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RULE 87 ACTIONS BY & AGAINST EXECUTORS & ADMINISTRATORS G.R. No. 144881 October 16, 2003 BETTY T. CHUA, ET AL. VS. ABSOLUTE MGT CORP, ET AL FACTS: Upon a petition for letters of administration filed by [herein petitioners] Jennifer T. Chua-Locsin, Benison T. Chua, and Baldwin T. Chua with the RTC of Pasay City, Betty T. Chua was appointed as administratrix of the intestate estate of the deceased Jose L. Chua. Thereafter, she submitted to the trial court an inventory of all the real and personal properties of the deceased. One of the creditors of the deceased, [herein respondent] Absolute Management Corporation, filed a claim on the estate in the amount of P63,699,437.74. In the interim, Absolute Management Corporation noticed that the deceaseds shares of stocks with Ayala Sales Corporation and Ayala Construction Supply, Inc. were not included in the inventory of assets. As a consequence, it filed a motion to require Betty T. Chua to explain why she did not report these shares of stocks in the inventory. Through a reply, Betty T. Chua alleged that these shares had already been assigned and transferred to other parties prior to the death of her husband, Jose L. Chua. She attached to her reply the deeds of assignment which allegedly constituted proofs of transfer. The judge accepted the explanation as meritorious. Absolute Management Corporation, suspecting that the documents attached to Betty T. Chuas reply were spurious and simulated, filed a motion for the examination of the supposed transferees. It premised its motion on Section 6, Rule 87, Revised Rules of Court, which states that when a person is suspected of having concealed, embezzled, or conveyed away any of the properties of the deceased, a creditor may file a complaint with the trial court and the trial court may cite the suspected person to appear before it and be examined under oath on the matter of such complaint. Private respondents opposed the motion on the ground that this provision bears no application to the case. RTC denied Absolute Management Corporations ("Absolute") Motion as it in effect seeks to engage in a fishing expedition for evidence to be used against the administratrix and others whom it seeks to examine. Absolute alleged that the trial court deprived it of the right to show that the documents presented by petitioners were fictitious to the prejudice of Absolute. During the hearing conducted before the CA, counsel for Absolute presented evidences to support its assertion that the transfers of the shares were spurious. Such as (1) Certification that the notary public who notarized the questioned Secretarys Certificate and Deeds of Assignment of Shares of Stock is not listed in the Roll of Notaries Public for the City of Pasay; (2) Certification that the questioned Secretarys Certificate and Deeds of Assignment of
SEC. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed . If an executor or administrator, heir, legatee, creditor, or other individual interested in the estate of the deceased, complains to the court having jurisdiction of the estate that a person is suspected of having concealed, embezzled, or conveyed away any of the money, goods, or chattels of the deceased, or that such person has in his possession or has knowledge of any deed, conveyance, bond, contract, or other writing which contains evidence of or tends to disclose the right, title, interest, or claim of the deceased, the court may cite such suspected person to appear before it and may examine him on oath on the matter of such complaint; and if the person so cited refuses to appear, or to answer on such examination or such interrogatories as are put to him, the court may punish him for contempt, and may commit him to prison until he submits to the order of the court. The interrogatories put to any such person, and his answers thereto, shall be in writing and shall be filed in the clerks office.
Section 6 of Rule 87 seeks to secure evidence from persons suspected of having possession or knowledge of the properties left by a deceased person, or of having concealed, embezzled or conveyed any of the properties of the deceased. The court which acquires jurisdiction over the properties of a deceased person through the filing of the corresponding proceedings has supervision and control over these properties. The trial court has the inherent duty to see to it that the inventory of the administrator lists all the properties, rights and credits which the law requires the administrator to include in his inventory. In compliance with this duty, the court also has the inherent power to determine what properties, rights and credits of the deceased the administrator should include or exclude in the inventory. An heir or person interested in the properties of a deceased may call the courts attention that certain properties, rights or credits are left out from the inventory. In such a case, it is likewise the courts duty to hear the observations of such party. The court has the power to determine if such observations deserve attention and if such properties belong prima facie to the estate. However, in such proceedings the trial court has no authority to decide whether the properties, real or personal, belong to the estate or to the persons examined. If after such examination there is good reason to believe that the person examined is keeping properties belonging to the estate, then the administrator should file an ordinary action in court to recover the same. Inclusion of
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WT CONSTRUCTION, INC. vs. HON. ULRIC R. CAETE, Presiding Judge, RTC, Mandaue City, Branch 55, and the ESTATE OF ALBERTO CABAHUG, thru its Administratrix, JULIANA VDA. DE CABAHUG FACTS: Juliana vda. De Cabahug filed a case for the settlement of the estate of her deceased husband, Alberto Cabahug, before the RTC of Mandaue City. On January 10, 1992, Ciriaco Cabahug, the administrator of the estate and heir of Alberto, was granted the authority to sell one of the properties of the estate to defray the expenses for the payment of taxes due from the estate. The property to be sold was the parcel of land subject of the petition, situated in Looc, Mandaue City. Ciriaco entered into an Agreement for Sale of Land with Downpayment with petitioner for P8,691,000 on September 23, 1996. In accordance with the agreement, petitioner made a down payment of 50% of the purchase price or P4,431,600 [should be P4,345,500]. The balance of the purchase price was to be paid "immediately after the land is free from all occupants/obstructions." The contract likewise stipulated the following: 5. That the seller shall undertake the clearing of the land herein sold of its present occupants and/or eject the squatters therein within a period of one (1) year reckoned from the receipt of the advance payment, provided however, that if the buyer will be the one to handle the clearing or ejectment of occupants, all the expenses incurred thereto shall be charged to and be deducted from the remaining balance payable.
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RULE 89 SALES, MORTGAGES & OTHER ENCRUMBANCES OF PROPERTY OF DECEDENT G.R. No. 158566 September 20, 2005 JOSEPHINE OROLA, MYRNA OROLA, ANGELINE OROLA, MANUEL OROLA, ANTONIO OROLA and ALTHEA OROLA, vs. THE RURAL BANK OF
Facts: 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. 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. 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. In 1973, Emilio Orola retired as cashier of the Philippine National Bank (PNB). 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 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. Emilio then filed an application with the Rural Bank for a financing loan of P600,000.00. The bank informed him that 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
(b)
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. Thus, in Manecl ang vs. Baun, 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 ., 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 Increas e 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. 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. As it were, the appellate court offered little explanation on why it did not believe the trial court in its finding that petitioners
Estoppel
3. 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. 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.
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 v. ALEX A. LINA - G.R. No. 141634 [2001] PHSC 1028 (5 February 2001)
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.
Facts: 1. On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition 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. Likewise on the same date, Eliodoro Sandejas, Sr. took his oath as administrator. 2. 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, Administrator Eliodoro Sandejas, Sr. filed a Motion for Reconstitution of the records of the case on February 9, 1983. On
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FRANK N. LIU, deceas ed, 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 Rodrigu ez v. ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAO - G.R. No. 145982 [2003] PHSC 787 (3 July 2003) Facts: On 13 January 1950, Teodoro Vao, as attorney-in-fact of Jose Vao, sold seven lots of the Banilad Estate located in Cebu City to Benito Liu and Cirilo Pangalo. Teodoro Vao dealt with Frank Liu, the brother of Benito Liu, in the sale of the lots to Benito Liu and Cirilo Pangalo. Meanwhile, Jose Vao passed away. Benito Liu subsequently paid installments totaling P2,900, leaving a balance of P1,000. Apparently, Benito Liu stopped further payments because Teodoro Vao admitted his inability to transfer the lot titles to Benito Liu. Later, in a letter dated 16 October 1954, Teodoro Vao informed Frank Liu that the Supreme Court had already declared valid the will of his father Jose Vao. Thus, Teodoro Vao could transfer the titles to the buyers names upon payment of the balance of the purchase price.
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Guided by previous decisions of this Court, good faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title (Arriola vs. Gomez de la Serna, 14 Phil. 627). Good faith, while it is always presumed in the absence of proof to the contrary, requires a wellfounded belief that the person from whom title was received was himself the owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest intention to abstain from taking unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). The Loys were not in good faith when they built on the lots because they knew that they bought from someone who was not the registered owner. The registered owner on the TCTs of the lots was the "Estate of Jose Vao," clearly indicating that the sale required probate court approval. Teodoro Vao did not show any court approval to the Loys when they purchased the lots because there was none. To repeat, any one who buys from a person who is not the registered owner is not a purchaser in good faith. 52 If the Loys built on the lots before the court approval, then they took the risk. Contract to sell versus contract of sale A prior contract to sell made by the decedent prevails over the subsequent contract of sale made by the administrator without probate court approval. The administrator cannot unilaterally cancel a contract to sell made by the decedent in his lifetime. 53 Any cancellation must observe all legal requisites, like written notice of cancellation based on lawful cause. 54 It is immaterial if the prior contract is a mere contract to sell and does not immediately convey ownership. 55 If it is valid, then it binds the estate to convey the property in accordance with Section 8 of Rule 89 upon full payment of the consideration. Frank Lius contract to sell became valid and effective upon its execution. 56 The seller, Jose Vao, was then alive and thus there was no need for court approval for the immediate effectivity of the contract to sell. In contrast, the execution of the contracts of sale
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Likewise, as found by the trial court and the appellate court, there is no basis to award attorneys fees. The policy of the law is to put no premium on the right to litigate. 58 The court may award attorneys fees only in the instances mentioned in Article 2208 of the Civil Code. The award of attorneys fees is the exception rather than the rule. 59 None of the instances mentioned in Article 2208 apply to this case. Con clusion Since the Loys have no contract of sale validly approved by the probate court, while Frank Liu has a contract of sale approved by the probate court in accordance with Section 8 of Rule 89, Lot Nos. 5 and 6 belong to Frank Liu. The Estate of Jose Vao should reimburse the Loys their payments on Lot Nos. 5 and 6, with annual interest at 6% from 4 June 1976, the date of filing of the complaint, until finality of this decision, and 12% thereafter until full payment.
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