89 of the Rules of Court. Reference to judicial approval,
however, cannot adversely affect the substantive rights of heirs to
dispose of their own pro indiviso shares in the co-heirship or co-
ownership.12 In other words, they can sell their rights, interests or
participation in the property under administration. A stipulation
requiring court approval does not affect the validity and the effectivity
of the sale as regards the selling heirs. It merely implies that the
property may be taken out of custodia legis, but only with the court's
permission.13 It would seem that the suspensive condition in the
present conditional sale was imposed only for this reason.
Thus, we are not persuaded by petitioners' argument that the
obligation was converted into a mere monetary claim. Paragraph 4
of the Receipt, which petitioners rely on, refers to a situation wherein
the sale has not materialized. In such a case," the seller is bound to
return to the buyer the earnest money paid plus interest at fourteen
percent per annum. But the sale was approved by the intestate
court; hence, the proviso does not apply.
Because petitioners did not consent to the sale of their ideal shares
in the disputed lots, the CA correctly limited the scope of the Receipt
to the pro-indiviso share of Eliodoro Sr. Thus, it correctly modified
the intestate court's ruling by excluding their shares from the ambit
of the transaction.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 4
COMPILATION OF CASES
First Collateral Issue:
Jurisdiction of Settlement Court
Petitioners also fault the CA Decision by arguing, inter alia, (a)
jurisdiction over ordinary civil action seeking not merely to enforce a
sale but to compel performance of a contract falls upon a civil court,
not upon an intestate court; and (b) that Section 8 of Rule 89 allows
the executor or administrator, and no one else, to file an application
for approval of a sale of the property under administration.
Citing Gil v. Cancio14 and Acebedo v. Abesamis,15 petitioners
contend that the CA erred in clothing the settlement court with the
jurisdiction to approve the sale and to compel petitioners to execute
the Deed of Sale. They allege factual differences between these
cases and the instant case, as follows: in Gil, the sale of the realty in
administration was a clear and an unequivocal agreement for the
support of the widow and the adopted child of the decedent; and
in Acebedo, a clear sale had been made, and all the heirs consented
to the disposition of their shares in the realty in administration.
We are not persuaded. We hold that Section 8 of Rule 89 allows this
action to proceed. The factual differences alleged by petitioners
have no bearing on the intestate court's jurisdiction over the
approval of the subject conditional sale. Probate jurisdiction covers
all matters relating to the settlement of estates (Rules 74 & 86-91)
and the probate of wills (Rules 75-77) of deceased persons,
including the appointment and the removal of administrators and
executors (Rules 78-85). It also extends to matters incidental and
collateral to the exercise of a probate court's recognized powers
such as selling, mortgaging or otherwise encumbering realty
belonging to the estate. Indeed, the rules on this point are intended
to settle the estate in a speedy manner, so that the benefits that may
flow from such settlement may be immediately enjoyed by the heirs
and the beneficiaries.16
In the present case, the Motion for Approval was meant to settle the
decedent's obligation to respondent; hence, that obligation clearly
falls under the jurisdiction of the settlement court. To require
respondent to file a separate action -- on whether petitioners should
convey the title to Eliodoro Sr.'s share of the disputed realty -- will
unnecessarily prolong the settlement of the intestate estates of the
deceased spouses.
The suspensive condition did not reduce the conditional sale
between Eliodoro Sr. and respondent to one that was "not a definite,
clear and absolute document of sale," as contended by petitioners.
Upon the occurrence of the condition, the conditional sale became a
reciprocally demandable obligation that is binding upon the
parties.17 That Acebedo also involved a conditional sale of real
property18 proves that the existence of the suspensive condition did
not remove that property from the jurisdiction of the intestate court.
Second Collateral Issue:
Intervenor's Standing
Petitioners contend that under said Rule 89, only the executor or
administrator is authorized to apply for the approval of a sale of
realty under administration. Hence, the settlement court allegedly
erred in entertaining and granting respondent's Motion for
Approval.1âwphi1.nêt

We read no such limitation. Section 8, Rule 89 of the Rules of Court,
provides:
"SEC. 8. When court may authorize conveyance of realty which
deceased contracted to convey. Notice. Effect of deed. -- Where the
deceased was in his lifetime under contract, binding in law, to deed
real property, or an interest therein, the court having jurisdiction of
the estate may, on application for that purpose, authorize the
executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the
parties and approved by the court; and if the contract is to convey
real property to the executor or administrator, the clerk of the court
shall execute the deed. x x x."
This provision should be differentiated from Sections 2 and 4 of the
same Rule, specifically requiring only the executor or administrator
to file the application for authority to sell, mortgage or otherwise
encumber real estate for the purpose of paying debts, expenses and
legacies (Section 2);19 or for authority to sell real or personal estate
beneficial to the heirs, devisees or legatees and other interested
persons, although such authority is not necessary to pay debts,
legacies or expenses of administration (Section 4). 20 Section 8
mentions only an application to authorize the conveyance of realty
under a contract that the deceased entered into while still alive.
While this Rule does not specify who should file the application, it
stands to reason that the proper party must be one .who is to be
benefited or injured by the judgment, or one who is to be entitled to
the avails of the suit.21
Third Collateral Issue:
Bad Faith
Petitioners assert that Eliodoro Sr. was not in bad faith, because (a)
he informed respondent of the need to secure court approval prior to
the sale of the lots, and (2) he did not promise that he could obtain
the approval.
We agree. Eliodoro Sr. did not misrepresent these lots to respondent
as his own properties to which he alone had a title in fee simple. The
fact that he failed to obtain the approval of the conditional sale did
not automatically imply bad faith on his part. The CA held him in bad
faith only for the purpose of binding him to the conditional sale. This
was unnecessary because his being bound to it is, as already
shown, beyond cavil.
Fourth Collateral Issue:
Computation of Eliodoro's Share
Petitioners aver that the CA's computation of Eliodoro Sr.'s share in
the disputed parcels of land was erroneous because, as the conjugal
partner of Remedios, he owned one half of these lots plus a further
one tenth of the remaining half, in his capacity as a one of her legal
heirs. Hence, Eliodoro's share should be 11/20 of the entire
property. Respondent poses no objection to this computation. 22
On the other hand, the CA held that, at the very least, the conditional
sale should cover the one half (1/2) pro indiviso conjugal share of
Eliodoro plus his one tenth (1/10) hereditary share as one of the ten
legal heirs of the decedent, or a total of three fifths (3/5) of the lots in
administration.23
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 5
COMPILATION OF CASES
Petitioners' correct. The CA computed Eliodoro's share as an heir
based on one tenth of the entire disputed property. It should be
based only on the remaining half, after deducting the conjugal
share.24
The proper determination of the seller-heir's shares requires further
explanation. Succession laws and jurisprudence require that when a
marriage is dissolved by the death of the husband or the wife, the
decedent's entire estate - under the concept of conjugal properties of
gains -- must be divided equally, with one half going to the surviving
spouse and the other half to the heirs of the deceased.25 After the
settlement of the debts and obligations, the remaining half of the
estate is then distributed to the legal heirs, legatees and devices.
We assume, however, that this preliminary determination of the
decedent's estate has already been taken into account by the
parties, since the only issue raised in this case is whether Eliodoro's
share is 11/20 or 3/5 of the disputed lots.
WHEREFORE, The Petition is hereby PARTIALLY GRANTED. The
appealed Decision and Resolution are AFFIRMED with
the MODIFICATION that respondent is entitled to only a pro-indiviso
share equivalent to 11/20 of the disputed lots.
SO ORDERED.
OROLA v. PONTEVEDRA
Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 158566 September 20, 2005
JOSEPHINE OROLA, MYRNA OROLA, ANGELINE OROLA,
MANUEL OROLA, ANTONIO OROLA and ALTHEA
OROLA, Petitioners,
vs.
THE RURAL BANK OF PONTEVEDRA (CAPIZ), INC., EMILIO Q.
OROLA, THE REGISTER OF DEEDS OF CAPIZ and THE EX-
OFFICIO PROVINCIAL SHERIFF OF CAPIZ, Respondent.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the
Court of Appeals (CA) in CA-G.R. CV No. 35724 reversing, on
appeal, the Decision2 of the Regional Trial Court (RTC) of Roxas
City, Branch 15, in Civil Case No. V-5452.
On July 16, 1969, Trinidad Laserna Orola died intestate. She was
survived by her husband Emilio Orola and their six minor children,
namely, 10-year-old Antonio, 12-year-old Josephine, 16-year-old
Manuel, and other siblings, Myrna, Angeline and Althea.
The estate consisted of property located in Pontevedra, Capiz. It
included portions of Lots 1071 and 1088 (Lot 2-B) of the Pontevedra
Cadastre, covered by Tax Declaration (T.D.) No. 71973 under the
names of the heirs of Trinidad Orola; Lot 1088 (Lot 2) covered by
T.D. No. 6901 under the name of Trinidad Orola; Lot 1071 and

portions of Lot 1088 (Lot 2-A) of the same cadastre covered by T.D.
No. 7196 under the names of the heirs of Trinidad Orola; and Lot
1050 of the same cadastre covered by T.D. No. 26234 under the
name of Trinidad Orola. Portions of the property were devoted to the
development and production of sugar. Some portions were riceland,
while some parts of the property were swampy.5
Emilio Orola, who, in the meantime, had married anew, executed a
waiver of all his rights and interests over the said property in favor of
his children by Trinidad Laserna, namely, Josephine, Myrna,
Angeline, Manuel, Antonio and Althea, all surnamed Orola.6
In 1973, Emilio Orola retired as cashier of the Philippine National
Bank (PNB).7 He filed a petition for his appointment as guardian over
the persons and property of his minor children. The case was
docketed as Special Proceedings (Sp. Proc.) No. V-3526. The
petition was granted, and Emilio Orola was appointed guardian not
only over the persons of his minor children but also over their
property. On November 6, 1973, Emilio filed a petition with the RTC
for the settlement of the estate of his deceased spouse, Trinidad
Laserna, and his appointment as administrator of her estate. The
RTC issued an order appointing Emilio Orola as administrator of the
estate of his deceased spouse.
As such administrator of the estate, Emilio took possession of the
said parcels of land. He opened an account in the name of the
estate with the PNB. He embarked on a massive sugar production
and, with prior approval of the court, negotiated with banking
institutions for financing loans to purchase the required equipments.
However, in 1976 and 1977, there was a sudden collapse of the
sugar industry. Emilio Orola found it necessary to develop the
swampy portion of the estate for the production of fish. To finance
the endeavor, he needed at least ₱600,000.00.
On September 11, 1980, Emilio Orola filed a motion8 in Sp. Proc.
No. V-3639 for authority to negotiate a ₱600,000.00 loan from the
Central Bank of the Philippines for the full and complete
development of the fishpond portion of the estate, and to transfer the
sugar account of the estate from the PNB to the Republic Planters
Bank (RPB).
On September 12, 1980, the court granted the motion of the
administrator and authorized him to negotiate the loan through the
Rural Bank of Capiz (Rural Bank of Pontevedra, Capiz) and to
transfer the sugar account of the estate to the RPB in Roxas
City.9 Emilio then filed an application with the Rural Bank for a
financing loan of ₱600,000.00. However, the bank informed him that
the said loan would have to be processed by the Central Bank and
that it would take some time. He was informed that there would be
no need for the Central Bank to intervene if the loan of ₱600,000.00
would be broken down into three parts of ₱200,000.00, each to be
applied for by three applicants to whom the property to be used as
collateral would be leased by the estate. Emilio agreed and talked to
his children, Josephine, Manuel and Antonio, about the bank’s
proposal. The three siblings agreed.10 The Estate of Trinidad
Laserna, through its administrator, Emilio, as lessor, and Josephine,
Manuel and Antonio, all surnamed Orola, as lessees, executed
separate contracts of lease over the aforesaid property of the estate.
On September 20, 1982, the intestate estate court issued an Order
approving the contracts.
However, it turned out that the lessees would not qualify for the
loans; the bank required a lease period of at least 10 years from the
time the court approved the same. On May 20, 1982, Emilio,
Antonio, Manuel and Josephine Orola filed a Manifestation11 with the
intestate estate court, praying that its order be amended to state that
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 6
COMPILATION OF CASES
the periods of the leases were to commence from court approval of
the said contracts.
However, on December 15, 1982, the estate, through Emilio, as
lessor, and Josephine, Antonio and Manuel Orola, executed
separate Amended Contracts of Lease12 covering the same
property. The periods of the lease were extended to 12 years, to
commence from their approval by the intestate estate court. The
lessees were also authorized to negotiate loans for the development
of the leased premises not to exceed ₱200,000.00, and to bind the
leased premises by way of real estate mortgage as security therefor.
On December 15, 1982, Emilio filed an Ex Parte Motion13 in the
intestate estate court for the approval of the amended contracts of
lease appended thereto. On December 17, 1982, Angeline, Myrna
and Althea Orola filed their Joint Affidavit of Conformity14 to the
motion. On December 17, 1982, the court granted the motion of
Emilio and approved the amended contracts of lease.15 On
December 20, 1982, the Rural Bank notified Emilio that the loan
applications of his children had been approved.16
Antonio, Manuel and Josephine signed separate Promissory
Notes17 on March 21, 1983 in which they promised and bound
themselves to pay their respective loans in 10 years in stated annual
installments. Antonio Orola, for and in behalf of his father Emilio
Orola, executed a Real Estate Mortgage over Lot 1088 as security
for the payment of his loan.18 Manuel Orola, also as attorney-in-fact
of the administrator of the estate, likewise, executed a real estate
mortgage in favor of the Rural Bank over the said lots as security for
his loan.19 Josephine Orola, as attorney-in-fact of the administrator
of the estate, executed a separate real estate mortgage agreement
over a portion of Lot 1088 and Lot 1071 as security for her
loan.20 However, the real estate mortgage contracts were not
submitted to the guardianship and intestate estate courts for
approval. Neither were Myrna, Angeline and Althea aware of the
said loans.
The net proceeds of the loan, in the total amount of ₱582,000.00,
were deposited in the Rural Bank on May 9, 1983 in Emilio’s
account.21 From the said proceeds, the Rural Bank deducted the
amount of ₱229,771.20, the accommodation loan Emilio secured
from the Rural Bank.22 As of September 9, 1983, the balance of the
said deposit amounted to only ₱4,292.79.23 Emilio, thereafter, failed
to pay the amortizations of the loans to the Rural Bank.24
This prompted the Rural Bank to write separate letters of demand to
Josephine, Manuel and Antonio, demanding payment of the balance
of their accounts within seven days from the receipt thereof,
otherwise the Rural Bank would cause the extrajudicial foreclosure
of the real estate mortgages.25 Emilio Orola pleaded to the Rural
Bank not to foreclose the mortgages. However, on June 15, 1985,
the Rural Bank filed an application with the Ex-Officio Provincial
Sheriff for the extrajudicial foreclosure of the real estate mortgages
over Lots 1071 and 1088.26The lots were sold at public auction on
April 14, 1986 with the Rural Bank as the winning bidder. The Ex-
OfficioProvincial Sheriff executed separate certificates of sale in
favor of the Rural Bank.27
On September 1, 1987, the guardianship court terminated the
guardianship and dismissed the case.28 On September 21, 1987,
Josephine, Myrna, Manuel and Antonio Orola executed a Deed of
Acceptance of Waiver or Donation in which they accepted their
father’s waiver of his rights, interests and participation over their
mother’s estate.29

On October 1, 1987, Josephine Orola and her siblings, Myrna,
Angeline, Manuel, Antonio and Althea, filed a Complaint against the
Rural Bank, their father Emilio and the Ex-Officio Provincial Sheriff
for the nullification of the Promissory Notes and Real Estate
Mortgages executed by Josephine, Manuel and Antonio Orola, and
the sale of the property subject of the said deed at public auction.
They alleged therein that they became the sole owners of Lots 1088
and 1071 when their father executed a waiver of his rights over the
said lots in their favor. They also alleged that the real estate
mortgage contracts were null and void because the same were
never submitted to and approved by the RTC in Sp. Proc. Nos. V-
3526 and V-3639. Moreover, they were hoodwinked by their father
into signing the contracts of lease and amended contracts of lease,
promissory notes and deeds of real estate mortgages as security for
the ₱600,000.00 loan on the assurance that they would be benefited
therefrom; moreover, they did not receive the proceeds of the said
loans. As such, the extrajudicial foreclosure of the real estate
mortgages and the sale of the property covered by the said deeds
were null and void. The plaintiffs prayed that:
(1) A Temporary Restraining Order be issued restraining in the
meantime the defendant Ex-Officio Provincial Sheriff from executing
the Sheriff’s Certificates of Sales arising out of Case No. 33 (1985),
Case No. 34 (1985) and Case No. 36 (1985), all of the Office of the
Provincial Sheriff.
(2) After hearing, a writ of preliminary injunction be issued against
the defendant Provincial Sheriff for the same purpose stated above,
and that the said Preliminary Injunction be made permanent after
trial on the merits.
(3) After trial, a Judgment be rendered -
(a) Declaring the contracts of loan and/or Promissory Notes
allegedly executed by plaintiffs Josephine, Manuel and Antonio
Orola in favor of the defendant Rural Bank of Pontevedra (Capiz),
Inc. null and void ab initio.
(b) Declaring the real estate mortgages purportedly signed by the
same plaintiffs Josephine, Manuel and Antonio Orola in favor of
defendant Rural Bank of Pontevedra (Capiz), Inc. null and
void ab initio.
(c) Ordering defendant Emilio Q. Orola and defendant Rural Bank of
Pontevedra (Capiz), Inc., jointly and severally, to pay the plaintiffs
moral damages in the sum of ₱600,000.00, actual damages in the
sum of ₱10,000.00, as and for attorney’s fees in the amount of
₱65,000.00, as exemplary damages in the sum of ₱10,000.00, and
to pay the costs of this suit.
(d) Ordering the Register of Deeds for the Province of Capiz to
cancel the registration of the real estate mortgages illegally made
under Section 113 of Presidential Decree No. 1529 affecting Lots
Nos. 1088 and 1050 of the Cadastral Survey of Pontevedra, Capiz.
The plaintiffs also pray for such other reliefs and remedies that may
be considered just and equitable under the premises.30
In its answer to the complaint, Rural Bank averred that the RTC in
Sp. Proc. No. V-3639 authorized and even approved the amended
contracts of sale executed by Antonio, Manuel and Josephine Orola
and the defendant Emilio Orola. It further averred that the plaintiffs
had agreed to the execution of the mortgages of the property subject
of the said deeds, and conformed to the said amended contracts
before the RTC in the intestate estate proceedings approved the
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 7
COMPILATION OF CASES
same; they were also notified of the balance of their account, and of
the extrajudicial foreclosure of the real estate mortgages, and the
subsequent sale of the property covered by the said mortgages at
public auction after they refused to pay their account despite
demands. As such, the plaintiffs were estopped from assailing the
real estate mortgages and the extrajudicial foreclosure thereof and
the sale of the lots covered by the said deeds at public auction.
Rural Bank prayed that:
WHEREFORE, premises considered, it is most respectfully prayed
of this Honorable Court that, after due notice and hearing, a
judgment be rendered in favor of defendant bank dismissing the
plaintiffs’ complaint and ordering the plaintiffs to pay defendant bank
the following:
1. As and for attorney’s fees in the amount of ₱50,000.00;
2. As moral, compensatory and exemplary damages, an amount to
be fixed by this Honorable Court;
3. The costs of this suit.
Herein defendant bank, likewise, prays that the plaintiffs petition for
the Issuance of a Temporary Restraining Order against the
defendant Ex-Officio Provincial Sheriff restraining him from
executing the Certificates of Sheriff Sale arising out of Case No. 33
(1985), Case No. 34 (1985) and Case No. 36 (1985), all of the Office
of the Provincial Sheriff of Capiz be denied for obvious lack of merit.
Herein defendant further prays that the extra-judicial foreclosure of
the Real Estate Mortgages recorded under Republic Act 3344 be
confirmed and declared binding and valid affecting the Original
Certificates of Title Nos. RO-801 (17658) and RO-802 (17682)
covering the mortgaged Lots Nos. 1088 and 1071 of the Cadastral
Survey of Capiz.
Herein defendant finally prays for such other reliefs or remedies
which are just and equitable in the premises.31
In his answer to the complaint, Emilio Orola admitted that the
guardianship proceedings terminated on September 1, 1987 but
specifically denied the allegations in the complaint that the plaintiffs
were the absolute owners of the lots subject matter thereof. He
alleged that he executed the Waiver of Right on October 26, 1976
only because his brother and sister-in-law required him to do so as a
condition to their signing the partition agreement, with their
assurance that the said waiver would take effect only after his death.
He further claimed that the plaintiffs were aware of this because they
accepted his waiver only on September 21, 1987 after they became
of age. Moreover, the plaintiffs had agreed to the execution of the
amended contracts of lease to facilitate the early release of the
loans as required by the Rural Bank. He further alleged that the
proceeds of the loans were used for the development of the estate;
the non-submission of the real estate mortgages to the intestate
estate and guardianship courts for approval was due to the fault of
Rural Bank; and his failure to pay the amortizations of the loan was
due to force majeure, namely, typhoon Undang.
On December 29, 1989, the Rural Bank presented the Real Estate
Mortgage in the Office of the Register of Deeds.32

On April 19, 1991, the RTC rendered judgment in favor of the
plaintiffs. The fallo of the decision reads:
IN VIEW OF THE CONSIDERATIONS, judgment is rendered:
1. Declaring the loans of Josephine Orola, Antonio Orola, Manuel
Orola, all on March 21, 1983, with the defendant, Rural Bank, at
₱200,000 each or a total of ₱600,000, null and void;
2. Declaring that the real estate mortgages of [the] above three (3)
plaintiffs on (a) Lot No. 1071-part and Lot No. 1088-part under Tax
Declaration No. 7196 in the name of [the] Heirs of Trinidad Laserna
Orola to secure the loan by Josephine Orola; (b) Lot No. 1088
known as Lot No. 2-B of the parcellary plan under Tax Declaration
No. 7197 in the name of the Heirs of Trinidad Orola and Lot No.
1050 under Tax Declaration No. 2623 in the name of Trinidad Orola
to secure the loan by Antonio Orola; and (c) Lot No. 1088 under Tax
Declaration No. 6901 in the name of Trinidad Laserna Orola to
secure the loan by Manuel Orola, all as Attorney-in-fact of defendant
Emilio Orola, administrator, null and void;
Both (Nos. 1 and 2) for failure to comply with the mandatory
requirements of Section 7, Rule 89, Revised Rules of Court;
3. Ordering the Office of the Registry of Land Titles and Deeds,
Province of Capiz, to cancel its registration of the real estate
mortgages affecting [the] above parcels of land.
Claims of damages and attorneys fees as well as counterclaims are
denied.
Costs against the defendants, pro indiviso.33
The trial court held that although the intestate estate court
authorized Emilio to negotiate a loan of ₱600,000.00 with Rural
Bank, he was not authorized to mortgage the real property of the
estate to the Rural Bank. The court ruled that the September 12,
1980 Order of the intestate estate court
was null and void because the motion of the administrator for
authority to negotiate a loan with the Rural Bank was made ex parte,
that is, without notifying the plaintiffs who were the heirs of the
deceased. The court also held that the plaintiffs were not estopped
from assailing the real estate mortgage contracts, the same being
null and void. It also declared that the issue of whether or not the
plaintiffs were the co-owners of the property should be ventilated
with the proper RTC in the exercise of its general jurisdiction in an
ordinary action for the said purpose.
Rural Bank’s motion for reconsideration of the decision was denied
by the trial court. It then appealed the decision to the CA, where it
alleged that:
As to Assignment on Error No. I and II
A – In ruling on the nullity of the loans and mortgages in question,
the lower court confined itself to the order of the intestate court,
dated December 12, 1980, totally ignoring the subsequent order
dated December 17, 1982 (Exhs. 36 & 37) which granted the
authority to encumber the estate in the manner required by the
defendant Rural Bank of Pontevedra.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 8
COMPILATION OF CASES
B – The non-presentation of the priorly authorized mortgages in
question in court after their execution, does not nullify said
mortgages, as what is required by Sec. 7, Rule 89 is only prior
approval by the intestate court.
As to Assignment of Error No. III
Estoppel [precludes] a party from [repudiating] an obligation
voluntarily assumed after having accepted benefits therefrom.
As to Assignment of Error No. IV
Because of their baseless complaint, defendant-appellant was
unnecessarily dragged into this litigation causing defendant-
appellant damages.34
The appellant bank averred that the amended contracts of lease,
which contained provisions requiring the intestate estate court’s
approval, were approved by the intestate estate court and
conformed to by the other heirs of the deceased. The bank posited
that the court a quo had no jurisdiction to nullify the order of the
estate court, which was co-equal in rank with the estate court in
approving the amended contracts of lease. It further alleged that the
administrator of the estate is not required under Section 7, Rule 89
of the Rules of Court to secure prior authority to mortgage the real
properties or otherwise encumber the same. Rural Bank alleged that
the appellees were estopped from assailing the real estate
mortgages of the property after having been benefited by the
₱600,000.00 loan.
The appellees failed to file their brief. On October 18, 2002, the CA
rendered a Decision35 granting the appeal and reversing the
appealed decision.
The appellate court ruled that the intestate estate court’s approval of
the amended contracts of lease carried with it the approval of the
real estate mortgages executed by Emilio Orola in favor of the Rural
Bank. Angeline, Myrna and Althea even conformed to the amended
contracts of lease; hence, were estopped from assailing them, as
well as the real estate mortgage contracts.
After the appellate court denied their motion for reconsideration of
the decision, the Orola siblings, now the petitioners, filed the instant
petition for review on certiorari with this Court, alleging that:
-I-
THE SUBJECT MORTGAGES CONSTITUTED OVER THE REAL
ESTATE PROPERTIES OF PETITIONERS-APPELLEES UNDER
SECTION 7, RULE 89 OF THE RULES OF COURT ARE VOID FOR
NON-COMPLIANCE WITH THE MANDATORY REGULATIONS
(SIC) OF THE SAID PROVISION.
-II-
ASSUMING ARGUENDO SUBSTANTIAL COMPLIANCE WITH
THE PROVISIONS OF RULE 89, SECTION 7, THE SUBJECT
MORTGAGES ARE STILL VOID FOR LACK OF AUTHORITY
FROM THE PROBATE COURT, HAVING BEEN CONSTITUTED
BY PERSONS OTHER THAN THE ADMINISTRATOR OF THE
ESTATE OF TRINIDAD LASERNA OROLA.36

The petitioners reiterate their argument that respondent Emilio
Orola, then administrator of the estate, failed to comply with Section
7, Rule 89 of the Rules of Court. They aver that this provision is
mandatory in nature, including the fixing of a time and place for
hearing of the motion for the approval of the amended contracts of
lease. They point out that respondent Orola failed to file a motion for
the approval of the real estate mortgages. The petitioners insist that
even if it is assumed that the December 17, 1982 Order of the
intestate estate court approving the amended contracts of lease
authorized the constitution of real estate mortgages over the real
property of the estate, such order is void, as it authorized petitioners
Manuel, Antonio and Josephine Orola, and not the respondent
Emilio Orola, to mortgage the said property. They insist that they are
not estopped from assailing a void order issued by the intestate
estate court.
Respondent Rural Bank insists that the petitioners had been
benefited by the loans granted to them; hence, are estopped from
assailing the real estate mortgage contracts. Respondent Orola, for
his part, avers that the one-half undivided portion of the property
subject of the real estate mortgages was the exclusive property of
the deceased, and partly the conjugal property of the respondent
and the deceased. Moreover, respondent Orola’s share in the
conjugal property was not the subject of the intestate case, as it was
not included as part of the property given as security for the loans of
the petitioners-mortgagees.
The petition is meritorious.
Section 2, Rule 89 of the Rules of Court provides that, upon
application of the administrator and on written notice to the heirs, the
court may authorize the administrator to mortgage so much as may
be necessary of the real estate for the expenses of the
administrator, or if it clearly appears that such mortgage would be
beneficial to the persons interested:
Sec. 2. When court may authorize sale, mortgage, or other
encumbrance of realty to pay debts and legacies through personality
not exhausted. – When the personal estate of the deceased is not
sufficient to pay the debts, expenses of administration, and legacies,
or where the sale of such personal estate may injure the business or
other interests of those interested in the estate, and where a testator
has not, otherwise, made sufficient provision for the payment of such
debts, expenses, and legacies, the court, on the application of the
executor or administrator and on written notice to the heirs,
devisees, and legatees residing in the Philippines, may authorize the
executor or administrator to sell, mortgage, or otherwise, encumber
so much as may be necessary of the real estate, in lieu of personal
estate, for the purpose of paying such debts, expenses, and
legacies, if it clearly appears that such sale, mortgage, or
encumbrance would be beneficial to the persons interested; and if a
part cannot be sold, mortgaged, or otherwise encumbered without
injury to those interested in the remainder, the authority may be for
the sale, mortgage, or other encumbrance of the whole of such real
estate, or so much thereof as is necessary or beneficial under the
circumstances.
Section 7 of Rule 89 provides the rules to obtain court approval for
such mortgage:
(a) The executor or administrator shall file a written petition setting
forth the debts due from the deceased, the expenses of
administration, the legacies, the value of the personal estate, the
situation of the estate to be sold, mortgaged, or otherwise
encumbered, and such other facts as show that the sale, mortgage,
or other encumbrance is necessary or beneficial;
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 9
COMPILATION OF CASES
(b) The court shall thereupon fix a time and place for hearing such
petition, and cause notice stating the nature of the petition, the
reason for the same, and the time and place of hearing, to be given
personally or by mail to the persons interested, and may cause such
further notice to be given, by publication or otherwise, as it shall
deem proper;
(c) If the court requires it, the executor or administrator shall give an
additional bond, in such sum as the court directs, conditioned that
such executor or administrator will account for the proceeds of the
sale, mortgage, or other encumbrance;
(d) If the requirements in the preceding subdivisions of this section
have been complied with, the court, by order stating such
compliance, may authorize the executor or administrator to sell,
mortgage, or otherwise encumber, in proper cases, such part of the
estate as is deemed necessary, and in case of sale the court may
authorize it to be public or private, as would be most beneficial to all
parties concerned. The executor or administrator shall be furnished
with a certified copy of such order;
(e) If the estate is to be sold at auction, the mode of giving notice of
the time and place of the sale shall be governed by the provisions
concerning notice of execution sale;
(f) There shall be recorded in the registry of deeds of the province in
which the real estate thus sold, mortgaged, or otherwise
encumbered is situated, a certified copy of the order of the court,
together with the deed of the executor or administrator for such real
estate, which shall be as valid as if the deed had been executed by
the deceased in his lifetime.
After the real estate mortgage is executed in accordance with the
foregoing regulations, the said deed must be submitted for the
consideration and approval or disapproval of the court.37
The records show that respondent Emilio Orola notified the
petitioners of his motion for the approval of the amended contracts
of lease. Although the motion was ex parte, nonetheless, petitioners
Angeline, Myrna and Althea Orola filed their Joint Affidavit of
Conformity, in which they declared that:
7. That on December 15, 1982, the administrator, thru counsel, filed
an ex parte motion for the admission and approval of the amended
contracts of lease in favor of our brothers and sister changing the
term from ten (10) to twelve (12) years, copy of the amended
contracts of lease [were] shown to us;
8. That we have no objection and we voluntarily conform to the
amendment of the term from ten (10) to twelve (12) years and freely
give our consent to having the Lessees execute a real estate
mortgage over the leased property in favor of the bank just to be
able to avail with the CB: IBRD financing loan to develop the
property;
9. That we are jointly executing this affidavit for the purpose of
facilitating the immediate admission and approval of the amended
contracts of lease as prayed for in the ex parte motion dated
December 5, 1982.38
However, the Court agrees with the petitioners’ contention that
respondent Orola failed to secure an order from the intestate estate
court authorizing him to mortgage the subject lots and execute a real
estate mortgage contract in favor of respondent Rural Bank. What
the intestate estate court approved in its December 17, 1982 Order

was the authority incorporated in the amended contracts of lease
respondent Orola gave to petitioners Josephine, Manuel and
Antonio Orola so that the said lots could be mortgaged to the
respondent Rural Bank as security for the ₱600,000.00 loan under
their respective names. In fine, the intestate estate court
authorized the petitioners, not respondent Orola, to mortgage the
said lots to respondent Rural Bank. Moreover, under Section 7 of
Rule 89 of the Rules of Court, only the executor or administrator of
the estate may be authorized by the intestate estate court to
mortgage real estate belonging to the estate; hence, the order of the
estate court authorizing the petitioners to mortgage the realty of the
estate to the respondent Rural Bank is a nullity.
The respondents must have realized that the order of the intestate
estate court authorizing petitioners Manuel, Antonio and Josephine
Orola to mortgage the lots was void because respondent Emilio
Orola caused the real estate mortgage contracts in favor of
respondent Rural Bank to be executed by his children, petitioners
Josephine, Manuel and Antonio Orola, "acting as attorneys-in-fact of
the administrator of the estate." However, the estate court had not
appointed petitioners Antonio, Josephine and Manuel Orola as
attorneys-in-fact of respondent Emilio Orola empowered to execute
the said contracts. Hence, they had no authority to execute the said
Real Estate Mortgage Contracts for and in behalf of respondent
Orola, in the latter’s capacity as administrator of the estate.
Worse, respondent Orola failed to submit the real estate mortgage
contracts to the intestate estate court for its consideration and
approval. To give approval means to confirm, ratify, or to consent to
some act or thing done by another.39 Unless and until the said
contracts are approved by the intestate estate court, the same
cannot have any binding effect upon the estate; nor serve as basis
for any action against the estate and against the parcels of land
described in the said contracts belonging to it.40
It bears stressing that respondent Orola had no right or authority to
mortgage the realty belonging to the estate. He derived his authority
from the order of the estate court which had jurisdiction to authorize
the real estate mortgage thereof under such terms and conditions
and upon proper application. Any mortgage of realty of the estate
without the appropriate authority of the estate court has no legal
support and is void.41 The purchaser at public auction acquires no
title over the realty.42 The real estate mortgage contracts, as well as
the extrajudicial foreclosure thereof and the sale of the property
described therein at public auction, can thus be attacked directly and
collaterally.43
Contrary to the contention of respondent Rural Bank, the petitioners
were not estopped from assailing the real estate mortgage contracts,
the extrajudicial foreclosure thereof and the sale of the property to
respondent Rural Bank.
Although the records show that petitioners Josephine, Manuel and
Antonio Orola received the proceeds of the loan from respondent
Rural Bank, the amount was deposited by respondent Emilio Orola
in his savings account with respondent Rural Bank. He was obliged
to deposit the said amount in the estate’s account with the Republic
Planters Bank, as ordered by the intestate estate court. Worse,
respondent Rural Bank applied ₱229,771.20 of the loan proceeds to
liquidate the accommodation loan it granted to respondent Emilio
Orola. There is no showing in the records that the intestate estate
court ever authorized the use of the proceeds of the loan to pay
respondent Emilio Orola’s accommodation loan. The loan proceeds
were to be used to develop property belonging to the estate into a
fishpond from which income could be generated. Of the net
proceeds of the ₱582,000.00 loan, only ₱4,292.79 remained as of
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 10
COMPILATION OF CASES
September 9, 1983. Respondent Emilio Orola failed to pay the
amortization of the loan for the respondent Rural Bank of the estate.
Had the real estate mortgage contracts been submitted to the
intestate estate court for consideration and approval after proper
notice to the petitioners, the court would have been apprised of the
terms and conditions contained therein, and that about one-half of
the loan would be used to pay the accommodation loan of
respondent Emilio Orola.
Petitioners Manuel, Josephine and Antonio Orola executed the
amended contracts of lease, the promissory notes and the real
estate mortgages upon the prodding of their father, respondent
Emilio Orola, and upon the suggestion of respondent Rural Bank,
solely to facilitate the speedy approval of the loan of the estate,
which was to be the ultimate beneficiary thereof. The petitioners
acted on the belief that the loan would be used to develop the
swampy portion of the realty into an income-generating fishpond,
impervious of the fact that almost one-half of the proceeds of the
loan had been used to pay the accommodation loan of respondent
Emilio Orola.
The claim of respondent Emilio Orola that part of the property used
as collateral for the loan was part of his and his deceased wife’s
conjugal property, and that the waiver he executed was to take
effect only upon his death, is belied by the records. Indeed, in his
Waiver of Rights dated October 26, 1976, respondent Emilio Orola
declared that:
1. That during the lifetime of my first wife, Trinidad Laserna, we have
acquired property by purchase from Mr. Manuel Laserna, in co-
ownership with Pedro Laserna, Dolores Deocampo, Jesus Laserna
and Emiliana Laserna affecting Lots Nos. 1070, 1071, 1074, 1075,
1088, 1050 & 1051, all of Pontevedra Cadastre;
2. That the said [properties] mentioned above are still under co-
ownership, pro indiviso, between and among the Vendees whose
names are mentioned above;
3. That during the marital relations between me and my deceased
wife, Trinidad Laserna, we have six (6) children, namely, Josephine,
Myrna, Angeline, Manuel, Antonio and Althea, all surnamed Orola;
4. That the co-owners have decided to terminate the co-ownership
over the above-mentioned properties of which the aforementioned
children of the spouses, Emilio Orola and Trinidad Laserna, became
co-owners thereof in representation of their deceased mother,
Trinidad Laserna, by operation of law and the herein undersigned
desires to give protection to his children of the first marriage which
are named above.
NOW, THEREFORE, for and in consideration of the love, affection
and mutual agreements, I, EMILIO Q. OROLA, by these presents,
do hereby waive and relinquish all my shares, interests and
participations over all the above-mentioned properties in favor of my
six (6) children of the first marriage, namely, Josephine, Myrna,
Angeline, Manuel, Antonio and Althea.
It is understood that, upon the registration of the project of partition
which the co-owners will present that the shares and participations
of the undersigned shall be consolidated in the names of the
children mentioned above in equal right and participation.44

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.
The assailed Decision and Resolution of the Court of Appeals
are REVERSED AND SET ASIDE. The Decision of the Regional
Trial Court is REINSTATED. No costs.
SO ORDERED.
LIU v. LOY
FIRST DIVISION
G.R. No. 145982 July 3, 2003
FRANK N. LIU, deceased, substituted by his surviving spouse
Diana Liu, and children, namely: Walter, Milton, Frank, Jr.,
Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and
Pearl Liu Rodriguez, petitioners,
vs.
ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE
VAÑO, respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 13
June 2000 and the Resolution dated 14 November 2002 of the Court
of Appeals which affirmed the Decision2 of the Regional Trial Court,
Branch 14, Cebu City. The Court of Appeals agreed with the trial
court that the sales by the late Teodoro Vaño to respondents Alfredo
Loy, Jr. and Teresita A. Loy of Lot Nos. 5 and 6, respectively, were
valid. The Court of Appeals also agreed with the trial court that the
unilateral extrajudicial rescission by the late Teodoro Vaño of the
contract to sell involving five lots, including Lot Nos. 5 and 6,
between him and Benito Liu (predecessor-in-interest of Frank Liu)
was valid.
The Facts
On 13 January 1950, Teodoro Vaño, as attorney-in-fact of Jose
Vaño, sold seven lots of the Banilad Estate located in Cebu City to
Benito Liu and Cirilo Pangalo.3 Teodoro Vaño dealt with Frank Liu,
the brother of Benito Liu, in the sale of the lots to Benito Liu and
Cirilo Pangalo. The lots sold to Benito Liu were Lot Nos. 5, 6, 13, 14,
and 15 of Block 12 for a total price of P4,900. Benito Liu gave a
down payment of P1,000, undertaking to pay the balance of P3,900
in monthly installments of P100 beginning at the end of January
1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 of
Block 11 for a total price of P1,967.50. Cirilo Pangalo gave P400 as
down payment, undertaking to pay the balance of P1,567.50 in
monthly installments of P400 beginning at the end of January 1950.
Meanwhile, Jose Vaño passed away.
Benito Liu subsequently paid installments totaling P2,900, leaving a
balance of P1,000.4 Apparently, Benito Liu stopped further payments
because Teodoro Vaño admitted his inability to transfer the lot titles
to Benito Liu. Later, in a letter5 dated 16 October 1954, Teodoro
Vaño informed Frank Liu6 that the Supreme Court had already
declared valid the will of his father Jose Vaño. Thus, Teodoro Vaño
could transfer the titles to the buyers’ names upon payment of the
balance of the purchase price.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 11
COMPILATION OF CASES
When Frank Liu failed to reply, Teodoro Vaño sent him another
letter,7 dated 1 January 1955, reminding him of his outstanding
balance. It appears that it was only after nine years that Frank Liu
responded through a letter,8 dated 25 January 1964. In the letter,
Frank Liu informed Teodoro Vaño that he was ready to pay the
balance of the purchase price of the seven lots. He requested for the
execution of a deed of sale of the lots in his name and the delivery of
the titles to him.
On 22 April 1966, Benito Liu sold to Frank Liu the five lots (Lot Nos.
5, 6, 13, 14 and 15 of Block 12) which Benito Liu purchased from
Teodoro Vaño.9 Frank Liu assumed the balance of P1,000 for the
five lots. Cirilo Pangalo likewise sold to Frank Liu the two lots (Lot
Nos. 14 and 15 of Block 11) that Pangalo purchased from Teodoro
Vaño. Frank Liu likewise assumed the balance of P417 for the two
lots.
On 21 March 1968, Frank Liu reiterated in a letter10 his request for
Teodoro Vaño to execute the deed of sale covering the seven lots
so he could secure the corresponding certificates of title in his name.
He also requested for the construction of the subdivision roads
pursuant to the original contract. In the letter, Frank Liu referred to
another letter, dated 25 June 1966, which he allegedly sent to
Teodoro Vaño. According to Frank Liu, he enclosed PBC Check No.
D-782290 dated 6 May 1966 for P1,417, which is the total balance of
the accounts of Benito Liu and Cirilo Pangalo on the seven lots.
However, Frank Liu did not offer in evidence the letter or the check.
Frank Liu sent two other letters,11 dated 7 June 1968 and 29 July
1968, to Teodoro Vaño reiterating his request for the execution of
the deed of sale in his favor but to no avail.
On 19 August 1968, Teodoro Vaño sold Lot No. 6 to respondent
Teresita Loy for P3,930.12 The Register of Deeds of Cebu City
entered this sale in the Daybook on 24 February 1969.13
On 2 December 1968, Frank Liu filed a complaint against Teodoro
Vaño for specific performance, execution of deed of absolute sale,
issuance of certificates of title and construction of subdivision roads,
before the Court of First Instance of Davao. The case was docketed
as Civil Case No. 6300.14
On 19 December 1968, Frank Liu filed with the Register of Deeds of
Cebu City a notice of lis pendens on the seven lots due to the
pendency of Civil Case No. 6300.15 However, the Register of Deeds
denied the registration of the lis pendens "on the ground that the
property is under administration and said claim must be filed in
court."16
On 16 December 1969, Teodoro Vaño sold Lot No. 5 to respondent
Alfredo Loy for P3,910.17 The Register of Deeds of Cebu City
entered this sale in the Daybook on 16 January 1970.18
On 3 October 1970, the Court of First Instance of Davao, on motion
of Teodoro Vaño, dismissed Civil Case No. 6300 on the ground that
Frank Liu should have filed the claim with the probate court.19 Thus,
on 17 February 1972, Frank Liu filed before the probate court a
claim against the Estate of Jose Vaño for "Specific Performance,
Execution of Deed of Absolute Sale, Issuance of Certificate of Title,
and Construction of Subdivision Roads."20
During the proceedings, Teodoro Vaño died. His widow, Milagros
Vaño, succeeded as administratrix of the Estate of Jose Vaño.

On 24 February 1976, the probate court approved the claim of Frank
Liu. On 5 March 1976, Milagros Vaño executed a deed of
conveyance covering the seven lots in favor of Frank Liu, in
compliance with the probate court’s order. 21The deed of conveyance
included Lot Nos. 5 and 6, the same lots Teodoro Vaño sold
respectively to Alfredo Loy, Jr. on 16 December 1969 and to
Teresita Loy on 19 August 1968.
On 19 March 1976, the probate court, upon an ex-parte motion filed
by Teresita Loy, issued an Order22 approving the 16 August 1968
sale by Teodoro Vaño of Lot No. 6 in her favor. Likewise, upon an
ex-parte motion filed by Alfredo Loy, Jr., the probate court issued on
23 March 1976 an Order23 approving the 16 December 1969 sale of
Lot No. 5 by Teodoro Vaño in his favor.
On 10 May 1976, the Register of Deeds of Cebu City cancelled TCT
No. 44204 in the name of the Estate of Jose Vaño covering Lot No.
5 and issued a new title, TCT No. 64522, in the name of Alfredo Loy,
Jr. and Perfeccion V. Loy.24 Likewise, on the same date, the
Register of Deeds cancelled TCT No. 44205 in the name of the
Estate of Jose Vaño covering Lot No. 6, and issued TCT No. 64523
in the name of Teresita A. Loy.25
On 3 June 1976, Milagros Vaño, as administratrix of the estate, filed
a motion for reconsideration of the Orders of the probate court dated
19 and 23 March 1976. She contended that she already complied
with the probate court’s Order dated 24 February 1976 to execute a
deed of sale covering the seven lots, including Lot Nos. 5 and 6, in
favor of Frank Liu. She also stated that no one notified her of the
motion of the Loys, and if the Loys or the court notified her, she
would have objected to the sale of the same lots to the Loys.
On 4 June 1976, Frank Liu filed a complaint for reconveyance or
annulment of title of Lot Nos. 5 and 6. Frank Liu filed the case in the
Regional Trial Court of Cebu City, Branch 14, which docketed it as
Civil Case No. R-15342.
On 5 August 1978, the probate court denied the motion for
reconsideration of Milagros Vaño on the ground that the conflicting
claims regarding the ownership of Lot Nos. 5 and 6 were already
under litigation in Civil Case No. R-15342.
On 8 April 1991, the Regional Trial Court of Cebu City ("trial court"),
Branch 14, rendered judgment against Frank Liu as follows:
WHEREFORE, judgment is hereby rendered:
(1) Dismissing the complaint at bar; and
(2) Confirming the unilateral extrajudicial rescission of the contract
Exhibit A by the late Teodoro Vaño, conditioned upon the refund by
the Estate of Jose Vaño of one-half (1/2) of what the plaintiff had
paid under that contract.
The counterclaims by the defendants Alfredo A. Loy, Jr. and
Teresita A. Loy and by the defendant Estate of Jose Vaño, not
having been substantiated, are hereby denied.
Without special pronouncement as to costs.
SO ORDERED.26
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 12
COMPILATION OF CASES
Frank Liu appealed to the Court of Appeals, which affirmed in toto
the decision of the trial court. Frank Liu27 filed a motion for
reconsideration but the Court of Appeals denied the same.
Hence, the instant petition.
The Trial Court’s Ruling
The trial court held that the contract between Teodoro Vaño and
Benito Liu was a contract to sell. Since title to Lot Nos. 5 and 6
never passed to Benito Liu due to non-payment of the balance of the
purchase price, ownership of the lots remained with the vendor.
Therefore, the trial cour ruled that the subsequent sales to Alfredo
Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6, respectively, were
valid.
The trial court viewed the letter of Teodoro Vaño dated 1 January
1995 addressed to Frank Liu as a unilateral extrajudicial rescission
of the contract to sell. The trial court upheld the unilateral rescission
subject to refund by the Estate of Jose Vaño of one-half (1/2) of
what Frank Liu paid under the contract.
The trial court ruled that Teodoro Vaño, as administrator of the
Estate of Jose Vaño and as sole heir of Jose Vaño, acted both as
principal and as agent when he sold the lots to Alfredo Loy, Jr. and
Teresita Loy. The probate court subsequently approved the sales.
The trial court also found that Alfredo Loy, Jr. and Teresita Loy were
purchasers in good faith.
The Court of Appeals’ Ruling
In affirming in toto the trial court’s decision, the appellate court found
no evidence of fraud or ill-motive on the part of Alfredo Loy, Jr. and
Teresita Loy. The Court of Appeals cited the rule that "the law
always presumes good faith such that any person who seeks to be
awarded damages due to the acts of another has the burden of
proving that the latter acted in bad faith or ill-motive."
The Court of Appeals also held that the sales to Alfredo Loy, Jr. and
Teresita Loy of Lot Nos. 5 and 6, respectively, were valid despite
lack of prior approval by the probate court. The Court of Appeals
declared that Teodoro Vaño sold the lots in his capacity as heir of
Jose Vaño. The appellate court ruled that an heir has a right to
dispose of the decedent’s property, even if the same is under
administration, because the hereditary property is deemed
transmitted to the heir without interruption from the moment of the
death of the decedent.
The Court of Appeals held that there is no basis for the claim of
moral damages and attorney’s fees. The appellate court found that
Frank Liu failed to prove that he suffered mental anguish due to the
actuations of the Loys. The Court of Appeals likewise disallowed the
award of attorney’s fees. The fact alone that a party was compelled
to litigate and incur expenses to protect his claim does not justify an
award of attorney’s fees. Besides, the Court of Appeals held that
where there is no basis to award moral damages, there is also no
basis to award attorney’s fees.
The Issues
Petitioners28 raise the following issues:29
1. Whether prior approval of the probate court is necessary to
validate the sale of Lot Nos. 5 and 6 to Loys;

2. Whether the Loys can be considered buyers and registrants in
good faith despite the notice of lis pendens;
3. Whether Frank Liu has a superior right over Lot Nos. 5 and 6;
4. Whether the Court of Appeals erred in not passing upon the trial
court’s declaration that the extra-judicial rescission by Teodoro Vaño
of the sale in favor of Frank Liu is valid;
5.Whether petitioners are entitled to moral damages and attorney’s
fees.
The Court’s Ruling
The petition is meritorious.
Whether there was a valid cancellation of the contract to sell
There was no valid cancellation of the contract to sell because there
was no written notice of the cancellation to Benito Liu or Frank Liu.
There was even no implied cancellation of the contract to sell. The
trial court merely "viewed" the alleged "unilateral extrajudicial
rescission" from the letter of Teodoro Vaño, dated 1 January 1955,
addressed to Frank Liu, stating that:
Two months, I believe, is ample for the allowance of delays caused
by your (sic) either too busy, or having been some place else, or for
consultations. These are the only reasons I can think of that could
have caused the delay in your answer, unless you do not think an
answer is necessary at all, as you are not the party concerned in the
matter.
I shall therefor (sic) appreciate it very much, if you will write me
within ten days from receipt of this letter, or enterprete (sic) your
silence as my mistake in having written to the wrong party, and
therefor (sic) proceed to write Misters: B. Liu and C.
Pangalo.30 (Emphasis supplied)
Obviously, we cannot construe this letter as a unilateral extrajudicial
rescission of the contract to sell. As clearly stated in the letter, the
only action that Teodoro Vaño would take if Frank Liu did not reply
was that Teodoro Vaño would write directly to Benito Liu and Cirilo
Pangalo. The letter does not mention anything about rescinding or
cancelling the contract to sell.
Although the law allows the extra-judicial cancellation of a contract
to sell upon failure of one party to comply with his obligation, notice
of such cancellation must still be given to the party who is at
fault.31 The notice of cancellation to the other party is one of the
requirements for a valid cancellation of a contract to sell, aside from
the existence of a lawful cause. Even the case cited by the trial court
emphasizes the importance of such notice:
Of course, it must be understood that the act of a party in treating a
contract as cancelled or resolved on account of infractions by the
other contracting party must be made known to the other and is
always provisional, being ever subject to scrutiny and review by the
proper court. If the other party denies that rescission is justified, it is
free to resort to judicial action in its own behalf, and bring the matter
to court. Then, should the court, after due hearing, decide that the
resolution of the contract was not warranted, the responsible party
will be sentenced to damages; in the contrary case, the resolution
will be affirmed, and the consequent indemnity awarded to the party
prejudiced.32 (Emphasis supplied)
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 13
COMPILATION OF CASES
The fact that Teodoro Vaño advised Frank Liu to file his claim with
the probate court is certainly not the conduct of one who supposedly
unilaterally rescinded the contract with Frank Liu.33
In this case, there was prior delay or default by the seller. As
admitted by Teodoro Vaño, he could not deliver the titles because of
a case questioning the authenticity of the will of his father. In a
letter33 to Frank Liu dated 16 October 1954, Teodoro Vaño stated:
Some time last May, if I remember correctly, you offered to settle the
whole balance of your account if I can have the Titles transferred
immediately in your brother’s name, and to that of Mr. Pangalo’s. I
cannot blame you if you were disappointed then, to know that I could
not have the titles transferred, even should you have paid in full.
(Emphasis supplied)
In the same letter of 16 October 1954, Teodoro Vaño informed
Frank Liu that the titles were ready for transfer, thus:
However, last June 30, of this year, the Supreme Court,
unanimously concurred in the reversal of the decision of the Court of
First Instance, as regard the legality of the Will of my father. Now
that the Will of my Father has been declared Legal, my opponents
have lost their personality in the case, and with it their power to
harass me in court. Also, sometime in the middle of July, also this
year, the Supreme Court again declared that all the sales I have
made of the properties of my Father, were Legal, and that I should
be empowered to have the Titles transferred in the buyer’s names,
should they have paid in full. A few have already received their
Titles. And yours can be had too in two days time from the time you
have paid in full.
Nevertheless, the subsequent approval by the probate court of the
sale of Lot Nos. 5 and 6 to Frank Liu rendered moot any question on
the continuing validity of the contract to sell.
Whether the lis pendens in the Davao case served as notice to
the Loys
The lis pendens in the Davao case did not serve as notice to the
Loys. The Register of Deeds of Cebu City denied registration of
the lis pendens on 19 December 1968.35 Frank Liu did not appeal to
the Land Registration Commission36 to keep alive the lis pendens.
Republic Act No. 1151,37 which took effect 17 June 1954, provides:
SEC. 4. Reference of doubtful matters to Commissioner of Land
Registration.— When the Register of Deeds is in doubt with regard
to the proper step to be taken or memorandum to be made in
pursuance of any deed, mortgage, or other instrument presented to
him for registration, or where any party in interest does not agree
with the Register of Deeds with reference to any such matter, the
question shall be submitted to the Commissioner of Land
Registration either upon the certification of the Register of Deeds,
stating the question upon which he is in doubt, or upon the
suggestion in writing by the party in interest; and thereupon the
Commissioner, after consideration of the matter shown by the
records certified to him, and in case of registered lands, after notice
to the parties and hearing, shall enter an order prescribing the step
to be taken or memorandum to be made. His decision in such cases
shall be conclusive and binding upon all Registers of Deeds:
Provided, however, That when a party in interest disagrees with a
ruling or resolution of the Commissioner and the issue involves a
question of law, said decision may be appealed to the Supreme
Court within thirty days from and after receipt of the notice thereof.
(Emphasis supplied)

Frank Liu’s failure to appeal38 the denial of the registration rendered
the lis pendens ineffective. The Court of First Instance of Davao City
eventually dismissed Frank Liu’s complaint on 3 October 1970.
Whether the registration by the Loys of their contracts of sale
made them the first registrants in good faith to defeat prior
buyers
The registration by the Loys of their contracts of sale did not defeat
the right of prior buyers because the person who signed the Loys’
contracts was not the registered owner. The registered owner of Lot
Nos. 5 and 6 was the "Estate of Jose Vaño." Teodoro Vaño was the
seller in the contract of sale with Alfredo Loy, Jr. The Estate of Jose
Vaño was the seller in the contract of sale with Teresita Loy.
Teodoro Vaño signed both contracts of sale. The rule is well-settled
that "one who buys from a person who is not the registered owner is
not a purchaser in good faith."39 As held in Toledo-Banaga v. Court
of Appeals:40
To repeat, at the time of the sale, the person from whom petitioner
Tan bought the property is neither the registered owner nor was the
former authorized by the latter to sell the same. She knew she was
not dealing with the registered owner or a representative of the
latter. One who buys property with full knowledge of the flaws and
defects in the title of his vendor is enough proof of his bad faith and
cannot claim that he acquired title in good faith as against the owner
or of an interest therein. When she nonetheless proceeded to buy
the lot, petitioner Tan gambled on the result of litigation. She is
bound by the outcome of her indifference with no one to blame
except herself if she looses her claim as against one who has a
superior right or interest over the property. x x x.
The Loys were under notice to inquire why the land was not
registered in the name of the person who executed the contracts of
sale. They were under notice that the lots belonged to the "Estate of
Jose Vaño" and any sale of the lots required court approval. Any
disposition would be subject to the claims of creditors of the estate
who filed claims before the probate court.41
The contracts of the Loys did not convey ownership of the lots to
them as against third persons. The contracts were binding only on
the seller, Teodoro Vaño. The contracts of the Loys would become
binding against third persons only upon approval of the sale by the
probate court and registration with the Register of Deeds.
Registration of the contracts without court approval would be
ineffective to bind third persons, especially creditors of the estate.
Otherwise, this will open the door to fraud on creditors of the estate.
Whether the probate court’s ex-parte approval of the contracts
of the Loys was valid
Section 8, Rule 89 of the 1964 Rules of Court 42 specifically requires
notice to all interested parties in any application for court approval to
convey property contracted by the decedent in his lifetime. Thus:
SECTION 8. When court may authorize conveyance of realty which
deceased contracted to convey. Notice. Effect of deed. — Where the
deceased was in his lifetime under contract, binding in law, to deed
real property, or an interest therein, the court having jurisdiction of
the estate may, on application for that purpose, authorize the
executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the
parties and approved by the court; and if the contract is to convey
real property to the executor or administrator, the clerk of the court
shall execute the deed. The deed executed by such executor,
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 14
COMPILATION OF CASES
administrator, or clerk of court shall be as effectual to convey the
property as if executed by the deceased in his lifetime; but no such
conveyance shall be authorized until notice of the application for that
purpose has been given personally or by mail to all persons
interested, and such further notice has been given, by publication or
otherwise, as the court deems proper; nor if the assets in the hands
of the executor or administrator will thereby be reduced so as to
prevent a creditor from receiving his full debt or diminish his
dividend. (Rule 89, 1964 Rules of Court) (Emphasis supplied)
Despite the clear requirement of Section 8 of Rule 89, the Loys did
not notify the administratrix of the motion and hearing to approve the
sale of the lots to them. The administratrix, who had already signed
the deed of sale to Frank Liu as directed by the same probate court,
objected to the sale of the same lots to the Loys. Thus, as found by
the trial court:
On June 3, 1976, Milagros H. Vaño moved for the reconsideration of
the Order issued by Judge Ramolete on March 19, 1976 and March
23, 1976, contending that she had not been personally served with
copies of the motions presented to the Court by Alfredo Loy, Jr. and
by Teresita Loy seeking the approval of the sales of the lots in their
favor, as well as the Orders that were issued by the Court pursuant
thereto; that the Court in its Order of February 24, 1976 had ordered
her (Milagros H. Vaño), to execute a deed of absolute sale in favor
of the plaintiff, which sale had been approved by the Court; that she
had not known of the sale of Lots 5 and 6 to any other person except
to the plaintiff; that the sale of the two lots in favor of plaintiff was
made earlier, when there was yet no litigation with the Bureau of
Internal Revenue, while those in favor of the defendant Loys were
made when there was already a prohibition by the Court against any
sale thereof; that the sales in favor of the Loys were made without
Court authority; and that if the approval of the sales had not been
obtained ex-parte she would have informed the Court of the
complication arising therefrom, and she would not have executed
the sale in favor of plaintiff, and she would have asked the Court to
decide first as to who had preference over said lots.43
The failure to notify the administratrix and other interested persons
rendered the sale to the Loys void. As explained by Justice J.B.L.
Reyes in De Jesus v. De Jesus:44
Section 9, Rule 90, however, provides that authority can be given by
the probate court to the administrator to convey property held in trust
by the deceased to the beneficiaries of the trust only "after notice
given as required in the last preceding section"; i.e., that "no such
conveyance shall be authorized until notice of the application for that
purpose has been given personally or by mail to all persons
interested, and such further notice has been given, by publication or
otherwise, as the court deems proper" (sec. 8, Rule 90). This rule
makes it mandatory that notice be served on the heirs and other
interested persons of the application for approval of any conveyance
of property held in trust by the deceased, and where no such notice
is given, the order authorizing the conveyance, as well as the
conveyance itself, is completely void. (Emphasis supplied)
In this case, the administratrix, the wife of the deceased Teodoro
Vaño, was not notified of the motion and hearing to approve the sale
of the lots to the Loys. Frank Liu did not also receive any notice,
although he obviously was an interested party. The issuance of new
titles to the Loys on 10 May 1976 by the Registry of Deeds did not
vest title to the Loys because the "conveyance itself" was
"completely void." The consequences for the failure to notify the
administratrix and other interested parties must be borne by the
Loys.

Necessity of court approval of sales
Indisputably, an heir can sell his interest in the estate of the
decedent, or even his interest in specific properties of the estate.
However, for such disposition to take effect against third parties, the
court must approve such disposition to protect the rights of creditors
of the estate. What the deceased can transfer to his heirs is only the
net estate, that is, the gross estate less the liabilities. As held in
Baun v. Heirs of Baun:45
The heir legally succeeds the deceased, from whom he derives his
right and title, but only after the liquidation of the estate, the payment
of the debts of the same, and the adjudication of the residue of the
estate of the deceased; and in the meantime the only person in
charge by law to attend to all claims against the estate of the
deceased debtor is the executor or administrator appointed by the
court.
In Opulencia v. Court of Appeals,46 an heir agreed to convey in a
contract to sell her share in the estate then under probate
settlement. In an action for specific performance filed by the buyers,
the seller-heir resisted on the ground that there was no approval of
the contract by the probate court. The Court ruled that the contract
to sell was binding between the parties, but subject to the outcome
of the testate proceedings. The Court declared:
x x x Consequently, although the Contract to Sell was perfected
between the petitioner (seller-heir) and private respondents (buyers)
during the pendency of the probate proceedings, the consummation
of the sale or the transfer of ownership over the parcel of land to the
private respondents is subject to the full payment of the purchase
price and to the termination and outcome of the testate proceedings.
x x x Indeed, it is settled that ‘the sale made by an heir of his share
in an inheritance, subject to the pending administration, in no wise
stands in the way of such administration.’ (Emphasis supplied)
In Alfredo Loy’s case, his seller executed the contract of sale after
the death of the registered owner Jose Vaño. The seller was
Teodoro Vaño who sold the lot in his capacity as sole heir of the
deceased Jose Vaño. Thus, Opulencia applies to the sale of the lot
to Alfredo Loy, Jr., which means that the contract of sale was
binding between Teodoro Vaño and Alfredo Loy, Jr., but subject to
the outcome of the probate proceedings.
In Frank Liu’s case, as successor-in-interest of Benito Liu, his seller
was Jose Vaño, who during his lifetime executed the contract to sell
through an attorney-in-fact, Teodoro Vaño. This is a disposition of
property contracted by the decedent during his lifetime. Section 8 of
Rule 89 specifically governs this sale:
SECTION 8. When court may authorize conveyance of realty which
deceased contracted to convey. Notice. Effect of deed. — Where the
deceased was in his lifetime under contract, binding in law, to deed
real property, or an interest therein, the court having jurisdiction of
the estate may, on application for that purpose, authorize the
executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the
parties and approved by the court; x x x
Thus, Frank Liu applied to the probate court for the grant of authority
to the administratrix to convey the lots in accordance with the
contract made by the decedent Jose Vaño during his lifetime. The
probate court approved the application.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 15
COMPILATION OF CASES
In Teresita Loy’s case, her seller was the Estate of Jose Vaño.
Teodoro Vaño executed the contract of sale in his capacity as
administrator of the Estate of Jose Vaño, the registered owner of the
lots. The Court has held that a sale of estate property made by an
administrator without court authority is void and does not confer on
the purchaser a title that is available against a succeeding
administrator.47
Manotok Realty, Inc. v. Court of Appeals48 emphasizes the need for
court approval in the sale by an administrator of estate property. The
Court held in Manotok Realty:
We also find that the appellate court committed an error of law when
it held that the sale of the lot in question did not need the approval of
the probate court.
Although the Rules of Court do not specifically state that the sale of
an immovable property belonging to an estate of a decedent, in a
special proceeding, should be made with the approval of the court,
this authority is necessarily included in its capacity as a probate
court.
An administrator under the circumstances of this case cannot enjoy
blanket authority to dispose of real estate as he pleases, especially
where he ignores specific directives to execute proper documents
and get court approval for the sale’s validity.
Section 91 of Act No. 496 (Land Registration Act) specifically
requires court approval for any sale of registered land by an
executor or administrator, thus:
SEC. 91. Except in case of a will devising the land to an executor to
his own use or upon some trust or giving to the executor power to
sell, no sale or transfer of registered land shall be made by an
executor or by an administrator in the course of administration for
the payment of debts or for any other purpose, except in pursuance
of an order of a court of competent jurisdiction obtained as provided
by law. (Emphasis supplied)
Similarly, Section 88 of Presidential Decree No. 1529 (Property
Registration Decree) provides:
SEC. 88. Dealings by administrator subject to court approval. —
After a memorandum of the will, if any, and order allowing the same,
and letters testamentary or letters of administration have been
entered upon the certificate of title as hereinabove provided, the
executor or administrator may alienate or encumber registered land
belonging to the estate, or any interest therein, upon approval of the
court obtained as provided by the Rules of Court. (Emphasis
supplied)
Clearly, both the law and jurisprudence expressly require court
approval before any sale of estate property by an executor or
administrator can take effect.
Moreover, when the Loys filed in March 1976 their ex-parte motions
for approval of their contracts of sale, there was already a prior order
of the probate court dated 24 February 1976 approving the sale of
Lot Nos. 5 and 6 to Frank Liu. In fact, the administratrix had signed
the deed of sale in favor of Frank Liu on 5 March 1976 pursuant to
the court approval. This deed of sale was notarized on 5 March
1976, which transferred ownership of Lot Nos. 5 and 6 to Frank Liu
on the same date.49

Thus, when the probate court approved the contracts of the Loys on
19 and 23 March 1976, the probate court had already lost
jurisdiction over Lot Nos. 5 and 6 because the lots no longer formed
part of the Estate of Jose Vaño.
In Dolar v. Sundiam,50 an heir sold parcels of land that were part of
the estate of the decedent. The probate court approved the sale.
Thereafter, the probate court authorized the administrator to sell
again the same parcels of land to another person. The Court ruled
that the probate court had already lost jurisdiction to authorize the
further sale of the parcels of land to another person because such
property no longer formed part of the estate of the decedent. The
Court declared:
In our opinion, where, as in this case, a piece of property which
originally is a part of the estate of a deceased person is sold by an
heir of the deceased having a valid claim thereto, and said piece of
property is, by mistake, subsequently inventoried or considered part
of the deceased’s estate subject to settlement, and, thereafter, with
the authority and approval of the probate court, it sold once more to
another person, a receiver of the property so sold may, during the
pendency of a motion to set aside the second sale, be appointed by
the court when in its sound judgment the grant of such temporary
relief is reasonably necessary to secure and protect the rights of its
real owner against any danger of loss or material injury to him
arising from the use and enjoyment thereof by another who
manifestly cannot acquire any right of dominion thereon because the
approving surrogate court had already lost jurisdiction to authorize
the further sale of such property. (Emphasis supplied)
Similarly, in this case, the Loys cannot acquire any right of dominion
over Lot Nos. 5 and 6 because the probate court had already lost
jurisdiction to authorize the second sale of the same lots. Moreover,
the probate court’s approval of the sale to the Loys was completely
void due to the failure to notify the administratrix of the motion and
hearing on the sale.
Whether the Loys were in good faith when they built on the
Lots.
The Civil Code describes a possessor in good faith as follows:
Art. 526. He is deemed a possessor in good faith who is not aware
that there exists in his title or mode of acquisition any flaw which
invalidates it.
He is deemed a possessor in bad faith who possesses in any case
contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis
of good faith.
Art. 1127. The good faith of the possessor consists in the
reasonable belief that the person from whom he received the thing
was the owner thereof, and could transmit his ownership.
In Duran v. Intermediate Appellate Court,51 the Court explained
possession in good faith in this manner:
Guided by previous decisions of this Court, good faith consists in the
possessor’s belief that the person from whom he received the thing
was the owner of the same and could convey his title (Arriola vs.
Gomez de la Serna, 14 Phil. 627). Good faith, while it is always
presumed in the absence of proof to the contrary, requires a well-
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 16
COMPILATION OF CASES
founded belief that the person from whom title was received was
himself the owner of the land, with the right to convey it (Santiago
vs. Cruz, 19 Phil. 148). There is good faith where there is an honest
intention to abstain from taking unconscientious advantage from
another (Fule vs. Legare, 7 SCRA 351).
The Loys were not in good faith when they built on the lots because
they knew that they bought from someone who was not the
registered owner. The registered owner on the TCTs of the lots was
the "Estate of Jose Vaño," clearly indicating that the sale required
probate court approval. Teodoro Vaño did not show any court
approval to the Loys when they purchased the lots because there
was none. To repeat, any one who buys from a person who is not
the registered owner is not a purchaser in good faith. 52 If the Loys
built on the lots before the court approval, then they took the risk.
Contract to sell versus contract of sale
A prior contract to sell made by the decedent prevails over the
subsequent contract of sale made by the administrator without
probate court approval. The administrator cannot unilaterally cancel
a contract to sell made by the decedent in his lifetime. 53 Any
cancellation must observe all legal requisites, like written notice of
cancellation based on lawful cause.54
It is immaterial if the prior contract is a mere contract to sell and
does not immediately convey ownership.55 If it is valid, then it binds
the estate to convey the property in accordance with Section 8 of
Rule 89 upon full payment of the consideration.
Frank Liu’s contract to sell became valid and effective upon its
execution.56 The seller, Jose Vaño, was then alive and thus there
was no need for court approval for the immediate effectivity of the
contract to sell. In contrast, the execution of the contracts of sale of
the Loys took place after the death of the registered owner of the
lots. The law requires court approval for the effectivity of the Loys’
contracts of sale against third parties. The probate court did not
validly give this approval since it failed to notify all interested parties
of the Loy’s motion for court approval of the sale. Besides, the
probate court had lost jurisdiction over the lots after it approved the
earlier sale to Frank Liu. Clearly, Frank Liu’s contract to sell prevails
over the Loys’ contracts of sale.
Whether petitioners are entitled to award of moral damages and
attorney’s fees.
The Court upholds the ruling of the trial and appellate courts that
petitioners are not entitled to moral damages. Moral damages
should not enrich a complainant at the expense of the defendant. 57
Likewise, as found by the trial court and the appellate court, there is
no basis to award attorney’s fees. The policy of the law is to put no
premium on the right to litigate.58 The court may award attorney’s
fees only in the instances mentioned in Article 2208 of the Civil
Code. The award of attorney’s fees is the exception rather than the
rule.59None of the instances mentioned in Article 2208 apply to this
case.
Conclusion
Since the Loys have no contract of sale validly approved by the
probate court, while Frank Liu has a contract of sale approved by the
probate court in accordance with Section 8 of Rule 89, Lot Nos. 5
and 6 belong to Frank Liu. The Estate of Jose Vaño should
reimburse the Loys their payments on Lot Nos. 5 and 6, with annual
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 17
COMPILATION OF CASES

interest at 6% from 4 June 1976, the date of filing of the complaint,
until finality of this decision, and 12% thereafter until full payment. 60
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE
and a new one is RENDERED:
WHEREFORE, premises considered, the order of the lower court
dismissing the complaint is SET ASIDE and judgment is hereby
rendered declaring the CONTRACT TO SELL executed by appellee
in favor of appellants as valid and binding, subject to the result of the
administration proceedings of the testate Estate of Demetrio
Carpena.

1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6
executed by Teodoro Vaño in favor of Alfredo Loy, Jr. and Teresita SO ORDERED. 4
Loy, respectively.
Petitioner's Motion for Reconsideration was denied in the challenged
2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. Resolution. 5
64522 and 64523 and to issue a new one in the name of petitioner
Frank N. Liu; The Facts

3. Ordering the Estate of Jose Vaño to reimburse to respondent The antecedent facts, as succinctly narrated by Respondent Court of
Loys the amounts paid on Lot Nos. 5 and 6, with interest at 6% per Appeals, are:
annum from 4 June 1976 until finality of this decision, and 12% per
annum thereafter until full payment. In a complaint for specific performance filed with the court a
quo [herein private respondents] Aladin Simundac and Miguel Oliven
SO ORDERED. alleged that [herein petitioner] Natalia Carpena Opulencia executed
in their favor a "CONTRACT TO SELL" Lot 2125 of the Sta. Rosa
WHO MAY APPLY? Estate, consisting of 23,766 square meters located in Sta. Rosa,
Laguna at P150.00 per square meter; that plaintiffs paid a
SANDEJAS v. LINA downpayment of P300,000.00 but defendant, despite demands,
failed to comply with her obligations under the contract. [Private
respondents] therefore prayed that [petitioner] be ordered to perform
xxx
her contractual obligations and to further pay damages, attorney's
fee and litigation expenses.
WHEN REQUIRED?

OPULENCIA v. CA, et al. In her traverse, [petitioner] admitted the execution of the contract in
favor of plaintiffs and receipt of P300,000.00 as downpayment.
However, she put forward the following affirmative defenses: that the
Republic of the Philippines
property subject of the contract formed part of the Estate of
SUPREME COURT
Demetrio Carpena (petitioner's father), in respect of which a petition
Manila
for probate was filed with the Regional Trial Court, Branch 24, Biñan,
Laguna; that at the time the contract was executed, the parties were
FIRST DIVISION aware of the pendency of the probate proceeding; that the contract
to sell was not approved by the probate court; that realizing the
G.R. No. 125835 July 30, 1998 nullity of the contract [petitioner] had offered to return the
downpayment received from [private respondents], but the latter
refused to accept it; that [private respondents] further failed to
NATALIA CARPENA OPULENCIA, petitioner,
provide funds for the tenant who demanded P150,00.00 in payment
of his tenancy rights on the land; that [petitioner] had chosen to
vs. rescind the contract.

COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL At the pre-trial conference the parties stipulated on [sic] the following
OLIVAN, respondents. facts:

1. That on February 3, 1989, [private respondents] and [petitioner]

entered into a contract to sell involving a parcel of land situated in
PANGANIBAN, J.: Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the Sta.
Rosa Estate.

Is a contract to sell a real property involved in restate proceedings

valid and binding without the approval of the probate court?
Statement of the Case
This is the main question raised in this petition for review before us,
assailing the Decision 1 of the Court of Appeals 2 in CA-GR CV No.
41994 promulgated on February 6, 1996 and its Resolution 3 dated
July 19, 1996. The challenged Decision disposed as follows:
2. That the price or consideration of the said sell [sic] is P150.00 per
square meters;
3. That the amount of P300,000.00 had already been received by
[petitioner];
4. That the parties have knowledge that the property subject of the
contract to sell is subject of the probate proceedings;

5. That [as] of this time, the probate Court has not yet issued an
order either approving or denying the said sale. (p. 3, appealed
Order of September 15, 1992, pp. 109-112, record).
[Private respondents] submitted their evidence in support of the
material allegations of the complaint. In addition to testimonies of
witnesses, [private respondents] presented the following
documentary evidences: (1) Contract to Sell (Exh A); (2) machine
copy of the last will and testament of Demetrio Carpena (defendant's
father) to show that the property sold by defendant was one of those
devised to her in said will (Exh B); (3) receipts signed by defendant
for the downpayment in the total amount of P300,000.00 (Exhs C, D
& E); and (4) demand letters sent to defendant (Exhs F & G).
It appears that [petitioner], instead of submitting her evidence, filed a
Demurrer to Evidence. In essence, defendant maintained that the
contract to sell was null and void for want of approval by the probate
court. She further argued that the contract was subject to a
suspensive condition, which was the probate of the will of
defendant's father Demetrio Carpena. An Opposition was filed by
[private respondents]. It appears further that in an Order dated
December 15, 1992 the court a quo granted the demurrer to
evidence and dismissed the complaint. It justified its action in
dismissing the complaint in the following manner:
It is noteworthy that when the contract to sell was consummated, no
petition was filed in the Court with notice to the heirs of the time and
place of hearing, to show that the sale is necessary and beneficial. A
sale of properties of an estate as beneficial to the interested parties
must comply with the requisites provided by law, (Sec. 7, Rule 89,
Rules of Court) which are mandatory, and without them, the
authority to sell, the sale itself, and the order approving it, would be
null and void ab initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al.,
vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2
Phil. 755) Besides, it is axiomatic that where the estate of a
deceased person is already the subject of a testate or intestate
proceeding, the administrator cannot enter into any transaction
involving it without prior approval of the probate Court. (Estate of
Obave, vs. Reyes, 123 SCRA 767).
As held by the Supreme Court, a decedent's representative
(administrator) is not estopped from questioning the validity of his
own void deed purporting to convey land. (Bona vs. Soler, 2 Phil,
755). In the case at bar, the [petitioner,] realizing the illegality of the
transaction[,] has interposed the nullity of the contract as her
defense, there being no approval from the probate Court, and, in
good faith offers to return the money she received from the [private
respondents]. Certainly, the administratrix is not estop[ped] from
doing so and the action to declare the inexistence of contracts do
not prescribe. This is what precipitated the filing of [petitioner's]
demurrer to evidence. 6
The trial court's order of dismissal was elevated to the Court of
Appeals by private respondents who alleged:
1. The lower court erred in concluding that the contract to sell is null
and void, there being no approval of the probate court.
2. The lower court erred in concluding that [petitioner] in good faith
offers to return the money to [private respondents].
3. The lower court erred in concluding that [petitioner] is not under
estoppel to question the validity of the contract to sell.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 18
COMPILATION OF CASES
4. The lower court erred in not ruling on the consideration of the
contract to sell which is tantamount to plain unjust enrichment of
[petitioner] at the expense of [private respondents]. 7
Public Respondent's Ruling
Declaring the Contract to Sell valid, subject to the outcome of the
testate proceedings on Demetrio Carpena's estate, the appellate
court set aside the trial court's dismissal of the complaint and
correctly ruled as follows:
It is apparent from the appealed order that the lower court treated
the contract to sell executed by appellee as one made by the
administratrix of the Estate of Demetrio Carpena for the benefit of
the estate. Hence, its main reason for voiding the contract in
question was the absence of the probate court's approval.
Presumably, what the lower court had in mind was the sale of the
estate or part thereof made by the administrator for the benefit of the
estate, as authorized under Rule 89 of the Revised Rules of Court,
which requires the approval of the probate court upon application
therefor with notice to the heirs, devisees and legatees.
However, as adverted to by appellants in their brief, the contract to
sell in question is not covered by Rule 89 of the Revised Rules of
Court since it was made by appellee in her capacity as an heir, of a
property that was devised to her under the will sought to be
probated. Thus, while the document inadvertently stated that
appellee executed the contract in her capacity as "executrix and
administratrix" of the estate, a cursory reading of the entire text of
the contract would unerringly show that what she undertook to sell to
appellants was one of the "other properties given to her by her late
father," and more importantly, it was not made for the benefit of the
estate but for her own needs. To illustrate this point, it is apropos to
refer to the preambular or preliminary portion of the document, which
reads:
WHEREAS, the SELLER is the lawful owner of a certain parcel of
land, which is more particularly described as follows:
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
WHEREAS, the SELLER suffers difficulties in her living and has
forced to offer the sale of the above-described property, "which
property was only one among the other properties given to her by
her late father," to anyone who can wait for complete clearance of
the court on the Last Will Testament of her father.
WHEREAS, the SELLER in order to meet her need of cash, has
offered for sale the said property at ONE HUNDRED FIFTY PESOS
(150.00) Philippine Currency, per square meter unto the BUYERS,
and with this offer, the latter has accepted to buy and/or purchase
the same, less the area for the road and other easements indicated
at the back of Transfer Certificate of Title No. 2125 duly confirmed
after the survey to be conducted by the BUYER's Licensed Geodetic
Engineer, and whatever area [is] left. (Emphasis added).
To emphasize, it is evident from the foregoing clauses of the
contract that appellee sold Lot 2125 not in her capacity as executrix
of the will or administratrix of the estate of her father, but as an heir
and more importantly as owner of said lot which, along with other

properties, was devised to her under the will sought to be probated.
That being so, the requisites stipulated in Rule 89 of the Revised
Rules of Court which refer to a sale made by the administrator for
the benefit of the estate do not apply.
xxx xxx xxx
It is noteworthy that in a Manifestation filed with this court by
appellants, which is not controverted by appellee, it is mentioned
that the last will and testament of Demetrio Carpena was approved
in a final judgment rendered in Special Proceeding No. B-979 by the
Regional Trial Court, Branch 24 Biñan, Laguna. But of course such
approval does not terminate the proceeding[s] since the settlement
of the estate will ensue. Such proceedings will consist, among
others, in the issuance by the court of a notice to creditors (Rule 86),
hearing of money claims and payment of taxes and estate debts
(Rule 88) and distribution of the residue to the heirs or persons
entitled thereto (Rule 90). In effect, the final execution of the deed of
sale itself upon appellants' payment of the balance of the purchase
price will have to wait for the settlement or termination of the
administration proceedings of the Estate of Demetrio Carpena.
Under the foregoing premises, what the trial court should have done
with the complaint was not to dismiss it but to simply put on hold
further proceedings until such time that the estate or its residue will
be distributed in accordance with the approved will.
The rule is that when a demurrer to the evidence is granted by the
trial court but reversed on appeal, defendant loses the right to
adduce his evidence. In such a case, the appellate court will decide
the controversy on the basis of plaintiff's evidence. In the case at
bench, while we find the contract to sell valid and binding between
the parties, we cannot as yet order appellee to perform her
obligations under the contract because the result of the
administration proceedings of the testate Estate of Demetrio
Carpena has to be awaited. Hence, we shall confine our adjudication
to merely declaring the validity of the questioned Contract to Sell.
Hence, this appeal. 8
The Issue
Petitioner raises only one issue:
Whether or not the Contract to Sell dated 03 February 1989
executed by the [p]etitioner and [p]rivate [r]espondent[s] without the
requisite probate court approval is valid.
The Court's Ruling
The petition has no merit.
Contract to Sell Valid
In a nutshell, petitioner contends that "where the estate of the
deceased person is already the subject of a testate or intestate
proceeding, the administrator cannot enter into any transaction
involving it without prior approval of the Probate Court." 9 She
maintains that the Contract to Sell is void because it was not
approved by the probate court, as required by Section 7, Rule 89 of
the Rules of Court:
Sec. 7. Regulations for granting authority to sell, mortgage, or
otherwise encumber estate. — The court having jurisdiction of the
estate of the deceased may authorize the executor or administrator
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 19
COMPILATION OF CASES
to sell, mortgage, or otherwise encumber real estate, in cases
provided by these rules and when it appears necessary or beneficial,
under the following regulations:
xxx xxx xxx
Insisting that the above rule should apply to this case, petitioner
argues that the stipulations in the Contract to Sell require her to act
in her capacity as an executrix or administratrix. She avers that her
obligation to eject tenants pertains to the administratrix or executrix,
the estate being the landlord of the said tenants. 10Likewise
demonstrating that she entered into the contract in her capacity as
executor is the stipulation that she must effect the conversion of
subject land from irrigated rice land to residential land and secure
the necessary clearances from government offices. Petitioner
alleges that these obligations can be undertaken only by an executor
or administrator of an estate, and not by an heir. 11
The Court is not persuaded. As correctly ruled by the Court of
Appeals, Section 7 of Rule 89 of the Rules of Court is not applicable,
because petitioner entered into the Contract to Sell in her capacity
as an heiress, not as an executrix or administratrix of the estate. In
the contract, she represented herself as the "lawful owner" and seller
of the subject parcel of land. 12 She also explained the reason for the
sale to be "difficulties in her living" conditions and consequent "need
of cash." 13 These representations clearly evince that she was not
acting on behalf of the estate under probate when she entered into
the Contract to Sell. Accordingly, the jurisprudence cited by
petitioners has no application to the instant case.
We emphasize that hereditary rights are vested in the heir or heirs
from the moment of the decedent's death. 14 Petitioner, therefore,
became the owner of her hereditary share the moment her father
died. Thus, the lack of judicial approval does not invalidate the
Contract to Sell, because the petitioner has the substantive right to
sell the whole or a part of her share in the estate of her late
father. 15 Thus, in Jakosalem vs. Rafols, 16 the Court resolved an
identical issue under the old Civil Code and held:
Art. 440 of the Civil Code provides that "the possession of hereditary
property is deemed to be transmitted to the heir without interruption
from the instant of the death of the decedent, in case the inheritance
be accepted." And Manresa with reason states that upon the death
of a person, each of his heirs "becomes the undivided owner of the
whole estate left with respect to the part or portion which might be
adjudicated to him, a community of ownership being thus formed
among the coowners of the estate while it remains undivided." . . .
And according to article 399 of the Civil Code, every part owner may
assign or mortgage his part in the common property, and the effect
of such assignment or mortgage shall be limited to the portion which
may be allotted him in the partition upon the dissolution of the
community. Hence, where some of the heirs, without the
concurrence of the others, sold a property left by their deceased
father, this Court, speaking thru its then Chief Justice Cayetano
Arellano, said that the sale was valid, but that the effect thereof was
limited to the share which may be allotted to the vendors upon the
partition of the estate.
Administration of the Estate Not
Prejudiced by the Contract to Sell
Petitioner further contends that "[t]o sanction the sale at this stage
would bring about a partial distribution of the decedent's estate
pending the final termination of the testate proceedings." 17 This

becomes all the more significant in the light of the trial court's
finding, as stated in its Order dated August 20, 1997, that "the
legitimate of one of the heirs has been impaired." 18
Petitioner's contention is not convincing. The Contract to Sell
stipulates that petitioner's offer to sell is contingent on the "complete
clearance of the court on the Last Will Testament of her
father." 19Consequently, although the Contract to Sell was perfected
between the petitioner and private respondents during the pendency
of the probate proceedings, the consummation of the sale or the
transfer of ownership over the parcel of land to the private
respondents is subject to the full payment of the purchase price and
to the termination and outcome of the testate proceedings.
Therefore, there is no basis for petitioner's apprehension that the
Contract to Sell may result in a premature partition and distribution
of the properties of the estate. Indeed, it is settled that "the sale
made by an heir of his share in an inheritance, subject to the
pending administration, in no wise stands in the way of such
administration." 20
Estoppel
Finally, petitioner is estopped from backing out of her
representations in her valid Contract to Sell with private
respondents, from whom she had already received P300,000 as
initial payment of the purchase price. Petitioner may not renege on
her own acts and representations, to the prejudice of the private
respondents who have relied on them. 21 Jurisprudence teaches us
that neither the law nor the courts will extricate a party from an
unwise or undesirable contract he or she entered into with all the
required formalities and with full awareness of its consequences. 22
WHEREFORE, the petition is hereby DENIED and the assailed
Decision of the Court of Appeals AFFIRMED. Costs against
petitioner.
SO ORDERED.
WHAT ARE INCLUDED IN COURT’S POWER TO GRANT
AUTHORITY TO APPROVE SALE
LEE, et al. v. RTC of QUEZON CITY
THIRD DIVISION
G.R. No. 146006 February 23, 2004
JOSE C. LEE AND ALMA AGGABAO, in their capacities as
President and Corporate Secretary, respectively, of Philippines
International Life Insurance Company, and FILIPINO LOAN
ASSISTANCE GROUP, petitioners
vs.
REGIONAL TRIAL COURT OF QUEZON CITY BRANCH 85
presided by JUDGE PEDRO M. AREOLA, BRANCH CLERK OF
COURT JANICE Y. ANTERO, DEPUTY SHERIFFS ADENAUER G.
RIVERA and PEDRO L. BORJA, all of the Regional Trial Court of
Quezon City Branch 85, MA. DIVINA ENDERES claiming to be
Special Administratrix, and other persons/ public officers acting
for and in their behalf, respondents.
DECISION
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 20
COMPILATION OF CASES
CORONA, J.:
This is a petition for review under Rule 45 of the Rules of Court
seeking to reverse and set aside the decision1 of the Court of
Appeals, First Division, dated July 26, 2000, in CA G.R. 59736,
which dismissed the petition for certiorari filed by petitioners Jose C.
Lee and Alma Aggabao (in their capacities as president and
secretary, respectively, of Philippine International Life Insurance
Company) and Filipino Loan Assistance Group.
The antecedent facts follow.
Dr. Juvencio P. Ortañez incorporated the Philippine International Life
Insurance Company, Inc. on July 6, 1956. At the time of the
company’s incorporation, Dr. Ortañez owned ninety percent (90%) of
the subscribed capital stock.
On July 21, 1980, Dr. Ortañez died. He left behind a wife (Juliana
Salgado Ortañez), three legitimate children (Rafael, Jose and
Antonio Ortañez) and five illegitimate children by Ligaya Novicio
(herein private respondent Ma. Divina Ortañez-Enderes and her
siblings Jose, Romeo, Enrico Manuel and Cesar, all surnamed
Ortañez).2
On September 24, 1980, Rafael Ortañez filed before the Court of
First Instance of Rizal, Quezon City Branch (now Regional Trial
Court of Quezon City) a petition for letters of administration of the
intestate estate of Dr. Ortañez, docketed as SP Proc. Q-30884
(which petition to date remains pending at Branch 85 thereof).
Private respondent Ma. Divina Ortañez-Enderes and her siblings
filed an opposition to the petition for letters of administration and, in
a subsequent urgent motion, prayed that the intestate court appoint
a special administrator.
On March 10, 1982, Judge Ernani Cruz Paño, then presiding judge
of Branch 85, appointed Rafael and Jose Ortañez joint special
administrators of their father’s estate. Hearings continued for the
appointment of a regular administrator (up to now no regular
administrator has been appointed).
As ordered by the intestate court, special administrators Rafael and
Jose Ortañez submitted an inventory of the estate of their father
which included, among other properties, 2,0293 shares of stock in
Philippine International Life Insurance Company (hereafter
Philinterlife), representing 50.725% of the company’s outstanding
capital stock.
On April 15, 1989, the decedent’s wife, Juliana S. Ortañez, claiming
that she owned 1,0144 Philinterlife shares of stock as her conjugal
share in the estate, sold said shares with right to repurchase in favor
of herein petitioner Filipino Loan Assistance Group (FLAG),
represented by its president, herein petitioner Jose C. Lee. Juliana
Ortañez failed to repurchase the shares of stock within the stipulated
period, thus ownership thereof was consolidated by petitioner FLAG
in its name.
On October 30, 1991, Special Administrator Jose Ortañez, acting in
his personal capacity and claiming that he owned the remaining
1,0115 Philinterlife shares of stocks as his inheritance share in the
estate, sold said shares with right to repurchase also in favor of
herein petitioner FLAG, represented by its president, herein
petitioner Jose C. Lee. After one year, petitioner FLAG consolidated
in its name the ownership of the Philinterlife shares of stock when
Jose Ortañez failed to repurchase the same.

It appears that several years before (but already during the
pendency of the intestate proceedings at the Regional Trial Court of
Quezon City, Branch 85), Juliana Ortañez and her two children,
Special Administrators Rafael and Jose Ortañez, entered into a
memorandum of agreement dated March 4, 1982 for the
extrajudicial settlement of the estate of Dr. Juvencio Ortañez,
partitioning the estate (including the Philinterlife shares of stock)
among themselves. This was the basis of the number of shares
separately sold by Juliana Ortañez on April 15, 1989 (1,014 shares)
and by Jose Ortañez on October 30, 1991 (1,011 shares) in favor of
herein petitioner FLAG.
On July 12, 1995, herein private respondent Ma. Divina Ortañez–
Enderes and her siblings (hereafter referred to as private
respondents Enderes et al.) filed a motion for appointment of special
administrator of Philinterlife shares of stock. This move was opposed
by Special Administrator Jose Ortañez.
On November 8, 1995, the intestate court granted the motion of
private respondents Enderes et al. and appointed private respondent
Enderes special administratrix of the Philinterlife shares of stock.
On December 20, 1995, Special Administratrix Enderes filed an
urgent motion to declare void ab initio the memorandum of
agreement dated March 4, 1982. On January 9, 1996, she filed a
motion to declare the partial nullity of the extrajudicial settlement of
the decedent’s estate. These motions were opposed by Special
Administrator Jose Ortañez.
On March 22, 1996, Special Administratrix Enderes filed an urgent
motion to declare void ab initio the deeds of sale of Philinterlife
shares of stock, which move was again opposed by Special
Administrator Jose Ortañez.
On February 4, 1997, Jose Ortañez filed an omnibus motion for (1)
the approval of the deeds of sale of the Philinterlife shares of stock
and (2) the release of Ma. Divina Ortañez-Enderes as special
administratrix of the Philinterlife shares of stock on the ground that
there were no longer any shares of stock for her to administer.
On August 11, 1997, the intestate court denied the omnibus motion
of Special Administrator Jose Ortañez for the approval of the deeds
of sale for the reason that:
Under the Godoy case, supra, it was held in substance that a sale of
a property of the estate without an Order of the probate court is void
and passes no title to the purchaser. Since the sales in question
were entered into by Juliana S. Ortañez and Jose S. Ortañez in their
personal capacity without prior approval of the Court, the same is
not binding upon the Estate.
WHEREFORE, the OMNIBUS MOTION for the approval of the sale
of Philinterlife shares of stock and release of Ma. Divina Ortañez-
Enderes as Special Administratrix is hereby denied. 6
On August 29, 1997, the intestate court issued another order
granting the motion of Special Administratrix Enderes for the
annulment of the March 4, 1982 memorandum of agreement or
extrajudicial partition of estate. The court reasoned that:
In consonance with the Order of this Court dated August 11, 1997
DENYING the approval of the sale of Philinterlife shares of stocks
and release of Ma. Divina Ortañez-Enderes as Special
Administratrix, the "Urgent Motion to Declare Void Ab
Initio Memorandum of Agreement" dated December 19, 1995. . . is
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 21
COMPILATION OF CASES
hereby impliedly partially resolved insofar as the
transfer/waiver/renunciation of the Philinterlife shares of stock are
concerned, in particular, No. 5, 9(c), 10(b) and 11(d)(ii) of the
Memorandum of Agreement.
WHEREFORE, this Court hereby declares the Memorandum of
Agreement dated March 4, 1982 executed by Juliana S. Ortañez,
Rafael S. Ortañez and Jose S. Ortañez as partially void ab
initio insofar as the transfer/waiver/renunciation of the Philinterlife
shares of stocks are concerned.7
Aggrieved by the above-stated orders of the intestate court, Jose
Ortañez filed, on December 22, 1997, a petition for certiorari in the
Court of Appeals. The appellate court denied his petition, however,
ruling that there was no legal justification whatsoever for the
extrajudicial partition of the estate by Jose Ortañez, his brother
Rafael Ortañez and mother Juliana Ortañez during the pendency of
the settlement of the estate of Dr. Ortañez, without the requisite
approval of the intestate court, when it was clear that there were
other heirs to the estate who stood to be prejudiced thereby.
Consequently, the sale made by Jose Ortañez and his mother
Juliana Ortañez to FLAG of the shares of stock they invalidly
appropriated for themselves, without approval of the intestate court,
was void.8
Special Administrator Jose Ortañez filed a motion for
reconsideration of the Court of Appeals decision but it was denied.
He elevated the case to the Supreme Court via petition for review
under Rule 45 which the Supreme Court dismissed on October 5,
1998, on a technicality. His motion for reconsideration was denied
with finality on January 13, 1999. On February 23, 1999, the
resolution of the Supreme Court dismissing the petition of Special
Administrator Jose Ortañez became final and was subsequently
recorded in the book of entries of judgments.
Meanwhile, herein petitioners Jose Lee and Alma Aggabao, with the
rest of the FLAG-controlled board of directors, increased the
authorized capital stock of Philinterlife, diluting in the process the
50.725% controlling interest of the decedent, Dr. Juvencio Ortañez,
in the insurance company.9 This became the subject of a separate
action at the Securities and Exchange Commission filed by private
respondent-Special Administratrix Enderes against petitioner Jose
Lee and other members of the FLAG-controlled board of Philinterlife
on November 7, 1994. Thereafter, various cases were filed by Jose
Lee as president of Philinterlife and Juliana Ortañez and her sons
against private respondent-Special Administratrix Enderes in the
SEC and civil courts.10 Somehow, all these cases were connected to
the core dispute on the legality of the sale of decedent Dr. Ortañez’s
Philinterlife shares of stock to petitioner FLAG, represented by its
president, herein petitioner Jose Lee who later became the president
of Philinterlife after the controversial sale.
On May 2, 2000, private respondent-Special Administratrix Enderes
and her siblings filed a motion for execution of the Orders of the
intestate court dated August 11 and August 29, 1997 because the
orders of the intestate court nullifying the sale (upheld by the Court
of Appeals and the Supreme Court) had long became final.
Respondent-Special Administratrix Enderes served a copy of the
motion to petitioners Jose Lee and Alma Aggabao as president and
secretary, respectively, of Philinterlife,11 but petitioners ignored the
same.
On July 6, 2000, the intestate court granted the motion for execution,
the dispositive portion of which read:

WHEREFORE, premises considered, let a writ of execution issue as
follows:
1. Confirming the nullity of the sale of the 2,029 Philinterlife shares in
the name of the Estate of Dr. Juvencio Ortañez to Filipino Loan
Assistance Group (FLAG);
2. Commanding the President and the Corporate Secretary of
Philinterlife to reinstate in the stock and transfer book of Philinterlife
the 2,029 Philinterlife shares of stock in the name of the Estate of
Dr. Juvencio P. Ortañez as the owner thereof without prejudice to
other claims for violation of pre-emptive rights pertaining to the said
2,029 Philinterlife shares;
3. Directing the President and the Corporate Secretary of Philinterlife
to issue stock certificates of Philinterlife for 2,029 shares in the name
of the Estate of Dr. Juvencio P. Ortañez as the owner thereof
without prejudice to other claims for violations of pre-emptive rights
pertaining to the said 2,029 Philinterlife shares and,
4. Confirming that only the Special Administratrix, Ma. Divina
Ortañez-Enderes, has the power to exercise all the rights
appurtenant to the said shares, including the right to vote and to
receive dividends.
5. Directing Philinterlife and/or any other person or persons claiming
to represent it or otherwise, to acknowledge and allow the said
Special Administratrix to exercise all the aforesaid rights on the said
shares and to refrain from resorting to any action which may tend
directly or indirectly to impede, obstruct or bar the free exercise
thereof under pain of contempt.
6. The President, Corporate Secretary, any responsible officer/s of
Philinterlife, or any other person or persons claiming to represent it
or otherwise, are hereby directed to comply with this order within
three (3) days from receipt hereof under pain of contempt.
7. The Deputy Sheriffs Adenauer Rivera and Pedro Borja are hereby
directed to implement the writ of execution with dispatch to forestall
any and/or further damage to the Estate.
SO ORDERED.12
In the several occasions that the sheriff went to the office of
petitioners to execute the writ of execution, he was barred by the
security guard upon petitioners’ instructions. Thus, private
respondent-Special Administratrix Enderes filed a motion to cite
herein petitioners Jose Lee and Alma Aggabao (president and
secretary, respectively, of Philinterlife) in contempt.13
Petitioners Lee and Aggabao subsequently filed before the Court of
Appeals a petition for certiorari, docketed as CA G.R. SP No. 59736.
Petitioners alleged that the intestate court gravely abused its
discretion in (1) declaring that the ownership of FLAG over the
Philinterlife shares of stock was null and void; (2) ordering the
execution of its order declaring such nullity and (3) depriving the
petitioners of their right to due process.
On July 26, 2000, the Court of Appeals dismissed the petition
outright:
We are constrained to DISMISS OUTRIGHT the present petition for
certiorari and prohibition with prayer for a temporary restraining
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 22
COMPILATION OF CASES
order and/or writ of preliminary injunction in the light of the following
considerations:
1. The assailed Order dated August 11, 1997 of the respondent
judge had long become final and executory;
2. The certification on non-forum shopping is signed by only one (1)
of the three (3) petitioners in violation of the Rules; and
3. Except for the assailed orders and writ of execution, deed of sale
with right to repurchase, deed of sale of shares of stocks and
omnibus motion, the petition is not accompanied by such pleadings,
documents and other material portions of the record as would
support the allegations therein in violation of the second paragraph,
Rule 65 of the 1997 Rules of Civil Procedure, as amended.
Petition is DISMISSED.
SO ORDERED.14
The motion for reconsideration filed by petitioners Lee and Aggabao
of the above decision was denied by the Court of Appeals on
October 30, 2000:
This resolves the "urgent motion for reconsideration" filed by the
petitioners of our resolution of July 26, 2000 dismissing outrightly the
above-entitled petition for the reason, among others, that the
assailed Order dated August 11, 1997 of the respondent Judge had
long become final and executory.
Dura lex, sed lex.
WHEREFORE, the urgent motion for reconsideration is hereby
DENIED, for lack of merit.
SO ORDERED.15
On December 4, 2000, petitioners elevated the case to the Supreme
Court through a petition for review under Rule 45 but on December
13, 2000, we denied the petition because there was no showing that
the Court of Appeals in CA G.R. SP No. 59736 committed any
reversible error to warrant the exercise by the Supreme Court of its
discretionary appellate jurisdiction.16
However, upon motion for reconsideration filed by petitioners Lee
and Aggabao, the Supreme Court granted the motion and reinstated
their petition on September 5, 2001. The parties were then required
to submit their respective memoranda.
Meanwhile, private respondent-Special Administratrix Enderes, on
July 19, 2000, filed a motion to direct the branch clerk of court in lieu
of herein petitioners Lee and Aggabao to reinstate the name of Dr.
Ortañez in the stock and transfer book of Philinterlife and issue the
corresponding stock certificate pursuant to Section 10, Rule 39 of
the Rules of Court which provides that "the court may direct the act
to be done at the cost of the disobedient party by some other person
appointed by the court and the act when so done shall have the
effect as if done by the party." Petitioners Lee and Aggabao
opposed the motion on the ground that the intestate court should
refrain from acting on the motion because the issues raised therein
were directly related to the issues raised by them in their petition for
certiorari at the Court of Appeals docketed as CA-G.R. SP No.
59736. On October 30, 2000, the intestate court granted the motion,
ruling that there was no prohibition for the intestate court to execute

its orders inasmuch as the appellate court did not issue any TRO or
writ of preliminary injunction.
On December 3, 2000, petitioners Lee and Aggabao filed a petition
for certiorari in the Court of Appeals, docketed as CA-G.R. SP No.
62461, questioning this time the October 30, 2000 order of the
intestate court directing the branch clerk of court to issue the stock
certificates. They also questioned in the Court of Appeals the order
of the intestate court nullifying the sale made in their favor by Juliana
Ortañez and Jose Ortañez. On November 20, 2002, the Court of
Appeals denied their petition and upheld the power of the intestate
court to execute its order. Petitioners Lee and Aggabao then filed
motion for reconsideration which at present is still pending resolution
by the Court of Appeals.
Petitioners Jose Lee and Alma Aggabao (president and secretary,
respectively, of Philinterlife) and FLAG now raise the following errors
for our consideration:
The Court of Appeals committed grave reversible ERROR:
A. In failing to reconsider its previous resolution denying the petition
despite the fact that the appellate court’s mistake in apprehending
the facts had become patent and evident from the motion for
reconsideration and the comment of respondent Enderes which had
admitted the factual allegations of petitioners in the petition as well
as in the motion for reconsideration. Moreover, the resolution of the
appellate court denying the motion for reconsideration was
contained in only one page without even touching on the substantive
merits of the exhaustive discussion of facts and supporting law in the
motion for reconsideration in violation of the Rule on administrative
due process;
B. in failing to set aside the void orders of the intestate court on the
erroneous ground that the orders were final and executory with
regard to petitioners even as the latter were never notified of the
proceedings or order canceling its ownership;
C. in not finding that the intestate court committed grave abuse of
discretion amounting to excess of jurisdiction (1) when it issued the
Omnibus Order nullifying the ownership of petitioner FLAG over
shares of stock which were alleged to be part of the estate and (2)
when it issued a void writ of execution against petitioner FLAG as
present owner to implement merely provisional orders, thereby
violating FLAG’s constitutional right against deprivation of property
without due process;
D. In failing to declare null and void the orders of the intestate court
which nullified the sale of shares of stock between the legitimate heir
Jose S. Ortañez and petitioner FLAG because of settled law and
jurisprudence, i.e., that an heir has the right to dispose of the
decedent’s property even if the same is under administration
pursuant to Civil Code provision that possession of hereditary
property is transmitted to the heir the moment of death of the
decedent (Acedebo vs. Abesamis, 217 SCRA 194);
E. In disregarding the final decision of the Supreme Court in G.R.
No. 128525 dated December 17, 1999 involving substantially the
same parties, to wit, petitioners Jose C. Lee and Alma Aggabao
were respondents in that case while respondent Ma. Divina Enderes
was the petitioner therein. That decision, which can be considered
law of the case, ruled that petitioners cannot be enjoined by
respondent Enderes from exercising their power as directors and
officers of Philinterlife and that the intestate court in charge of the
intestate proceedings cannot adjudicate title to properties claimed to
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 23
COMPILATION OF CASES
be part of the estate and which are equally CLAIMED BY petitioner
FLAG.17
The petition has no merit.
Petitioners Jose Lee and Alma Aggabao, representing Philinterlife
and FLAG, assail before us not only the validity of the writ of
execution issued by the intestate court dated July 7, 2000 but also
the validity of the August 11, 1997 order of the intestate court
nullifying the sale of the 2,029 Philinterlife shares of stock made by
Juliana Ortañez and Jose Ortañez, in their personal capacities and
without court approval, in favor of petitioner FLAG.
We cannot allow petitioners to reopen the issue of nullity of the sale
of the Philinterlife shares of stock in their favor because this was
already settled a long time ago by the Court of Appeals in its
decision dated June 23, 1998 in CA-G.R. SP No. 46342. This
decision was effectively upheld by us in our resolution dated October
9, 1998 in G.R. No. 135177 dismissing the petition for review on a
technicality and thereafter denying the motion for reconsideration on
January 13, 1999 on the ground that there was no compelling
reason to reconsider said denial.18 Our decision became final on
February 23, 1999 and was accordingly entered in the book of entry
of judgments. For all intents and purposes therefore, the nullity of
the sale of the Philinterlife shares of stock made by Juliana Ortañez
and Jose Ortañez in favor of petitioner FLAG is already a closed
case. To reopen said issue would set a bad precedent, opening the
door wide open for dissatisfied parties to relitigate unfavorable
decisions no end. This is completely inimical to the orderly and
efficient administration of justice.
The said decision of the Court of Appeals in CA-G.R. SP No. 46342
affirming the nullity of the sale made by Jose Ortañez and his
mother Juliana Ortañez of the Philinterlife shares of stock read:
Petitioner’s asseverations relative to said [memorandum] agreement
were scuttled during the hearing before this Court thus:
JUSTICE AQUINO:
Counsel for petitioner, when the Memorandum of Agreement was
executed, did the children of Juliana Salgado know already that
there was a claim for share in the inheritance of the children of
Novicio?
ATTY. CALIMAG:
Your Honor please, at that time, Your Honor, it is already known to
them.
JUSTICE AQUINO:
What can be your legal justification for extrajudicial settlement of a
property subject of intestate proceedings when there is an adverse
claim of another set of heirs, alleged heirs? What would be the legal
justification for extra-judicially settling a property under
administration without the approval of the intestate court?
ATTY. CALIMAG:
Well, Your Honor please, in that extra-judicial settlement there is an
approval of the honorable court as to the property’s partition x x x.
There were as mentioned by the respondents’ counsel, Your Honor.

ATTY. BUYCO:
No…
JUSTICE AQUINO:
The point is, there can be no adjudication of a property under
intestate proceedings without the approval of the court. That is basic
unless you can present justification on that. In fact, there are two
steps: first, you ask leave and then execute the document and then
ask for approval of the document executed. Now, is there any legal
justification to exclude this particular transaction from those steps?
ATTY. CALIMAG:
None, Your Honor.
ATTY. BUYCO:
With that admission that there is no legal justification, Your Honor,
we rest the case for the private respondent. How can the lower court
be accused of abusing its discretion? (pages 33-35, TSN of January
29, 1998).
Thus, We find merit in the following postulation by private
respondent:
What we have here is a situation where some of the heirs of the
decedent without securing court approval have appropriated as their
own personal property the properties of [the] Estate, to the exclusion
and the extreme prejudice of the other claimant/heirs. In other
words, these heirs, without court approval, have distributed the asset
of the estate among themselves and proceeded to dispose the same
to third parties even in the absence of an order of distribution by the
Estate Court. As admitted by petitioner’s counsel, there was
absolutely no legal justification for this action by the heirs. There
being no legal justification, petitioner has no basis for demanding
that public respondent [the intestate court] approve the sale of the
Philinterlife shares of the Estate by Juliana and Jose Ortañez in
favor of the Filipino Loan Assistance Group.
It is an undisputed fact that the parties to the Memorandum of
Agreement dated March 4, 1982 (see Annex 7 of the Comment). . .
are not the only heirs claiming an interest in the estate left by Dr.
Juvencio P. Ortañez. The records of this case. . . clearly show that
as early as March 3, 1981 an Opposition to the Application for
Issuance of Letters of Administration was filed by the acknowledged
natural children of Dr. Juvencio P. Ortañez with Ligaya Novicio. . .
This claim by the acknowledged natural children of Dr. Juvencio P.
Ortañez is admittedly known to the parties to the Memorandum of
Agreement before they executed the same. This much was admitted
by petitioner’s counsel during the oral argument. xxx
Given the foregoing facts, and the applicable jurisprudence, public
respondent can never be faulted for not approving. . . the
subsequent sale by the petitioner [Jose Ortañez] and his mother
[Juliana Ortañez] of the Philinterlife shares belonging to the Estate of
Dr. Juvencio P. Ortañez." (pages 3-4 of Private Respondent’s
Memorandum; pages 243-244 of the Rollo)
Amidst the foregoing, We found no grave abuse of discretion
amounting to excess or want of jurisdiction committed by respondent
judge.19
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 24
COMPILATION OF CASES
From the above decision, it is clear that Juliana Ortañez, and her
three sons, Jose, Rafael and Antonio, all surnamed Ortañez,
invalidly entered into a memorandum of agreement extrajudicially
partitioning the intestate estate among themselves, despite their
knowledge that there were other heirs or claimants to the estate and
before final settlement of the estate by the intestate court. Since the
appropriation of the estate properties by Juliana Ortañez and her
children (Jose, Rafael and Antonio Ortañez) was invalid, the
subsequent sale thereof by Juliana and Jose to a third party (FLAG),
without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property
under administration under Art. 533 of the Civil Code which provides
that possession of hereditary property is deemed transmitted to the
heir without interruption from the moment of death of the
decedent.20 However, an heir can only alienate such portion of the
estate that may be allotted to him in the division of the estate by the
probate or intestate court after final adjudication, that is, after all
debtors shall have been paid or the devisees or legatees shall have
been given their shares.21 This means that an heir may only sell
his ideal or undivided share in the estate, not any specific property
therein. In the present case, Juliana Ortañez and Jose Ortañez sold
specific properties of the estate (1,014 and 1,011 shares of stock in
Philinterlife) in favor of petitioner FLAG. This they could not lawfully
do pending the final adjudication of the estate by the intestate court
because of the undue prejudice it would cause the other claimants to
the estate, as what happened in the present case.
Juliana Ortañez and Jose Ortañez sold specific properties of the
estate, without court approval. It is well-settled that court approval is
necessary for the validity of any disposition of the decedent’s estate.
In the early case of Godoy vs. Orellano,22 we laid down the rule that
the sale of the property of the estate by an administrator without the
order of the probate court is void and passes no title to the
purchaser. And in the case of Dillena vs. Court of Appeals,23 we
ruled that:
[I]t must be emphasized that the questioned properties (fishpond)
were included in the inventory of properties of the estate submitted
by then Administratrix Fausta Carreon Herrera on November 14,
1974. Private respondent was appointed as administratrix of the
estate on March 3, 1976 in lieu of Fausta Carreon Herrera. On
November 1, 1978, the questioned deed of sale of the fishponds
was executed between petitioner and private respondent without
notice and approval of the probate court. Even after the sale,
administratrix Aurora Carreon still included the three fishponds as
among the real properties of the estate in her inventory submitted on
August 13, 1981. In fact, as stated by the Court of Appeals,
petitioner, at the time of the sale of the fishponds in question, knew
that the same were part of the estate under administration.
xxx xxx xxx
The subject properties therefore are under the jurisdiction of the
probate court which according to our settled jurisprudence has the
authority to approve any disposition regarding properties under
administration. . . More emphatic is the declaration We made in
Estate of Olave vs. Reyes (123 SCRA 767) where We stated that
when the estate of the deceased person is already the subject of a
testate or intestate proceeding, the administrator cannot enter into
any transaction involving it without prior approval of the probate
court.
Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149
SCRA 174), We held that the sale of an immovable property
belonging to the estate of a decedent, in a special proceedings,

needs court approval. . . This pronouncement finds support in the
previous case of Dolores Vda. De Gil vs. Agustin Cancio (14 SCRA
797) wherein We emphasized that it is within the jurisdiction of a
probate court to approve the sale of properties of a deceased person
by his prospective heirs before final adjudication. x x x
It being settled that property under administration needs the
approval of the probate court before it can be disposed of, any
unauthorized disposition does not bind the estate and is null and
void. As early as 1921 in the case of Godoy vs. Orellano (42 Phil
347), We laid down the rule that a sale by an administrator of
property of the deceased, which is not authorized by the probate
court is null and void and title does not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and
void the disposition of the property under administration, made by
private respondent, the same having been effected without authority
from said court. It is the probate court that has the power to
authorize and/or approve the sale (Section 4 and 7, Rule 89), hence,
a fortiori, it is said court that can declare it null and void for as long
as the proceedings had not been closed or terminated. To uphold
petitioner’s contention that the probate court cannot annul the
unauthorized sale, would render meaningless the power pertaining
to the said court. (Bonga vs. Soler, 2 SCRA 755). (emphasis ours)
Our jurisprudence is therefore clear that (1) any disposition of estate
property by an administrator or prospective heir pending final
adjudication requires court approval and (2) any unauthorized
disposition of estate property can be annulled by the probate court,
there being no need for a separate action to annul the unauthorized
disposition.
The question now is: can the intestate or probate court execute its
order nullifying the invalid sale?
We see no reason why it cannot. The intestate court has the power
to execute its order with regard to the nullity of an unauthorized sale
of estate property, otherwise its power to annul the unauthorized or
fraudulent disposition of estate property would be meaningless. In
other words, enforcement is a necessary adjunct of the intestate or
probate court’s power to annul unauthorized or fraudulent
transactions to prevent the dissipation of estate property before final
adjudication.
Moreover, in this case, the order of the intestate court nullifying the
sale was affirmed by the appellate courts (the Court of Appeals in
CA-G.R. SP No. 46342 dated June 23, 1998 and subsequently by
the Supreme Court in G.R. No. 135177 dated October 9, 1998). The
finality of the decision of the Supreme Court was entered in the book
of entry of judgments on February 23, 1999. Considering the finality
of the order of the intestate court nullifying the sale, as affirmed by
the appellate courts, it was correct for private respondent-Special
Administratrix Enderes to thereafter move for a writ of execution and
for the intestate court to grant it.
Petitioners Jose Lee, Alma Aggabao and FLAG, however, contend
that the probate court could not issue a writ of execution with regard
to its order nullifying the sale because said order was merely
provisional:
The only authority given by law is for respondent judge to determine
provisionally whether said shares are included or excluded in the
inventory… In ordering the execution of the orders, respondent
judge acted in excess of his jurisdiction and grossly violated settled
law and jurisprudence, i.e., that the determination by a probate or
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 25
COMPILATION OF CASES
intestate court of whether a property is included or excluded in the
inventory of the estate being provisional in nature, cannot be the
subject of execution.24 (emphasis ours)
Petitioners’ argument is misplaced. There is no question, based on
the facts of this case, that the Philinterlife shares of stock were part
of the estate of Dr. Juvencio Ortañez from the very start as in fact
these shares were included in the inventory of the properties of the
estate submitted by Rafael Ortañez after he and his brother, Jose
Ortañez, were appointed special administrators by the intestate
court.25
The controversy here actually started when, during the pendency of
the settlement of the estate of Dr. Ortañez, his wife Juliana Ortañez
sold the 1,014 Philinterlife shares of stock in favor petitioner FLAG
without the approval of the intestate court. Her son Jose Ortañez
later sold the remaining 1,011 Philinterlife shares also in favor of
FLAG without the approval of the intestate court.
We are not dealing here with the issue of inclusion or exclusion of
properties in the inventory of the estate because there is no question
that, from the very start, the Philinterlife shares of stock were owned
by the decedent, Dr. Juvencio Ortañez. Rather, we are concerned
here with the effect of the sale made by the decedent’s heirs,
Juliana Ortañez and Jose Ortañez, without the required
approval of the intestate court. This being so, the contention of
petitioners that the determination of the intestate court was merely
provisional and should have been threshed out in a separate
proceeding is incorrect.
The petitioners Jose Lee and Alma Aggabao next contend that the
writ of execution should not be executed against them because they
were not notified, nor they were aware, of the proceedings nullifying
the sale of the shares of stock.
We are not persuaded. The title of the purchaser like herein
petitioner FLAG can be struck down by the intestate court after a
clear showing of the nullity of the alienation. This is the logical
consequence of our ruling in Godoy andin several subsequent
cases.26 The sale of any property of the estate by an
administrator or prospective heir without order of the probate
or intestate court is void and passes no title to the
purchaser. Thus, in Juan Lao et al. vs. Hon. Melencio Geneto, G.R.
No. 56451, June 19, 1985, we ordered the probate court to cancel
the transfer certificate of title issued to the vendees at the instance
of the administrator after finding that the sale of real property under
probate proceedings was made without the prior approval of the
court. The dispositive portion of our decision read:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed
Order dated February 18, 1981 of the respondent Judge approving
the questioned Amicable Settlement is declared NULL and VOID
and hereby SET ASIDE. Consequently, the sale in favor of Sotero
Dioniosio III and by the latter to William Go is likewise declared
NULL and VOID. The Transfer Certificate of Title issued to the latter
is hereby ordered cancelled.
It goes without saying that the increase in Philinterlife’s authorized
capital stock, approved on the vote of petitioners’ non-existent
shareholdings and obviously calculated to make it difficult for Dr.
Ortañez’s estate to reassume its controlling interest in Philinterlife,
was likewise void ab initio.
Petitioners next argue that they were denied due process.

We do not think so.
The facts show that petitioners, for reasons known only to them, did
not appeal the decision of the intestate court nullifying the sale of
shares of stock in their favor. Only the vendor, Jose Ortañez,
appealed the case. A careful review of the records shows that
petitioners had actual knowledge of the estate settlement
proceedings and that they knew private respondent Enderes was
questioning therein the sale to them of the Philinterlife shares of
stock.
It must be noted that private respondent-Special Administratrix
Enderes filed before the intestate court (RTC of Quezon City,
Branch 85) a "Motion to Declare Void Ab Initio Deeds of Sale of
Philinterlife Shares of Stock" on March 22, 1996. But as early as
1994, petitioners already knew of the pending settlement
proceedings and that the shares they bought were under the
administration by the intestate court because private respondent Ma.
Divina Ortañez-Enderes and her mother Ligaya Novicio had filed a
case against them at the Securities and Exchange Commission on
November 7, 1994, docketed as SEC No. 11-94-4909, for annulment
of transfer of shares of stock, annulment of sale of corporate
properties, annulment of subscriptions on increased capital stocks,
accounting, inspection of corporate books and records and damages
with prayer for a writ of preliminary injunction and/or temporary
restraining order.27 In said case, Enderes and her mother questioned
the sale of the aforesaid shares of stock to petitioners. The SEC
hearing officer in fact, in his resolution dated March 24, 1995,
deferred to the jurisdiction of the intestate court to rule on the validity
of the sale of shares of stock sold to petitioners by Jose Ortañez and
Juliana Ortañez:
Petitioners also averred that. . . the Philinterlife shares of Dr.
Juvencio Ortañez who died, in 1980, are part of his estate which is
presently the subject matter of an intestate proceeding of the RTC of
Quezon City, Branch 85. Although, private respondents [Jose Lee et
al.] presented the documents of partition whereby the foregoing
share of stocks were allegedly partitioned and conveyed to Jose S.
Ortañez who allegedly assigned the same to the other private
respondents, approval of the Court was not presented. Thus, the
assignments to the private respondents [Jose Lee et al.] of the
subject shares of stocks are void.
xxx xxx xxx
With respect to the alleged extrajudicial partition of the shares of
stock owned by the late Dr. Juvencio Ortañez, we rule that the
matter properly belongs to the jurisdiction of the regular court where
the intestate proceedings are currently pending. 28
With this resolution of the SEC hearing officer dated as early as
March 24, 1995 recognizing the jurisdiction of the intestate court to
determine the validity of the extrajudicial partition of the estate of Dr.
Ortañez and the subsequent sale by the heirs of the decedent of the
Philinterlife shares of stock to petitioners, how can petitioners claim
that they were not aware of the intestate proceedings?
Furthermore, when the resolution of the SEC hearing officer reached
the Supreme Court in 1996 (docketed as G.R. 128525), herein
petitioners who were respondents therein filed their answer which
contained statements showing that they knew of the pending
intestate proceedings:
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 26
COMPILATION OF CASES
[T]he subject matter of the complaint is not within the jurisdiction of
the SEC but with the Regional Trial Court; Ligaya Novicio and
children represented themselves to be the common law wife and
illegitimate children of the late Ortañez; that on March 4, 1982, the
surviving spouse Juliana Ortañez, on her behalf and for her minor
son Antonio, executed a Memorandum of Agreement with her other
sons Rafael and Jose, both surnamed Ortañez, dividing the estate of
the deceased composed of his one-half (1/2) share in the conjugal
properties; that in the said Memorandum of Agreement, Jose S.
Ortañez acquired as his share of the estate the 1,329 shares of
stock in Philinterlife; that on March 4, 1982, Juliana and Rafael
assigned their respective shares of stock in Philinterlife to Jose; that
contrary to the contentions of petitioners, private respondents Jose
Lee, Carlos Lee, Benjamin Lee and Alma Aggabao became
stockholders of Philinterlife on March 23, 1983 when Jose S.
Ortañez, the principal stockholder at that time, executed a deed of
sale of his shares of stock to private respondents; and that the right
of petitioners to question the Memorandum of Agreement and the
acquisition of shares of stock of private respondent is barred by
prescription.29
Also, private respondent-Special Administratrix Enderes offered
additional proof of actual knowledge of the settlement proceedings
by petitioners which petitioners never denied: (1) that petitioners
were represented by Atty. Ricardo Calimag previously hired by the
mother of private respondent Enderes to initiate cases against
petitioners Jose Lee and Alma Aggabao for the nullification of the
sale of the shares of stock but said counsel made a conflicting turn-
around and appeared instead as counsel of petitioners, and (2) that
the deeds of sale executed between petitioners and the heirs of the
decedent (vendors Juliana Ortañez and Jose Ortañez) were
acknowledged before Atty. Ramon Carpio who, during the pendency
of the settlement proceedings, filed a motion for the approval of the
sale of Philinterlife shares of stock to the Knights of Columbus
Fraternal Association, Inc. (which motion was, however, later
abandoned).30 All this sufficiently proves that petitioners, through
their counsels, knew of the pending settlement proceedings.
Finally, petitioners filed several criminal cases such as libel (Criminal
Case No. 97-7179-81), grave coercion (Criminal Case No. 84624)
and robbery (Criminal Case No. Q-96-67919) against private
respondent’s mother Ligaya Novicio who was a director of
Philinterlife,31 all of which criminal cases were related to the
questionable sale to petitioners of the Philinterlife shares of stock.
Considering these circumstances, we cannot accept petitioners’
claim of denial of due process. The essence of due process is the
reasonable opportunity to be heard. Where the opportunity to be
heard has been accorded, there is no denial of due process.32 In this
case, petitioners knew of the pending instestate proceedings for the
settlement of Dr. Juvencio Ortañez’s estate but for reasons they
alone knew, they never intervened. When the court declared the
nullity of the sale, they did not bother to appeal. And when they were
notified of the motion for execution of the Orders of the intestate
court, they ignored the same. Clearly, petitioners alone should bear
the blame.
Petitioners next contend that we are bound by our ruling in G.R. No.
128525 entitled Ma. Divina Ortañez-Enderes vs. Court of
Appeals, dated December 17, 1999, where we allegedly ruled that
the intestate court "may not pass upon the title to a certain property
for the purpose of determining whether the same should or should
not be included in the inventory but such determination is not
conclusive and is subject to final decision in a separate action
regarding ownership which may be constituted by the parties."

We are not unaware of our decision in G.R. No. 128525. The issue
therein was whether the Court of Appeals erred in affirming the
resolution of the SEC that Enderes et al. were not entitled to the
issuance of the writ of preliminary injunction. We ruled that the Court
of Appeals was correct in affirming the resolution of the SEC
denying the issuance of the writ of preliminary injunction because
injunction is not designed to protect contingent rights. Said case
did not rule on the issue of the validity of the sale of shares of stock
belonging to the decedent’s estate without court approval nor of the
validity of the writ of execution issued by the intestate court. G.R.
No. 128525 clearly involved a different issue and it does not
therefore apply to the present case.
Petitioners and all parties claiming rights under them are hereby
warned not to further delay the execution of the Orders of the
intestate court dated August 11 and August 29, 1997.
WHEREFORE, the petition is hereby DENIED. The decision of the
Court of Appeals in CA-G.R. S.P. No. 59736 dated July 26, 2000,
dismissing petitioners’ petition for certiorari and affirming the July 6,
2000 order of the trial court which ordered the execution of its (trial
court’s) August 11 and 29, 1997 orders, is hereby AFFIRMED.
SO ORDERED.
WT CONSTRUCTION INC. v. CANETE
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 157287 February 12, 2008
WT CONSTRUCTION, INC., petitioner,
vs.
HON. ULRIC R. CAÑETE, Presiding Judge, RTC, Mandaue City,
Branch 55, and the ESTATE OF ALBERTO CABAHUG, thru its
Administratrix, JULIANA VDA. DE CABAHUG, respondents.
DECISION
AZCUNA, J.:
This is a petition for review1 of the Decision and Resolution of the
Court of Appeals (CA), dated July 25, 2002 and February 12, 2003,
respectively, in CA-G.R. SP No. 65592 entitled "WT Construction,
Inc. vs. Hon. Ulric R. Cañete, in his capacity as Presiding Judge of
the Regional Trial Court of Mandaue City, Branch 55, et al."
The facts are as follows:2
Juliana vda. De Cabahug filed a case for the settlement of the estate
of her deceased husband, Alberto Cabahug, 3before the Regional
Trial Court (RTC) of Mandaue City, Branch 55, presided by public
respondent, Judge Ulric R. Cañete.
On January 10, 1992, Ciriaco Cabahug, the administrator of the
estate and heir of Alberto, was granted the authority to sell one of
the properties of the estate to defray the expenses for the payment
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 27
COMPILATION OF CASES
of taxes due from the estate. The property to be sold was the parcel
of land subject of the petition, Lot 1, FLS-322-D, situated in Looc,
Mandaue City, covered by Tax Declaration No. 00272 with an
estimated area of 17,382 square meters.
Ciriaco entered into an Agreement for Sale of Land with
Downpayment with petitioner for P8,691,000 on September 23,
1996. In accordance with the agreement, petitioner made a down
payment of fifty percent (50%) of the purchase price or P4,431,600
[should be P4,345,500]. The balance of the purchase price was to
be paid "immediately after the land is free from all
occupants/obstructions." The contract likewise stipulated the
following:
5. That the seller shall undertake the clearing of the land herein sold
of its present occupants and/or eject the squatters therein within a
period of one (1) year reckoned from the receipt of the advance
payment, provided however, that if the buyer will be the one to
handle the clearing or ejectment of occupants, all the expenses
incurred thereto shall be charged to and be deducted from the
remaining balance payable.
6. Upon receipt of the 50% advance payment of the purchase price,
the buyer shall be authorized to enter the property, utilize the same
and introduce improvements thereon….
Subsequently, petitioner took steps in clearing the property of its
occupants by filing a complaint for ejectment in 1998 with the
Municipal Trial Court in Cities, Branch 3, Mandaue City.
It was later discovered that Ciriaco did not inform his co-heirs of the
sale. He appropriated the amount paid by petitioner, so public
respondent issued an Order on August 19, 1997, relieving Ciriaco of
his functions as administrator and directing him to render an
accounting of all the properties and assets of the estate.
Consequently, Administrator Linda Cabahug-Antigue, along with her
co-heirs, demanded from petitioner the payment of the balance of
the purchase price. Referring to the provision of the agreement
relating to the payment of the balance of the purchase price
conditioned upon the removal of occupants and obstructions in the
property, petitioner refused to pay the remaining balance.
On July 6, 2000, public respondent issued an Order,4 stating:
WHEREFORE, premises considered, WT Construction is ordered to
manifest in court within five (5) days from receipt of this order
whether it wants the Contract of Sale rescinded.
If no manifestation is filed within said period, WT Construction is
further ordered to pay the estate of Alberto Cabahug the amount
of P4,259,400.00 less expenses incurred in the ejectment case
within a period of fifteen (15) days, otherwise, failure to do so will
prompt the court to issue a writ of execution as prayed for by
movant-administratrix.
Petitioner filed a Motion for Reconsideration and/or Extension of
Time to Manifest Option to Rescind on July 31, 2000. An Opposition
to the motion was filed by private respondent on August 2, 2000. 5
The motion for reconsideration was denied, and a Writ of
Execution6 to implement the above Order7 was issued by public
respondent on October 5, 2000. The writ issued to Sheriff IV of RTC,
Branch 55, Mandaue City, Veronico C. Ouano, stated the following:

WHEREFORE, you are hereby commanded that of the goods and
chattels of WT CONSTRUCTION, not exempt from execution, you
cause to be made the sum of P4,259,400.00, liable to pay the estate
of Alberto Cabahug minus the expenses incurred by WT
Construction in ejecting the occupants of the land.
But if sufficient personal properties could be found to satisfy this writ,
then of the land and buildings of the defendants you cause to be
made the said sums of money in the manner required of you by law.8
On November 17, 2000, petitioner filed an Urgent Motion to Quash
the Writ of Execution claiming that the issuance of the writ is
premature for the following reasons: (1) the expenses to be
deducted from the purchase price could not be ascertained as there
are still squatters on the land who have yet to be evicted; (2) the
existence of an action for Quieting of Title, Injunction and
Damages9 for ownership and possession of a portion of the property
in question or 4,690 square meters; and (3) the balance of the
purchase price would be significantly reduced if the claim of the
plaintiffs in the aforesaid action will be granted.10
During the pendency of the motion, the plaintiffs in the action for
quieting of title, namely, Antonia Flores, Andrea Lumapas, Emilio
Omobong and Constancia O. Tolo, filed a Motion for Leave to
Intervene contending that they have a right to a portion or to 4,690
square meters of the subject lot. The group also moved for the
quashing of the writ of execution.11
On May 15, 2001, public respondent issued an Order denying
petitioner’s motion:
There being no merits to the urgent Motion to Quash the Writ of
Execution, the same is denied.
SO ORDERED.12
Petitioner’s motion for reconsideration was likewise denied in an
Order dated June 28, 2001.
Petitioner went to the CA on a petition for certiorari under Rule 65
but the CA dismissed the petition on July 25, 2002. The pertinent
portions of the Decision of the CA read:
The resolution of the ejectment case came in the wake of apparently
persistent efforts of the estate to collect the balance of the purchase
price from the petitioner. The developments were chronicled in an
Order of July 6, 2000 issued by respondent Judge Ulric O. Cañete. It
appears that on October 15, 1999, he directed petitioner to
pay P4,259,400 to the estate minus expenses incurred by it in
ejecting the occupants of the land. The implementation of the Order
was held in abeyance when the petitioner went on certiorari to the
Court of Appeals. The Fifteenth Division of the Court dismissed the
petition prompting the estate to pray for the immediate execution of
the Order of October 15, 1999. But it also asked that the petitioner’s
Willy Te be required to manifest if he would prefer to have the sale
rescinded and the amount advanced returned. Judge Cañete was
thus constraint on July 6, 2000 to give the petitioner an opportunity
within a certain period to manifest its willingness to rescind the
agreement. He finally said:
"If no manifestation is filed within said period, WT Construction is
further ordered to pay the estate of Alberto Cabahug the amount
of P4,259,400.00 less expenses incurred in the ejectment case
within a period of fifteen (15) days, otherwise, failure to do so will
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 28
COMPILATION OF CASES
prompt the court to issue writ of execution as prayed for by movant-
administratrix."
When the Order was issued, the petitioner had already obtained a
decree of ejectment from the MTCC. A week before the writ of
execution in the ejectment case was served on the occupants, the
estate was able to obtain its own Order from Judge Cañete denying
the motion for reconsideration of the petitioner and ordering the
latter, in view of the lapse of the grace period, to pay the stated
amount less expenses. On October 5, 2000, the writ of execution
was issued.
The determination of petitioner to resist payment of the balance was
as dogged as ever. In November 2000, it filed a motion to quash the
writ, citing the existence of a complaint filed by third parties for
ownership and possession of a portion of the property in question
and the failure of the estate to exclude another portion from the
computation of the balance as allegedly stipulated in the sales
agreement. In February 2001, some parties sought to intervene in
the Special Proceedings 3562-R and asked, in so many words, that
their interest in the purchase price to be paid to the estate be
recognized and respected.
On May 15, 2001, the assailed Order was handed down denying the
Motion to Quash Writ of Execution, followed by the Order of June
28, 2001 denying the Motion for Reconsideration. The petitioner
arrayed several issues against these Orders, to wit: 13
"1. Public respondent gravely abused his discretion in failing to state
the facts and the law which served as the basis for his Order of June
28, 2001 denying herein petitioner’s urgent motion to quash writ of
execution;
2. Public respondent gravely abused his discretion in not quashing
the writ of execution for being prematurely issued;
3. Public respondent gravely abused his discretion in not quashing
the writ of execution on the ground that the Order sought to be
executed was conditional and incomplete; and
4. Public respondent gravely abused his discretion in not quashing
the writ of execution on the ground that a change in the situation of
the parties had occurred."
We rule against the petitioner.
The disposition of the first argument turns on an understanding of
the kind of issuances that must contain the relevant facts and law
that support them. The requirement appears in Section 4, Article 8 of
the 1987 Constitution which says that "no decision shall be rendered
by any court without expressing therein clearly and distinctly the
facts and the law on which it is based," and Section 1, Rule 36 of the
1997 Rules of Civil Procedure, that "a judgment or final order
determining the merits of the case shall… (state) clearly and
distinctly the facts and the law on which it is based. In fine, only
decisions and final orders on the merits need to reflect the relevant
facts and law. The second paragraph of the cited provision of the
Constitution specifies two other issuances to which a different
requirement applies. These are denials of petitions for review and
motions for reconsiderations of decisions, for which it is enough that
the legal basis is stated. The Constitution and the Rules of Court are
silent as to all other issuances.

There are nonetheless Supreme Court decisions, promulgated
before the 1987 Constitution, which frown on minute orders by trial
courts. In Continental Bank vs. Tiangco, 94 SCRA 715, the order did
not contain any reason for granting a motion to dismiss a complaint,
in Eastern Assurance and Surety Corporation vs. Cui, 195 SCRA
622, it only said that the motion to dismiss a third-party complaint
was well-taken, and in Barrera vs. Militante, 114 SRA 325, it held
that the motion for reconsideration of an order of dismissal was
without merit. These orders were actually reviewed by the High
Court in spite of the fact that they were found to be minute orders,
and the third was upheld for being supported with good reasons.
Subsequent cases have taken the concept of legal basis in a liberal
light. Lack of merit was considered a legal basis for the denial of a
motion for reconsideration of a decision. Prudential Bank vs. Castro,
158 SCRA 646, and order of dismissal of appeal, United Placement
International vs. NLRC, 257 SCRA 404, while it should be deemed
inferred from the statement of the High Court, in refusing due course
to a petition for certiorari, that the petitioner had failed to show grave
abuse of discretion in the action taken below. Nunal vs. Commission
on Audit, 169 SCRA 356.
Applying these precepts, it is clear that the assailed Order of May
15, 2001, being merely a resolution of the motion to quash the writ of
execution, is neither a decision nor a final order on the merits. As
stated in Puertollano vs. Intermediate Appellate Court, 156 SCRA
188, a final judgment or order is one that finally disposes of and
determines the rights of the parties, either on the entire controversy
or a segment thereof, and concludes them until it is revised or set
aside. The Order in question does not purport to settle a right but
assumes it already. The respondents are correct in pointing out that
it was the Order of October 15, 1999 that settled the rights of the
parties to the matter of the balance of the purchase price and
became the subject of the writ of execution. The intervening
proceeding was nothing more than an attempt by the trial court to
thresh out a settlement by the parties, which did not push through
because of the intransigence of the petitioner, leaving the court no
choice but to enforce the terms of the original order upon motion of
the estate. On the basis of present jurisprudential trends, the
expression no merit may safely be used for ordinary motions such
as the one in issue here.
Neither may it be said that the writ had been prematurely issued,
simply because the ejectment case, the expenses of which were to
be deducted from the balance of the purchase price, was not yet
terminated. The respondent estate had correctly pointed out that the
litigation expenses could be determined beforehand…. To allow
petitioner to defer payment until it wound up the ejectment case
would only place in its hands a potestative power to determine the
enforceability of its own obligations under the contract.
The order sought to be enforced by the writ is not, as argued, the
Order of July 6, 2000. Even a cursory reading of this issuance will
tell us that what the estate was praying for was the enforcement of
the October 15, 1999 Order. The trial court categorically stated that
it would grant the writ "as prayed for by movant-administratrix" if
petitioner would not exercise the option extended to it by the estate
within a certain period. Nowhere do we see an instruction that the
enforcement of the order of payment would have to defend on the
eviction of the occupants.
Finally, it is not meet for petitioner to argue its way out of its
obligation by citing the intervention of other parties in the case to
claim a portion of the property. As it appears in their pleading, these
parties expect to be prejudiced by the turnover of the purchase price
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 29
COMPILATION OF CASES
to the estate. They can take care of themselves, and evidently, they
are doing so by such intervention."
IN VIEW OF THE FOREGOING, the petition is dismissed.
SO ORDERED.
Petitioner’s motion for reconsideration was denied in a resolution
dated February 12, 2003.
Petitioner raises the following issues:14
I
Whether or not the trial court can delegate the authority to hear and
determine the amount to be levied in a writ of execution to the
sheriff; and
II
Whether or not a probate court has the jurisdiction to determine the
rights and obligations of the parties in a contract, one of which is a
private corporation.
Petitioner argues as follows:
1. the writ of execution dated October 5, 2000 sought to be quashed
by petitioner is inherently defective, as it gives the sheriff the
authority to determine the amount to be levied in violation of the
mandatory provision of Section 8(e), Rule 39 of the 1997 Rules of
Civil Procedure;
2. the quashal of the writ of execution issued by public respondent is
necessary and proper because, aside from being inherently
defective, it is the product of a null and void proceedings because
the jurisdiction to determine the rights and obligations of petitioner
and private respondent under the "Agreement for Sale of Land with
Downpayment" exclusively belongs to courts of general jurisdiction;
3. the writ of execution sought to be quashed by petitioner is not one
of those allowed to be issued by probate courts under Section 6,
Rule 88; Section 3, Rule 90 and Section 13, Rule 142 of the Revised
Rules of Court;
4. the writ of execution violates the doctrine that a contract is the law
between parties, and courts have no choice but to enforce such
contract so long as it is not contrary to law, morals, customs or
public policy;
5. there was a supervening cause which made the implementation of
the subject writ of execution unjust and inequitable; and
6. certiorari is the appropriate remedy to assail the subject orders of
public respondent for being issued outside or in excess of his
jurisdiction.
The petition is denied.
As correctly held by the CA, there was no discretion given to the
sheriff as to the amount to be paid or executed on under the writ of
execution. While the writ of execution did say ". . . the sum
of P4,259,400.00, . . . minus the expenses incurred by WT

Construction in ejecting the occupants of the land," this simply
means that petitioner was being given a chance by the court to
reduce the aforementioned amount upon proof of said deductible
expenses, after which an alias writ would be issued. In the absence
of such proof, the sheriff would have to execute for the full amount.
And as noted by the CA, petitioner failed to prove such expenses
within the period given by the probate/estate court. The issue is,
therefore, moot.
As to petitioner’s argument that the probate/estate court cannot
adjudicate the rights and obligations of the parties under the deed of
sale, the CA rightly found that this was a new issue not raised in the
probate/estate court. Furthermore, the deed of sale in question is the
sale of the property of the estate to pay for taxes, a matter definitely
within the power of the probate/estate court to order.
It is but logical that probate/estate courts can enforce obligations
under such a deed of sale. Otherwise, they would not be able to
secure the proceeds to pay for the taxes and this would defeat the
purpose of the proceedings to settle the estate. Stated otherwise,
the power to enforce obligations under the deed of sale of a property
ordered sold to pay debts of the estate is but a necessary incident of
the power of a probate/estate court to order and effect such sale in
the first place.
In fine, this Court sees no error on the part of the CA in dismissing
petitioner’s special civil action for certiorari.
WHEREFORE, the petition is DENIED and the Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 65592 dated
July 25, 2002 and February 12, 2003, respectively, are
hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
LIU v. LOY
xxx
AUTHORITY GRANTED TO HEIRS
OROLA v. PONTEVEDRA
xxx
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 30
COMPILATION OF CASES
BOÑAGA v. SOLER
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15717 June 30, 1961
JULIAN BOÑAGA, plaintiff-appellant,
vs.
ROBERTO SOLER, ET AL., defendants-appellants.
Luis Contreras for plaintiff-appellant.
Segismundo Garga, Luis Isaac and Augusto Pardalis for
defendants-appellants.
REYES, J.B.L., J.:
From the order dated April 30, 1959 dismissing the complaint in Civil
Case No. 2123 of the Court of First Instance f Camarines Sur, Julian
Boñaga, Administrator of the state of the deceased spouses
Alejandro Ros and Maria Isaac, appeals directly to this Court.
It appears that following the death of the spouses Alejandro Ros and
Maria Isaac in 1935 and 1940, respectively, intestate proceedings
for the settlement of their estate were commenced in the Court of
First Instance of Camarines Sur, Special Proceeding No. 7194 of
that court. In time Juan Garza was appointed administrator of the
estate Upon application, Juan Garza was authorized by he probate
court on August 29, 1944 (Annex "X") to sell certain parcels of land
pertaining to the estate. Pursuant hereto, Garza sold said parcels of
land on August 30, 944 in favor of appellee Roberto Soler (Annex
"A"), which sale was subsequently approved on October 9, 1944
(Annex "B"). On October 14, 1944, the heirs of the deceased wife,
Maria Isaac, after having been declared as such (Annex "B"), sold all
their shares and interests over certain parcels of land in favor of
appellee Soler (Annex "C").
Sometime during the war, the records of Special Proceeding No.
7194 were destroyed. Upon reconstitution of these records by court
order, Julian Boñaga was issued letters of administration on
September 6, 1951. On May 1952, the instant action was filed by
Boñaga in his capacity as administrator, seeking to annul the sales
of August 30, 1944 and October 14, 1944 in favor of Roberto Soler
on the ground that said transactions were fraudulent made without
notice to the heirs of Alejandro Ros of the hearing of the application
to sell, and that the sales were not beneficial to the heirs for various
reasons, and praying for reconveyance of the lands sold, since they
were fraudulently registered under Act 496 in the name of Roberto
Soler on December 17, 1949 and on January 2, 1952, and for
recovery of damages.
A motion to dismiss interposed by Soler on August 29, 1952,
alleging lack of legal capacity to sue and failure to state a cause of
action as grounds, was denied on September 17, 1952. Soler then
filed his answer and counter-claim on September 26, 1952. On June
11, 1953, Soler filed his second motion to dismiss, raising the same
grounds contained in the first motion; this was again denied on
August 29, 1953. On July 18, 1955, Soler filed his thirdmotion to
dismiss, for the first time raising estoppel, prescription of the action,

and non-inclusion of necessary parties, as grounds. Upon an order
for plaintiff to include the vendors in the sales as parties to the case,
the court, on August 22, 1955, denied the motion to dismiss, but
apparently without resolving the issues of estoppel and prescription.
On February 9, 1959, Soler sought a resolution of his third motion to
dismiss. On April 30, 1959, and over plaintiff's objections, the court
ordered the dismissal of the action, sustaining the contention that as
administrator of the estate succeeding Juan Garza, plaintiff was
estopped to file an action to annul the sales, and, moreover, that the
action had prescribed. Hence, this appeal.
The sale on August 30, 1944 appears to be of 21 parcels of abaca,
coconut, forest and pasture lands, covering an aggregate area of
more than 1,001 hectares for the lump sum of P142,800, Japanese
currency (Annex "A"). Plaintiff-appellant alleges (and the record
nowhere indicates the contrary), that these lands comprised almost
the entire estate. Nothing in the record would show whether, as
required by Rule 90, sections 4 and 7, the application for authority to
sell was set for hearing, or that the court ever caused notice thereof
to be issued to the heirs of Alejandro Ros Incidentally, these heirs
seem not to have gotten any part of the purchase price since they
were then allegedly in Spain. Yet, in the order of declaration of heirs
of the wife and approving the sale to Soler (Annex "B"), the
declaration of the heirs of the husband Alejandro Ros was expressly
held in abeyance, indicating a recognition of their existence.
Appellees maintain that the sale was made for the purpose of paying
debts, but this, at lease, is controversial. Appellant asserts that the
total outstanding debts of the estate at the time of the sale amounted
to only P4,641.48, a relatively meager sum compared to the large
tracts of land sold.
We think the lower court erred in dismissing the action without a
hearing on the merits. A sale of properties of an estate as beneficial
to the interested parties, under Sections 4 and 7, Rule 90, must
comply with the requisites therein provided, which are mandatory.
Among these requisites, the fixing of the time and place of hearing
for an application to sell, and the notice thereof to the heirs, are
essential; and without them, the authority to sell, the sale itself, and
the order approving it, would be null and void ab initio (Arcilla vs.
David, 77 Phil. 718; Gabriel, et al. vs. Encarnacion, et al., L-6736,
May 4, 1954, and others cited therein). Rule 90, Section 4, does not
distinguish between heirs residing in and those residing outside the
Philippines. Therefore, its requirements should apply regardless of
the place of residence of those required to be notified under said
rule.
The contention that the sale was made under Section 2, Rule 90
(wherein notice is required only to those heirs, etc., residing in the
Philippines), is not substantiated by the record. Neither the deed of
sale on August 30, 1944, nor the orders issued by the probate court
in connection there with, show whether, as required by said Section
2, the personal properties were insufficient to pay the debts and
expenses of administration. There is not even a showing, to start
with, that the sale was made for the purpose of paying debts or
expenses of administration (or legacies), a condition which
circumscribes the applicability of that section. On the face of the
reamended complaint at any rate, it does not appear that the
contested sale was one under section 2 of Rule 90; and the same
can not be invoked to sustain the motion to dismiss. Without
reception of further evidence to determine whether the requisites of
the applicable provisions of the Rules had been followed, the
dismissal of the action was erroneous and improvident. Plaintiff
should at least have been given a chance to prove his case.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 31
COMPILATION OF CASES
As to the plea of estoppel, the rule is that a decedent's
representative is not estopped to question the validity of his own
void deed purporting to convey land (Chase vs. Cartwright, 22 Am.
St. Rep. 207, and cases cited; Meeks vs. Olpherts, 25 L. Ed. (U.S.)
735; 21 Am. Jur. 756, s. 667); and if this be true of the administrator
as to his own acts, a fortiori, his successor can not be estopped to
question the acts of his predecessor are not conformable to law (cf.
Walker vs. Portland Savings Bank, L.R.A. 1915 E, p. 840; 21 Am.
Jur. p. 820, s. 785).
We also find untenable the claim of prescription of the action.
Actions to declare the inexistence of contracts do not prescribe (Art.
1410, N.C.C.), a principle applied even before the effectivity of the
new Civil Code (Eugenio, et al. vs. Perdido, et al., supra., citing
Tipton vs. Velasco, 6 Phil. 67 and Sabas vs. Germa, 66 Phil. 471).
The sale on October 14, 1944 by the heirs of Maria Isaac of
whatever interests or participation they might have in the four
parcels of land covered by the deed may be valid (De Guanzon vs.
Jalandoni and Ramos, L-5049, October 31, 1953; De Jesus vs.
Daza, 77 Phil. 152; Cea vs. C.A., 84 Phil. 798), yet it could not have
effected an immediate absolute transfer of title to appellee Soler
over any part of the parcels of land themselves, much less over their
entirety. Necessarily, the sale was subject to the result of the
administration proceedings, a contingency upon which the deed of
sale itself expressly founded the transaction. By its terms, not only
was the existence of possible heirs of Alejandro Ros recognized, but
it also provided for the contingency that said heirs could yet be
declared or adjudicated in the administration proceedings as the
sole owners of the four parcels being sold.
The subsequent registration of those lands covered by the sale of
October 14, 1944 and that of August 30, 1944, allegedly in the
exclusive name of appellee Roberto Soler, gave rise to an action for
reconveyance based on trust. Assuming that this case is one of
constructive trust, and under the theory that actions to recover
property held in constructive trust would prescribe, there is here no
showing as to when the alleged fraud was discovered (Article 1391,
N.C.C.). Hence, it cannot be said that prescription has tolled the
action.
Finally, neither in the first motion to dismiss on August 29, 1952; nor
in the Answer on September 26, 1952; nor in the second motion to
dismiss on June 11, 1953, was the defense of prescription raised.
From the time the Complaint was filed on May 9, 1952 to the third
motion to dismiss on July 18, 1955, was a period of more than three
(3) years in which it took Soler just to raise prescription as an issue.
Not having been set up in the two (2) motions to dismiss or in the
answer as affirmative defense, it is deemed to have been waived
(Rule 9, See. 10; Rule 26, Sec. 8; Pascua vs. Copuyoc, L-9595,
November 28, 1958). Obviously, prescription in this case does not
appear on the face of the pleadings, where failure to plead it would
not have constituted a waiver (Chua Lamko vs. Diego, et al., L-5279,
October 31, 1955). On the contrary, it would appear to raise an issue
of fact not contained in the pleadings, i.e., the time the fraud was
discovered. And this, furthermore, necessitates reception of
evidence.
WHEREFORE, the appealed order dismissing the complaint in Civil
Case No. 2123 of the court below is reversed, and the case
remanded, with instructions to proceed in accordance with this
decision. Costs against appellee Roberto Soler.

PAHAMOTANG, et al. v. PNB, et al.
Republic of the Philippines
SUPREME COURT
THIRD DIVISION
G.R. No. 156403. March 31, 2005
JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-
BASA, Petitioners,
vs.
THE PHILIPPINE NATIONAL BANK (PNB) and the HEIRS OF
ARTURO ARGUNA, Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a
petition for review on certiorari under Rule 45 of the Rules of Court
are the following issuances of the Court of Appeals in CA-G.R. CV
No. 65290, to wit:
1. Decision dated March 20, 2002,1 granting the appeal and
reversing the appealed August 7, 1998 decision of the Regional Trial
Court at Davao City; and
2. Resolution dated November 20, 2002, denying herein
petitioners' motion for reconsideration.2
The factual background:
On July 1, 1972, Melitona Pahamotang died. She was survived by
her husband Agustin Pahamotang, and their eight (8) children,
namely: Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion
and herein petitioners Josephine and Eleonor, all
surnamed Pahamotang.
On September 15, 1972, Agustin filed with the then Court of First
Instance of Davao City a petition for issuance of letters
administration over the estate of his deceased wife. The petition,
docketed as Special Case No. 1792, was raffled to Branch VI of
said court, hereinafter referred to as the intestate court.
In his petition, Agustin identified petitioners Josephine and Eleonor
as among the heirs of his deceased spouse. It appears that Agustin
was appointed petitioners' judicial guardian in an earlier case -
Special Civil Case No. 1785 – also of the CFI of Davao City, Branch
VI.
On December 7, 1972, the intestate court issued an order granting
Agustin’s petition.
On July 6, 1973, respondent Philippine National Bank (PNB) and
Agustin executed an Amendment of Real and Chattel Mortgages
with Assumption of Obligation. It appears that earlier, or on
December 14, 1972, the intestate court approved the mortgage to
PNB of certain assets of the estate to secure an obligation in the
amount of ₱570,000.00. Agustin signed the document in behalf of
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 32
COMPILATION OF CASES
(1) the estate of Melitona; (2) daughters Ana and Corazon; and (3) a
logging company named Pahamotang Logging Enterprises, Inc.
(PLEI) which appeared to have an interest in the properties of the
estate. Offered as securities are twelve (12) parcels of registered
land, ten (10) of which are covered by transfer certificates of title
(TCT) No. 2431, 7443, 8035, 11465, 21132, 4038, 24327, 24326,
31226 and 37786, all of the Registry of Deeds of Davao City, while
the remaining two (2) parcels by TCTs No. (3918) 1081 and (T-
2947) 562 of the Registry of Deeds of Davao del Norte and Davao
del Sur, respectively.
On July 16, 1973, Agustin filed with the intestate court a Petition for
Authority To Increase Mortgage on the above mentioned
properties of the estate.
In an Order dated July 18, 1973, the intestate court granted said
petition.
On October 5, 1974, Agustin again filed with the intestate court
another petition, Petition for Declaration of Heirs And For
Authority To Increase Indebtedness, whereunder he alleged the
necessity for an additional loan from PNB to capitalize the business
of the estate, the additional loan to be secured by additional
collateral in the form of a parcel of land covered by Original
Certificate of Title (OCT) No. P-7131 registered in the name of Heirs
of Melitona Pahamotang. In the same petition, Agustin prayed the
intestate court to declare him and Ana, Genoveva, Isabelita,
Corazon, Susana, Concepcion and herein petitioners Josephine and
Eleonor as the only heirs of Melitona.
In an Order of October 19, 1974, the intestate court granted
Agustin authority to seek additional loan from PNB in an amount not
exceeding ₱5,000,000.00 to be secured by the land covered by OCT
No. P-7131 of the Registry of Deeds of Davao Oriental, but denied
Agustin’s prayer for declaration of heirs for being premature.
On October 22, 1974, a real estate mortgage contract for
₱4,500,000.00 was executed by PNB and Agustin in his several
capacities as: (1) administrator of the estate of his late wife; (2)
general manager of PLEI; (3) attorney-in-fact of spouses Isabelita
Pahamotang and Orlando Ruiz, and spouses Susana Pahamotang
and Octavio Zamora; and (4) guardian of daughters Concepcion and
Genoveva and petitioners Josephine and Eleonor. Offered as
securities for the additional loan are three (3) parcels of registered
land covered by TCTs No. T-21132, 37786 and 43264.
On February 19, 1980, Agustin filed with the intestate court
a Petition (Request for Judicial Authority To Sell Certain
Properties of the Estate), therein praying for authority to sell
to Arturo Arguna the properties of the estate covered by TCTs No.
7443, 8035, 11465, 24326 and 31226 of the Registry of Deeds of
Davao City, and also TCT No. (T-3918) T-1081 of the Registry of
Deeds of Davao del Norte.
On February 27, 1980, Agustin yet filed with the intestate court
another petition, this time a Petition To Sell the Properties of the
Estate, more specifically referring to the property covered by OCT
No. P-7131, in favor of PLEI.
In separate Orders both dated February 25, 1980, the intestate
court granted Agustin authority to sell estate properties, in which
orders the court also required all the heirs of Melitona to give their
express conformity to the disposal of the subject properties of the
estate and to sign the deed of sale to be submitted to the same
court. Strangely, the two (2) orders were dated two (2) days earlier

than February 27, 1980, the day Agustin supposedly filed his
petition.
In a motion for reconsideration, Agustin prayed the intestate court for
the amendment of one of its February 25, 1980 Orders by canceling
the requirement of express conformity of the heirs as a condition for
the disposal of the aforesaid properties.
In its Order of January 7, 1981, the intestate court granted
Agustin’s prayer.
Hence, on March 4, 1981, estate properties covered by TCTs No.
7443,11465, 24326, 31226, 8035, (T-2947) 662 and (T-3918) T-
1081, were sold to respondent Arturo Arguna, while the property
covered by OCT No. P-7131 was sold to PLEI. Consequent to such
sales, vendees Arguna and PLEI filed witt the intestate court a
motion for the approval of the corresponding deeds of sale in their
favor. And, in an Order dated March 9, 1981, the intestate court
granted the motion.
Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita
and Corazon petitioned the intestate court for the payment of their
respective shares from the sales of estate properties, which was
granted by the intestate court.
Meanwhile, the obligation secured by mortgages on the subject
properties of the estate was never satisfied. Hence, on the basis of
the real estate mortgage contracts dated July 6, 1973 and October
22, 1974, mortgagor PNB filed a petition for the extrajudicial
foreclosure of the mortgage.
Petitioner Josephine filed a motion with the intestate court for the
issuance of an order restraining PNB from extrajudicially foreclosing
the mortgage. In its Order dated August 19, 1983, the intestate court
denied Josephine’s motion. Hence, PNB was able to foreclose the
mortgage in its favor.
Petitioners Josephine and Eleanor, together with their sister Susana
Pahamatong-Zamora, filed motions with the intestate court to set
aside its Orders of December 14, 1972 [Note: the order dated July
18, 1973 contained reference to an order dated December 14, 1972
approving the mortgage to PNB of certain properties of the
estate], July 18, 1973, October 19, 1974 and February 25, 1980.
In an Order dated September 5, 1983, the intestate court denied the
motions, explaining:
"Carefully analyzing the aforesaid motions and the grounds relied
upon, as well as the opposition thereto, the Court holds that the
supposed defects and/or irregularities complained of are mainly
formal or procedural and not substantial, for which reason, the Court
is not persuaded to still disturb all the orders, especially that
interests of the parties to the various contracts already authorized or
approved by the Orders sought to be set aside will be adversely
affected".3
Such was the state of things when, on March 20, 1984, in the
Regional Trial Court at Davao City, petitioners Josephine and
Eleanor, together with their sister Susana, filed their complaint
for Nullification of Mortgage Contracts and Foreclosure
Proceedings and Damages against Agustin, PNB, Arturo Arguna,
PLEI, the Provincial Sheriff of Mati, Davao Oriental, the Provincial
Sheriff of Tagum, Davao del Norte and the City Sheriff of Davao
City. In their complaint, docketed as Civil Case No. 16,802 which
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 33
COMPILATION OF CASES
was raffled to Branch 12 of the court, the sisters Josephine, Eleanor
and Susana prayed for the following reliefs:
"1.) The real estate mortgage contracts of July 6, 1973 and that of
October 2, 1974, executed by and between defendants PNB AND
PLEI be declared null and void ab initio;
2.) Declaring the foreclosure proceedings conducted by defendants-
sheriffs, insofar as they pertain to the assets of the estate of
Melitona L. Pahamotang, including the auction sales thereto, and
any and all proceedings taken thereunder, as null and void ab initio;
3.) Declaring the Deed of Absolute Sale, Doc. No. 473; Page No.96;
Book No.VIII, Series of 1981 of the Notarial Registry of Paquito G.
Balasabas of Davao City evidencing the sale/transfer of the real
properties described therein to defendant Arturo S. Arguna, as null
and void ab initio;
4.) Declaring the Deed of Absolute Sale, Doc. No. 474; Page No. 96,
Book No. VIII, series of 1981 of the Notarial Registry of Paquito G.
Balasabas of Davao City, evidencing the sale/transfer of real
properties to PLEI as null and void ab initio;
5.) For defendants to pay plaintiffs moral damages in such sums as
may be found to be just and equitable under the premises;
6.) For defendants to pay plaintiffs, jointly and severally, the
expenses incurred in connection with this litigation;
7.) For defendants to pay plaintiffs, jointly and severally attorney's
fees in an amount to be proven during the trial;
8.) For defendants to pay the costs of the suit".4
PNB moved to dismiss the complaint, which the trial court granted in
its Order of January 11, 1985.
However, upon motion of the plaintiffs, the trial court reversed itself
and ordered defendant PNB to file its answer.
Defendant PNB did file its answer with counterclaim, accompanied
by a cross-claim against co-defendants Agustin and PLEI.
During the ensuing pre-trial conference, the parties submitted the
following issues for the resolution of the trial court, to wit:
"1. Whether or not the Real Estate Mortgage contracts executed on
July 6, 1973 and October 2, 1974 (sic) by and between defendants
Pahamotang Logging Enterprises, Inc. and the Philippine National
Bank are null and void?
2. Whether or not the foreclosure proceedings conducted by
defendants-Sheriffs, insofar as they affect the assets of the Estate of
Melitona Pahamotang, including the public auction sales thereof, are
null and void?
3. Whether or not the Deed of Absolute Sale in favor of defendant
Arturo Arguna entered as Doc. No. 473; Page No. 96; Book No. VIII,
series of 1981 of the Notarial Register of Notary Public Paquito
Balasabas is null and void?

4. Whether or not the Deed of Absolute Sale in favor of defendant
Pahamotang Logging Enterprises, Inc. entered as Doc. No. 474;
Page No. 96; Book No. VIII, series of 1981 of the Notarial Register
of Notary Public Paquito Balasabas is null and void?
5. On defendant PNB's cross-claim, in the event the mortgage
contracts and the foreclosure proceedings are declared null and
void, whether or not defendant Pahamotang Logging Enterprises,
Inc. is liable to the PNB?
6. Whether or not the defendants are liable to the plaintiffs for
damages?
7. Whether or not the plaintiffs are liable to the defendants for
damages"?5
With defendant Arturo Arguna’s death on October 31, 1990, the trial
court ordered his substitution by his heirs: Heirs of Arturo Alguna.
In a Decision dated August 7, 1998, the trial court in effect
rendered judgment for the plaintiffs. We quote the decision’s
dispositive portion:
"WHEREFORE, in view of all the foregoing, judgment is hereby
rendered as follows:
1. Declaring the Mortgage Contracts of July 6, 1973 and October 22,
1974, as well as the foreclosure proceedings, void insofar as it
affects the share, interests and property rights of the plaintiffs in the
assets of the estate of Melitona Pahamotang, but valid with respect
to the other parties;
2. Declaring the deeds of sale in favor of defendants Pahamotang
Logging Enterprises, Inc. and Arturo Arguna as void insofar as it
affects the shares, interests and property rights of herein plaintiffs in
the assets of the estate of Melitona Pahamotang but valid with
respect to the other parties to the said deeds of sale.
3. Denying all the other claims of the parties for lack of strong,
convincing and competent evidence.
No pronouncement as to costs.
SO ORDERED".6
From the aforementioned decision of the trial court, PNB, PLEI and
the Heirs of Arturo Arguna went on appeal to the Court of Appeals
in CA-G.R. CV No. 65290. While the appeal was pending, the CA
granted the motion of Susana Pahamatong-Zamora to withdraw
from the case.
As stated at the threshold hereof, the Court of Appeals, in
its Decision dated March 20, 2002,7 reversed the appealed
decision of the trial court and dismissed the petitioners’ complaint in
Civil Case No. 16,802, thus:
WHEREFORE, the appeal is hereby GRANTED. The assailed
August 07, 1998 Decision rendered by the Regional Trial Court of
Davao City, Branch 12, is hereby REVERSED and SET ASIDE and
a new one is entered DISMISSING the complaint filed in Civil Case
No. 16,802.
SO ORDERED.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 34
COMPILATION OF CASES
The appellate court ruled that petitioners, while ostensibly
questioning the validity of the contracts of mortgage and sale
entered into by their father Agustin, were essentially attacking
collaterally the validity of the four (4) orders of the intestate court in
Special Case No. 1792, namely:
1. Order dated July 18, 1973, granting Agustin’s Petition for
Authority to Increase Mortgage;
2. Order dated October 19, 1974, denying Agustin’s petition for
declaration of heirs but giving him authority to seek additional loan
from PNB;
3. Order dated February 25, 1980, giving Agustin permission to sell
properties of the estate to Arturo Arguna and PLEI; and
4. Order dated January 7, 1981, canceling the requirement of
express conformity by the heirs as a condition for the disposal of
estate properties.
To the appellate court, petitioners committed a fatal error of
mounting a collateral attack on the foregoing orders instead of
initiating a direct action to annul them. Explains the Court of
Appeals:
"A null and void judgment is susceptible to direct as well as collateral
attack. A direct attack against a judgment is made through an action
or proceeding the main object of which is to annul, set aside, or
enjoin the enforcement of such judgment, if not carried into effect; or
if the property has been disposed of, the aggrieved party may sue
for recovery. A collateral attack is made when, in another action to
obtain a different relief, an attack on the judgment is made as an
incident in said action. This is proper only when the judgment, on its
fact, is null and void, as where it is patent that the court which
rendered such judgment has no jurisdiction. A judgment void on its
face may also be attacked directly.
xxx xxx xxx
Perusing the above arguments and comparing them with the settled
ruling, the plaintiffs-appellees [now petitioners], we believe had
availed themselves of the wrong remedy before the trial court. It is
clear that they are collaterally attacking the various orders of the
intestate court in an action for the nullification of the subject
mortgages, and foreclosure proceedings in favor of PNB, and the
deeds of sale in favor of Arguna. Most of their arguments stemmed
from their allegations that the various orders of the intestate court
were issued without a notification given to them. An examination,
however, of the July 18, 1973 order shows that the heirs of Melitona
have knowledge of the petition to increase mortgage filed by
Agustin, thus:
`The petitioner testified that all his children including those who are
of age have no objection to this petition and, as matter of fact, Ana
Pahamotang, one of the heirs of Melitona Pahamotang, who is the
vice-president of the logging corporation, is the one at present
negotiating for the increase of mortgage with the Philippine National
Bank.'
The presumption arising from those statements of the intestate court
is that the heirs were notified of the petition for the increase of
mortgage.

The same can be seen in the October 19, 1974 order:
`The records show that all the known heirs, namely Ana, Isabelita,
Corazon, Susana, including the incompetent Genoveva, and the
minors Josephine, Eleanor and Concepcion all surnamed were
notified of the hearing of the petition.'
On the other hand, the February 25, 1980 order required Agustin to
obtain first express conformity from the heirs before the subject
property be sold to Arguna. The fact that this was reconsidered by
the intestate court in its January 07, 1981 is of no moment. The
questioned orders are valid having been issued in accordance with
law and procedure. The problem with the plaintiffs-appellees is that,
in trying to nullify the subject mortgages and the foreclosure
proceedings in favor of PNB and the deeds of sale in favor of
Arguna, they are assailing the aforesaid orders of the intestate court
and in attacking the said orders, they attached documents that they
believe would warrant the conclusion that the assailed orders are
null and void. This is a clear collateral attack of the orders of the
intestate court which is not void on its face and which cannot be
allowed in the present action. The defects alleged by the plaintiff-
appellees are not apparent on the face of the assailed orders. Their
recourse is to ask for the declaration of nullity of the said orders, not
in a collateral manner, but a direct action to annul the same". 8
The same court added that petitioners’ failure to assail said orders at
the most opportune time constitutes laches:
"In their complaint below, plaintiffs, appellees are assailing in their
present action, four orders of the intestate court namely: July 18,
1973, October 19, 1974, February 25, 1980 and January 07, 1981
orders which were then issued by Judge Martinez. It should be
recalled that except for the January 07, 1981 order, Judge Jacinto,
upon taking over Sp. No. 1792, denied the motion of the plaintiffs-
appellees to set aside the aforesaid orders. Aside from their motion
before Judge Jacinto, nothing on the records would show that the
plaintiffs-appellees availed of other remedies to set aside the
questioned orders. Further, the records would not show that the
plaintiffs-appellees appealed the order of Judge Jacinto. If an
interval of two years, seven months and ninety nine days were
barred by laches, with more reason should the same doctrine apply
to the present case, considering that the plaintiffs-appellees did not
avail of the remedies provided by law in impugning the various
orders of the intestate court. Thus, the questioned orders of the
intestate court, by operation of law became final. It is a fundamental
principle of public policy in every jural system that at the risk of
occasional errors, judgments of courts should become final at some
definite time fixed by law (interest rei publicae ut finis sit litum). The
very object of which the courts were constituted was to put an end to
controversies. Once a judgment or an order of a court has become
final, the issues raised therein should be laid to rest. To date, except
as to the present action which we will later discuss as improper, the
plaintiff-appellees have not availed themselves of other avenues to
have the orders issued by Judge Martinez and Judge Jacinto
annulled and set aside. In the present case, when Judge Jacinto
denied the motion of the plaintiffs-appellees, the latter had remedies
provided by the rules to assail such order. The ruling by Judge
Jacinto denying plaintiffs-appellees motion to set aside the
questioned orders of Judge Martinez has long acquired finality. It is
well embedded in our jurisprudence, that judgment properly
rendered by a court vested with jurisdiction, like the RTC, and which
has acquired finality becomes immutable and unalterable, hence,
may no longer be modified in any respect except only to correct
clerical errors or mistakes. Litigation must have and always has an
end. If not, judicial function will lose its relevance".
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 35
COMPILATION OF CASES
In time, petitioners moved for a reconsideration but their motion was
denied by the appellate court in its Resolution of November 20,
2002.
Hence, petitioners’ present recourse, basically praying for the
reversal of the CA decision and the reinstatement of that of the trial
court.
We find merit in the petition.
It is petitioners’ posture that the mortgage contracts dated July 6,
1973 and October 22, 1974 entered into by Agustin with respondent
PNB, as well as his subsequent sale of estate properties to PLEI
and Arguna on March 4, 1981, are void because they [petitioners]
never consented thereto. They assert that as heirs of their mother
Melitona, they are entitled to notice of Agustin's several petitions in
the intestate court seeking authority to mortgage and sell estate
properties. Without such notice, so they maintain, the four orders of
the intestate court dated July 18, 1973, October 19, 1974,
February 25, 1980 and January 7, 1981, which allowed Agustin to
mortgage and sell estate properties, are void on account of Agustin’s
non-compliance with the mandatory requirements of Rule 89 of the
Rules of Court.
Prescinding from their premise that said orders are completely void
and hence, could not attain finality, petitioners maintain that the
same could be attacked directly or collaterally, anytime and
anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as
issue in this proceedings the validity of the subject orders in their
desire to invalidate the contracts of mortgage entered into by
Agustin. To PNB, the validity of the subject orders of the intestate
court can only be challenged in a direct action for such purpose and
not in an action to annul contracts, as the petitioners have done.
This respondent adds that the mortgage on the subject properties is
valid because the same was made with the approval of the intestate
court and with the knowledge of the heirs of Melitona, petitioners
included.9
Upon the other hand, respondent Heirs of Arturo Arguna likewise
claim that petitioners knew of the filing with the intestate court by
Agustin of petitions to mortgage and sell the estate properties. They
reecho the CA’s ruling that petitioners are barred by laches in filing
Civil Case No. 16,802.10
As we see it, the determinative question is whether or not petitioners
can obtain relief from the effects of contracts of sale and mortgage
entered into by Agustin without first initiating a direct action against
the orders of the intestate court authorizing the challenged contracts.
We answer the question in the affirmative.
It bears emphasizing that the action filed by the petitioners before
the trial court in Civil Case No. 16,802 is for the annulment of
several contracts entered into by Agustin for and in behalf of the
estate of Melitona, namely: (a) contract of mortgage in favor of
respondent PNB, (b) contract of sale in favor of Arguna involving
seven (7) parcels of land; and (c) contract of sale of a parcel of land
in favor of PLEI.
The trial court acquired jurisdiction over the subject matter of the
case upon the allegations in the complaint that said contracts were
entered into despite lack of notices to the heirs of the petition for the
approval of those contracts by the intestate court.

Contrary to the view of the Court of Appeals, the action which
petitioners lodged with the trial court in Civil Case No. 16,802 is not
an action to annul the orders of the intestate court, which, according
to CA, cannot be done collaterally. It is the validity of the contracts of
mortgage and sale which is directly attacked in the action.
And, in the exercise of its jurisdiction, the trial court made a factual
finding in its decision of August 7, 1998 that petitioners were, in fact,
not notified by their father Agustin of the filing of his petitions for
permission to mortgage/sell the estate properties. The trial court
made the correct conclusion of law that the challenged orders of the
intestate court granting Agustin’s petitions were null and void for lack
of compliance with the mandatory requirements of Rule 89 of the
Rules of Court, particularly Sections 2, 4, 7 thereof, which
respectively read:
"Sec. 2. When court may authorize sale, mortgage, or other
encumbrance of realty to pay debts and legacies through personalty
not exhausted. - When the personal estate of the deceased is not
sufficient to pay the debts, expenses of administration, and legacies,
or where the sale of such personal estate may injure the business or
other interests of those interested in the estate, and where a testator
has not otherwise made sufficient provision for the payment of such
debts, expenses, and legacies, the court, on the application of the
executor or administrator and on written notice to the heirs,
devisees, and legatees residing in the Philippines, may authorize
the executor or administrator to sell, mortgage, or otherwise
encumber so much as may be necessary of the real estate, in lieu of
personal estate, for the purpose of paying such debts, expenses,
and legacies, if it clearly appears that such sale, mortgage, or
encumbrance would be beneficial to the persons interested; and if a
part cannot be sold, mortgaged, or otherwise encumbered without
injury to those interested in the remainder, the authority may be for
the sale, mortgage, or other encumbrance of the whole of such real
estate, or so much thereof as is necessary or beneficial under the
circumstances".
"Sec. 4. When court may authorize sale of estate as beneficial to
interested persons. Disposal of proceeds. - When it appears that the
sale of the whole or a part of the real or personal estate, will be
beneficial to the heirs, devisees, legatees, and other interested
persons, the court may, upon application of the executor or
administrator and on written notice to the heirs, devisees and
legatees who are interested in the estate to be sold, authorize the
executor or administrator to sell the whole or a part of said estate,
although not necessary to pay debts, legacies, or expenses of
administration; but such authority shall not be granted if inconsistent
with the provisions of a will. In case of such sale, the proceeds shall
be assigned to the persons entitled to the estate in the proper
proportions".
"Sec. 7. Regulations for granting authority to sell, mortgage, or
otherwise encumber estate. - The court having jurisdiction of the
estate of the deceased may authorize the executor or administrator
to sell personal estate, or to sell, mortgage, or otherwise encumber
real estate; in cases provided by these rules and when it appears
necessary or beneficial, under the following regulations:
(a) The executor or administrator shall file a written petition setting
forth the debts due from the deceased, the expenses of
administration, the legacies, the value of the personal estate, the
situation of the estate to be sold, mortgaged, or otherwise
encumbered, and such other facts as show that the sale, mortgage,
or other encumbrance is necessary or beneficial;
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 36
COMPILATION OF CASES
(b) The court shall thereupon fix a time and place for hearing such
petition, and cause notice stating the nature of the petition, the
reason for the same, and the time and place of hearing, to be given
personally or by mail to the persons interested, and may cause such
further notice to be given, by publication or otherwise, as it shall
deem proper; (Emphasis supplied)".
xxx xxx xxx
Settled is the rule in this jurisdiction that when an order authorizing
the sale or encumbrance of real property was issued by the testate
or intestate court without previous notice to the heirs, devisees and
legatees as required by the Rules, it is not only the contract itself
which is null and void but also the order of the court authorizing the
same.11
Thus, in Maneclang vs. Baun,12 the previous administrator of the
estate filed a petition with the intestate court seeking authority to sell
portion of the estate, which the court granted despite lack of notice
of hearing to the heirs of the decedent. The new administrator of the
estate filed with the Regional Trial Court an action for the annulment
of the sales made by the previous administrator. After trial, the trial
court held that the order of the intestate court granting authority to
sell, as well as the deed of sale, were void. On appeal directly to this
Court, We held that without compliance with Sections 2, 4 and 7 of
Rule 89 of the Rules of Court, "the authority to sell, the sale itself
and the order approving it would be null and void ab initio".
In Liu vs. Loy, Jr.,13 while the decedent was still living, his son and
attorney-in-fact sold in behalf of the alleged decedent certain parcels
of land to Frank Liu. After the decedent died, the son sold the same
properties to two persons. Upon an ex parte motion filed by the 2nd
set of buyers of estate properties, the probate court approved the
sale to them of said properties. Consequently, certificates of title
covering the estate properties were cancelled and new titles issued
to the 2nd set of buyers. Frank Liu filed a complaint for
reconveyance/ annulment of title with the Regional Trial Court. The
trial court dismissed the complaint and the Court of Appeals affirmed
the dismissal. When the case was appealed to us, we set aside the
decision of the appellate court and declared the probate court's
approval of the sale as completely void due to the failure of the 2nd
set of buyers to notify the heir-administratrix of the motion and
hearing for the sale of estate property.
Clearly, the requirements of Rule 89 of the Rules of Court are
mandatory and failure to give notice to the heirs would invalidate the
authority granted by the intestate/probate court to mortgage or sell
estate assets.
Here, it appears that petitioners were never notified of the several
petitions filed by Agustin with the intestate court to mortgage and sell
the estate properties of his wife.
According to the trial court, the "[P]etition for Authority to
Increase Mortgage" and "[P]etition for Declaration of Heirs and
for Authority to Increase Indebtedness", filed by Agustin on July
16, 1973 and October 5, 1974, respectively, do not contain
information that petitioners were furnished with copies of said
petitions. Also, notices of hearings of those petitions were not sent to
the petitioners.14 The trial court also found in Civil Case No. 16,802
that Agustin did not notify petitioners of the filing of his petitions for
judicial authority to sell estate properties to Arturo Arguna and
PLEI.15
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 37
COMPILATION OF CASES

As it were, the appellate court offered little explanation on why it did DISTRIBUTION AND PARTITION OF ESTATE
not believe the trial court in its finding that petitioners were ignorant
of Agustin’s scheme to mortgage and sell the estate properties. TAYAG v. CA

Aside from merely quoting the orders of July 18, 1973 and October Republic of the Philippines
19, 1974 of the intestate court, the Court of Appeals leaves us in the SUPREME COURT
dark on its reason for disbelieving the trial court. The appellate court Manila
did not publicize its appraisal of the evidence presented by the
parties before the trial court in the matter regarding the knowledge,
FIRST DIVISION
or absence thereof, by the petitioners of Agustin’s petitions. The
appellate court cannot casually set aside the findings of the trial
court without stating clearly the reasons therefor. Findings of the trial G.R. No. 95229 June 9, 1992
court are entitled to great weight, and absent any indication to
believe otherwise, we simply cannot adopt the conclusion reached CORITO OCAMPO TAYAG, petitioner,
by the Court of Appeals. vs.
HON. COURT OF APPEALS and EMILIE DAYRIT
Laches is negligence or omission to assert a right within a CUYUGAN, respondent.
reasonable time, warranting the presumption that the party entitled
to assert it has either abandoned or declined the right. 16 The
essential elements of laches are: (1) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the
REGALADO, J.:
situation of which complaint is made and for which the complaint
seeks a remedy; (2) delay in asserting the complainant's rights, the
complainant having had knowledge or notice of the defendant's The instant petition seeks to reverse and set aside the decision 1 of
conduct and having been afforded an opportunity to institute a suit; respondent Court of Appeals in CA-G.R. SP No. 20222, entitled
(3) lack of knowledge or notice on the part of the defendant that the "Corito Ocampo Tayag vs. Hon. Norberto C. Ponce, Judge, Regional
complainant would assert the right on which he bases his suit; and Trial Court of San Fernando, Pampanga and Emilde Dayrit
(4) injury or prejudice to the defendant in the event relief is accorded Cuyugan," promulgated on May 10, 1990, and its resolution denying
to the complainant, or the suit is not held barred.17 petitioner's motion for reconsideration. 2 Said decision, now before
us for review, dismissed petitioner's Petition for Certiorariand
Prohibition with Preliminary Injunction on the ground that the denial
In the present case, the appellate court erred in appreciating laches
of the motion to dismiss Civil Case No. 7938 of the court a quo is an
against petitioners. The element of delay in questioning the subject
interlocutory order and cannot be the subject of the said special civil
orders of the intestate court is sorely lacking. Petitioners were totally
action, ordinary appeal in due time being petitioner's remedy.
unaware of the plan of Agustin to mortgage and sell the estate
properties. There is no indication that mortgagor PNB and vendee
Arguna had notified petitioners of the contracts they had executed In said Civil Case No, 7938, herein private respondent, in her
with Agustin. Although petitioners finally obtained knowledge of the capacity as mother and legal guardian of minor Chad D. Cuyugan,
subject petitions filed by their father, and eventually challenged the filed on April 9, 1987 a complaint denominated "Claim for
July 18, 1973, October 19, 1974, February 25, 1980 and January 7, Inheritance" against herein petitioner as the administratrix of the
1981 orders of the intestate court, it is not clear from the challenged estate of the late Atty. Ricardo Ocampo. The operative allegations in
decision of the appellate court when they (petitioners) actually said complaint are as follows:
learned of the existence of said orders of the intestate court. Absent
any indication of the point in time when petitioners acquired xxx xxx xxx
knowledge of those orders, their alleged delay in impugning the
validity thereof certainly cannot be established. And the Court of
Appeals cannot simply impute laches against them.

2. Plaintiff is the mother and legal guardian of her minor son, Chad
WHEREFORE, the assailed issuances of the Court of Appeals are
Cuyugan, by the father of the defendant, the late Atty. Ricardo
hereby REVERSED and SET ASIDE and the decision dated August
Ocampo; and the defendant is the known administratrix of the real
7, 1998 of the trial court in its Civil Case No. 16,802 REINSTATED.
and personal properties left by her deceased father, said Atty.
Ocampo, who died intestate in Angeles City on September 28, 1983;
SO ORDERED.
3. Plaintiff has been estranged from her husband, Jose Cuyugan, for
several years now and during which time, plaintiff and Atty. Ricardo
Ocampo had illicit amorous relationship with each other that, as a
consequence thereof, they begot a child who was christened Chad
Cuyugan in accordance with the ardent desire and behest of said
Atty. Ocampo;

4. Chad, the son of plaintiff by the late Atty. Ricardo Ocampo, who
was born in Angeles City on October 5, 1980 bad been sired,
showered with exceptional affection, fervent love and care by his
putative father for being his only son as can be gleaned from
indubitable letters and documents of the late Atty. Ocampo to herein
plaintiff, excerpts from some of which are hereunder reproduced;

. . . Keep good keep faith keep Chad and yourself for me alone and
for me all the time. As I have now I shall save my heart to you and to
Chad.
. . . Please take good care and pray to Sto. Niño for our sake and for
the child sake.
. . . Keep him. Take good care of him.
. . . I'm proud that you are his mother. . . I'm proud of him and you.
Let me bless him by my name and let me entitle him to all what I am
and what I've got.
. . . I have vowed to recognize him and be my heir.
. . . How is CHAD and you . . .
. . . Why should we not start now to own him, jointly against the
whole world. After all we love each other and CHAD is the product of
our love.
5. The minor, Chad D. Cuyugan, although illegitimate is
nevertheless entitled to a share in the intestate estate left by his
deceased father, Atty. Ricardo Ocampo as one of the surviving
heirs;
6. The deceased Atty. Ricardo Ocampo, at the time of his death was
the owner of real and personal property, located in Baguio City,
Angeles City and in the Province of Pampanga with approximate
value of several millions of pesos;
7. The estate of the late Atty. Ocampo has not as yet been
inventoried by the defendant and the inheritance of the surviving
heirs including that of said Chad has not likewise been ascertained;
8. The only known surviving heirs of the deceased Atty. Ricardo
Ocampo are his children, namely: Corito O. Tayag, Rivina O. Tayag,
Evita O. Florendo, Felina Ocampo, and said minor Chad, for and in
whose behalf this instant complaint is filed;
9. Plaintiff has no means of livelihood and she only depends on the
charity of friends and relatives for the sustenance of her son, Chad,
such that it is urgent, necessary and imperative that said child be
extended financial support from the estate of his putative father,
Atty. Ricardo Ocampo;
10. Several demands, verbal and written, have been made for
defendant to grant Chad's lawful inheritance, but despite said
demands, defendant failed and refused and still fails and refused
and still fails and refuses to satisfy the claim for inheritance against
the estate of the late Atty. Ocampo; 3
xxx xxx xxx
Plaintiff thereafter prays, among others, that judgment be rendered
ordering defendant to render an inventory and accounting of the real
and personal properties left by Atty. Ricardo Ocampo; to determine
and deliver the share of the minor child Chad in the estate of the
deceased; and to give him support pendente lite.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 38
COMPILATION OF CASES
Petitioner, as defendant therein, filed her answer with counterclaim
on June 3, 1987, disputing the material allegations in the complaint.
She maintained by way of affirmative defenses, inter alia, that the
complaint states no cause of action; that the action is premature;
that the suit as barred by prescription; that respondent Cuyugan has
no legal and judicial personality to bring the suit; that the lower court
was no jurisdiction over the nature of the action; and that there is
improper joinder of causes of action. 4
After the hearing of the motion to dismiss on the grounds asserted
as affirmative defenses, the trial court issued the following order on
October 20, 1987:
xxx xxx xxx
The Court is of the considered opinion that there is a need of further
proceedings to adduce evidence on the various claims of the parties
so as to hear their respective sides
WHEREFORE, resolution on the preliminary hearing which partakes
of the nature of a motion to dismiss requiring additional evidence is
in the meantime held in abeyance. The Motion to Dismiss is hereby
denied and the case as set for pre-trial . . . 5
With the denial of her motion for reconsideration of said order on
November 19, 1987, 6 petitioner filed on December 10, 1987 a
petition for certiorari and prohibition before the Court of Appeals,
docketed therein as CA-G.R. SP No. 13464, which was granted by
the Sixth Division of respondent court on August 2, 1989 and
enjoined respondent judge to resolve petitioner's motion praying for
the dismissal of the complaint based on the affirmative defenses
within ten (10) days from notice thereof. 7
In compliance with said decision of respondent court, the trial court
acted on and thereafter denied the motion to dismiss, which had
been pleaded in the affirmative defenses in Civil Case No. 7938, in
an order dated October 24, 1989, resolving the said motion in the
following manner:
xxx xxx xxx
The Court now resolves:
No. 1. The complaint sufficiently shows that a cause of action exists
in favor of the plaintiff. A cause of action being the "primary right to
redress a wrong" (Marquez vs. Valera, 48 OG 5272), which
apparently on the face of the complaint, plaintiff has a right to
enforce through this case. Defendant's protestation that there is no
sufficient cause of action is therefore untenable.
No. 2. The present action. despite the claim of defendant is not
premature. It is exactly filed in order to prove filiation, and then
recognition. To go about the step by step procedure outlined by the
defendant by filing one action after another is definitely violative of
the prohibition against splitting a cause of action.
No. 3. It is not the plaintiff that is now bringing the case before the
Court. It is (her) spurious child that she represents as natural
guardian that is instituting the action.

No. 4. Prescription has not set in if we consider that a spurious child
may file an action for recognition within four years from his
attainment of majority (New Civil Code. Art, 285, No. 2). Whether the
letters of the putative father, Atty. Ocampo, is evidence, that should
be inquired into in a hearing on the merits.
No. 5. Several causes of action may be joined in one complaint as
was done in this case. The defendant's claim that there was a
misjoinder is untenable.
No. 6. The Court being a court of general jurisdiction, and of special
jurisdiction, such as a probate court has capacity to entertain a
complaint such as the one now before it.
The nature of the case "CLAIM FOR INHERITANCE" does not
control the body of the complaint.
From all the foregoing, the Court finds that the complaint is sufficient'
in form and substance and, therefore, the motion to dismiss could
not be granted until after trial on the merits in which it should be
shown that the allegations of the complaint are unfounded or a
special defense to the action exists.
WHEREFORE, the Motion to Dismiss is hereby DENIED. 8
Petitioner's motion for reconsideration of said order was denied by
the trial court on January 30, 1990. 9 As a consequence, another
petition for certiorari and prohibition with preliminary injunction was
filed by petitioner on March 12, 1990 with respondent court,
docketed as CA-G.R. SP No. 20222, praying that the orders dated
October 24, 1989 and January 30, 1990 of the trial court be annulled
and set aside for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction.
On May 10, 1990, as earlier stated, respondent court promulgated
its decision dismissing the petition, and likewise denied petitioner's
motion for reconsideration in a resolution dated September 5, 1990,
hence the present petition for review on certiorari.
In elevating the case before us, petitioner relies on these grounds:
a. The Honorable Respondent Court of Appeals dismissed
Petitioner's Petition for Certiorari and Prohibition in UTTER
DISREGARD OF APPLICABLE DECISIONS OF THIS
HONORABLE COURT providing clear exceptions to the general rule
that interlocutory orders may not be elevated by way of the special
civil action of certiorari;
b. Respondent Court refused to resolve certain issues raised by
Petitioner before the Regional Trial Court and before Respondent
Court of Appeals involving QUESTIONS OF SUBSTANCE not
theretofore determined by this Honorable Court, such as the
interpretation and application of Art. 281 of the Civil Code requiring
judicial approval when the recognition of an illegitimate minor child
does not take place in a record of birth or in a will: of Art. 175, Par. 2,
in relation to Art. 172, Par. 2 of the Family Code, providing for the
prescriptive period with respect to the action to establish illegitimate
filiation; and of Art. 285 of the Civil Code, providing for the
prescriptive period with respect to the action for recognition of a
natural child; and
c. Respondent Court has sanctioned a DEPARTURE by the
Regional Trial Court from the accepted and usual course of judicial
proceedings. 10
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 39
COMPILATION OF CASES
Petitioner contends that the action to claim for inheritance filed by
herein private respondent in behalf of the minor child, Chad
Cuyugan, is premature and the complaint states no cause of action,
she submits that the recognition of the minor child, either voluntarily
or by judicial action, by the alleged putative father must first be
established before the former can invoke his right to succeed and
participate in the estate of the latter. Petitioner asseverates that
since there is no allegation of such recognition in the complaint
denominated as "Claim for Inheritance," then there exists no basis
for private respondent's aforesaid claim and, consequently, the
complaint should be dismissed.
The instant case is similar to the case of Paulino vs. Paulino, et
al., 11 wherein the petitioner, as plaintiff, brought an action against
the private respondents, as defendants, to compel them to give her
share of inheritance in the estate of the late Marcos Paulino,
claiming and alleging, inter alia, that she is the illegitimate child of
the deceased; that no proceedings for the settlement of the
deceased's estate had been commenced in court; and that the
defendants had refused and failed to deliver her share in the estate
of the deceased. She accordingly prayed that the defendants therein
be ordered to deliver her aforesaid share. The defendants moved for
the dismissal of her complaint on the ground that it states no cause
of action and that, even if it does, the same is barred by prescription.
The only difference between the aforecited case and the case at bar
is that at the time of the filing of the complaint therein, the petitioner
in that case had already reached the age of majority, whereas the
claimant in the present case is still a minor. In Paulino, we held that
an illegitimate child, to be entitled to support and successional rights
from the putative or presumed parent, must prove his filiation to the
latter. We also said that it is necessary to allege in the complaint that
the putative father had acknowledged and recognized the illegitimate
child because such acknowledgment is essential to and is the basis
of the right to inherit. There being no allegation of such
acknowledgment, the action becomes one to compel recognition
which cannot be brought after the death of the putative father.
The ratio decidendi in Paulino, therefore, is not the absence of a
cause of action for failure of the petitioner to allege the fact of
acknowledgment in the complaint, but the prescription of the action.
Applying the foregoing principles to the case at bar, although
petitioner contends that the complaint filed by herein private
respondent merely alleges that the minor Chad Cuyugan is an
illegitimate child of the deceased and is actually a claim for
inheritance, from the allegations therein the same may be
considered as one to compel recognition. Further that the two
causes of action, one to compel recognition and the other to claim
inheritance, may be joined in one complaint is not new in our
jurisprudence.
As early as 1922, we had occasion to rule thereon in Briz vs. Briz, et
al., 12 wherein we said:
The question whether a person in the position of the present plaintiff
can any event maintain a complex action to compel recognition as a
natural child and at the same time to obtain ulterior relief in the
character of heir, is one which, in the opinion of this court must be
answered in the affirmative, provided always that the conditions
justifying the joinder of the two distinct causes of action are present
in the particular case. In, other words, there is no absolute necessity
requiring that the action to compel acknowledgment should have
been instituted and prosecuted to a successful conclusion prior to
the action in which that same plaintiff seers additional relief in the
character of heir. Certainly, there is nothing so peculiar to the action

to compel acknowledgment as to require that a rule should be here
applied different from that generally applicable in other cases. . .
The conclusion above stated, though not heretofore explicitly
formulated by this court, is undoubtedly to some extent supported by
our prior decisions. Thus, we have held in numerous cases, and the
doctrine must be considered well settled, that a natural child having
a right to compel acknowledgment, but who has not been in fact
legally acknowledged, may maintain partition proceedings for the
division of the inheritance against his co-heirs . . .; and the same
person may intervene in proceedings for the distribution of the estate
of his deceased natural father, or mother . . . In neither of these
situations has it been thought necessary for the plaintiff to show a
prior decree compelling acknowledgment. The obvious reason is
that in partition suits and distribution proceedings the other persons
who might take by inheritance are before the court; and the
declaration of heirship is appropriate to such proceedings.
The next question to be resolved is whether the action to compel
recognition has prescribed.
Petitioner argues that assuming arguendo that the action is one to
compel recognition, private respondent's cause of action has
prescribed for the reason that since filiation is sought to be proved
by means of a private handwritten instrument signed by the parent
concerned, then under paragraph 2, Article 175 of the Family Code,
the action to establish filiation of the illegitimate minor child must be
brought during the lifetime of the alleged putative father. In the case
at bar, considering that the complaint was filed after the death of the
alleged parent, the action has prescribed and this is another ground
for the dismissal of the complaint. Petitioner theorizes that Article
285 of the Civil Code is not applicable to the case at bar and,
instead, paragraph 2, Article 175 of the Family Code should be given
retroactive effect. The theory is premised on the supposition that the
latter provision of law being merely procedural in nature, no vested
rights are created, hence it can be made to apply retroactively.
Article 285 of the Civil Code provides:
Art. 285. The action for the recognition of natural children may be
brought only during the lifetime of the presumed parents, except in
the following cases:
(1) If the father or mother died during the minority of the child, in
which case the latter may file the action before the expiration of four
years from the attainment of his majority;
xxx xxx xxx
On the other hand, Article 175 of the Family Code reads:
Art. 175. Illegitimate children may establish their illegitimate filiation
in the same way and on the same evidence as legitimate children.
The action must be brought within the same period specified in
Article 173, except when the action is based on the second
paragraph of Article 172, in which case the action may be brought
during the lifetime of the alleged parent.
Under the last-quoted provision of law, therefore, if the action is
based on the record of birth of the child, a final judgment, or an
admission by the parent of the child's filiation in a public document or
in a private handwritten signed instrument, then the action may be
brought during the lifetime of the child. However, if the action is
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 40
COMPILATION OF CASES
based on the open and continuous possession by the child of the
status of an illegitimate child, or on other evidence allowed by the
Rules of Court and special laws, the view has been expressed that
the action must be brought during the lifetime of the alleged
parent. 13
Petitioner submits that Article 175 of the Family Code applies in
which case the complaint should have been filed during the lifetime
of the putative father, failing which the same must be dismissed on
the ground of prescription. Private respondent, however, insists that
Article 285 of the Civil Code is controlling and, since the alleged
parent died during the minority of the child, the action for filiation
may be filed within four years from the attainment of majority of the
minor child.
Article 256 of the Family Code states that "[t]his Code shall have
retroactive effect insofar as it does not prejudice or impair vested or
acquired rights in accordance with the Civil Code or other laws." It
becomes essential, therefore, to determine whether the right of the
minor child to file an action for recognition is a vested right or not.
Under the circumstances obtaining in the case at bar, we hold that
the right of action of the minor child bas been vested by the filing of
the complaint in court under the regime of the Civil Code and prior to
the effectivity of the Family Code. 14 We herein adopt our ruling in
the recent case of Republic of the Philippines vs. Court of Appeals,
et al. 15 where we held that the fact of filing of the petition already
vested in the petitioner her right to file it and to have the same
proceed to final adjudication in accordance with the law in force at
the time, and such right can no longer be prejudiced or impaired by
the enactment of a new law.
Even assuming ex gratia argumenti that the provision of the Family
Code in question is procedural in nature, the rule that a statutory
change in matters of procedure may affect pending actions and
proceedings, unless the language of the act excludes them from its
operation, is not so pervasive that it may be used to validate or
invalidate proceedings taken before it goes into effective, since
procedure must be governed by the law regulating it at the time the
question of procedure arises especially where vested rights may be
prejudiced. Accordingly, Article 175 of the Family Code finds no
proper application to the instant case since it will ineluctably affect
adversely a right of private respondent and, consequentially, of the
mind child she represents, both of which have been vested with the
filing of the complaint in court. The trial court is therefore, correct in
applying the provisions of Article 285 of the Civil Code and in holding
that private respondent's cause of action has not yet prescribed.
Finally, we conform with the holding of the Court of Appeals that the
questioned order of the court below denying the motion to dismiss is
interlocutory and cannot be the subject of a petition for certiorari.
The exceptions to this rule invoked by petitioner and allegedly
obtaining in the case at bar, are obviously not present and may not
be relied upon.
WHEREFORE, the petition at bar is DENIED and the assailed
decision and resolution of respondent Court of Appeals are hereby
AFFIRMED in toto.
SO ORDERED.