Sell Estate as beneficial to interested persons

G.R. No. 164255               September 7, 2011

SPOUSES ELBE LEBIN and ERLINDA LEBIN, Petitioners, vs.VILMA S. MIRASOL, and REGIONAL TRIAL COURT OF ILOILO, BRANCH XXVII, Respondents.

II

RTC committed no reversible error in allocating

Lot 18 in equal portions to both petitioners and respondent

The non-perfection of the appeal by the petitioners notwithstanding, the Court declares that the RTC did not err in allocating the parcel of land equally to the parties if only to serve and enforce a standing policy in the settlement of the large estate of the late L.J. Hodges to prefer actual occupants in the disposition of estate assets. The policy was entirely within the power of the RTC to adopt and enforce as the probate court.

As stated in the administrator’s motion for approval of the offer, the approval of the offer to purchase would be conditioned upon whether the petitioners were the only actual occupants. The condition was designed to avoid the dislocation of actual occupants, and was the reason why the RTC dispatched Atty. Tabares to determine who actually occupied the property before approving the motion. It turned out that the report of Atty. Tabares about the petitioners being the only occupants was mistaken, because the house of Mirasol, who had meanwhile also offered to purchase the portion where her house stood, happened to be within the same lot subject of the petitioners’ offer to purchase. The confusion arose from the misdescription of Mirasol’s portion as Lot 4, instead of Lot 18.411âwphi1

Under Rule 89 of the Rules of Court, the RTC may authorize the sale, mortgage, or encumbrance of assets of the estate.1avvphi1 The approval of the sale in question, and the modification of the disposition of property of the Estate of L.J. Hodges were made pursuant to Section 4 of Rule 89, to wit:

Section 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. [emphasis supplied]

Without doubt, the disposal of estate property required judicial approval before it could be executed.42 Implicit in the requirement for judicial approval was that the probate court could rescind or nullify the disposition of a property under administration that was effected without its authority.43 This power included the authority to nullify or modify its approval of the sale of the property of the estate to conform to the law or to the standing policies set and fixed for the purpose, where the invalidation or modification derived from the falsity of the factual basis of the disposition, or from any other factual mistake, or from the concealment of a material fact by a party. Consequently, the probate court’s modification of its approval of the petitioners’ offer to purchase was well within the power of the RTC to nullify or modify after it was found to be contrary to the condition for the approval. Thereby, the RTC’s ruling, being sound and judicious, constituted neither abuse of discretion nor excess of jurisdiction.

WHEREFORE, we DENY the petition for review, and AFFIRM the final orders dated May 3, 1995 and March 2, 1998.

The petitioners shall pay the costs of suit.

G.R. No. L-12880             April 30, 1960

FLORA A. DE DEL CASTILLO, ET AL., plaintiffs-appellants, vs.ISABEL S. DE SAMONTE, defendant-appellee.

The contention that Luisa A. Vda. de del Castro can not sell the ½ portion belonging to the estate, and that the probate court had no authority to confirm such sale, assuming that the stocks in question are conjugal, is untenable (Errors II, V). Section 4, Rule 90 of the Rules of the Court provides:

Sec. 4. When Court May Authorize sale of estate as beneficial to interested person. 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 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 provision of a will.

As Administratrix of the estate, Luisa A. Vda. de del Castillo could sell property of the estate with authority of the probate court under the above provision. Whether the sale is considered to have taken place in 1949 (at the time Certificates of Stock Nos. 1704 and 1706 were substituted in lieu of Stock Certificate 1098) or in 1944, will make no difference because the issuance of letters testamentary relates back to the time of the decedent's death and validates the acts of the representative done in the interim which are otherwise lawful and proper (See C.J.S. Vol. 33, p. 1113). In her petition of October 10, 1950, Luisa A. Vda. de Del Castillo, as Administratrix, alleged that the sale was absolutely necessary for the subsistence of herself and her family during the most critical period of the Japanese occupation. By virtue of Section 4, Rule 90 above, the probate court had jurisdiction to authorize or approve the sale made, pursuant to the Administratrix's petition.

G.R. Nos. L-27860 and L-27896 March 29, 1974

PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the Testate Estate of Charles Newton Hodges (Sp. Proc. No. 1672 of the Court of First Instance of Iloilo), petitioner, vs.THE HONORABLE VENICIO ESCOLIN, Presiding Judge of the Court of First Instance of Iloilo, Branch II, and AVELINA A. MAGNO, respondents.

G.R. Nos. L-27936 & L-27937 March 29, 1974

TESTATE ESTATE OF THE LATE LINNIE JANE HODGES (Sp. Proc. No. 1307). TESTATE ESTATE OF THE LATE CHARLES NEWTON HODGES (Sp. Proc. No. 1672). PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, administrator-appellant, vs.LORENZO CARLES, JOSE PABLICO, ALFREDO CATEDRAL, SALVADOR GUZMAN, BELCESAR CAUSING, FLORENIA BARRIDO, PURIFICACION CORONADO, GRACIANO LUCERO, ARITEO THOMAS JAMIR, MELQUIADES BATISANAN, PEPITO IYULORES, ESPERIDION PARTISALA, WINIFREDO ESPADA, ROSARIO ALINGASA, ADELFA PREMAYLON, SANTIAGO PACAONSIS, and AVELINA A. MAGNO, the last as Administratrix in Sp. Proc. No. 1307, appellees, WESTERN INSTITUTE OF TECHNOLOGY, INC., movant-appellee.

PCIB insists, however, that to read the orders of May 27 and December 14, 1957, not as adjudicatory, but merely as approving past and authorizing future dispositions made by Hodges in a wholesale and general manner, would necessarily render the said orders void for being violative of the provisions of Rule 89 governing the manner in which such dispositions may be made and how the authority therefor and approval thereof by the probate court may be secured. If We sustained such a view, the result would only be that the said orders should be declared ineffective either way they are understood, considering We have already seen it is legally impossible to consider them as adjudicatory. As a matter of fact, however, what surges immediately to the surface, relative to PCIB's observations based on Rule 89, is that from such point of view, the supposed irregularity would involve no more than some non-jurisdictional technicalities of procedure, which have for their evident fundamental purpose the protection of parties interested in the estate, such as the heirs, its creditors, particularly the government on account of the taxes due it; and since it is apparent here that none of such parties are objecting to said orders or would be prejudiced by the unobservance by the trial court of the procedure pointed out by PCIB, We find no legal inconvenience in nor impediment to Our giving sanction to the blanket approval and authority contained in said orders. This solution is definitely preferable in law and in equity, for to view said orders in the sense suggested by PCIB would result in the deprivation of substantive rights to the brothers and sisters of Mrs. Hodges, whereas reading them the other way will not cause any prejudice to anyone, and, withal, will give peace of mind and stability of rights to the

innocent parties who relied on them in good faith, in the light of the peculiar pertinent provisions of the will of said decedent.

It is of no moment in what capacity Hodges made the "contracts to sell' after the death of his wife. Even if he had acted as executor of the will of his wife, he did not have to submit those contracts to the court nor follow the provisions of the rules, (Sections 2, 4, 5, 6, 8 and 9 of Rule 89 quoted by appellant on pp. 125 to 127 of its brief) for the simple reason that by the very orders, much relied upon by appellant for other purposes, of May 27, 1957 and December 14, 1957, Hodges was "allowed or authorized" by the trial court "to continue the business in which he was engaged and to perform acts which he had been doing while the deceased was living", (Order of May 27) which according to the motion on which the court acted was "of buying and selling personal and real properties", and "to execute subsequent sales, conveyances, leases and mortgages of the properties left by the said deceased Linnie Jane Hodges in consonance with the wishes conveyed in the last will and testament of the latter." (Order of December 14) In other words, if Hodges acted then as executor, it can be said that he had authority to do so by virtue of these blanket orders, and PCIB does not question the legality of such grant of authority; on the contrary, it is relying on the terms of the order itself for its main contention in these cases. On the other hand, if, as PCIB contends, he acted as heir-adjudicatee, the authority given to him by the aforementioned orders would still suffice.

Republic of the PhilippinesSupreme Court

ManilaFIRST DIVISION

 SPOUSES ELBE LEBIN and ERLINDA LEBIN,

Petitioners,  - versus -  VILMA S. MIRASOL, and REGIONAL TRIAL COURTOF ILOILO, BRANCH XXVII,

Respondents.

G.R. No. 164255 Present: 

CORONA, C.J., Chairperson,LEONARDO-DE CASTRO,BERSAMIN,DEL CASTILLO, andVILLARAMA, JR., JJ.

 Promulgated: September 7, 2011

x-----------------------------------------------------------------------------------------x 

D E C I S I O N 

BERSAMIN, J.:  The perfection of an appeal in the manner and within the period laid down by law is mandatory and jurisdictional. 

The Case 

In Special Proceedings No. 1307 involving the settlement of the estate of the late L.J. Hodges, the Regional Trial Court (RTC), Branch 27, in Iloilo City, issued an order dated May 3, 1995 (ruling that a property of the estate sold to the petitioners be divided in two equal portions between the petitioners and the respondent). [1] On March 2, 1998, the RTC affirmed the order dated May 3, 1995. [2] The petitioners filed a notice of appeal and, later on, a record on appeal, but the respondents moved to dismiss their appeal on June 15, 2000 on the ground of tardiness of the record on appeal. The RTC granted the motion to dismiss on February 1, 2002. On March 13, 2002, the petitioners moved for reconsideration of the dismissal,[3] but the RTC denied the motion for reconsideration on May 21, 2004.[4] Thus, on June 23, 2004, the petitioners directly appealed to the Court, assailing the orders of February 1, 2002 and May 21, 2004.

 Antecedents

 In January 1985, the petitioners relayed their offer to the administrator of the Estate of L.J. Hodges to purchase for P22,560.00 Lot 18, Block 7 of 971 (Lot 18), an asset of the Estate situated on D.B. Ledesma Interior, Jaro, Iloilo City. They made a deposit of P4,512.00, the equivalent of 20% of the offer.[5] On August 1, 1985, the administrator sought judicial approval of the offer,[6] stating to the RTC that petitioner Erlinda Lebin was the actual occupant of Lot 18.[7] The RTC commissioned one Atty. Tabares to conduct an ocular inspection of Lot 18 to ascertain if Erlinda Lebin was really the occupant. In his report, Atty. Tabares confirmed that Erlinda Lebin was the only occupant of Lot 18.[8] Accordingly, on August 28, 1985, the RTC granted the administrators motion for approval of the offer.[9]

 In the meanwhile, respondent Vilma S. Mirasol (Mirasol) also offered to purchase

the lot containing an area of 188 square meters where her house stood. The lot was initially identified as Lot No. 4, Block 7 of 971 (Lot 4), but a later survey revealed that her house was actually standing on Lot 18, not Lot 4. [10]Learning on November 11, 1985 of the approval of the petitioners offer to purchase Lot 18, therefore, Mirasol filed on December 6, 1985 a petition for relief from the order dated August 28, 1985. [11]

 On December 17, 1987, pending resolution of the petition for relief, the

petitioners paid the last installment for Lot 18, and moved for the execution of the deed of sale.[12] Apparently, the motion was not acted upon by the RTC.

 At last, on May 3, 1995, the RTC resolved the petition for relief, viz:

WHEREFORE, the Court, under the auspices of equity and justice tempered with humanitarian reasons, hereby declare each of the offeror-claimants after complying with their respective obligation with the estate, should there be any, to be the owner where their respective houses stand, and therefore, DIRECTS and ENJOINS for the following matters to be undertaken:

 For the Administrator of the L.J. Hodges Estate: 1) To assist both offeror-claimants in effecting a Relocation Survey

Plan and cause the equal partition of the subject lot herein between the said offeror-claimant;

 

2) To execute the corresponding deed of sale over the aforecited subject lot in favor of the herein offeror-claimants --- Erlinda Lebin and Vilma S. Mirasol purposely to expedite the issuance of respective title; and ---

 3) To exact payment from either or both offeror-claimants should

there be any deficiency, and/or to refund payment should there be any excess payment from either or both offeror-claimants.

 SO ORDERED.[13]

 On May 23, 1995, the petitioners moved for reconsideration and/or new trial. [14] On March 2, 1998, the RTC denied the motion for reconsideration and/or new trial of the petitioners.[15] Thus, on March 27, 1998, the petitioners filed a notice of appeal in the RTC.[16] Allegedly, on May 5, 1998, they also filed a record on appeal. [17] On January 25, 1999, they presented an ex parte motion to approve the record on appeal.[18] On June 15, 2000, Mirasol filed a motion to dismiss the appeal, insisting that the record on appeal had been filed late.[19] The RTC granted the motion to dismiss the appeal on February 1, 2002.[20] The petitioners moved for reconsideration on March 13, 2002,[21] but the RTC denied their motion for reconsideration on May 21, 2004.[22]

 Hence, the petitioners appealed via petition for review on certiorari filed on June 23, 2004, to seek the review and reversal of the orders of the RTC dated February 1, 2002 and May 21, 2004.

Issues 

1.     Whether or not the RTC erred in dismissing the petitioners appeal for their failure to timely file a record on appeal; and

 2.     Whether or not the RTC committed reversible error in adjudging that

Lot 18 be sold to both the petitioners and Mirasol in equal portions.  

Ruling

  

The petition for review lacks merit. 

IRTC did not err in dismissing the petitioners appeal

for their failure to timely file a record on appeal

 Among the innovations introduced by Batas Pambansa Blg. 129[23] is the

elimination of the record on appeal in most cases, retaining the record on appeal only for appeals in special proceedings and in other cases in which the Rules of Court allows multiple appeals. Section 39 of Batas Pambansa Blg. 129 has incorporated this innovation, to wit:

 Section 39. Appeals. - The period for appeal from final orders,

resolutions, awards, judgments, or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from: Provided however, That in habeas corpus cases, the period for appeal shall be forty-eight (48) hours from the notice of the judgment appealed from.

 No record on appeal shall be required to take an appeal. In lieu

thereof, the entire record shall be transmitted with all the pages prominently numbered consecutively, together with an index of the contents thereof.

 This section shall not apply in appeals in special proceedings

and in other cases wherein multiple appeals are allowed under applicable provisions of the Rules of Court. (emphasis supplied) 

In early 1990, the Supreme Court issued its resolution in Murillo v. Consul[24] to clarify and fortify a judicial policy against misdirected or erroneous appeals, stating:

 At present then, except in criminal cases where the penalty imposed

is life imprisonment or reclusion perpetua, there is no way by which judgments of regional trial courts may be appealed to the Supreme Court except by petition for review on certiorari in accordance with Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act of 1948 as amended. The proposition is clearly stated in the Interim Rules: Appeals to the Supreme Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court.

 On the other hand, it is not possible to take an appeal by certiorari to

the Court of Appeals. Appeals to that Court from the Regional Trial Courts are perfected in two (2) ways, both of which are entirely distinct from an appeal by certiorari to the Supreme Court. They are: 

a) by ordinary appeal, or appeal by writ of error - where judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; and

 b) by petition for review - where judgment was rendered by the

RTC in the exercise of appellate jurisdiction. 

The petition for review must be filed with the Court of Appeals within 15 days from notice of the judgment, and as already stated, shall point out the error of fact or law that will warrant a reversal or modification of the decision or judgment sought to be reviewed. An ordinary appeal is taken by merely filing a notice of appeal within 15 days from notice of the judgment, except in special proceedings or cases where multiple appeals are allowed in which event the period of appeal is 30 days and a record on appeal is necessary.

 There is therefore no longer any common method of appeal in civil

cases to the Supreme Court and the Court of Appeals. The present procedures for appealing to either court and, it may be added, the process of ventilation of the appeal are distinct from each other. To repeat, appeals to this court cannot now be made by petition for review or by notice of appeals (and, in certain instances, by record on appeal), but only by petition for review on certiorari under Rule 45. As was stressed by this Court as early as 1980, in Buenbrazo v. Marave, 101 SCRA 848, all the members of the bench and bar are charged with knowledge, not only that since the enactment of Republic Act No. 8031 in 1969, the review of the decision of the Court of First Instance in a case exclusively cognizable by the inferior court xxx cannot be made in an ordinary appeal or by record on appeal, but also that appeal by record on appeal to the Supreme Court under Rule 42 of the Rules of Court was abolished by Republic Act No. 5440 which, as already stated, took effect on September 9, 1968. Similarly, in Santos, Jr., v. C.A., 152 SCRA 378, this Court declared that Republic Act No. 5440 had long superseded Rule 41 and Section 1, Rule 122 of the Rules of Court on direct appeals from the court of first instance to the Supreme Court in civil and criminal cases, x x and that direct appeals to this Court from the trial court on questions of law had to be through the filing of a petition for review on certiorari, wherein this Court could either give due course to the proposed appeal or deny it outright to prevent the clogging of its docket with unmeritorious and dilatory appeals.

 In fine, if an appeal is essayed to either court by the wrong

procedure, the only course of action open is to dismiss the appeal. In other words, if an appeal is attempted from a judgment of a Regional Trial Court by notice of appeal, that appeal can and should never go to this Court, regardless of any statement in the notice that the court of choice is the Supreme Court; and more than once has this Court admonished a

Trial Judge and/or his Clerk of Court, as well as the attorney taking the appeal, for causing the records to be sent up to this Court in such a case. Again, if an appeal by notice of appeal is taken from the Regional Trial Court to the Court of Appeals and in the latter Court, the appellant raises naught but issues of law, the appeal should be dismissed for lack of jurisdiction. And finally, it may be stressed once more, it is only through petitions for review on certiorari that the appellate jurisdiction of the Supreme Court may properly be invoked. 

There is no longer any justification for allowing transfers of erroneous appeals from one court to the other, much less for tolerating continued ignorance of the law on appeals. It thus behooves every attorney seeking review and reversal of a judgment or order promulgated against his client, to determine clearly the errors he believes may be ascribed to the judgment or order, whether of fact or of law; then to ascertain which court properly has appellate jurisdiction; and finally, to observe scrupulously the requisites for appeal prescribed by law, with keen awareness that any error or imprecision in compliance therewith may well be fatal to his client's cause.[25] (emphasis supplied) 

An offshoot of Murillo v. Consul is the inclusion in the 1997 revision of the rules of civil procedure, effective July 1, 1997, of a provision that forthrightly delineated the modes of appealing an adverse judgment or final order. The provision is Section 2 of Rule 41, viz:

 

Section 2. Modes of appeal. (a) Ordinary appeal. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

 (b) Petition for review. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

 

(c) Appeal by certiorari. In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. (n) (emphasis supplied)  The changes and clarifications recognize that appeal is neither a natural nor a

constitutional right, but merely statutory, and the implication of its statutory character is that the party who intends to appeal must always comply with the procedures and rules governing appeals, or else the right of appeal may be lost or squandered.

 As the foregoing rules further indicate, a judgment or final order in special

proceedings is appealed by record on appeal. A judgment or final order determining and terminating a particular part is usually appealable, because it completely disposes of a particular matter in the proceeding, unless otherwise declared by the Rules of Court.[26] The ostensible reason for requiring a record on appeal instead of only a notice of appeal is the multi-part nature of nearly all special proceedings, with each part susceptible of being finally determined and terminated independently of the other parts. An appeal by notice of appeal is a mode that envisions the elevation of the original records to the appellate court as to thereby obstruct the trial court in its further proceedings regarding the other parts of the case. In contrast, the record on appeal enables the trial court to continue with the rest of the case because the original records remain with the trial court even as it affords to the appellate court the full opportunity to review and decide the appealed matter.

 Section 1, Rule 109 of the Rules of Court underscores the multi-part nature of

special proceedings by enumerating the particular judgments and final orders already subject of appeal by any interested party despite other parts of the proceedings being still untried or unresolved, to wit:

 Section 1. Orders or judgments from which appeals may be taken.

- An interested person may appeal in special proceedings from an order or judgment rendered by a Court of First Instance or a Juvenile and Domestic Relations Court, where such order or judgment:

 (a) Allows or disallows a will; (b) Determines who are the lawful heirs of a deceased person, or the

distributive share of the estate to which such person is entitled; 

(c) Allows or disallows, in whole or in part, any claim against the estate of a deceased person, or any claim presented on behalf of the estate in offset to a claim against it;

 (d) Settles the account of an executor, administrator, trustee or

guardian; (e) Constitutes, in proceedings relating to the settlement of the estate

of a deceased person, or the administration of a trustee or guardian, a final determination in the lower court of the rights of the party appealing, except that no appeal shall be allowed from the appointment of a special administrator; and

 (f) Is the final order or judgment rendered in the case, and affects the

substantial rights of the person appealing, unless it be an order granting or denying a motion for a new trial or for reconsideration. The petitioners appeal comes under item (e) of Section 1, supra, due to the final

order of May 3, 1995 issued in the settlement of the estate of L.J. Hodgesbeing a final determination in the lower court of the rights of the party appealing. In order to elevate a part of the records sufficient for appellate review without the RTC being deprived of the original records, the remedy was to file a record on appeal to be approved by the RTC.

 The elimination of the record on appeal under Batas Pambansa Blg. 129 made

feasible the shortening of the period of appeal from the original 30 days to only 15 days from notice of the judgment or final order. Section 3, [27] Rule 41 of the Rules of Court, retains the original 30 days as the period for perfecting the appeal by record on appeal to take into consideration the need for the trial court to approve the record on appeal. Within that 30-day period a party aggrieved by a judgment or final order issued in special proceedings should perfect an appeal by filing both a notice of appeal and a record on appeal in the trial court, serving a copy of the notice of appeal  and a record on appeal upon the adverse party within the period; [28] in addition, the appealing party shall pay within the period for taking an appeal to the clerk of the court that rendered the appealed judgment or final order the full amount of the appellate court docket and other lawful fees.[29]A violation of these requirements for the timely perfection of an appeal by record on appeal,[30] or the non-payment of the full amount of the appellate court docket and other lawful fees to the clerk of the trial court [31] may be a ground for the dismissal of the appeal.

 

Did the petitioners comply with the requirements for perfecting their appeal? The petitioners received the assailed May 3, 1995 order of the RTC on May 15,

1995. They filed a motion for reconsideration and/or new trial on May 24, 1995. On March 23, 1998, they were served with the order dated March 2, 1998 (denying their motion for reconsideration and/or new trial). Although they filed a notice of appeal on March 27, 1998, they submitted the record on appeal only on May 5, 1998. Undoubtedly, they filed the record on appeal 43 days from March 23, 1998, the date they received the denial of their motion for reconsideration and/or new trial. They should have filed the record on appeal within 30 days from their notice of the judgment. Their appeal was not perfected, therefore, because their filing of the record on appeal happened beyond the end of their period for the perfection of their appeal.

 The petitioners filing of the motion for reconsideration vis--vis the order of May 3,

1995 interrupted the running of the period of 30 days; hence, their period to appeal started to run from May 15, 1995, the date they received the order of May 3, 1995. They filed their motion for reconsideration on May 24, 1995. By then, nine days out of their 30-day period to appeal already elapsed. They received a copy of the order dated March 2, 1998 on March 23, 1998. Thus, the period to appeal resumed from March 23, 1998 and ended 21 days later, or on April 13, 1998. Yet, they filed their record on appeal only on May 5, 1998, or 22 days beyond the end of their reglementary period. Although, by that time, the 1997 Rules on Civil Procedure had meanwhile taken effect (July 1, 1997), their period of appeal remained 30 days. It is stressed that under the 1997 revisions, the timely filing of the motion for reconsideration interrupted the running of the period of appeal, pursuant to Section 3, Rule 41 of the 1997 Rules on Civil Procedure, viz: 

Section 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.

 The period of appeal shall be interrupted by a timely motion for

new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n) (emphasis supplied) 

Section 13, Rule 41 of the Rules of Court empowers the RTC as the trial court, motu proprio or on motion, to dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[32] For that reason, the RTC rightly granted Mirasols motion to dismiss the record on appeal.

 

Nonetheless, the petitioners propose to be excused from the requirement of filing a record on appeal, arguing that (t)o require a (r)ecord on (a)ppeal here is to reproduce the more than eighteen (18) volumes of records here which is quite impossible to do and that most of these records, (sic) have nothing to do with the present controversy.[33] Also, they state that their counsel was of the honest belief and impression that the same was not really necessary because the nature of the controversy xxx is civil and not an intestate one.[34]

 The petitioners submissions are frail and facetious. In order to come up with the record on appeal, the petitioners were not expected

to reproduce over 18 volumes of the records, for their record on appeal would have included only the records of the trial court which the appellate court would be asked to pass upon.[35] Section 6, Rule 41 of the 1997 Rules of Civil Procedure, which meanwhile became applicable to them, specified what the record on appeal should contain, thusly:

 Section 6. Record on appeal; form and contents thereof. - The full

names of all the parties to the proceedings shall be stated in the caption of the record on appeal and it shall include the judgment or final order from which the appeal is taken and, in chronological order, copies of only such pleadings, petitions, motions and all interlocutory orders as are related to the appealed judgment or final order for the proper understanding of the issue involved, together with such data as will show that the appeal was perfected on time. If an issue of fact is to be raised on appeal, the record on appeal shall include by reference all the evidence, testimonial and documentary, taken upon the issue involved. The reference shall specify the documentary evidence by the exhibit numbers or letters by which it was identified when admitted or offered at the hearing, and the testimonial evidence by the names of the corresponding witnesses. If the whole testimonial and documentary evidence in the case is to be included, a statement to that effect will be sufficient without mentioning the names of the witnesses or the numbers or letters of exhibits. Every record on appeal exceeding twenty (20) pages must contain a subject index. (6a)

 The right to appeal is a mere statutory privilege, and should be exercised only in

the manner prescribed by law.[36] The statutory nature of the right to appeal requires the one who avails himself of it to strictly comply with the statutes or rules that are considered indispensable interdictions against needless delays and for an orderly discharge of judicial business. In the absence of highly exceptional circumstances warranting their relaxation, like when the loftier demands of substantial justice and equity require the relaxation,[37] or when there are other special and meritorious circumstances and issues,[38] such statutes or rules should remain inviolable.[39]

 In like manner, the perfection of an appeal within the period laid down by law is

mandatory and jurisdictional, because the failure to perfect the appeal within the time prescribed by the Rules of Court causes the judgment or final order to become final as to preclude the appellate court from acquiring the jurisdiction to review the judgment or final order.[40] The failure of the petitioners and their counsel to file their record on appeal on time rendered the orders of the RTC final and unappealable. Thereby, the appellate court lost the jurisdiction to review the challenged orders, and the petitioners were precluded from assailing the orders. 

IIRTC committed no reversible error in allocating

Lot 18 in equal portions to both petitioners and respondent

 The non-perfection of the appeal by the petitioners notwithstanding, the Court declares that the RTC did not err in allocating the parcel of land equally to the parties if only to serve and enforce a standing policy in the settlement of the large estate of the late L.J. Hodges to prefer actual occupants in the disposition of estate assets. The policy was entirely within the power of the RTC to adopt and enforce as the probate court. As stated in the administrators motion for approval of the offer, the approval of the offer to purchase would be conditioned upon whether the petitioners were the only actual occupants. The condition was designed to avoid the dislocation of actual occupants, and was the reason why the RTC dispatched Atty. Tabares to determine who actually occupied the property before approving the motion. It turned out that the report of Atty. Tabares about the petitioners being the only occupants was mistaken, because the house of Mirasol, who had meanwhile also offered to purchase the portion where her

house stood, happened to be within the same lot subject of the petitioners offer to purchase. The confusion arose from the misdescription of Mirasols portion as Lot 4, instead of Lot 18.[41]

 Under Rule 89 of the Rules of Court, the RTC may authorize the sale, mortgage, or encumbrance of assets of the estate. The approval of the sale in question, and the modification of the disposition of property of the Estate of L.J. Hodges were made pursuant to Section 4 of Rule 89, to wit: 

Section 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. [emphasis supplied]

 Without doubt, the disposal of estate property required judicial approval before it could be executed.[42] Implicit in the requirement for judicial approval was that the probate court could rescind or nullify the disposition of a property under administration that was effected without its authority.[43] This power included the authority to nullify or modify its approval of the sale of the property of the estate to conform to the law or to the standing policies set and fixed for the purpose, where the invalidation or modification derived from the falsity of the factual basis of the disposition, or from any other factual mistake, or from the concealment of a material fact by a party. Consequently, the probate courts modification of its approval of the petitioners offer to purchase was well within the power of the RTC to nullify or modify after it was found to be contrary to the condition for the approval. Thereby, the RTCs ruling, being sound and judicious, constituted neither abuse of discretion nor excess of jurisdiction.

 WHEREFORE, we DENY the petition for review, and AFFIRM the final orders

dated May 3, 1995 and March 2, 1998. 

The petitioners shall pay the costs of suit. 

SO ORDERED.  

LUCAS P. BERSAMINAssociate Justice

 WE CONCUR:

   

RENATO C. CORONAChief JusticeChairperson

    TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLOAssociate Justice Associate Justice    

MARTIN S. VILLARAMA, JR.Associate Justice

  

CERTIFICATION  Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.   

RENATO C. CORONAChief Justice

[1] Rollo, pp. 12-13.[2] Id., p. 17.

[3] Id., pp. 26-27.[4] Id., pp. 28-29.[5] Id., pp. 39.[6] Id., pp. 30-31.[7] Id., p. 31.[8] Id., pp. 32-33[9] Id., p. 32.[10] Id., p. 36.[11] Id., pp. 32-35.[12] Id., pp. 37-38.[13] Id., pp. 12-13.[14] Id., pp. 14-16.[15] Id., p. 17.[16] Id., p. 18.[17] Id., p. 20.[18] Id., p. 19.[19] Id., pp. 20-22.[20] Id., pp. 24-25.[21] Id., pp. 26-27.[22] Id., pp. 28-29.[23] Entitled An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for other Purposes.[24] Undk. No. 9748, February 27, 1990; 183 SCRA xi, which became the basis for the guidelines set forth in Circular No. 2-90 issued by the Supreme Court on March 9, 1990.[25] Id., pp. xv-xviii.[26] According to Section 1, first paragraph, Rule 41, Rules of Court: An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. [27] Section 3. Period of Ordinary Appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of the judgment or final order.[28] Section 2(a) and Section 3, Rule 41, Rules of Court.[29] Section 4, Rule 41, Rules of Court.[30] Section 13, Rule 41, and Section 1(a), Rule 50, Rules of Court.[31] Section 1(a) and (c), Rule 50, Rules of Court.[32] Section 13. Dismissal of appeal. Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may, motu proprio or on motion, dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[33] Id., p. 8.[34] Id.[35] Bersamin, Appeal and Review in the Philippines, Central Professional Books, Inc., 2nd Edition, p. 136; citing 3 Am Jur 215.

[36] Borlongan v. Buenaventura, G.R. No. 167234, September 27, 2006, 483 SCRA 405, 411-412; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 106956, January 27, 1994, 229 SCRA 560.[37] Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Yutingco v. Court of Appeals, G.R. No. 137264, August 1, 2002, 386 SCRA 85, 91; Tan Tiac Chiong v. Cosico, A.M. No. CA-02-33, July 21, 2002, 385 SCRA 509, 515; Olacao v. NLRC, G.R. No. 81390, August 29, 1989, 177 SCRA 38, 49.[38] Equitable PCI Bank v. Ku, G.R. No. 142950, March 26, 2001, 355 SCRA 309, 316; De Guzman v. Sandiganbayan, G.R. No. 103276, April 11, 1996, 256 SCRA 171, 177; Orata v.Intermediate Appellate Court, G.R. No. 73471, May 8, 1990, 185 SCRA 148, 152.[39] Almeda v. Court of Appeals, G.R. No. 121013, July 16, 1998 292 SCRA 587, 593-595.[40] Ko v. Philippine National Bank, G. R. Nos. 169131-132, January 20, 2006, 479 SCRA 298; Air France Philippines v. Leachon, G.R. No. 134113, October 12, 2005, 472 SCRA 439; Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 127275, June 20, 2003, 404 SCRA 442, 448; Yao v. Court of Appeals, G.R. No. 132426, October 24, 2000, 344 SCRA 202; Dayrit v. Philippine Bank of Communications, G.R. No. 140316, August 1, 2002, 386 SCRA 117, 125; Bishop of Tuguegarao v. Director of Lands, 34 Phil 623 (1916); Estate of Cordoba and Zarate v. Alabado, 34 Phil. 920 (1916); Bermudez v. Director of Lands, 36 Phil. 774 (1917).[41] Id., p. 36.[42] Acebedo v Abesamis, G.R. No. 102380, January 18, 1993, 217 SCRA 186, 193.[43] Dillena v. Court of Appeals, G.R. No. L-77660, July 28, 1988, 163 SCRA 630, 637.

THIRD DIVISION

[G.R. No. 141634. February 5, 2001]

Heirs of Spouses REMEDIOS R. SANDEJAS and ELIODORO P. SANDEJAS SR. -- ROBERTO R. SANDEJAS, ANTONIO R. SANDEJAS, CRISTINA SANDEJAS MORELAND, BENJAMIN R. SANDEJAS, REMEDIOS R. SANDEJAS; and heirs of SIXTO S. SANDEJAS II, RAMON R. SANDEJAS, TERESITA R. SANDEJAS, and ELIODORO R. SANDEJAS JR., all represented by ROBERTO R. SANDEJAS,petitioners, vs. ALEX A. LINA, respondent.

D E C I S I O NPANGANIBAN, J.:

A contract of sale is not invalidated by the fact that it is subject to probate court approval. The transaction remains binding on the seller-heir, but not on the other heirs who have not given their consent to it. In settling the estate of the deceased, a probate court has jurisdiction over matters incidental and collateral to the exercise of its recognized powers. Such matters include selling, mortgaging or otherwise encumbering realty belonging to the estate. Rule 89, Section 8 of the Rules of Court, deals with the conveyance of real property contracted by the decedent while still alive. In contrast with Sections 2 and 4 of the same Rule, the said provision does not limit to the executor or administrator the right to file the application for authority to sell, mortgage or otherwise encumber realty under administration. The standing to pursue such course of action before 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.

The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to reverse and set aside the Decision[1] dated April 16, 1999 and the Resolution [2] dated January 12, 2000, both promulgated by the Court of Appeals in CA-GR CV No. 49491. The dispositive portion of the assailed Decision reads as follows:[3]

WHEREFORE, for all the foregoing, [w]e hereby MODIFY the [O]rder of the lower court dated January 13, 1995, approving the 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 covering the share of [A]dministrator Eliodoro Sandejas, Sr. [in] the property. The intervenor is hereby directed to pay appellant the balance of the purchase price of the three-fifth (3/5) portion of the property within thirty (30) days from receipt of this [O]rder

and x x x the administrator [is directed] to execute the necessary and proper deeds of conveyance in favor of appellee within thirty (30) days thereafter.

The assailed Resolution denied reconsideration of the foregoing disposition.

The Facts

The facts of the case, as narrated by the Court of Appeals (CA), are as follows:[4]

On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition (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 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 administrator of the estate of the late Remedios Sandejas (Record, SP. Proc. No. R-83-15601, p. 16). Likewise on the same date, Eliodoro Sandejas, Sr. took his oath as administrator (Record, SP. Proc. No. R-83-15601, p. 17). x x x.

On November 19, 1981, the 4th floor of Manila City Hall was burned and among the records burned were the records of Branch XI of the 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).

On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by [M]ovant Alex A. Lina alleging among others that on June 7, 1982, movant and [A]dministrator Eliodoro P. Sandejas, in his capacity as seller, bound and obligated himself, his heirs, administrators, and assigns, to sell forever and absolutely and in their entirety the following parcels of land which formed part of the estate of the late Remedios R. Sandejas, to wit:

1. A parcel of land (Lot No. 22 Block No. 45 of the subdivision plan Psd-21121, being a portion of Block 45 described on plan Psd-19508, G.L.R.O. Rec. No. 2029), situated in the Municipality of Makati, province of Rizal, containing an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13465;

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 Makati, Province of Rizal, containing an area of TWO HUNDRED SEVENTY (270) SQUARE METERS, more or less, with TCT No. 13464;

3. A parcel of land (Lot No. 5 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 Makati, Province of Rizal, containing an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with TCT No. 13468;

4. A parcel of land (Lot No. 6, 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 Makati, Province of Rizal, containing an area of TWO HUNDRED EIGHT (208) SQUARE METERS, more or less, with TCT No. 13468;

The [R]eceipt of the [E]arnest [M]oney with [P]romise to [S]ell and to [B]uy is hereunder quoted, to wit:

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:

x x x x x x x x x

all registered with the Registry of Deeds of the [P]rovince of Rizal (Makati Branch Office) in the name of SELLER ELIODORO 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 SELLERS 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)

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 a new [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 28, 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 Sandejas, 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 administrators 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-Intervention 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 intervenors [M]otion for the [A]pproval of the Receipt of Earnest Money with promise to buy between Plaintiff-in-Intervention 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 court[5] disposed as follows:

WHEREFORE, [i]ntervenors 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]

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 89[7] 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 enjoy a claim arising from ones 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 respondents 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 courts 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 courts jurisdiction; (2) respondent-intervenors standing to file an application for the approval of the sale of realty in the settlement case, (3) the decedents bad faith, and (4) the computation of the decedents share in the realty under administration.

This Courts 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 vendors 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 courts 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 courts 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 fulfill what they had expressly agreed upon.

Court approval is required in any disposition of the decedents 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 courts 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 courts ruling by excluding their shares from the ambit of the transaction.

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. Cancio[14] 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 courts 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 courts 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 decedents 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 property[18] proves that the existence of the suspensive condition did not remove that property from the jurisdiction of the intestate court.

Second Collateral Issue: Intervenors 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 respondents Motion for Approval.

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 Eliodoros Share

Petitioners aver that the CAs 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, Eliodoros 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]

Petitioners computation is correct. The CA computed Eliodoros 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-heirs 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 decedents 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 decedents estate has already been taken into account by the parties, since the only issue raised in this case is whether Eliodoros 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.Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Penned by Justice Mariano M. Umali of the Special Seventh Division of the Court of Appeals with the concurrence of Justices Romeo J. Callejo Sr., acting Division Chairman; and Bernardo P. Abesamis, member. Rollo, pp. 39-56.[1]

[2] Rollo , p. 58.[3] CA Decision, p. 18; rollo, p. 56.[4] CA Decision, pp. 2-8; rollo, pp. 40-46.[5] Penned by Judge Roberto A. Barrios of the Regional Trial Court of Manila, Branch 11.[6] RTC Order, p. 3; rollo, p. 73.[7] SECTION 1. Order of sale of personalty. Upon the application of the executor or administrator, and on written notice to the heirs and other persons interested, the court

may order the whole or a part of the personal estate to be sold, if it appears necessary for the purpose of paying debts, expenses of administration, or legacies, or the preservation of the property.[8] This case was submitted for resolution upon the receipt by this Court of the Memorandum for the Petitioners on October 12, 2000, signed by Atty. Pascual T. Lacas of Lacas, Lao & Associates.Respondents Memorandum, signed by Atty. Rudegelio D. Tacorda, was submitted on October 5, 2000.[9] Rollo, p. 139.[10] Justice Jose C. Vitug, Compendium of Civil Law and Jurisprudence, rev. ed., p. 580; Cheng v. Genato, 300 SCRA 722, 734, December 29, 1998; Odyssey Park, Inc. v. Court of Appeals, 280 SCRA 253, 260, October 8, 1997.[11] Cheng v. Genato, supra, pp. 735-736; Coronel v. Court of Appeals, 263 SCRA 15, 33, October 7, 1996; Compendium, pp. 487-488, 580 & 603.[12] Acebedo v. Abesamis, 217 SCRA 186, 193, January 18, 1993.[13] Vda. de Cruz v. Ilagan, 81 SCRA 554, 561, September 30, 1948.[14] 14 SCRA 796, 796-801, July 30, 1965.[15] Supra.[16] Sikat v. Vda. de Villanueva, 57 Phil. 486, 494, November 10, 1932; Magbanua v. Akol, 72 Phil. 567, 572, June 27, 1941; Del Castillo v. Enriquez, 109 Phil. 491, 494-495, September 30, 1960.[17] Art. 1458, Civil Code.[18] Supra, p. 188.[19] 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.[20] 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.[21] Section 2, Rule 3, Rules of Court.[22] Respondents Memorandum; rollo, p. 124.[23] 1/2 + 1/10 = 6/10 or 3/5 reduced to the lowest term.[24] 1/2 + [1/10 x 1/2]=1/2 + [1/20]=10/20 + 1/20=11/20[25] Art. 129(7), Family Code; Armas v. Calisterio, GR No. 136467, April 6, 2000, p. 8, per Vitug, J.; and Del Mundo v. Court of Appeals, 97 SCRA 373, 382, April 30, 1980.

  

THIRD DIVISION 

ANITA REYESMESUGAS, G.R. No. 174835Petitioner,

Present: CORONA, J., Chairperson,VELASCO, JR.,- v e r s u s - NACHURA,PERALTA andABAD, JJ.*

ALEJANDRO AQUINO REYES,Respondent. Promulgated:

 March 22, 2010

 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x 

D E C I S I O NCORONA, J.:

 This is a petition for review on certiorari [1] seeking to reverse the June 23, 2006

and September 21, 2006 orders[2] of the Regional Trial Court of Makati (RTC), Branch 62 denying the petitioners motion to cancel a notice of lis pendens. Petitioner Anita Reyes-Mesugas and respondent Alejandro A. Reyes are the children of Lourdes Aquino Reyes and Pedro N. Reyes. Lourdes died intestate, leaving to her heirs, among others, three parcels of land, including a lot covered by Transfer Certificate of Title (TCT) No. 24475. 

On February 3, 2000, respondent filed a petition for settlement of the estate of Lourdes,[3] praying for his appointment as administrator due to alleged irregularities and fraudulent transactions by the other heirs. Petitioner, her father Pedro and Arturo, a sibling of the petitioner, opposed the petition.

 On August 30, 2000, a compromise agreement[4] was entered into by the parties whereby the estate of Lourdes was partitioned. A decision [5] dated September 13, 2000 was rendered by the RTC pursuant to the said compromise agreement. The compromise agreement with respect to TCT No. 24475 is reproduced below: 

5. That the parties hereto hereby agree to recognize, acknowledge and respect:

 5.1. the improvements found on the parcel of land covered under

TCT No. 24475 of the Registry of Deeds of Rizal consisting of two lots namely Lot 4-A and Lot 4-B of the new survey with two (2) residential houses presently occupied and possessed as owners thereof by Antonio Reyes and Anita Reyes-Mesugas to constitute part of their shares in the estate of Lourdes Aquino Reyes;

 5.2 further, the improvement consisting of a bakery-store under

lease to a third party. The proceeds thereof shall be shared by Antonio Reyes and Pedro N. Reyes;

 5.3 that the expenses for the partition and titling of the property

between Antonio Reyes and Anita Reyes-Mesugas shall be equally shared by them.

 On December 7, 2004, petitioner filed a motion to cancel lis pendens annotation for TCT No. 24475[6] in the RTC in view of the finality of judgment in the settlement of the estate. Petitioner argued that the settlement of the estate proceeding had terminated; hence, the annotation of lis pendens could already be cancelled since it had served its purpose. 

Respondent opposed the motion and claimed that the parties, in addition to the compromise agreement, executed side agreements which had yet to be fulfilled. One such agreement was executed between petitioner [7] and respondent granting respondent a one-meter right of way on the lot covered by TCT No. 24475. However, petitioner refused to give the right of way and threatened to build a concrete structure to prevent access. He argued that, unless petitioner permitted the inscription of the right of way on the certificate of title pursuant to their agreement, the notice of lis pendens in TCT No. 24475 must remain. In its order[8] dated January 26, 2006, the RTC denied the motion to cancel the notice of lis pendens annotation for lack of sufficient merit. It found that the cancellation of the notice of lis pendens was unnecessary as there were reasons for maintaining it in view of petitioner's non-compliance with the alleged right of way agreement between the parties. It stated that:  

A careful perusal of the compromise agreement dated September 13, 2000 revealed that one of the properties mentioned is a parcel of land with improvements consisting [of] two hundred nine (209) square meters situated in Makati covered under TCT No. 24475 of the Registry of Deeds

[of] Rizal in the name of Pedro N. Reyes married to Lourdes Aquino Reyes and form[s] part of the notarized right of way agreement on TCT No. 24475, considering that the movant Anita Reyes is still bound by the right of way agreement, the same should be complied with before the cancellation of the subject annotation.[9] (Citations omitted)

Petitioner filed a notice of appeal.[10] Because the denial of a motion to cancel the notice of lis pendens annotation was an interlocutory order, the RTC denied the notice of appeal as it could not be appealed until the judgment on the main case was rendered.[11] A motion for reconsideration was filed by petitioner but the same was also denied. [12]

 Hence, this petition. We find for petitioner. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. [13] Once submitted to the court and stamped with judicial approval, it becomes more than a mere private contract binding upon the parties; having the sanction of the court and entered as its determination of the controversy, it has the force and effect of any judgment. [14]

 Consequently, a judgment rendered in accordance with a compromise agreement is immediately executory as there is no appeal from such judgment. [15] When both parties enter into an agreement to end a pending litigation and request that a decision be rendered approving said agreement, such action constitutes an implied waiver of the right to appeal against the said decision.[16]

In this instance, the case filed with the RTC was a special proceeding for the settlement of the estate of Lourdes. The RTC therefore took cognizance of the case as a probate court.

 Settled is the rule that a probate court is a tribunal of limited jurisdiction. It acts on

matters pertaining to the estate but never on the rights to property arising from the contract.[17] It approves contracts entered into for and on behalf of the estate or the heirs to it but this is by fiat of the Rules of Court. [18] It is apparent therefore that when the RTC approved the compromise agreement on September 13, 2000, the settlement of the estate proceeding came to an end.

 Moreover, a notice of lis pendens may be cancelled when the annotation is not

necessary to protect the title of the party who caused it to be recorded. [19]The compromise agreement did not mention the grant of a right of way to respondent. Any agreement other than the judicially approved compromise agreement between the parties was outside the limited jurisdiction of the probate court. Thus, any other agreement entered into by the petitioner and respondent with regard to a grant of a right

of way was not within the jurisdiction of the RTC acting as a probate court. Therefore, there was no reason for the RTC not to cancel the notice of lis pendens on TCT No. 24475 as respondent had no right which needed to be protected. Any alleged right arising from the side agreement on the right of way can be fully protected by filing an ordinary action for specific performance in a court of general jurisdiction.

 More importantly, the order of the probate court approving the compromise had

the effect of directing the delivery of the residue of the estate of Lourdes to the persons entitled thereto under the compromise agreement. As such, it brought to a close the intestate proceedings[20] and the probate court lost jurisdiction over the case, except only as regards to the compliance and the fulfillment by the parties of their respective obligations under the compromise agreement.

 Having established that the proceedings for the settlement of the estate of

Lourdes came to an end upon the RTCs promulgation of a decision based on the compromise agreement, Section 4, Rule 90 of the Rules of Court provides:

 Sec. 4. Recording the order of partition of estate. - Certified copies of final orders and judgments of the court relating to the real estate or the partition thereof shall be recorded in the registry of deeds of the province where the property is situated.In line with the recording of the order for the partition of the estate, paragraph 2,

Section 77 of Presidential Decree (PD) No. 1529[21] provides: Section 77. Cancellation of Lis Pendens xxx xxx xxx

xxx xxxAt any time after final judgment in favor of the defendant, or

other disposition of the action such as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has been registered as provided in the preceding section, the notice of lispendens shall be deemed cancelled upon the registration of a certificate of the clerk of court in which the action or proceeding was pending stating the manner of disposal thereof. (emphasis supplied)Thus, when the September 13, 2000 decision was recorded in the Registry of

Deeds of Rizal pursuant to Section 4, Rule 90 of the Rules of Court, the notice of lis pendens inscribed on TCT No. 24475 was deemed cancelled by virtue of Section 77 of PD No. 1529.

WHEREFORE, the petition is hereby GRANTED. The Orders of the Regional Trial Court of Makati, Branch 62 dated June 23, 2006 and September 21, 2006 are SET ASIDE. The notice of lis pendens annotated on TCT No. 24475 is hereby declared CANCELLED pursuant to Section 77 of the PD No. 1529 in relation to Section 4, Rule 90 of the Rules of Court.

 SO ORDERED.

 

RENATO C. CORONAAssociate Justice

Chairperson 

 

WE CONCUR:

   PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURAAssociate Justice Associate Justice   DIOSDADO M. PERALTA ROBERTO A. ABADAssociate Justice Associate Justice    

A T T E S T A T I O N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.   

RENATO C. CORONAAssociate Justice

Chairperson    

C E R T I F I C A T I O N 

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

 

 

REYNATO S. PUNOChief Justice

* Additional member per raffle dated March 17, 2010 in lieu of Justice Jose Catral Mendoza.[1] Under Rule 45 of the Rules of Court.[2] Penned by Judge Selma Palacio Alaras. Rollo, pp. 25-26.[3] Docketed as SP No. M-4984.[4] Dated August 30, 2000. Id., pp. 50-56.[5] Penned by Judge Roberto C. Diokno. Id., pp. 57-62.[6] Two hundred nine (209) sq. m. situated in Makati.[7] With sibling Antonio.[8] Id., pp. 27-28.[9] Id., p. 27.[10] Dated March 9, 2006. Id., p. 29.[11] Order dated July 26, 2006. Id., p. 25.[12] Order dated September 21, 2006. Id., p. 26.[13] Article 2028, NEW CIVIL CODE.[14] Domingo v. Court of Appeals, 325 Phil. 469 (1996).[15] Id.[16] Id.[17] Pio Baretto Realty Dev., Inc. v. Court of Appeals, No. L-62432, 3 August 1984, 131 SCRA 606.[18] Rule 89 of the RULES OF COURT. See also Article 2032, NEW CIVIL CODE.[19] Section 14, Rule 13 of the RULES OF COURT.[20] Santiesteban v. Santiesteban, 68 Phil. 367 (1939); Philippine Commercial and

Industrial Bank v. Escolin, G.R. No. L-27860, 29 March 1974, 50 SCRA 266.[21] PROPERTY REGISTRATION DECREE. PRESIDENTIAL DECREE NO. 1529.

Republic of the PhilippinesSupreme Court

ManilaFIRST DIVISION

 SPOUSES ELBE LEBIN and ERLINDA LEBIN,

Petitioners,  - versus -  VILMA S. MIRASOL, and REGIONAL TRIAL COURTOF ILOILO, BRANCH XXVII,

Respondents.

G.R. No. 164255 Present: 

CORONA, C.J., Chairperson,LEONARDO-DE CASTRO,BERSAMIN,DEL CASTILLO, andVILLARAMA, JR., JJ.

 Promulgated: September 7, 2011

x-----------------------------------------------------------------------------------------x 

D E C I S I O N 

BERSAMIN, J.:  The perfection of an appeal in the manner and within the period laid down by law is mandatory and jurisdictional. 

The Case 

In Special Proceedings No. 1307 involving the settlement of the estate of the late L.J. Hodges, the Regional Trial Court (RTC), Branch 27, in Iloilo City, issued an order dated May 3, 1995 (ruling that a property of the estate sold to the petitioners be divided in two equal portions between the petitioners and the respondent). [1] On March 2, 1998, the RTC affirmed the order dated May 3, 1995. [2] The petitioners filed a notice of appeal and, later on, a record on appeal, but the respondents moved to dismiss their appeal on June 15, 2000 on the ground of tardiness of the record on appeal. The RTC granted the motion to dismiss on February 1, 2002. On March 13, 2002, the petitioners moved for reconsideration of the dismissal,[3] but the RTC denied the motion for reconsideration on May 21, 2004.[4] Thus, on June 23, 2004, the petitioners directly appealed to the Court, assailing the orders of February 1, 2002 and May 21, 2004. 

Antecedents In January 1985, the petitioners relayed their offer to the administrator of the Estate of L.J. Hodges to purchase for P22,560.00 Lot 18, Block 7 of 971 (Lot 18), an asset of

the Estate situated on D.B. Ledesma Interior, Jaro, Iloilo City. They made a deposit of P4,512.00, the equivalent of 20% of the offer.[5] On August 1, 1985, the administrator sought judicial approval of the offer,[6] stating to the RTC that petitioner Erlinda Lebin was the actual occupant of Lot 18.[7] The RTC commissioned one Atty. Tabares to conduct an ocular inspection of Lot 18 to ascertain if Erlinda Lebin was really the occupant. In his report, Atty. Tabares confirmed that Erlinda Lebin was the only occupant of Lot 18.[8] Accordingly, on August 28, 1985, the RTC granted the administrators motion for approval of the offer.[9]

 In the meanwhile, respondent Vilma S. Mirasol (Mirasol) also offered to purchase

the lot containing an area of 188 square meters where her house stood. The lot was initially identified as Lot No. 4, Block 7 of 971 (Lot 4), but a later survey revealed that her house was actually standing on Lot 18, not Lot 4. [10]Learning on November 11, 1985 of the approval of the petitioners offer to purchase Lot 18, therefore, Mirasol filed on December 6, 1985 a petition for relief from the order dated August 28, 1985. [11]

 On December 17, 1987, pending resolution of the petition for relief, the

petitioners paid the last installment for Lot 18, and moved for the execution of the deed of sale.[12] Apparently, the motion was not acted upon by the RTC.

 At last, on May 3, 1995, the RTC resolved the petition for relief, viz:

WHEREFORE, the Court, under the auspices of equity and justice tempered with humanitarian reasons, hereby declare each of the offeror-claimants after complying with their respective obligation with the estate, should there be any, to be the owner where their respective houses stand, and therefore, DIRECTS and ENJOINS for the following matters to be undertaken:

 For the Administrator of the L.J. Hodges Estate: 1) To assist both offeror-claimants in effecting a Relocation Survey

Plan and cause the equal partition of the subject lot herein between the said offeror-claimant;

 2) To execute the corresponding deed of sale over the aforecited

subject lot in favor of the herein offeror-claimants --- Erlinda Lebin and Vilma S. Mirasol purposely to expedite the issuance of respective title; and ---

 3) To exact payment from either or both offeror-claimants should

there be any deficiency, and/or to refund payment should there be any excess payment from either or both offeror-claimants.

 SO ORDERED.[13]

 

On May 23, 1995, the petitioners moved for reconsideration and/or new trial. [14] On March 2, 1998, the RTC denied the motion for reconsideration and/or new trial of the petitioners.[15] Thus, on March 27, 1998, the petitioners filed a notice of appeal in the RTC.[16] Allegedly, on May 5, 1998, they also filed a record on appeal. [17] On January 25, 1999, they presented an ex parte motion to approve the record on appeal.[18] On June 15, 2000, Mirasol filed a motion to dismiss the appeal, insisting that the record on appeal had been filed late.[19] The RTC granted the motion to dismiss the appeal on February 1, 2002.[20] The petitioners moved for reconsideration on March 13, 2002,[21] but the RTC denied their motion for reconsideration on May 21, 2004.[22]

 Hence, the petitioners appealed via petition for review on certiorari filed on June 23, 2004, to seek the review and reversal of the orders of the RTC dated February 1, 2002 and May 21, 2004.

Issues 

1.     Whether or not the RTC erred in dismissing the petitioners appeal for their failure to timely file a record on appeal; and

 2.     Whether or not the RTC committed reversible error in adjudging that

Lot 18 be sold to both the petitioners and Mirasol in equal portions.  

Ruling

  

The petition for review lacks merit. 

IRTC did not err in dismissing the petitioners appeal

for their failure to timely file a record on appeal Among the innovations introduced by Batas Pambansa Blg. 129[23] is the

elimination of the record on appeal in most cases, retaining the record on appeal only for appeals in special proceedings and in other cases in which the Rules of Court allows multiple appeals. Section 39 of Batas Pambansa Blg. 129 has incorporated this innovation, to wit:

 Section 39. Appeals. - The period for appeal from final orders,

resolutions, awards, judgments, or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from: Provided however, That in habeas corpus cases, the period for appeal shall be forty-eight (48) hours from the notice of the judgment appealed from.

 

No record on appeal shall be required to take an appeal. In lieu thereof, the entire record shall be transmitted with all the pages prominently numbered consecutively, together with an index of the contents thereof.

 This section shall not apply in appeals in special proceedings

and in other cases wherein multiple appeals are allowed under applicable provisions of the Rules of Court. (emphasis supplied) 

In early 1990, the Supreme Court issued its resolution in Murillo v. Consul[24] to clarify and fortify a judicial policy against misdirected or erroneous appeals, stating:

 At present then, except in criminal cases where the penalty imposed

is life imprisonment or reclusion perpetua, there is no way by which judgments of regional trial courts may be appealed to the Supreme Court except by petition for review on certiorari in accordance with Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act of 1948 as amended. The proposition is clearly stated in the Interim Rules: Appeals to the Supreme Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court.

 On the other hand, it is not possible to take an appeal by certiorari to

the Court of Appeals. Appeals to that Court from the Regional Trial Courts are perfected in two (2) ways, both of which are entirely distinct from an appeal by certiorari to the Supreme Court. They are: 

a) by ordinary appeal, or appeal by writ of error - where judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; and

 b) by petition for review - where judgment was rendered by the

RTC in the exercise of appellate jurisdiction. 

The petition for review must be filed with the Court of Appeals within 15 days from notice of the judgment, and as already stated, shall point out the error of fact or law that will warrant a reversal or modification of the decision or judgment sought to be reviewed. An ordinary appeal is taken by merely filing a notice of appeal within 15 days from notice of the judgment, except in special proceedings or cases where multiple appeals are allowed in which event the period of appeal is 30 days and a record on appeal is necessary.

 There is therefore no longer any common method of appeal in civil

cases to the Supreme Court and the Court of Appeals. The present procedures for appealing to either court and, it may be added, the process of ventilation of the appeal are distinct from each other. To repeat, appeals

to this court cannot now be made by petition for review or by notice of appeals (and, in certain instances, by record on appeal), but only by petition for review on certiorari under Rule 45. As was stressed by this Court as early as 1980, in Buenbrazo v. Marave, 101 SCRA 848, all the members of the bench and bar are charged with knowledge, not only that since the enactment of Republic Act No. 8031 in 1969, the review of the decision of the Court of First Instance in a case exclusively cognizable by the inferior court xxx cannot be made in an ordinary appeal or by record on appeal, but also that appeal by record on appeal to the Supreme Court under Rule 42 of the Rules of Court was abolished by Republic Act No. 5440 which, as already stated, took effect on September 9, 1968. Similarly, in Santos, Jr., v. C.A., 152 SCRA 378, this Court declared that Republic Act No. 5440 had long superseded Rule 41 and Section 1, Rule 122 of the Rules of Court on direct appeals from the court of first instance to the Supreme Court in civil and criminal cases, x x and that direct appeals to this Court from the trial court on questions of law had to be through the filing of a petition for review on certiorari, wherein this Court could either give due course to the proposed appeal or deny it outright to prevent the clogging of its docket with unmeritorious and dilatory appeals.

 In fine, if an appeal is essayed to either court by the wrong

procedure, the only course of action open is to dismiss the appeal. In other words, if an appeal is attempted from a judgment of a Regional Trial Court by notice of appeal, that appeal can and should never go to this Court, regardless of any statement in the notice that the court of choice is the Supreme Court; and more than once has this Court admonished a Trial Judge and/or his Clerk of Court, as well as the attorney taking the appeal, for causing the records to be sent up to this Court in such a case. Again, if an appeal by notice of appeal is taken from the Regional Trial Court to the Court of Appeals and in the latter Court, the appellant raises naught but issues of law, the appeal should be dismissed for lack of jurisdiction. And finally, it may be stressed once more, it is only through petitions for review on certiorari that the appellate jurisdiction of the Supreme Court may properly be invoked. 

There is no longer any justification for allowing transfers of erroneous appeals from one court to the other, much less for tolerating continued ignorance of the law on appeals. It thus behooves every attorney seeking review and reversal of a judgment or order promulgated against his client, to determine clearly the errors he believes may be ascribed to the judgment or order, whether of fact or of law; then to ascertain which court properly has appellate jurisdiction; and finally, to observe scrupulously the requisites for appeal prescribed by law, with keen awareness that any error or imprecision in compliance therewith may well be fatal to his client's cause.[25] (emphasis supplied)

 

An offshoot of Murillo v. Consul is the inclusion in the 1997 revision of the rules of civil procedure, effective July 1, 1997, of a provision that forthrightly delineated the modes of appealing an adverse judgment or final order. The provision is Section 2 of Rule 41, viz:

 

Section 2. Modes of appeal. (a) Ordinary appeal. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

 (b) Petition for review. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

 (c) Appeal by certiorari. In all cases where only questions of law are

raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. (n) (emphasis supplied)  The changes and clarifications recognize that appeal is neither a natural nor a

constitutional right, but merely statutory, and the implication of its statutory character is that the party who intends to appeal must always comply with the procedures and rules governing appeals, or else the right of appeal may be lost or squandered.

 As the foregoing rules further indicate, a judgment or final order in special

proceedings is appealed by record on appeal. A judgment or final order determining and terminating a particular part is usually appealable, because it completely disposes of a particular matter in the proceeding, unless otherwise declared by the Rules of Court.[26] The ostensible reason for requiring a record on appeal instead of only a notice of appeal is the multi-part nature of nearly all special proceedings, with each part susceptible of being finally determined and terminated independently of the other parts. An appeal by notice of appeal is a mode that envisions the elevation of the original records to the appellate court as to thereby obstruct the trial court in its further proceedings regarding the other parts of the case. In contrast, the record on appeal enables the trial court to continue with the rest of the case because the original records remain with the trial court even as it affords to the appellate court the full opportunity to review and decide the appealed matter.

 Section 1, Rule 109 of the Rules of Court underscores the multi-part nature of

special proceedings by enumerating the particular judgments and final orders already subject of appeal by any interested party despite other parts of the proceedings being still untried or unresolved, to wit:

 Section 1. Orders or judgments from which appeals may be taken.

- An interested person may appeal in special proceedings from an order or judgment rendered by a Court of First Instance or a Juvenile and Domestic Relations Court, where such order or judgment:

 (a) Allows or disallows a will; (b) Determines who are the lawful heirs of a deceased person, or the

distributive share of the estate to which such person is entitled; (c) Allows or disallows, in whole or in part, any claim against the

estate of a deceased person, or any claim presented on behalf of the estate in offset to a claim against it;

 (d) Settles the account of an executor, administrator, trustee or

guardian; (e) Constitutes, in proceedings relating to the settlement of the estate

of a deceased person, or the administration of a trustee or guardian, a final determination in the lower court of the rights of the party appealing, except that no appeal shall be allowed from the appointment of a special administrator; and

 (f) Is the final order or judgment rendered in the case, and affects the

substantial rights of the person appealing, unless it be an order granting or denying a motion for a new trial or for reconsideration. The petitioners appeal comes under item (e) of Section 1, supra, due to the final

order of May 3, 1995 issued in the settlement of the estate of L.J. Hodgesbeing a final determination in the lower court of the rights of the party appealing. In order to elevate a part of the records sufficient for appellate review without the RTC being deprived of the original records, the remedy was to file a record on appeal to be approved by the RTC.

 The elimination of the record on appeal under Batas Pambansa Blg. 129 made

feasible the shortening of the period of appeal from the original 30 days to only 15 days from notice of the judgment or final order. Section 3, [27] Rule 41 of the Rules of Court, retains the original 30 days as the period for perfecting the appeal by record on appeal to take into consideration the need for the trial court to approve the record on appeal. Within that 30-day period a party aggrieved by a judgment or final order issued in special proceedings should perfect an appeal by filing both a notice of appeal and a

record on appeal in the trial court, serving a copy of the notice of appeal  and a record on appeal upon the adverse party within the period; [28] in addition, the appealing party shall pay within the period for taking an appeal to the clerk of the court that rendered the appealed judgment or final order the full amount of the appellate court docket and other lawful fees.[29]A violation of these requirements for the timely perfection of an appeal by record on appeal,[30] or the non-payment of the full amount of the appellate court docket and other lawful fees to the clerk of the trial court [31] may be a ground for the dismissal of the appeal.

 Did the petitioners comply with the requirements for perfecting their appeal? The petitioners received the assailed May 3, 1995 order of the RTC on May 15,

1995. They filed a motion for reconsideration and/or new trial on May 24, 1995. On March 23, 1998, they were served with the order dated March 2, 1998 (denying their motion for reconsideration and/or new trial). Although they filed a notice of appeal on March 27, 1998, they submitted the record on appeal only on May 5, 1998. Undoubtedly, they filed the record on appeal 43 days from March 23, 1998, the date they received the denial of their motion for reconsideration and/or new trial. They should have filed the record on appeal within 30 days from their notice of the judgment. Their appeal was not perfected, therefore, because their filing of the record on appeal happened beyond the end of their period for the perfection of their appeal.

 The petitioners filing of the motion for reconsideration vis--vis the order of May 3,

1995 interrupted the running of the period of 30 days; hence, their period to appeal started to run from May 15, 1995, the date they received the order of May 3, 1995. They filed their motion for reconsideration on May 24, 1995. By then, nine days out of their 30-day period to appeal already elapsed. They received a copy of the order dated March 2, 1998 on March 23, 1998. Thus, the period to appeal resumed from March 23, 1998 and ended 21 days later, or on April 13, 1998. Yet, they filed their record on appeal only on May 5, 1998, or 22 days beyond the end of their reglementary period. Although, by that time, the 1997 Rules on Civil Procedure had meanwhile taken effect (July 1, 1997), their period of appeal remained 30 days. It is stressed that under the 1997 revisions, the timely filing of the motion for reconsideration interrupted the running of the period of appeal, pursuant to Section 3, Rule 41 of the 1997 Rules on Civil Procedure, viz: 

Section 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.

 The period of appeal shall be interrupted by a timely motion for

new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n) (emphasis supplied)

 

Section 13, Rule 41 of the Rules of Court empowers the RTC as the trial court, motu proprio or on motion, to dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[32] For that reason, the RTC rightly granted Mirasols motion to dismiss the record on appeal.

 

Nonetheless, the petitioners propose to be excused from the requirement of filing a record on appeal, arguing that (t)o require a (r)ecord on (a)ppeal here is to reproduce the more than eighteen (18) volumes of records here which is quite impossible to do and that most of these records, (sic) have nothing to do with the present controversy.[33] Also, they state that their counsel was of the honest belief and impression that the same was not really necessary because the nature of the controversy xxx is civil and not an intestate one.[34]

 The petitioners submissions are frail and facetious. In order to come up with the record on appeal, the petitioners were not expected

to reproduce over 18 volumes of the records, for their record on appeal would have included only the records of the trial court which the appellate court would be asked to pass upon.[35] Section 6, Rule 41 of the 1997 Rules of Civil Procedure, which meanwhile became applicable to them, specified what the record on appeal should contain, thusly:

 Section 6. Record on appeal; form and contents thereof. - The full

names of all the parties to the proceedings shall be stated in the caption of the record on appeal and it shall include the judgment or final order from which the appeal is taken and, in chronological order, copies of only such pleadings, petitions, motions and all interlocutory orders as are related to the appealed judgment or final order for the proper understanding of the issue involved, together with such data as will show that the appeal was perfected on time. If an issue of fact is to be raised on appeal, the record on appeal shall include by reference all the evidence, testimonial and documentary, taken upon the issue involved. The reference shall specify the documentary evidence by the exhibit numbers or letters by which it was identified when admitted or offered at the hearing, and the testimonial evidence by the names of the corresponding witnesses. If the whole testimonial and documentary evidence in the case is to be included, a statement to that effect will be sufficient without mentioning the names of the witnesses or the numbers or letters of exhibits. Every record on appeal exceeding twenty (20) pages must contain a subject index. (6a) The right to appeal is a mere statutory privilege, and should be exercised only in

the manner prescribed by law.[36] The statutory nature of the right to appeal requires the one who avails himself of it to strictly comply with the statutes or rules that are considered indispensable interdictions against needless delays and for an orderly

discharge of judicial business. In the absence of highly exceptional circumstances warranting their relaxation, like when the loftier demands of substantial justice and equity require the relaxation,[37] or when there are other special and meritorious circumstances and issues,[38] such statutes or rules should remain inviolable.[39]

 In like manner, the perfection of an appeal within the period laid down by law is

mandatory and jurisdictional, because the failure to perfect the appeal within the time prescribed by the Rules of Court causes the judgment or final order to become final as to preclude the appellate court from acquiring the jurisdiction to review the judgment or final order.[40] The failure of the petitioners and their counsel to file their record on appeal on time rendered the orders of the RTC final and unappealable. Thereby, the appellate court lost the jurisdiction to review the challenged orders, and the petitioners were precluded from assailing the orders. 

IIRTC committed no reversible error in allocating

Lot 18 in equal portions to both petitioners and respondent

 The non-perfection of the appeal by the petitioners notwithstanding, the Court declares that the RTC did not err in allocating the parcel of land equally to the parties if only to serve and enforce a standing policy in the settlement of the large estate of the late L.J. Hodges to prefer actual occupants in the disposition of estate assets. The policy was entirely within the power of the RTC to adopt and enforce as the probate court. As stated in the administrators motion for approval of the offer, the approval of the offer to purchase would be conditioned upon whether the petitioners were the only actual occupants. The condition was designed to avoid the dislocation of actual occupants, and was the reason why the RTC dispatched Atty. Tabares to determine who actually occupied the property before approving the motion. It turned out that the report of Atty. Tabares about the petitioners being the only occupants was mistaken, because the house of Mirasol, who had meanwhile also offered to purchase the portion where her house stood, happened to be within the same lot subject of the petitioners offer to purchase. The confusion arose from the misdescription of Mirasols portion as Lot 4, instead of Lot 18.[41]

 Under Rule 89 of the Rules of Court, the RTC may authorize the sale, mortgage, or encumbrance of assets of the estate. The approval of the sale in question, and the modification of the disposition of property of the Estate of L.J. Hodges were made pursuant to Section 4 of Rule 89, to wit: 

Section 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. [emphasis supplied]

 Without doubt, the disposal of estate property required judicial approval before it could be executed.[42] Implicit in the requirement for judicial approval was that the probate court could rescind or nullify the disposition of a property under administration that was effected without its authority.[43] This power included the authority to nullify or modify its approval of the sale of the property of the estate to conform to the law or to the standing policies set and fixed for the purpose, where the invalidation or modification derived from the falsity of the factual basis of the disposition, or from any other factual mistake, or from the concealment of a material fact by a party. Consequently, the probate courts modification of its approval of the petitioners offer to purchase was well within the power of the RTC to nullify or modify after it was found to be contrary to the condition for the approval. Thereby, the RTCs ruling, being sound and judicious, constituted neither abuse of discretion nor excess of jurisdiction.

 WHEREFORE, we DENY the petition for review, and AFFIRM the final orders

dated May 3, 1995 and March 2, 1998. The petitioners shall pay the costs of suit.

 SO ORDERED.  

LUCAS P. BERSAMINAssociate Justice

 WE CONCUR:

   

RENATO C. CORONAChief JusticeChairperson

    TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLOAssociate Justice Associate Justice  

  

MARTIN S. VILLARAMA, JR.Associate Justice

  

CERTIFICATION  Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. 

RENATO C. CORONAChief Justice

[1] Rollo, pp. 12-13.[2] Id., p. 17.[3] Id., pp. 26-27.[4] Id., pp. 28-29.[5] Id., pp. 39.[6] Id., pp. 30-31.[7] Id., p. 31.[8] Id., pp. 32-33[9] Id., p. 32.[10] Id., p. 36.[11] Id., pp. 32-35.[12] Id., pp. 37-38.[13] Id., pp. 12-13.[14] Id., pp. 14-16.[15] Id., p. 17.[16] Id., p. 18.[17] Id., p. 20.[18] Id., p. 19.[19] Id., pp. 20-22.[20] Id., pp. 24-25.[21] Id., pp. 26-27.[22] Id., pp. 28-29.[23] Entitled An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for other Purposes.[24] Undk. No. 9748, February 27, 1990; 183 SCRA xi, which became the basis for the guidelines set forth in Circular No. 2-90 issued by the Supreme Court on March 9, 1990.[25] Id., pp. xv-xviii.[26] According to Section 1, first paragraph, Rule 41, Rules of Court: An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.

 [27] Section 3. Period of Ordinary Appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of the judgment or final order.[28] Section 2(a) and Section 3, Rule 41, Rules of Court.[29] Section 4, Rule 41, Rules of Court.[30] Section 13, Rule 41, and Section 1(a), Rule 50, Rules of Court.[31] Section 1(a) and (c), Rule 50, Rules of Court.[32] Section 13. Dismissal of appeal. Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may, motu proprio or on motion, dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[33] Id., p. 8.[34] Id.[35] Bersamin, Appeal and Review in the Philippines, Central Professional Books, Inc., 2nd Edition, p. 136; citing 3 Am Jur 215.[36] Borlongan v. Buenaventura, G.R. No. 167234, September 27, 2006, 483 SCRA 405, 411-412; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 106956, January 27, 1994, 229 SCRA 560.[37] Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Yutingco v. Court of Appeals, G.R. No. 137264, August 1, 2002, 386 SCRA 85, 91; Tan Tiac Chiong v. Cosico, A.M. No. CA-02-33, July 21, 2002, 385 SCRA 509, 515; Olacao v. NLRC, G.R. No. 81390, August 29, 1989, 177 SCRA 38, 49.[38] Equitable PCI Bank v. Ku, G.R. No. 142950, March 26, 2001, 355 SCRA 309, 316; De Guzman v. Sandiganbayan, G.R. No. 103276, April 11, 1996, 256 SCRA 171, 177; Orata v.Intermediate Appellate Court, G.R. No. 73471, May 8, 1990, 185 SCRA 148, 152.[39] Almeda v. Court of Appeals, G.R. No. 121013, July 16, 1998 292 SCRA 587, 593-595.[40] Ko v. Philippine National Bank, G. R. Nos. 169131-132, January 20, 2006, 479 SCRA 298; Air France Philippines v. Leachon, G.R. No. 134113, October 12, 2005, 472 SCRA 439; Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 127275, June 20, 2003, 404 SCRA 442, 448; Yao v. Court of Appeals, G.R. No. 132426, October 24, 2000, 344 SCRA 202; Dayrit v. Philippine Bank of Communications, G.R. No. 140316, August 1, 2002, 386 SCRA 117, 125; Bishop of Tuguegarao v. Director of Lands, 34 Phil 623 (1916); Estate of Cordoba and Zarate v. Alabado, 34 Phil. 920 (1916); Bermudez v. Director of Lands, 36 Phil. 774 (1917).[41] Id., p. 36.[42] Acebedo v Abesamis, G.R. No. 102380, January 18, 1993, 217 SCRA 186, 193.[43] Dillena v. Court of Appeals, G.R. No. L-77660, July 28, 1988, 163 SCRA 630, 637.

SECOND DIVISION

G.R. No. L-35367 April 9, 1987

MANOTOK REALTY, INC., petitioner, -versus-

THE HONORABLE COURT OF APPEALS and APOLONIO SIOJO, respondents.

 

GUTIERREZ, JR., J.:

This is an appeal by way of certiorari seeking to set aside the decision of the Court of Appeals which reversed the decision of the trial court and upheld the sale of the disputed lot in favor of the private respondent.

Wayback on November 21, 1951, the Court of First Instance of Manila, acting as a probate court in the special proceedings of the testate estate of Clara Tambunting de Legarda, authorized Vicente Legarda, as special co-administrator, to sell the Legarda Tambunting Subdivision. The order of the probate court partly states:

xxx xxx xxx

The co-administrator herein are hereby authorized to sold the "Legarda Tambunting Subdivision" covered by Transfer Certificate of Title Nos. 62042, 45149, 29578, 40957, and 59585, with a total area of 80,238.90 square meters, more or less, at a price of P50.00 per square meter, executing the necessary document or documents and submitting the same to this Court for Approval

xxx xxx xxx

On December 10, 1952, Vicente Legarda as co-administrator allegedly sold an area of about 280 square meters of the subdivision denominated as Lot 6, Block 4 situated at Dinalupihan, Tondo, Manila at P30.00 per square meter to Abelardo Lucero. The sale was on an installment basis and Lucero paid an initial amount of P200.00 by virtue of which a receipt was issued by Legarda. On the same day, Lucero took possession of the lot,

In 1953, Lucero leased the lot to six persons, one of whom is herein private respondent. Like the other tenants, respondent constructed a house on an area of 73 square meters of the lot now denominated as Lot III, Block 2, and paid P15.00 as monthly rentals.

On July 31, 1956, the probate court issued another order authorizing the Philippine Trust Company as administrator, to sell the subdivision at the earliest possible time at the best obtainable price.

Sometime in 1957, the lessees of Lucero, including the private respondent, defaulted in their payment of rentals. Separate actions for ejectment were filed against them However, a compromise agreement was concluded and the tenants resumed the payment of rentals. Up until 1966, the private respondent continued paying monthly rentals to Lucero.

In the meantime, Lucero accordingly awaited the sending by Legarda of the formal contract but as none came, he could not make further payments. In 1957-58, he, therefore, went to the Philippine Trust Company to make further payments, showing it the receipt evidencing the down payment but the latter refused either to receive payment or to issue a formal contract because the Legarda-Tambunting Subdivision was involved in litigation.

The petitioner was subsequently awarded the sale of the entire subdivision. On March 13, 1959, the deed of sale was executed by and between petitioner and Philippine Trust Company and the same was approved by the probate court. The petitioner obtained Transfer Certificate of Title Numbers 62042, 45149, 29578, 40957 and 59585 which covered the whole Legarda-Tambunting estate including the lot sold to Lucero.

On January 1966, the petitioner caused to be published in the Manila Times and Taliba notices addressed to "all squatter-occupants" of the subdivision advising them to surrender the material and actual possession of the portions occupied by them otherwise judicial action would be taken. On March 4, 1966, the petitioner filed the complaint below for ejectment against the private respondent. On March 11, 1966, summons was served on the latter. These circumstances, notwithstanding, on May 23, 1966, Lucero executed a deed of assignment of the lot in question in favor of his lessees, including the private respondent.

After hearing, the trial court rendered judgment in favor of the petitioner, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring the plaintiff (petitioner) to be the owner and entitled to the possession of the land described as Lot III, Block 2, located at 1286 Dinalupihan, Tondo, Manila, and defendant (private respondent) is hereby ordered to deliver the possession thereof to the plaintiff, to pay a monthly rental at the rate of P50 centavos a square meter per month from March 20, 1959 until the

land is delivered to the plaintiff, and to pay the cost. (pp, 44-47, Rec. on Appeal).

On appeal, the Court of Appeals reversed the decision of the trial court and held that the sale made by Legarda to Lucero was valid because the former acted within his authority as special co-administrator and that there was no need for the approval of the probate court of such sale. According to the appellate court, where the co-administrator sold the estate pursuant to an authority granted him by the probate court, and where, the administrator acted in obedience to the court's directive and within the scope of his authority, the sale could well be considered the act of the probate court itself. Therefore, the approval of the probate court, if wanting, cannot affect the validity of the administrator's act.

The appellate court also ruled that there was a consummated sale between Legarda and Lucero because they had agreed on the subject matter and the purchase price and that the latter paid part of the purchase price while the former delivered the land.

In this petition, the petitioner contends the appellate court committed an error of law when: a) it upheld the validity of the contract of sale between Legarda and Lucero; and b) it ruled that the approval of the probate court was not necessary for the validity of the said sale.

The petitioner argues that the receipt evidencing the alleged sale by Legarda to Lucero does not conform to the legal requirements of contracts of sale and that when the law requires that a contract be in a public document in order that it may be valid or enforceable, such as contracts which have for their object of the creation or transmission of real rights over immovable property, that requirement is absolute and indispensable. Therefore, the questioned sale cannot be enforced against third persons such as petitioner by the private respondent who only derived his right to the property from Lucero. Furthermore, the alleged sale was on an installment basis and thus, necessitated court approval because the same was patently not in accordance with the express terms and conditions specified in the authorization to sell by the probate court.

We find merit in the petition.

The alleged sale made by Legarda to Lucero should have been embodied in a public instrument in accordance with Article 1358 of the Civil Code and should have been duly registered with the Register of Deeds to make it binding against third persons. The authority given by the probate court to Legarda specifically required the execution of necessary documents. Lucero not only failed to obtain a deed of sale from Legarda but also failed to secure any kind of writing evidencing the contract of sale other than the receipt issued by Legarda acknowledging the amount of P200.00. No explanation was offered by the private respondent as to why there was no effort on the part of Lucero to pay the balance of the purchase price during the time that Legarda was the special co- administrator. The private respondent merely alleged that Lucero awaited the sending of the formal contract by Legarda but as none came, he could not make further payments.

It was only after about five years that Lucero allegedly went to the administrator and offered to pay the balance. By this time, Philippine Trust Company was already the administrator of the Legarda-Tambunting estate and it refused to accept further payments from Lucero who had only the receipt in the amount of P200.00 and nothing more as proof that more than five years earlier a piece of real property was sold to him by a special administrator acting under court orders.

We, therefore, rule that the alleged sale made by Legarda to Lucero did not bind the Legarda-Tambunting estate, much less, the petitioner who acquired the property in dispute with the approval of the probate court and in a sole reliance on the clean title of the said property. As correctly ruled by the trial court:

The plaintiff (petitioner), as the registered owner of the property, is entitled to the possession thereof, unless the defendant (private respondent) could show that he is entitled to its possession or to purchase the same. The property was advertised for sale, but neither Abelardo Lucero nor the defendant herein appeared in the testate proceedings of Clara Tambunting de Legarda to claim their right to the particular lot in question. The records of the testate proceedings of Clara Tambunting de Legarda did not show that any claim was made by Dr. Abelardo Lucero or by the defendant herein. The alleged sale made by Vicente Legarda in favor of Dr. Lucero did not bind the estate, for aside from the fact that no formal deed of sale was executed by Vicente Legarda specifying the terms thereof, it was never approved by the Court. Sales of immovable properties by the administrators did not bind the estate and have no validity unless they are approved by the Court. Moreover, the alleged receipt issued by Vicente Legarda does not constitute even a memorandum of sale, because it did not specify the price of the land and the manner of payment ...

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.

In the case of Estate of Olave v. Reyes (123 SCRA 767, 772), we ruled:

Section 1, Rule 73 of the Rules of Court, expressly provides that "the court first taking cognizance of the settlement of the estate of a decedent, shall

exercise jurisdiction to the exclusion of all other courts." (Emphasis supplied). The law is clear 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.

Also, in Vda. de Gil v. Cancio (14 SCRA 796, 800), we ruled:

xxx xxx xxx

... And bearing in mind this situation of the two heirs which happened during the Japanese occupation, the probate court did not hesitate in approving the agreement thereby giving to the administratrix the necessary authority to execute the deed of sale covering the two properties of the deceased in favor of Agustin Cancio provided that the deed of sale be submitted to the court for its approval. And this matter is sanctioned by Section 4, Rule 89 of the Rules of Court, which provides:

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; ...

Moreover, the authority granted by the probate court in the case at bar specifically ordered Legarda to submit the document of sale for its approval.

Thus, as stated earlier, the sale made by Legarda to Lucero, having been done without the approval of the probate court and without the execution of the necessary documents did not bind the Legarda-Tambunting estate and could not have affected the rights of the petitioner over the disputed lot. Furthermore, the private respondent is only a transferee of Lucero. At the time of the transfer of rights, the private respondent already had notice of the petitioner's ownership because he was served with a summons in the ejectment case filed against him by the petitioner. More importantly, the private respondent is deemed to have constructive notice of such ownership from the time the petitioner was able to secure a title over the said property in 1959. The controversies and litigations over the estate, the problems with numerous squatters, and other aspects of the acquisition of the property attracted wide public attention and anybody in the subsidivision could not have avoided being involved or aware. Therefore, the private respondent cannot even be considered a possessor and builder in good faith.

Again, as correctly held by the trial court:

After this case had been filed on March 4, 1966, Dr. Abelardo Lucero, on May 23, 1966, executed a deed of sale of the lot in question in favor of his lessees, including the defendant. This deed of sale did not confer upon the defendant the character of a builder in good faith, He built his house at the time when he was a mere lessee of Dr. Abelardo Lucero. The fact that he subsequently bought the rights of Dr. Lucero did not change the character of his possession to a possessor in good faith. Moreover, it is apparent that the deed of sale was executed in bad faith with the intention of giving the defendant the character of a possessor in good faith. The records show that the defendant was served with summons on March 11, 1966. At the time of the execution of the deed of sale (Exh. C) on March 26, 1966, defendant already knew, or had been informed, that the plaintiff claims to be the owner of the land in question, and that plaintiff's ownership is evidenced by Transfer Certificate of Title Nos. 62042, 45149, 29578, 40957 and 59585. The alleged sale made by Vicente Legarda to Abelardo Lucero was not annotated in the certificate of title of the plaintiff, and therefore, was not binding upon it. When Dr. Abelardo Lucero executed the deed of sale in favor of the defendant, he already knew of the plaintiff's claim of ownership.

WHEREFORE, IN VIEW OF THE FOREGOING, the questioned decision of the Court of Appeals is REVERSED and SET ASIDE. The decision of the then Court of First Instance of Manila in Civil Case No. 64559 is REINSTATED.

SO ORDERED.

Fernan (Chairman), Padilla, Bidin and Cortes, JJ., concur.

Paras, J., concur in the result.

University of Santo Tomas, Faculty of Civil Law © 2010 All Rights Reserved.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-28214             July 30, 1969

NATIVIDAD V. A. JARODA, petitioner, vs.THE HONORABLE VICENTE N. CUSI, JR., Presiding Judge, Branch I, Court of First Instance of Davao, and ANTONIO V. A. TAN, in his capacity as judicial administrator of intestate estate of Carlos Villa Abrille, Special Proc. No. 1391, Court of First Instance of Davao, respondents.

Dario C. Rama for petitioner.Jose R. Madrazo, Jr. for respondents.

REYES, J.B.L., J.:

Questioned as null and void in this petition for certiorari with preliminary injunction are two (2) orders of the Court of First Instance of Davao, Branch I, issued in its Special Proceeding No. 1391 entitled "In the Matter of the Intestate Estate of Carlos Villa Abrille, deceased, Antonio V. A. Tan, petitioner."

The first of the said two orders, dated 5 May 1965, granted an ex-parte petition by then special administrator Antonio V. A. Tan, the herein respondent, to withdraw from the Philippine National Bank the amount of P182,531.08 deposited in savings and checking accounts in the name, and during the lifetime, of Carlos Villa Abrille (now deceased) but allegedly held in trust for the decedent's co-owners in the Juna Subdivision.

The second order, dated 3 September 1965, approved ex-parte the power of attorney executed by special administrator Tan appointing himself attorney-in-fact to sell the share of the estate in the subdivision lots.

The aforesaid Special Proceeding No. 1391 was commenced by Antonio V. A. Tan on 22 April 1965, alleging in his petition filed with the respondent court that Carlos Villa Abrille died intestate on 3 April 1965; that he left an estate consisting of his conjugal share in real and personal properties, among which are:

p. Nineteen (19) Percent share in the co-ownership known as Juna Subdivision;

x x x           x x x           x x x

x x x           x x x           x x x

t. Cash on Bank: BPI (Savings) D-1365 in the amount of P55,284.11; PNB (Savings) 8189, in the amount of P9,047.74; and PCIB (Savings) 337, in the amount of P416.24. (Annex "A" to Petition, Rollo, pages 1415);

that the heirs of the deceased are his surviving spouse, nine (9) children (among them the herein petitioner, Natividad V. A. Jaroda), and four (4) grandsons, among them the herein respondent, Antonio V. A. Tan.

On 26 April 1965, respondent Tan was appointed special administrator.

On 4 May 1965, respondent special administrator Tan fled an ex-parte petition for the withdrawal of the sums of P109,886.42 and P72,644.66 from the Philippine National Bank, Davao Branch, which sums were not listed in his petition for administration as among the properties left by the deceased, alleging that these sums were deposited in the name of the deceased but that they actually belong to, and were held in trust for, the co-owners of the Juna Subdivision, and alleging as reason for the withdrawal that it would be advantageous to the estate of the deceased. Annexed to the said petition are powers of attorney purportedly signed by the co-owners in 1948 and 1949 authorizing the late Carlos Villa Abrille to sell the lots in the Juna Subdivision and to deposit the proceeds thereof with the Philippine National Bank. The alleged co-owners of the subdivision concurred in the petition, but not the heirs of the deceased (Annex "C" to Petition, Rollo, page 19).

The respondent court found the petition for withdrawal of the bank deposits as "meritorious", and granted the petition in an order on 5 May 1965.

On 7 May 1965, special administrator Tan executed, together with the other co-owners of the Juna Subdivision, a power of attorney appointing himself as attorney-in-fact to "sell (or) dispose upon terms and conditions as he deems wise" the lots in the 99.546-hectare subdivision (Annex "F-1" to Petition, Rollo, pages 30-32).

On 9 September 1965, respondent Tan was issued letters of administration by the respondent court.

On the same day, 9 September 1965, as regular administrator, respondent Tan filed a petition with the respondent court, alleging that the deceased was the manager of and a co-owner in the Juna Subdivision and that he had been engaged in the business of selling the lots, and praying for the approval by the court of the power of attorney executed by him, in behalf of the intestate estate, and appointing and authorizing himself to sell the lots.

The court granted the petition, "as prayed for," on 3 September 1965.1äwphï1.ñët

On 29 November 1966, herein petitioner Natividad V. A. Jaroda moved to nullify the order of 5 May 1965, that allowed the withdrawal of the bank deposits, as well as the order of 3 September 1965, which approved the power of attorney.

The respondent court denied, on 25 February 1967, "for lack of merit" the aforesaid motion.

Petitioner Jaroda appealed from the order of denial, but the respondent court dismissed the appeal on the ground that the order appealed from was interlocutory. Jaroda then filed before the Supreme Court a petition for certiorari and/or mandamus on 8 July 1967, docketed as G.R. No. L-27831, but this Court dismissed the petition, adding in its resolution that appeal in due time is the remedy.

On 28 October 1967, petitioner Jaroda filed the present petition for certiorari with preliminary injunction. She alleged, among other things, that appeal would not be speedy and adequate as respondent Tan has sold and continues to sell the subdivision lots on the strength of the respondent court's order, to her irreparable prejudice and that of the other heirs. This Court gave due course to the petition and issued preliminary injunction on 3 November 1967, restraining the respondent from selling the share of the intestate estate.

We agree with petitioner that the order of 5 May 1965 allowing the special administrator to withdraw the bank deposits standing in the name of the decedent is in abuse of discretion amounting to lack of jurisdiction. In the first place, said withdrawal is foreign to the powers and duties of a special administrator, which, as Section 2 of Rule 80 of the Rules of Court provides, are to —

take possession and charge of the goods, chattels, rights, credits and estate of the decease and preserve the same for the executor or administrator afterwards appointed, and for that purpose may commence and maintain suits as administrator. He may sell only such perishable and other property as the court orders sold. A special administrator shall not be liable to pay any debts of the deceased unless so ordered by the court.

In the second place, the order was issued without notice to, and hearing of, the heirs of the deceased. The withdrawal of the bank deposits may be viewed as a taking of possession and charge of the credits of the estate, and apparently within the powers and duties of a special administrator; but actually, said withdrawal is a waiver by the special administrator of a prima facie exclusive right of the intestate estate to the bank deposits in favor of the co-owners of the Juna Subdivision, who were allegedly claiming the same as alleged by the administrator in his motion (Petition, Annex "C"). The bank deposits were in the name of the deceased; they, therefore, belong prima facie to his estate after his death. And until the contrary is shown by proper evidence at the proper stage, when money claims may be filed in the intestate proceedings, the special administrator is without power to make the waiver or to hand over part of the estate, or what appears to be a prima facie part of the estate, to other persons on the ground that the estate is not the owner thereof. If even to sell for valuable consideration property of the estate requires prior written notice of the application to the heirs, legatees, or devisees under Rule 89 of the Rules of Court, such notice is equally, if not more, indispensable for disposing gratuitously of assets of the decedent in favor of strangers.

Admittedly, no such notice was given, and without it the court's authority is invalid and improper.

The order of 3 September 1965 approving the power of attorney executed by administrator Tan and appointing himself as attorney-in-fact to sell the subdivision lots for a price at his discretion is, likewise, void for want of notice and for approving an improper contract or transaction.

The very rule, Section 4 of Rule 89 of the Rules of Court, relied on by respondent Tan to sustain the power of attorney for the sale of the pro-indiviso share of the estate in the subdivision requires "written notice to the heirs, devisees, and legatees who are interested in the estate to be sold" and, admittedly, administrator Tan did not furnish such notice. (Answer, pages 1 and 2, paragraph 3, Rollo, page 53) Without such notice, the order of the court authorizing the sale is void. (Estate of Gamboa vs. Floranza, 12 Phil. 191; Gabriel vs. Encarnacion, 94 Phil. 917)

But respondent Tan holds petitioner Jaroda with actual knowledge of the questioned order, and to show it he quotes the transcript of stenographic notes of a discussion by a lawyer of Jaroda about the said order. The discussion, however, took place on 19 March 1966 while the order was issued on 13 September 1965, and there is nothing in the discussion that may indicate knowledge by Jaroda of the order before, at or immediately after its issuance.

It has been broadly stated that an administrator is not permitted to deal with himself as an individual in any transaction concerning trust property. (Pesula's Estate, 64 ALR 2d 851, 150 Cal. App. 2d 462, 310 P 2d 39)

It is well settled that an executrix holds the property of her testator's estate as a trustee. In re Heydenfeldt's Estate, 117 Cal. 551, 49 P. 713; Firebaugh v. Burbank, 121 Cal. 186, 53 P. 560. It is equally well settled that an executrix will not be permitted to deal with herself as an individual in any transaction concerning the trust property. Civil Code, S 2230. In Davis v. Rock Creek L., F. & M Co., 55 Cal. 359, at page 364, 36 Am. Rep. 40, it is said: 'The law, for wise reasons, will not permit one who acts in a fiduciary capacity thus to deal with himself in his individual capacity.' The following cases are to the same effect: Wickersham v. Crittenden, 93 Cal. 17, 29, 28 P. 788; Sims v. Petaluma Gas Light Co., 131 Cal. 656, 659, 63 P. 1011; Western States Life Ins. Co. v. Lockwood, 166 Cal. 185, 191, 135 P. 496; In re Estate of Parker, 200 Cal. 132, 139, 251 P 907, 49 A. L. R. 1025. In Wickersham v. Crittenden, supra, 93 Cal. at page 29, 28 P. at page 790, it is further stated in respect to a transaction wherein a trustee sought to deal with trust property: 'Courts will not permit any investigation into the fairness of the transaction, or allow the trustee to show that the dealing was for the best interest of the beneficiary.' This language is quoted with approval in the case of Pacific Vinegar & Pickle Works v. Smith, 145 Cal. 352, 365, 78 P. 550, 104 Am. St. Rep 42. (In re Bogg's Estate, 121 P. 2d 678, 683).

The opinion of some commentators that, as a general rule, auto-contracts are permissible if not expressly prohibited (See Tolentino, Civil Code of the Philippines, Vol. IV 1962, pages 375-377), and that there is no express provision of law prohibiting an administrator from appointing himself as his own agent, even if correct, cannot and should not apply to administrator of decedent's estates, in view of the fiduciary relationship that they occupy with respect to the heirs of the deceased and their responsibilities toward the probate court. A contrary ruling would open the door to fraud and maladministration, and once the harm is done, it might be too late to correct it. A concrete example would be for administrator Tan to authorize agent Tan to sell a lot for P50, with the condition that if he can sell it for more he could keep the difference; agent Tan sells the lot for P150.00; he retains P100.00 and deposits in the bank P50.00 "in the name of Antonio V. A. Tan, in trust for Juna Subdivision" (as worded in the power of attorney. Annex "F-1"); thus, administrator Tan's accounting to the estate for the sale of the lot for P50 would be in order, but the estate would have been actually cheated of the sum of P100, which went to agent Tan in his individual capacity.

The court below also failed to notice that, as alleged in the administrator's petition (Annex "F" herein), after the death of Carlos Villa Abrille the administrator Tan, in his personal capacity, had replaced said deceased as manager of the Juna Subdivision by authority of the other co-owners. By the court's questioned order of 3 September 1965 empowering him to represent the interest of the deceased in the management of the subdivision, the administrator Tan came to be the agent or attorney-in-fact of two different principals: the court and the heirs of the deceased on the one hand, and the majority co-owners of the subdivision on the other, in managing and disposing of the lots of the subdivision. This dual agency of the respondent Tan rendered him incapable of independent defense of the estate's interests against those of the majority co-owners. It is highly undesirable, if not improper, that a court officer and administrator, in dealing with property under his administration, should have to look to the wishes of strangers as well as to those of the court that appointed him. A judicial administrator should be at all times subject to the orders of the appointing Tribunal and of no one else.

That petitioner Jaroda, as heir of the late Carlos Villa Abrille, should hold a minor interest (¹/¹¹ of 19%) in the co-ownership known as the Juna Subdivision and that the early termination of said co-ownership would redound to the benefit of the co-owners, including the heirs of Carlos Villa Abrille, are beside the point. Jaroda's interest in the estate demands that she be heard by the court in all matters affecting the disposal of her share, and that the administrator should primarily protect the interest of the estate in which she is a participant rather than those of the decedent's co-owners.

The resolution of this Court in L-27836 (Natividad V. A. Jaroda vs. the Hon. Vicente N. Cusi, Jr., etc., et al.), dismissing the petition for certiorari and/or mandamus and stating that appeal in due time is the remedy, is no bar to the present petition, for it has not been shown that the allegations in both the dismissed petition and those of the present one are substantially the same. Anyway, certiorari lies if appeal would not be prompt enough to block the injurious effects of the orders of the lower court (Silvestre vs.

Torres, et al., 57 Phil. 885; Pachoco vs. Tumangday, L-14500, 25 May 1960; Mayormente vs. Robaco Corp., L-25337, 27 Nov. 1967, 21 SCRA 1080).

After the present case was submitted for decision, respondent Tan manifested that the co-owners of the Juna Subdivision and the heirs of the late Carlos Villa Abrille, including the petitioner Natividad V. A. Jaroda, had executed a partial partition and the same has been approved by the probate court. Said approved partial partition has no effect, one way or the other, upon the orders contested in the present case. For one thing, it is not definite whether the lots described in the 57 pages of the partition agreement correspond to those of the Juna Subdivision as described in the power of attorney.

FOR THE FOREGOING REASONS, the order of 5 May 1965 and 3 September 1965 of the Court of First Instance of Davao, Branch I, in its Special Proceeding No. 1391, are hereby set aside and declared null and void. The preliminary injunction heretofore issued is hereby made permanent. Costs against the respondent, Antonio V. A. Tan, in his personal capacity.

Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, JJ., concur.

1äwphï1.ñët The Lawphil Project - Arellano Law Foundation

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-12880             April 30, 1960

FLORA A. DE DEL CASTILLO, ET AL., plaintiffs-appellants, vs.ISABEL S. DE SAMONTE, defendant-appellee.

Sergio F. del Castillo for appellants.San Juan, Africa and Benedicto for appellees.

REYES, J. B. L., J.:

Appeal from a decision of the Court of First Instance of Negros Occidental dismissing plaintiffs' complaint for recovery of 1/2 interest in Certificates of Stock Nos. 1704 and 1706 of the Ma-ao Sugar Central Co., Inc., of Bago, Negros Occidental allegedly sold by Luisa Vda. de del Castillo to the defendant Isabel S. de Samonte.

The essential facts are not in dispute. It appears that in September, 1944, Clemente del Castillo died intestate in Pasay City. In October, 1944, his widow, Luisa Vda. de del Castillo, sold to defendant Isabel S. de Samonte 2,000 shares of stock in the Ma-ao Sugar Central Co., Inc., as follows:

Date Sold Stock Certificate

No.

No. of Shares

October 10, 1944 .................

1654 840

October 21, 1944 .................

774-886 (1653)

210

October 21, 1944 .................

1098 950

On October 26, 1945, administration proceedings were began in the Court of First Instance of Negros Occidental of the intestate estate of Clemente del Castillo (Special Proceeding No. 168 of said Court). On December 15, 1945, Luisa A. Vda. de del Castillo was appointed Administratrix of the estate.

On July 16, 1946, Isabel S. de Samonte, vendee of the shares of stock abovementioned, filed Civil Case No. 569 of the Court of First Instance of Rizal (now

Pasay City) for specific performance in order to recover the shares of stock abovementioned, allegedly sold to her. On September 4, 1948, the Court of First Instance of Rizal (now Pasay City) in said case rendered judgment by default against Luisa Vda. de del Castillo, ordering her to deliver the certificates of stock in question. This judgment, not having been appealed from, has long become final and executory.

In 1949, Luisa A. Vda. de del Castillo (who had in the meantime been appointed Administratrix of her husband's estate), represented by Raul del Castillo, and defendant-appellee Isabel S. de Samonte, thru her lawyers, substituted Certificates of Stock Nos. 1704 and 1706 of the Ma-ao Sugar Central Co., Inc., in lieu of Certificate of Stock No. 1098, one of the certificates sold in 1944.

On October 10, 1950, Luisa A. Vda. de del Castillo, as Administratrix of the estate of Clemente del Castillo, petitioned the probate court in Special Proceeding No. 168 to confirm the sale of Certificates of Stock Nos. 1704 and 1706, alleging that their sale was absolutely necessary for the subsistence of the surviving spouse and family of the deceased in the City of Manila during the most critical period of the Japanese occupation. On October 19, 1950, the probate court issued an order refusing to act on the petition to confirm the sale until after there was proof that the heirs had been notified of its hearing.

On September 18, 1951, the buyer Isabel S. de Samonte filed a petition in the probate court alleging that she had caused to be served on all the heirs of the estate of Clemente del Castillo a copy of the Administratrix's petition of October 10, 1950, together with his own petition, with notice that the same would be submitted for consideration and approval of the Court on September 29, 1951. Samonte's petition, with attached copy of Administratrix's petition of October 10, 1950, prayed that this latter petition by the Administratrix be given due course.

On September 29, 1951, the heirs of Clemente del Castillo did not attend, and the probate court, after a hearing conducted, confirmed and approved the sale of Certificates of Stock Nos. 1704 and 1706 to defendant-appellee Isabel S. de Samonte. After his two motions for reconsideration were denied by the probate court, the heir Sergio F. del Castillo (one of the plaintiffs-appellants herein) appealed to the Court of Appeals.

On August 26, 1953, the Court of Appeals in C.A.-G.R. No. 9189-R, affirmed the order of the probate court of September 29, 1951, confirming the sale of Certificates of Stock Nos. 1704 and 1706. A petition for a writ of certiorari filed in the Supreme Court was dismissed for lack of merit on October 27, 1953.

On January 4, 19,54, Civil Case No. 2901, the subject-matter of this present appeal, for recovery of a ½-interest in the shares covered by Stock Certificates Nos. 1704 and 1706, was filed in the Court of First Instance of Negros Occidental, with the heirs of the late Clemente del Castillo as plaintiffs, and Isabel S. de Samonte, as defendant. By subsequent amendments to the complaint Luisa Vda. de del Castillo (as vendor of the

shares in question), Raul del Castillo, and the Ma-ao Sugar Central Co., Inc., were joined with Samonte as defendants in the case. Luisa Vda. de del Castillo and Raul del Castillo, failing to answer, were declared in default.

On July 31, 1957, judgment was rendered by the trial court dismissing plaintiffs' complaint, based mainly on its opinion that the decision of the Court of Appeals in C.A.-G.R. No. 9189-R, affirming the order of the probate court of September 29, 1951, is res judicata in the present case. Hence, the instant appeal.

For brevity, the assignments of error of plaintiffs-appellants, so far as relevant to the disposition of this appeal, can be summarized as follows:

1. That Certificates Nos. 1704 and 1706 are conjugal property of the spouses Clemente del Castillo and Luisa Vda. de del Castillo, and, consequently, the sale made by the widow of these stocks, so far as relates to the ½ portion belonging to the estate of the late Clemente del Castillo is null and void; that what Luisa Vda. de del Castillo sold were only her "rights, title, and interest" in the stocks in question, as per the Deeds of Sale executed in 1944; that therefore, the probate court had no authority to confirm and approve a sale which, being null and void, was non-existent. (Errors II, V).

II. That the confirmation of the sale is null and void because the Administratrix's Petition of October 10, 1950 and the notice given by Samonte in his motion of September 18, 1951, are not sufficient compliance with paragraphs (a) and (b), Section 7, Rule 90 of the Rules of Court; that Samonte not being a creditor of the estate, it was improper for the probate court to have allowed her to intervene. (Errors IV, VII).

III. That the decision of the Court of Appeals in C.A.-G.R. No. 9189-R is not res judicata for the following reasons:

1. That the probate court had no jurisdiction to pass upon question of title or ownership.2. That there is no identity of parties, subject-matter and cause of action.3. That the Court of Appeals in C.A.-G.R. No. 9189-11 had no jurisdiction as only questions of law were involved and it was therefore within the exclusive appellate jurisdiction of the Supreme Court (Errors VII, IX).

The contention that Luisa A. Vda. de del Castro can not sell the ½ portion belonging to the estate, and that the probate court had no authority to confirm such sale, assuming that the stocks in question are conjugal, is untenable (Errors II, V). Section 4, Rule 90 of the Rules of the Court provides:

Sec. 4. When Court May Authorize sale of estate as beneficial to interested person. 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 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 provision of a will.

As Administratrix of the estate, Luisa A. Vda. de del Castillo could sell property of the estate with authority of the probate court under the above provision. Whether the sale is considered to have taken place in 1949 (at the time Certificates of Stock Nos. 1704 and 1706 were substituted in lieu of Stock Certificate 1098) or in 1944, will make no difference because the issuance of letters testamentary relates back to the time of the decedent's death and validates the acts of the representative done in the interim which are otherwise lawful and proper (See C.J.S. Vol. 33, p. 1113). In her petition of October 10, 1950, Luisa A. Vda. de Del Castillo, as Administratrix, alleged that the sale was absolutely necessary for the subsistence of herself and her family during the most critical period of the Japanese occupation. By virtue of Section 4, Rule 90 above, the probate court had jurisdiction to authorize or approve the sale made, pursuant to the Administratrix's petition.

Under Errors IV and VII, plaintiffs-appellants assail the validity of the order of the probate court confirming the sale of Stock Certificates 1704 and 1706, claiming that the procedure adopted was not in compliance with the pertinent provisions of the Rules of Court on the matter as to notice to the heirs, etc. However, it appears that these question have already been raised in C.A.-G.R. No. 9189-R wherein the order of the probate court approving the sale of Stock Certificates 1704 and 1706 was upheld. At any rate, it is settled that a:

Judgment is conclusive not only upon questions actually contested but upon all matters which might have been litigated and decided, and the estoppel applies where defenses which were available in the first action but not set up are sought to be used in a second action, either by way of defense or as the foundation of a claim for relief. (Soriano vs. de Leon, et al., L-7863, Aug. 31, 1959; Aragon, et al., March 30, 1959).

Plaintiffs-appellants, however, further contend that the decision of the Court of Appeals in C.A.-G.R. No. 9189-R cannot be res judicata because a probate court may not pass upon questions of ownership, and that, therefore, in taking cognizance of the appeal, the Court of Appeals did not likewise pass upon such questions. That a probate court may not pass upon questions of title cannot be doubted, but this principle does not apply in this case. What the probate court in Special Proceeding No. 168 did was merely to confirm or approve the sale of Stock Certificates 1704 and 1706 made by the Administratrix to defendant-appellee, Isabel S. de Samonte; and this, by virtue of Section 4. Rule 90, the probate court had authority to do (See Roa vs. De la Cruz, 103 Phil., 116; 55 Off. Gaz., [31 438).

It is claimed further for plaintiffs-appellants that there is no identity of parties in C.A.-G.R. No. 9189-R and the present case. This is untenable. As to the heir Sergio del Castillo, since he was the one who appealed the order of the probate court, and the decision of the Court of Appeals aforementioned is now final, he is bound by said decision and may not raise the question again. As to the other heirs joined as plaintiffs-appellants in this case, they could have also appealed the order of the probate court approving the sale of Stock Certificates 1704 and 1706, because an interested party may appeal in special proceedings from an order of the court where the order is a final determination of his rights. (Rule 105, sec. 1(e); Tambunting De Tengco vs. Hon. San Jose, 97 Phil., 491). Since an order of the probate court relating to sale of property of the decedent is of final character and appealable (Dais vs.Carduño, 49 Phil., 165), the failure of the other heirs to appeal therefrom makes the order final and conclusive as to them also.

As to the other aspects of res judicata, it is settled that notwithstanding the difference in the form of two actions, the doctrine of res judicata will apply where it appears that the parties are in effect "litigating for the same thing." A party cannot, by varying the form of his action, or adopting a different method of presenting his case, escape the effects ofres judicata (Aguirre vs. Atienza, 104 Phil., 477; also Geronimo vs. Nava 103 Phil., 145;57 Off. Gaz. [24] 4417; Labarro vs. Labitoria, 28 Off. Gaz., 4479). Here, it cannot be seriously questioned that the parties are litigating for the same thing, namely, the ½ interest in Stock Certificates 1704 and 1706.

Finally, as to plaintiffs-appellants' contention that the Court of Appeals in C.A.-G.R. No. 9189-R had no jurisdiction as only questions of law were involved, an examination of the decision therein rendered shows that while predominantly, the questions were of law, they were interlaced with factual issues (C.A.-G.R. No. 9189-R; Rec. App. pp. 37 et seq.).

The foregoing discussion makes consideration of the other assignments of error irrelevant.

Wherefore, the decision appealed from is affirmed, with costs against plaintiffs-appellants.

Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia and Gutierrez David, JJ.,concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-20735             August 14, 1965

GLICERIA C. LIWANAG, Special Administratrix of the Estate of PIO D. LIWANAG, petitioner, vs.HON. COURT OF APPEALS, HON. JESUS DE VEYRA, as Judge of the Court of First Instance of Manila, and MANUEL AGREGADO, respondents.

C. M. Baltazar and A. P. Narvasa for petitioner.Manuel P. Calanog for respondents.

CONCEPCION, J.:

Appeal by certiorari from a decision of the Court of Appeals.

Petitioner Gliceria C. Liwanag is the special administratrix of the estate of Pio D. Liwanag, the settlement of which is the subject of Special Proceeding No. 46599 of the Court of First Instance of Manila. On January 9, 1962 respondent Manuel Agregado commenced against her as such special administratrix, Civil Case No. 50897 of the same court, for the foreclosure of a real estate mortgage constituted in his favor by said Pio D. Liwanag during his lifetime. On July 18, 1962, here petitioner moved to dismiss Agregado's complaint, upon the ground that as special administratrix she cannot be sued by a creditor of the deceased. In an order dated August 1, 1962, respondent, Hon. Jesus de Veyra, as Judge of said court, denied the motion, whereupon petitioner filed case CA-G.R. No. 31168-R of the Court of Appeals against respondent Judge and Agregado, to annul said order by writ of certiorariand enjoin said Judge from entertaining said Case No. 50897. Upon petitioner's motion, the Court of Appeals issued a writ of preliminary injunction directing respondent Judge to refrain from proceeding with the trial of that case, until further orders. However, subsequently, or on December 3, 1962, the Court of Appeals rendered a decision denying the writ prayed for and dissolving said writ of preliminary injunction, with costs against the petitioner. Hence this appeal taken by petitioner upon the theory that, pursuant to Section 2, Rule 81 of the (old) Rules of Court, "a special administrator shall not be liable to pay any debts of the deceased," and that, accordingly, Agregado has no cause of action against her as a special administratrix.

In as much, however, as the alleged absence of a cause of action does not affect respondent's jurisdiction to hear Case No. 50897, it follows that the denial of petitioner's motion to the same, even if it were erroneous, is reviewable, not by writ of certiorari, but

by appeal, after the rendition of judgment on the merits. Moreover, the theory that a mortgagee cannot bring an action for foreclosure against the special administrator of the estate of a deceased person has already been rejected by this Court. In Liwanag vs. Hon. Luis B. Reyes, G.R. No. L-19159 (September 29, 1964), involving the same petitioner herein, the same estate of the deceased Pio D. Liwanag, a similar action for foreclosure, although of another mortgage and an identical motion to dismiss and issue, we expressed ourselves as follows:

The defendant Gliceria Liwanag filed a motion to dismiss the complaint for foreclosure, on the theory that she may not be sued as special administratrix.

x x x           x x x           x x x

Section 7 of Rule 86 of the New Rules of Court provides that a creditor holding a claim against the deceased, secured by a mortgage or other collateral security, may pursue any of these remedies: (1) abandon his security and prosecute his claim and share in the general distribution of the assets of the estate; (2) foreclose his mortgage or realize upon his security by an action in court, making the executor or administrator a party defendant, and if there is a deficiency after the sale of the mortgaged property, he may prove the same in the testate or intestate proceedings; and (3) rely exclusively upon his mortgage and foreclose it any time within the ordinary period of limitations, and if he relies exclusively upon the mortgage, he shall not...share in the distribution of the assets.

Obviously, the herein respondent has chosen the second remedy, having filed his action for foreclosure against the administratrix of the property.

Now the question arises as to whether the petitioner herein can be sued as special administratrix. The Rules of Court do not expressly prohibit making the special administratrix a defendant in a suit against the estate. Otherwise, creditors would find the adverse effects of the statute of limitations running against them in cases where the appointment of a regular administrator is delayed. So that if We are not to deny the present action on this technical ground alone, and the appointment of a regular administrator will be delayed, the very purpose for which the mortgage was constituted will be defeated.

WHEREFORE, the decision appealed from is hereby affirmed, with costs against the petitioner. It is so ordered.

Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.Barrera, J., is on leave.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-16584             November 17, 1921

EUSEBIO A. GODOY, plaintiff-appellee, vs.GUILLERMO ORELLANO, ET AL., defendants. FELISA PAÑGILINAN, PAZ ORELLANO assisted by her husband FRANCISCO MARTINEZ, JOSE ORELLANO, and DEMETRIO ORELLANO, defendants-appellants.

Francisco Sevilla for appellant Pañgilinan.No appearance for the other appellants. Teofilo Mendoza for appellee.

 

VILLAMOR, J.:

On January 13, 1919, in consideration of the amount of P1,000 received by the appellant, Felisa Pañgilinan, a document was executed by her giving the appellee, Eusebio A. Godoy, an option to buy a dredge for the sum of P10,000. It appears from that document that the dredge is the common property of the vendor and of the brothers Demetrio, Jose, Guillermo, Alfredo, and Paz, all surnamed Orellano; that the condition was that Godoy was to pay the whole price of the dredge within twenty days; and that said option was granted in accordance with the power of attorney executed by her coowners who reserved the right to ratify whatever sale might be made, or option granted by Pañgilinan, their attorney-in-fact. The latter's coowners did not ratify the option contract. Before the expiration of twenty days, the appelle was ready to make complete payment of the price, but the appellant failed to deliver the dredge. Then the appellee brought suit in the Court of First Instance against Feliza Pañgilinan, Paz Orellano, Jose Orellano, Demetrio Orellano, Guillermo Orellano, and Alfredo Orellano, praying that they be ordered to deliver the dredge, upon payment by him of the sum of P9,000; to pay him the sum of P10,000 as damages, and to return to the plaintiff the sum of P1,000 should the carrying out of the sale become impossible.

The defendants Orellano set up in their answer a general denial of the facts alleged in the complaint and, as a special defense, alleged that the dredge in question was the property of the intestate estate of Julio Orellano, pending in the Court of First Instance of Manila, and under the administration of Felisa Pangilinan; that the plaintiff perfectly knows that said dredge is under judicial control and could not be disposed of without judicial authority, and that the court has never authorized the sale mentioned in the

complaint filed herein; and that the defendants Jose, Guillermo, and Alfredo surnamed Orellano are at present under age, and the defendant Paz Orellano is a married woman who had not obtained the consent of her husband before executing the power of attorney in favor of the administratrix.

The defendant Felisa Pañgilinan filed a separate answer, and a defense alleges: (a) That the dredge which was the subject-matter of the option is property of the intestate estate of Julio Orellano, of which she is the administratrix; (b) that the plaintiff, as well as the defendants, and the notary who prepared the aforesaid option sale, were all aware of these facts, and they led her to believe that she had the authority to dispose of the dredge in her name and by themselves; (c) that believing herself to be under obligation to comply with the aforesaid option deed, she applied to the court of probate for permission to sell the dredge in the sum of P10,000; (d) that on the day of the hearing of the motion, her codefendants who had themselves authorized her by means of a power of attorney, opposed the motion through their attorneys, Francisco and Lualhati, on the ground that there were higher bidders and the best thing to do was to sell it at public auction; (e) that in view of this opposition, the administratrix asked the court that it be sold at public auction, and the court authorized said defendant to sell it at public auction, advertising the sale in newspapers of general circulation, and the aforesaid dredge was sold for P10,000, accordingly; ( f ) that the defendant did not at any time refuse to make delivery of the dredge to the plaintiff, but that it was the court that would not give her the authority to do so; and (g) that she is all times ready to return the P1,000 received from the plaintiff and that she has tendered it several times, but that the plaintiff refused to accept it.

The judge a quo rendered judgment, ordering the defendants to pay Eusebio A. Godoy the sum of P2,000 with legal interest thereon from February 13, 1919, and the cost and dismissing the complaint as against the defendants Guillermo Orellano and Alfredo Orellano.

From this judgment the defendants have appealed to this court by bill of exceptions.

By a resolution of this court of September 14, 1920, the appeal of the defendants Paz Orellano, Jose Orellano and Demetrio Orellano was declared abandoned for failure to file their brief within the period prescribed by the rules of the court. Wherefore, this decision concerns only the appeal taken by Felisa Pañgilinan.lawphil.net

It appears from the evidence that the dredge in question belongs to the intestate estate of Julio Orellano, father of the defendants, which was pending in the Court of First Instance of Manila, of which the judicial administratrix is the defendant herein, Felisa Pañgilinan; that when this defendant contracted with the plaintiff Godoy the sale of the aforesaid dredge, she had no authority of the court; and that the plaintiff knew that the dredge, which was the subject-matter of that contract, belonged to the intestate estate of Julio Orellano, under the control of the court.

In the sale of the property of an intestate estate for the benefit of the heirs, it is necessary to comply with the provisions of sections 717, 718, and 722 of the Code of Civil Procedure. The said sections prescribed the proceedings to be had before an administrator of an intestate or testate estate may sell personal or real property and also the conditions under which the personal or real property pertaining to an estate may be sold or disposed of by the administrator. Unless compliance is had with the provisions of these sections, the sale of the aforesaid dredge by the administratrix, or her promise to sell it is null and void.

A sale and conveyance by executors without an order of the probate court, under a will devising property to them in trust, but not authorizing any sale of the realty, otherwise than by a direction to pay the debts of the testator, is void, and passes no title to the purchase. (Huse vs. Den, 85 Cal., 390.)

A sale by an administrator of the personal property of the estate, without the authority of an order of court, or of a will, or under an order of court which is void for want of jurisdiction, does not confer on the purchaser a title which is available against a succeeding administrator. (Wyatt's Adm'r vs. Rambo, 29 Ala., 510.)

Under the law, the court has exclusive jurisdiction to authorize the sale of properties like the one under consideration and the power of attorney executed by the heirs of Orellano in favor of the administratrix, without authority of court, has no legal effect, and this is the more so, since two of the said heirs are under age, and the others did not ratify the option contract, as provided in the aforesaid power of attorney.

It is not necessary to dwell longer upon this point, as the appellee himself admits in his brief "that the dredge in question being a part of the intestate estate of Julio Orellano, it cannot be disposed of by any person without the proper authority of the court, in accordance with the existing laws."lawphil.net

In view of the foregoing, we are of the opinion, and so hold, that the appellant was not, in her capacity as judicial administratrix of the intestate estate of Julio Orellano, legally authorized to sell, or contract to sell, any property belonging to said estate without the authority of the court, and the contract entered into by her with the plaintiff, without this authority, is null and void.

The judgment appealed from is reversed and the complaint against the appellant Felisa Pañgilinan is hereby dismissed, without special finding as to costs. So ordered.

Johnson, Araullo, Street and Avanceña, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-349            September 30, 1948

Intestate estate of the late Eulalio Ilagan Bisig; Santos Ilagan, administrator. ESTEFANIA R. VDA. DE CRUZ,petitioner-appellant, vs.JESUS ILAGAN, ET AL., oppositors-appellees.

Lauro S. Esteban for appellant.Arturo A. Alafriz for appellees.

TUASON, J.:

This is an appeal from an order of the Court of First Instance of Nueva Ecija in an intestate proceeding disapproving the sale of two parcels of land by the administrator to the present appellant and her husband, since deceased.

It appears that under date of September 5, 1941, the administrator, one of the children and heirs of the decedent, executed "an absolute deed of sale" over two parcels of land for P18,000 in favor of Severo Cruz and his wife. On September 18, the administrator submitted the deed to the court with a corresponding motion bearing the same date as the deed of conveyance for approval. All the other children and heirs of the decedent, four in number and all of lawful age, gave their approval and conformity to the sale and to the administrator's motion by signing with appropriate expressions both papers. The motion with the deed attached was set for hearing for September 22, 1941, but for reasons not appearing on the record, it seems that this motion was not acted upon.

On December 18, 1943, the heirs of the deceased, except Santos Ilagan, the administrator, filed a written opposition to the sale. On June 30, 1944, Judge Quintin Paredes, Jr., sustained the opposition holding that the sale was "improper." Judge Paredes said "that the sale was, in effect, primarily, intended to pay the mortgage debt, and to sell the aforesaid property preferentially to the mortgagee.

The grounds of the opposition were that "the price fixed in the motion is not reasonable under the present condition, because now the two parcels of land command a better and higher price than P18,000 as fixed in the executory contract of sale in favor of the mortgagees, Severo Cruz and Estefania Rodriguez de Cruz, which will be beneficial to the estate." In this instance, the appellees maintain that the properties, which were the subject matter of the sale, being in custodia legis, the sale "could only be validly

affected under and by virtue of an express authority of the Court having cognizance of the proceedings and only upon strict compliance with the formalities prescribed by law.

A case in point is Teves de Jakosalem vs. Rafols,1 No. 28372, July 24, 1942, 2 Off. Gaz., 31, 32. We will quote at length from the decision as we think it is decisive of the main issue in the present case.

The lower court absolved Nicolas Rafols upon the theory that Susana Melgar could not have sold anything to Pedro Cui because the land was then in custodia legis, that is, under judicial administration. This is error. That the land could not ordinarily be levied upon while in custodia legis, does not mean that one of the heirs may not sell the right, interest or participation which he has or might have in the lands under administration. The ordinary execution of property in custodia legis is prohibited in order to avoid interference with the possession by the court. But the sale made by an heir of his share in an inheritance, subject to the result of the pending administration, in no wise, stands in the way of such administration.

Article 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 states left with respect to the part of portion which might be adjudicated to him, a community of ownership being thus formed among the co-owners of the estate which it remains undivided.' (3 Manresa, 357; Alcala, 35 Phil., 679.) 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 alloted him in the portion upon dissolution of the community. Hence in the case of Ramirez vs. Bautista, 14 Phil., 528, where some of the heirs, without the concurrence of the other, sold a property left by their deceased father, this Court, speaking through its then Chief Justice Cayetano Arellano, said that the sale was valid, but the effect thereof was limited to the share which may be allotted to the vendors upon the partition of the estate.

It results therefore that the sale made by Susana Melgar in favor of Pedro Cui was valid, but it would be effective only as to the property left by her deceased father, Juan Melgar. And as on December 12, 1920, upon the partition of said property the land in question was adjudicated to Susana Melgar, the sale of the whole land which the latter made in favor of Pedro Cui was entirely confirmed.

The appellee distinguish the above case from the case at bar in that, it is argued, in the former the heir personally made the sale while in the latter the seller was judicial administrator. But the distinction thus noted goes to mere form. In their effects and in the underlying principles, the two cases are analogous. The appellees by signing the deed of sale in token of approval bound themselves as completely and as effectively as

if they had signed the document as vendors, or co-vendors with the administrator. If they had executed a separate document authorizing the sale the result could not have been any different. What else could be the meaning and effect of their approval and conformity? "A sale which the representative makes, with the written assent of all legatees or distributees of the estate, is in effect their sale as well as his, and, if made in good faith, ought to bind strongly provided that all the persons assenting are sui juris." 3 Schouler on Wills, Executors and Administrators, section 2366, p. 2187.

We believe that estoppel is well pleaded. "Heir, by their conduct in remaining silent when a sale of a decedent's property is made by the executor or administrator, or by so conducting themselves as to consent or assent in the consummation of the sale, may estop themselves from subsequently questioning the validity of the sale." 21 Am. Jur., p. 756.

The applicable estoppel by deed, a bar which precludes a party from denying the truth of his deed. Prejudice is not an essential element of this kind of estoppel.

However, equitable estoppel or estoppel by misrepresentation fits as well into the facts of this case. Disapproval of the sale would result in material injury or detriment of the vendees.

It will be noted that, although neither the administrator nor the other heirs received any part of the proceeds upon the consummation of the sale or afterward, except a promissory note for P2,100 payable in 60 days, it is a fact that the estate owed the vendees P12,000 exclusive of interest. Of this amount P4,500 had been received by the decedent himself in his lifetime, and the remainder, P7,500, by the administrator avowedly for the benefit of the estate. The latter amount was secured by a mortgage on the land sold; and authority for the loans by the administrator and the execution of the mortgage was obtained with the express and written conformity of all the heirs. All the loans bore 12 per cent interest per annum.

By reason of the sale, and relying on the good faith of these heirs, the vendees, it is inferred from the contract, agreed to the cancellation of the mortgage and stopped collecting interest. With the loans cancelled, the mortgage or mortgages were not foreclosed upon the expiration of their terms. According to the administrator, in his request for authority to sell, he had not paid interest on the entire loan since 1939.

To disallow estoppel against the appellees in the face of these circumstances would be to allow them to profit by their own wrong and inconsistency at the expense of innocent parties.

Under the circumstances, the probate court should have approved the sale. The subsequent increase in value of the property was not a sufficient reason for turning down the conveyance. This should be true particularly where, as in this case, the alleged inadequacy of price was based on war-time and invasion money standard, inadequacy which emerged after the sale and which could not have been availed of if

the court had not unduly delayed action on the motion for approval or disapproval of a sale by an administrator is the interest of innocent heirs, legatees, devises and, above all, creditors. In the present case, it is an admitted fact that there are neither claims against the estate nor heirs other than the administrator and the appellees. Unless fraud, mistake or duress intervened in the sale — and there is no charge that any of these vices intervened — the heirs by their assent placed themselves outside the protection of the court. They can not be heard to say that the sale was detrimental to their interest.

The heirs being estopped from blocking the sale, and the opposition disregarded, the court had before it an agreement, not contrary to law, entered into by the only parties interested in the estate regarding the disposition of the estate's assets. Viewed in this light, the court had no discretion to disapproved the agreement. It has been held that, when there are no creditors or all the debts have been paid, "the heirs have the right to ask the probate court to turn over to them both real and personal property without division; and where such request unanimous, it is the duty of the court to comply with it, and there is nothing in section 753 of the Code of Civil Procedure (now section 1, Rule 9, of the Rules of Court) which prohibits it." (Del Val vs. Del Val, 29 Phil., 534-539.) The right to demand the delivery of property includes the right to dispose of it in the manner the heir please.

The court seemed to believed that the administrator, rather than sell the mortgaged property to the creditor, as he did, should have allowed the mortgage to take its course. Disregarding the fact that it is no concern of the court to inquire into the judiciousness of a sale when all interested parties have given their assent, the evidence is against the belief that if the mortgage had been foreclosed, the property could have commanded a better price at an auction sale. The administrator said in his request for permission to sell, a request concurred in by all the other heirs, that the lands which he proposed to convey to the mortgagees "cannot command a better and higher price, there being a possibility of its being eroded by the Pampanga river." The administrator was presumed to know whereof he spoke, and so were the appellees. They were all of age and must have been familiar with the prevailing prices of lands in their municipality. Moreover, the administrator was a lawyer and signed some of his motions both as administrator was a lawyer and signed some of his motions both as administrator and as attorney for his brothers and sisters. Experience shows that public sales seldom bring better results than private sales.

It is said that the sale was conditional. The alleged condition is said to be embodied in this clause of the deed of sale: "That from the approval of this sale, the said Severo Cruz and Estefania Rodriguez de Cruz, their heirs and assigns, shall have the sole and absolute dominion and ownership and actual and legal possession of the above described properties, good and valid title thereto being hereby warranted.

The question ceases to have any practical value after it is ruled that the court is bound to approved the sale. Nevertheless, we will take it up if only to show that this contention is without merit.

We do not construe the aforesaid stipulation as a condition precedent to the validity and effectiveness of the sale. It is merely a covenant that, as the lands were in the custody of the court and might not be taken out of that custody without the court's permission, even though the granting of the permission be mandatory, material possession of the parcels should not be delivered till the court's approval was secured. This is the view that accords with the words of the entire instrument and the purposes of the parties as gathered from their action. The heading of the conveyance is "Deed of Absolute sale," and the vendors stated in the deed, "I do hereby sell, cede, transfer and convey by way of absolute sale, etc." The facts that, as has been seen, all the previous transactions and pending accounts between the parties were liquidated, that the balance resulting from the liquidation was charge to the sale price, and that the loans liquidated ceased to earn any interest, add to the cogency of the proposition that the sale was final and definite in the minds of the parties, leaving nothing but the pro forma sanction of the probate court.

Pushing the argument further, it should be noted that the disapproval (granting that approval was a condition precedent), was caused by the heirs themselves, and that, had no objection been offered by them there would have been little likehood of the approval being withheld. The point is that a party to a contract may not be excused from performing his promise by the non-occurrence of an event which he himself prevented.

The order appealed from is reversed and the court below shall enter a new order approving the sale and ordering the delivery of the lands in question to the vendees or their successors in interest, with costs against the appellees.

Paras, Pablo, Perfecto, Bengzon, and Briones, JJ., concur.

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.

D E C I S I O NGARCIA, 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 Agustins 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

ofP570,000.00. Agustin signed the document in behalf of (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 P5,000,000.00 to be secured by the land covered by OCT No. P-7131 of the Registry of Deeds of Davao Oriental, but denied Agustins prayer for declaration of heirs for being premature.

On October 22, 1974, a real estate mortgage contract for P4,500,000.00 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 Agustins 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 respondentArturo 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 Josephines 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. 16,802which 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 Argunas 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 decisions 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.

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 Agustins Petition for Authority to Increase Mortgage;

2. Order dated October 19, 1974, denying Agustins 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.

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 Agustins 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 CAs 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 Agustins 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;

(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]

As it were, the appellate court offered little explanation on why it did not believe the trial court in its finding that petitioners were ignorant of Agustins scheme to mortgage and sell the estate properties.

Aside from merely quoting the orders of July 18, 1973 and October 19, 1974 of the intestate court, the Court of Appeals leaves us in the dark on its reason for disbelieving the trial court. The appellate court did not publicize its appraisal of the evidence presented by the parties before the trial court in the matter regarding the knowledge, or absence thereof, by the petitioners of Agustins petitions. The appellate court cannot casually set aside the findings of the trial court without stating clearly the reasons therefor. Findings of the trial court are entitled to great weight, and absent any indication to believe otherwise, we simply cannot adopt the conclusion reached by the Court of Appeals.

Laches is negligence or omission to assert a right within a 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 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 conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. [17]

In the present case, the appellate court erred in appreciating laches against petitioners. The element of delay in questioning the subject orders of the intestate court is sorely lacking. Petitioners were totally 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 with Agustin. Although petitioners finally obtained knowledge of the subject petitions filed by their father, and eventually challenged the July 18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981 orders of the intestate court, it is not clear from the challenged decision of the appellate court when they (petitioners) actually learned of the existence of said orders of the intestate court. Absent any indication of the point in time when petitioners acquired 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.

WHEREFORE, the assailed issuances of the Court of Appeals are hereby REVERSED and SET ASIDE and the decision dated August 7, 1998 of the trial court in its Civil Case No. 16,802 REINSTATED.

SO ORDERED.Panganiban, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales,

JJ., concur.

[1] Penned by Associate Justice Perlita J. Tria Tirona and concurred in by then Acting Presiding Justice (now deceased) Eubolo G. Verzola and then (now retired) Associate Justice Bernardo P. Abesamis.

[2] Rollo, pp. 63-64.[3] Rollo, p. 42.[4] Rollo, p. 66.[5] Rollo, p. 73.[6] Rollo, pp. 77-78.[7] Rollo, pp. 39-53.[8] Rollo, pp. 49-52.[9] Rollo, pp. 138-158.[10] Rollo, pp. 188-212.[11] See Rafols vs. Barba, L-28446, December 13, 1982.[12] 208 SCRA 179 [ 1992].[13] 405 SCRA 319 [ 2003].[14] RTC Decision, pp. 9-10, 13; Rollo, pp. 73-74, 77.[15] RTC Decision, p. 13; Rollo, p. 77.[16] Villanueva-Mijares vs. Court of Appeals, 330 SCRA 349 [2000].[17] See Note 12.

Footnotes

1 73 Phil., 628

Republic of the PhilippinesSupreme Court

ManilaFIRST DIVISION

 SPOUSES ELBE LEBIN and ERLINDA LEBIN,

Petitioners,  - versus -  VILMA S. MIRASOL, and REGIONAL TRIAL COURTOF ILOILO, BRANCH XXVII,

Respondents.

G.R. No. 164255 Present: 

CORONA, C.J., Chairperson,LEONARDO-DE CASTRO,BERSAMIN,DEL CASTILLO, andVILLARAMA, JR., JJ.

 Promulgated: September 7, 2011

x-----------------------------------------------------------------------------------------x 

D E C I S I O N 

BERSAMIN, J.:  The perfection of an appeal in the manner and within the period laid down by law is mandatory and jurisdictional. 

The Case 

In Special Proceedings No. 1307 involving the settlement of the estate of the late L.J. Hodges, the Regional Trial Court (RTC), Branch 27, in Iloilo City, issued an order dated May 3, 1995 (ruling that a property of the estate sold to the petitioners be divided in two equal portions between the petitioners and the respondent). [1] On March 2, 1998, the RTC affirmed the order dated May 3, 1995. [2] The petitioners filed a notice of appeal and, later on, a record on appeal, but the respondents moved to dismiss their appeal on June 15, 2000 on the ground of tardiness of the record on appeal. The RTC granted the motion to dismiss on February 1, 2002. On March 13, 2002, the petitioners moved for reconsideration of the dismissal,[3] but the RTC denied the motion for reconsideration on May 21, 2004.[4] Thus, on June 23, 2004, the petitioners directly appealed to the Court, assailing the orders of February 1, 2002 and May 21, 2004. 

Antecedents In January 1985, the petitioners relayed their offer to the administrator of the Estate of L.J. Hodges to purchase for P22,560.00 Lot 18, Block 7 of 971 (Lot 18), an asset of

the Estate situated on D.B. Ledesma Interior, Jaro, Iloilo City. They made a deposit of P4,512.00, the equivalent of 20% of the offer.[5] On August 1, 1985, the administrator sought judicial approval of the offer,[6] stating to the RTC that petitioner Erlinda Lebin was the actual occupant of Lot 18.[7] The RTC commissioned one Atty. Tabares to conduct an ocular inspection of Lot 18 to ascertain if Erlinda Lebin was really the occupant. In his report, Atty. Tabares confirmed that Erlinda Lebin was the only occupant of Lot 18.[8] Accordingly, on August 28, 1985, the RTC granted the administrators motion for approval of the offer.[9]

 In the meanwhile, respondent Vilma S. Mirasol (Mirasol) also offered to purchase

the lot containing an area of 188 square meters where her house stood. The lot was initially identified as Lot No. 4, Block 7 of 971 (Lot 4), but a later survey revealed that her house was actually standing on Lot 18, not Lot 4. [10]Learning on November 11, 1985 of the approval of the petitioners offer to purchase Lot 18, therefore, Mirasol filed on December 6, 1985 a petition for relief from the order dated August 28, 1985. [11]

 On December 17, 1987, pending resolution of the petition for relief, the

petitioners paid the last installment for Lot 18, and moved for the execution of the deed of sale.[12] Apparently, the motion was not acted upon by the RTC.

 At last, on May 3, 1995, the RTC resolved the petition for relief, viz:

WHEREFORE, the Court, under the auspices of equity and justice tempered with humanitarian reasons, hereby declare each of the offeror-claimants after complying with their respective obligation with the estate, should there be any, to be the owner where their respective houses stand, and therefore, DIRECTS and ENJOINS for the following matters to be undertaken:

 For the Administrator of the L.J. Hodges Estate: 1) To assist both offeror-claimants in effecting a Relocation Survey

Plan and cause the equal partition of the subject lot herein between the said offeror-claimant;

 2) To execute the corresponding deed of sale over the aforecited

subject lot in favor of the herein offeror-claimants --- Erlinda Lebin and Vilma S. Mirasol purposely to expedite the issuance of respective title; and ---

 3) To exact payment from either or both offeror-claimants should

there be any deficiency, and/or to refund payment should there be any excess payment from either or both offeror-claimants.

 SO ORDERED.[13]

 

On May 23, 1995, the petitioners moved for reconsideration and/or new trial. [14] On March 2, 1998, the RTC denied the motion for reconsideration and/or new trial of the petitioners.[15] Thus, on March 27, 1998, the petitioners filed a notice of appeal in the RTC.[16] Allegedly, on May 5, 1998, they also filed a record on appeal. [17] On January 25, 1999, they presented an ex parte motion to approve the record on appeal.[18] On June 15, 2000, Mirasol filed a motion to dismiss the appeal, insisting that the record on appeal had been filed late.[19] The RTC granted the motion to dismiss the appeal on February 1, 2002.[20] The petitioners moved for reconsideration on March 13, 2002,[21] but the RTC denied their motion for reconsideration on May 21, 2004.[22]

 Hence, the petitioners appealed via petition for review on certiorari filed on June 23, 2004, to seek the review and reversal of the orders of the RTC dated February 1, 2002 and May 21, 2004.

Issues 

1.     Whether or not the RTC erred in dismissing the petitioners appeal for their failure to timely file a record on appeal; and

 2.     Whether or not the RTC committed reversible error in adjudging that

Lot 18 be sold to both the petitioners and Mirasol in equal portions.  

Ruling

  

The petition for review lacks merit. 

IRTC did not err in dismissing the petitioners appeal

for their failure to timely file a record on appeal Among the innovations introduced by Batas Pambansa Blg. 129[23] is the

elimination of the record on appeal in most cases, retaining the record on appeal only for appeals in special proceedings and in other cases in which the Rules of Court allows multiple appeals. Section 39 of Batas Pambansa Blg. 129 has incorporated this innovation, to wit:

 Section 39. Appeals. - The period for appeal from final orders,

resolutions, awards, judgments, or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from: Provided however, That in habeas corpus cases, the period for appeal shall be forty-eight (48) hours from the notice of the judgment appealed from.

 

No record on appeal shall be required to take an appeal. In lieu thereof, the entire record shall be transmitted with all the pages prominently numbered consecutively, together with an index of the contents thereof.

 This section shall not apply in appeals in special proceedings

and in other cases wherein multiple appeals are allowed under applicable provisions of the Rules of Court. (emphasis supplied) 

In early 1990, the Supreme Court issued its resolution in Murillo v. Consul[24] to clarify and fortify a judicial policy against misdirected or erroneous appeals, stating:

 At present then, except in criminal cases where the penalty imposed

is life imprisonment or reclusion perpetua, there is no way by which judgments of regional trial courts may be appealed to the Supreme Court except by petition for review on certiorari in accordance with Rule 45 of the Rules of Court, in relation to Section 17 of the Judiciary Act of 1948 as amended. The proposition is clearly stated in the Interim Rules: Appeals to the Supreme Court shall be taken by petition for certiorari which shall be governed by Rule 45 of the Rules of Court.

 On the other hand, it is not possible to take an appeal by certiorari to

the Court of Appeals. Appeals to that Court from the Regional Trial Courts are perfected in two (2) ways, both of which are entirely distinct from an appeal by certiorari to the Supreme Court. They are: 

a) by ordinary appeal, or appeal by writ of error - where judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; and

 b) by petition for review - where judgment was rendered by the

RTC in the exercise of appellate jurisdiction. 

The petition for review must be filed with the Court of Appeals within 15 days from notice of the judgment, and as already stated, shall point out the error of fact or law that will warrant a reversal or modification of the decision or judgment sought to be reviewed. An ordinary appeal is taken by merely filing a notice of appeal within 15 days from notice of the judgment, except in special proceedings or cases where multiple appeals are allowed in which event the period of appeal is 30 days and a record on appeal is necessary.

 There is therefore no longer any common method of appeal in civil

cases to the Supreme Court and the Court of Appeals. The present procedures for appealing to either court and, it may be added, the process of ventilation of the appeal are distinct from each other. To repeat, appeals

to this court cannot now be made by petition for review or by notice of appeals (and, in certain instances, by record on appeal), but only by petition for review on certiorari under Rule 45. As was stressed by this Court as early as 1980, in Buenbrazo v. Marave, 101 SCRA 848, all the members of the bench and bar are charged with knowledge, not only that since the enactment of Republic Act No. 8031 in 1969, the review of the decision of the Court of First Instance in a case exclusively cognizable by the inferior court xxx cannot be made in an ordinary appeal or by record on appeal, but also that appeal by record on appeal to the Supreme Court under Rule 42 of the Rules of Court was abolished by Republic Act No. 5440 which, as already stated, took effect on September 9, 1968. Similarly, in Santos, Jr., v. C.A., 152 SCRA 378, this Court declared that Republic Act No. 5440 had long superseded Rule 41 and Section 1, Rule 122 of the Rules of Court on direct appeals from the court of first instance to the Supreme Court in civil and criminal cases, x x and that direct appeals to this Court from the trial court on questions of law had to be through the filing of a petition for review on certiorari, wherein this Court could either give due course to the proposed appeal or deny it outright to prevent the clogging of its docket with unmeritorious and dilatory appeals.

 In fine, if an appeal is essayed to either court by the wrong

procedure, the only course of action open is to dismiss the appeal. In other words, if an appeal is attempted from a judgment of a Regional Trial Court by notice of appeal, that appeal can and should never go to this Court, regardless of any statement in the notice that the court of choice is the Supreme Court; and more than once has this Court admonished a Trial Judge and/or his Clerk of Court, as well as the attorney taking the appeal, for causing the records to be sent up to this Court in such a case. Again, if an appeal by notice of appeal is taken from the Regional Trial Court to the Court of Appeals and in the latter Court, the appellant raises naught but issues of law, the appeal should be dismissed for lack of jurisdiction. And finally, it may be stressed once more, it is only through petitions for review on certiorari that the appellate jurisdiction of the Supreme Court may properly be invoked. 

There is no longer any justification for allowing transfers of erroneous appeals from one court to the other, much less for tolerating continued ignorance of the law on appeals. It thus behooves every attorney seeking review and reversal of a judgment or order promulgated against his client, to determine clearly the errors he believes may be ascribed to the judgment or order, whether of fact or of law; then to ascertain which court properly has appellate jurisdiction; and finally, to observe scrupulously the requisites for appeal prescribed by law, with keen awareness that any error or imprecision in compliance therewith may well be fatal to his client's cause.[25] (emphasis supplied)

 

An offshoot of Murillo v. Consul is the inclusion in the 1997 revision of the rules of civil procedure, effective July 1, 1997, of a provision that forthrightly delineated the modes of appealing an adverse judgment or final order. The provision is Section 2 of Rule 41, viz:

 

Section 2. Modes of appeal. (a) Ordinary appeal. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

 (b) Petition for review. The appeal to the Court of Appeals in cases

decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

 (c) Appeal by certiorari. In all cases where only questions of law are

raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. (n) (emphasis supplied)  The changes and clarifications recognize that appeal is neither a natural nor a

constitutional right, but merely statutory, and the implication of its statutory character is that the party who intends to appeal must always comply with the procedures and rules governing appeals, or else the right of appeal may be lost or squandered.

 As the foregoing rules further indicate, a judgment or final order in special

proceedings is appealed by record on appeal. A judgment or final order determining and terminating a particular part is usually appealable, because it completely disposes of a particular matter in the proceeding, unless otherwise declared by the Rules of Court.[26] The ostensible reason for requiring a record on appeal instead of only a notice of appeal is the multi-part nature of nearly all special proceedings, with each part susceptible of being finally determined and terminated independently of the other parts. An appeal by notice of appeal is a mode that envisions the elevation of the original records to the appellate court as to thereby obstruct the trial court in its further proceedings regarding the other parts of the case. In contrast, the record on appeal enables the trial court to continue with the rest of the case because the original records remain with the trial court even as it affords to the appellate court the full opportunity to review and decide the appealed matter.

 Section 1, Rule 109 of the Rules of Court underscores the multi-part nature of

special proceedings by enumerating the particular judgments and final orders already subject of appeal by any interested party despite other parts of the proceedings being still untried or unresolved, to wit:

 Section 1. Orders or judgments from which appeals may be taken.

- An interested person may appeal in special proceedings from an order or judgment rendered by a Court of First Instance or a Juvenile and Domestic Relations Court, where such order or judgment:

 (a) Allows or disallows a will; (b) Determines who are the lawful heirs of a deceased person, or the

distributive share of the estate to which such person is entitled; (c) Allows or disallows, in whole or in part, any claim against the

estate of a deceased person, or any claim presented on behalf of the estate in offset to a claim against it;

 (d) Settles the account of an executor, administrator, trustee or

guardian; (e) Constitutes, in proceedings relating to the settlement of the estate

of a deceased person, or the administration of a trustee or guardian, a final determination in the lower court of the rights of the party appealing, except that no appeal shall be allowed from the appointment of a special administrator; and

 (f) Is the final order or judgment rendered in the case, and affects the

substantial rights of the person appealing, unless it be an order granting or denying a motion for a new trial or for reconsideration. The petitioners appeal comes under item (e) of Section 1, supra, due to the final

order of May 3, 1995 issued in the settlement of the estate of L.J. Hodgesbeing a final determination in the lower court of the rights of the party appealing. In order to elevate a part of the records sufficient for appellate review without the RTC being deprived of the original records, the remedy was to file a record on appeal to be approved by the RTC.

 The elimination of the record on appeal under Batas Pambansa Blg. 129 made

feasible the shortening of the period of appeal from the original 30 days to only 15 days from notice of the judgment or final order. Section 3, [27] Rule 41 of the Rules of Court, retains the original 30 days as the period for perfecting the appeal by record on appeal to take into consideration the need for the trial court to approve the record on appeal. Within that 30-day period a party aggrieved by a judgment or final order issued in special proceedings should perfect an appeal by filing both a notice of appeal and a

record on appeal in the trial court, serving a copy of the notice of appeal  and a record on appeal upon the adverse party within the period; [28] in addition, the appealing party shall pay within the period for taking an appeal to the clerk of the court that rendered the appealed judgment or final order the full amount of the appellate court docket and other lawful fees.[29]A violation of these requirements for the timely perfection of an appeal by record on appeal,[30] or the non-payment of the full amount of the appellate court docket and other lawful fees to the clerk of the trial court [31] may be a ground for the dismissal of the appeal.

 Did the petitioners comply with the requirements for perfecting their appeal? The petitioners received the assailed May 3, 1995 order of the RTC on May 15,

1995. They filed a motion for reconsideration and/or new trial on May 24, 1995. On March 23, 1998, they were served with the order dated March 2, 1998 (denying their motion for reconsideration and/or new trial). Although they filed a notice of appeal on March 27, 1998, they submitted the record on appeal only on May 5, 1998. Undoubtedly, they filed the record on appeal 43 days from March 23, 1998, the date they received the denial of their motion for reconsideration and/or new trial. They should have filed the record on appeal within 30 days from their notice of the judgment. Their appeal was not perfected, therefore, because their filing of the record on appeal happened beyond the end of their period for the perfection of their appeal.

 The petitioners filing of the motion for reconsideration vis--vis the order of May 3,

1995 interrupted the running of the period of 30 days; hence, their period to appeal started to run from May 15, 1995, the date they received the order of May 3, 1995. They filed their motion for reconsideration on May 24, 1995. By then, nine days out of their 30-day period to appeal already elapsed. They received a copy of the order dated March 2, 1998 on March 23, 1998. Thus, the period to appeal resumed from March 23, 1998 and ended 21 days later, or on April 13, 1998. Yet, they filed their record on appeal only on May 5, 1998, or 22 days beyond the end of their reglementary period. Although, by that time, the 1997 Rules on Civil Procedure had meanwhile taken effect (July 1, 1997), their period of appeal remained 30 days. It is stressed that under the 1997 revisions, the timely filing of the motion for reconsideration interrupted the running of the period of appeal, pursuant to Section 3, Rule 41 of the 1997 Rules on Civil Procedure, viz: 

Section 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.

 The period of appeal shall be interrupted by a timely motion for

new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n) (emphasis supplied)

 

Section 13, Rule 41 of the Rules of Court empowers the RTC as the trial court, motu proprio or on motion, to dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[32] For that reason, the RTC rightly granted Mirasols motion to dismiss the record on appeal.

 

Nonetheless, the petitioners propose to be excused from the requirement of filing a record on appeal, arguing that (t)o require a (r)ecord on (a)ppeal here is to reproduce the more than eighteen (18) volumes of records here which is quite impossible to do and that most of these records, (sic) have nothing to do with the present controversy.[33] Also, they state that their counsel was of the honest belief and impression that the same was not really necessary because the nature of the controversy xxx is civil and not an intestate one.[34]

 The petitioners submissions are frail and facetious. In order to come up with the record on appeal, the petitioners were not expected

to reproduce over 18 volumes of the records, for their record on appeal would have included only the records of the trial court which the appellate court would be asked to pass upon.[35] Section 6, Rule 41 of the 1997 Rules of Civil Procedure, which meanwhile became applicable to them, specified what the record on appeal should contain, thusly:

 Section 6. Record on appeal; form and contents thereof. - The full

names of all the parties to the proceedings shall be stated in the caption of the record on appeal and it shall include the judgment or final order from which the appeal is taken and, in chronological order, copies of only such pleadings, petitions, motions and all interlocutory orders as are related to the appealed judgment or final order for the proper understanding of the issue involved, together with such data as will show that the appeal was perfected on time. If an issue of fact is to be raised on appeal, the record on appeal shall include by reference all the evidence, testimonial and documentary, taken upon the issue involved. The reference shall specify the documentary evidence by the exhibit numbers or letters by which it was identified when admitted or offered at the hearing, and the testimonial evidence by the names of the corresponding witnesses. If the whole testimonial and documentary evidence in the case is to be included, a statement to that effect will be sufficient without mentioning the names of the witnesses or the numbers or letters of exhibits. Every record on appeal exceeding twenty (20) pages must contain a subject index. (6a) The right to appeal is a mere statutory privilege, and should be exercised only in

the manner prescribed by law.[36] The statutory nature of the right to appeal requires the one who avails himself of it to strictly comply with the statutes or rules that are considered indispensable interdictions against needless delays and for an orderly

discharge of judicial business. In the absence of highly exceptional circumstances warranting their relaxation, like when the loftier demands of substantial justice and equity require the relaxation,[37] or when there are other special and meritorious circumstances and issues,[38] such statutes or rules should remain inviolable.[39]

 In like manner, the perfection of an appeal within the period laid down by law is

mandatory and jurisdictional, because the failure to perfect the appeal within the time prescribed by the Rules of Court causes the judgment or final order to become final as to preclude the appellate court from acquiring the jurisdiction to review the judgment or final order.[40] The failure of the petitioners and their counsel to file their record on appeal on time rendered the orders of the RTC final and unappealable. Thereby, the appellate court lost the jurisdiction to review the challenged orders, and the petitioners were precluded from assailing the orders. 

IIRTC committed no reversible error in allocating

Lot 18 in equal portions to both petitioners and respondent

 The non-perfection of the appeal by the petitioners notwithstanding, the Court declares that the RTC did not err in allocating the parcel of land equally to the parties if only to serve and enforce a standing policy in the settlement of the large estate of the late L.J. Hodges to prefer actual occupants in the disposition of estate assets. The policy was entirely within the power of the RTC to adopt and enforce as the probate court. As stated in the administrators motion for approval of the offer, the approval of the offer to purchase would be conditioned upon whether the petitioners were the only actual occupants. The condition was designed to avoid the dislocation of actual occupants, and was the reason why the RTC dispatched Atty. Tabares to determine who actually occupied the property before approving the motion. It turned out that the report of Atty. Tabares about the petitioners being the only occupants was mistaken, because the house of Mirasol, who had meanwhile also offered to purchase the portion where her house stood, happened to be within the same lot subject of the petitioners offer to purchase. The confusion arose from the misdescription of Mirasols portion as Lot 4, instead of Lot 18.[41]

 Under Rule 89 of the Rules of Court, the RTC may authorize the sale, mortgage, or encumbrance of assets of the estate. The approval of the sale in question, and the modification of the disposition of property of the Estate of L.J. Hodges were made pursuant to Section 4 of Rule 89, to wit: 

Section 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. [emphasis supplied]

 Without doubt, the disposal of estate property required judicial approval before it could be executed.[42] Implicit in the requirement for judicial approval was that the probate court could rescind or nullify the disposition of a property under administration that was effected without its authority.[43] This power included the authority to nullify or modify its approval of the sale of the property of the estate to conform to the law or to the standing policies set and fixed for the purpose, where the invalidation or modification derived from the falsity of the factual basis of the disposition, or from any other factual mistake, or from the concealment of a material fact by a party. Consequently, the probate courts modification of its approval of the petitioners offer to purchase was well within the power of the RTC to nullify or modify after it was found to be contrary to the condition for the approval. Thereby, the RTCs ruling, being sound and judicious, constituted neither abuse of discretion nor excess of jurisdiction.

 WHEREFORE, we DENY the petition for review, and AFFIRM the final orders

dated May 3, 1995 and March 2, 1998. The petitioners shall pay the costs of suit.

 SO ORDERED.  

LUCAS P. BERSAMINAssociate Justice

 WE CONCUR:

   

RENATO C. CORONAChief JusticeChairperson

  TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLOAssociate Justice Associate Justice  

MARTIN S. VILLARAMA, JR.Associate Justice

  

CERTIFICATION  Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.  

RENATO C. CORONAChief Justice

[1] Rollo, pp. 12-13.[2] Id., p. 17.[3] Id., pp. 26-27.[4] Id., pp. 28-29.[5] Id., pp. 39.[6] Id., pp. 30-31.[7] Id., p. 31.[8] Id., pp. 32-33[9] Id., p. 32.[10] Id., p. 36.[11] Id., pp. 32-35.[12] Id., pp. 37-38.[13] Id., pp. 12-13.[14] Id., pp. 14-16.[15] Id., p. 17.[16] Id., p. 18.[17] Id., p. 20.[18] Id., p. 19.[19] Id., pp. 20-22.[20] Id., pp. 24-25.[21] Id., pp. 26-27.[22] Id., pp. 28-29.[23] Entitled An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for other Purposes.[24] Undk. No. 9748, February 27, 1990; 183 SCRA xi, which became the basis for the guidelines set forth in Circular No. 2-90 issued by the Supreme Court on March 9, 1990.[25] Id., pp. xv-xviii.[26] According to Section 1, first paragraph, Rule 41, Rules of Court: An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. 

[27] Section 3. Period of Ordinary Appeal. The appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of the judgment or final order.[28] Section 2(a) and Section 3, Rule 41, Rules of Court.[29] Section 4, Rule 41, Rules of Court.[30] Section 13, Rule 41, and Section 1(a), Rule 50, Rules of Court.[31] Section 1(a) and (c), Rule 50, Rules of Court.[32] Section 13. Dismissal of appeal. Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may, motu proprio or on motion, dismiss the appeal for having been taken out of time or for non-payment of the docket and other lawful fees within the reglementary period.[33] Id., p. 8.[34] Id.[35] Bersamin, Appeal and Review in the Philippines, Central Professional Books, Inc., 2nd Edition, p. 136; citing 3 Am Jur 215.[36] Borlongan v. Buenaventura, G.R. No. 167234, September 27, 2006, 483 SCRA 405, 411-412; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 106956, January 27, 1994, 229 SCRA 560.[37] Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Yutingco v. Court of Appeals, G.R. No. 137264, August 1, 2002, 386 SCRA 85, 91; Tan Tiac Chiong v. Cosico, A.M. No. CA-02-33, July 21, 2002, 385 SCRA 509, 515; Olacao v. NLRC, G.R. No. 81390, August 29, 1989, 177 SCRA 38, 49.[38] Equitable PCI Bank v. Ku, G.R. No. 142950, March 26, 2001, 355 SCRA 309, 316; De Guzman v. Sandiganbayan, G.R. No. 103276, April 11, 1996, 256 SCRA 171, 177; Orata v.Intermediate Appellate Court, G.R. No. 73471, May 8, 1990, 185 SCRA 148, 152.[39] Almeda v. Court of Appeals, G.R. No. 121013, July 16, 1998 292 SCRA 587, 593-595.[40] Ko v. Philippine National Bank, G. R. Nos. 169131-132, January 20, 2006, 479 SCRA 298; Air France Philippines v. Leachon, G.R. No. 134113, October 12, 2005, 472 SCRA 439; Remulla v. Manlongat, G.R. No. 148189, November 11, 2004, 442 SCRA 226, 233; Philippine Commercial International Bank v. Court of Appeals, G.R. No. 127275, June 20, 2003, 404 SCRA 442, 448; Yao v. Court of Appeals, G.R. No. 132426, October 24, 2000, 344 SCRA 202; Dayrit v. Philippine Bank of Communications, G.R. No. 140316, August 1, 2002, 386 SCRA 117, 125; Bishop of Tuguegarao v. Director of Lands, 34 Phil 623 (1916); Estate of Cordoba and Zarate v. Alabado, 34 Phil. 920 (1916); Bermudez v. Director of Lands, 36 Phil. 774 (1917).[41] Id., p. 36.[42] Acebedo v Abesamis, G.R. No. 102380, January 18, 1993, 217 SCRA 186, 193.[43] Dillena v. Court of Appeals, G.R. No. L-77660, July 28, 1988, 163 SCRA 630, 637.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-30750             October 24, 1929

Intestate estate of Jacinto Baun, deceased. SIMPLICIO BAUN, administrator-appellee, vs.HEIRS OF THE DECEASED JACINTO BAUN, oppositors-appellants.

Francisco, Recto & Lualhati for appellants.Teotimo Duque for appellee.

 

JOHNSON, J.:

This is an appeal from an order of the Court of First Instance of Tarlac, dated September 12, 1928, sustaining the validity of the sale made by the administrator of the estate of Jacinto Baun, of a piece of parcel of land together with the machinery and building thereon belonging to said estate, and denying the motion of the heirs to set aside said sale.

The following facts are not in dispute:

(1) On May 31, 1928, the administrator of the estate filed a motion, requesting authority to sell personal and real properties of the estate, in order to pay its debts. The motion alleged (a) that the estate was indebted to the Asociacion Cooperativa del Credito Rural de Tarlac in the sum of P1,000, with interest at 10 per cent from February 11, 1925; (b) that it was also indebted to Manuel Urquico in the sum of P7,412.22, with interest at 12 per cent from November 1, 1927; and (c) that the estate was without sufficient funds to meet said obligations.

(2) On June 1, 1928, the heirs of the estate, with the exception of Damiana Manankil, widow of the deceased, filed their written conformity to the proposed sale of the only real property of the estate described in the inventory, consisting of a parcel of land and the machinery and building thereon. They also stated that Genara Pineda offered P20,000 of said property and that they considered said offer as most advantegeous and beneficial to their interest. Said written conformity was assign by Alejandro Calma in his own behalf and as guardian of the minors Guillermo and Simeona Calma, and by Celedonia Baun, with the consent of her husband Lorenzo Mallari.

(3) On June 15, 1928, the court appointed Jose Fausto, an attorney at law, as guardian ad litem of the minors Guillermo and Simeona Calma, heirs of Jacinto Baun, with special reference to the proposed sale of the real property of the estate.

(4) Some time thereafter said guardian ad litem filed his report, recommending favorably the proposed sale of the land and the machinery and building thereon to Genara Pineda at the price offered by her.

(5) On June 29, 1928, the court authorized the administrator of the estate to sell the property of the deceased in the form and manner most advantageous to the estate. The pertinent part of the order of the court said:" Por la presente queda autorizado el referido administrador para vender los vienes del aludido finado en la forma que crea procedente y ventajosa para los fines arriba indicados." "It is hereby authorized to sell the administrator referred the deceased come alluded to in any way it believes appropriate and advantageous for the purposes set out above."

(6) On July 6, 1928, Simplicio Baun, the administrator of the estate, filed a petition requesting approval by the court of the sale of said real property to Pedro Santos for the sum of P22,000. The administrator sold the property to said vendee, who gave a better price than that offered by Genara Pineda, which was for P20,000 only, as above stated.

(7) On July 7, 1928, the court approved said sale, and on July 10, 1928, ordered the vendee Pedro Santos to immediately deliver to the administrator of the estate the price of the property amounting to P22,000.

(8) On July 16,1928, the heirs of the estate filed a motion praying that the sale of the property as well as the decree of the court approving the same be set aside on the following grounds: (a) That the administrator sold the real property of the estate without having first sold the personal property; (b) that Damiana Manankil, the widow of the deceased, who was also an heir of the estate, did not give her conformity or consent to said sale; (c) that no notice of the hearing of the application for authority to sell the property of the estate was served upon the heirs, either personal or by publication, as required by section 722, paragraph 3, of the Code of Civil Procedure; and (d) that no hearing was held on said application of the administrator.

The administrator filed his answer to the motion, alleging (1) that said real property was sold because the personal property of the deceased was insufficient to meet the obligation of the estate; (2) that the real property of the estate was sold upon the initiative and with the written consent of the heirs and consequently they are now estopped from attacking the validity of said sale; (3) that notice of the hearing of the application for authority to sell the property of the estate was not necessary inasmuch as the requirements of the law had been virtually satisfied by the written consent of the

heirs to the sale; and (4) that the written consent of all of the heirs was not necessary because the law does not specifically require the consent in writing all of the heirs.1awph!l.net

Upon the foregoing facts and the issue raised by the motion and answer as above stated, the Honorable Cayetano Lukban, judge, on September 12, 1928, issued an order sustaining the validity of the sale to Pedro Santos of said land and the machinery and building thereon for the sum of 22,000, and denied the motion of heirs to set aside said sale. The pertinent parts of said order reads as follows:

“El administrador aqui nombrado, enterado de que se le autorizaba vender bienes del intestado, entre ellos el susodicho inmueble, en la forma que era procedente y ventajosa, dando pruebas de lealtad a sus obligasciones como tal, en lugar de proceder automaticamente a la venta, busco compradores con mejores ofertas. En efecto, encontro al referido Pedro Santos, de Porac, Pampanga, quien ofecio mejor precio. Se otorgo la venta a favor de este senor. Previa recomendacion favorable del curador ad litem, dicha venta fue aprobada por el Juzgado, y consecuentemente, de pago en su totalidad el precio de la venta, depositandose parte en la Escribania de este Juzgado, y parte en el Banco Postal de Ahorros.” "The manager here named, learned that is authorized to sell the intestate property, including the building above, in the way that was appropriate and beneficial, giving evidence of loyalty to their obligasciones as such, rather than automatically proceed with the sale Seeking buyers with better offers. Indeed, I found the referral Pedro Santos of Porac, Pampanga, who ofecio best price. The sale was granted in favor of this man. Prior favorable recommendation of the guardian ad litem, the sale was approved by the Court, and consequently, the payment in full of the sales price, depositing part in the writing of this Court, and some in the Postal Savings Bank. "

“Consta ademas en los inventarios presentados por el administrador y los comisionados de avaluo y reclamaciones nombrados en esta atuacion que el presente intestado caerce de suficientes bienes muebles que puedan ser vendidos para el pago de las obligaciones de este intestado. Tales obligaciones devengaban intereses que, con el tiempo y sulmados al capital caso de no efectuarse oportunamente su pago, importarian lo bastante para acabar con todos los bienes de este intestado y no dejar nada a los herederos.” "It has also in the inventories submitted by the administrator and commissioners appointed assessment and claims that this actuation present sufficient caerce intestate personal property that can be sold for the payment of the obligations of the intestate. Such obligations accrued interest, time and capital sulmados if not timely made payment, would import enough to kill all the goods of this intestate and leave nothing to the heirs. "

“Teniendo en cuenta estas circunstancias, y sobre todo, la conformidad de los herederos; el Juzgado es de opinion que carece de importancia la conencion de que la alegrada viuda no haya dado su conformidad a la venta. Porque, aun

cuando la misma hubiese opuesto, su oposicion no hubiera podido prosperar o prevalecer frente a la conformidad a la venta por parte de los herederos y del curador ad litem.” "Given these circumstances, and especially the agreement of the heirs; the Court is of the opinion that it is irrelevant that the conencion cheered widow has not agreed to the sale. For though it had opposed his opposition could not prosper or prevail against conformity to the sale by the heirs and the guardian ad litem. "

“Por todas estas consideraciones, no ha lugar a la peticion formulada por dichos herederos, al efecto de que se anule o rescinda la referida venta.” "For all these considerations, it is unnecessary to the request for such heirs, the effect annul or rescind the aforementioned sale."

The case is now before us on appeal by the heirs from said order.

The appellants now submit a number of propositions in which they attempt to show that the lower court erred in not declaring said sale null and void. One of said proportions is:

That the provisions of the Code of Civil Procedure, regulating the sale of the estate of the deceased and prescribing certain formalities, were not complied with in the sale of the real property in question, and consequently the sale is null and void.

In this jurisdiction, by virtue of the provisions of articles 657 and 661 of the Civil Code, the heirs succeeded to all the rights and obligations of the decedent "by the mere fact of his death." The rights to the succession of a person are transmitted from the moment of his death." In other words, the heirs succeed immediately to all the rights and obligations of the ancestor by the mere fact of the death of the ancestor. From the death of the ancestor the heirs are the absolute owners of his property, subject to the rights and obligations of the ancestor, and they cannot be deprived of their rights thereto except by the methods provided for by the law.

The only law providing for the sale of the property which formerly belonged to the deceased and prescribing the formalities antecedent to said sale, is found in sections 714 and 722 of the Code of Civil Procedure. Said section reads as follows:

SEC. 714. Reality may be sold or encumbered through personality not exhausted. — When the personal estate of the deceased is not sufficient to pay the debts and charges of administration without injuring the business of those interested in the estate, or otherwise prejudicing their interest, and where a testator has not otherwise made sufficient provision for the payment of such debts and charges, the court, on application of the executor or administrator with the consent and appropriation, in writing, of the heirs, devisees, and legatees, residing in the Philippine Islands, may grant a license to the administrator, to sell, mortgage or otherwise encumber for that purpose real, in lieu of personal estate, . . .

SEC. 722. Regulations for license to sell. — When an executor or administrator considers it necessary or beneficial to sell real or personal estate, in cases provided by law, he may make application to the court having jurisdiction of the estate, and such court may grant license, when it appears necessary or beneficial, under the following regulations:

1. The executor or administrator shall present to the court his petition in writing, setting forth the amount of debts due from the deceased, with charges of the administration, the value of the personal estate, situation of the estate to be sold, or such other facts as show that the sale is necessary or beneficial;

2. In the case where the consent of heirs, devisees, and legatees is required, the executor or the administrator shall produce to the court their assent in writing, and signed by such heirs, devisees, or legatees, or by the guardians of such as are minors or otherwise under guardianship;

3. The court shall thereupon appoint a time and place of hearing for deciding upon such application, and shall require notice to be given of such application, and of the time and place of hearing to the persons interested; which notice shall state the nature of the application and the reason for the same, the time and place of hearing, and shall be published three weeks successively previous thereto, in a newspaper of general circulation in the neighborhood of those interested, to be designated by the court; and the court may order such further notice as in adjudged proper. If personal notice is given to the persons interested, the public notice may be dispensed with;

x x x           x x x           x x x

5. If the proof produced satisfies the court and if the regulations in the first four subdivisions of this section are complied with, the court may, by decree, authorize the executor or administrator to sell such part of the estate and is deemed necessary, either at public or private sale, as would be most beneficial to all parties concerned, and furnish the executor or administrator with certified copy of such license or order of sale.

From the forgoing provisions of law, in relation with the facts of the present case, we are of the opinion that the requisites of the law were not complied with in the sale in question. Section 714 and paragraph 2 of section 722 of the Code of Civil Procedure require "the consent and approbation, in writing of the heirs, devisees and legatees signed by such heirs, devisees and legatees."

In the instant case the written consent of the widow Damiana Manankil, who was also an heir of the deceased, to the application of the administrator for authority to sell the property of the estate, was not obtained. We are of the opinion that the consent of all of

the heirs is necessary because each and every one of them is interested in the estate and because the law does not state that the consent of the majority of the heirs is sufficient to bind all of the heirs. The phrase "the consent and approbation, in writing, of the heirs, devisees and legatees," used in section 714 of the Code of Civil Procedure, cannot be susceptible of any other interpretation than that the consent of all the heirs, etc. is necessary.

Furthermore, the widow Damiana Manankil was not notified of the application of the administrator for authority to sell the property of the estate, neither was said application set for hearing as required in paragraph 3 of section 722 of the Code of Civil Procedure. Paragraph 5 of section 722 requires a compliance with the formalities as to written consent of heirs, notice of hearing of the application, and hearing of the application before a decree authorizing the sale maybe issued. Therefore, the decree of the lower court of June 29, 1928, authorizing the sale of the property in question is not in conformity with the provisions of sections 714 and 722 of the Code of Civil Procedure, because (1) the written consent of all of the heirs was not obtained, (2) the heirs was not notified of the hearing on said application, and (3) no hearing was held on said application; and, consequently, the sale of the property of the estate, effected by the administrator in pursuance of said decree of the court, is null and void. The appellee contends that those requirements of the law apply only to testate succession. We are of the opinion that they are applicable to both testate and intestate successions, because in both cases the heirs are entitled to be given an opportunity to be heard and protect their rights and interest in the estate.

The appellee contends that the appellants are estopped from questioning or attacking the validity of the sale in question, inasmuch as said sale was made with their consent. This contention cannot be sustained. We have already shown that one of the heirs did not consent to the sale and that the lower court failed to comply with the formalities of the law.

It will be remembered that the property in question belongs to the heirs absolutely, subject to the payment of the debts of the ancestor. Section 714 and 722 of Act No. 190 provide for the sale of the property belonging to the heirs. We are of the opinion that the procedure prescribed by said sections for the sale of property under this conditions must be strictly construed. When the jurisdiction of a court over the land of a decedent exist only for the purpose of sale upon certain conditions, these conditions must be present before the court can act. (Root vs. McFerrin, 37 Miss., [75 Am. Dec., 49].) So that, if the order of the court for the sale of the land of a decedent is made when the circumstances do not exist, which must concur as the basis of the order, there is lack of jurisdiction and the sale is therefore illegal. Sections 714 and 722 of Act No. 190 expressly provide the conditions under which the sale of the property of the heirs may be made. Such statute must be followed strictly. (Doe vs. Roe, 48 Am. Dec., 216.)

The Supreme Court of the United States, in the case of Thatcher vs. Powell (6 Wheaton, 119, 123) said: "That no individual or public officer can sell and convey a good title to the land of the another, unless authorized to do so by express law, is one of

those self-evident propositions to which the mind assents without hesitation; and that the person invested with such a power must pursue with precision the course prescribed by law, or his act is invalid, is a principle which has been repeatedly recognized in this court." (Black vs. Nygren, 8 Phil., 205.)

From the foregoing authorities we must conclude that inasmuch as the lower court failed to comply strictly with the procedure marked out by the law, the sale of the property in question is illegal and null and void.

It being true that the heirs succeed to the property of the ancestor with obligation of the ancestor against it, they cannot refuse to give their consent to the sale of the property for the purpose of paying obligations and thereby defeat their payment; and when said obligations are properly allowed against the estate, such property may be subjected to their payment. The heirs cannot defeat the payment of the obligations and still retain the property. If they insist in retaining the property, they must pay the existing obligations against the estate. The property belongs to them subject to the payment of the said obligations and they are bound to pay the indebtedness existing against the estate. (Sec. 731, Act No. 190.) The heirs cannot, by any act of their own, or agreement among themselves, impair the right of the creditors to recover their claim from the estate. The hereditary property remains liable for the debts of the decedent, and the heirs and the distributees may be compelled to pay the same in proportion to the share received by them from the estate. (Pavia vs. De la Rosa, 8 Phil., 70; Lopez vs. Enriquez, 16 Phil., 336; Fabie vs. Yulo, 24 Phil., 240.)

In the present case it is true that the heirs, after the sale of the property in pursuance of the order of the court, and after said sale had been approved by the court, made a deposit with the clerk of a sum of money sufficient to pay the existing indebtedness. We are at a loss to understand why the lower court did not even then accept the offers made by the heirs to pay the indebtedness and thereby save the estate from the further expense of litigation, in accordance with the provisions of the law. Had that been done, the long litigation which has followed would have been rendered unnecessary, at a great saving of expense to the estate.

The heir legally succeeds the deceased, from whom he derives his right and title, but only after the litigation of the estate, the payments 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. (Pavia vs. De la Rosa, 8 Phil., 70.)

Therefore, in view of what precedes, the order appealed from is hereby reversed, the sale is hereby declared null and void; and the record is hereby remanded to the lower court with the direction that, after the citations of all the heirs including Catalina Tejeiro and all of the other creditors and Pedro Santos, and after giving them an opportunity to be heard, it issue such orders in harmony with this decision as will, in equity and justice, protect the interest of all parties concerned, to the end that the estate of Jacinto Baun

may be finally settled and terminated. The appellants are also hereby ordered to deposit with the lower court such additional amount as may be found necessary to pay in full all the indebtedness and obligations of the estate, including the interest thereof; or, otherwise, the court shall proceed to sell the property of the estate for the purpose of paying said indebtedness. And without any finding as to costs, it is so ordered.

Avanceña, C. J., Street, Villamor, Johns, and Villa-Real, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-33106             October 15, 1930

ERNESTINA ORTALIZ, ET AL., plaintiffs-appellants, vs.THE REGISTRAR OF DEEDS OF THE PROVINCE OF OCCIDENTAL NEGROS, ET AL., defendants. PHILIPPINE NATIONAL BANK, appellant.

Jose B. Gamboa for plaintiffs-appellants. Elias N. Recto for defendant-appellant.

 

VILLAMOR, J.:

By this action is sought: (a) The annulment of the order of the court dated December 21, 1981, authorizing the administratrix to make out a power of attorney in favor of Gil Montilla to mortgage the property of the deceased Jose Ortaliz Jordan and Vicenta Montilla; (b) the annulment of the mortgage executed in favor of the National Bank for the indebtedness of Maao Sugar Central Co., Inc.; (c) the annulment of the mortgages subsequently executed by the Maao Sugar Central Co., Inc., for its indebtedness to the National Bank amounting to several million pesos; (d) the annulment of the annotations made in titles, Nos. 537, 4904, 5871, 6843, 5992, 5872, 6610, 7461 in the registry of deeds of Occidental Negros; and (e) the cancellation of the annotation of said encumbrances and mortgages and the return of titles to the plaintiffs.

The plaintiffs allege:

1. That Ernestina, Elisa, and Jose, surnamed Ortaliz, were, by a decree of the Court of First Instance of this province (Occidental Negros) issued on October 27, 1923, in the intestate proceedings of the late Vicenta Montilla, and another issued by the same court on the same day in the intestate proceedings of Jose Ortaliz y Jordan, declared and ratified as the only legitimate and universal heirs of said decedents;

2. That the plaintiffs by virtue of this declaration and ratification of the Court of First Instance of this province, are at present the legitimate and absolute owners of all the estate left by the deceased Jose Ortaliz and Vicenta Montilla, consisting, among other things, of the realty described as follows:

Lot number Title Number

2072 in Bago, Occidental Negros 5992

2073 in Bago, Occidental Negros 6843

2193 in Bago, Occidental Negros 537

865 of La Carlota 6610

977 of La Carlota 7461

926 of La Carlota 4904

974 of La Carlota 5871

975 of La Carlota 5872

3. That neither have the plaintiffs nor their predecessors in interest ever executed any mortgage deed in favor of the Philippine National Bank, and much less any document relating to the mortgage of the realty above-mentioned, for the increase of the corporate capital and exclusive benefit of the Maao Sugar Central Company, Inc., of Bago, Occidental Negros;

4. That the defendants illegally recorded in the registry of deeds of the province and in the title deeds of all the realty mentioned above, left by the deceased Jose Ortaliz y Jordan and Vicenta Montilla, an illegal order of the court of First Instance of this province dated December 21 1918, authorizing the administratrix, without first obtaining the written consent of the heirs of the decedents, to mortgage the latter's property, not for purposes of administration but solely for business and speculation; and that said defendants knew on that date that, for the reasons given, the said court had no jurisdiction to issue such an order. 1awph!l.net

5. That said authorization given by the Court to the administatrix of the estates of Jose Ortaliz y Jordan and Vicenta Montilla plainly stated that the administratrix aforesaid was bound to mortgage said property "for the exclusive benefit of said intestate estates," but the administratrix through her attorney-in-fact, Gil Montilla, illegally mortgaged said property "for the exclusive benefit of the Maao Sugar Central Company, Inc., a corporation with which the estates were not connected," and to the serious and utter prejudice of the interests of the intestate estates, as by such a mortgage for millions of pesos the property is encumbered forever without any benefit or compensation;

6. That the administratrix's illegal power and the unlawful mortgage executed by Gil Montilla as attorney-in- fact of said administratrix, infringed upon the

aforementioned order issued by the court, and the defendants also illegally recorded it in the registry of deeds of the province and in the title deeds of the said realty of the above-mentioned decedents;

7. That without any connection or authority, the Maao Central Co., Inc., later illegally mortgaged said realty of the decedents for millions of pesos, for their own interests, and to the serious and utter prejudice of the interests of the intestate estate; and the defendants likewise illegally recorded said illegal mortgages in the registry of deeds of the province and in the title deeds of the decedent's property;

8. That the defendants allege that the order of the court authorizing the administratrix to mortgage the property left by the decedents, the power of attorney made out by the administratrix in favor of Gil Montilla, the latter's mortgage and all subsequent mortgages executed by the Maao Sugar Central Co., Inc., to the defendant Philippine National Bank, are illegal, void ab initio, and without any effect according to the very text of said documents, making evidence unnecessary;

9. That the administratrix of the estates of Jose Ortaliz Jordan and Vicenta Montilla died on February 7, 1926, and the defendants continued thereafter to give effect to the illegal power of said administratrix, and refused to consider it terminated:

10. That the plaintiffs have requested the defendants to cancel said illegal encumbrances for millions of pesos recorded as documents Nos. 5924, 7327, 7577, and 10970 in the title deeds issued for the property left by the aforesaid decedents, but defendants refused to do so;

11. That the defendant, Philippine National Bank, although fully aware and agreeing that said property of the decedents was adjudicated by the Court of First Instance of the province to the plaintiffs Ernestina, Elisa, and Jose Ortaliz, refuses to deliver the original title of deeds to the registrar of deeds for their proper conveyance to the present owners.

The defendant registrar of deeds answered denying generally and specifically each and every allegation of the complaint, and praying for its dismissal.

The defendant Philippine National Bank also filed a general and specific denial of each and every allegation of the complaint, alleging by way of special defense:

(a) That the Philippine National Bank is a third party with respect to the plaintiffs, and has acquired the registration of the mortgages executed in its favor in good faith and for valuable consideration.

(b) That the registration of the mortgages executed in favor of the defendant Philippine National Bank is valid because at the time it was made said bank relied upon the books of the registrar of deeds which contained a record of the order of the court authorizing the administratrix to execute powers to mortgage the property referred to in the second amended complaint, and, moreover, had no knowledge whatsoever of the illegality alleged by the plaintiffs in their complaint.

(c) That since the defendant Philippine National Bank relied upon the annotations or memoranda endorsed upon the reverse side of the certificates of title covering the property in question as good and lawful with respect to the order of the court and the power-of-attorney executed in favor of Mr. Gil Montilla, in recording the mortgages executed in its favor by said attorney-in-fact, is entitled to the protection of the law.

(d) That the defendant Philippine National Bank has no objection to make delivery of the certificates of title claimed by the plaintiffs in their complaint, if the court so decrees, but said defendant believes and contends that the complaint herein is not the proper procedure to compel said defendant to make such delivery of the documents aforementioned. And, therefore, defendant asks to be absolved from the complaint with costs against the plaintiffs.

At the hearing, the parties submitted to the court the following stipulation of facts:

(a) That the defendants admit paragraph 1 of the first cause of action of the amended complaint.

(b) The defendants likewise admit paragraph 2 of the first cause of action of said amended complaint.

(c) The defendants also admit that Ernestina Ortaliz, Elisa Ortaliz, and Jose Ortaliz are children of the decedents Jose Ortaliz y Jordan and Vicenta Montilla, and that by virtue of the order of this court dated October 27,1923, issued in the intestate proceedings of said Jose Ortaliz Jordan and Vicenta Montilla, they were declared and ratified by the proper court as the only legitimate and universal heirs of all the, property left by said decedents, appearing in cadastral plans of Bago as lots Nos,. 2072, 2073, and 2173, and, in cadastral plans of La Carlota as lots Nos. 865, 867, 926, 174, and 975, and other lots therein.

(d) That on September 21, 1918, the judge presiding over the Court of First Instance of Occidental Negros issued a decree appointing Cecilia Ortaliz as administratrix of the estate of Jose Ortaliz Jordan with power to authorize Gil Montilla, among other things, to mortgage to any entity, lots Nos. 2072 and 2073, together with lots Nos. 2193, 1409, and 1411; but that the plaintiffs did not give their written consent to the administratrix to make out said power of attorney and to execute said mortgage.

(e) And that said authorization in its most important part, reads as follows: "Under such conditions as may be deemed most advantageous to the interest of the estates, etc., etc. . . . of Jose Ortaliz Jordan."

(f) The parties likewise agree that in the order or authorization given by this court to the administratrix Cecilia Montilla, no power was given her to appoint the substitute of Gil Montilla in said power-of-attorney, but neither is there a prohibition against it in said authorization.

(g) That on December 21,1918, the Court of First Instance of Occidental Negros issued an order of authorization identical with that issued in the intestate proceedings of Jose Ortaliz and in the intestate proceeding of Vicenta Montilla, civil cause No. 1720, referring to lots Nos. 865, 877, 926, 974 and 975 of the cadastral survey of La Carlota, Occidental Negros.

(h) There are also included in this stipulation of facts, Exhibits A and B of the plaintiffs, admitted by the defendants, and the certified copies (marked Exhibits 1 and 2 of the defendants) of the orders issued by the court in civil cases Nos. 1254 and 1720, being the intestate proceedings of the late Jose Ortaliz Jordan and Vicenta Montilla, and certified copies of the powers of attorney executed by Cecilia Ortaliz in favor of Gil Montilla, marked Exhibits 3 and 4 of the defendants.

In view of the stipulation of facts and other evidence adduced by the parties, the court below rendered judgment on March 13, 1929, holding: (1) That the mortgage executed in favor of the Bank by Gil Montilla, acting as attorney-in- fact of the judicial administratrix Cecilia Ortaliz, is valid since it was executed on March 2,1920, and Act No.2884, amending section 714 of the Code of Civil Procedure, was passed on February 24, 1920, which authorizes the establishment of liens on the estates of decedents; and no evidence of bad faith having been adduced against the bank in accepting the mortgage executed by Gil Montilla, it would seem clear that the privilege accorded a person acquiring a thing in good faith and for a valuable consideration may be invoked (sections 38 and 39, Act No. 496, and Angelo vs. Director of Lands, 49 Phil., 838); and (2) that said mortgage has been cancelled since 1920 for having been substituted by other contracts wherein neither Cecilia Ortaliz, nor Gil Montilla, nor the plaintiffs herein took part, and therefore the liens created by those subsequent contracts cannot be deemed to have been legally constituted upon the property belonging to the plaintiffs. And by virtue thereof the court ordered the registrar of deeds of Occidental Negros to cancel the liens in favor of the Philippine National Bank appearing in certificates of title covering lots Nos. 865, 926, 974, 975, and 977 of the cadaster of La Carlota, and lots Nos. 2072, 2073, and 2193 of the cadaster of Bago, both of the same province, without special pronouncement of costs.

Both parties appealed from this judgment.

The plaintiffs confine their appeal to that part of the judgment holding that the mortgage given to the bank by Gil Montilla was valid because it was executed after the enactment

of Act No. 2884, amending section 714 of the Code of Civil Procedure, authorizing a mortgage of real property included in an inheritance. The bank, on the other hand, appealed because the court below held that the mortgage of March 2,1920, was cancelled by the substitution of other contracts in which neither Cecilia Ortaliz, nor the attorney-in-fact Gil Montilla, nor the plaintiffs, took part.

In order to decide the appeal taken by the plaintiffs, section 714 of the Code of Civil Procedure, as amended by Act No. 2884, cited in the judgment below, must be considered, which provides:

SEC. 714. Realty may be sold or encumbered though personality not exhausted. — When the personal estate of the deceased is not sufficient to pay the debts and charges of administration without injuring the business of those interested in the estate, or otherwise prejudicing their interests, and where a testator has not otherwise made sufficient provision for the payment of such debts and charges, the court, on application of the executor or administrator with the consent and approbation, in writing, of the heirs, devisees, and legatees, residing in the Philippine Islands, may grant a license to the executor or administrator to sell, mortgage or otherwise encumber for that purpose real, in lieu of personal estate, if it clearly appears that such sale, mortgaging or encumbrance of real estate would be beneficial to the persons interested and will not defeat any devise of land; in which case the assent of the devisee shall be required.

According to this provision of law, the probate court may authorize the sale or mortgage of real property, even when there is still some personal property, subject to the following conditions: (a) That the application of the administrator be accompanied by the written consent and approval of the heirs, devisees, and legatees residing in the Philippine Islands; (b) that the sale or mortgage is necessary in order to pay off debts and expenses of administration; and (c) that the sale or mortgage is beneficial to the heirs and other persons interested in the estate.

The written consent of the heirs, devisees, and legatees is required because they, as presumptive owners, are the persons directly affected by the sale, and mortgage as well, of the decedent's estate, since a mortgage implies a sale in case of default in paying the debt. The sale or mortgage must be made for the purpose of paying the debts and expenses of administration, because the creditors of the decedent are indisputably entitled to collect their credits even before the distribution of the estate. And, lastly, the sale or mortgage must be beneficial to the heirs, because, in providing for the administration of decedent's estates, the law aims to protect the heirs as well as the creditors of the decedent.

The convenience or benefit to be derived from the sale or mortgage is not the only thing to be considered before a court authorizes a sale or mortgage; the principal requirement is that the heirs give their written consent and approval, for they are the owners of the property to be sold or mortgaged, and cannot be deprived thereof without due process of law.

In the case before us, the plaintiffs, who have been declared to be the heirs of Jose Ortaliz y Jordan and Vicenta Montilla, did not give their consent nor approval to the mortgage in question. Nor does the record show that said mortgage was necessary to pay off the debts and expenses of administration. Neither is there evidence that the mortgage has been beneficial to the heirs, the plaintiffs herein, for although the decree of the court reads "the attorney-in-fact is empowered to mortgage the estate of the decedents Jose Ortaliz Jordan and Vicenta Montilla, for such an amount and subject to such conditions as he may deem beneficial to the interest of the estates," as a matter of fact, Gil Montilla, the attorney-in-fact, mortgaged the said property for the exclusive benefit of the Maao Sugar Central Co., Inc. The court below committed an error prejudicial to the interests of the plaintiffs in authorizing the administratrix to appoint an attorney-in-fact with power to mortgage the property without the requisites required by law.

The requisites set forth in section 714 of the Code of Civil Procedure for a sale or mortgage of real estate under administration left by a decedent are so indispensable to the protection of the heirs that unless they are present the court has no power to grant the authority asked by the administratrix. The law provides how this kind of a sale or mortgage is to be made, and the manner thus provided must be strictly followed. The validity of the sale or mortgage depends upon the fulfillment of the requisites established by the law. (Lizarraga Hermanos vs. Abada, 40 Phil., 124; Buenaventura and Del Rosario vs. Ramos, 43 Phil., 704; and Jamora and Director of Education vs. Jaranilla, 47 Phil., 617.)

Wherefore, we are of the opinion and so hold that the orders of the court below authorizing the mortgage of the estate in question are null and void ab initio, and that the mortgages executed in favor of the defendant bank by Gil Montilla as attorney-in-fact of the judicial administratrix of the estate of the decedents Jose Ortaliz y Jordan and Vicenta Montilla, whereof the plaintiffs are heirs, are likewise null and void.

We do not consider the statement of the court below of much importance, to the effect that "it seems clear that the Bank may invoke the privilege given to persons acquiring property in good faith and for valuable consideration, no evidence of bad faith having been presented against it, in accepting the mortgage executed by Gil Montilla acting as attorney-in-fact of the administratrix of the estate of the decedents herein." The bank contracted with an agent, and did so at its own risk, being bound to ascertain the character and scope of the powers given to the agent with whom it contracted. (Strong vs. Gutierrez Repide, 6 Phil., 680.) The very entries in the registry of deeds relied upon by the bank show that the object of the authority granted by the court and of the powers given by the administratrix to Gil Montilla was to mortgage the property belonging to the intestate estate of the aforesaid decedents. And it was incumbent upon the bank to see whether the requisites of the law were complied with in said mortgage.

The conclusion we have reached in passing upon the plaintiffs' appeal does away with the necessity of discussing the defendant's appeal; for, if the mortgages executed by Gil Montilla on March 2,1920, and June 24,1920, acting in behalf of the administratrix of the

decedent's estates aforementioned are null and void ab initio, they do not constitute a lien upon the property in question, even supposing that those contracts were not substituted by the mortgages of December 23, 1920, and June 15,1922, in which neither the judicial administratrix Cecilia Ortaliz, nor her attorney-in-fact Gil Montilla, nor the plaintiffs herein had any part.

Wherefore, the judgment appealed from is hereby affirmed in so far as it orders the registrar of deeds of the Province of Occidental Negros to cancel the liens in favor of the Philippine National Bank appearing in certificates of title covering lots Nos. 865, 877 (not 977), 926, 974, and 975, of the cadaster of La Carlota, and lots Nos. 2072, 2073, and 2193 of the cadaster of Bago, both of the same province. Without special pronouncement of costs. So ordered.

Avanceña, C.J., Street, Malcolm, Ostrand, Johns, and Villa-Real, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-4069 December 5, 1908

THE ESTATE OF LUIS GAMBOA CARPIZO, deceased, plaintiff-appellee, vs.ROBERTO FLORANZA, defendant-appellant.

Carlos A. Imperial, for appellant.Tomas Lorayes, for appellee.

 

WILLARD, J.:

This case has been once more before this court (Jaucian vs. Floranza, 9 Phil. Rep., 236), where a motion to dismiss the appeal was denied.

The commissioners appointed to hear claims against the estate of Luis Gamboa Carpizo in the judicial proceedings for the settlement of that estate allowed a claim in favor of Balbino Jaucian for P2,720. In their report made to the court on the 30th of July, 1906, they said that this claim was secured by a mortgage on real estate and expressed an opinion as to the preferential rights to which this creditor and another mortgage creditor would be entitled in the distribution of the proceeds of the sale. On the 27th of August, 1906, the administrator presented a petition to the court in which he referred to the report of the commissioners, stated that it appeared that some of the creditors were mortgage creditors, and asked that the court appoint a day for hearing upon the question as to the preference which these creditors enjoyed.lawphil.net On the 22nd of October, 1906, the court apparently without hearing any of the parties interested, made an order directing the administrator to present a motion asking for an order directing the sale of the mortgaged property; that the mortgage debt be paid from the proceeds of the sale, and that what remained be distributed among the other creditors. This is one of the orders appealed from.

On the 23rd of October, 1906, the administrator presented a petition in compliance with the order of the 22nd of October asking that the real estate upon which it was said Balbino Jaucian had a mortgage be sold for the purpose of paying the mortgage debt. On the 12th of November, 1906, the court, without notice to any of the parties, and without hearing any of them, made an order directing that the property mentioned in the petition be sold for the purpose of paying the mortgage debt to Balbino Jaucian. It

provided that notice of the sale should be given in a certain way. This is the second order appealed from.

On the 14th of December, 1906, the administrator filed a report of the sale, stating that their property had been sold for P3,005, and asked that the sale be confirmed.

It does not appear from the record before us that this sale ever had been confirmed. On the contrary, it seems from certain findings subsequently made by the court that the land upon which the mortgaged house stood did not belong to the estate but belonged to the widow.

The creditor who has appealed says that the document evidencing the loan of Balbino Jaucian is not a mortgage. The appellant has not seen fit to have the document brought here and this assignment of error can not, therefore, be sustained.

The appellee insists that the questions as to the preferential right of Jaucian was determined by the commissioners in their report and that report, not having been appealed from, such determination is final and conclusive. It is very apparent from the provisions of the code declaring that the powers of this commission are that it had no authority to make any ruling whatever in relation to preferential rights which some creditors might have over others. (See sec. 686 and following sections, and sec. 735, Code of Civil Procedure.)

It is claimed by the appellant that, under the provisions of section 708 of the Code of Civil Procedure, Jaucian waived his mortgage lien by presenting his claim before the commissioners. That section is as follows:

A creditor holding a claim against the deceased, secured by mortgage or other collateral security, may abandon the security and prosecute his claim before the committee, and share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his security, by ordinary action in court, making the executor or administrator a party defendant; and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceedings to realize upon the security, he may prove his deficiency judgment before the committee against the estate of the deceased; or he may rely upon his mortgage or other security alone, and foreclose the same at any time, within the period of the statute of limitations, and in that even he shall not be admitted as a creditor, and shall receive no share in the distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the direction of the court, if the court shall adjudge it to be for the best interest of the estate that such redemption shall be made.

We do not find it necessary to decide this question, for the orders appealed from must be reversed on other grounds. The code states in its sections 714 to 721 various

conditions under which the real estate of the deceased may be sold for the payment of debts. There is nothing in any one of these sections nor in any other sections of the code which indicates that the Court of First Instance, in the exercise of its probate jurisdiction, has any power to order the sale of a specific piece of real estate for the purpose of paying a mortgage debt which is a lien thereon. It may be that the court would have authority to sell the property, subject to the mortgage lien, for the purpose of paying other debts of the estate, but there is nothing giving the court authority to sell it for the purpose of paying that specific debt. lawphil.net

Another fatal objection to the order of the 12th of November, directing the sale, is that the court entirely failed to comply with the provisions of section 722 of the Code of Civil Procedure. That section requires the administrator to present a petition asking for the sale of the real estate. It also distinctly provides that, when such petition is made, the court shall appoint a time and place for hearing it and shall require notice of the petition and of the time and place of such hearing to be given in a newspaper of general circulation, and that the court may order such further notice given as it deems proper.

No attempt was made to comply with the provisions of the law. No notice whatever was given to any of the persons interested of the application for license to sell.

The orders appealed from, namely, that made on the 22nd of October, 1906, and that made on the 12th of November, 1906, are reversed, and the case remanded for further proceedings in accordance with the law. No costs will be allowed to either party in this court. So ordered.

Arellano, C.J., Torres, Mapa, Johnson, Carson, and Tracey, JJ., concur.

FIRST DIVISION

[G.R. No. 21289. April 5, 1924. ]

In re estate of Engracio Orense, deceased. EUGENIA M. SANTOS, VIUDA DE ORENSE, Petitioner-Appellant, v. THE ROMAN CATHOLIC BISHOP OF NUEVA

CACERES, Opponent-Appellee. 

Camus & Delgado for Appellant. 

Manly, Goddard & Lockwood for Appellee. 

SYLLABUS

1. ESTATES OF DECEASED PERSONS; ORDER FOR LICENSE TO SELL REAL PROPERTY APPEALABLE. — An order for a license to sell real property in

administration proceedings is ordinarily in the nature of a judgment upon the issue involved and an appeal may be taken therefrom. 

2. ID; EFFECT OF ORDER OF DISTRIBUTION; VACATING ORDER FOR LICENSE TO SELL REAL PROPERTY. — A final order of distribution of the estate of a deceased person vests the title to the land of the estate in the distributees; a license to sell such land granted after the distribution, without notice to the distributee, is void for want of

jurisdiction in the court and the order granting it may be vacated at any time before the sale has been made. 

3. EVIDENCE; JUDICIAL NOTICE; ADMINISTRATION OF THE TEMPORALITIES OF THE ROMAN CATHOLIC CHURCH. The court may take judicial notice of the fact that the corporation sole The Roman Catholic Bishop of a diocese, in which temporalities of the Roman Catholic Church are situated, is the administrator of such temporalities and

that the parish priests, as such, have no control thereover.

D E C I S I O N

OSTRAND, J. :

It appears from the record of this case that the appellant’s husband, Engracio Orense, a resident of the municipality of Guinobatan, Province of Albay, died on October 8, 1918, leaving an estate which, according to the inventory filed by the appellant on May 19, 1919, was worth the sum of P43,382.27 over and above all debts, expenses of administration. The only claim presented to the committee on claims and approved was one for P6,720 in favor of Asuncion Fortic de Morata, which has been paid. 

The deceased left a will, according to which six parcels of land were left to the Roman

Catholic church as trustee for various purposes, subject to a life estate in favor of the appellant who, in the absence of descendants, ascendants and collateral heirs of the deceased, was made his universal testamentary heir. 

The will was probated on March 6, 1919, and the appellants was appointed executrix. In the meantime, on January 29, 1919, the appellant, as special administratrix of the estate, filed a motion reciting that the deceased, in his lifetime, had obtained a franchise to establish and operate an electric light plant in the town of Guinobatan and had signed a contract with the Pacific Commercial Company whereby the latter agreed to furnish him the machinery for the plant for the sum of P15,590; that the machinery had began to arrive and that company was urgently demanding payment of the second installment of the purchase price amounting to P6,236 and that besides the said appellant was bound to continue to pay the sum of P779.50 per month for ten months in order to completely extinguish the obligation; that she had no funds with which to meet the obligation except liberty bonds to the amount of P5,000 and that it would be necessary to borrow P10,000 from the National Bank or mortgage certain lands with Torrens titles. She therefore asked for authority to sell or mortgage the liberty bonds or obtain a loan of P10,000 from the bank. The desired authority was granted by the court two days later, on January 31, 1919. 

On November 20, 1919, the appellant who had then been appointed administratrix with the will annexed, filed a motion with the court of First Instance asking that the declaration of heirs made by the testator in his will be confirmed, and that a commission be appointed to make a nominal division of the estate, the word "nominal" being used because, according to the terms of the will, all of the property was to remain in possession of the appellant in usufruct. This motion was granted by other of December 13, 1919, the court declaring the appellant the universal heir of the testator and providing that the various legatees under the will should not take possession of their respective legacies during the lifetime of the appellant or while "the debts of the deceased occasioned by the establishment of the electric light plant in Guinobatan remained unpaid." In the same order the court also appointed a commissioner to partition the estate in accordance with the will and declared that the purpose of the partition was to secure the termination of the testamentary proceedings and have the interests of the parties recorded in the registry of deeds. 

On September 1, 1920, the appellant submitted the commissioner’s report of the nominal partition, in which report the six parcels of land above referred to were duly assigned to the Roman Catholic Church. In there report mention was made of the conditions of the will that the legatees cannot take possession of the legacies while the widow lived, and as a special reason why the legatees cannot take possession, it is further stated that "the deceased, and now the estate, is in debt to the Philippine National Bank in the sum of P35,000 and to the Pacific Commercial Company in the sum of P15,000, making in all P50,000." The court approved the "nominal" partition of the estate by an order dated September 4, 1920. 

On April 7, 1921, the appellant filed another motion in which she alleged that the debt of

the Pacific Commercial Company had been paid in full, but that the estate still owed the bank the sum of P29,500 which, with other expenses, interest, etc., would amount to a total indebtedness of P38,000 or P40,000; that the bank was demanding payment; that the estate was without funds and that, because of the low price of abaca, the income was not sufficient to pay the interest due the bank. After various other allegations to the same effect, the motion concluded with a prayer for authority to sell four parcels of land, three of which were devised to the Roman Catholic Church. The following indorsement appears at the bottom of the motion:jgc:chanrobles.com.ph

"Conforme y recibi copia de la macion precedente hoy 9 de abril de 1921. 

"JULIAN OPE

"Parroco de Guinobatan" 

On June 30, 1921, the appellant filed another motion in which she stated that "in conformity with the bank and the legatees she had been seeking buyers for the properties included in the former motion and that offers had not reached even half of the debts which amounted to P40,000," and she therefore asked for authority to sell three more parcels of land, all of which pertained to the devise in favor of the Roman Catholic Church. This motion also contained the indorsement of Julian Ope, the parish priest of Guinobatan. 

On July 6, 1921, the court dictated an order authorizing the disposal of the aforesaid parcels of land, either at public or private sale as thought best, subject to the confirmation of the court. 

On July 27, 1922, the appellant reported to the court that she had sold the smallest of the parcels willed to the Roman Catholic Church for P350 and asked the approval of the court. This sale was approved by an order dated August 12, 1922. 

On February 5, 1923, the appellant again filed a motion asking for authority to sell seven small parcels of rice land which had been devised to different nephews and nieces of the deceased. The motion states that these small parcels adjoin one of the large parcels of abaca land devised to the church and that a buyer has been found who was willing to pay P8,000 for the land provided these small parcels were included. Before this motion had been acted upon, the Roman Catholic Archbishop of Nueva Caceres, a corporation sole, on February 12, 1923, filed a motion asking that the order of June 16,1920, authorizing the sale of the property willed to the Roman Catholic Church be revoked on the ground that parish priests have no control over the temporalities of the Roman Catholic Church and that, therefore, the consent given by Father Julian Ope was invalid and of no legal effect and that the debts to which the proceeds of the sale are to be devoted are not the debts of the deceased, but were incurred during the administration of the estate by the administratrix through the mismanagement of its property. 

The appellant, through her attorney, filed a lengthy answer to this motion, in which the questions involved were extensively discussed and in which the appellant insisted that the motion having been filed one year and seven months after the issuance of the order of June 16, 1921, the order could not then be revoked. Upon argument by counsel for both parties, but without any testimony being offered or received, the court, by an order dated July 3, 1923, revoked the license to sell granted by the order of June 16, 1921, on the ground that the consent to the sale given by the parish priest at Guinobatan was of no legal effect and that the license, therefore, was improvidently granted. 

The case is now before us upon appeal from said order of July 3, 1923, and the appellee argues that the order appealed from, not constituting a final determination of the rights of the parties, the appeal is premature and should be dismissed. In this we think counsel is mistaken. An order for a license to sell real estate in administration proceedings, ordinarily, is in the nature of a judgment upon the issues involved and an appeal may be taken therefrom as in the case of any other judgment. 

The appellant presents one assignment of error, involving two principal propositions, neither of which is, in our opinion, tenable. 

It is first argued that the motion for the revocation of the license to sell was presented out of time and after the order granting the license had become final. There might be some force in this contention if the motion were based on mere errors of procedure not affecting the jurisdiction of the court, but from our point of view, such is not the case here. 

At the time of the granting of the licensed, a distribution of the estate of the deceased had been made, the order of distribution had become final and the title to the estate in remainder devised to the Roman Catholic Church had become vested. As far as the title to the property was concerned, the administration proceedings were then terminated and the court had lost its jurisdiction in respect thereto. There might still be a lien on the property for the debts of the deceased and legitimate expenses of administration, but it seems obvious that the court could have no jurisdiction to foreclose this lien and order the property sold unless some sort of notice was given the holder of the title. No notice, neither actual nor constructive, was given in the present case. It does not even appear that the order of sale was recorded in the office of the registry of deeds as required by subsection 7 of section 722 of the Code of Civil Procedure. The order of sale was therefore void for want of jurisdiction in the court and could be vacated at anytime before it had been acted upon and sale made and confirmed. (24 C. J., 615.) 

The appellant also maintains that the court below erred in vacating the order of sale upon an unverified motion and without the presentation of evidence. In answer, we may say that the court could property take judicial notice of the fact that the corporation sole, the Roman Catholic Archbishop of Nueva Caceres is the administrator of the temporalities of that church in the diocese within which the land in question is situated and that the parish priest have no control thereover. (See sec. 157, Act No. 1459; Dougherty v. Evangelista, 7 Phil., 37; Berlin v. Ramirez and Municipality of Lagonoy, 7

Phil., 41; Alonso v. Villamor, 16 Phil., 315; Roman Catholic Bishop of Nueva Segovia v. Government of the Philippine Islands, 26 Phil., 300; Harty v. Sandin, 11 Phil., 450.) As all other facts upon which the order appealed from is based appear in the record, it was unnecessary to require the presentation of other evidence. 

We find no error in the order appealed from and the same is therefore affirmed, with the costs against the appellant. So ordered. 

Araullo, C.J., Johnson, Street, Avanceña, Johns, and Romualdez, JJ., concur.