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G.R. No. 165554 July 26, 2010

LAZARO PASCO and LAURO PASCO, Petitioners,vs.

HEIRS OF FILOMENA DE GUZMAN, represented by CRESENCIA DE GUZMAN-PRINCIPE, Respondents.

D E C I S I O N

DEL CASTILLO, J .:

No court should shield a party from compliance with valid obligations based on whollyunsubstantiated claims of mistake or fraud. Having refused to abide by a compromise agreement,the aggrieved party may either enforce it or regard it as rescinded and insist upon the originaldemand.

This Petition for Review on Certiorari1assails the May 13, 2004 Decision2of the Court of Appeals(CA) and its October 5, 2004 Resolution3in CA-G.R. SP No. 81464 which dismissed petitionersappeal and affirmed the validity of the parties Compromise Agreement.

Factual Antecedents

The present petition began with a Complaint for Sum of Money and Damages4filed on December13, 2000 by respondents, the heirs of Filomena de Guzman (Filomena), represented by Cresenciade Guzman-Principe (Cresencia), against petitioners Lauro Pasco (Lauro) and Lazaro Pasco(Lazaro). The case was filed before the Municipal Trial Court (MTC) of Bocaue, Bulacan, anddocketed as Civil Case No. MM-3191.5

In their Complaint,6

herein respondents alleged that on February 7, 1997, petitioners obtained a loanin the amount of P140,000.00 from Filomena (now deceased). To secure the petitioners loan, Lauroexecuted a chattel mortgage on his Isuzu Jeep in favor of Filomena. Upon her death, her heirssought to collect from the petitioners, to no avail. Despite numerous demands, petitioners refused toeither pay the balance of the loan or surrender the Isuzu Jeep to the respondents. Thus,respondents were constrained to file the collection case to compel the petitioners to pay the principalamount of P140,000.00 plus damages in the amount of 5% monthly interest from February 7, 1997,25% attorneys fees, exemplary damages, and expenses of litigation.

Filomenas heirs, consisting of Avelina de Guzman-Cumplido, Cecilia de Guzman, Rosita deGuzman, Natividad de Guzman, and Cresencia de Guzman-Principe, authorized Cresencia to act astheir attorney-in-fact through a Special Power of Attorney7(SPA) dated April 6, 1999. The SPAauthorized Cresencia to do the following on behalf of the co-heirs:

1) To represent us on all matters concerning the intestate estate of our deceased sister,Filomena de Guzman;

2) To file cases for collection of all accounts due said Filomena de Guzman or her estate,including the power to file petition for foreclosure of mortgaged properties;
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3) To do and perform all other acts necessary to carry out the powers hereinaboveconferred.

During the pre-trial of the case on February 15, 2002, the parties verbally agreed to settle the case.On February 21, 2002, the parties jointly filed a Compromise Agreement8that was signed by theparties and their respective counsel. Said Compromise Agreement, approved by the MTC in an

Order9

dated April 4, 2002, contained the following salient provisions:

1. That [petitioners] admit their principal loan and obligation to the [respondents] in the sumof One Hundred Forty Thousand Pesos (P140,000.00) Philippine currency; in addition to theincidental and other miscellaneous expenses that they have incurred in the pursuit of thiscase, in the further sum ofP18,700.00;

2. That, [petitioners] undertake to pay to the [respondents] their aforementioned obligations,together with attorneys fees equivalent to ten percentum (10%) of the total sum thereof,directly at the BULACAN OFFICE of the [respondents] counsel, located at No. 24 HornbillStreet, St. Francis Subdivision, Bo. Pandayan, Meycauayan, Bulacan, WITHOUT NEED OFFURTHER DEMAND in the following specific manner, to wit:

P60,000.00 to be paid on or before May 15, 2002

P10,000.00 monthly payments thereafter, starting June 15, 2002 up to and until theaforementioned obligations shall have been fully paid;

3. That, provided that [petitioners] shall truely [sic] comply with the foregoing specificallyagreed manner of payments, [respondents] shall forego and waive all the interests chargesof 5% monthly from February 7, 1998 and the 25% attorneys fees provided for in Annex"AA" of the Complaint;

4. In the event of failure on the part of the [petitioners] to comply with any of the specific

provisions of this Compromise Agreement, the [respondents] shall be entitled to the issuanceof a "Writ of Execution" to enforce the satisfaction of [petitioners] obligations, as mentio nedin paragraph 1, together with the 5% monthly interests charges and attorneys feesmentioned in paragraph 3 thereof.10

Ruling of the Municipal Trial Court

Unfortunately, this was not the end of litigation. On May 2, 2002, petitioners filed a verified Motion toSet Aside Decision11alleging that the Agreement was written in a language not understood by them,and the terms and conditions thereof were not fully explained to them. Petitioners further questionedthe MTCs jurisdiction, arguing that the total amount allegedly covered by the Compromise

Agreement amounted to P588,500.00, which exceeded the MTCs P200,000.00 jurisdictional limit. Inan Order12dated June 28, 2002, the MTC denied the motion; it also granted Cresencias prayer for

the issuance of a writ of execution. The writ of execution13was subsequently issued on July 3, 2002.Petitioners Motion for Reconsideration and to Quash Writ/Order of Execution14dated August 1, 2002was denied by the MTC in an Order15dated September 5, 2002.

Undeterred, on October 10, 2002, petitioners filed a Petition for Certiorari and Prohibition withApplication for Temporary Restraining Order/Preliminary Injunction16before the Regional Trial Court(RTC) of Bocaue. The case was raffled to Branch 82,17and docketed as Civil Case No. 764-M-2002.In their petition, petitioners argued that the MTC gravely abused its discretion in approving theCompromise Agreement because (1) the amount involved was beyond the jurisdiction of the MTC;
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(2) the MTC failed to ascertain that the parties fully understood the contents of the Agreement; (3)Crescencia had no authority to represent her co-heirs because Filomenas estate had a personalityof its own; and (4) the Compromise Agreement was void for failure of the judge and Cresencia toexplain the terms and conditions to the petitioners.

In their Comment18dated October 29, 2002, respondents argued that (1) the principal claim

of P140,000.00 was within the MTCs jurisdiction; and (2) the records reveal that it was thepetitioners themselves, assisted by their counsel, who proposed the terms of the settlement, whichoffer of compromise was accepted in open court by the respondents. Thus, the Compromise

Agreement merely reduced the parties agreement into writing.

Ruling of the Regional Trial Court

The RTC initially granted petitioners prayer for the issuance of a Temporary Restraining Order(TRO)19on November 18, 2002, and later issued a preliminary injunction in an Order20datedDecember 10, 2002, primarily on the ground that the SPA did not specifically authorize Cresencia tosettle the case. However, Presiding Judge Herminia V. Pasamba later inhibited herself,21so the casewas re-raffled to Branch 6, presided over by Judge Manuel D.J. Siayngo.22The grant of the

preliminary injunction was thus reconsidered and set aside in an Order

23

dated May 15, 2003. In thesame Order, the RTC dismissed the petition and held that (1) the MTC had jurisdiction over thesubject matter; (2) Cresencia was authorized to institute the action and enter into a Compromise

Agreement on behalf of her co-heirs; and (3) the MTCs approval of the Compromise Agreementwas not done in a capricious, whimsical, or arbitrary manner; thus, petitioners resortto certiorariunder Rule 65 was improper. Petitioners Motion for Reconsideration24wasdenied,25hence they sought recourse before the CA.

Ruling of the Court of Appeals

In its Decision26dated May 13, 2004 and Resolution27dated October 5,

2004, the CA dismissed petitioners appeal, and held that:

1) the MTC had jurisdiction, since the principal amount of the loan only amountedto P140,000.00;

2) Cresencia was duly authorized by her co-heirs to enter into the Compromise Agreement;

3) Petitioners improperly sought recourse before the RTC through a PetitionforCertiorariunder Rule 65, when the proper remedy was a Petition for Relief fromJudgment under Rule 38.

Issues

Before us, petitioners claim that, first, they correctly resorted to the remedy ofcertiorariunder Rule65; second, the RTC gravely erred in dismissing their Petition forCertiorariand Prohibition, when thematter under consideration was merely the propriety of the grant of the preliminary injunction; andthird, that the SPA did not validly authorize Cresencia to enter into the Compromise Agreement onbehalf of her co-heirs.

Our Ruling
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We deny the petition.

The MTC had jurisdiction over the case.

It bears stressing that the question of the MTCs jurisdiction has not been raised before this Court;hence, petitioners appear to have admitted that the MTC had jurisdiction to approve the

Compromise Agreement. In any event, it is beyond dispute that the Judiciary Reorganization Act of1980, orBatas Pambansa (BP) Blg. 129,28as amended by Republic Act No. 7691,29fixes the MTCs

jurisdiction over cases where "the demand does not exceed Two hundred thousand pesos(P200,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses,and costs."30Thus, respondents initiatory complaint, covering the principal amount ofP140,000.00,falls squarely within the MTCs jurisdiction.

Petitioners properly resorted to the special civil action of certiorari.

On the first question, the CA held that the proper remedy from the MTCs Order approving theCompromise Agreement was a Petition for Relief from Judgment under Rule 38 and not a PetitionforCertiorariunder Rule 65. We recall that petitioners filed a verified Motion to Set Aside Decision

on May 2, 2002,31

which was denied by the MTC on June 28, 2002. This Order of denial wasproperly the subject of a petition forcertiorari, pursuant to Rule 41, Section 1, of the Rules of Court:

Section 1. Subject of Appeal An appeal may be taken from a judgment or final order thatcompletely disposes of the case, or of a particular matter therein when declared by these Rules tobe appealable.

No appeal may be taken from:

x x x x

(e) an order denying a motion to set aside a judgment by consent, confession or compromise on the

ground of fraud, mistake or duress, or any other ground vitiating consent.

x x x x

In all the above instances where the judgment or final order is not appealable, the aggrieved partymay file an appropriate special civil action under Rule 65.

From the express language of Rule 41, therefore, the MTCs denial of petitioners Motion to SetAside Decision could not have been appealed. Indeed, a decision based on a compromiseagreement is immediately final and executory and cannot be the subject of appeal,32for when partiesenter into a compromise agreement and request a court to render a decision on the basis of theiragreement, it is presumed that such action constitutes a waiver of the right to appeal said

decision.

33

While there may have been other remedies available to assail the decision,

34

petitionerswere well within their rights to institute a special civil action under Rule 65.

The Regional Trial Court rightly dismissed the petition for certiorari.

On the second issue, petitioners argue that the RTC, in reconsidering the order granting theapplication for writ of preliminary injunction, should not have gone so far as dismissing the main casefiled by the petitioners. They claim that the issue in their application for writ of preliminary injunctionwas different from the issues in the main case forcertiorari, and that the dissolution of the preliminary
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injunction should have been without prejudice to the conduct of further proceedings in the maincase. They also claim that the RTC did not have the power to dismiss the case without requiring theparties to file memoranda.

These assertions are belied, however, by petitioners own submissions.

Their arguments were exactly the same, whether relating to the preliminary or permanent injunction.Identical matters were at issuethe MTCs jurisdiction, petitioners alleged vitiated consent, and thepropriety of enforcing the Compromise Agreement. The reliefs sought, too, were the same, that is,the grant of an injunction against the enforcement of the compromise:35

WHEREFORE, it is most respectfully prayed that:

1) A Temporary Restraining Order and/or Preliminary Injunction issue ex parte directing therespondents to cease and desist from enforcing, executing, or implementing in any mannerthe Decision dated April 4, 2002 and acting in Civil Case No. MM-3191 until further ordersfrom this Honorable Court.

2) After hearing, the temporary restraining order/ex parte injunction be replaced by a writ ofpreliminary injunction.

3) After hearing on the merits, judgment be rendered:

a. Making the injunction permanent.

Since the RTC found at the preliminary injunction phase that petitioners were not entitled to aninjunction (whether preliminary or permanent), that petitioners arguments were insufficient tosupport the relief sought, and that the MTCs approval of the Compromise Agreement was not donein a capricious, whimsical, or arbitary manner, the RTC was not required to engage in unnecessaryduplication of proceedings. As such, it rightly dismissed the petition.

In addition, nothing in the Rules of Court commands the RTC to require the parties to fileMemoranda. Indeed, Rule 65, Sec. 8 is explicit in that the court "may dismiss the petition if it findsthe same to be patently without merit, prosecuted manifestly for delay, or that the questions raisedtherein are too unsubstantial to require consideration."36

Cresencia was authorized to enter into the Compromise Agreement.

As regards the third issue, petitioners maintain that the SPA was fatally defective because Cresenciawas not specifically authorized to enter into a compromise agreement. Here, we fully concur with thefindings of the CA that:

x x x It is undisputed that Cresencias co-heirs executed a Special Power of Attorney, dated 6 April1999, designating the former as their attorney-in-fact and empowering her to file cases for collectionof all the accounts due to Filomena or her estate. Consequently, Cresencia entered into the subjectCompromise Agreement in order to collect the overdue loan obtained by Pasco from Filomena. In sodoing, Cresencia was merely performing her duty as attorney-in-fact of her co-heirs pursuant to theSpecial Power of Attorney given to her.371avvphi1

Our ruling in Trinidad v. Court of Appeals38is illuminating. In Trinidad, the heirs of Vicente Trinidadexecuted a SPA in favor of Nenita Trinidad (Nenita) to be their representative in litigation involving
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the sale of real property covered by the decedents estate. As here, there was no specific authorityto enter into a Compromise Agreement. When a compromise agreement was finally reached, theheirs later sought to invalidate it, claiming that Nenita was not specifically authorized to enter into thecompromise agreement. We held then, as we do now, that the SPA necessarily included the powerof the attorney-in-fact to compromise the case, and that Nenitas co-heirs could not belatedlydisavow their original authorization.39This ruling is even more significant here, where the co-heirs

have not taken any action to invalidate the Compromise Agreement or assail their SPA.

Moreover, we note that petitioners never assailed the validity of the SPA

during the pre-trial stage prior to entering the Compromise Agreement. This matter was never evenraised as a ground in petitioners Motion to Set Aside the compromise, or in the initial Petition beforethe RTC. It was only months later, in December 2002, that petitioners rather self-servingly -claimed that the SPA was insufficient.

The stated interest rate should be reduced.

Although the petition is unmeritorious, we find the 5% monthly interest rate stipulated in Clause 4 of

the Compromise Agreement to be iniquitous and unconscionable. Accordingly, the legal interest of12% per annum must be imposed in lieu of the excessive interest stipulated in the agreement. As weheld in Castro v. Tan:40

In several cases, we have ruled that stipulations authorizing iniquitous or unconscionable interestsare contrary to morals, if not against the law. In Medelv. Court of Appeals, we annulled a stipulated5.5% per month or 66%per annum interest on a P500,000.00 loan and a 6% per month or 72%perannum interest on a P60,000.00 loan, respectively, for being excessive, iniquitous, unconscionableand exorbitant. In Ruiz v. Court of Appeals, we declared a 3% monthly interest imposed on fourseparate loans to be excessive. In both cases, the interest rates were reduced to 12%per annum.

In this case, the 5% monthly interest rate, or 60%per annum, compounded monthly, stipulated inthe Kasulatan is even higher than the 3% monthly interest rate imposed in the Ruizcase. Thus, wesimilarly hold the 5% monthly interest to be excessive, iniquitous, unconscionable and exorbitant,contrary to morals, and the law. It is therefore void ab initio for being violative of Article 1306 of theCivil Code. x x x (citations omitted)

The proceeds of the loan should be released to Filomenas heirs only upon settlement of her estate.

Finally, it is true that Filomenas estate has a different juridical personality than that of the heirs.Nonetheless, her heirs certainly have an interest in the preservation of the estate and the recovery ofits properties,41for at the moment of Filomenas death, the heirs start to own the property, subject tothe decedent's liabilities. In this connection, Article 777 of the Civil Code states that "[t]he rights tothe succession are transmitted from the moment of the death of the decedent."42

Unfortunately, the records before us do not show the status of the proceedings for the settlement ofthe estate of Filomena, if any. But to allow the release of the funds directly to the heirs would amountto a distribution of the estate; which distribution and delivery should be made only after, not before,the payment of all debts, charges, expenses, and taxes of the estate have been paid .43We thusdecree that respondent Cresencia should deposit the amounts received from the petitioners with theMTC of Bocaue, Bulacan and in turn, the MTC of Bocaue, Bulacan should hold in abeyance therelease of the amounts to Filomenas heirs until after a showing that the proper procedure for thesettlement of Filomenas estate has been followed.
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WHEREFORE, the petition is DENIED. The May 13, 2004 Decision of the Court of Appeals and itsOctober 5, 2004 Resolution are AFFIRMED with MODIFICATIONS that the interest rate of 5% permonth (60% per annum) is ordered reduced to 12 % per annum. Respondent Cresencia DeGuzman-Principe is DIRECTED to deposit with the Municipal Trial Court of Bocaue, Bulacan theamounts received from the petitioners. The Municipal Trial Court of Bocaue, Bulacan islikewise DIRECTED to hold in abeyance the release of any amounts recovered from the petitioners

until after a showing that the procedure for settlement of estates of Filomena de Guzmans estatehas been followed, and after all charges on the estate have been fully satisfied.

SO ORDERED.

MARIANO C. DEL CASTILLOAssociate Justice


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2.

G.R. No. 168970 January 15, 2010

CELESTINO BALUS, Petitioner,vs.SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents.

D E C I S I O N

PERALTA, J.:

Assailed in the present petition for review on certiorariunder Rule 45 of the Rules of Court is theDecision1of the Court of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which setaside the February 7, 1997 Decision of the Regional Trial Court (RTC) of Lanao del Norte, Branch 4in Civil Case No. 3263.

The facts of the case are as follows:

Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus.Sebastiana died on September 6, 1978, while Rufo died on July 6, 1984.

On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan heobtained from the Rural Bank of Maigo, Lanao del Norte (Bank). The said property was originallycovered by Original Certificate of Title No. P-439(788) and more particularly described as follows:

A parcel of land with all the improvements thereon, containing an area of 3.0740 hectares, more orless, situated in the Barrio of Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded

on the NE., along line 1-2, by Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along line 12-13 by Lot 4649, Csd-292; and along line 12-1, by Lot 4661, Csd-292. x x x2

Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and wassubsequently sold to the Bank as the sole bidder at a public auction held for that purpose. OnNovember 20, 1981, a Certificate of Sale3was executed by the sheriff in favor of the Bank. Theproperty was not redeemed within the period allowed by law. More than two years after the auction,or on January 25, 1984, the sheriff executed a Definite Deed of Sale 4in the Bank's favor. Thereafter,a new title was issued in the name of the Bank.

On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement ofEstate5adjudicating to each of them a specific one-third portion of the subject property consisting of

10,246 square meters. The Extrajudicial Settlement also contained provisions wherein the partiesadmitted knowledge of the fact that their father mortgaged the subject property to the Bank and thatthey intended to redeem the same at the soonest possible time.

Three years after the execution of the Extrajudicial Settlement, herein respondents bought thesubject property from the Bank. On October 12, 1992, a Deed of Sale of Registered Land6wasexecuted by the Bank in favor of respondents. Subsequently, Transfer Certificate of Title (TCT) No.T-39,484(a.f.)7was issued in the name of respondents. Meanwhile, petitioner continued possessionof the subject lot.
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On June 27, 1995, respondents filed a Complaint8for Recovery of Possession and Damages againstpetitioner, contending that they had already informed petitioner of the fact that they were the newowners of the disputed property, but the petitioner still refused to surrender possession of the sameto them. Respondents claimed that they had exhausted all remedies for the amicable settlement ofthe case, but to no avail.

On February 7, 1997, the RTC rendered a Decision9

disposing as follows:

WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale infavor of the defendant, the one-third share of the property in question, presently possessed by him,and described in the deed of partition, as follows:

A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate ofTitle No. P-788, now in the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated atLagundang, Bunawan, Iligan City, bounded on the North by Lot 5122; East by shares of SaturninoBalus and Leonarda Balus-Calunod; South by Lot 4649, Dodiongan River; West by Lot 4661,consisting of 10,246 square meters, including improvements thereon.

and dismissing all other claims of the parties.

The amount of P6,733.33 consigned by the defendant with the Clerk of Court is hereby ordereddelivered to the plaintiffs, as purchase price of the one-third portion of the land in question.

Plaintiffs are ordered to pay the costs.

SO ORDERED.10

The RTC held that the right of petitioner to purchase from the respondents his share in the disputedproperty was recognized by the provisions of the Extrajudicial Settlement of Estate, which the partieshad executed before the respondents bought the subject lot from the Bank.

Aggrieved by the Decision of the RTC, herein respondents filed an appeal with the CA.

On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting asidethe Decision of the RTC and ordering petitioner to immediately surrender possession of the subjectproperty to the respondents. The CA ruled that when petitioner and respondents did not redeem thesubject property within the redemption period and allowed the consolidation of ownership and theissuance of a new title in the name of the Bank, their co-ownership was extinguished.

Hence, the instant petition raising a sole issue, to wit:

WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS

OVER THE PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OFTITLE TO THE BANK) BY VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THEREPURCHASE THEREOF BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S

ACT OF ENFORCING THE AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS(PETITIONER'S) JUST SHARE OF THE REPURCHASE PRICE.11

The main issue raised by petitioner is whether co-ownership by him and respondents over thesubject property persisted even after the lot was purchased by the Bank and title thereto transferredto its name, and even after it was eventually bought back by the respondents from the Bank.
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Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputedproperty was already in the name of the Bank, they still proceeded to execute the subjectExtrajudicial Settlement, having in mind the intention of purchasing back the property together withpetitioner and of continuing their co-ownership thereof.

Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him

and respondents, because it contains a provision whereby the parties agreed to continue their co-ownership of the subject property by "redeeming" or "repurchasing" the same from the Bank. Thisagreement, petitioner contends, is the law between the parties and, as such, binds the respondents.

As a result, petitioner asserts that respondents' act of buying the disputed property from the Bankwithout notifying him inures to his benefit as to give him the right to claim his rightful portion of theproperty, comprising 1/3 thereof, by reimbursing respondents the equivalent 1/3 of the sum they paidto the Bank.

The Court is not persuaded.

Petitioner and respondents are arguing on the wrong premise that, at the time of the execution of theExtrajudicial Settlement, the subject property formed part of the estate of their deceased father to

which they may lay claim as his heirs.

At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subjectproperty was exclusively owned by petitioner and respondents' father, Rufo, at the time that it wasmortgaged in 1979. This was stipulated by the parties during the hearing conducted by the trial courton October 28, 1996.12Evidence shows that a Definite Deed of Sale13was issued in favor of theBank on January 25, 1984, after the period of redemption expired. There is neither any dispute thata new title was issued in the Bank's name before Rufo died on July 6, 1984. Hence, there is noquestion that the Bank acquired exclusive ownership of the contested lot during the lifetime of Rufo.

The rights to a person's succession are transmitted from the moment of his death.14In addition, theinheritance of a person consists of the property and transmissible rights and obligations existing atthe time of his death, as well as those which have accrued thereto since the opening of the

succession.15In the present case, since Rufo lost ownership of the subject property during hislifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed partof his estate to which his heirs may lay claim. Stated differently, petitioner and respondents neverinherited the subject lot from their father.

Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of thesubject lot. Thus, any issue arising from the supposed right of petitioner as co-owner of thecontested parcel of land is negated by the fact that, in the eyes of the law, the disputed lot did notpass into the hands of petitioner and respondents as compulsory heirs of Rufo at any given point intime.

The foregoing notwithstanding, the Court finds a necessity for a complete determination of the

issues raised in the instant case to look into petitioner's argument that the Extrajudicial Settlement isan independent contract which gives him the right to enforce his right to claim a portion of thedisputed lot bought by respondents. 1avvphi1

It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mereconsent; and from that moment, the parties are bound not only to the fulfillment of what has beenexpressly stipulated but also to all the consequences which, according to their nature, may be inkeeping with good faith, usage and law.
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Article 1306 of the same Code also provides that the contracting parties may establish suchstipulations, clauses, terms and conditions as they may deem convenient, provided these are notcontrary to law, morals, good customs, public order or public policy.

In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate anyexpress stipulation for petitioner and respondents to continue with their supposed co-ownership of

the contested lot.

On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in anyway, support petitioner's contention that it was his and his sibling's intention to buy the subjectproperty from the Bank and continue what they believed to be co-ownership thereof. It is a cardinalrule in the interpretation of contracts that the intention of the parties shall be accorded primordialconsideration.16It is the duty of the courts to place a practical and realistic construction upon it,giving due consideration to the context in which it is negotiated and the purpose which it is intendedto serve.17Such intention is determined from the express terms of their agreement, as well as theircontemporaneous and subsequent acts.18Absurd and illogical interpretations should also beavoided.19

For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblingsto continue what they thought was their ownership of the subject property, even after the same hadbeen bought by the Bank, is stretching the interpretation of the said Extrajudicial Settlement too far.

In the first place, as earlier discussed, there is no co-ownership to talk about and no property topartition, as the disputed lot never formed part of the estate of their deceased father.

Moreover, petitioner's asseveration of his and respondents' intention of continuing with theirsupposed co-ownership is negated by no less than his assertions in the present petition that onseveral occasions he had the chance to purchase the subject property back, but he refused to do so.In fact, he claims that after the Bank acquired the disputed lot, it offered to re-sell the same to himbut he ignored such offer. How then can petitioner now claim that it was also his intention topurchase the subject property from the Bank, when he admitted that he refused the Bank's offer to

re-sell the subject property to him?

In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of theexecution thereof, the parties were not yet aware that the subject property was already exclusivelyowned by the Bank. Nonetheless, the lack of knowledge on the part of petitioner and respondentsthat the mortgage was already foreclosed and title to the property was already transferred to theBank does not give them the right or the authority to unilaterally declare themselves as co-owners ofthe disputed property; otherwise, the disposition of the case would be made to depend on the beliefand conviction of the party-litigants and not on the evidence adduced and the law and jurisprudenceapplicable thereto.

Furthermore, petitioner's contention that he and his siblings intended to continue their supposed co-

ownership of the subject property contradicts the provisions of the subject Extrajudicial Settlementwhere they clearly manifested their intention of having the subject property divided or partitioned byassigning to each of the petitioner and respondents a specific 1/3 portion of the same. Partition callsfor the segregation and conveyance of a determinate portion of the property owned in common. Itseeks a severance of the individual interests of each co-owner, vesting in each of them a sole estatein a specific property and giving each one a right to enjoy his estate without supervision orinterference from the other.20In other words, the purpose of partition is to put an end to co-ownership,21an objective which negates petitioner's claims in the present case.
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WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, datedMay 31, 2005 in CA-G.R. CV No. 58041, is AFFIRMED.

SO ORDERED

DIOSDADO M. PERALTA

Associate Justice


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3.

G.R. No. 126707 February 25, 1999

BLANQUITA E. DELA MERCED, LUISITO E. DELA MERCED, BLANQUTIA M. MACATANGAY,MA. OLIVIA M. PAREDES, TERESITA P. RUPISAN, RUBEN M. ADRIANO, HERMINIO M.ADRIANO, JOSELITO M. ADRIANO, ROGELIO M. ADRIANO, WILFREDO M. ADRIANO, VICTORM. ADRIANO, CORAZON A. ONGOCO, JASMIN A. MENDOZA and CONSTANTINO M.ADRIANO, petitioners,vs.JOSELITO P. DELA MERCED, respondent.

PURISIMA, J .:

This is a Petition for Review on Certiorari of the Decision of the Court of Appeals, dated October 17,1996, in CA-G.R. CV No. 41283, which reversed the decision, dated June 10, 1992, of the RegionalTrial Court, Branch 67, Pasig City, in Civil Case No. 59705.

The facts of the case are, as follows:

On March 23, 1987, Evarista M. dela Merced died intestate, without issue. She left five (5) parcels ofland situated in Orambo, Pasig City.

At the time of her death, Evarista was survived by three sets of heirs, viz: (1) Francisco M. delaMerced, her legitimate brother; (2) Teresita P. Rupisan, her niece who is the only daughter of Rosadela Merced-Platon (a sister who died in 1943); and (3) the legitimate children of Eugenia dela

Merced-Adriano (another sister of Evarista who died in 1965), namely: Herminio, Ruben, Joselito,Rogelio, Wilfredo, Victor and Constantino, all surnamed Adriano, Corazon Adriano-Ongoco andJasmin Adriano-Mendoza.

Almost a year later or on March 19, 1988, to be precise, Francisco (Evarista's brother) died. He wassurvived by his wife Blanquita Errea dela Merced and their three legitimate children, namely, LuisitoE. dela Merced, Blanquita M. Macatangay and Ma. Olivia M. Paredes.

On April 20, 1989, the three sets of heirs of the decedent, Evarista M. dela Merced, referring to (1)the abovenamed heirs of Francisco; (2) Teresita P. Rupisan and (3) the nine [9] legitimate childrenof Eugenia, executed an extrajudicial settlement, entitled "Extrajudicial Settlement of the Estate ofthe Deceased Evarista M. dela Merced" adjudicating the properties of Evarista to them, each set

with a share of one-third (1/3) pro-indiviso.

On July 26, 1990, private respondent Joselito P. Dela Merced, illegitimate son of the late Franciscode la Merced, filed a "Petition for Annulment of the Extrajudicial Settlement of the Estate of theDeceased Evarista M. Dela Merced with Prayer for a Temporary Restraining Order", alleging that hewas fraudulently omitted from the said settlement made by petitioners, who were fully aware of hisrelation to the late Francisco. Claiming successional rights, private respondent Joselito prayed thathe be included as one of the beneficiaries, to share in the one-third (1/3) pro-indiviso share in theestate of the deceased Evarista, corresponding to the heirs of Francisco.


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On August 3, 1990, the trial court issued the temporary restraining order prayed for by privaterespondent Joselito, enjoining the sale of any of the real properties of the deceased Evarista.

After trial, however, or on June 10, 1992, to be definite, the trial court dismissed the petition, liftedthe temporary restraining order earlier issued, and cancelled the notice of lis pendens on thecertificates of title covering the real properties of the deceased Evarista.

In dismissing the petition, the trial court stated:

The factual setting of the instant motion after considering the circumstances of theentire case and the other evidentiary facts and documents presented by the hereinparties points only to one issue which goes into the very skeleton of the controversy,to wit: "Whether or not the plaintiff may participate in the intestate estate of the lateEvarista M. Dela Merced in his capacity as representative of his alleged father,Francisdo Dela Merced, brother of the deceased, whose succession is underconsideration.

xxx xxx xxx

It is to be noted that Francisco Dela Merced, alleged father of the herein plaintiff, is alegitimate child, not an illegitimate. Plaintiff, on the other hand, is admittedly anillegitimate child of the late Francisco Dela Merced. Hence, as such, he cannotrepresent his alleged father in the succession of the latter in the intestate estate ofthe late Evarista Dela Merced, because of the barrier in Art. 992 of the New CivilCode which states that:

An illegitimate child has no right to inherit ab intestato from the legitimate childrenand relatives of his father or mother, nor shall such children or relatives inherit in thesame manner from the illegitimate child.

The application of Art. 992 cannot be ignored in the instant case, it is clearly wordedin such a way that there can be no room for any doubts and ambiguities. Thisprovision of the law imposes a barrier between the illegitimate and the legitimatefamily. . . . (Rollo, p. 87-88)

Not satisfied with the dismissal of his petition, the private respondent appealed to the Court ofAppeals.

In its Decision of October 17, 1996, the Court of Appeals reversed the decision of the trial court oforigin and ordered the petitioners to execute an amendatory agreement which shall form part of theoriginal settlement, so as to include private respondent Joselito as a co-heir to the estate ofFrancisco, which estate includes one-third (1/3) pro indiviso of the latter's inheritance from thedeceased Evarista.

The relevant and dispositive part of the Decision of the Court of Appeals, reads:

xxx xxx xxx

It is a basic principle embodied in Article 777, New Civil Code that the rights to thesuccession are transmitted from the moment of the death of the decedent, so thatFrancisco dela Merced inherited 1/3 of his sister's estate at the moment of the latter's


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death. Said 1/3 of Evarista's estate formed part of Francisco's estate which wassubsequently transmitted upon his death on March 23, 1987 to his legal heirs, amongwhom is appellant as his illegitimate child. Appellant became entitled to his share inFrancisco's estate from the time of the latter's death in 1987. The extrajudicialsettlement therefore is void insofar as it deprives plaintiff-appellant of his share in theestate of Francisco M. dela Merced. As a consequence, the cancellation of the notice

oflis pendens is not in order because the property is directly affected. Appellant hasthe right to demand a partition of his father's estate which includes 1/3 of the propertyinherited from Evarista dela Merced.

WHEREFORE, premises considered, the appealed decision is hereby REVERSEDand SET ASIDE. Defendants-appellees are hereby ordered to execute anamendatory agreement/settlement to include herein plaintiff-appellant Joselito delaMerced as co-heir to the estate of Francisco dela Merced which includes 1/3 of theestate subject of the questioned Deed of Extrajudicial Settlement of the Estate ofEvarista M. dela Merced dated April 20, 1989. The amendatoryagreement/settlement shall form part of the original Extrajudicial Settlement. Withcosts against defendants-appellees.

SO ORDERED. (Rollo, p. 41)

In the Petition under consideration, petitioners insist that being an illegitimate child, privaterespondent Joselito isbarredfrom inheriting from Evarista because of the provision of Article 992 ofthe New Civil Code, which lays down an impassable barrier between the legitimate and illegitimatefamilies.

The Petition is devoid of merit.

Article 992 of the New Civil Code is not applicable because involved here is not a situation where anillegitimate child would inherit ab intestato from a legitimate sister of his father, which is prohibited bythe aforesaid provision of law. Rather, it is a scenario where an illegitimate child inherits from his

father, the latter's share in or portion of, what the latter already inherited from the deceased sister,Evarista.

As opined by the Court of Appeals, the law in point in the present case is Article 777 of the New CivilCode which provides that the rights to succession are transmitted from the moment of death of thedecedent.

Since Evarista died ahead of her brother Francisco, the latter inherited a portion of the estate of theformer as one of her heirs. Subsequently, when Francisco died, his heirs, namely: his spouse,legitimate children, and the private respondent, Joselito, an illegitimate child, inherited his(Francisco's) share in the estate of Evarista. It bears stressing that Joselito does not claim to be anheir of Evarista by right of representation but participates in his own right, as an heir of the late

Francisco, in the latter's share (or portion thereof) in the estate of Evarista.

Petitioners argue that if Joselito desires to assert successional rights to the intestate estate of hisfather, the proper forum should be in the settlement of his own father's intestate estate, as this Courtheld in the case ofGutierrez vs. Macandog(150 SCRA 422 [1987])

Petitioners' reliance on the case ofGutierrez vs. Macandog(supra) is misplaced. The said caseinvolved a claim for support filed by one Elpedia Gutierrez against the estate of the decedent,

Agustin Gutierrez, Sr., when she was not even an heir to the estate in question, at the time, and the


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decedent had no obligation whatsoever to give her support. Thus, this Court ruled that Elpediashould have asked for support pendente lite before the Juvenile and Domestic Relations Court inwhich court her husband (one of the legal heirs of the decedent) had instituted a case for legalseparation against her on the ground of an attempt against his life. When Mauricio (her husband)died, she should have commenced an action for the settlement of the estate of her husband, inwhich case she could receive whatever allowance the intestate court would grant her.

The present case, however, relates to the rightful and undisputed right of an heir to the share of hislate father in the estate of the decedent Evarista, ownership of which had been transmitted to hisfather upon the death of Evarista. There is no legal obstacle for private respondent Joselito,admittedly the son of the late Francisco, to inherit in his own right as an heir to his father's estate,which estate includes a one-third (1/3) undivided share in the estate of Evarista.

WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Appealed Decision of theCourt of Appeals AFFIRMED in toto.

SO ORDERED.

Romero, Panganiban and Gonzaga-Reyes, JJ., concur.

Vitug, J., abroad on official business.


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4.

G.R. No. 125835 July 30, 1998

NATALIA CARPENA OPULENCIA, petitioner,

vs.

COURT OF APPEALS, ALADIN SIMUNDAC and MIGUEL OLIVAN, respondents.

PANGANIBAN, J .:

Is a contract to sell a real property involved in restate proceedings valid and binding without theapproval 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 theCourt of Appeals 2 in CA-GR CV No. 41994 promulgated on February 6, 1996 and itsResolution 3dated July 19, 1996. The challenged Decision disposed as follows:

WHEREFORE, premises considered, the order of the lower court dismissing thecomplaint is SET ASIDE and judgment is hereby rendered declaring the CONTRACTTO SELL executed by appellee in favor of appellants as valid and binding, subject tothe result of the administration proceedings of the testate Estate of DemetrioCarpena.

SO ORDERED. 4

Petitioner's 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 privaterespondents] Aladin Simundac and Miguel Oliven alleged that [herein petitioner]Natalia Carpena Opulencia executed in their favor a "CONTRACT TO SELL" Lot2125 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 obligationsunder the contract. [Private respondents] therefore prayed that [petitioner] be orderedto perform her contractual obligations and to further pay damages, attorney's fee andlitigation expenses.

In her traverse, [petitioner] admitted the execution of the contract in favor of plaintiffsand receipt of P300,000.00 as downpayment. However, she put forward the followingaffirmative defenses: that the property subject of the contract formed part of theEstate of Demetrio Carpena (petitioner's father), in respect of which a petition for


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probate was filed with the Regional Trial Court, Branch 24, Bian, Laguna; that at thetime the contract was executed, the parties were aware of the pendency of theprobate 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 thedownpayment 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 inSta. 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 persquare 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 thecontract to sell is subject of the probate proceedings;

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

[Private respondents] submitted their evidence in support of the material allegations

of the complaint. In addition to testimonies of witnesses, [private respondents]presented the following documentary evidences: (1) Contract to Sell (Exh A); (2)machine copy of the last will and testament of Demetrio Carpena (defendant's father)to show that the property sold by defendant was one of those devised to her in saidwill (Exh B); (3) receipts signed by defendant for the downpayment in the totalamount 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 toEvidence. In essence, defendant maintained that the contract to sell was null andvoid for want of approval by the probate court. She further argued that the contractwas subject to a suspensive condition, which was the probate of the will ofdefendant's father Demetrio Carpena. An Opposition was filed by [private

respondents]. It appears further that in an Order dated December 15, 1992 thecourt 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 filedin the Court with notice to the heirs of the time and place of hearing, to show that thesale is necessary and beneficial. A sale of properties of an estate as beneficial to theinterested 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


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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 deceasedperson is already the subject of a testate or intestate proceeding, the administratorcannot enter into any transaction involving it without prior approval of the probateCourt. (Estate of Obave, vs. Reyes, 123 SCRA 767).

As held by the Supreme Court, a decedent's representative (administrator) is notestopped 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 ofthe transaction[,] has interposed the nullity of the contract as her defense, there being noapproval from the probate Court, and, in good faith offers to return the money shereceived 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. Thisis what precipitated the filing of [petitioner's] demurrer to evidence. 6

The trial court's order of dismissal was elevated to the Court of Appeals by private respondents whoalleged:

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

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

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

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

Public Respondent's Ruling

Declaring the Contract to Sell valid, subject to the outcome of the testate proceedings on DemetrioCarpena's estate, the appellate court set aside the trial court's dismissal of the complaint andcorrectly ruled as follows:

It is apparent from the appealed order that the lower court treated the contract to sellexecuted by appellee as one made by the administratrix of the Estate of DemetrioCarpena for the benefit of the estate. Hence, its main reason for voiding the contractin question was the absence of the probate court's approval. Presumably, what thelower 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 theRevised Rules of Court, which requires the approval of the probate court uponapplication therefor with notice to the heirs, devisees and legatees.

However, as adverted to by appellants in their brief, the contract to sell in question isnot covered by Rule 89 of the Revised Rules of Court since it was made by appelleein her capacity as an heir, of a property that was devised to her under the will soughtto be probated. Thus, while the document inadvertently stated that appellee executedthe contract in her capacity as "executrix and administratrix" of the estate, a cursory


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reading of the entire text of the contract would unerringly show that what sheundertook to sell to appellants was one of the "other properties given to her by herlate father," and more importantly, it was not made for the benefit of the estate but forher own needs. To illustrate this point, it is apropos to refer to the preambular orpreliminary portion of the document, which reads:

WHEREAS, the SELLER is the lawful ownerof a certain parcel ofland, which is more particularly described as follows:

xxx xxx xxx

xxx xxx xxx

xxx xxx xxx

WHEREAS, the SELLER suffers difficulties in her living and hasforced to offer the sale of the above-described property, "whichproperty was only one among the other properties given to her by her

late father," to anyone who can wait for complete clearance of thecourt on the Last Will Testament of her father.

WHEREAS, the SELLER in order to meet her need of cash, hasoffered 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 thesame, less the area for the road and other easements indicated at theback of Transfer Certificate of Title No. 2125 duly confirmed after thesurvey to be conducted by the BUYER's Licensed GeodeticEngineer, and whatever area [is] left. (Emphasis added).

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

xxx xxx xxx

It is noteworthy that in a Manifestation filed with this court by appellants, which is notcontroverted by appellee, it is mentioned that the last will and testament of DemetrioCarpena was approved in a final judgment rendered in Special Proceeding No. B-979 by the Regional Trial Court, Branch 24 Bian, Laguna. But of course such

approval does not terminate the proceeding[s] since the settlement of the estate willensue. Such proceedings will consist, among others, in the issuance by the court of anotice to creditors (Rule 86), hearing of money claims and payment of taxes andestate debts (Rule 88) and distribution of the residue to the heirs or persons entitledthereto (Rule 90). In effect, the final execution of the deed of sale itself uponappellants' payment of the balance of the purchase price will have to wait for thesettlement or termination of the administration proceedings of the Estate of DemetrioCarpena. Under the foregoing premises, what the trial court should have done withthe complaint was not to dismiss it but to simply put on hold further proceedings until


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such time that the estate or its residue will be distributed in accordance with theapproved will.

The rule is that when a demurrer to the evidence is granted by the trial court butreversed on appeal, defendant loses the right to adduce his evidence. In such acase, the appellate court will decide the controversy on the basis of plaintiff's

evidence. In the case at bench, while we find the contract to sell valid and bindingbetween the parties, we cannot as yet order appellee to perform her obligationsunder the contract because the result of the administration proceedings of the testateEstate of Demetrio Carpena has to be awaited. Hence, we shall confine ouradjudication 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 approvalis valid.

The Court's Ruling

The petition has no merit.

Contract to Sell Valid

In a nutshell, petitioner contends that "where the estate of the deceased person is already thesubject 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 isvoid because it was not approved by the probate court, as required by Section 7, Rule 89 of theRules of Court:

Sec. 7. Regulations for granting authority to sell, mortgage, or otherwise encumberestate. The court having jurisdiction of the estate of the deceased may authorizethe executor or administrator to sell, mortgage, or otherwise encumber real estate, incases provided by these rules and when it appears necessary or beneficial, underthe following regulations:

xxx xxx xxx

Insisting that the above rule should apply to this case, petitioner argues that the stipulations in theContract to Sell require her to act in her capacity as an executrix or administratrix. She avers that herobligation to eject tenants pertains to the administratrix or executrix, the estate being the landlord ofthe said tenants. 10 Likewise demonstrating that she entered into the contract in her capacity asexecutor is the stipulation that she must effect the conversion of subject land from irrigated rice landto residential land and secure the necessary clearances from government offices. Petitioner allegesthat these obligations can be undertaken only by an executor or administrator of an estate, and notby an heir. 11


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The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of Rule 89 of theRules of Court is not applicable, because petitioner entered into the Contract to Sell in her capacityas an heiress, not as an executrix or administratrix of the estate. In the contract, she representedherself as the "lawful owner" and seller of the subject parcel of land. 12 She also explained thereason for the sale to be "difficulties in her living" conditions and consequent "need ofcash." 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 bypetitioners has no application to the instant case.

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

Art. 440 of the Civil Code provides that "the possession of hereditary property isdeemed to be transmitted to the heir without interruption from the instant of the deathof the decedent, in case the inheritance be accepted." And Manresa with reasonstates that upon the death of a person, each of his heirs "becomes the undividedowner of the whole estate left with respect to the part or portion which might beadjudicated to him, a community of ownership being thus formed among thecoowners of the estate while it remains undivided." . . . And according to article 399of the Civil Code, every part owner may assign or mortgage his part in the commonproperty, and the effect of such assignment or mortgage shall be limited to theportion which may be allotted him in the partition upon the dissolution of thecommunity. 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 ChiefJustice Cayetano Arellano, said that the sale was valid, but that the effect thereofwas limited to the share which may be allotted to the vendors upon the partition ofthe 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 partialdistribution of the decedent's estate pending the final termination of the testate proceedings." 17 Thisbecomes all the more significant in the light of the trial court's finding, as stated in its Order dated

August 20, 1997, that "the legitimate of one of the heirs has been impaired." 18

Petitioner's contention is not convincing. The Contract to Sell stipulates that petitioner's offer to sellis 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 andprivate respondents during the pendency of the probate proceedings, the consummation of the saleor the transfer of ownership over the parcel of land to the private respondents is subject to the fullpayment of the purchase price and to the termination and outcome of the testate proceedings.Therefore, there is no basis for petitioner's apprehension that the Contract to Sell may result in apremature partition and distribution of the properties of the estate. Indeed, it is settled that "the salemade by an heir of his share in an inheritance, subject to the pending administration, in no wisestands in the way of such administration." 20


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Estoppel

Finally, petitioner is estopped from backing out of her representations in her valid Contract to Sellwith private respondents, from whom she had already received P300,000 as initial payment of thepurchase price. Petitioner may not renege on her own acts and representations, to the prejudice ofthe 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 intowith 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 AppealsAFFIRMED. Costs against petitioner.

SO ORDERED.


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5.

G.R. No. 103577 October 7, 1996

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C.GONZALES (for herself and on behalf of Florida C. Tupper, as attorney-in-fact), CIELITO A.

CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners,vs.THE COURT OF APPEALS, CONCEPCION D. ALCARAZ, and RAMONA PATRICIA ALCARAZ,assisted by GLORIA F. NOEL as attorney-in-fact, respondents.

MELO, J .:p

The petition before us has its roots in a complaint for specific performance to compel hereinpetitioners (except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel ofland with its improvements located along Roosevelt Avenue in Quezon City entered into by the

parties sometime in January 1985 for the price of P1,240,000.00.

The undisputed facts of the case were summarized by respondent court in this wise:

On January 19, 1985, defendants-appellants Romulo Coronel, et al. (hereinafterreferred to as Coronels) executed a document entitled "Receipt of Down Payment"(Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred to asRamona) which is reproduced hereunder:

RECEIPT OF DOWN PAYMENT

P1,240,000.00 Total amount

50,000 Down payment

P1,190,000.00 Balance

Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum ofFifty Thousand Pesos purchase price of our inherited house and lot, covered by TCTNo. 119627 of the Registry of Deeds of Quezon City, in the total amount ofP1,240,000.00.

We bind ourselves to effect the transfer in our names from our deceased father,Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the

down payment above-stated.

On our presentation of the TCT already in or name, We will immediately execute thedeed of absolute sale of said property and Miss Ramona Patricia Alcaraz shallimmediately pay the balance of the P1,190,000.00.

Clearly, the conditions appurtenant to the sale are the following:


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1. Ramona will make a down payment of Fifty Thousand (P50,000.00) Pesos uponexecution of the document aforestated;

2. The Coronels will cause the transfer in their names of the title of the propertyregistered in the name of their deceased father upon receipt of the Fifty Thousand(P50,000.00) Pesos down payment;

3. Upon the transfer in their names of the subject property, the Coronels will executethe deed of absolute sale in favor of Ramona and the latter will pay the former thewhole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos.

On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz(hereinafter referred to as Concepcion), mother of Ramona, paid the down paymentof Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh. "2").

On February 6, 1985, the property originally registered in the name of the Coronels'father was transferred in their names under TCTNo. 327043 (Exh. "D"; Exh. "4")

On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 tointervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) forOne Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latterhas paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")

For this reason, Coronels canceled and rescinded the contract (Exh. "A") withRamona by depositing the down payment paid by Concepcion in the bank in trust forRamona Patricia Alcaraz.

On February 22, 1985, Concepcion, et al., filed a complaint for specific performanceagainst the Coronels and caused the annotation of a notice of lis pendens at the

back of TCT No. 327403 (Exh. "E"; Exh. "5").

On April 2, 1985, Catalina caused the annotation of a notice of adverse claimcovering the same property with the Registry of Deeds of Quezon City (Exh. "F";Exh. "6").

On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subjectproperty in favor of Catalina (Exh. "G"; Exh. "7").

On June 5, 1985, a new title over the subject property was issued in the name ofCatalina under TCT No. 351582 (Exh. "H"; Exh. "8").

(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the partiesagreed to submit the case for decision solely on the basis of documentary exhibits. Thus, plaintiffstherein (now private respondents) proffered their documentary evidence accordingly marked asExhibits "A" through "J", inclusive of their corresponding submarkings. Adopting these same exhibitsas their own, then defendants (now petitioners) accordingly offered and marked them as Exhibits "1"through "10", likewise inclusive of their corresponding submarkings. Upon motion of the parties, thetrial court gave them thirty (30) days within which to simultaneously submit their respective


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memoranda, and an additional 15 days within which to submit their corresponding comment or replythereof, after which, the case would be deemed submitted for resolution.

On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who wasthen temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989,

judgment was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for

the Quezon City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered orderingdefendant to execute in favor of plaintiffs a deed of absolute sale covering that parcelof land embraced in and covered by Transfer Certificate of Title No. 327403 (nowTCT No. 331582) of the Registry of Deeds for Quezon City, together with all theimprovements existing thereon free from all liens and encumbrances, and onceaccomplished, to immediately deliver the said document of sale to plaintiffs and uponreceipt thereof, the said document of sale to plaintiffs and upon receipt thereof, theplaintiffs are ordered to pay defendants the whole balance of the purchase priceamounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of theRegistry of Deeds for Quezon City in the name of intervenor is hereby canceled anddeclared to be without force and effect. Defendants and intervenor and all otherpersons claiming under them are hereby ordered to vacate the subject property anddeliver possession thereof to plaintiffs. Plaintiffs' claim for damages and attorney'sfees, as well as the counterclaims of defendants and intervenors are herebydismissed.

No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)

A motion for reconsideration was filed by petitioner before the new presiding judge of the QuezonCity RTC but the same was denied by Judge Estrella T. Estrada, thusly:

The prayer contained in the instant motion, i.e., to annul the decision and to renderanew decision by the undersigned Presiding Judge should be denied for thefollowing reasons: (1) The i

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