 CLAIMS NOT DUE, CONTINGENT RULE 88 SECTION 5

Section 5. How contingent claim becoming absolute in two years allowed and paid. Action
against distributees later. —
1. If such contingent claim
a. becomes absolute and is presented to the court, or to the executor or
administrator,
b. within two (2) years from the time limited for other creditors to present their claims1,
i. it may be allowed by the court if not disputed by the executor or administrator
and,
ii. if disputed, it may be proved and allowed or disallowed by the court as the
facts may warrant.
1. If the contingent claim is allowed, the creditor shall receive payment to
the same extent as the other creditors if the estate retained by the
executor or administrator is sufficient.
2. But if the claim is not so presented, after having become absolute, within
said two (2) years, and allowed, the assets retained in the hands of the
executor or administrator, not exhausted in the payment of claims, shall
be distributed by the order of the court to the persons entitled to the
same;
a. but the assets so distributed may still be applied to the payment of
the claim when established, and the creditor may maintain an
action against the distributees to recover the debt, and such
distributees and their estates shall be liable for the debt in proportion
to the estate they have respectively received from the property of
the deceased.

 contingent claims, period to file

3. before it becomes due – within 6mos-12mos.
4. After it becomes due – within 2 years

o MCMICKING VS SYCONBIENG 1912 DUTY OF CREDITOR

FACTS: Ocampo Lao Sempco is one of the sureties of Palanca who was the
appointed administrator of Margarita Jose’s estate. On the 22d of April, 1904, the
Mariano Ocampo Lao Sempco died in the city of Manila, testate. The fact of his
death was brought to the attention of the Court of First Instance of said city on the
2nd of November, 1904, by an application made by one of the legatees of said
Margarita Jose, deceased, for an order directing said administrator to furnish a new
bond. On July 27, 1904 The administrator filed a complete report and inventory of
all his properties with a statement of all his debts and liabilities. As part of this report
and inventory, he also filed an instrument signed by all of the persons interested in
the estate agreeing to partition of the estate among themselves without
proceedings in court, at the same time assuming to pay all obligations of the
estate. At the time the agreement was signed and at the time of the distribution of
the property of the estate pursuant thereto, no committee had been appointed to
hear claims vs the estate of Mariano Ocampo and no notice had been published
to creditors of the said deceased to present their claims vs the said estate in the
manner prescribed by law.

Engracio Palanca was removed from office as administrator of Margarita Jose for
absconding and failure to render accounts. Jose McMicking was appointed as

1
Not more than 12 mos. Nor less than 6 mos.
new administrator. He made an application for the appointment of commissioners
of the estate of Mariano Ocampo for hearing claims vs the estate. He presented a
claims vs the estate of Ocampo based upon the defalcation of Palanca in the
estate of Margarita Jose.

It is disputed in the case that all of the claims against the estate of Mariano
Ocampo were fully paid and satisfied at the time of the partition of said estate,
with the exception of the alleged claim arising by virtue of his having been a surety
of the default Palanca. It nowhere appears in the evidence or the record exactly
when this claim arose it may be inferred from the time of presentation in 1909, and
we have no means of determining whether the defalcation represented by the
said claim occurred before or after the substitution of sureties herefore referred to.

HELD: action been commenced against him. If the principal is not liable upon the
obligation, the surety cannot be.
At the head of the law of administration of the Philippine Islands stands sections 596
and 597 of the Code of Civil Procedure. They are as follows:
SEC. 596. Settlement of intestate estates, without legal proceedings, in
certain cases. — Whatever all the heirs of a deceased person are of lawful
age and legal capacity, and their are no debts due from the intestate
estate, or all the debts have been paid by the heirs, the heirs may, by a
family council as shown under Spanish law, or by agreement between
themselves, duly executed in writing, apportion and divide the estate
among themselves, as they may see fit, without proceedings in court.

SEC. 597. In such case distributees liable for debts. — But if it shall appear,
at any time within two years after such settlement and distribution of the
estate, that there are debts outstanding against the estate which have not
been paid, any creditor may compel the settlement of the estate in the
courts in the manner hereinafter provided, unless his debt shall be paid, with
interest; and the administrator appointed by the court may recover the
assets of the estate from those who have received them, for the purpose
of paying the debts; and the real estate belonging to the deceased shall
remain charged with the liability to creditors for the full period of two years
after such distribution, notwithstanding any transfers thereof that may have
been made.

These sections provide for the voluntary division of the whole property of the
decedent without proceedings in court. The provisions which they contain are
extremely important.
.
After the partition and division provided for in sections 596 and 597 have been fully
consummated, no further administration of the estate can be had unless there
occur the following requisites:
1. There must have been discovered a claim against the estate "within two years
after such settlement and distribution of estate."
2. The creditor holding the claim must be the person who moves the court for the
appointment of an administrator.

IT MUST BE REMEMBERED THAT IT IS ONLY DEBTS DISCOVERED WITHIN THE PRESCRIBED

PERIOD THAT CAN BE MADE THE REASON FOR AN ADMINISTRATION OF THE ESTATE
SUBSEQUENT TO ITS PARTITION. The necessary result is that a debt not discovered
 within that period cannot be made the reason for an administration of the estate.
The debt in the case at bar having first discovered more than four years after the
partition of the estate of Mariano Ocampo, deceased, an administrator, even
though appointed under section 57, would not no authority in law, over the
objection of one interested, to pay the debt in question or to maintain an action
or other proceeding for the recovery of property for that purpose. This section
creates a statute of limitations which deprives all debts which are not discovered
within the prescribed time of the power of requiring an administration of the estate.
The administration of the estate after the partition under the law has been
accomplished depends upon the discovery of the debt "at any time within two
years after such settlement and distribution of the estate." The law does not
operate unless that discovery is made within the time prescribed.

The fact that the claim in the case at bar was, during a certain period, a contingent
one is of no importance. THE SECTIONS UNDER DISCUSSION MAKE NO DISTINCTION
BETWEEN CLAIMS.
The creditor himself is not without duties. In the case at bar it was five years after
the petition before the alleged creditor made any attempt whatsoever to
"discover" or present his claim. He knew of the death of Ocampo very soon after it
occurred. He knew that it was among the possibilities that Ocampo's estate might
be called upon to respond for the failure of Palanca to perform his duty as
administrator. It was his duty to see to it that he would be protected in that event.
Nevertheless he permitted the estate of Ocampo to be partitioned and distributed
without protest and without the presentation of his contingent claim, and sat quiet
and passive for nearly five years thereafter knowing that it was very probable that
the property of the estate was being consumed, incumbered, and transferred by
the persons among whom it had been distributed.

o HILADO VS CA ACCESS TO RECORDS OF PROCEEDINGS

The claims against Benedicto were based on tort, as they arose from his actions in
connection with Philsucom, Nasutra and Traders Royal Bank. CIVIL ACTIONS FOR
TORT OR QUASI-DELICT DO NOT FALL WITHIN THE CLASS OF CLAIMS TO BE FILED
UNDER THE NOTICE TO CREDITORS REQUIRED UNDER RULE 86.[20] These actions,
being as they are civil, survive the death of the decedent and may be
commenced against the administrator pursuant to Section 1, Rule 87. Indeed, the
records indicate that the intestate estate of Benedicto, as represented by its
administrator, was successfully impleaded in Civil Case No. 11178, whereas the
other civil case[21] was already pending review before this Court at the time of
Benedictos death.

EVIDENTLY, THE MERITS OF PETITIONERS CLAIMS AGAINST BENEDICTO ARE TO BE

SETTLED IN THE CIVIL CASES WHERE THEY WERE RAISED, and not in the intestate
proceedings. In the event the claims for damages of petitioners are granted, they
would have the right to enforce the judgment against the estate.

o SHEKER VS ESTATE OF ALICE SHEKER CNFS

FACTS: The RTC admitted to probate the holographic will of Alice O. Sheker and
thereafter issued an order for all the creditors to file their respective claims against
the estate. In compliance therewith, Alan Sheker filed on October 7, 2002 a
contingent claim for agent's commission due him amounting to
approximately P206,250.00 in the event of the sale of certain parcels of land
belonging to the estate, and the amount of P275,000.00, as reimbursement for
 expenses incurred and/or to be incurred by petitioner in the course of negotiating
the sale of said realties.

The executrix of the Estate of Alice O. Sheker (respondent) moved for the dismissal
of said money claim against the estate on the grounds that (1) the requisite docket
fee, as prescribed in Section 7(a), Rule 141 of the Rules of Court, had not been paid;
(2) petitioner failed to attach a certification against non-forum shopping; and (3)
petitioner failed to attach a written explanation why the money claim was not filed
and served personally.

ISSUES: (a) must a contingent claim filed in the probate proceeding contain a
certification against non-forum shopping, failing which such claim should be
dismissed?

(b) must a contingent claim filed against an estate in a probate proceeding be

dismissed for failing to pay the docket fees at the time of its filing thereat?

HELD:
THE CERTIFICATION OF NON-FORUM SHOPPING IS REQUIRED ONLY FOR COMPLAINTS
AND OTHER INITIATORY PLEADINGS. The RTC erred in ruling that a contingent money
claim against the estate of a decedent is an initiatory pleading. In the present
case, the whole probate proceeding was initiated upon the filing of the petition for
allowance of the decedent's will. Under Sections 1 and 5, Rule 86 of the Rules of
Court, after granting letters of testamentary or of administration, all persons having
money claims against the decedent are mandated to file or notify the court and
the estate administrator of their respective money claims; otherwise, they would
be barred, subject to certain exceptions.[5]

SUCH BEING THE CASE, A MONEY CLAIM AGAINST AN ESTATE IS MORE AKIN TO A
MOTION FOR CREDITORS' CLAIMS TO BE RECOGNIZED AND TAKEN INTO
CONSIDERATION IN THE PROPER DISPOSITION OF THE PROPERTIES of the estate

x x x The OFFICE OF A MOTION IS NOT TO INITIATE NEW LITIGATION, BUT TO BRING A MATERIAL
BUT INCIDENTAL MATTER ARISING IN THE PROGRESS OF THE CASE in which the motion is filed. A
motion is not an independent right or remedy, but is confined to incidental matters in the progress
of a cause. It relates to some question that is collateral to the main object of the action and is
connected with and dependent upon the principal remedy.[

A MONEY CLAIM IS ONLY AN INCIDENTAL MATTER IN THE MAIN ACTION FOR THE
SETTLEMENT OF THE DECEDENT'S ESTATE; more so if the claim is contingent since the
claimant cannot even institute a separate action for a mere contingent
claim. Hence, herein petitioner's contingent money claim, not being an initiatory
pleading, does not require a certification against non-forum shopping.

 PROCESSING CLAIMS
o FILING OF CLAIMS
o RULE 86, Section 9. How to file a claim. Contents thereof. Notice to executor or
administrator. — A claim may be filed
1. by delivering the same with the necessary vouchers to the clerk of court and
2. by serving a copy thereof on the executor or administrator.
 a. If the claim be founded on a bond, bill, note, or any other instrument,
the original need not be filed, but a copy thereof with all indorsements
shall be attached to the claim and filed therewith.
b. On demand, however, of the executor or administrator, or by order of
the court or judge, the original shall be exhibited, unless it be list or
destroyed, in which case the claimant must accompany his claim with
affidavit or affidavits containing a copy or particular description of the
instrument and stating its loss or destruction.
c. When the claim is due, it must be supported by affidavit stating the
amount justly due, that no payments have been made thereon which
are not credited, and that there are no offsets to the same, to the
knowledge of the affiant.
d. If the claim is not due, or is contingent, when filed, it must also be
supported by affidavits stating the particulars thereof.
i. When the affidavit is made by a person other than the claimant,
he must set forth therein the reason why it is not made by the
claimant.

The claim once filed shall be attached to the record of the case in which
the letters testamentary or of administration were issued, although the
court, in its discretion, and as a matter of convenience, may order all the
claims to be collected in a separate folder.

o RULE 86, Section 10. Answer of executor or administrator. Offsets —

1. Within fifteen (15) days after service of a copy of the claim on the executor or
administrator,
a. he shall file his answer admitting or denying the claim specifically, and
setting forth the admission or denial.
b. If he has no knowledge sufficient to enable him to admit or deny
specifically, he shall state such want of knowledge.
c. The executor or administrator in his answer shall allege in offset any
claim which the decedent before death had against the claimant, and
his failure to do so shall bar the claim forever.
2. A copy of the answer shall be served by the executor or administrator on the
claimant.
3. The court in its discretion may extend the time for filing such answer.

o APPROVAL OF ADMITTED CLAIMS RULE 86 SECTION 11 Disposition of admitted claim.

—
1. Any claim admitted entirely by the executor or administrator shall immediately
be submitted by the clerk to the court who may approve the same without
hearing;
2. but the court, in its discretion, before approving the claim, may order that
known heirs, legatees, or devisees be notified and heard.
a. If upon hearing, an heir, legatees, or devisee opposes the claim, the
court may, in its discretion, allow him fifteen (15) days to file an answer
to the claim in the manner prescribed in the preceding section.

o TRIAL OF CONTESTED CLAIMS RULE 86 SECTION 12

Section 12. Trial of contested claim. —
1. Upon the filing of an answer to a claim, or
2. upon the expiration of the time for such filing,
 a. the clerk of court shall set the claim for trial
b. with notice to both parties.
c. The court may refer the claim to a commissioner.

o JUDGMENT RULE 86 SECTION 13 Judgment appealable. — The judgment of the

court approving or disapproving a claim,
1. shall be filed with the record of the administration proceedings
2. with notice to both parties, and
3. is appealable as in ordinary cases.
4. A judgment against the executor or administrator shall be that
a. he pay, in due course of administration, the amount ascertained to be due,
and
b. it shall not create any lien upon the property of the estate, or
c. give to the judgment creditor any priority of payment.

o COSTS RULE 6 Section 14. Costs. —

1. When the executor or administrator, in his answer, admits and offers to pay
part of a claim, and
2. the claimant refuses to accept the amount offered in satisfaction of his claim,
if he fails to obtain a more favorable judgment,
a. he cannot recover costs, but must pay to the executor or administrator
costs from the time of the offer.
b. Where an action commenced against the deceased for money has
been discontinued and the claim embraced therein presented as in
this rule provided, the prevailing party shall be allowed the costs of his
action up to the time of its discontinuance.

 ACTIONS THAT SURVIVE RULE 87 SECTION 1, 2

Actions By and Against Executors and Administrators

Section 1. Actions which may and which may not be brought against executor or
administrator. — No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but
1. to recover real or personal property, or an interest therein, from the estate, or to
enforce a lien thereon, and
2. actions to recover damages for an injury to person or property, real or personal, may
be commenced against him.

Section 2. Executor or administrator may bring or defend actions which survive. — For
the recovery or protection of the property or rights of the deceased, an executor or
administrator may bring or defend, in the right of deceased, actions for causes which
survive.

o WHO MAY FILE? RULE 87, SECTION 1, 3

Section 3. Heir may not sue until share assigned —
1. When an executor or administrator is appointed and assumes the trust,
2. no action to recover the title or possession of lands or for damages done to
such lands shall be maintained against him by an heir or devisee
a. until there is an order of the court assigning such lands to such heir or
devisee or
b. until the time allowed for paying debts has expired.
 RIOFERIO VS CA –
Whether the heirs may bring suit to recover property of the estate pending
the appointment of an administrator

FACTS: Alfonso Orfinada died intestate leaving several properties. There

were two sets of heirs, one with the legal wife and children, the other with
the paramour. The latter executed an Extrajudicial Settlement of Estate of
a Deceased Person with Quitclaim involving the properties of the estate of
the decedent located in Dagupan City and that accordingly, the Registry
of Deeds in Dagupan issued COTs in their favor and also obtained a loan
executing a REM over the properties subject to extrajudicial settlement.

The legal family of Orfinada filed a complaint for the Annulment/Rescission

of the Extrajudicial Settlement. In their answer, the paramour and her
children raised an affirmative defense that respondents are not the real
parties-in-interest but rather the estate of Orfinada in view of the pendency
of the administration proceedings. They then filed a motion to set the
defenses for hearing.

Lower court denied the motion on the ground that respondents (legal
family), as heirs, are the real parties-in-interest especially in the absence of
an administrator who is yet to be appointed.

HELD:
Pending the filing of administration proceedings, the heirs without doubt
have legal personality to bring suit in behalf of the estate of the decedent
in accordance with the provision of Article 777 of the New Civil Code that
(t)he rights to succession are transmitted from the moment of the death of
the decedent. The provision in turn is the foundation of the principle that
the property, rights and obligations to the extent and value of the
inheritance of a person are transmitted through his death to another or
others by his will or by operation of law.[25]

Even if administration proceedings have already been commenced, the

heirs may still bring the suit if an administrator has not yet been
appointed. This is the proper modality despite the total lack of advertence
to the heirs in the rules on party representation, namely Section 3, Rule
3[26] and Section 2, Rule 87[27] of the Rules of Court. In fact, in the case
of Gochan v. Young,[28] this Court recognized the legal standing of the heirs
to represent the rights and properties of the decedent under administration
pending the appointment of an administrator.

The above-quoted rules,[29] while permitting an executor or administrator to

represent or to bring suits on behalf of the deceased, do not prohibit the
heirs from representing the deceased. These rules are easily applicable to
cases in which an administrator has already been appointed. But no rule
categorically addresses the situation in which special proceedings for the
settlement of an estate have already been instituted, yet no administrator
has been appointed. In such instances, the heirs cannot be expected to
wait for the appointment of an administrator; then wait further to see if the
administrator appointed would care enough to file a suit to protect the
 rights and the interests of the deceased; and in the meantime do nothing
while the rights and the properties of the decedent are violated or
dissipated.

Even if there is an appointed administrator, jurisprudence recognizes two

exceptions, viz:
(1) if the executor or administrator is unwilling or refuses to bring
suit;[30] and
(2) when the administrator is alleged to have participated in the
act complained of[31] and he is made a party defendant.[32]

Evidently, the necessity for the heirs to seek judicial relief to recover property
of the estate is as compelling when there is no appointed administrator, if
not more, as where there is an appointed administrator but he is either
disinclined to bring suit or is one of the guilty parties himself.

All told, therefore, the rule that the heirs have no legal standing to sue for
the recovery of property of the estate during the pendency of
administration proceedings has three exceptions, the third being when
there is no appointed administrator such as in this case.

o ACTIONS ON BEHALF OF ESTATE RULE 87 SECTION 5 AND 8

Section 5. Mortgage due estate may be foreclosed. — A mortgage belonging to
the estate of a deceased person, as mortgagee or assignee of the right or a
mortgage, may be foreclosed by the executor or administrator.

Section 8. Embezzlement before letters issued —

1. If a person, before the granting of letters testamentary or of administration on
the estate of the deceased,
2. embezzles or alienates any of the money, goods, chattels, or effects of such
deceased,
a. such person shall be liable to an action in favor of the executor or
administrator of the estate
b. for double the value of the property sold, embezzled, or alienated,
c. to be recovered for the benefit of such estate

o ACTIONS ON BEHALF OF CREDITORS RULE 87, SECTION 9 AND 10

Section 9. Property fraudulently conveyed by deceased may be recovered.
When executor or administrator must bring action. —
1. When there is a deficiency of assets in the hands of an executor or administrator
for the payment of debts and expenses of administration, and
2. the deceased in his lifetime had conveyed real or personal property, or a right
or interest therein, or an debt or credit, with intent to defraud his creditors or to
avoid any right, debt, or duty; or had so conveyed such property, right, interest,
debt or credit that by law the conveyance would be void as against his
creditors, and
3. the subject of the attempted conveyance would be liable to attachment by
any of them in his lifetime,
a. the executor or administrator may commence and prosecute to final
judgment an action for the recovery of such property, right, interest,
debt, or credit for the benefit of the creditors;
 b. but he shall not be bound to commence the action unless
i. on application of the creditors of the deceased, not
ii. unless the creditors making the application pay such part of the
costs and expenses, or give security therefor to the executor or
administrator, as the court deems equitable.

Section 10. When creditor may bring action. Lien for costs. —
1. When there is such a deficiency of assets, and
2. the deceased in his lifetime had made or attempted such a conveyance, as is
stated in the last preceding section, and the
3. executor or administrator has not commenced the action therein provided for,
a. any creditor of the estate may, with the permission of the court,
commence and prosecute to final judgment,
b. in the name of the executor or administrator, a like action for the
recovery of the subject of the conveyance or attempted conveyance
for the benefit of the creditors.
c. But the action shall not be commenced until
i. the creditor has filed in a court a bond executed to the executor
or administrator, in an amount approved by the judge,
ii. conditioned to indemnify the executor or administrator against
the costs and expenses incurred by reason of such action.
iii. Such creditor shall have a lien upon any judgment recovered
by him in the action for such costs and other expenses incurred
therein as the court deems equitable.
4. Where the conveyance or attempted conveyance had been made by the
deceased in his lifetime in favor of the executor or administrator,
a. the action which a credit may bring shall be in the name of all the
creditors, and
b. permission of the court and filing of bond as above prescribed, are not
necessary.
 PROCEEDINGS UNDER RULE 87 SECTION 6
Section 6. Proceedings when property concealed, embezzled, or fraudulently conveyed.
—
1. If an executor or administrator, heir, legatee, creditor or other individual interested in
the estate of the deceased,
2. 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
3. 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 or discloses the
right, title, interest, or claim of the deceased,
a. the court may cite such suspected person to appear before it and may
examine him on oath on the matter of such complaint; and
b. 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.
c. The interrogatories put any such person, and his answers thereto, shall be in
writing and shall be filed in the clerk's office.

o CHUA VS ABSOLUTE MANAGEMENT CORP

FACTS: Upon a petition for letters of administration filed by Jennifer Chua, et al,
Betty Chua (widow) was appointed as administratrix of the intestate estate of the
deceased Jose 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 is respondent for 63k, filed a claim which was tentatively accepted by
Betty.

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. Judge Dumatol 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. xxx It premised its motion on Section 6,
Rule 87, Revised Rules of Court, infra, 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

HELD: 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.[16]

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.[18] Inclusion of certain shares of stock
by the administrator in the inventory does not automatically deprive the assignees
of their shares. They have a right to be heard on the question of ownership, when
that property is properly presented to the court.[19]

In the present case, some of the transferees of the shares of stock do not appear
to be heirs of the decedent. Neither do they appear to be parties to the intestate
proceedings.[20] Third persons to whom the decedents assets had been conveyed
may be cited to appear in court and examined under oath as to how they came
into possession of the decedents assets. In case of fraudulent conveyances, a
separate action is necessary to recover these assets.[21]

Taken in this light, there is no reason why the trial court should disallow the
examination of the alleged transferees of the shares of stocks. This is only for
purposes of eliciting information or securing evidence from persons suspected of
concealing or conveying some of the decedents properties to the prejudice of
creditors. Petitioners admission that these persons are the decedents assignees
does not automatically negate concealment of the decedents assets on their
part. The assignment might be simulated so as to place the shares beyond the
reach of creditors. In case the shares are eventually included in the estate, this
inventory is merely provisional and is not determinative of the issue of ownership. A
separate action is necessary for determination of ownership and recovery of
possession.

 The Motion was a preparatory move sanctioned by the Rules of Court. The
denial of Absolutes Motion was an interlocutory order not subject to
appeal. The order of denial may, however, be challenged before a
superior court through a petition for certiorari under Rule 65.

 PAYMENT OF THE DEBTS OF THE ESTATE

o SOLVENT ESTATE RULE 88 SECTION 1, 2, 3, 6
 Section 1. Debts paid in full if estate sufficient. —
1. If, after hearing all the money claims against the estate, and
2. after ascertaining the amount of such claims,
a. it appears that there are sufficient assets to pay the debts,
b. the executor or administrator pay the same within the time limited for
that purpose.

Section 2. Part of estate from which debt paid when provision made by will. —
1. If the testator makes provision by his will, or
2. designates the estate to be appropriated for the payment of his debts, the
expenses of administration, or the family expenses,
a. they shall be paid according to the provisions of the will;
b. but if the provision made by the will or the estate appropriated, is not
sufficient for that purpose,
i. such part of the estate of the testator, real or personal, as is not
disposed of by will, if any shall be appropriated for that purpose.

Section 3. Personalty first chargeable for debts, then realty. —

1. The personal estate of the deceased not disposed of by will shall be first
chargeable with the payment of debts and expenses; and
2. if said personal estate is not sufficient for that purpose, or
3. its sale would redound to the detriment of the participants for the estate,
a. the whole of the real estate not dispose of by will, or so
b. much thereof as is necessary, may be sold, mortgaged, or otherwise
encumbered for that purpose by the executor or administrator, after
obtaining the authority of the court therefor.
c. Any deficiency shall be met by contributions in accordance with the
provisions of section 6 of this rule.

Section 6. Court to fix contributive shares where devisees, legatees, or heirs

have been possession. —
1. Where devisees, legatees, or heirs have entered into possession of portions of
the estate before the debts and expenses have been settled and paid, and
have become liable to contribute for the payment of such debts and
expenses,
a. the court having jurisdiction of the estate may, by order for that
purpose, after hearing, settle the amount of their several liabilities, and
b. order how much and in what manner each person shall contribute, and
c. may issue execution as circumstances require.

o INSOLVENT ESTATE RULE 88 SECTION 7, 8, 9, 10

Section 7. Order of payment if estate insolvent —
1. If the assets which can be appropriated for the payment of debts are not
sufficient for that purpose,
2. the executor or administrator shall pay the debts against the estate, observing
the provisions of Articles 1059 and 2239 to 2251 of the Civil Code.

Section 8. Dividends to be paid in proportion to claims. —

1. If there are no assets sufficient to pay the credits of any one class of creditors
after paying the credits entitled to preference over it,
a. each creditor within such class shall be paid a dividend in proportion to
his claim.
b. No creditor of any one class shall receive any payment until those of
the preceding class are paid.

Section 9. Estate of insolvent non-resident, how disposed of. — In case

administration is taken in the Philippine of the estate of a person who was at the
time of his death an
1. inhabitant of another country, and
2. who died insolvent,
a. his estate found in the Philippines shall, as far as practicable, be so
disposed of
b. that his creditors here and elsewhere may receive each an equal share,
in proportion to their respective credits.

Section 10. When and how claim proved outside the Philippines against
insolvent resident's estate paid. —
1. If it appears to the court having jurisdiction that
2. claims have been duly proven in another country against the estate of an
insolvent
3. who was at the time of his death an inhabitant of the Philippines,
4. and that the executor or administrator in the Philippines had knowledge of the
presentation of such claims in such country and an opportunity to contest their
allowance,
a. the court shall receive a certified list of such claims, when perfected in
such country, and
b. add the same to the list of claims proved against the deceased person
in the Philippines
i. so that a just distribution of the whole estate may be made
equally among all its creditors according to their respective
claims;
ii. but the benefit of this and the preceding sections shall not be
extended to the creditors in another country if the property of
such deceased person there found is not equally apportioned
to the creditors residing in the Philippines and the other creditor,
according to their respective claims.
o CONTINGENT CLAIM RULE 88 SECTION 5
Section 5. How contingent claim becoming absolute in two years allowed and
paid. Action against distributees later. —
1. If such contingent claim becomes absolute and
2. is presented to the court, or to the executor or administrator, within two (2) years
from the time limited for other creditors to present their claims,
a. it may be allowed by the court if not disputed by the executor or
administrator and,
b. if disputed, it may be proved and allowed or disallowed by the court as
the facts may warrant.
c. If the contingent claim is allowed, the creditor shall receive payment to
the same extent as the other creditors if the estate retained by the
executor or administrator is sufficient.
d. But if the claim is not so presented, after having become absolute,
within said two (2) years, and allowed, the assets retained in the hands
of the executor or administrator, not exhausted in the payment of
claims, shall be distributed by the order of the court to the persons
entitled to the same;
e. but the assets so distributed may still be applied to the payment of the
claim when established, and
i. the creditor may maintain an action against the distributees to
recover the debt, and
ii. such distributees and their estates shall be liable for the debt in
proportion to the estate they have respectively received from
the property of the deceased.

o TIME FOR PAYMENT OF DEBTS AND LEGACIES RULE 88 SECTION 15 & 16

Section 15. Time for paying debts and legacies fixed, or extended after notice,
within what periods. — On granting letters testamentary or administration the court
shall allow to the executor or administrator a time for disposing of the estate and
paying the debts and legacies of the deceased,
1. which shall not, in the first instance, exceed one (1) year;
2. but the court may, on application of the executor or administrator and after
hearing on such notice of the time and place therefor given to all persons
interested as it shall direct, extend the time as the circumstances of the estate
require not exceeding six (6) months for a single extension not so that the whole
period allowed to the original executor or administrator shall exceed two (2)
years.

Section 16. Successor of dead executor or administrator may have time

extended on notice within certain period. —
1. When an executor or administrator dies, and
2. a new administrator of the same estate is appointed,
a. the court may extend the time allowed for the payment of the debts or
legacies beyond the time allowed to the original executor or
administrator, not exceeding six (6) months at a time and
b. not exceeding six (6) months beyond the time which the court might
have allowed to such original executor or administrator; and
c. notice shall be given of the time and place for hearing such
application, as required in the last preceding section.
 o ORDER OR MANNER FOR PAYMENT AND DISTRIBUTION OF ASSETS RULE 88 SECTION11,
12, 13, 14

Section 11. Order for payment of debts. —

1. Before the expiration of the time limited for the payment of the debts,
a. the court shall order the payment thereof, and
b. the distribution of the assets received by the executor or administrator
for that purpose among the creditors, as the circumstances of the
estate require and in accordance with the provisions of this rule.

Section 12. Orders relating to payment of debts where appeal is taken. —

1. If an appeal has been taken from a decision of the court concerning a claim,
a. the court may suspend the order for the payment of the debts or
b. may order the distributions among the creditors whose claims are
definitely allowed, leaving in the hands of the executor or administrator
sufficient assets to pay the claim disputed and appealed.
c. When a disputed claim is finally settled the court having jurisdiction of
the estate shall order the same to be paid out of the assets retained to
the same extent and in the same proportion with the claims of other
creditors.

Section 13. When subsequent distribution of assets ordered. — If the whole of the
debts are not paid on the first distribution, and if the whole assets are not
distributed, or other assets afterwards come to the hands of the executor or
administrator, the court may from time to time make further orders for the
distributions of assets.

Section 14. Creditors to be paid in accordance with terms of order. — When an

order is made for the distribution of assets among the creditors, the executor or
administration shall, as soon as the time of payment arrives, pay the creditors the
amounts of their claims, or the dividend thereon, in accordance with the terms of
such order.

SALE, MORTGAGE, ENCUMBRANCE OF ASSETS (RULE 89, SECTIONS 2, 4, 6, 8, 9)

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

Section 4. When court may authorize sale of estate as beneficial to interested

persons. Disposal of proceeds. —
1. When it appears that the sale of the whole or a part of the real or personal estate, will
be beneficial to the heirs, devisees, legatees, and other interested persons,
2. the court may, upon application of the executor or administrator and on written notice
to the heirs, devisees, and legatees who are interested in the estate to be sold,
a. authorize the executor or administrator to sell the whole or a part of said
estate, although not necessary to pay debts, legacies, or expenses of
administration;
b. but such authority shall not be granted if inconsistent with the provisions of
a will.
c. In case of such sale, the proceeds shall be assigned to the persons entitled
to the estate in the proper proportions.

Section 6. When court may authorize sale, mortgage, or other encumbrance of realty
acquired on execution or foreclosure. —
1. The court may authorize an executor or administrator
2. to sell mortgage, or otherwise encumber real estate acquired by him on execution or
foreclosure sale, under the same circumstances and under the same regulations as
prescribed in this rule for the sale, mortgage, or other encumbrance of other real
estate.

Section 8. When court may authorize conveyance of realty which deceased contracted
to convey. Notice.Effect of deed. —
1. Where the deceased was in his lifetime under contract, binding in law, to deed real
property, or an interest therein,
2. the court having jurisdiction of the estate may,
a. 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
b. if the contract is to convey real property to the executor or administrator,
the clerk of court shall execute the deed.
c. The deed executed by such executor, administrator, or clerk of court shall
be as affectual to convey the property as if executed by the deceased in
his lifetime;
i. 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
ii. such further notice has been given, by publication or otherwise, as
the court deems proper;
 iii. 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.

Section 9. When court may authorize conveyance of lands which deceased held in trust.
—
1. Where the deceased in his lifetime held real property in trust for another person,
a. the court may after notice given as required in the last preceding section,
authorize the executor or administrator to deed such property to the
person, or his executor or administrator, for whose use and benefit it was so
held; and
b. the court may order the execution of such trust, whether created by deed
or by law.

 SALE OF PERSONALTY (RULE 89, SECTIONS 1 AND 4)

Section 1. Order of sale of personalty. —
1. Upon the application of the executor or administrator, and
2. on written notice to the heirs and other persons interested,
a. the court may order the whole or a part of the personal estate to be sold,
if it appears necessary for the purpose of paying debts, expenses of
administration, or legacies, or for the preservation of the property.

Section 4. When court may authorize sale of estate as beneficial to interested

persons. Disposal of proceeds. — When it appears that the sale of the whole or a part of
the real or personal estate, will be beneficial to the heirs, devisees, legatees, and other
interested persons, the court may,
1. upon application of the executor or administrator and
2. on written notice to the heirs, devisees, and legatees who are interested in the estate
to be sold,
3. authorize the executor or administrator to sell the whole or a part of said estate,
although not necessary to pay debts, legacies, or expenses of administration;
4. but such authority shall not be granted if inconsistent with the provisions of a will.
5. In case of such sale, the proceeds shall be assigned to the persons entitled to the
estate in the proper proportions.
SALE, MORTGAGAE, ENCUMBRANCE OF REALTY RULE 89 (SEC.2, 4, 5)
Section 2. When court may authorize sale, mortgage, or other encumbrance of realty to
pay debts and legacies through personalty not exhausted. —
1. When the personal estate of the deceased is not sufficient to pay the debts, expenses
of administration, and legacies, or
2. where the sale of such personal estate may injure the business or other interests of those
interested in the estate, and
3. where a testator has not otherwise made sufficient provision for the payment of such
debts, expenses, and legacies,
the court,
4. on the application of the executor or administrator and
5. on written notice of the heirs, devisees, and legatees residing in the Philippines,
a. may authorize the executor or administrator to sell, mortgage, or otherwise
encumber so much as may be necessary of the real estate, in lieu of personal
estate,
b. for the purpose of paying such debts, expenses, and legacies,
c. if it clearly appears that such sale, mortgage, or encumbrance would be
beneficial to the persons interested; and
d. if a part cannot be sold, mortgaged, or otherwise encumbered without injury
to those interested in the remainder, the authority may be for the sale,
mortgage, or other encumbrance of the whole of such real estate, or so much
thereof as is necessary or beneficial under the circumstances.

Section 4 SUPRA
Section 5. When court may authorize sale, mortgage, or other encumbrance of estate to
pay debts and legacies in other countries. —
1. When the sale of personal estate, or the sale, mortgage, or other encumbrance of real
estate is not necessary to pay the debts, expenses of administration, or legacies in the
Philippines,
2. but it appears from records and proceedings of a probate court in another country
that the estate of the deceased in such other country is not sufficient to pay the debts,
expenses of administration, and legacies there,
the court here
a. may authorize the executor or administrator to sell the personal estate or to sell,
mortgage, or otherwise encumber the real estate for the payment of debts or
legacies in the other country,
b. in same manner as for the payment of debts or legacies in the Philippines.

WHO MAY OPPOSE? RULE 89, SECTION 3

Section 3. Persons interested may prevent such sale, etc., by giving bond. —
1. No such authority to sell, mortgage, or otherwise encumber real or personal estate shall
be granted if
a. any person interested in the estate gives a bond,
b. in a sum to be fixed by the court,
c. conditioned to pay the debts, expenses of administration, and legacies within
such time as the court directs; and
d. such bond shall be for the security of the creditors, as well as of the executor or
administrator, and
e. may be prosecuted for the benefit of either.
 REGULATIONS FOR GRANTING AUTHORITY RULE 89, SECTION 7
Section 7. Regulation 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
1. the debts due from the deceased,
2. the expenses of administration,
3. the legacies,
4. the value of the personal estate,
5. the situation of the estate to be sold, mortgaged, or otherwise encumbered,
and
6. such other facts as show that the sale, mortgage, or other encumbrance is
necessary or beneficial.
(b) The court shall thereupon
1. fix a time and place for hearing such petition, and
2. cause notice stating
a. the nature of the petition,
b. the reasons for the same, and
c. the time and place of hearing,
i. to be given personally or by mail to the persons interested,
3. 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, mortgage, 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.

SANDEJAS VS LINA
Facts: Upon his petition, Eliodoro Sandejas was granted a letters of administration for the
settlement of the estate of his wife Remedios. Letters of Administration [were issued by
the lower court appointing Eliodoro Sandejas, Sr. as administrator of the estate of the late
Remedios Sandejas. As [A]dministrator, Eliodoro P. Sandejas, in his capacity as seller,
bound and obligated himself, his heirs, administrators, and assigns, to sell 4 parcels of land
to Alex Lina. However, the execution of the deed of absolute sale was subject to a
condition which is the approval of the motion filed by the seller-administrator for authority
to sell. By his intervention, the buyer eventually became the administrator of Remedios’
estate after the death of the seller.
The assailed order allowed the sale and bound the Eliodoro as a matter of justice and
good faith to comply with his contractual commitments as an owner and heir.

Petitioners argue that the CA erred in ordering the conveyance of the disputed 3/5 of the
parcels of land, despite the nonfulfillment of the suspensive condition -- court approval of
the sale -- as contained in the "Receipt of Earnest Money with Promise to Sell and to Buy"
(also referred to as the "Receipt"). Instead, they assert that because this condition had not
been satisfied, their obligation to deliver the disputed parcels of land was converted into
a money claim which must not be settled in the intestate court.

MAIN ISSUE: OBLIGATION WITH A SUSPENSIVE CONDITION

HELD: CONDITIONAL SALE
Petitioners admit that the agreement between the deceased Eliodoro Sandejas Sr. and
respondent was a contract to sell. Not exactly. In a contract to sell, the payment of the
purchase price is a positive suspensive condition. The vendor's obligation to convey the
title does not become effective in case of failure to pay.10
On the other hand, the agreement between Eliodoro Sr. and respondent is subject to a
suspensive condition -- the procurement of a court approval, not full payment. There was
no reservation of ownership in the agreement. In accordance with paragraph 1 of the
Receipt, petitioners were supposed to deed the disputed lots over to respondent. This they
could do upon the court's approval, even before full payment. Hence, their contract was
a conditional sale, rather than a contract to sell as determined by the CA.

COURT APPROVAL IS REQUIRED IN ANY DISPOSITION OF THE DECEDENT'S ESTATE PER RULE 89
OF THE RULES OF COURT. Reference to judicial approval, however, cannot adversely affect
the substantive rights of heirs to dispose of their own pro indiviso shares in the co-heirship
or co-ownership.12 In other words, they can sell their rights, interests or participation in the
property under administration. A stipulation requiring court approval does not affect the
validity and the effectivity of the sale as regards the selling heirs. It merely implies that the
property may be taken out of custodia legis, but only with the court's permission.13 It would
seem that the suspensive condition in the present conditional sale was imposed only for
this reason. THE EXISTENCE OF THE SUSPENSIVE CONDITION DID NOT REMOVE THAT PROPERTY
FROM THE JURISDICTION OF THE INTESTATE COURT.

COLLATERAL ISSUE: INTERVENOR’S STANDING; WHO MAY APPLY FOR AUTHORITY TO SELL?
HELD: Petitioners contend that under said Rule 89, only the executor or administrator is authorized to
apply for the approval of a sale of realty under administration. Hence, the settlement court allegedly
erred in entertaining and granting respondent's Motion for Approval.

We read no such limitation. Section 8, Rule 89 of the Rules of Court, provides:

"SEC. 8. When court may authorize conveyance of realty which deceased contracted to convey.
Notice. Effect of deed. -- Where the deceased was in his lifetime under contract, binding in law, to
deed real property, or an interest therein, the court having jurisdiction of the estate may, on
application for that purpose, authorize the executor or administrator to convey such property
according to such contract, or with such modifications as are agreed upon by the parties and
approved by the court; and if the contract is to convey real property to the executor or
administrator, the clerk of the court shall execute the deed. x x x."
This provision should be differentiated from Sections 2 and 4 of the same Rule, specifically requiring
only the executor or administrator to file the application for authority to sell, mortgage or otherwise
encumber real estate for the purpose of paying debts, expenses and legacies (Section 2); 19 or for
authority to sell real or personal estate beneficial to the heirs, devisees or legatees and other
interested persons, although such authority is not necessary to pay debts, legacies or expenses of
administration (Section 4).20 Section 8 mentions only an application to authorize the conveyance of
realty under a contract that the deceased entered into while still alive. While this Rule does not
specify who should file the application, it stands to reason that the proper party must be one .who is
to be benefited or injured by the judgment, or one who is to be entitled to the avails of the suit.

OROLA VS PONTEVEDRA
FACTS: Trinidad Orola died intestate, survived by her husband Emilio with their 6 minor
children. As such administrator of the estate, Emilio took possession of the said parcels of
land. He opened an account in the name of the estate with the PNB. He embarked on a
massive sugar production and, with prior approval of the court, negotiated with banking
institutions for financing loans to purchase the required equipments. However, in 1976 and
1977, there was a sudden collapse of the sugar industry. Emilio Orola found it necessary to
develop the swampy portion of the estate for the production of fish. To finance the
endeavor, he needed at least P600,000.00.

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

This was granted by the court as well as the subsequent lease contracts he entered into
with the other heirs. The other heirs also entered into REM contracts but these were not
submitted to the guardianship and intestate courts for approval and the remaining heirs
were also unaware of said loans. Later, it was foreclosed by the banks for failure to pay
the loan amortizations.

The other heirs now assail the validity of the contracts entered into as these were never
submitted to and approved by the RTC.

RTC: although the intestate estate court authorized Emilio to negotiate a loan
of P600,000.00 with Rural Bank, he was not authorized to mortgage the real property of the
estate to the Rural Bank. The court ruled that the September 12, 1980 Order of the intestate
estate court
was null and void because the motion of the administrator for authority to negotiate a
loan with the Rural Bank was made ex parte, that is, without notifying the plaintiffs who
were the heirs of the deceased.

Rural Bank: the administrator of the estate is not required under Section 7, Rule 89 of the
Rules of Court to secure prior authority to mortgage the real properties or otherwise
encumber the same.

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

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

Section 7 of Rule 89 provides the rules to obtain court approval for such mortgage: After
the real estate mortgage is executed in accordance with the foregoing regulations, the
said deed must be submitted for the consideration and approval or disapproval of the
court.

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

However, the Court agrees with the petitioners contention that respondent Orola failed to
secure an order from the intestate estate court authorizing him to mortgage the subject
lots and execute a real estate mortgage contract in favor of respondent Rural Bank. What
the intestate estate court approved in its December 17, 1982 Order was the authority
incorporated in the amended contracts of lease respondent Orola gave to petitioners
Josephine, Manuel and Antonio Orola so that the said lots could be mortgaged to the
respondent Rural Bank as security for the P600,000.00 loan under their respective names.
In fine, the intestate estate court authorized the petitioners, not respondent Orola, to
mortgage the said lots to respondent Rural Bank. Moreover, under Section 7 of Rule 89 of
the Rules of Court, only the executor or administrator of the estate may be authorized by
the intestate estate court to mortgage real estate belonging to the estate; hence, the
order of the estate court authorizing the petitioners to mortgage the realty of the estate
to the respondent Rural Bank is a nullity

However, the estate court had not appointed petitioners Antonio, Josephine and Manuel
Orola as attorneys-in-fact of respondent Emilio Orola empowered to execute the said
contracts. Hence, they had no authority to execute the said Real Estate Mortgage
Contracts for and in behalf of respondent Orola, in the latters capacity as administrator of
the estate.

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

LIU VS LOY
The Facts

1. On 13 January 1950, Teodoro Vao, as attorney-in-fact of Jose Vao, sold seven lots to
Benito Liu and Cirilo Pangalo.
 a. Benito Liu gave a down payment of P1,000, undertaking to pay the balance
of P3,900 in monthly installments of P100 beginning at the end of January 1950.
b. Cirilo Pangalo gave P400 as down payment, undertaking to pay the balance
of P1,567.50 in monthly installments of P400 beginning at the end of January
1950.
2. Meanwhile, Jose Vao passed away.
3. 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,
4. Teodoro Vao informed Frank Liu[6] 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.
a. When Frank Liu failed to reply, Teodoro Vao sent him another letter, [7] dated 1
January 1955, reminding him of his outstanding balance. It appears that it was
only after nine years that Frank Liu responded through a letter, [8] dated 25
January 1964. In the letter, Frank Liu informed Teodoro Vao that he was ready
to pay the balance of the purchase price of the seven lots. He requested for
the execution of a deed of sale of the lots in his name and the delivery of the
titles to him.
5. On 22 April 1966 Frank Liu bought the lots from Cirilo and Benito, assuming the balance.
Frank Liu sent two other letters,[11] dated 7 June 1968 and 29 July 1968, to Teodoro Vao
reiterating his request for the execution of the deed of sale in his favor but to no avail.
6. On 19 August 1968, Teodoro Vao sold Lot No. 6 to respondent Teresita Loy
for P3,930.[12] The Register of Deeds of Cebu City entered this sale in the Daybook on 24
February 1969.[13]

A. On 2 December 1968, Frank Liu filed a complaint against Teodoro Vao for specific
performance, execution of deed of absolute sale, issuance of certificates of title
and construction of subdivision roads, before the Court of First Instance of
Davao. The case was docketed as Civil Case No. 6300.[14]
1. On 19 December 1968, Frank Liu filed with the Register of Deeds of Cebu City a
notice of lis pendens on the seven lots due to the pendency of Civil Case No.
6300.[15]However, the Register of Deeds denied the registration of the lis
pendens on the ground that the property is under administration and said claim
must be filed in court.[16]

7. On 16 December 1969, Teodoro Vao sold Lot No. 5 to respondent Alfredo Loy
for P3,910.[17] The Register of Deeds of Cebu City entered this sale in the Daybook on 16
January 1970.[18]

B. RTC dismissed Civil Case No. 6300 on the ground that Frank Liu should have filed
the claim with the probate court.[19] Thus, on 17 February 1972, Frank Liu filed before
the probate court a claim against the Estate of Jose Vao for Specific Performance,
Execution of Deed of Absolute Sale, Issuance of Certificate of Title, and
Construction of Subdivision Roads.[20]
C. During the proceedings, Teodoro Vao died. His widow, Milagros Vao, succeeded
as administratrix of the Estate of Jose Vao.
2. On 24 February 1976, the probate court approved the claim of Frank Liu. On 5
March 1976, Milagros Vao executed a deed of conveyance covering the
seven lots in favor of Frank Liu, in compliance with the probate courts
order.[21] The deed of conveyance included Lot Nos. 5 and 6, the same lots
Teodoro Vao sold respectively to Alfredo Loy, Jr. on 16 December 1969 and to
Teresita Loy on 19 August 1968.

8. On 19 March 1976, the probate court, upon an ex-parte motion filed by Teresita Loy,
issued an Order[22] approving the 16 August 1968 sale by Teodoro Vao of Lot No. 6 in her
favor. Likewise, upon an ex-parte motion filed by Alfredo Loy, Jr., the probate court
 issued on 23 March 1976 an Order[23] approving the 16 December 1969 sale of Lot No. 5
by Teodoro Vao in his favor.
a. On 3 June 1976, Milagros Vao, as administratrix of the estate, filed a motion for
reconsideration of the Orders of the probate court dated 19 and 23 March
1976. She contended that she already complied with the probate courts Order
dated 24 February 1976 to execute a deed of sale covering the seven lots,
including Lot Nos. 5 and 6, in favor of Frank Liu. She also stated that no one
notified her of the motion of the Loys, and if the Loys or the court notified her,
she would have objected to the sale of the same lots to the Loys.
b. On 4 June 1976, Frank Liu filed a complaint for reconveyance or annulment of
title of Lot Nos. 5 and 6. Frank Liu filed the case in the Regional Trial Court of
Cebu City, Branch 14, which docketed it as Civil Case No. R-15342.
c. On 5 August 1978, the probate court denied the motion for reconsideration of
Milagros Vao on the ground that the conflicting claims regarding the ownership
of Lot Nos. 5 and 6 were already under litigation in Civil Case No. R-15342.

RTC

1. CONTRACT BETWEEN TEODORO VAO AND BENITO LIU WAS A CONTRACT TO SELL. Since
title to Lot Nos. 5 and 6 never passed to Benito Liu due to non-payment of the balance
of the purchase price, ownership of the lots remained with the vendor. Therefore, the
trial court ruled that THE SUBSEQUENT SALES TO ALFREDO LOY, JR. AND TERESITA LOY OF
LOT NOS. 5 AND 6, RESPECTIVELY, WERE VALID.
2. The trial court ruled that Teodoro Vao, as administrator of the Estate of Jose Vao and
as sole heir of Jose Vao, acted both as principal and as agent when he sold the lots to
Alfredo Loy, Jr. and Teresita Loy. The probate court subsequently approved the sales.
The trial court also found that Alfredo Loy, Jr. and Teresita Loy were purchasers in good
faith.

CA

1. THE SALES TO ALFREDO LOY, JR. AND TERESITA LOY OF LOT NOS. 5 AND 6, RESPECTIVELY,
WERE VALID DESPITE LACK OF PRIOR APPROVAL BY THE PROBATE COURT. The Court of
Appeals declared that Teodoro Vao sold the lots in his capacity as heir of Jose Vao. The
appellate court ruled that an heir has a right to dispose of the decedents property, even
if the same is under administration, because the hereditary property is deemed
transmitted to the heir without interruption from the moment of the death of the
decedent.

ISSUE: Whether prior approval of the probate court is necessary to validate the sale of Lot Nos. 5 and
6 to Loys;

HELD: The petition is meritorious.

There was no valid cancellation of the contract to sell. The subsequent approval by the
probate court of the sale of Lot Nos. 5 and 6 to Frank Liu rendered moot any question on the
continuing validity of the contract to sell.
Whether the probate courts ex-parte approval of the contracts of the Loys was valid

Section 8, Rule 89 of the 1964 Rules of Court[42] specifically requires notice to all interested
parties in any application for court approval to convey property contracted by the decedent
in his lifetime. Thus:

SECTION 8. When court may authorize conveyance of realty which deceased

contracted to convey. Notice. Effect of deed. Where the deceased was in his lifetime
under contract, binding in law, to deed real property, or an interest therein, the court
having jurisdiction of the estate may, on application for that purpose, authorize the
executor or administrator to convey such property according to such contract, or with
such modifications as are agreed upon by the parties and approved by the court; and
if the contract is to convey real property to the executor or administrator, the clerk of
the court shall execute the deed. 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. (Rule 89, 1964 Rules of Court) (Emphasis supplied)

DESPITE THE CLEAR REQUIREMENT OF SECTION 8 OF RULE 89, THE LOYS DID NOT NOTIFY THE
ADMINISTRATRIX OF THE MOTION AND HEARING TO APPROVE THE SALE OF THE LOTS TO THEM. The
administratrix, who had already signed the deed of sale to Frank Liu as directed by the same
probate court, objected to the sale of the same lots to the Loys. Thus, as found by the trial court:

On June 3, 1976, Milagros H. Vao moved for the reconsideration of the Order
issued by Judge Ramolete on March 19, 1976 and March 23, 1976, contending
that she had not been personally served with copies of the motions presented to
the Court by Alfredo Loy, Jr. and by Teresita Loy seeking the approval of the sales
of the lots in their favor, as well as the Orders that were issued by the Court
pursuant thereto; that the Court in its Order of February 24, 1976 had ordered her
(Milagros H. Vao), to execute a deed of absolute sale in favor of the plaintiff, which
sale had been approved by the Court; that she had not known of the sale of Lots
5 and 6 to any other person except to the plaintiff; that the sale of the two lots in
favor of plaintiff was made earlier, when there was yet no litigation with the Bureau
of Internal Revenue, while those in favor of the defendant Loys were made when
there was already a prohibition by the Court against any sale thereof; that the
sales in favor of the Loys were made without Court authority; and that if the
approval of the sales had not been obtained ex-parte she would have informed
the Court of the complication arising therefrom, and she would not have
executed the sale in favor of plaintiff, and she would have asked the Court to
decide first as to who had preference over said lots.[43]

THE FAILURE TO NOTIFY THE ADMINISTRATRIX AND OTHER INTERESTED PERSONS RENDERED THE
SALE TO THE LOYS VOID. As explained by Justice J.B.L. Reyes in De Jesus v. De Jesus:[44]

Section 9, Rule 90, however, provides that authority can be given by the probate court
to the administrator to convey property held in trust by the deceased to the
beneficiaries of the trust only after notice given as required in the last preceding
section; i.e., that 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 (sec. 8, Rule 90). This rule makes it mandatory that notice be
served on the heirs and other interested persons of the application for approval of any
conveyance of property held in trust by the deceased, and where no such notice is
given, the order authorizing the conveyance, as well as the conveyance itself,
is completely void.(Emphasis supplied)

In this case, the administratrix, the wife of the deceased Teodoro Vao, was not notified of
the motion and hearing to approve the sale of the lots to the Loys. Frank Liu did not also receive
any notice, although he obviously was an interested party. The issuance of new titles to the Loys
on 10 May 1976 by the Registry of Deeds did not vest title to the Loys because the conveyance
itself was completely void. The consequences for the failure to notify the administratrix and other
interested parties must be borne by the Loys.

Necessity of court approval of sales Indisputably, an heir can sell his interest in the estate of the
decedent, or even his interest in specific properties of the estate. However, FOR SUCH
DISPOSITION TO TAKE EFFECT AGAINST THIRD PARTIES, THE COURT MUST APPROVE SUCH
DISPOSITION TO PROTECT THE RIGHTS OF CREDITORS OF THE ESTATE. What the deceased can
transfer to his heirs is only the net estate, that is, the gross estate less the liabilities. As held in Baun
v. Heirs of Baun:[45]

The heir legally succeeds the deceased, from whom he derives his right and title,
but only after the liquidation of the estate, the payment of the debts of the same,
and the adjudication of the residue of the estate of the deceased; and in the
meantime the only person in charge by law to attend to all claims against the
estate of the deceased debtor is the executor or administrator appointed by the
court.

In Opulencia v. Court of Appeals,[46] an heir agreed to convey in a contract to sell her share in
the estate then under probate settlement. In an action for specific performance filed by the
buyers, the seller-heir resisted on the ground that there was no approval of the contract by the
probate court. The Court ruled that the contract to sell was binding between the parties, but
subject to the outcome of the testate proceedings.The Court declared:

x x x Consequently, although the Contract to Sell was perfected between the

petitioner (seller-heir) and private respondents (buyers) during the pendency of
the probate proceedings, the consummation of the sale or the transfer of
ownership over the parcel of land to the private respondents is subject to the full
payment of the purchase price and to the termination and outcome of the testate
proceedings. x x x Indeed, it is settled that the sale made by an heir of his share in
an inheritance, subject to the pending administration, in no wise stands in the way
of such administration. (Emphasis supplied)

IN ALFREDO LOYS CASE, his seller executed the contract of sale after the death of the registered
owner Jose Vao. The seller was Teodoro Vao who sold the lot in his capacity as sole heir of the
deceased Jose Vao. Thus, Opulencia applies to the sale of the lot to Alfredo Loy, Jr., which
means that THE CONTRACT OF SALE WAS BINDING BETWEEN TEODORO VAO AND ALFREDO LOY,
JR., BUT SUBJECT TO THE OUTCOME OF THE PROBATE PROCEEDINGS.

IN FRANK LIUS CASE, as successor-in-interest of Benito Liu, his seller was Jose Vao, who during his
lifetime executed the contract to sell through an attorney-in-fact, Teodoro Vao. This is a
disposition of property contracted by the decedent during his lifetime.Section 8 of Rule 89
specifically governs this sale:
 SECTION 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; x x x

THUS, FRANK LIU APPLIED TO THE PROBATE COURT FOR THE GRANT OF AUTHORITY TO THE
ADMINISTRATRIX TO CONVEY THE LOTS IN ACCORDANCE WITH THE CONTRACT MADE BY
THE DECEDENT JOSE VAO DURING HIS LIFETIME. The probate court approved the
application.

IN TERESITA LOYS CASE, her seller was the Estate of Jose Vao. Teodoro Vao executed the
contract of sale in his capacity as administrator of the Estate of Jose Vao, the registered owner
of the lots. The Court has held that A SALE OF ESTATE PROPERTY MADE BY AN ADMINISTRATOR
WITHOUT COURT AUTHORITY IS VOID AND DOES NOT CONFER ON THE PURCHASER A TITLE THAT IS
AVAILABLE AGAINST A SUCCEEDING ADMINISTRATOR.[47]

Manotok Realty, Inc. v. Court of Appeals[48] emphasizes the need for court approval in
the sale by an administrator of estate property. The Court held in Manotok Realty:

We also find that the appellate court committed an error of law when it held
that the sale of the lot in question did not need the approval of the probate
court.

Although the Rules of Court do not specifically state that the sale of an
immovable property belonging to an estate of a decedent, in a special
proceeding, should be made with the approval of the court, this authority is
necessarily included in its capacity as a probate court.

An administrator under the circumstances of this case cannot enjoy blanket

authority to dispose of real estate as he pleases, especially where he ignores
specific directives to execute proper documents and get court approval for
the sales validity.

Section 91 of Act No. 496 (Land Registration Act) specifically requires court
approval for any sale of registered land by an executor or administrator, thus:

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)

Similarly, Section 88 of Presidential Decree No. 1529 (Property Registration Decree)

provides:

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)

Clearly, both the law and jurisprudence expressly require court approval before
any sale of estate property by an executor or administrator can take effect.

FACTS:

Moreover, when the Loys filed in March 1976 their ex-parte motions for approval of their
contracts of sale, 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. In fact, the administratrix had signed the deed
of sale in favor of Frank Liu on 5 March 1976 pursuant to the court approval. This deed of sale
was notarized on 5 March 1976, which transferred ownership of Lot Nos. 5 and 6 to Frank Liu on
the same date.[49]

Thus, when the probate court approved the contracts of the Loys on 19 and 23 March 1976,
the probate court had already lost jurisdiction over Lot Nos. 5 and 6 because the lots no longer
formed part of the Estate of Jose Vao. in this case, the Loys cannot acquire any right of dominion
over Lot Nos. 5 and 6 because the probate court had already lost jurisdiction to authorize the
second sale of the same lots. Moreover, the probate courts approval of the sale to the Loys was
completely void due to the failure to notify the administratrix of the motion and hearing on the
sale.

conclusion

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.[60]

WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and a new one is RENDERED:

1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vao in favor
of Alfredo Loy, Jr. and Teresita Loy, respectively.

2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. 64522 and 64523 and to issue
a new one in the name of petitioner Frank N. Liu;

3. Ordering the Estate of Jose Vao to reimburse to respondent Loys the amounts paid on Lot Nos.
5 and 6, with interest at 6% per annum from 4 June 1976 until finality of this decision, and 12%
per annum thereafter until full payment.

SO ORDERED.

 AUTHORITY TO SELL
 ACT 496, SECTION 91
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)
 PD 1529, SECTION 88 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)

 WHO MAY APPLY?

 SANDEJAS VS LINA
Petitioners contend that under said Rule 89, only the executor or administrator is authorized
to apply for the approval of a sale of realty under administration. Hence, the settlement
court allegedly erred in entertaining and granting respondents Motion for Approval.

HELD: We read no such limitation. This provision should be differentiated from

1. Sections 2 and 4 of the same Rule, specifically requiring only the executor or
administrator to file the application for authority to sell, mortgage or otherwise
encumber real estate for the purpose of paying debts, expenses and legacies (Section
2);[19] or
2. for authority to sell real or personal estate beneficial to the heirs, devisees or legatees
and other interested persons, although such authority is not necessary to pay debts,
legacies or expenses of administration (Section 4).[20]
3. Section 8 mentions only an application to authorize the conveyance of realty under a
contract that the deceased entered into while still alive. While this Rule does not
specify who should file the application, it stands to reason that the proper party must
be one who is to be benefited or injured by the judgment, or one who is to be entitled
to the avails of the suit.[21]

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

As held by the Supreme Court, a decedents representative (administrator) is not estopped

from questioning the validity of his own void deed purporting to convey land. (Bona vs.
Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the illegality of the
transaction[,] has interposed the nullity of the contract as her defense, there being no
approval from the probate Court, and, in good faith offers to return the money she
received from the [private respondents].Certainly, the administratrix is not estop[ped] from
doing so and the action to declare the inexistence of contracts do not prescribe. This is
what precipitated the filing of [petitioners] demurrer to evidence
ISSUE: Whether or not the Contract to Sell dated 03 February 1989 executed by the
[p]etitioner and [p]rivate [r]espondent[s] without the requisite probate court approval is
valid.

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

SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber estate.
The court having jurisdiction of the estate of the deceased may authorize the executor or
administrator to sell, mortgage, or otherwise encumber real estate, in cases provided by
these rules and when it appears necessary or beneficial, under the following regulations:
xxx
Insisting that the above rule should apply to this case, petitioner argues that the stipulations
in the Contract to Sell require her to act in her capacity as an executrix or
administratrix. She avers that her obligation to eject tenants pertains to the administratrix
or executrix, the estate being the landlord of the said tenants.[10] Likewise demonstrating
that she entered into the contract in her capacity as executor is the stipulation that she
must effect the conversion of subject land from irrigated rice land to residential land and
secure the necessary clearances from government offices.Petitioner alleges that these
obligations can be undertaken only by an executor or administrator of an estate, and not
by an heir.[11]

The Court is not persuaded. As correctly ruled by the Court of Appeals, SECTION 7 OF RULE
89 OF THE RULES OF COURT IS NOT APPLICABLE, BECAUSE PETITIONER ENTERED INTO THE
CONTRACT TO SELL IN HER CAPACITY AS AN HEIRESS, NOT AS AN EXECUTRIX OR
ADMINISTRATRIX OF THE ESTATE. IN THE CONTRACT, SHE REPRESENTED HERSELF AS THE
LAWFUL OWNER AND SELLER OF THE SUBJECT PARCEL OF LAND.[12] She also explained the
reason for the sale to be difficulties in her living conditions and consequent need of
cash.[13] These representations clearly evince that she was not acting on behalf of the
estate under probate when she entered into the Contract to Sell. Accordingly, the
jurisprudence cited by petitioner has no application to the instant case.

We emphasize that hereditary rights are vested in the heir or heirs from the moment of the
decedents death.[14] Petitioner, therefore, became the owner of her hereditary share the
moment her father died. Thus, the lack of judicial approval does not invalidate the
Contract to Sell, because the petitioner has the substantive right to sell the whole or a part
of her share in the estate of her late father.[15] Thus, in Jakosalem vs. Rafols,[16]the Court
resolved an identical issue under the old Civil Code and held:
Article 440 of the Civil Code provides that the possession of hereditary property is
deemed to be transmitted to the heir without interruption from the instant of the
death of the decedent, in case the inheritance be accepted. And Manresa with
reason states that upon the death of a person, each of his heirs becomes the
undivided owner of the whole estate left with respect to the part or portion which
might be adjudicated to him, a community of ownership being thus formed among
the coowners of the estate while it remains undivided. xxx And according to article
 399 of the Civil Code, every part owner may assign or mortgage his part in the
common property, and the effect of such assignment or mortgage shall be limited
to the portion which may be allotted him in the partition upon the dissolution of the
community. Hence, where some of the heirs, without the concurrence of the
others, sold a property left by their deceased father, this Court, speaking thru its
then Chief Justice Cayetano Arellano, said that the sale was valid, but that the
effect thereof was limited to the share which may be allotted to the vendors upon
the partition of the estate.

Administration of the Estate Not Prejudiced by the Contract to Sell

Petitioner further contends that [t]o sanction the sale at this stage would bring about a
partial distribution of the decedents estate pending the final termination of the testate
proceedings.[17] This becomes all the more significant in the light of the trial courts finding,
as stated in its Order dated August 20, 1997, that the legitime of one of the heirs has been
impaired.[18]
Petitioners contention is not convincing. The Contract to Sell stipulates that petitioners offer
to sell is contingent on the complete clearance of the court on the Last Will Testament of
her father.[19] Consequently, although the Contract to Sell was perfected between the
petitioner and private respondents during the pendency of the probate proceedings, the
consummation of the sale or the transfer of ownership over the parcel of land to the private
respondents is subject to the full payment of the purchase price and to the termination
and outcome of the testate proceedings.Therefore, there is no basis for petitioners
apprehension that the Contract to Sell may result in a premature partition and distribution
of the properties of the estate. Indeed, it is settled that the sale made by an heir of his
share in an inheritance, subject to the pending administration, in no wise stands in the way
of such administration.[20]

 WHAT ARE INCLUDED IN COURT’S POWER TO GRANT AUTHORITY AND APPROVE SALE
o LEE VS RTC OF QUEZON
FACTS: Dr Ortanez incorporated International Life Insurance Company owning 90%
of the subscribed capital stock. When he died, he was survived by his wife and 3
legitimate children and also 5 illegitimate children. It appears that the legitimate
heirs partitioned among themselves the estate including the PhilInterLife shares of
stock which became the basis of the number of shares separately sold by the wife
and one legitimate child.

Enderes et al filed an urgent motion to declare the MOA void as well as the sales
of the shares of stock. This motion was granted. Aggrieved, Jose filed a petition
which the CA resolved vs it stating that the sale made by Jose Ortaez and his
mother Juliana Ortaez to FLAG of the shares of stock they invalidly appropriated
for themselves, without approval of the intestate court, was void

What we have here is a situation where some of the heirs of the decedent without securing court approval
have appropriated as their own personal property the properties of [the] Estate, to the exclusion and the
extreme prejudice of the other claimant/heirs. In other words, these heirs, without court approval, have
distributed the asset of the estate among themselves and proceeded to dispose the same to third parties even
in the absence of an order of distribution by the Estate Court. As admitted by petitioners counsel, there was
absolutely no legal justification for this action by the heirs. There being no legal justification, petitioner has
no basis for demanding that public respondent [the intestate court] approve the sale of the Philinterlife
shares of the Estate by Juliana and Jose Ortaez in favor of the Filipino Loan Assistance Group.

It is an undisputed fact that the parties to the Memorandum of Agreement dated March 4, 1982 (see Annex
7 of the Comment). . . are not the only heirs claiming an interest in the estate left by Dr. Juvencio P. Ortaez.
The records of this case. . . clearly show that as early as March 3, 1981 an Opposition to the Application
for Issuance of Letters of Administration was filed by the acknowledged natural children of Dr. Juvencio
P. Ortaez with Ligaya Novicio. . . This claim by the acknowledged natural children of Dr. Juvencio P.
Ortaez is admittedly known to the parties to the Memorandum of Agreement before they executed the same.
This much was admitted by petitioners counsel during the oral argument. xxx

Given the foregoing facts, and the applicable jurisprudence, public respondent can never be faulted for not
approving. . . the subsequent sale by the petitioner [Jose Ortaez] and his mother [Juliana Ortaez] of the
Philinterlife shares belonging to the Estate of Dr. Juvencio P. Ortaez. (pages 3-4 of Private Respondents
Memorandum; pages 243-244 of the Rollo)

From the above decision, it is clear that Juliana Ortaez, and her three sons, Jose, Rafael
and Antonio, all surnamed Ortaez, invalidly entered into a memorandum of agreement
extrajudicially partitioning the intestate estate among themselves, despite their knowledge that
there were other heirs or claimants to the estate and before final settlement of the estate by the
intestate court. Since the appropriation of the estate properties by Juliana Ortaez and her children
(Jose, Rafael and Antonio Ortaez) was invalid, the subsequent sale thereof by Juliana and Jose
to a third party (FLAG), without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under administration under
Art. 533 of the Civil Code which provides that possession of hereditary property is deemed
transmitted to the heir without interruption from the moment of death of the decedent. However, [20]

an heir can only alienate such portion of the estate that may be allotted to him in the division of
the estate by the probate or intestate court after final adjudication, that is, after all debtors shall
have been paid or the devisees or legatees shall have been given their shares. This means that
[21]

an heir may only sell his ideal or undivided share in the estate, not any specific property therein.
In the present case, Juliana Ortaez and Jose Ortaez sold specific properties of the estate (1,014
and 1,011 shares of stock in Philinterlife) in favor of petitioner FLAG. This they could not lawfully do
pending the final adjudication of the estate by the intestate court because of the undue
prejudice it would cause the other claimants to the estate, as what happened in the present case.
Juliana Ortaez and Jose Ortaez sold specific properties of the estate, without court approval.
It is well-settled that court approval is necessary for the validity of any disposition of the decedents
estate. In the early case of Godoy vs. Orellano, we laid down the rule that the sale of the property
[22]

of the estate by an administrator without the order of the probate court is void and passes no title
to the purchaser.

Our jurisprudence is therefore clear that (1) any disposition of estate property by an administrator
or prospective heir pending final adjudication requires court approval and (2) any unauthorized
disposition of estate property can be annulled by the probate court, there being no need for a
separate action to annul the unauthorized disposition.

VIP RULING:
THE INTESTATE COURT HAS THE POWER TO EXECUTE ITS ORDER WITH REGARD TO THE NULLITY OF AN
UNAUTHORIZED SALE OF ESTATE PROPERTY, otherwise its power to annul the unauthorized or
fraudulent disposition of estate property would be meaningless. In other words, enforcement is a
necessary adjunct of the intestate or probate courts power to annul unauthorized or fraudulent
transactions to prevent the dissipation of estate property before final adjudication.

Moreover, in this case, the order of the intestate court nullifying the sale was affirmed by the
appellate courts (the Court of Appeals in CA-G.R. SP No. 46342 dated June 23, 1998 and
subsequently by the Supreme Court in G.R. No. 135177 dated October 9, 1998). The finality of the
decision of the Supreme Court was entered in the book of entry of judgments on February 23,
1999. Considering the finality of the order of the intestate court nullifying the sale, as affirmed by
the appellate courts, it was correct for private respondent-Special Administratrix Enderes to
thereafter move for a writ of execution and for the intestate court to grant it.

CONTENTION 1: the probate court could not issue a writ of execution with regard to its order
nullifying the sale because said order was merely provisional: The only authority given by law is for
respondent judge to determine provisionally whether said shares are included or excluded in the
inventory In ordering the execution of the orders,

HELD: Petitioners argument is misplaced. There is no question, based on the facts of this
case, that the Philinterlife shares of stock were part of the estate of Dr. Juvencio Ortaez
from the very start as in fact these shares were included in the inventory of the properties
of the estate submitted by Rafael Ortaez after he and his brother, Jose Ortaez, were
appointed special administrators by the intestate court.[25]

The controversy here actually started when, during the pendency of the settlement of the
estate of Dr. Ortaez, his wife Juliana Ortaez sold the 1,014 Philinterlife shares of stock in favor
petitioner FLAG without the approval of the intestate court. Her son Jose Ortaez later sold
the remaining 1,011 Philinterlife shares also in favor of FLAG without the approval of the
intestate court.

WE ARE NOT DEALING HERE WITH THE ISSUE OF INCLUSION OR EXCLUSION OF PROPERTIES in
the inventory of the estate because there is no question that, from the very start, the
Philinterlife shares of stock were owned by the decedent, Dr. Juvencio Ortaez. RATHER, WE
ARE CONCERNED HERE WITH THE EFFECT OF THE SALE MADE BY THE DECEDENTS HEIRS,
JULIANA ORTAEZ AND JOSE ORTAEZ, WITHOUT THE REQUIRED APPROVAL OF THE INTESTATE
COURT. This being so, the contention of petitioners that the determination of the intestate
court was merely provisional and should have been threshed out in a separate
proceeding is incorrect.

CONTENTION 2: The petitioners Jose Lee and Alma Aggabao next contend that the writ of
execution should not be executed against them because they were not notified, nor they were
aware, of the proceedings nullifying the sale of the shares of stock.
HELD: We are not persuaded. The title of the purchaser like herein petitioner FLAG can be
struck down by the intestate court after a clear showing of the nullity of the alienation. This
is the logical consequence of our ruling in Godoy and in several subsequent cases.[26] THE
SALE OF ANY PROPERTY OF THE ESTATE BY AN ADMINISTRATOR OR PROSPECTIVE HEIR
WITHOUT ORDER OF THE PROBATE OR INTESTATE COURT IS VOID AND PASSES NO TITLE TO THE
PURCHASER.

o WT CONSTRUCTION VS CANETE
FACTS: Juliana vs de Cabahug filed a case for the settlement of the estate of her deceased
husband. 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.
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 fifty percent (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. Subsequently, petitioner took steps in clearing the property
of its occupants by filing a complaint for ejectment in 1998 with the Municipal Trial Court in Cities,
Branch 3, Mandaue City.

It was later discovered that Ciriaco did not inform his co-heirs of the sale. He appropriated the
amount paid by petitioner, so public respondent issued an Order on August 19, 1997, relieving
Ciriaco of his functions as administrator and directing him to render an accounting of all the
properties and assets of the estate.

Consequently, Administrator Linda Cabahug-Antigue, along with her co-heirs, demanded from
petitioner the payment of the balance of the purchase price.Referring to the provision of the
agreement relating to the payment of the balance of the purchase price conditioned upon the
removal of occupants and obstructions in the property, petitioner refused to pay the remaining
balance and eventually, was compelled by the court to pay such amount owing to the estate.

Petitioner argues that the quashal of the writ of execution issued by public respondent is necessary
and proper because, aside from being inherently defective, it is the product of a null and void
proceedings because the jurisdiction to determine the rights and obligations of petitioner and
private respondent under the Agreement for Sale of Land with Downpayment exclusively belongs
to courts of general jurisdiction;

HELD:

As to petitioners argument that the probate/estate court cannot adjudicate the rights and
obligations of the parties under the deed of sale, the CA rightly found that this was a new issue
not raised in the probate/estate court. Furthermore, the deed of sale in question is the sale of the
property of the estate to pay for taxes, a matter definitely within the power of the probate/estate
court to order.

IT IS BUT LOGICAL THAT PROBATE/ESTATE COURTS CAN ENFORCE OBLIGATIONS UNDER SUCH A DEED
OF SALE. Otherwise, they would not be able to secure the proceeds to pay for the taxes and this
would defeat the purpose of the proceedings to settle the estate.Stated otherwise, the power to
enforce obligations under the deed of sale of a property ordered sold to pay debts of the estate
is but a necessary incident of the power of a probate/estate court to order and effect such sale
in the first place.

o LIU VS LOY
 AUTHORITY GRANTED TO HEIRS
o OROLA VS PONTEVEDRA
FACTS: Emilio Orola filed a motion[8] in Sp. Proc. No. V-3639 for authority to negotiate a P600,000.00
loan from the Central Bank of the Philippines for the full and complete development of the
fishpond portion of the estate, and to transfer the sugar account of the estate from the PNB to the
Republic Planters Bank (RPB).
On September 12, 1980, the court granted the motion of the administrator and authorized him to
negotiate the loan through the Rural Bank of Capiz (Rural Bank of Pontevedra, Capiz) and to
transfer the sugar account of the estate to the RPB in Roxas City.

A contract of lease was arranged between and among 4 of the heirs as advised by the bank.
These lease contracts were approved by the court. The lessees were also authorized to negotiate
loans for the development of the leased premises not to exceed P200,000.00, and to bind the
leased premises by way of real estate mortgage as security therefor.

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

Antonio Orola for and in behalf of his father executed a REM to secure his loan. The two other
siblings also, as atty in fact of their father, executed REMs. However, the real estate mortgage
contracts were not submitted to the guardianship and intestate estate courts for approval. Neither
were Myrna, Angeline and Althea aware of the said loans.

the children who were not parties to the loan agreements filed a compkaint vs Rural Bank and
their father when the properties were foreclosed by nonfailure of the amortization.

RTC: held that although the intestate estate court authorized Emilio to negotiate a loan
of P600,000.00 with Rural Bank, he was not authorized to mortgage the real property of the estate
to the Rural Bank. The court ruled that the September 12, 1980 Order of the intestate estate
court was null and void because the motion of the administrator for authority to negotiate a loan
with the Rural Bank was made ex parte, that is, without notifying the plaintiffs who were the heirs
of the deceased. The court also held that the plaintiffs were not estopped from assailing the real
estate mortgage contracts, the same being null and void. It also declared that the issue of
whether or not the plaintiffs were the co-owners of the property should be ventilated with the
proper RTC in the exercise of its general jurisdiction in an ordinary action for the said purpose

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

ISSUE:
HELD:
After the real estate mortgage is executed in accordance with the foregoing regulations (sec 7
and sec 2 of rule 89), the said deed must be submitted for the consideration and approval or
disapproval of the court.

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

However, the Court agrees with the petitioners contention that respondent Orola failed to secure
an order from the intestate estate court authorizing him to mortgage the subject lots and execute
a real estate mortgage contract in favor of respondent Rural Bank. What the intestate estate court
approved in its December 17, 1982 Order was the authority incorporated in the amended
contracts of lease respondent Orola gave to petitioners Josephine, Manuel and Antonio Orola so
that the said lots could be mortgaged to the respondent Rural Bank as security for the P600,000.00
loan under their respective names. In fine, the intestate estate court
authorized the petitioners, not respondent Orola, to mortgage the said lots to respondent Rural
Bank. Moreover, under Section 7 of Rule 89 of the Rules of Court, only the executor or administrator
of the estate may be authorized by the intestate estate court to mortgage real estate belonging
to the estate; hence, the order of the estate court authorizing the petitioners to mortgage the
realty of the estate to the respondent Rural Bank is a nullity.

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

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

o BONAGA VS SOLER
FACTS: following the death of the spouses Alejandro Ros and Maria Isaac in 1935 and 1940,
respectively, intestate proceedings for the settlement of their estate were commenced where
Juan Garza was appointed administrator of the estate

Upon application, Juan Garza was authorized by the probate court to sell certain parcels of land
pertaining to the estate. Pursuant hereto, Garza sold said parcels of land on August 30, 944 in favor
of appellee Roberto Soler which sale was subsequently approved on October 9, 1944.

On October 14, 1944, the heirs of the deceased wife, Maria Isaac, after having been declared as
such, sold all their shares and interests over certain parcels of land in favor of appellee Soler.

Sometime during the war, the records of Special Proceeding No. 7194 were destroyed. Upon
reconstitution of these records by court order, Julian Boñaga was issued letters of administration
on September 6, 1951. On May 1952, the instant action was filed by Boñaga in his capacity as
administrator, seeking to annul the sales of August 30, 1944 and October 14, 1944 in favor of
Roberto Soler on the ground that said transactions were fraudulent made without notice to the
heirs of Alejandro Ros of the hearing of the application to sell, and that the sales were not
beneficial to the heirs for various reasons, and praying for reconveyance of the lands sold, since
they were fraudulently registered under Act 496 in the name of Roberto Soler on December 17,
1949 and on January 2, 1952, and for recovery of damages.

SOLER raised the ff defenses: estoppel, prescription of the action, and non-inclusion of necessary
parties, as grounds for dismissal.
PLAINTIFF-APPELLANT alleges (and the record nowhere indicates the contrary), that these lands
comprised almost the entire estate. Nothing in the record would show whether, as required by
Rule 90, sections 4 and 7, the application for authority to sell was set for hearing, or that the court
ever caused notice thereof to be issued to the heirs of Alejandro Ros Incidentally, these heirs seem
not to have gotten any part of the purchase price since they were then allegedly in Spain. Yet, in
the order of declaration of heirs of the wife and approving the sale to Soler (Annex "B"), the
declaration of the heirs of the husband Alejandro Ros was expressly held in abeyance, indicating
a recognition of their existence.

APPELLEES maintain that the sale was made for the purpose of paying debts, but this, at lease, is
controversial. Appellant asserts that the total outstanding debts of the estate at the time of the
sale amounted to only P4,641.48, a relatively meager sum compared to the large tracts of land
sold.

HELD: We think the lower court erred in dismissing the action without a hearing on the merits. A
sale of properties of an estate as beneficial to the interested parties, under Sections 4 and 7, Rule
90, must comply with the requisites therein provided, which are mandatory. Among these
requisites, the fixing of the time and place of hearing for an application to sell, and the notice
thereof to the heirs, are essential; and without them, the authority to sell, the sale itself, and the
order approving it, would be null and void ab initio (Arcilla vs. David, 77 Phil. 718; Gabriel, et al. vs.
Encarnacion, et al., L-6736, May 4, 1954, and others cited therein).

Rule 90, Section 4, does not distinguish between heirs residing in and those residing outside the
Philippines. Therefore, its requirements should apply regardless of the place of residence of those
required to be notified under said rule.

The contention that the sale was made under Section 2, Rule 90 (wherein notice is required only
to those heirs, etc., residing in the Philippines), is not substantiated by the record. Neither the deed
of sale on August 30, 1944, nor the orders issued by the probate court in connection there with,
show whether, as required by said Section 2, the personal properties were insufficient to pay the
debts and expenses of administration. There is not even a showing, to start with, that the sale was
made for the purpose of paying debts or expenses of administration (or legacies), a condition
which circumscribes the applicability of that section. On the face of the reamended complaint
at any rate, it does not appear that the contested sale was one under section 2 of Rule 90; and
the same can not be invoked to sustain the motion to dismiss. Without reception of further
evidence to determine whether the requisites of the applicable provisions of the Rules had been
followed, the dismissal of the action was erroneous and improvident. Plaintiff should at least have
been given a chance to prove his case.

As to the plea of estoppel, the rule is that a decedent's representative is not estopped to question
the validity of his own void deed purporting to convey land and if this be true of the administrator
as to his own acts, a fortiori, his successor can not be estopped to question the acts of his
predecessor are not conformable to law

We also find untenable the claim of prescription of the action. Actions to declare the inexistence
of contracts do not prescribe (Art. 1410, N.C.C.), a principle applied even before the effectivity of
the new Civil Code. The sale on October 14, 1944 by the heirs of Maria Isaac of whatever interests
or participation they might have in the four parcels of land covered by the deed may be valid ,
yet it could not have effected an immediate absolute transfer of title to appellee Soler over any
part of the parcels of land themselves, much less over their entirety. Necessarily, the sale was
subject to the result of the administration proceedings, a contingency upon which the deed of
sale itself expressly founded the transaction. By its terms, not only was the existence of possible
heirs of Alejandro Ros recognized, but it also provided for the contingency that said heirs could
yet be declared or adjudicated in the administration proceedings as the sole owners of the four
parcels being sold.

The subsequent registration of those lands covered by the sale of October 14, 1944 and that of
August 30, 1944, allegedly in the exclusive name of appellee Roberto Soler, gave rise to an action
for reconveyance based on trust. Assuming that this case is one of constructive trust, and under
the theory that actions to recover property held in constructive trust would prescribe, there is here
no showing as to when the alleged fraud was discovered (Article 1391, N.C.C.). Hence, it cannot
be said that prescription has tolled the action.

o PAHAMOTANG VS PNB

It is petitioners posture that the mortgage contracts dated July 6, 1973 and October 22,
1974 entered into by Agustin with respondent PNB, as well as his subsequent sale of estate
properties to PLEI and Arguna on March 4, 1981, are void because they [petitioners] never
consented thereto. They assert that as heirs of their mother Melitona, they are entitled to notice
of Agustin's several petitions in the intestate court seeking authority to mortgage and sell estate
properties. Without such notice, so they maintain, the four orders of the intestate court dated July
18, 1973, October 19, 1974, February 25, 1980 and January 7, 1981, which allowed Agustin to
mortgage and sell estate properties, are void on account of Agustins non-compliance with the
mandatory requirements of Rule 89 of the Rules of Court.
Prescinding from their premise that said orders are completely void and hence, could not attain
finality, petitioners maintain that the same could be attacked directly or collaterally, anytime and
anywhere.
For its part, respondent PNB asserts that petitioners cannot raise as issue in this proceedings the
validity of the subject orders in their desire to invalidate the contracts of mortgage entered into
by Agustin. To PNB, the validity of the subject orders of the intestate court can only be challenged
in a direct action for such purpose and not in an action to annul contracts, as the petitioners have
done. This respondent adds that the mortgage on the subject properties is valid because the
same was made with the approval of the intestate court and with the knowledge of the heirs of
Melitona, petitioners included.[9]
Upon the other hand, respondent Heirs of Arturo Arguna likewise claim that petitioners knew of
the filing with the intestate court by Agustin of petitions to mortgage and sell the estate properties.
They reecho the CAs ruling that petitioners are barred by laches in filing Civil Case No. 16,802. [10]
As we see it, the determinative question is whether or not petitioners can obtain relief from the
effects of contracts of sale and mortgage entered into by Agustin without first initiating a direct
action against the orders of the intestate court authorizing the challenged contracts.
We answer the question in the affirmative.

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

 DISTRIBUTION AND PARTITION OF ESTATE RULE 90

RULE 90

Section 1. When order for distribution of reside made. —

1. When the debts, funeral charges, and expenses of administration, the allowance to
the widow, and inheritance tax, if any, chargeable to the estate in accordance with
law, have been paid,
2. the court, on the application of the executor or administrator, or of a person interested
in the estate, and
3. after hearing upon notice,
a. shall assign the residue of the estate to the persons entitled to the same,
b. naming them and the proportions, or parts, to which each is entitled, and such
persons may demand and recover their respective shares from the executor or
administrator, or any other person having the same in his possession.
c. If there is a controversy before the court as to who are the lawful heirs of the
deceased person or as the distributive shares to which each person is entitled
under the law, the controversy shall be heard and decided as in ordinary cases.

No distribution shall be allowed until the payment of the obligations above mentioned has
been made or provided for, unless the distributees, or any of them, give a bond, in a sum
to be fixed by the court, conditioned for the payment of said obligations within such time
as the court directs.

Section 2. Questions as to advancement to be determined. —

1. Questions as to advancement made, or alleged to have been made, by the
deceased to any heir
2. may be heard and determined by the court having jurisdiction of the estate
proceedings; and
3. the final order of the court thereon shall be binding on the person raising the questions
and on the heir.

Section 3. By whom expenses of partition paid. —

1. If at the time of distribution the executor or administrator has retained sufficient effects
in his hands which may lawfully be applied for the expenses of partition of the
properties distributed, such expenses of partition may be paid by such executor or
administrator when it appears equitable to the court and not inconsistent with the
intention of the testator;
2. otherwise, they shall be paid by the parties in proportion to their respective shares or
interest in the premises, and the apportionment shall be settled and allowed by the
court, and, if any person interested in the partition does not pay his proportion or share,
the court may issue an execution in the name of the executor or administrator against
the party not paying the sum assessed.

Section 4. Recording the order of partition of estate. —

1. Certified copies of final orders and judgments of the court relating to the real estate or
the partition thereof shall be recorded in the registry of deeds of the province where
the property is situated.

RULE 91 Escheats

Section 1. When an by whom petition filed. —

1. When a person dies intestate, seized of real property in the Philippines,
2. leaving no heir or person by law entitled to the same,
 a. the Solicitor General or his representative in behalf of the Republic of the
Philippines, may file a petition in the Court of First Instance of the province
b. where the deceased last resided or in which he had estate, if he resided out of
the Philippines,
c. setting forth the facts, and praying that the estate of the deceased be
declared escheated.

Section 2. Order for hearing. — If the petition is sufficient in form and substance, the
court, by an order reciting the purpose of the petition, shall fix a date and place for the
hearing thereof, which date shall be not more than six (6) months after the entry of the
order, and shall direct that a copy of the order be published before the hearing at least
once a week for six (6) successive weeks in some newspaper of general circulation
published in the province, as the court shall be deem best.

Section 3. Hearing and judgment. —

1. Upon satisfactory proof in open court on the date fixed in the order that such order
has been published as directed and that the person died intestate, seized of real or
personal property in the Philippines, leaving no heir or person entitled to the same, and
no sufficient cause being shown to the contrary, the court shall adjudge that the estate
of the estate of the deceased in the Philippines, after the payment of just debts and
charges, shall escheat; and
a. shall, pursuant to law, assign the personal estate to the municipality or city
where he last resided in the Philippines, and the real estate to the municipalities
or cities, respectively, in which the same is situated.
b. If the deceased never resided in the Philippines, the whole estate may be
assigned to the respective municipalities or cities where the same is located.
Shall estate shall be for the benefit of public schools, and public charitable
institutions and centers in said municipalities or cities.

The court, at the instance of an interested party, or on its own motion, may order the
establishment of a permanent trust, so that the only income from the property shall be
used.

Section 4. When and by whom claim to estate filed. — If a devisee, legatee, heir,
widow, widower, or other person entitled to such estate appears and files a claim thereto
with the court within five (5) years from the date of such judgment, such person shall have
possession of and title to the same, or if sold, the municipality or city shall be accountable
to him for the proceeds after deducting reasonable charges for the care of the estate;
but a claim not made within the said time shall be forever barred.

Section 5. Other actions for escheat. — Until otherwise provided by law,

1. actions reversion or
2. escheat of properties alienated in violation of the Constitution or of any statute shall
be governed by this rule, except that the action shall be instituted in the province
where the land lies in whole or in part.

o TAYAG VS CA
o WHEN PROPER RULE 90, SECTION 1
o ISSUED ON ADVANCEMENT RULE 90, SECTION 2
o EXPENSES OF PARTITION RULE 90, SECTION 3
o RECORDING OF PARTITION ORDER RULE 90, SECTION 4
 ESCHEATS RULE 91, SECTION 1
o PROCEEDINGS COVERED RULE 91, SECTION 5
o PROCEDURE RULE 91, SECTIONS 1, 2, AND 3
o RECOVERY OF ESCHEATED PROPERTIES RULE 91, SECTION 4