FIRST DIVISION

G.R. Nos. 208828-29               August 13, 2014

RICARDO C. SILVERIO, SR., Petitioner,
vs.
RICARDO S. SILVERIO, JR., CITRINE HOLDINGS, INC., MONICA P. OCAMPO and ZEE2
RESOURCES, INC., Respondents.
DECISION
VILLARAMA, JR., J.:

Before the Court is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
to reverse and set aside the Decision1 dated March 8, 2013 of the Court of Appeals (CA) insofar as CA-
G.R. SP Nos. 121173 and 122024 are concerned, and Resolution2 dated July 4, 2013 denying
petitioner's Motion for Partial Reconsideration. The CA nullified the preliminary injunction issued by the
Regional Trial Court (RTC) of Makati City ("intestate court"), Branch 57 in Sp. Proc. No. M-2629 and
reversed said court's Order dated August 18, 2011 declaring the sales and derivative titles over two
properties subject of intestate proceedings as null and void.

The factual and procedural antecedents of the case, as summarized by the CA, are as follows: The late
Beatriz S. Silverio died without leaving a will on October 7, 1987. She was survived by her legal heirs,
namely: Ricardo C. Silverio, Sr. (husband), Edmundo S. Silverio (son), Edgardo S. Silverio (son), Ricardo
S. Silverio, Jr. (son), Nelia S.Silverio-Dee (daughter), and Ligaya S. Silverio (daughter). Subsequently, an
intestate proceeding (SP PROC. NO. M-2629) for the settlement of her estate was filed by SILVERIO, SR.

In the course of the proceedings, the parties filed different petitions and appeal challenging several
orders ofthe intestate court that went all the way up to the Supreme Court. To better understand the
myriad of factual and procedural antecedents leading to the instant consolidated case, this court will
resolve the petitions in seriatim.

The Petitions

CA-G.R. SP No. 121172

The first petition of the three consolidated petitions is CA-G.R. SP No. 121172 wherein petitioner,
RICARDO S. SILVERIO JR. ("SILVERIO JR.") assails the Order ofthe intestate court dated 16 June 2011
reinstating RICARDO SILVERIO SR. ("SILVERIO SR.") as administrator to the estate of the late Beatriz
Silverio.

The administrator first appointed by the Court was EDGARDO SILVERIO ("EDGARDO"), but by virtue of
a Joint Manifestation dated 3 November 1999 filed by the heirs of BEATRIZ D. SILVERIO, the motion to
withdraw as administrator filed by EDGARDO was approved by the intestate court and in his stead,
SILVERIO SR. was appointed as the new administrator. Thereafter, an active exchange of pleadings to
remove and appoint a new administrator ensued between SILVERIO SR. and SILVERIO JR. The flip-
flopping appointment of administrator is summarized below:

In an Order dated 3 January 2005, SILVERIO SR. was removed as administrator and in his stead,
SILVERIO, JR. was designated as the new administrator. A motion for reconsideration was separately
filed by SILVERIO SR. and Nelia Silverio-Dee ("SILVERIO-DEE") and on 31 May 2005, the intestate court
issued an Omnibus Order affirming among others, the Order of 3 January 2005. Inthe same Order, the
intestate court also granted the motion of SILVERIO JR. to take his oath as administrator effective upon
receipt of the order and expunged the inventory report filed by SILVERIO SR.

On 12 December 2005 the intestate court acting on the motion filed by SILVERIO SR. recalled the Order
granting letters of administration to SILVERIO JR. and reinstated SILVERIO SR. as administrator. Then
again, the intestate court acting on the motion for partial consideration to the Order dated 12 December
2005 filed by SILVERIO JR. issued an Omnibus Order dated 31 October 2006 upholding the grant of
Letters of Administration to SILVERIO JR. and removed SILVERIO SR., ad administrator for gross
violation of his duties and functions under Section 1, Rule 81 of the Rules of Court.

SILVERIO SR. moved for reconsideration of the above Order whereas SILVERIO-DEE on the other hand,
filed a Petition for Certiorari before the Court of Appeals docketed as CA-G.R. SP No. 97196. On 28
August 2008, the Court of Appeals (Seventh Division) rendered a decision reinstating SILVERIO, SR. as
administrator, the decretal portion of the Order reads:

"WHEREFORE, the petition is GRANTED. The portions of the Omnibus Order upholding the grant of
letters of administration to and the taking of an oath of administration by Ricardo Silverio, Jr., as well as
the removal of Ricardo Silverio, Sr. as administrator to the Estate of Beatriz Silverio, are declared NULL
and VOID. The writ of preliminary injunction earlier issued is MADE PERMANENT in regard to the said
portions. Respondent RTC is ORDERED to reinstate Ricardo Silverio, Sr. as administrator to the Estate
of Beatriz Silverio. Costs against the Private Respondents.

SO ORDERED."

SILVERIO JR. filed a Petition for review on Certioraribefore the Supreme Court docketed as G.R. No.
185619 challenging the 28 Augsut 2008 decision of the Court of Appeals. On 11 February 2009, the
Supreme Court issued a resolution denying the petition for failure to sufficiently show any reversible error
inthe assailed judgment to warrant the exercise by the Court of discretionary appellate jurisdiction.
Acting on SILVERIO JR.’s motion for reconsideration, the Supreme Court on 11 February 2011, denied
the motion with finality. An entry of judgment was made on 29 March 2011.

On 25 April 2011 SILVERIO SR. filed before the intestate court, an urgent motion to be reinstated as
administrator of the estate. Acting on the motion, the intestate court issued the now challenged Order
dated 16 June 2011, the pertinent portion of the Order reads:

x x x x

"WHEREFORE, upon posting of a bond in the sum of TEN MILLION PESOS, the same to be approved
by this Court, Mr. Ricardo C. Silverio, Sr. is hereby ordered reinstated as the Administrator to the estate
of the late Beatriz Silverio and to immediately take his oath as such, and exercise his duties and
functions as are incumbent under the law upon the said position. xxx."

x x x x

CA-G.R. SP No. 121173

x x x x

On 15 March 2011, heirs SILVERIO JR., EDMUNDO and LIGAYA represented by her legal guardian
moved for the disqualification and/or inhibition of JUDGE GUANLAO, JR. based on the following
grounds: (1) Absence of the written consent of all parties in interest allowing JUDGE GUANLAO, JR. to
continue hearing the case considering that he appeared once as counsel in the intestate proceedings; (2)
JUDGE GUANLAO, JR. has shown bias and partiality in favor of SILVERIO SR. by allowing the latter to
pursue several motions and even issued a TRO in violation of the rules against forum shopping; (3) Heir
LIGAYA’s Petition for Support and Release of Funds for Medical Support has not been resolved; and (4)
It is in the best interest of all the heirs that the proceedings be presided and decided by the cold
neutrality of an impartial judge.

On 23 March 2011, JUDGE GUANLAO, JR. issued an order denying the Motion for Disqualification and/
or Inhibition. The movants filed a motion for reconsideration but the same was denied in an order dated
14 June 2011. Hence, the instant petition.

x x x x

CA-G.R. SP NO. 122024

x x x x

The intestate court in its Omnibus Order dated 31 October 2006, ordered among others, the sale of
certain properties belonging to the estate. The portion of the order which is pertinent to the present
petition reads:

"WHEREFORE, above premises considered, this Court for the foregoing reasons resolves to grant the
following:

(1) xxx

(2) xxx

(3) Allowing the sale of the properties located at (1) No. 82 Cambridge Circle, Forbes Park, Makati City,
covered by T.C.T. No. 137155 issued by Register of Deeds of Makati City; (2) No. 3 Intsia Road, Forbes
Park, Makati City covered by T.C.T. No. 4137154 issued by the Register of Deeds of Makati City; and (3)
No. 19 Taurus St., Bel-Air Subd. Makati City covered by TCT No. 137156 issued by the Register of
Deeds of Makati City to partially settle the intestate estate of the late Beatriz S. Silverio, and authorizing
the Administrator to undertake the proper procedure or transferring the titles involved to the name of the
estate; and

(4) To apply the proceeds of the sale mentioned in Number 3 above to the payment of taxes, interests,
penalties and other charges, if any, and todistribute the residue among the heirs Ricardo C. Silverio, Sr.,
Ricardo S. Silverio, Jr., Ligaya S. Silverio represented by Legal Guardian Nestor S. Dela Merced II,
Edmundo S. Silverio and Nelia S. SilverioDee in accordance with the law on intestacy.

SO ORDERED."

By virtue of the aforesaid Order, SILVERIO, JR. on 16 October 2007 executed a Deed of Absolute Salein
favor of CITRINE HOLDINGS, Inc. ("CITRINE") over the property located at No. 3 Intsia Road, Forbes
Park, Makati City. CITRINE became the registered owner thereof on 06 September 2010 as evidenced by
TCT No. 006-201000063.

A Deed of Absolute Sale was likewise executed in favor of Monica P. Ocampo (notarized on September
16, 2010) for the lot located at No. 82 Cambridge Circle, Forbes Park, Makati City. On 23 December
2010, TCT No. 006-2011000050 was issued toMonica P. Ocampo. The latter subsequently sold said
property to ZEE2 Resources, Inc. (ZEE2) and TCT No. 006-2011000190 was issued on 11 February 2011
under its name.

In the interim, or on 12 December 2006 SILVERIO-DEE filed a petition for certioraribefore the Court of
Appeals docketed as CA-G.R. SP No. 97196 with prayer for injunctive relief. As prayed for, the Court of
Appeals issued a Temporary Restraining Order (TRO) on 5 February 2007. On 4 July 2007, the Court
issueda Writ of Preliminary Injunction conditioned upon the posting of the bond in the amount of two
million pesos (Php2,000,000.00). SILVERIO-DEE posted the required bond on February 5, 2007 but in an
order dated 3 January 2008, the Court ruled that the bond posted by SILVERIO-DEE failed to comply
with A.M. No. 04-7-02-SC. The Court, however, did not reverse the ruling granting the injunction but
instead ordered SILVERIO-DEE to comply with A.M. No. 04-7-02-SC. The Court also increased the bond
from two million to ten million. On 29 February 2008, the Court issued a Resolution approving the ten
million bond and issued the Writ of Preliminary Injunction. Eventually, on 28 August 2008 the Court of
Appeals (Seventh Division) issued a decision reinstating SILVERIO SR. as administrator and declaring the
Writ of Preliminary Injunction permanent in regard to the appointment of administrator.

On 04 February 2011 SILVERIO SR. filed an Urgent Application for the Issuance of Temporary
Restraining Order/Preliminary Prohibitory Injunction (With Motion For the Issuance of Subpoena Ad
Testificandum and Subpoena Duces Tecum) praying among others, that a TRO be issued restraining
and/or preventing SILVERIO, JR., MONICA OCAMPO, CITRINE HOLDINGS, INC. and their successors-
in-interest from committing any act that would affect the titles to the three properties.

On 14 February 2011, SILVERIO SR. filed an Urgent Omnibus Motion (a) To Declare as Null and Void the
Deed of Absolute Sale dated 16 September 2010; (b) To cancel the Transfer Certificate of Title No.
006-2011000050; and (c) To reinstate the Transfer Certificate of Title No. 2236121 in the name of Ricardo
C. SilverioSr. and the Intestate Estate of the late Beatriz S. Silverio.

On 28 February 2011 the Intestate Court issued an Order granting a Temporary Restraining Order
enjoining SILVERIO JR., their agent or anybody acting in their behalf from committing any act that would
affect the titles to the properties and enjoining the Register of Deeds of Makati City from accepting,
admitting, approving, registering, annotating or in any way giving due course to whatever deeds,
instruments or any other documents involving voluntary or involuntary dealings which may have the
effect of transferring, conveying, encumbering, ceding, waiving, alienating, or disposing in favor of any
individual or any entity of the subject properties. Subpoena ad testificandumand duces tecumwas also
issued by the intestate court requiring SILVERIO, JR., MONICA OCAMPO and ALEXANDRA GARCIA of
CITRINE to testify and bring with them any books and documents under their control to shed light on the
circumstances surrounding the transaction involving the properties in question.

On 9 March 2011, SILVERIO Sr. filed a Supplement to the Urgent Omnibus Motion dated 14 February
2011. On 18 August 2011, the intestate court rendered the now assailed Order the decretal portion of the
Order is quoted hereunder:

"WHEREFORE, this Court hereby orders that:

1. The Deed of Absolute Sale dated 16 September 2010 as VOID:

2. The Transfer Certificate of Title No. 006-2011000050 in the name of defendant MONICA OCAMPO or
any of her successors-in-interestincluding all derivative titles, as NULL AND VOID;

3. The Transfer Certificate of Title TCT No. 006-2011000190 in the name of ZEE2 RESOURCES, INC. or
any of its successors-in-interest including all derivative titles, as NULL AND VOID;

4. (T)he Register of Deeds of Makati City to CANCEL Transfer Certificate of Title No. 006-2011000050,
Transfer Certificate of Title No. 006-2011000190 and all of its derivative titles; and 5. Reinstating the
Transfer Certificate of Title No. 2236121 in the name of RICARDO C. SILVERIO, SR. AND THE
INTESTATE ESTATE OF THE LATE BEATRIZ SILVERIO, and AS TO THE INTSIA PROPERTY:

1. The Register of Deeds ofMakati City to CANCEL Transfer Certificate ofTitle No. 006-2010000063, in
the name of CITRINE HOLDINGS, INC. and all of its derivative titles; and

2. The reinstatement of Transfer Certificate of Title No. 223612 in the name of RICARDO C. SILVERIO,
SR. and the INTESTATE ESTATE OF THE LATE BEATRIZ SILVERIO.

SO ORDERED."

x x x x3

The consolidated petitions for certiorari filed by respondent Ricardo S. Silverio, Jr. ("Silverio, Jr.") before
the CA questioned the following issuances of the intestate court: CA-G.R. SP No. 121172 – Order dated
June 16, 2011 reinstating Silverio, Sr. as Administrator; CA-G.R. SP No. 121173 – (1) Order dated March
23,2011 granting Silverio, Sr.’s application for preliminary injunction enjoining Silverio, Jr. or anyone
acting on their behalf from committing any act that would affect the titles to the subject properties and
enjoining the Register of Deeds of Makati City from accepting, admitting, approving, registering,
annotating or in any way giving due course to whatever deeds, instruments or any other documents
involving the Cambridge and Intsia properties, (2) Order dated March 23, 2011 which denied Silverio,
Jr.’s motion or disqualification and/or inhibition of Judge Guanlao, Jr., and (3) Order dated June 14, 2011
denying the motion for reconsideration of the March 23, 2011 Order (granting application for preliminary
injunction); and in CA-G.R. SP No. 122024 – Order dated August 18, 2011 declaring the Deed of
Absolute Sale, TCT and all derivative titles over the Cambridge and Intsiaproperties as null and void.

On March 8, 2013, the CA rendered its Decision, the falloof which reads:

WHEREFORE, based on the foregoing premises, the Court hereby disposes and orders the following:

1. The petition in CA G.R. SP No. 121172is DENIEDfor lack of merit. Accordingly, the 16 June 2011
Order of the Regional Trial Court of Makati City, Branch 57 reinstating MR. RICARDO C. SILVERIO, SR.
as Administrator is AFFIRMED.

2. The petition in CA GR. S.P. No. 121173is partly DENIEDfor lack of merit insofar as it questions the 23
March 2011 Order denying RICARDO SILVERIO, JR’s Motion for Disqualification and/or Inhibition of
Judge Honorio E. Guanlao, Jr. The petition is partly GRANTEDin that the Preliminary Injunction issued by
the Regional Trial Court of Makati City, Branch 57 is herebydeclared NULL and VOID for being issued
with grave abuse of discretion.

3. The petition in CA G.R.-S.P. No. 122024is GRANTED. Accordingly, the 18 August 2011 Order
declaring the Deed of Absolute Sale, Transfer Certificate of Title and all derivative titles over the
Cambridge and Intsia Property null and void is hereby REVERSEDand SET ASIDE.

SO ORDERED.4

Ricardo C. Silverio, Sr. (petitioner) filed a Motion for Partial Reconsideration5 "insofar as its ruling in CA-
G.R. SP No. 122024" praying that the August 18, 2011 Order of the intestate court be affirmed. By
Resolution dated July 4, 2013, the CA denied his motion for partial reconsideration.

Hence, this petition contending thatthe CA committed a reversible error in upholding the validity of the
Intsia and Cambridgeproperties upon the ground that the intestate court cannotannul the sales as it has
a limited jurisdiction only and which does not includeresolving issues of ownership. It is asserted that the
CA should nothave stopped there and looked into the nature of the properties sold, which formed part of
the conjugal partnership of Ricardo Silverio, Sr. and Beatriz S. Silverio.

Petitioner seeks the reinstatement of the order of the intestate court annulling the sales of the
Cambridge and Intsia properties. In the alternative, should the said sales be upheld, petitioner prays that
this Court (1) declare the sales to be valid only to the extent of 50% net remainder share of the late
Beatriz less the corresponding shares therefrom of petitioner and the other legal compulsory heirs, and
(2) order respondent Silverio, Jr. to account for the proceeds of sales for distribution of the residue
among the legal/compulsory heirs.

In their Comment, respondents Silverio, Jr., Monica Ocampo and Citrine Holdings, Inc. argued that the
intestate court should not have ruled on the validity of the sale of the subject properties to third parties
after it itself had authorized their disposal in partial settlementof the estate, especially so when separate
actions assailing the new titles issued to said third parties were already instituted by petitioner.

As to the issue of alleged lack ofprior consent of petitioner to the aforesaid sales as the surviving
spouses with a 50% conjugal share in the subject properties, respondents point out that such is belied
by the October 31, 2006 Order of the intestate court, which clearly showed that counsels of all the heirs
were present at the hearing of June 16, 2006 and no objection was made by them to the sale of the
properties and the partial settlement of the Estate of Beatriz S. Silverio, together with the transfer of titles
of these properties in the name of the Estate as prayed for in petitioner’s Manifestation and Motion dated
April 19, 2006. Petitioner had not challenged or appealed the said order authorizing the sale of the
subject properties. Thus, it is too late in the day for petitioner to raise this factual issue before this Court,
not to mention that it cannot be ventilated in the present appeal by certiorari as thisCourt is not a trier of
facts.

Respondent ZEE2 Resources Corporation filed its Comment contending that the intestate court
improperly nullified the titles despite the fact that the present registered owners, who are indispensable
parties, were not impleaded. Indeed, a Torrens title cannot be collaterally attacked and may be cancelled
only in a direct proceeding brought for the purpose. Respondent points out that petitioner himself
recognized thata direct action is required to annul a Torrens title ashe initially instituted two civil
complaints before the RTC of Makati City seeking to annul, among others, the TCT’s issued to
respondent Ocampo for the Cambridge property. After failing to secure restraining orders in these two
civil cases, petitioner filed in the intestate court his Urgent OmnibusMotion dated February 14, 2011 to
annul the said titles, including that of ZEE2. In any case, respondent maintains that it is a buyer of good
faith and for value, of which the intestate court never made a determination nor did the aforesaid Urgent
Omnibus Motion and Supplement to the Omnibus Motion dated March 4, 2011 contain allegations
indicating that respondent ZEE2 was not a buyer in good faith and for value.

According to respondent ZEE2, petitioner’s act of filing a separate complaint with application for a
temporary restraining order (TRO) and preliminary injunction on January 31, 2011 in another court (Civil
Case Nos. 11-084 of the RTC of Makati City, Branch 143) constitutes willful and deliberate forum
shopping asthe former also prayedsimilar primary reliefs and setting up the alleged nullity of the subject
deeds of absolute sale as those raised in the Urgent Omnibus Motion and Supplement to the Urgent
Omnibus Motion filed in the intestate court.

At the outset, we emphasize that the probate court having jurisdiction over properties under
administration has the authority not only to approve any disposition or conveyance, but also to annul an
unauthorized sale by the prospective heirs or administrator. Thus we held in Lee v. Regional Trial Court of
Quezon City, Branch 856:

Juliana Ortañez and Jose Ortañez sold specific properties of the estate, without court approval. It is well-
settled that court approval is necessary for the validity of any disposition of the decedent’s estate. In the
early case of Godoy vs. Orellano, we laid down the rule that the sale of the property of the estate by an
administrator without the order of the probate court is void and passes no title to the purchaser. And in
the case of Dillena vs. Court of Appeals, we ruled that: x x x x

It being settled that property under administration needs the approval of the probate court before it can
be disposed of, any unauthorized disposition does not bind the estate and is null and void. Asearly as
1921 in the case of Godoy vs. Orellano(42 Phil 347), We laid down the rule that a sale by an
administrator of property of the deceased, which is not authorized by the probate court is null and void
and title does not pass to the purchaser.

There is hardly any doubt that the probate court can declare null and void the disposition of the property
under administration, made by private respondent, the same having been effected without authority from
said court. It is the probate court that has the power to authorize and/or approve the sale (Section 4 and
7, Rule 89), hence, a fortiori, it is said court that can declare it null and void for as long as the
proceedings had not been closed or terminated. To uphold petitioner’s contention that the probate court
cannot annul the unauthorized sale, would render meaningless the power pertaining to the said court.
(Bonga vs. Soler, 2 SCRA 755). (italics ours) Our jurisprudence is therefore clear that (1) any disposition
of estate property by an administrator or prospective heir pending final adjudication requires court
approval and (2) any unauthorized disposition of estate property can be annulled by the probate court,
there being no need for a separate action to annul the unauthorized disposition. (Emphasis supplied.)

In this case, the sale of the subject properties was executed by respondent Silverio, Jr. with prior
approval of the intestate court under its Omnibus Order dated October 31, 2006. Subsequently, however,
the sale was annulled by the said court on motion by petitioner.

In reversing the intestate court’s order annulling the sale of the subject properties, the CA noted that said
ruling is anchored on the fact that the deeds of sale were executed at the time when the TRO and writ of
preliminary injunction issued in CA-G.R. SP No. 97196 was still in effect. It then concluded that the
eventual decision in the latter case making the writ of preliminary injunction permanent only with respect
to the appointment of petitioner as administrator and not to the grant of authority to sell mooted the
issue of whether the sale was executed at the time when the TRO and writ of preliminary injunction were
in effect.

The CA’s ruling on this issue is hereunder quoted:

The more crucial question that needs to be addressed is: Whether the authority to sell the properties in
question granted under the October 31, 2006 Omnibus Order, was nullified by the decision of the Court
of Appeals in CA-G.R. SP No. 97196. A look at the dispositive portion of the decision in CA-G.R. SP No.
97196 would lead us to reasonably conclude that the grant of authority to sell is still good and valid. The
fallo of the decision reads:

"WHEREFORE, the petition is GRANTED. The portions of the Omnibus Order upholding the grant of
letters of administration to and the taking of an oath of administration by Ricardo Silverio, Jr., as well as
the removal of Ricardo Silverio, Sr. as administrator to the Estate of Beatriz Silverio, are declared NULL
and VOID. The writ of preliminary injunction earlier issued is made permanent in regard to the said
portions. Respondent RTC is ORDERED to reinstate Ricardo Silverio, Sr. as administrator of the Estate of
Beatriz Silverio. Costs against the Private Respondents.

SO ORDERED."

The October 31, 2006 Omnibus Order of the testate [sic] court in so far as it authorizes the saleof the
three properties in question was not declared by the Court of Appeals, Seventh Division as null and
void.It is axiomatic that it is the dispositive portion of the decision that finally invests rights upon the
parties, sets conditions for the exercise of those rights, and imposes the corresponding duties or
obligations.

From all the foregoing, We declare that it was grave abuse of discretion on the part of the intestate court
when it ordered the sale of the Cambridge Property and Intsia Property as NULL and VOID citing as
justification the decision of the Court of Appeals, Seventh Division in CAG.R. SP No. 97196. To reiterate,
the injunction order which was made permanent by the Court of Appeals (Seventh Division) was
declared to be limited only to the portion ofthe Omnibus Order that upheld the grant of letters of
administrationby SILVERIO, JR. and the removal of SILVERIO, SR. as administrator and nothing else.

Anent the preliminary injunction issued by the intestate court in its Order dated 23 March 2011 and
challenged by SILVERIO JR. in CA-G.R. SP No. 121173, we find that it was issued with grave abuse of
discretion as it was directed against acts which were already [fait]accompli. The preliminary injunction
sought to: 1) restrain SILVERIO JR., their agents, or anybody acting in their behalf or any person from
committing any act that would affect the titles to the subject properties belonging to the Intestate Estate
of the late Beatriz Silverio and (2) enjoining the Register of Deeds of Makati City from accepting,
admitting, approving, registering, annotating or in any giving due course to whatever deeds, instruments
or any other documents involving voluntary or involuntary dealings which may have the effect of
transferring, conveying, encumbering, ceding, waiving, alienating or disposing in favor of any individual
or any entity the above-enumerated properties belonging to the Intestate Estate of the late Beatriz
Silverio. However, the records show that when the preliminary injunction was issued on 23 March 2011
new titles over the disputed properties were already issued to CITRINE HOLDINGS, INC. and ZEE2
RESOURCES INC.7 (Emphasis supplied.)

We affirm the CA.

It bears to stress that the October 31, 2006 Omnibus Order was issued by the intestate court acting
upon pending motions filed by petitioner and respondent Silverio, Jr., father and son, respectively, who
are the central figures in the now decade-old controversy over the Intestate Estate of the late Beatriz S.
Silverio. The intestate court flip-flopped in appointing as administrator of the estate petitioner and
respondent Silverio, Jr., their personal conflicts becoming more evident to the intestate court as the
proceedings suffered delays. At the hearing of the urgent motion filed by Edmundo Silverio to sell the
subject properties and partially settle the estate, the much awaited opportunity came when the heirs
represented by their respective counsels interposed no objection to the same.

While it is true that petitioner was eventually reinstated as Administrator pursuant to the August 28, 2008
decision in CA-G.R. SP No. 97196 (petition for certiorari filed by Nelia Silverio-Dee), weagree with the CA
that the permanent injunction issued under the said decision, as explicitly stated in its fallo, pertained
only to the portions of the October 31, 2006 Omnibus Order upholding the grant of letters of
administration to and taking of an oath of administration by respondent Silverio, Jr., as otherwise the CA
would have expressly set aside as well the directive in the same Omnibus Order allowing the sale of the
subject properties. Moreover, the CA Decision attained finality only on February 11, 2011 when this
Court denied with finality respondent Silverio, Jr.’s motion for reconsideration of the February 11, 2009
Resolution denyinghis petition for review (G.R. No. 185619).1âwphi1

The CA therefore did not err in reversing the August 18, 2011 Order of the intestate court annulling the
sale of the subject properties grounded solely on the injunction issued in CA-G.R. SP No. 97196.
Respondents Ocampo, Citrine and ZEE2 should not be prejudiced by the flip-flopping appointment of
Administrator by the intestate court, having relied in good faith that the sale was authorized and with
prior approval of the intestate court under its Omnibus Order dated October 31, 2006 which remained
valid and subsisting insofar as it allowed the aforesaid sale.

WHEREFORE, the petition is DENIED. The Decision dated March 8, 2013 and Resolution dated July 4,
2013 of the Court of Appeals in CAG.R. SP Nos. 121173 and 122024 are AFFIRMED.

With costs against the petitioner.

SO ORDERED.

G.R. No. 75884 September 24, 1987

JULITA GO ONG, FOR HERSELF AND AS JUDICIAL GUARDIAN OF STEVEN GO ONG, petitioners,

vs.

THE HON. COURT OF APPEALS, ALLIED BANKING CORPORATION and the CITY SHERIFF OF
QUEZON CITY, respondents.

PARAS, J.:

This is a petition for review on certiorari of the March 21, 1986 Decision * of the Court of Appeals in AC-
G.R. CV No. 02635, "Julita Ong etc. vs. Allied Banking Corp. et al." affirming, with modification, the
January 5, 1984 Decision of the Regional Trial Court of Quezon City in Civil Case No. Q-35230.

The uncontroverted facts of this case, as found by the Court of Appeals, are as follows:

...: Two (2) parcels of land in Quezon City Identified as Lot No. 12, Block 407, Psd 37326 with an area of
1960.6 sq. m. and Lot No. 1, Psd 15021, with an area of 3,660.8 sq. m. are covered by Transfer
Certificate of Title No. 188705 in the name of "Alfredo Ong Bio Hong married to Julita Go Ong "(Exh. D).
Alfredo Ong Bio Hong died on January 18, 1975 and Julita Go Ong was appointed administratrix of her
husband's estate in Civil Case No. 107089. The letters of administration was registered on TCT No.
188705 on October 23, 1979. Thereafter, Julita Go Ong sold Lot No. 12 to Lim Che Boon, and TCT No.
188705 was partially cancelled and TCT No. 262852 was issued in favor of Lim Che Boon covering Lot
No. 12 (Exh. D-4). On June 8, 1981 Julita Go Ong through her attorney-in-fact Jovita K. Yeo (Exh. 1)
mortgaged Lot No. 1 to the Allied Banking Corporation to secure a loan of P900,000.00 obtained by JK
Exports, Inc. The mortgage was registered on TCT No. 188705 on the same date with the following
notation: "... mortgagee's consent necessary in case of subsequent alienation or encumbrance of the
property other conditions set forth in Doc. No. 340, Page No. 69, Book No. XIX, of the Not. Public of
Felixberto Abad". On the loan there was due the sum of P828,000.00 and Allied Banking Corporation
tried to collect it from Julita Go Ong, (Exh. E). Hence, the complaint alleging nullity of the contract for
lack of judicial approval which the bank had allegedly promised to secure from the court. In response
thereto, the bank averred that it was plaintiff Julita Go Ong who promised to secure the court's approval,
adding that Julita Go Ong informed the defendant that she was processed the sum of P300,000.00 by
the JK Exports, Inc. which will also take charge of the interest of the loan.

Concluding, the trial court ruled:

Absent (of) any evidence that the property in question is the capital of the deceased husband brought
into the marriage, said property should be presumed as acquired during the marriage and, therefore,
conjugal property,

After the dissolution of the marriage with the death of plaintiff's husband, the plaintiff acquired, by law,
her conjugal share, together with the hereditary rights thereon. (Margate vs. Rabacal, L-14302, April 30,
1963). Consequently, the mortgage constituted on said property, upon express authority of plaintiff,
notwithstanding the lack of judicial approval, is valid, with respect to her conjugal share thereon,
together with her hereditary rights.

On appeal by petitioner, respondent Court of Appeals affirmed, with modification, the appealed decision
(Record, pp. 19-22). The dispositive portion of the appellate court's decision reads:

WHEREFORE, with the modification that the extrajudicial foreclosure proceedings instituted by
defendant against plaintiff shall be held in abeyance to await the final result of Civil Case No. 107089 of
the Court of First Instance of Manila, 6th Judicial District Branch XXXII, entitled "IN THE MATTER OF
THE INTESTATE ESTATE OF THE LATE ALFREDO ONG BIO: JULITA GO ONG, ADMINISTRATRIX". In
pursuance with which the restraining order of the lower court in this case restraining the sale of the
properties levied upon is hereby ordered to continue in full force and effect coterminous with the final
result of Civil Case No. 107089, the decision appealed from is hereby affirmed. Costs against plaintiff-
appellant.

SO ORDERED.

On April 8, 1986, petitioner moved for the reconsideration of the said decision (Ibid., pp. 24-29), but in a
Resolution dated September 11, 1986, respondent court denied the motion for lack of merit (Ibid., p. 23).
Hence, the instant petition (Ibid., pp. 6-17).

The Second Division of this Court, in a Resolution dated November 19, 1986 (Rollo, p. 30), without giving
due course to the petition, resolved to require private respondent to comment thereon and it did on
February 19, 1987 (Ibid., pp. 37-42). Thereafter, in a Resolution dated April 6, 1987, the petition was
given due course and the parties were required to file their respective memoranda (Ibid., p. 43).

Petitioner filed her Memorandum on May 13, 1987 (Ibid., pp. 45-56), while private respondent filed its
Memorandum on May 20, 1987 (Ibid., pp. 62-68).

The sole issue in this case is —

WHETHER OR NOT THE MORTGAGE CONSTITUTED OVER THE PARCEL OF LAND UNDER
PETITIONER'S ADMINISTRATION IS NULL AND VOID FOR WANT OF JUDICIAL APPROVAL.

The instant petition is devoid of merit.

The well-settled rule that the findings of fact of the trial court are entitled to great respect, carries even
more weight when affirmed by the Court of Appeals as in the case at bar.

In brief, the lower court found: (1) that the property under the administration of petitioner — the wife of
the deceased, is a community property and not the separate property of the latter; (2) that the mortgage
was constituted in the wife's personal capacity and not in her capacity as administratrix; and (3) that the
mortgage affects the wife's share in the community property and her inheritance in the estate of her
husband.

Petitioner, asserting that the mortgage is void for want of judicial approval, quoted Section 7 of Rule 89
of the Rules of Court and cited several cases wherein this Court ruled that the regulations provided in the
said section are mandatory.

While petitioner's assertion may have merit insofar as the rest of the estate of her husband is concerned
the same is not true as regards her conjugal share and her hereditary rights in the estate. The records
show that petitioner willingly and voluntarily mortgaged the property in question because she was
processed by JK Exports, Inc. the sum of P300,000.00 from the proceeds of the loan; and that at the
time she executed the real estate mortgage, there was no court order authorizing the mortgage, so she
took it upon herself, to secure an order.

Thus, in confirming the findings of the lower court, as supported by law and the evidence, the Court of
Appeals aptly ruled that Section 7 of Rule 89 of the Rules of Court is not applicable, since the mortgage
was constituted in her personal capacity and not in her capacity as administratrix of the estate of her
husband.

Nevertheless, petitioner, citing the cases of Picardal, et al. vs. Lladas (21 SCRA 1483) and Fernandez, et
al. vs. Maravilla (10 SCRA 589), further argues that in the settlement proceedings of the estate of the
deceased spouse, the entire conjugal partnership property of the marriage is under administration. While
such may be in a sense true, that fact alone is not sufficient to invalidate the whole mortgage, willingly
and voluntarily entered into by the petitioner. An opposite view would result in an injustice. Under similar
circumstances, this Court applied the provisions of Article 493 of the Civil Code, where the heirs as co-
owners shall each have the full ownership of his part and the fruits and benefits pertaining thereto, and
he may therefore alienate, assign or mortgage it, and even effect of the alienation or mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership (Philippine National Bank vs. Court of Appeals, 98 SCRA 207
[1980]).

Consequently, in the case at bar, the trial court and the Court of Appeals cannot be faulted in ruling that
the questioned mortgage constituted on the property under administration, by authority of the petitioner,
is valid, notwithstanding the lack of judicial approval, with respect to her conjugal share and to her
hereditary rights. The fact that what had been mortgaged was in custodia legis is immaterial, insofar as
her conjugal share and hereditary share in the property is concerned for after all, she was the
ABSOLUTE OWNER thereof. This ownership by hers is not disputed, nor is there any claim that the
rights of the government (with reference to taxes) nor the rights of any heir or anybody else have been
prejudiced for impaired. As stated by Associate Justice (later Chief Justice) Manuel Moran in Jakosalem
vs. Rafols, et al., 73 Phil. 618 —

The land in question, described in the appealed decision, originally belonged to Juan Melgar. The latter
died and the judicial administration of his estate was commenced in 1915 and came to a close on
December 2, 1924, only. During the pendency of the said administration, that is, on July 5, 1917, Susana
Melgar, daughter of the deceased Juan Melgar, sold the land with the right of repurchase to Pedro Cui,
subject to the stipulation that during the period for the repurchase she would continue in possession of
the land as lessee of the purchase. On December 12, 1920, the partition of the estate left by the
deceased Juan Melgar was made, and the land in question was adjudicated to Susana Melgar. In 1921,
she conveyed, in payment of professional fees, one-half of the land in favor of the defendant-appellee
Nicolas Rafols, who entered upon the portion thus conveyed and has been in possession thereof up to
the present. On July 23, 1921, Pedro Cui brought an action to recover said half of the land from Nicolas
Rafols and the other half from the other defendants, and while that case was pending, or about August
4, 1925, Pedro Cui donated the whole land in question to Generosa Teves, the herein plaintiff-appellant,
after trial, the lower court rendered a decision absolving Nicolas Rafols as to the one-half of the land
conveyed to him by Susana Melgar, and declaring the plaintiff owner of the other half by express
acknowledgment of the other defendants. The plaintiff appealed from that part of the judgment which is
favorable to Nicolas Rafols.

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 ordinary 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.

The reference to judicial approval in Sec. 7, Rule 89 of the Rules of Court cannot adversely affect the
substantive rights of private respondent to dispose of her Ideal [not inchoate, for the conjugal
partnership ended with her husband's death, and her hereditary rights accrued from the moment of the
death of the decedent (Art. 777, Civil Code) share in the co-heirship and/or co-ownership formed
between her and the other heirs/co-owners (See Art. 493, Civil Code, supra.). Sec. 7, Art. 89 of the Civil
Code applies in a case where judicial approval has to be sought in connection with, for instance, the sale
or mortgage of property under administration for the payment, say of a conjugal debt, and even here, the
conjugal and hereditary shares of the wife are excluded from the requisite judicial approval for the reason
already adverted to hereinabove, provided of course no prejudice is caused others, including the
government.

Moreover, petitioner is already estopped from questioning the mortgage. An estoppel may arise from the
making of a promise even though without consideration, if it was intended that the promise should be
relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the
perpetration of fraud or would result in other injustice (Gonzalo Sy Trading vs. Central Bank, 70 SCRA
570).

PREMISES CONSIDERED, the instant petition is hereby DENIED and the assailed decision of the Court
of Appeals is hereby AFFIRMED.

SO ORDERED.

G.R. No. L-27876 April 22, 1992

ADELAIDA S. MANECLANG, in her capacity as Administrator of the Intestate Estate of the late
Margarita Suri Santos, plaintiff-appellee,
vs.
JUAN T. BAUN and AMPARO S. BAUN, ET AL., defendants. CITY OF DAGUPAN, defendant-
appellant.
 

DAVIDE, JR., J.:

The issue presented in this case is the validity of a sale of a parcel of land by the administrator of an
intestate estate made pursuant to a petition for authority to sell and an order granting it which were filed
and entered, respectively, without notice to the heirs of the decedents.

The records disclose that on 12 June 1947, Margarita Suri Santos died intestate. She was survived by
her husband Severo Maneclang and nine (9) children. On 30 July 1947, a petition for the settlement of
her estate was filed by Hector S. Maneclang, one of her legitimate children, with the Court of First
Instance at Dagupan City, Pangasinan; the case was docketed as Special Proc. No. 3028. At the time of
the filing of the petition, the ages of her children were as follows:

Hector Maneclang –– 21 years old

Cesar Maneclang –– 19

Oscar Maneclang –– 17

Amanda Maneclang –– 16

Adelaida Meneclang –– 13

Linda Maneclang –– 7

Priscila Maneclang –– 6

Natividad Maneclang –– 3

Teresita Maneclang –– 2

No guardian ad litem was appointed by the court for the minor children.

Margarita left several parcels of land, among which is Lot No. 203 of the Cadastral Survey of Dagupan
City containing an area of 7, 401 square meters, more or less , and covered by Transfer Certificate of
Title No. 1393.

On 2 September 1949, Pedro M. Feliciano, the administrator of the intestate estate of Margarita, filed a
petition in SP Proc. No. 3028 asking the court to give him "the authority to dispose of so much of the
estate that is necessary to meet the debts enumerated" in the petition. While notice thereof was given to
the surviving spouse, Severo Maneclang, through his counsel, Atty. Teofilo Guadiz, no such notice was
sent to the heirs of Margarita.

On 9 September 1949, despite the absence of notice to the heirs, the intestate court issued an Order
"authorizing the administrator to mortgage or sell so much of the properties of the estate for the
purposes (sic) of paying off the obligations" referred to in the petition.

Pursuant to this Order, Oscar Maneclang, the new administrator of the intestate estate, executed on 4
October 1952 a deed of sale1 in favor of the City of Dagupan, represented by its mayor, Angel B.
Fernandez, of a portion consisting of 4,415 square meters of the aforementioned Lot No. 203 for and in
consideration of P11,687.50. This sale was approved by the intestate court on 15 March 1954.

The City of Dagupan immediately took possession of the land and constructed thereon a public market,
known as the Perez Boulevard Public Market, at a cost of P100,00.00, more or less. It has been in
continuous and uninterrupted possession of the property since the construction of the market. 2

Some other parcels of land belonging to the intestate estate were sold by the administrator pursuant of
the same authority granted by the 9 September 1949 Order. 3

On 28 September 1965, the new judicial administratrix of the intestate estate, Adelaida S. Maneclang,
daughter of the late Margarita Suri Santos, filed with the Court of First Instance of Pangasinan an action
for the annulment of the sales made by the previous administrator pursuant to the order of 9 September
1949, cancellation of titles, recovery of possession and damages against the vendees Juan T. Baun and
Amparo Baun, Marcelo Operaña and Aurora Pagurayan, Crispino Tandoc and Brigida Tandoc, Jose
Infante and Mercedes Uy Santos, Roberto Cabugao, Basilisa Callanta and Fe Callanta, Ricardo Bravo
and Francisca Estrada, the City of Dagupan, and Constantino Daroya and Marciana Caramat. 4 The
complaint was docketed as Civil Case No. D-1785. The cause of action against the City of Dagupan
centers around the deed of sale executed in its favor on 4 October 1952 by former judicial administrator
Oscar S. Maneclang. In its Answer filed on 5 November 1965, 5 the City of Dagupan interposed the
following affirmative defenses: (a) the sale in its favor is valid, legal and above board; (b) plaintiff has no
cause of action against it, or that the same, if any, had prescribed since the complaint was filed thirteen
(13) years after the execution of the sale; (c) plaintiff is barred by estoppel and laches; (d) it is a buyer in
good faith; and (e) it has introduced necessary and useful improvements and contructed a supermarket
worth P200,000.00; hence, assuming arguendo that the sale was illegal, it has the right to retain the land
and the improvements until it is reimbursed for the said improvements.

On 30 March 1966, plaintiff and the City of Dagupan entered into a Stipulation of Facts wherein they
agreed on the facts earlier adverted to. They, however, agreed: (a) to adduce evidence concerning the
reasonable rental of the property in question and other facts not embodied therein but which are material
and vital to the final determination of the case, and (b) to request the court to take judicial notice of SP
Proc. No. 3028.

The evidence adduced by plaintiff discloses that Oscar Maneclang was induced by its then incumbent
Mayor, Atty. Angel B. Fernandez, to sell the property to the City of Dagupan and that the said City has
been leasing the premises out to numerous tenants at the rate of P0.83 per square meter per month, or a
total monthly rental of P3,747.45, since 4 October 1952. 6

On 9 November 1966, the trial court rendered a partial decision in Civil Case No. D-1785 against the City
of Dagupan, the dispositive portion of which reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment:

(a) Annulling (sic) the Deed of Sale executed by the Administrator on October 4, 1952 (Exh. F) being null
and void ab initio;

(b) Ordering the cancellation of the Certificate of Title issued in favor of the defendant City of Dagupan
by virtue of said Deed of Sale, and directing the Register of Deeds of said City to issue a new Certificate
of Title in favor of the plaintiff as Administratrix covering the property in question;

(c) Ordering the defendant City of Dagupan to restore the possession to the plaintiff in her capacity as
Judicial Administratrix of the Intestate Estate of Margarita Suri Santos of the parcel of land in question,
together with all the improvements thereon existing;

(d) Ordering the defendant City of Dagupan City to pay the plaintiff the sum of P584,602.20 as
accumulated rentals or reasonable value of the use of the property in question from October 4, 1952 up
to the filing of the complaint in 1985, plus interest thereon at the rate of 6% per annum from the later
date;

(e) Ordering the defendant City of Dagupan to pay a monthly rental or reasonable value of its occupation
of the premises in the amount of P3,747.45 from October 9, 1985 up to the date the possession of the
premises is delivered (sic) the plaintiff by said defendant, and

(f) Ordering the plaintiff to reimburse the defendant City of Dagupan the sums of P100,000.00 and
P11,687.50 both amounts to be deducted from the amount due the plaintiff from said defendant.

Defendant shall also pay the costs.

SO ORDERED. 7

In arriving at the said disposition, the trial court held that:

(a) Under Rule 90 of the Rules of Court, 8 which is similar to the provisions of Section 722 of the Code of
Civil Procedure, it is essential and mandatory that the interested parties be given notices of the
application for authority to sell the estate or any portion thereof which is pending settlement in a probate
court. As held in the early case of Estate of Gamboa vs. Floranza, 9 an order issued by a probate court
for the sale of real property belonging to the estate of a deceased person would be void if no notice for
the hearing of the petition for such sale is given as required by said Section 722. Under this section,
when such a petition is made, the court shall designate a time and place for the hearing and shall require
notice of such hearing to be given in a newspaper of general circulation; moreover, the court may require
the giving of such further notice as it deems proper.

In the instant case, no notice of the application was given to the heirs; hence, both the order granting
authority to sell and the deed of sale executed in favor of the City of Dagupan pursuant thereto, are null
and void.

(b) Estoppel does not lie against plaintiff as no estoppel can be predicated on an illegal act and estoppel
is founded on ignorance. In the instant case, the nullity is by reason of the non-observance of the
requirements of law regarding notice; this legal defect or deficiency deprived the probate court of its
jurisdiction to dispose of the property of the estate. Besides, the City of Dagupan was represented in the
transaction by lawyers who are presumed to know the law. This being the case, they should not be
allowed to plead estoppel; finally, estoppel cannot give validity to an act which is prohibited by law or is
against public policy. 10

(c) Laches and prescription do not apply. The deed of sale being void ab initio, it is in contemplation of
law inexistent and therefore the right of the plaintiff to bring the action for the declaration of inexistence
of such contract does not prescribe. 11

(d) The City of Dagupan is not a purchaser in good faith and for value as the former judicial administrator,
Oscar Maneclang, testified that he was induced by then incumbent Mayor of the City Councilor Atty.
Teofilo Guadiz, Sr. to sell the property; moreover, the City Fiscal signed as witness to the deed of sale.
These lawyers are presumed to know the law.

Not satisfied with the decision, the City of Dagupan appealed to this Court 12 alleging that said decision
is contrary to law, the facts and the evidence on record, and that the amount involved exceeds
P500,000.00.

In its Brief, the City of Dagupan submits the following assigned errors:

FIRST ERROR

THE LOWER COURT ERRED IN HOLDING THAT THE SALE EXECUTED BY THE JUDICIAL
ADMINISTRATOR TO THE CITY OF DAGUPAN IS NULL AND VOID AB INITIO.

SECOND ERROR

THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF IS NOT IN ESTOPPEL FROM ASSAILING
THE LEGALITY OF THE SALE.

THIRD ERROR

THE LOWER COURT ERRED IN HOLDING THAT THE INSTANT ACTION IS NOT BARRED BY LACHES
AND PRESCRIPTION.

FOURTH ERROR

THE LOWER COURT ERRED IN DECLARING THAT DEFENDANT CITY OF DAGUPAN IS NOT A
PURCHASER IN GOOD FAITH AND FOR VALUE.

FIFTH ERROR

THE LOWER COURT ERRED IN ORDERING DEFENDANT CITY OF DAGUPAN TO PAY THE PLAINTIFF
THE SUM OF P584,602.20 AS ACCUMULATED RENTALS OR REASONABLE VALUE OF (sic) THE USE
OF THE PROPERTY IN QUESTION FROM OCTOBER 4, 1952 UP TO THE FILING OF THE COMPLAINT
IN 1965, PLUS INTEREST THEREON AT THE RATE OF 6% PER ANNUM FROM THE LATER DATE.

SIXTH ERROR

THE LOWER COURT ERRED IN ORDERING THE DEFENDANT CITY OF DAGUPAN TO PAY A
MONTHLY RENTAL OR REASONABLE VALUE OF (sic) ITS OCCUPATION OF THE PREMISES IN THE
AMOUNT OF P3,747,45 FROM OCTOBER 9, 1965 UP TO THE DATE THE POSSESSION OF THE
PREMISES IS DELIVERED TO THE PLAINTIFF BY SAID DEFENDANT.

We shall consider these assigned errors sequentially.

1. In support of the first, appellant maintains that notice of the application for authority to sell was given
to Severo Maneclang, surviving spouse of Margarita. As the designated legal representative of the minor
children in accordance with Article 320 of the Civil Code, notice to him is deemed sufficient notice to the
latter; moreover, after Oscar Maneclang signed the deed of sale 13 in his capacity as judicial
administrator, he "sent copies of his annual report and the deed of sale to Severo Maneclang, and his
brothers Hector Maneclang and Oscar Maneclang and sister Amanda Maneclang, all of legal ages (sic),
while the other minor heirs received theirs through his lawyer." 14 Besides, per Flores vs. Ang Bansing, 15
the sale of property by the judicial administrator cannot be set aside on the sole ground of lack of notice.

These contentions are without merit.

Article 320 of the Civil Code does not apply. While the petition for authority to sell was filed on 2
September 1949, the Civil Code took effect only on 30 August 1950. 16 Thus, the governing law at the
time of the filing of the petition was Article 159 of the Civil Code of Spain which provides as follows:

The father, or in his default, the mother, shall be the legal administrator of the property of the children
who are subject to parental authority.

However, the provisions of the Code of Civil Procedure on guardianship impliedly repealed those of the
Civil Code relating to that portion of the patria potestad (parental authority) which gave to the parents the
administration and usufruct of their minor children's property; said parents were however entitled, under
normal conditions, to the custody and care of the persons of their minor children. 17

Article 320 of the present Civil Code, taken from the aforesaid Article 159, incorporates the amendment
that if the property under administration is worth more than two thousand pesos (P2,000.00), the father
or the mother shall give a bond subject to the approval of the Court of First Instance. This provision then
restores the old rule 18 which made the father or mother, as such, the administrator of the child's
property. Be that as it may, it does not follow that for purposes of complying with the requirement of
notice under Rule 89 of the Rules of the Court, notice to the father is notice to the children. Sections 2, 4
and 7 of said Rule state explicitly that the notice, which must be in be writing, must be given to the heirs,
devisees, and legatees and that the court shall fix a time and place for hearing such petition and cause
notice to be given to the interested parties.

There can be no dispute that if the heirs were duly represented by counsel or by a guardian ad litem in
the case of the minors, the notice may be given to such counsel or guardian ad litem. In this case,
however, only the surviving spouse, Severo Maneclang, was notified through his counsel. Two of the
heirs, Hector Maneclang and Oscar Maneclang, who were then of legal age, were not represented by
counsel. The remaining seven (7) children were still minors with no guardian ad litem having been
appointed to represent them. Obviously then, the requirement of notice was not satisfied. The requisite
set forth in the aforesaid sections of Rule 89 are mandatory and essential. Without them, the authority to
sell, the sale itself and the order approving it would be null and void ab initio. 19 The reason behind this
requirement is that the heirs, as the presumptive owners 20 since they succeed to all the rights and
obligations of the deceased from the moment of the latter's death, 21 are the persons directly affected by
the sale or mortage and therefore cannot be deprived of the property except in the manner provided by
law.

Consequently, for want of notice to the children, the Order of 9 September 1949 granting the application,
the sale in question of 4 October 1952 and the Order of 15 March 1954 approving the sale are all void ab
initio as against said children. Severo Maneclang, however, stands on different ground altogether. Having
been duly notified of the application, he was bound by the said order, sale and approval of the latter.
However, the only interest which Severino Maneclang would have over the property is his right of
usufruct which is equal to that corresponding by way of legitime pertaining to each of the surviving
children pursuant to Article 834 of the Civil Code of Spain, the governing law at that time since Margarita
Suri Santos died before the effectivity of the Civil Code of the Philippines.

2 Estoppel is unavailable as an argument against the administratrix of the estate and against the
children.

As to the former, this Court, in Boñaga vs. Soler, supra, reiterated the rule "that a decedent's
representative is not estopped to question the validity of his own void deed purporting to convey land; 22
and if this be true of the administrator as to his own acts, a fortiori, his successor can not be estopped to
question the acts of his predecessor are not conformable to law." 23 Not being the party who petitioned
the court for authority to sell and who executed the sale, she cannot be held liable for any act or
omission which could give rise to estoppel. Under Article 1431 of the Civil Code, through estoppel an
admission or representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. In estoppel by pais, as related to the party sought to be
estopped, it is necessary that there be a concurrence of the following requisites: (a) conduct amounting
to false representation or concealment of material facts or at least calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to
assert; (b) intent, or at least expectation that this conduct shall be acted upon, or at least influenced by
the other party; and (c) knowledge, actual or constructive of the actual facts. 24 In estoppel by conduct,
on the other hand, (a) there must have been a representation or concealment of material facts; (c) the
party to whom it was made must have been ignorant of the truth of the matter; and (d) it must have been
made with the intention that the other party would act upon it. 25

As to the latter, considering that, except as to Oscar Maneclang who executed the deed of sale in his
capacity as judicial administrator, the rest of the heirs did not participate in such sale, and considering
further that the action was filed solely by the administratrix without the children being impleaded as
parties plaintiffs or intervenors, there is neither rhyme nor reason to hold these heirs in estoppel. For
having executed the deed of sale, Oscar Maneclang is deemed to have assented to both the motion for
and the actual order granting the authority to sell. Estoppel operates solely against him.

3 As to prescription, this Court ruled in the Boñaga case that "[a]ctions to declare the inexsistence of
contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of the new
Civil Code (Eugenio, et al. vs. Perdido, et al., supra, citing Tipton vs. Velasco, 6 Phil. 67, and Sabas vs.
Germa , 66 Phil. 471 )."

4. Laches is different from prescription. As the court held in Nielsen & Co. Inc . vs. Lepanto Consolidated
Mining Co.,26 the defense of laches applies independently of prescription. While prescription is
concerned with the fact of delay, laches is concerned with the effect of delay. Prescription is a matter of
time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being
founded on some change in the condition of the property or the relation of the parties. Prescription is
statutory; laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is
based on fixed time, laches is not.

The essential elements of laches are the following: (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 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. 27

In the instant case, from time the deed of sale in favor of the City of Dagupan was executed on 4
October 1952, up to the time of the filing of the complaint for annulment on 28 September 1965, twelve
(12) years, ten (10) months and twenty-four (24) days had elapsed.

The respective ages of the children of Margarita Suri Santos on these two dates were, more or less, as
follows:

Upon execution At the filing


of the deed of sale of the complaint

Hector Maneclang 26 39

Cesar Maneclang 24 37

Oscar Maneclang 22 35

Amanda Maneclang 21 34

Adelaida Maneclang 18 31

Linda Maneclang 12 25

Priscila Maneclang 11 24

Natividad Maneclang 8 20

Teresita Maneclang 7 20

It is an undisputed fact that the City of Dagupan immediately took possession of the property and
constructed thereon a public market; such possession was open, uninterrupted and continuous.
Obviously, Hector, Cesar, Oscar and Amanda were already of legal age when the deed of sale was
executed. As it was Oscar who executed the deed of sale, he cannot be expected to renounce his own
act. With respect to Hector, Cesar and Amanda, they should have taken immediate steps to protect their
rights. Their failure to do so for thirteen (13) years amounted to such inaction and delay as to constitute
laches. This conclusion, however, cannot apply to the rest of the children — who were then minors and
not represented by any legal representative. They could not have filed an action to protect their interests;
hence, neither delay nor negligence could be attributed to them as a basis for laches. Accordingly, the
estate is entitled to recover 5/9 of the questioned property.

5. In ruling out good faith, the trial court took into account the testimony of Oscar Maneclang to the
effect that it was Mayor Fernandez of Dagupan City and Councilor Teofilo Guadiz, Sr., both lawyers, who
induced him to sell the property and that the execution of the sale was witnessed by the City Fiscal.

We are unable to agree.

While the order granting the motion for authority to sell was actually issued on 9 September 1949, the
same was secured during the incumbency of the then judicial administrator Pedro Feliciano. Even if it is
to be assumed that Mayor Fernandez and Councilor Guadiz induced Oscar Maneclang to sell the
property, the fact remains that there was already the order authorizing the sale. Having been issued by a
Judge who was lawfully appointed to his position, he was disputably presumed to have acted in the
lawful exercise of jurisdiction and that his official duty was regularly performed. 28 It was not incumbent
upon them to go beyond the order to find out if indeed there was a valid motion for authority to sell.
Otherwise, no order of any court can be relied upon by the parties. Under Article 526 of the Civil Code, a
possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any
flaw which invalidates it; furthermore, mistake upon a doubtful or difficult question of law may be the
basis of good faith. It implies freedom from knowledge and circumstances which ought to put a person
on inquiry. 29 We find no circumstance in this case to have alerted the vendee, the City of Dagupan, to a
possible flaw or defect in the authority of the judicial administrator to sell the property. Since good faith
is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden
of proof, 30 it was incumbent upon the administrator to established such proof, which We find to be
wanting. However, Article 528 of the Civil Code provides that: "Possession acquired in good faith does
not lose this character except in the case and from the moment facts exist which show that the
possessor is not unaware that he possesses the thing improperly or wrongfully." The filing of a case
alleging bad faith on the part of a vendee gives cause for cessation of good faith.

In Tacas vs. Tobon, 31 this Court held that if there are no other facts from which the interruption of good
faith may be determined, and an action is filed to recover possession, good faith ceases from the date of
receipt of the summons to appear at the trial and if such date does not appear in the record, that of the
filing of the answer would control. 32

The date of service of summons to the City of Dagupan in Civil Case No. D-1785 is not clear from the
record. Its Answer, however, was filed on 5 November 1965. Accordingly, its possession in good faith
must be considered to have lasted up to that date. As a possessor in good faith, it was entitled to all the
fruits of the property and was under no obligation to pay rental to the intestate of Margarita for the use
thereof. Under Article 544 of the Civil Code, a possessor in good faith is entitled to the fruits received
before the possession is legally interrupted. Thus, the trial court committed an error when it ordered the
City of Dagupan to pay accumulated rentals in the amount of P584,602.20 from 4 October 1952 up to
the filing of the complaint.

6. However, upon the filing of the Answer, the City of Dagupan already became a possessor in bad faith.
This brings Us to the issue of reasonable rentals, which the trial court fixed at P3,747.45 a month. The
basis thereof is the monthly earnings of the city from the lessees of the market stalls inside the Perez
Boulevard Supermarket. The lesses were paying rental at the rate of P0.83 per square meter. Appellant
maintains that this is both unfair and unjust. The property in question is located near the Chinese
cemetery and at the time of the questioned sale, it had no access to the national road, was located "in
the hinterland" and, as admitted by the former judicial administrator, Oscar Maneclang, the persons who
built houses thereon prior to the sale paid only P6.00 to P8.00 as monthly rentals and the total income
from them amounted only to P40.00 a month. Appellant contends that it is this income which should be
made the basis for determining the reasonable rental for the use of the property.

There is merit in this contention since indeed, if the rental value of the property had increased, it would
be because of the construction by the City of Dagupan of the public market and not as a consequence
of any act imputable to the intestate estate. It cannot, however, be denied that considering that the
property is located within the city, its value would never decrease; neither can it be asserted that its price
remained constant. On the contrary, the land appreciated in value at least annually, if not monthly. It is
the opinion of this Court that the reasonable compensation for the use of the property should be fixed at
P1,000.00 a month. Taking into account the fact that Severo Maneclang, insofar as his usufructuary right
is concerned, but only until his death, is precluded from assailing the sale, having been properly notified
of the motion for authority to sell and considering further that the heirs, Hector, Cesar, Oscar and
Amanda, all surnamed Maneclang, are, as discussed above, barred by laches, only those portions of the
monthly rentals which correspond to the presumptive shares of Adelaida, Linda, Priscila, Natividad and
Teresita, all surnamed Maneclang, to the extent untouched by the usufructuary right of Severo
Maneclang, should be paid by the City of Dagupan. There is no showing as to when Severo Maneclang
died; this date of death is necessary to be able to determine the cessation of his usufructuary right and
the commencement of the full enjoyment of the fruits of the property by the unaffected heirs. Under the
circumstances, and for facility of computation, We hereby fix the presumptive shares in the rentals of the
aforenamed unaffected heirs at P500.00 a month, or at P100.00 each, effective 5 November 1965 until
the City of Dagupan shall have effectively delivered to the intestate estate 5/9 of the property in question.
The latter, however, shall reimburse the City of Dagupan of that portion of the real estate taxes it had
paid on the land corresponding to 5/9 of the lot commencing from taxable year 1965 until said 5/9 part is
effectively delivered to the intestate estate.

Pursuant to Article 546 of the Civil Code, the City of Dagupan may retain possession of the property until
it shall have been fully reimbursed the value of the building in the amount of P100,000.00 and 5/9 of the
purchase price amounting to P6,493.05

WHEREFORE, judgment is hereby rendered AFFIRMING the decision in all respects, except to the extent
as above modified. As modified, (a) the sale in favor of the City of Dagupan, executed on 4 October 1952
(Exhibit "F"), is hereby declared null and void; however, by reason of estoppel and laches as
abovestated, only 5/9 of the subject property representing the presumptive shares of Adelaida, Linda,
Priscila, Natividad and Teresita, all surnamed Maneclang, may be recovered; (b) subject, however, to its
right to retain the property until it shall have been refunded the amounts of P100,000.00 and P6,493.05,
the City of Dagupan is hereby ordered to reconvey to the intestate estate of Margarita Suri Santos 5/9 of
the property in question, for which purpose said parties shall cause the appropriate partition thereof,
expenses for which shall be borne by them proportionately; and (c) the City of Dagupan is further
ordered to pay reasonable compensation for the use of 5/9 of the property in question at the rate of
P500.00 a month from 5 November 1965 until it shall have effectively delivered the possession of the
property to the intestate estate of Margarita Suri Santos. Upon the other hand, said intestate estate is
hereby ordered to refund to the City of Dagupan that portion of the real estate taxes the latter had paid
for the lot corresponding to 5/9 thereof effective taxable year 1965 and until the latter shall have
delivered to said intestate estate.

SO ORDERED.

[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.
DECISION
PANGANIBAN, 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.

G.R. No. L-6306             May 26, 1954

FORTUNATO HALILI, plaintiff-appellee,
vs.
MARIA LLORET and RICARDO GONZALES LLORET, administrator of the intestate estate of
FRANCISCO A. GONZALES, defendants-appellants.
Diokno and Diokno for appellant.

M. G. Bustos for appellee.
BAUTISTA ANGELO, J.:

This is an action brought by plaintiff against the defendants to compel the latter to execute a deed of
sale of certain parcels of land described in the complaint, and to recover the sum of P50,000 as
damages.

The lower court decided the case in favor of the plaintiff, and the case is now before us because it
involves an amount which is beyond the jurisdiction of the Court of Appeals.

The evidence for the plaintiff discloses the following facts:

The six parcels of land subject of the present action were owned by pro-indiviso by Maria Lloret and the
estate of Francisco A. Gonzales, of which Ricardo Gonzales Lloret is the judicial administrator. On May
8, 1944, the judicial administrator filed a motion in the intestate proceedings praying for authority to sell
the said parcels of land for a price of not less than P100,000, to which Maria Lloret and the other heirs of
the estate gave their conformity. The court granted the motion as requested. Plaintiff became interested
in the purchase of said parcels of land and to this effect he sought the services of Atty. Teofilo Sauco
who readily agreed to serve him and took steps to negotiate the sale of said lands in his behalf. Sauco
dealt on the matter with Ricardo Gonzales Lloret. After several interviews wherein they discussed the
terms of the sale, especially the price, Gonzales Lloret told Sauco that if plaintiff would agree to pay the
sum of P200,000 for the lands, he may agree to carry out the transaction. Sauco broached the matter to
plaintiff who thereupon agreed to the proposition, and so, on June 17, 1944, Sauco went to see
Gonzales Lloret in his office in Manila wherein according to Sauco, it was agreed between them, among
other things, that the lands would be sold to the plaintifff or the sum of P200,000 and that, after the
execution of the sale, the plaintiff would in turn resell to Ricardo Gonzales Lloret one of the parcels of
land belonging to the estate for an undisclosed amount. It was also agreed upon that, since the lands
subject of the sale were then in litigation between the estate and one Ambrosio Valero, the deed of sale
would include a clause to the effect that, if by March, 1954, the vendors would be unable to deliver to
the purchase the possession of the lands peacefully and without encumbrance, said lands would be
substituted by others belonging to the estate, of equal area, value, and conditions. It was likewise
agreed upon that Sauco would prepare the necessary documents, as in facts he did in the same office of
Gonzales Lloret.

After preparing the documents, Sauco gave an account to the plaintiff of the result of his negotiations,
and having signified his conformity thereto, plaintiff gave to Sauco two checks one for the sum of
P100,000 drawn against the Philippine National Bank in favor of Maria Lloret(Exhibit B), and another for
the same amount drawn against the Philippine Trust Co. in favor of Ricardo Gonzales Lloret. With these
checks, Sauco returned on the same date to the Office of Gonzales Lloret to consummate the
transaction, but as Maria Lloret was not then present, Gonzales Lloret told Sauco that he could leave the
document with him as he would take care of having them signed by his mother Maria, and that he could
return the next Monday, June 19, to get them which by then would be signed and ratified before a notary
public. Since Sauco was then in a hurry to return to Malolos, and besides he had confidence in Gonzales
Lloret, who was his friend, the former agreed and left the two checks with the latter. But before receiving
the checks, Gonzales Lloret issued a receipt therefor, which was marked Exhibit A. Of this development,
Sauco informed the plaintiff in the afternoon of the same day, emphasizing the fact that he would return
to the office of Gonzales Lloret to get the documents on June 19.

Sauco however, was not able to return as was the understanding because he fell sick, and apprehensive
of such failure, plaintiff went on the next day, June 20, to the Philippine National Bank to inquire whether
the check he had issued in favor of Maria Lloret had already been collected, and having been informed in
the affirmative, he next went to the Philippine Trust Co., to make the same inquiry with regard to the
other check he issued against said bank in favor of Ricardo Gonzales Lloret, and when he was informed
that the same had not yet been collected, he suspended its payment informing the bank that, should the
party concerned execute the deed of sale for which it had been issued, he would reissue the check. The
bank accordingly suspended the payment of the check as requested.

On the occasion of a visit which plaintiff to Sauco in Malolos, the latter handed over to him the receipt
Exhibit A with the request that, in view of his sickness, he take charge of getting the deed of sale from
Gonzales Lloret. Plaintiff tried to do so, but when he interviewed Gonzales Lloret, the latter refused to
give him the documents on the pretext that he did not deal with him but with Sauco intimating that he
would just wait until the latter recover from his sickness. When Sauco got well he tried to renew his
dealings with Gonzales Lloret in an attempt to get from him the documents duly signed and ratified
before a notary public, but the latter at first gave excuses for his inability to do his part as agreed upon
until he finally said that he could not carry out the agreement in view of the fact that he had received
other better offers of the purchase of the lands among them one for the sum of P300,000, plus a vehicle
called dokar with its corresponding horse. This attitude was taken by the plaintiff as a refusal to sign the
deed of sale and so he instituted the present action making as party defendants Maria Lloret and her son
Ricardo Gonzales Lloret.

Ricardo Gonzales Lloret denied that a definite understanding had ever been reached between him and
the plaintiff or his representative relative to the sale of the lands in question. He testified that the
documents maked Exhbit D and D-1 do not represent the agreement which, according to Teofilo Sauco,
was concluded between them, intimating that said documents were already prepared when Sauco went
to his office to take up with him the matter relative to the sale of June 17, 1944; that Sauco, on that
occasion, had already with him the two checks referred to in the receipt Exhibit A, who insisted in leaving
them with him because he was in a hurry to return to Malolos, and so he accepted them by way of
deposit and deposited them in his current account in the Philippine National Bank in order that they may
not be lost; and that sometime in the morning of the succeeding Monday, June 19, a messenger of the
Philippine National Bank came to see him to return the check issued in his favor against the Philippine
Trust Co. with the information that the same had not been honored by the bank for the reason that the
plaintiff had suspended its payment which act he interpreted as an indication that the plaintiff had
decided to call off the negotiation. In other words, according to Gonzales Lloret, when plaintiff
suspended the payment of the two checks on June 19, 1944, as in fact one of them had been actually
suspended because it had not yet been actually collected from the Philippine Trust Co., the
understanding he had with Teofilo Sauco regarding the sale did not pass the stage of mere negotiation,
and, as such it did not produce any legal relation by which the defendants could be compelled to carry
out the sale as now pretended by plaintiff in his complaint.

After a careful examination of the evidence presented by both parties, both testimonial and
documentary, we are persuaded to uphold this contention of the defendants for the following reasons:

1. According to Teofilo Sauco, representative of the plaintiff, his agreement with defendant Gonzales
Lloret was that the price of the lands subject to the sale would be P200,000 so much so that he
delivered to said defendant two checks in the amount of P100,000 each issued in favor of each
defendant against two banking institutions. On the other hand, in the document Exhibit D, which is
claimed to be the one drawn up by Sauco in the very office of defendant Gonzales Lloret and which,
according to Sauco, contained the precise terms and conditions that were agreed upon between
them, the amount which appears therein as the consideration of the sale is P100,000. This
discrepancy, which does not appear sufficiently explained in the record, lends cogency to the claim
of Gonzales Lloret that when Sauco went to his office to discuss the transaction he had already with
him the document Exhibit D with the expectation that defendants might be prevailed upon to accept
the terms therein contained, or with the intention of leaving the document with Gonzales Lloret for his
perusal and for such alteration or amendment he may desire to introduce therein in accordance with
his interest.

2.
2. Both plaintiff and the defendants knew well that the properties were subject to judicial administration
and that the sale could have no valid effect until it merits the approval of the court, so much so that
before the lands were opened for negotiation the judicial administrator, with the conformity of the heirs,
secured from the court an authorization to that effect, and yet, as will be stated elsewhere, the terms that
were made to appear in the document Exhibit D differ substantially from the conditions prescribed in the
authorization given by the court, which indicates that said document cannot have any binding effect
upon the parties nor serve as basis for an action for specific performance, as now pretended by the
plaintiff, in the absence of such judicial approval.

3. It is a fact duly established and admitted by the parties the plaintiff suspended the payment of the two
checks of P100,000 each of June 19, 1944 (or June 20 according to plaintiff) in view of the failure of
defendants to sign the documents Exhibit D and D-1 which were delivered to them by Teofilo Sauco, and
in fact plaintiff succeeded in stopping the payment of one of them, or the check issued against the
Philippine Trust Co. This attitude of the plaintiff clearly indicates that the understanding between the
parties was merely in the stage of negotiation for otherwise the plaintiff could not have withdrawn legally
from a transaction which had ripened into a consummated contract. And even if the transaction had
reached the stage of perfection, we may say that it became rescinded when plaintiff withdraw from his
part in the transaction.

4. It should be recalled that when Sauco handed over to defendant Gonzales Lloret the two checks
referred to above, the latter was made to sign a receipt therefor, which was marked Exhibit A. This
receipt was prepared by Sauco himself, and it merely recited the fact of the receipt of the two checks,
without mentioning the purpose for which the checks were delivered. If it is true that those checks were
delivered as advance payment of the consideration of the sale referred to in the contract Exhibit D, no
reason is seen why no mention of that fact was made in the receipt. This ambiguity cannot but argue
against the pretense of Sauco who drafted the receipt in view of the rule that an obscure clause in a
contract cannot favor the one who has caused the obscurity(Article 1288, Old Civil Code.)

5. One of the documents turned over by Sauco to defendant Gonzales Lloret is Exhibit D-1 which
represents the resale by the plaintiff to the latter of one of the parcels of land originally included in the
sale contained in the document Exhibit D, and, according to Sauco, said document Exhibit D-1 was
delivered to defendant Gonzales Lloret for ratification before a notary public. An examination of said
document Exhibit D-1 will reveal that it contains many blank spaces intended to be filled out later on,
and the same does not bear the signature of the plaintiff. This indicates that said document Exhibit D-1
was but a mere draft and corroborates the statement of Gonzales Lloret that it was given to him,
together with the document Exhibit D, merely for his perusal and possible amendment or alteraion. And

6. It should be noted that the lands subject of negotiation were owned pro-indiviso by Maria Lloret and
the estate of Francisco A. Gonzales, and in that negotiation defendant Gonzales Lloret was merely
acting in his capacity as judicial administrator. Being a co-owner of the lands, the consent of Maria Lloret
to the terms of the sale is evidently indispensable, and yet there is nothing in the evidence to show that
she has ever been contacted in connection with the sale, nor is there any proof that Gonzales Lloret had
been authorized to conduct negotiations in her behalf. What the record shows that Gonzales Lloret
would take upon the matter with Maria Lloret on the date subsequent to that when the two documents
were delivered by Sauco to him (June 17, 1944), but this never materialized because of the unexpected
sickness of Teofilo Sauco.

Let us now examine the terms of the authorization given by the court relative to the sale of the lands in
question, and see if the same had been observed in the preparation of the deed of sale Exhibit D. Let us
note, at the outset, that the authorization of the court refers to the sale of certain parcels of land of an
area of 20 hectares situated in the barrio of Sabang, municipality of Baliuag, Province of Bulacan, for a
price of not less than P100,000 with the express condition that the encumbrance affecting those lands
would first be paid. Analyzing now the terms appearing in the document Exhibit D, we find that among
the lands included in the sale are lands situated in the barrio of San Roque. This is a variation of the
terms of the judicial authorization. The document Exhibit D also stipulates that the sale would be free
from any encumbrance, with the exception of the sum of P30,000 which is indebted to Ambrosio Valero,
but said document likewise stipulates that the possession of the lands sold should be delivered to the
purchaser sometime in March of the next year and that if this could not be done the lands would be
situated by others of the same area and value, belonging to the estate of Francisco A. Gonzales. This is
an onerous condition which does not appear in the authorization of the court. Of course, this is an
eventuality which the plaintiff wanted to forestall in view of the fact that the lands subject of the sale
were pending litigation between the estate and Ambrosio Valero, but this is no justification for departing
from the precise terms contained in the authorization of the court. And we find, finally, that the
authorization calls for the sale of six parcels of land belonging to the estate, but in the document as
drawn up by Sauco it appears that only five parcels would be sold to the plaintiff, and the other parcel to
Ricardo Gonzales Lloret. Undoubtedly, this cannot legally be done for, as we know, the law prohibits that
a land subject of administration be sold to its judicial administrator.

The foregoing discrepancies between the conditions appearing in the document Exhibit D and the terms
contained in the authorization of the court, plus the incongruencies and unexplained circumstances we
have pointed out above, and clearly give an idea that all that had taken place between Sauco and
defendant Gonzales Lloret was but mere planning or negotiation to be threshed out between them in the
conference they expected to have on June 19,1944, but which unfortunately was not carried out in view
of the illness of Teofilo Sauco. Such being the case, it logically follows that the action of the plaintiff has
no legal basis.

Before closing, one circumstance which should be mentioned here is that which refers to the delivery by
Sauco to Gonzales Lloret of the clerk in the amount of P10,000 drawn against the Philippine National
Bank which Lloret deposited in his current account with that institution. According to the evidence, when
the transaction was called off because of the failure of Sauco to appear on the date set for his last
conference with Lloret, the latter attempted to return the said amount to Sauco on August 2, 1944 who
declined to accept it on the pretext that he had another buyer who was willing to purchase the lands for
the sum of P300,000 and that if that sale were carried out Lloret could just deduct that amount from the
purchase price. That offer to return, in our opinion, cannot have the effect of relieving Lloret from liability.
His duty was consign it in court as required by law. His failure to do so makes him answerable therefor to
the plaintiff which he is now in duty bound to pay subject to adjustment under the Ballentyne Scale of
Values.

Wherefore the decision appealed from is reversed, without pronouncement as to costs. Defendant
Ricardo Gonzales Lloret is ordered to pay to the plaintiff the sum of P100,000 which should be adjusted
in accordance with the Ballentyne Scale of Values.

Paras, C.J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo, Labrador, and Concepcion, JJ., concur.

[G.R. No. 125835. July 30, 1998]

NATALIA CARPENA OPULENCIA, petitioner, vs. COURT OF APPEALS, ALADIN SIMUNDAC and
MIGUEL OLIVAN, respondents.
DECISION
PANGANIBAN, J.

Is a contract to sell a real property involved in testate proceedings valid and binding without the approval
of the probate court?

Statement of the Case

This is the main question raised in this petition for review before us, assailing the Decision[1] of the Court
of Appeals[2] in CA-GR CV No. 41994 promulgated on February 6, 1996 and its Resolution[3] dated July
19, 1996. The challenged Decision disposed as follows:

WHEREFORE, premises considered, the order of the lower court dismissing the complaint is SET ASIDE
and judgment is hereby rendered declaring the CONTRACT TO SELL executed by appellee in favor of
appellants as valid and binding, subject to the result of the administration proceedings of the testate
Estate of Demetrio Carpena.

SO ORDERED. [4]

Petitioners Motion for Reconsideration was denied in the challenged Resolution.[5]

The Facts

The antecedent facts, as succinctly narrated by Respondent Court of Appeals are:

In a complaint for specific performance filed with the court a quo [herein private respondents] Aladin
Simundac and Miguel Oliven alleged that [herein petitioner] Natalia Carpena Opulencia executed in their
favor a CONTRACT TO SELL Lot 2125 of the Sta. Rosa Estate, consisting of 23,766 square meters
located in Sta. Rosa, Laguna at P150.00 per square meter; that plaintiffs paid a downpayment of
P300,000.00 but defendant, despite demands, failed to comply with her obligations under the contract.
[Private respondents] therefore prayed that [petitioner] be ordered to perform her contractual obligations
and to further pay damages, attorneys fee and litigation expenses.

In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffs and receipt of
P300,000.00 as downpayment. However, she put forward the following affirmative defenses: that the
property subject of the contract formed part of the Estate of Demetrio Carpena (petitioners father), in
respect of which a petition for probate was filed with the Regional Trial Court, Branch 24, Bian, Laguna;
that at the time the contract was executed, the parties were aware of the pendency of the probate
proceeding; that the contract to sell was not approved by the probate court; that realizing the nullity of
the contract [petitioner] had offered to return the downpayment received from [private respondents], but
the latter refused to accept it; that [private respondents] further failed to provide funds for the tenant who
demanded P150,00.00 in payment of his tenancy rights on the land; that [petitioner] had chosen to
rescind the contract.

At the pre-trial conference the parties stipulated on [sic] the following facts:

1. That on February 3, 1989, [private respondents] and [petitioner] entered into a contract to sell
involving a parcel of land situated in Sta. Rosa, Laguna, otherwise known as Lot No. 2125 of the Sta.
Rosa Estate.

2. That the price or consideration of the said sell [sic] is P150.00 per square meters;

3. That the amount of P300,000.00 had already been received by [petitioner];

4. That the parties have knowledge that the property subject of the contract to sell is subject of the
probate proceedings;

5. That [as] of this time, the probate Court has not yet issued an order either approving or denying the
said sale. (p. 3, appealed Order of September 15, 1992, pp. 109-112, record).

[Private respondents] submitted their evidence in support of the material allegations of the complaint. In
addition to testimonies of witnesses, [private respondents] presented the following documentary
evidences: (1) Contract to Sell (Exh A); (2) machine copy of the last will and testament of Demetrio
Carpena (defendants father) to show that the property sold by defendant was one of those devised to
her in said will (Exh B); (3) receipts signed by defendant for the downpayment in the total amount of
P300,000.00 (Exhs C, D & E); and (4) demand letters sent to defendant (Exhs F & G).

It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to Evidence. In essence,
defendant maintained that the contract to sell was null and void for want of approval by the probate
court. She further argued that the contract was subject to a suspensive condition, which was the
probate of the will of defendants father Demetrio Carpena. An Opposition was filed by [private
respondents]. It appears further that in an Order dated December 15, 1992 the court a quo granted the
demurrer to evidence and dismissed the complaint. It justified its action in dismissing the complaint in
the following manner:

It is noteworthy that when the contract to sell was consummated, no petition was filed in the Court with
notice to the heirs of the time and place of hearing, to show that the sale is necessary and beneficial. A
sale of properties of an estate as beneficial to the interested parties must comply with the requisites
provided by law, (Sec. 7, Rule 89, Rules of Court) which are mandatory, and without them, the authority
to sell, the sale itself, and the order approving it, would be null and void ab initio. (Arcilla vs. David, 77
Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L-6736, May 4, 1954; Bonaga vs. Soler, 2 Phil. 755)
Besides, it is axiomatic that where the estate of a deceased person is already the subject of a testate or
intestate proceeding, the administrator cannot enter into any transaction involving it without prior
approval of the probate Court. (Estate of Obave, vs. Reyes, 123 SCRA 767).

As held by the Supreme Court, a decedents representative (administrator) is not estopped from
questioning the validity of his own void deed purporting to convey land. (Bona vs. Soler, 2 Phil, 755). In
the case at bar, the [petitioner,] realizing the illegality of the transaction[,] has interposed the nullity of the
contract as her defense, there being no approval from the probate Court, and, in good faith offers to
return the money she received from the [private respondents]. Certainly, the administratrix is not
estop[ped] from doing so and the action to declare the inexistence of contracts do not prescribe. This is
what precipitated the filing of [petitioners] demurrer to evidence.[6]

The trial courts order of dismissal was elevated to the Court of Appeals by private respondents who
alleged:

1. The lower court erred in concluding that the contract to sell is null and void, there being no approval of
the probate court.

2. The lower court erred in concluding that [petitioner] in good faith offers to return the money to [private
respondents].

3. The lower court erred in concluding that [petitioner] is not under estoppel to question the validity of
the contract to sell.

4. The lower court erred in not ruling on the consideration of the contract to sell which is tantamount to
plain unjust enrichment of [petitioner] at the expense of [private respondents].[7]

Public Respondents Ruling

Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on Demetrio
Carpenas estate, the appellate court set aside the trial courts dismissal of the complaint and correctly
ruled as follows:

It is apparent from the appealed order that the lower court treated the contract to sell executed by
appellee as one made by the administratrix of the Estate of Demetrio Carpena for the benefit of the
estate. Hence, its main reason for voiding the contract in question was the absence of the probate
courts approval. Presumably, what the lower court had in mind was the sale of the estate or part thereof
made by the administrator for the benefit of the estate, as authorized under Rule 89 of the Revised Rules
of Court, which requires the approval of the probate court upon application therefor with notice to the
heirs, devisees and legatees.

However, as adverted to by appellants in their brief, the contract to sell in question is not covered by
Rule 89 of the Revised Rules of Court since it was made by appellee in her capacity as an heir, of a
property that was devised to her under the will sought to be probated. Thus, while the document
inadvertently stated that appellee executed the contract in her capacity as executrix and administratrix
of the estate, a cursory reading of the entire text of the contract would unerringly show that what she
undertook to sell to appellants was one of the other properties given to her by her late father, and more
importantly, it was not made for the benefit of the estate but for her own needs. To illustrate this point, it
is apropos to refer to the preambular or preliminary portion of the document, which reads:

WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more particularly
described as follows:

x x x x x x x x x

x x x x x x x x x

x x x x x x x x x

WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the sale of the above-
described property, which property was only one among the other properties given to her by her late
father, to anyone who can wait for complete clearance of the court on the Last Will Testament of her
father.

WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the said property at ONE
HUNDRED FIFTY PESOS (150.00) Philippine Currency, per square meter unto the BUYERS, and with
this offer, the latter has accepted to buy and/or purchase the same, less the area for the road and other
easements indicated at the back of Transfer Certificate of Title No. 2125 duly confirmed after the survey
to be conducted by the BUYERs Licensed Geodetic Engineer, and whatever area [is] left. (Emphasis
added).

To emphasize, it is evident from the foregoing clauses of the contract that appellee sold Lot 2125 not in
her capacity as executrix of the will or administratrix of the estate of her father, but as an heir and more
importantly as owner of said lot which, along with other properties, was devised to her under the will
sought to be probated. That being so, the requisites stipulated in Rule 89 of the Revised Rules of Court
which refer to a sale made by the administrator for the benefit of the estate do not apply.

x x x x x x x x x

It is noteworthy that in a Manifestation filed with this court by appellants, which is not controverted by
appellee, it is mentioned that the last will and testament of Demetrio Carpena was approved in a final
judgment rendered in Special Proceeding No. B-979 by the Regional Trial Court, Branch 24 Binan,
Laguna. But of course such approval does not terminate the proceeding[s] since the settlement of the
estate will ensue. Such proceedings will consist, among others, in the issuance by the court of a notice
to creditors (Rule 86), hearing of money claims and payment of taxes and estate debts (Rule 88) and
distribution of the residue to the heirs or persons entitled thereto (Rule 90). In effect, the final execution
of the deed of sale itself upon appellants payment of the balance of the purchase price will have to wait
for the settlement or termination of the administration proceedings of the Estate of Demetrio Carpena.
Under the foregoing premises, what the trial court should have done with the complaint was not to
dismiss it but to simply put on hold further proceedings until such time that the estate or its residue will
be distributed in accordance with the approved will.

The rule is that when a demurrer to the evidence is granted by the trial court but reversed on appeal,
defendant loses the right to adduce his evidence. In such a case, the appellate court will decide the
controversy on the basis of plaintiffs evidence. In the case at bench, while we find the contract to sell
valid and binding between the parties, we cannot as yet order appellee to perform her obligations under
the contract because the result of the administration proceedings of the testate Estate of Demetrio
Carpena has to be awaited. Hence, we shall confine our adjudication to merely declaring the validity of
the questioned Contract to Sell.

Hence, this appeal.[8]

The Issue
Petitioner raises only one issue:

Whether or not the Contract to Sell dated 03 February 1989 executed by the [p]etitioner and [p]rivate
[r]espondent[s] without the requisite probate court approval is valid.

The Courts Ruling

The petition has no merit.

Contract to Sell Valid

In a nutshell, petitioner contends that where the estate of the deceased person is already the subject of
a testate or intestate proceeding, the administrator cannot enter into any transaction involving it without
prior approval of the Probate Court.[9] She maintains that the Contract to Sell is void because it was not
approved by the probate court, as required by Section 7, Rule 89 of the Rules of Court:

SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate. The court
having jurisdiction of the estate of the deceased may authorize the executor or administrator to sell,
mortgage, or otherwise encumber real estate, in cases provided by these rules and when it appears
necessary or beneficial, under the following regulations:

xxx

Insisting that the above rule should apply to this case, petitioner argues that the stipulations in the
Contract to Sell require her to act in her capacity as an executrix or administratrix. She avers that her
obligation to eject tenants pertains to the administratrix or executrix, the estate being the landlord of the
said tenants.[10] Likewise demonstrating that she entered into the contract in her capacity as executor is
the stipulation that she must effect the conversion of subject land from irrigated rice land to residential
land and secure the necessary clearances from government offices. Petitioner alleges that these
obligations can be undertaken only by an executor or administrator of an estate, and not by an heir.[11]

The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of the Rules
of Court is not applicable, because petitioner entered into the Contract to Sell in her capacity as an
heiress, not as an executrix or administratrix of the estate. In the contract, she represented herself as the
lawful owner and seller of the subject parcel of land.[12] She also explained the reason for the sale to be
difficulties in her living conditions and consequent need of cash.[13] These representations clearly evince
that she was not acting on behalf of the estate under probate when she entered into the Contract to Sell.
Accordingly, the jurisprudence cited by petitioner has no application to the instant case.

We emphasize that hereditary rights are vested in the heir or heirs from the moment of the decedents
death.[14] Petitioner, therefore, became the owner of her hereditary share the moment her father died.
Thus, the lack of judicial approval does not invalidate the Contract to Sell, because the petitioner has the
substantive right to sell the whole or a part of her share in the estate of her late father.[15] Thus, in
Jakosalem vs. Rafols,[16] the Court resolved an identical issue under the old Civil Code and held:

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 estate left with respect to the part or portion which
might be adjudicated to him, a community of ownership being thus formed among the coowners of the
estate while it remains undivided. xxx And according to article 399 of the Civil Code, every part owner
may assign or mortgage his part in the common property, and the effect of such assignment or
mortgage shall be limited to the portion which may be allotted him in the partition upon the dissolution of
the community. Hence, where some of the heirs, without the concurrence of the others, sold a property
left by their deceased father, this Court, speaking thru its then Chief Justice Cayetano Arellano, said that
the sale was valid, but that the effect thereof was limited to the share which may be allotted to the
vendors upon the partition of the estate.

Administration of the Estate Not Prejudiced by the Contract to Sell

Petitioner further contends that [t]o sanction the sale at this stage would bring about a partial distribution
of the decedents estate pending the final termination of the testate proceedings.[17] This becomes all the
more significant in the light of the trial courts finding, as stated in its Order dated August 20, 1997, that
the legitime of one of the heirs has been impaired.[18]

Petitioners contention is not convincing. The Contract to Sell stipulates that petitioners offer to sell is
contingent on the complete clearance of the court on the Last Will Testament of her father.[19]
Consequently, although the Contract to Sell was perfected between the petitioner and private
respondents during the pendency of the probate proceedings, the consummation of the sale or the
transfer of ownership over the parcel of land to the private respondents is subject to the full payment of
the purchase price and to the termination and outcome of the testate proceedings. Therefore, there is no
basis for petitioners apprehension that the Contract to Sell may result in a premature partition and
distribution of the properties of the estate. Indeed, it is settled that the sale made by an heir of his share
in an inheritance, subject to the pending administration, in no wise stands in the way of such
administration.[20]

Estoppel

Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sell with
private respondents, from whom she had already received P300,000 as initial payment of the purchase
price. Petitioner may not renege on her own acts and representations, to the prejudice of the private
respondents who have relied on them.[21] Jurisprudence teaches us that neither the law nor the courts
will extricate a party from an unwise or undesirable contract he or she entered into with all the required
formalities and with full awareness of its consequences.[22]

WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court of Appeals
AFFIRMED. Costs against petitioner.

SO ORDERED.

JOSEPHINE OROLA, MYRNA G.R. No. 158566

OROLA, ANGELINE OROLA,
MANUEL OROLA, ANTONIO
OROLA and ALTHEA OROLA, Present:
Petitioners,
 
PUNO, J., Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.
 
THE RURAL BANK OF
PONTEVEDRA (CAPIZ), INC.,
EMILIO Q. OROLA, THE
REGISTER OF DEEDS OF CAPIZ
and THE EX-OFFICIO
PROVINCIAL SHERIFF OF Promulgated:
CAPIZ,
Respondents. September 20, 2005
x--------------------------------------------------x
 
DECISION
 
 
CALLEJO, SR., J.:
 

Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R.
CV No. 35724 reversing, on appeal, the Decision[2] of the Regional Trial Court (RTC) of Roxas City,
Branch 15, in Civil Case No. V-5452.

On July 16, 1969, Trinidad Laserna Orola died intestate. She was survived by her husband Emilio Orola
and their six minor children, namely, 10-year-old Antonio, 12-year-old Josephine, 16-year-old Manuel,
and other siblings, Myrna, Angeline and Althea.

The estate consisted of property located in Pontevedra, Capiz. It included portions of Lots 1071 and
1088 (Lot 2-B) of the Pontevedra Cadastre, covered by Tax Declaration (T.D.) No. 7197[3] under the
names of the heirs of Trinidad Orola; Lot 1088 (Lot 2) covered by T.D. No. 6901 under the name of
Trinidad Orola; Lot 1071 and portions of Lot 1088 (Lot 2-A) of the same cadastre covered by T.D. No.
7196 under the names of the heirs of Trinidad Orola; and Lot 1050 of the same cadastre covered by T.D.
No. 2623[4] under the name of Trinidad Orola. Portions of the property were devoted to the development
and production of sugar. Some portions were riceland, while some parts of the property were swampy.[5]

Emilio Orola, who, in the meantime, had married anew, executed a waiver of all his rights and interests
over the said property in favor of his children by Trinidad Laserna, namely, Josephine, Myrna, Angeline,
Manuel, Antonio and Althea, all surnamed Orola.[6]

In 1973, Emilio Orola retired as cashier of the Philippine National Bank (PNB).[7] He filed a petition for his
appointment as guardian over the persons and property of his minor children. The case was docketed as
Special Proceedings (Sp. Proc.) No. V-3526. The petition was granted, and Emilio Orola was appointed
guardian not only over the persons of his minor children but also over their property. On November 6,
1973, Emilio filed a petition with the RTC for the settlement of the estate of his deceased spouse,
Trinidad Laserna, and his appointment as administrator of her estate. The RTC issued an order
appointing Emilio Orola as administrator of the estate of his deceased spouse.

As such administrator of the estate, Emilio took possession of the said parcels of land. He opened an
account in the name of the estate with the PNB. He embarked on a massive sugar production and, with
prior approval of the court, negotiated with banking institutions for financing loans to purchase the
required equipments. However, in 1976 and 1977, there was a sudden collapse of the sugar industry.
Emilio Orola found it necessary to develop the swampy portion of the estate for the production of fish. To
finance the endeavor, he needed at least P600,000.00.

On September 11, 1980, Emilio Orola filed a motion[8] in Sp. Proc. No. V-3639 for authority to negotiate a
P600,000.00 loan from the Central Bank of the Philippines for the full and complete development of the
fishpond portion of the estate, and to transfer the sugar account of the estate from the PNB to the
Republic Planters Bank (RPB).

On September 12, 1980, the court granted the motion of the administrator and authorized him to
negotiate the loan through the Rural Bank of Capiz (Rural Bank of Pontevedra, Capiz) and to transfer the
sugar account of the estate to the RPB in Roxas City.[9] Emilio then filed an application with the Rural
Bank for a financing loan of P600,000.00. However, the bank informed him that the said loan would have
to be processed by the Central Bank and that it would take some time. He was informed that there
would be no need for the Central Bank to intervene if the loan of P600,000.00 would be broken down
into three parts of P200,000.00, each to be applied for by three applicants to whom the property to be
used as collateral would be leased by the estate. Emilio agreed and talked to his children, Josephine,
Manuel and Antonio, about the banks proposal. The three siblings agreed.[10] The Estate of Trinidad
Laserna, through its administrator, Emilio, as lessor, and Josephine, Manuel and Antonio, all surnamed
Orola, as lessees, executed separate contracts of lease over the aforesaid property of the estate. On
September 20, 1982, the intestate estate court issued an Order approving the contracts.

However, it turned out that the lessees would not qualify for the loans; the bank required a lease period
of at least 10 years from the time the court approved the same. On May 20, 1982, Emilio, Antonio,
Manuel and Josephine Orola filed a Manifestation[11] with the intestate estate court, praying that its order
be amended to state that the periods of the leases were to commence from court approval of the said
contracts.

However, on December 15, 1982, the estate, through Emilio, as lessor, and Josephine, Antonio and
Manuel Orola, executed separate Amended Contracts of Lease[12] covering the same property. The
periods of the lease were extended to 12 years, to commence from their approval by the intestate estate
court. The lessees were also authorized to negotiate loans for the development of the leased premises
not to exceed P200,000.00, and to bind the leased premises by way of real estate mortgage as security
therefor.

On December 15, 1982, Emilio filed an Ex Parte Motion[13] in the intestate estate court for the approval of
the amended contracts of lease appended thereto. On December 17, 1982, Angeline, Myrna and Althea
Orola filed their Joint Affidavit of Conformity[14] to the motion. On December 17, 1982, the court granted
the motion of Emilio and approved the amended contracts of lease.[15] On December 20, 1982, the Rural
Bank notified Emilio that the loan applications of his children had been approved.[16]

Antonio, Manuel and Josephine signed separate Promissory Notes[17] on March 21, 1983 in which they
promised and bound themselves to pay their respective loans in 10 years in stated annual installments.
Antonio 

Orola, for and in behalf of his father Emilio Orola, executed a Real Estate Mortgage over Lot 1088 as
security for the payment of his loan.[18] Manuel Orola, also as attorney-in-fact of the administrator of the
estate, likewise, executed a real estate mortgage in favor of the Rural Bank over the said lots as security
for his loan.[19] Josephine Orola, as attorney-in-fact of the administrator of the estate, executed a
separate real estate mortgage agreement over a portion of Lot 1088 and Lot 1071 as security for her
loan.[20] However, the real estate mortgage contracts were not submitted to the guardianship and
intestate estate courts for approval. Neither were Myrna, Angeline and Althea aware of the said loans.

The net proceeds of the loan, in the total amount of P582,000.00, were deposited in the Rural Bank on
May 9, 1983 in Emilios account.[21] From the said proceeds, the Rural Bank deducted the amount of
P229,771.20, the accommodation loan Emilio secured from the Rural Bank.[22] As of September 9, 1983,
the balance of the said deposit amounted to only P4,292.79.[23] Emilio, thereafter, failed to pay the
amortizations of the loans to the Rural Bank.[24]

This prompted the Rural Bank to write separate letters of demand to Josephine, Manuel and Antonio,
demanding payment of the balance of their accounts within seven days from the receipt thereof,
otherwise the Rural 

Bank would cause the extrajudicial foreclosure of the real estate mortgages.[25] Emilio Orola pleaded to
the Rural Bank not to foreclose the mortgages. However, on June 15, 1985, the Rural Bank filed an
application with the Ex-Officio Provincial Sheriff for the extrajudicial foreclosure of the real estate
mortgages over Lots 1071 and 1088.[26] The lots were sold at public auction on April 14, 1986 with the
Rural Bank as the winning bidder. The Ex-Officio Provincial Sheriff executed separate certificates of sale
in favor of the Rural Bank.[27]

On September 1, 1987, the guardianship court terminated the guardianship and dismissed the case.[28]
On September 21, 1987, Josephine, Myrna, Manuel and Antonio Orola executed a Deed of Acceptance
of Waiver or Donation in which they accepted their fathers waiver of his rights, interests and participation
over their mothers estate.[29]

On October 1, 1987, Josephine Orola and her siblings, Myrna, Angeline, Manuel, Antonio and Althea,
filed a Complaint against the Rural Bank, their father Emilio and the Ex-Officio Provincial Sheriff for the
nullification of the Promissory Notes and Real Estate Mortgages executed by Josephine, Manuel and
Antonio Orola, and the sale of the property subject of the said deed at public auction. They alleged
therein that they became the sole owners of Lots 1088 and 1071 when their father executed a waiver of
his rights over the said lots in their favor. They also alleged that the real estate mortgage contracts were
null and void because the same were never submitted to and approved by the RTC in Sp. Proc. Nos.
V-3526 and V-3639. Moreover, they were hoodwinked by their father into signing the contracts of lease
and amended contracts of lease, promissory notes and deeds of real estate mortgages as security for
the P600,000.00 loan on the assurance that they would be benefited therefrom; moreover, they did not
receive the proceeds of the said loans. As such, the extrajudicial foreclosure of the real estate mortgages
and the sale of the property covered by the said deeds were null and void. The plaintiffs prayed that:

(1) A Temporary Restraining Order be issued restraining in the meantime the defendant Ex-Officio
Provincial Sheriff from executing the Sheriffs Certificates of Sales arising out of Case No. 33 (1985), Case
No. 34 (1985) and Case No. 36 (1985), all of the Office of the Provincial Sheriff.

(2) After hearing, a writ of preliminary injunction be issued against the defendant Provincial Sheriff for the
same purpose stated above, and that the said Preliminary Injunction be made permanent after trial on
the merits.

(3) After trial, a Judgment be rendered -

(a) Declaring the contracts of loan and/or Promissory Notes allegedly executed by plaintiffs Josephine,
Manuel and Antonio Orola in favor of the defendant Rural Bank of Pontevedra (Capiz), Inc. null and void
ab initio.

(b) Declaring the real estate mortgages purportedly signed by the same plaintiffs Josephine, Manuel and
Antonio Orola in favor of defendant Rural Bank of Pontevedra (Capiz), Inc. null and void ab initio.

(c) Ordering defendant Emilio Q. Orola and defendant Rural Bank of Pontevedra (Capiz), Inc., jointly and
severally, to pay the plaintiffs moral damages in the sum of P600,000.00, actual damages in the sum of
P10,000.00, as and for attorneys fees in the amount of P65,000.00, as exemplary damages in the sum of
P10,000.00, and to pay the costs of this suit.

(d) Ordering the Register of Deeds for the Province of Capiz to cancel the registration of the real estate
mortgages illegally made under Section 113 of Presidential Decree No. 1529 affecting Lots Nos. 1088
and 1050 of the Cadastral Survey of Pontevedra, Capiz.

The plaintiffs also pray for such other reliefs and remedies that may be considered just and equitable
under the premises.[30]

In its answer to the complaint, Rural Bank averred that the RTC in Sp. Proc. No. V-3639 authorized and
even approved the amended contracts of sale executed by Antonio, Manuel and Josephine Orola and
the defendant Emilio Orola. It further averred that the plaintiffs had agreed to the execution of the
mortgages of the property subject of the said deeds, and conformed to the said amended contracts
before the RTC in the intestate estate proceedings approved the same; they were also notified of the
balance of their account, and of the extrajudicial foreclosure of the real estate mortgages, and the
subsequent sale of the property covered by the said mortgages at public auction after they refused to
pay their account despite demands. As such, the plaintiffs were estopped from assailing the real estate
mortgages and the extrajudicial foreclosure thereof and the sale of the lots covered by the said deeds at
public auction. Rural Bank prayed that:

WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that, after due
notice and hearing, a judgment be rendered in favor of defendant bank dismissing the plaintiffs
complaint and ordering the plaintiffs to pay defendant bank the following:

1. As and for attorneys fees in the amount of P50,000.00;

2. As moral, compensatory and exemplary damages, an amount to be fixed by this Honorable Court;

3. The costs of this suit.

Herein defendant bank, likewise, prays that the plaintiffs petition for the Issuance of a Temporary
Restraining Order against the defendant Ex-Officio Provincial Sheriff restraining him from executing the
Certificates of Sheriff Sale arising out of Case No. 33 (1985), Case No. 34 (1985) and Case No. 36 (1985),
all of the Office of the Provincial Sheriff of Capiz be denied for obvious lack of merit.

Herein defendant further prays that the extra-judicial foreclosure of the Real Estate Mortgages recorded
under Republic Act 3344 be confirmed and declared binding and valid affecting the Original Certificates
of Title Nos. RO-801 (17658) and RO-802 (17682) covering the mortgaged Lots Nos. 1088 and 1071 of
the Cadastral Survey of Capiz.

Herein defendant finally prays for such other reliefs or remedies which are just and equitable in the
premises.[31]

In his answer to the complaint, Emilio Orola admitted that the guardianship proceedings terminated on
September 1, 1987 but specifically denied the allegations in the complaint that the plaintiffs were the
absolute owners of the lots subject matter thereof. He alleged that he executed the Waiver of Right on
October 26, 1976 only because his brother and sister-in-law required him to do so as a condition to their
signing the partition agreement, with their assurance that the said waiver would take effect only after his
death. He further claimed that the plaintiffs were aware of this because they accepted his waiver only on
September 21, 1987 after they became of age. Moreover, the plaintiffs had agreed to the execution of
the amended contracts of lease to facilitate the early release of the loans as required by the Rural Bank.
He further alleged that the proceeds of the loans were used for the development of the estate; the non-
submission of the real estate mortgages to the intestate estate and guardianship courts for approval was
due to the fault of Rural Bank; and his failure to pay the amortizations of the loan was due to force
majeure, namely, typhoon Undang.

On December 29, 1989, the Rural Bank presented the Real Estate Mortgage in the Office of the Register
of Deeds.[32]

On April 19, 1991, the RTC rendered judgment in favor of the plaintiffs. The fallo of the decision reads:

IN VIEW OF THE CONSIDERATIONS, judgment is rendered:

1. Declaring the loans of Josephine Orola, Antonio Orola, Manuel Orola, all on March 21, 1983, with the
defendant, Rural Bank, at P200,000 each or a total of P600,000, null and void;

2. Declaring that the real estate mortgages of [the] above three (3) plaintiffs on (a) Lot No. 1071-part and
Lot No. 1088-part under Tax Declaration No. 7196 in the name of [the] Heirs of Trinidad Laserna Orola to
secure the loan by Josephine Orola; (b) Lot No. 1088 known as Lot No. 2-B of the parcellary plan under
Tax Declaration No. 7197 in the name of the Heirs of Trinidad Orola and Lot No. 1050 under Tax
Declaration No. 2623 in the name of Trinidad Orola to secure the loan by Antonio Orola; and (c) Lot No.
1088 under Tax Declaration No. 6901 in the name of Trinidad Laserna Orola to secure the loan by Manuel
Orola, all as Attorney-in-fact of defendant Emilio Orola, administrator, null and void;

Both (Nos. 1 and 2) for failure to comply with the mandatory requirements of Section 7, Rule 89, Revised
Rules of Court;

3. Ordering the Office of the Registry of Land Titles and Deeds, Province of Capiz, to cancel its
registration of the real estate mortgages affecting [the] above parcels of land.

Claims of damages and attorneys fees as well as counterclaims are denied.

Costs against the defendants, pro indiviso.[33]

The trial court held that although the intestate estate court authorized Emilio to negotiate a loan of
P600,000.00 with Rural Bank, he was not authorized to mortgage the real property of the estate to the
Rural Bank. The court ruled that the September 12, 1980 Order of the intestate estate court 

was null and void because the motion of the administrator for authority to negotiate a loan with the Rural
Bank was made ex parte, that is, without notifying the plaintiffs who were the heirs of the deceased. The
court also held that the plaintiffs were not estopped from assailing the real estate mortgage contracts,
the same being null and void. It also declared that the issue of whether or not the plaintiffs were the co-
owners of the property should be ventilated with the proper RTC in the exercise of its general jurisdiction
in an ordinary action for the said purpose.

Rural Banks motion for reconsideration of the decision was denied by the trial court. It then appealed the
decision to the CA, where it alleged that:

As to Assignment on Error No. I and II

A In ruling on the nullity of the loans and mortgages in question, the lower court confined itself to the
order of the intestate court, dated December 12, 1980, totally ignoring the subsequent order dated
December 17, 1982 (Exhs. 36 & 37) which granted the authority to encumber the estate in the manner
required by the defendant Rural Bank of Pontevedra.

B The non-presentation of the priorly authorized mortgages in question in court after their execution,
does not nullify said mortgages, as what is required by Sec. 7, Rule 89 is only prior approval by the
intestate court.

As to Assignment of Error No. III

Estoppel [precludes] a party from [repudiating] an obligation voluntarily assumed after having accepted
benefits therefrom.

As to Assignment of Error No. IV

Because of their baseless complaint, defendant-appellant was unnecessarily dragged into this litigation
causing defendant-appellant damages.[34]

The appellant bank averred that the amended contracts of lease, which contained provisions requiring
the intestate estate courts approval, were approved by the intestate estate court and conformed to by
the other heirs of the deceased. The bank posited that the court a quo had no jurisdiction to nullify the
order of the estate court, which was co-equal in rank with the estate court in approving the amended
contracts of lease. It further alleged that the administrator of the estate is not required under Section 7,
Rule 89 of the Rules of Court to secure prior authority to mortgage the real properties or otherwise
encumber the same. Rural Bank alleged that the appellees were estopped from assailing the real estate
mortgages of the property after having been benefited by the P600,000.00 loan.

The appellees failed to file their brief. On October 18, 2002, the CA rendered a Decision[35] granting the
appeal and reversing the appealed decision.

The appellate court ruled that the intestate estate courts approval of the amended contracts of lease
carried with it the approval of the real estate mortgages executed by Emilio Orola in favor of the Rural
Bank. Angeline, Myrna and Althea even conformed to the amended contracts of lease; hence, were
estopped from assailing them, as well as the real estate mortgage contracts.

After the appellate court denied their motion for reconsideration of the decision, the Orola siblings, now
the petitioners, filed the instant petition for review on certiorari with this Court, alleging that:

-I-

THE SUBJECT MORTGAGES CONSTITUTED OVER THE REAL ESTATE PROPERTIES OF

PETITIONERS-APPELLEES UNDER SECTION 7, RULE 89 OF THE RULES OF COURT ARE VOID FOR
NON-COMPLIANCE WITH THE MANDATORY REGULATIONS (SIC) OF THE SAID PROVISION.

-II-

ASSUMING ARGUENDO SUBSTANTIAL COMPLIANCE WITH THE PROVISIONS OF RULE 89, SECTION
7, THE SUBJECT MORTGAGES ARE STILL VOID FOR LACK OF AUTHORITY FROM THE PROBATE
COURT, HAVING BEEN CONSTITUTED BY PERSONS OTHER THAN THE ADMINISTRATOR OF THE
ESTATE OF TRINIDAD LASERNA OROLA.[36]

The petitioners reiterate their argument that respondent Emilio Orola, then administrator of the estate,
failed to comply with Section 7, Rule 89 of the Rules of Court. They aver that this provision is mandatory
in nature, including the fixing of a time and place for hearing of the motion for the approval of the
amended contracts of lease. They point out that respondent Orola failed to file a motion for the approval
of the real estate mortgages. The petitioners insist that even if it is assumed that the December 17, 1982
Order of the intestate estate court approving the amended contracts of lease authorized the constitution
of real estate mortgages over the real property of the estate, such order is void, as it authorized
petitioners Manuel, Antonio and Josephine Orola, and not the respondent Emilio Orola, to mortgage the
said property. They insist that they are not estopped from assailing a void order issued by the intestate
estate court.

Respondent Rural Bank insists that the petitioners had been benefited by the loans granted to them;
hence, are estopped from assailing the real estate mortgage contracts. Respondent Orola, for his part,
avers that the one-half undivided portion of the property subject of the real estate mortgages was the
exclusive property of the deceased, and partly the conjugal property of the respondent and the
deceased. Moreover, respondent Orolas share in the conjugal property was not the subject of the
intestate case, as it was not included as part of the property given as security for the loans of the
petitioners-mortgagees.

The petition is meritorious.

Section 2, Rule 89 of the Rules of Court provides that, upon application of the administrator and on
written notice to the heirs, the court may authorize the administrator to mortgage so much as may be
necessary of the real estate for the expenses of the administrator, or if it clearly appears that such
mortgage would be beneficial to the persons interested:

Sec. 2. When court may authorize sale, mortgage, or other encumbrance of realty to pay debts and
legacies through personality not exhausted. When the personal estate of the deceased is not sufficient
to pay the debts, expenses of administration, and legacies, or where the sale of such personal estate
may injure the business or other interests of those interested in the estate, and where a testator has not,
otherwise, made sufficient provision for the payment of such debts, expenses, and legacies, the court,
on the application of the executor or administrator and on written notice to the heirs, devisees, and
legatees residing in the Philippines, may authorize the executor or administrator to sell, mortgage, or
otherwise, encumber so much as may be necessary of the real estate, in lieu of personal estate, for the
purpose of paying such debts, expenses, and legacies, if it clearly appears that such sale, mortgage, or
encumbrance would be beneficial to the persons interested; and if a part cannot be sold, mortgaged, or
otherwise encumbered without injury to those interested in the remainder, the authority may be for the
sale, mortgage, or other encumbrance of the whole of such real estate, or so much thereof as is
necessary or beneficial under the circumstances.

Section 7 of Rule 89 provides the rules to obtain court approval for such mortgage:

(a) The executor or administrator shall file a written petition setting forth the debts due from the
deceased, the expenses of administration, the legacies, the value of the personal estate, the situation of
the estate to be sold, mortgaged, or otherwise encumbered, and such other facts as show that the sale,
mortgage, or other encumbrance is necessary or beneficial;

(b) The court shall thereupon fix a time and place for hearing such petition, and cause notice stating the
nature of the petition, the reason for the same, and the time and place of hearing, to be given personally
or by mail to the persons interested, and may cause such further notice to be given, by publication or
otherwise, as it shall deem proper;

(c) If the court requires it, the executor or administrator shall give an additional bond, in such sum as the
court directs, conditioned that such executor or administrator will account for the proceeds of the sale,
mortgage, or other encumbrance;

(d) If the requirements in the preceding subdivisions of this section have been complied with, the court,
by order stating such compliance, may authorize the executor or administrator to sell, mortgage, or
otherwise encumber, in proper cases, such part of the estate as is deemed necessary, and in case of
sale the court may authorize it to be public or private, as would be most beneficial to all parties
concerned. The executor or administrator shall be furnished with a certified copy of such order;

(e) If the estate is to be sold at auction, the mode of giving notice of the time and place of the sale shall
be governed by the provisions concerning notice of execution sale;

(f) There shall be recorded in the registry of deeds of the province in which the real estate thus sold,
mortgaged, or otherwise encumbered is situated, a certified copy of the order of the court, together with
the deed of the executor or administrator for such real estate, which shall be as valid as if the deed had
been executed by the deceased in his lifetime.

After the real estate mortgage is executed in accordance with the foregoing regulations, the said deed
must be submitted for the consideration and approval or disapproval of the court.[37]

The records show that respondent Emilio Orola notified the petitioners of his motion for the approval of
the amended contracts of lease. Although the motion was ex parte, nonetheless, petitioners Angeline,
Myrna and Althea Orola filed their Joint Affidavit of Conformity, in which they declared that:

7. That on December 15, 1982, the administrator, thru counsel, filed an ex parte motion for the admission
and approval of the amended contracts of lease in favor of our brothers and sister changing the term
from ten (10) to twelve (12) years, copy of the amended contracts of lease [were] shown to us;

8. That we have no objection and we voluntarily conform to the amendment of the term from ten (10) to
twelve (12) years and freely give our consent to having the Lessees execute a real estate mortgage over
the leased property in favor of the bank just to be able to avail with the CB: IBRD financing loan to
develop the property;

9. That we are jointly executing this affidavit for the purpose of facilitating the immediate admission and
approval of the amended contracts of lease as prayed for in the ex parte motion dated December 5,
1982.[38]

However, the Court agrees with the petitioners contention that respondent Orola failed to secure an
order from the intestate estate court authorizing him to mortgage the subject lots and execute a real
estate mortgage contract in favor of respondent Rural Bank. What the intestate estate court approved in
its December 17, 1982 Order was the authority incorporated in the amended contracts of lease
respondent Orola gave to petitioners Josephine, Manuel and Antonio Orola so that the said lots could be
mortgaged to the respondent Rural Bank as security for the P600,000.00 loan under their respective
names. In fine, the intestate estate court 

authorized the petitioners, not respondent Orola, to mortgage the said lots to respondent Rural Bank.
Moreover, under Section 7 of Rule 89 of the Rules of Court, only the executor or administrator of the
estate may be authorized by the intestate estate court to mortgage real estate belonging to the estate;
hence, the order of the estate court authorizing the petitioners to mortgage the realty of the estate to the
respondent Rural Bank is a nullity.

The respondents must have realized that the order of the intestate estate court authorizing petitioners
Manuel, Antonio and Josephine Orola to mortgage the lots was void because respondent Emilio Orola
caused the real estate mortgage contracts in favor of respondent Rural Bank to be executed by his
children, petitioners Josephine, Manuel and Antonio Orola, acting as attorneys-in-fact of the
administrator of the estate. However, the estate court had not appointed petitioners Antonio, Josephine
and Manuel Orola as attorneys-in-fact of respondent Emilio Orola empowered to execute the said
contracts. Hence, they had no authority to execute the said Real Estate Mortgage Contracts for and in
behalf of respondent Orola, in the latters capacity as administrator of the estate.

Worse, respondent Orola failed to submit the real estate mortgage contracts to the intestate estate court
for its consideration and approval. To give approval means to confirm, ratify, or to consent to some act
or thing done by another.[39] Unless and until the said contracts are approved by the intestate estate
court, the same cannot have any binding effect upon the estate; nor serve as basis for any action against
the estate and against the parcels of land described in the said contracts belonging to it.[40]

It bears stressing that respondent Orola had no right or authority to mortgage the realty belonging to the
estate. He derived his authority from the order of the estate court which had jurisdiction to authorize the
real estate mortgage thereof under such terms and conditions and upon proper application. Any
mortgage of realty of the estate without the appropriate authority of the estate court has no legal support
and is void.[41] The purchaser at public auction acquires no title over the realty.[42] The real estate
mortgage contracts, as well as the extrajudicial foreclosure thereof and the sale of the property
described therein at public auction, can thus be attacked directly and collaterally.[43]

Contrary to the contention of respondent Rural Bank, the petitioners were not estopped from assailing
the real estate mortgage contracts, the extrajudicial foreclosure thereof and the sale of the property to
respondent Rural Bank.

Although the records show that petitioners Josephine, Manuel and Antonio Orola received the proceeds
of the loan from respondent Rural Bank, the amount was deposited by respondent Emilio Orola in his
savings account with respondent Rural Bank. He was obliged to deposit the said amount in the estates
account with the Republic Planters Bank, as ordered by the intestate estate court. Worse, respondent
Rural Bank applied P229,771.20 of the loan proceeds to liquidate the accommodation loan it granted to
respondent Emilio Orola. There is no showing in the records that the intestate estate court ever
authorized the use of the proceeds of the loan to pay respondent Emilio Orolas accommodation loan.
The loan proceeds were to be used to develop property belonging to the estate into a fishpond from
which income could be generated. Of the net proceeds of the P582,000.00 loan, only P4,292.79
remained as of September 9, 1983. Respondent Emilio Orola failed to pay the amortization of the loan
for the respondent Rural Bank of the estate.

Had the real estate mortgage contracts been submitted to the intestate estate court for consideration
and approval after proper notice to the petitioners, the court would have been apprised of the terms and
conditions contained therein, and that about one-half of the loan would be used to pay the
accommodation loan of respondent Emilio Orola.

Petitioners Manuel, Josephine and Antonio Orola executed the amended contracts of lease, the
promissory notes and the real estate mortgages upon the prodding of their father, respondent Emilio
Orola, and upon the suggestion of respondent Rural Bank, solely to facilitate the speedy approval of the
loan of the estate, which was to be the ultimate beneficiary thereof. The petitioners acted on the belief
that the loan would be used to develop the swampy portion of the realty into an income-generating
fishpond, impervious of the fact that almost one-half of the proceeds of the loan had been used to pay
the accommodation loan of respondent Emilio Orola.

The claim of respondent Emilio Orola that part of the property used as collateral for the loan was part of
his and his deceased wifes conjugal property, and that the waiver he executed was to take effect only
upon his death, is belied by the records. Indeed, in his Waiver of Rights dated October 26, 1976,
respondent Emilio Orola declared that:

1. That during the lifetime of my first wife, Trinidad Laserna, we have acquired property by purchase from
Mr. Manuel Laserna, in co-ownership with Pedro Laserna, Dolores Deocampo, Jesus Laserna and
Emiliana Laserna affecting Lots Nos. 1070, 1071, 1074, 1075, 1088, 1050 & 1051, all of Pontevedra
Cadastre;

2. That the said [properties] mentioned above are still under co-ownership, pro indiviso, between and
among the Vendees whose names are mentioned above;

3. That during the marital relations between me and my deceased wife, Trinidad Laserna, we have six (6)
children, namely, Josephine, Myrna, Angeline, Manuel, Antonio and Althea, all surnamed Orola;

4. That the co-owners have decided to terminate the co-ownership over the above-mentioned properties
of which the aforementioned children of the spouses, Emilio Orola and Trinidad Laserna, became co-
owners thereof in representation of their deceased mother, Trinidad Laserna, by operation of law and the
herein undersigned desires to give protection to his children of the first marriage which are named
above.

NOW, THEREFORE, for and in consideration of the love, affection and mutual agreements, I, EMILIO Q.
OROLA, by these presents, do hereby waive and relinquish all my shares, interests and participations
over all the above-mentioned properties in favor of my six (6) children of the first marriage, namely,
Josephine, Myrna, Angeline, Manuel, Antonio and Althea.

It is understood that, upon the registration of the project of partition which the co-owners will present
that the shares and participations of the undersigned shall be consolidated in the names of the children
mentioned above in equal right and participation.[44]

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision and Resolution
of the Court of Appeals are REVERSED AND SET ASIDE. The Decision of the Regional Trial Court is
REINSTATED. No costs.

SO ORDERED.

[G.R. No. 156403. March 31, 2005]

JOSEPHINE PAHAMOTANG and ELEANOR PAHAMOTANG-BASA, petitioners, vs. THE PHILIPPINE
NATIONAL BANK (PNB) and the HEIRS OF ARTURO ARGUNA, respondents.
DECISION
GARCIA, J.:

Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari under Rule
45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R. CV No. 65290,
to wit:

1. Decision dated March 20, 2002,[1] granting the appeal and reversing the appealed August 7, 1998
decision of the Regional Trial Court at Davao City; and

2. Resolution dated November 20, 2002, denying herein petitioners' motion for reconsideration.[2]

The factual background:

On July 1, 1972, Melitona Pahamotang died. She was survived by her husband Agustin Pahamotang,
and their eight (8) children, namely: Ana, Genoveva, Isabelita, Corazon, Susana, Concepcion and herein
petitioners Josephine and Eleonor, all surnamed Pahamotang.

On September 15, 1972, Agustin filed with the then Court of First Instance of Davao City a petition for
issuance of letters administration over the estate of his deceased wife. The petition, docketed as
Special Case No. 1792, was raffled to Branch VI of said court, hereinafter referred to as the intestate
court.

In his petition, Agustin identified petitioners Josephine and Eleonor as among the heirs of his deceased
spouse. It appears that Agustin was appointed petitioners' judicial guardian in an earlier case - Special
Civil Case No. 1785 also of the CFI of Davao City, Branch VI.

On December 7, 1972, the intestate court issued an order granting 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 of P570,000.00. 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 respondent Arturo Arguna, while the property covered
by OCT No. P-7131 was sold to PLEI. Consequent to such sales, vendees Arguna and PLEI filed witt the
intestate court a motion for the approval of the corresponding deeds of sale in their favor. And, in an
Order dated March 9, 1981, the intestate court granted the motion.

Thereafter, three (3) daughters of Agustin, namely, Ana, Isabelita and Corazon petitioned the intestate
court for the payment of their respective shares from the sales of estate properties, which was granted
by the intestate court.

Meanwhile, the obligation secured by mortgages on the subject properties of the estate was never
satisfied. Hence, on the basis of the real estate mortgage contracts dated July 6, 1973 and October 22,
1974, mortgagor PNB filed a petition for the extrajudicial foreclosure of the mortgage.

Petitioner Josephine filed a motion with the intestate court for the issuance of an order restraining PNB
from extrajudicially foreclosing the mortgage. In its Order dated August 19, 1983, the intestate court
denied 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.
16,802 which 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.