SPECIAL FIRST DIVISION
G.R. No. 145982 September 13, 2004
FRANK N. LIU, deceased, substituted by his surviving spouse Diana Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu Rodriguez, petitioners,
vs.
ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAÑO, respondents.
R E S O L U T I O N
CARPIO, J.:
The Loys seek a reconsideration of the Decision dated 3 July 2003 of this Court declaring void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vaño in favor of Alfredo Loy, Jr. and Teresita Loy. We held that Lot Nos. 5 and 6 belong to Frank Liu1 since the probate court approved his deeds of sale in accordance with Section 8,2 Rule 89 of the Rules of Court. The deeds of sale of the Loys lacked a valid probate court approval. As a result, we ordered the Estate of Jose Vaño to reimburse the Loys the amounts they paid for Lot Nos. 5 and 6, with interest at 6% annually from 4 June 1976, the date of filing of the complaint, until finality of the decision, and 12% annually thereafter until full payment.
The Court heard the parties on oral arguments on 10 March 2004 and granted them time to submit their memoranda. Frank Liu filed his memorandum on 29 March 2004 while the Loys filed their memorandum on 25 March 2004 by registered mail.
The issues that the Loys raise in their motion for reconsideration are not new. The Court already considered and discussed extensively these issues in the assailed Decision. We find no compelling reason to reconsider the assailed Decision.
The Loys insist that the transaction between Teodoro Vaño and Benito Liu, the predecessor-in-interest of Frank Liu, is a contract to sell. In contrast, the transactions between Teodoro Vaño and Alfredo Loy, Jr. and Teresita A. Loy were contracts of sale. According to the Loys, the contract to sell did not transfer ownership of Lot Nos. 5 and 6 to Benito Liu or Frank Liu because it was only a promise to sell subject to the full payment of the consideration. On the other hand, the contracts of sale in favor of the Loys transferred ownership, as the conveyances were absolute.3
As we held in our Decision, a prior contract to sell made by the decedent during his lifetime prevails over a subsequent contract of sale made by the administrator without probate court approval. It is immaterial if the prior contract is a mere contract to sell and does not immediately convey ownership. Frank Liu’s contract to sell became valid and effective upon its execution and bound the estate to convey the property upon full payment of the consideration.
It is apparent from Teodoro Vaño’s letter4 dated 16 October 1954 that the reason why Frank Liu stopped further payments on the lots, leaving a balance of ₱1,000, was because Teodoro Vaño could not yet transfer the titles to Benito Liu, the predecessor-in-interest of Frank Liu. It would appear that Frank Liu and Teodoro Vaño lost contact with each other thereafter and it was only on 25 January 1964 that Frank Liu wrote Teodoro Vaño informing the latter that he was ready to pay the balance of the purchase price of the lots. Teodoro Vaño did not reply to Frank Liu’s letter. On 22 April 1966, Benito Liu sold to Frank Liu the lots, including Lot Nos. 5 and 6, which Benito Liu purchased from Teodoro Vaño on 13 January 1950. Frank Liu sent three letters dated 21 March 1968, 7 June 1968 and 29 July 1968 to Teodoro Vaño reiterating his request for the execution of the deed of sale covering the lots in his favor but to no avail. On 19 August 1968, Teodoro Vaño sold Lot No. 6 to Teresita Loy and on 16 December 1969, he sold Lot No. 5 to Alfredo Loy, Jr. The sales to the Loys were made after Frank Liu offered to pay the balance of the purchase price of the lots and after he repeatedly requested for the execution of the deeds of sale in his favor.
The sale of the lots by Teodoro Vaño to Benito Liu was valid. The sale was made by Teodoro Vaño on 13 January 1950 in his capacity as attorney-in-fact of Jose Vaño. The sale to Benito Liu was made during the lifetime of Jose Vaño, not after the death of Jose Vaño who died on 28 January 1950.5 The power of attorney executed by Jose Vaño in favor of Teodoro Vaño remained valid during the lifetime of Jose Vaño. In his letter dated 16 October 1954, Teodoro Vaño stated that on 30 June 1954, the Supreme Court allowed the probate of the will of Jose Vaño. Teodoro Vaño likewise mentioned in the letter that in July 1954, the Supreme Court held that all the sales made by Teodoro Vaño of the properties of his father were legal.6 Thus, Benito Liu’s deed of sale in favor of Frank Liu covering the lots sold to him by Teodoro Vaño constitutes a valid charge or claim against the estate of Jose Vaño.
The Loys reiterate their contention that Teodoro Vaño, as administrator and sole heir to the properties, can sell the lots to them since the rights of an heir are transmitted from the moment of death of the testator. Although a property under estate proceedings cannot be sold without judicial approval, the Loys allege that in their case, the probate court later approved the sales to them, thereby ratifying the sales.7
Well-settled is the rule that an administrator needs court approval to sell estate property, otherwise the sale is void.8 Court approval of the sale of estate property is clearly required under Rule 89 of the Rules of Court, which enumerates the instances when the court may allow the sale or encumbrance of estate property. Section 7 of Rule 89 of the Rules of Court
even provides for the regulations for granting authority to sell, mortgage or otherwise encumber estate property.9
More importantly, Section 9110 of Act No. 496 (Land Registration Act) and Section 8811 of Presidential Decree No. 1529 (Property Registration Decree) specifically require court approval for any sale of registered land by an executor or administrator.
The laws, Rules of Court, jurisprudence and regulations explicitly require court approval before any sale of estate property by an executor or administrator can take effect. The purpose of requiring court approval is to protect creditors. In this case, Frank Liu is a creditor, and he is the person the law seeks to protect.
The orders of the probate court dated 19 and 23 March 1976 approving the contracts of the Loys are void. The orders did not ratify the sales because there was already a prior order of the probate court dated 24 February 1976 approving the sale of Lot Nos. 5 and 6 to Frank Liu. Hence, the probate court had already lost jurisdiction over Lot Nos. 5 and 6 since the lots no longer formed part of the Estate of Jose Vaño. In fact, the administratrix of the estate filed a motion for reconsideration of the orders of the probate court approving the contracts of the Loys because she already executed a deed of sale covering Lot Nos. 5 and 6 in favor of Frank Liu.
The Loys impliedly admitted that their contracts of sale dated 19 August 1968 and 16 December 1969 were ineffective when they belatedly asked in 1976 for court approval of the sales. If the Loys believed that their deeds of sale in 1968 and 1969 were valid, they would not have asked for court approval in 1976. By asking for court approval, they necessarily admitted that without court approval, the sale to them was ineffectual.
The Loys are not buyers and registrants in good faith considering that they bought from a seller who was not a registered owner. Teodoro Vaño signed both contracts of sale but the titles to the lots sold were in the name of "Estate of Jose Vaño." And since the titles to Lot Nos. 5 and 6 were in name of "Estate of Jose Vaño," the Loys were on notice that court approval was needed for the sale of estate property. The ex-parte motion for the court approval of the sales filed by the Loys some seven or eight years after the sales transaction reveals a less than honest actuation, prompting the administratrix to object to the court’s approval.lawph!l.net
WHEREFORE, we DENY the motion for reconsideration.
SO ORDERED.
Davide, Jr., Ynares-Santiago, and Azcuna, JJ., concur.
Footnotes
1 Subsequently substituted by his heirs.
2 Section 8 of Rule 89 of the Rules of Court reads:
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 court shall execute the deed. The deed executed by such executor, administrator or clerk of court shall be as effectual to convey the property as if executed by the deceased in his lifetime; but no such conveyance shall be authorized until notice of the application for that purpose has been given personally or by mail to all persons interested, and such further notice has been given, by publication or otherwise, as the court deems proper; nor if the assets in the hands of the executor or administrator will thereby be reduced so as to prevent a creditor from receiving his full debt or diminish his dividend.
3 Rollo, pp. 373-374.
4 The letter reads (emphasis supplied):
Teodoro Vaño
Juana Osmeña Ext.
P.O. Box 61
Cebu City, Philippines
Oct. 16, 1954
Mr. Frank Liu
Southern Motors,
Davao Branch, Davao City
Dear Mr. Liu:
Some time last May, if I remember correctly, you offered to settle the whole balance of your account if I can have the Titles transferred immediately in your brother’s name, and to that of Mr. Pangalo’s. I cannot blame you if you were disappointed then, to know that I could not have the titles transferred, even should you have paid in full.
At that time however, without your knowledge, you were innocently being made the tool of an intrigue, intended to put me in hot water, by inducing me to put in writing what we have agreed verbally. I hope I have explained the matter to your satisfaction.
However, last June 30, of this year, the Supreme Court, unanimously concurred in the reversal of the decision of the Court of First Instance, as regard the legality of the Will of my father. Now that the Will of my Father has been declared legal, my opponents have lost their personality in the case, and with it their power to harass me in court. Also, sometime in the middle of July, also this year, the Supreme Court again declared that all the sales I have made of the properties of my father were legal, and that I should be empowered to have the titles transferred in the buyer’s names, should they have paid in full. A few have already received their titles. And yours can be had too in two days time from the time you have paid in full.
With the best of wishes for your continued good health and prosperity and that of your family’s, and hoping to hear from you soon, I remain,
Yours very truly,
Teodoro Vaño
(signed)
5 In the case of Vaño v. Vda. de Garces, et al., 95 Phil. 333 (1954), involving the last will and testament of Jose Vaño, it was mentioned that Jose Vaño died on 28 January 1950. The Supreme Court allowed probate of the last will and testament of Jose Vaño who bequeathed all his properties to his son, Teodoro Ceblero Vaño.
6 See Exhibit "C," Records, p. 64.
7 Rollo, pp. 388-389.
8 Dillena v. Court of Appeals, No. L-77660, 28 July 1988, 163 SCRA 630; Manotok Realty, Inc. v. Court of Appeals, No. L-35367, 9 April 1987, 149 SCRA 174; Estate of Amadeo Matute Olave, et al. v. Hon. Reyes, et al., 208 Phil. 678 (1983); Godoy v. Orellano, 42 Phil. 347 (1921).
9 Section 7, Rule 89 of the Rules of Court reads:
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;
(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.
10 Section 91 of Act No. 496 reads:
SEC. 91. Except in case of a will devising the land to an executor to his own use or upon some trust or giving to the executor power to sell, no sale or transfer of registered land shall be made by an executor or by an administrator in the course of administration for the payment of debts or for any other purpose, except in pursuance of an order of a court of competent jurisdiction obtained as provided by law. (Emphasis supplied)
11 Section 88 of P.D. No. 1529 reads:
SEC. 88. Dealings by administrator subject to court approval. – After a memorandum of the will, if any, and order allowing the same, and letters testamentary or letters of administration have been entered upon the certificate of title as hereinabove provided, the executor or administrator may alienate or encumber registered land belonging to the estate, or any interest therein, upon approval of the court obtained as provided by the Rules of Court. (Emphasis supplied)
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