Amorante Plan vs. Intermediate Appellate Court and Federico Bautista

A sale of estate property authorized and approved by the probate court for the payment of debts is final and not subject to legal redemption, and any challenge to its validity must be raised in the intestate proceeding itself, not in a separate action. The probate court, having authorized and approved the sale, should resolve the issue of its validity, and the purchaser is a forced intervenor in the intestate proceeding.

Federico Bautista is one of seven children of the deceased Regino Bautista and his widow, Florencia Topacio, who served as administratrix of the estate. The disputed property consisted of two conjugal lots with a theater thereon, in which Florencia had a 5/8 interest and Federico claimed a 1/8 interest. The intestate proceeding for the settlement of Regino Bautista's estate was pending before the probate court, and the widow sought authority to sell the property to pay estate debts amounting to P117,220.

Federico Bautista is one of seven children of the deceased Regino Bautista and his widow, Florencia Topacio, who was appointed administratrix of the estate. In the intestate proceeding for the settlement of Regino's estate, the widow filed a motion dated December 9, 1964 for authority to sell to Plan the two lots and theater for not less than P140,000, the purpose being to pay debts amounting to P117,220. The motion was set for hearing on December 18, 1964, and it was indicated that the children were notified through one child named Milagros Bautista.

On December 22, 1964, Judge Jose B. Jimenez granted the authority to sell to Plan the entire estate of the deceased for not less than P140,000 so as to pay the obligations of the estate, "it appearing that all the heirs have conformed thereto." On that same day, Florencia Topacio and Plan executed a deed of absolute sale with assumption of mortgage obligations for the two lots with an area of 664 square meters together with the theater (with a total assessed value of P52,720) and the apparatus used therein. The deed recited that Regino's estate owed Plan P25,700 and a mortgage debt of P44,292.07 to the Philippine National Bank which Plan assumed; the amount actually received by the administratrix as vendor was P70,007.93. Milagros Bautista-Alcantara, the heir through whom the other six children were allegedly notified, was an instrumental witness in the sale. A motion to approve the sale was filed on January 5, 1965, and Judge Jimenez signed the original deed under the word "Approved" to indicate that the sale was okayed by the probate court. Notably, in 1963 the widow and four of her seven children as owners of 7/8 interest in the property had, in consideration of P9,600, agreed to sell that same property to Plan for the same amount of P140,000.

Sixteen days after the sale, on January 7, 1965, Federico filed an "Opposition to Agreement to Sell Absolute Sale, Project of Partition and Request for Inventory and Accounting of Estate and for Furnishing of Orders, Notices and Pleadings." The clerk of court set the opposition for hearing on January 26, 1965, on which date Judge Jimenez gave Federico's counsel ten days to interpose any opposition to the project of partition filed by the administratrix on October 16, 1964, which had not been acted upon and of which the decedent's six children were notified through Milagros Bautista. Federico's counsel did not file any objection to the project of partition, the reason being that the estate sought to be partitioned had already been sold to Plan. Federico then filed on March 2, 1965, or 56 days after the approval of the sale, a "petition for relief from order," alleging that counsel for the administratrix misrepresented to the court that all the heirs had approved of the sale and that there was fraud in not giving notice to the heirs of the proposed sale. He contended that because there was no compliance with section 7, Rule 89 of the Rules of Court, the sale was void, and prayed that the order authorizing the sale be set aside. No action was taken by the probate court on the petition for relief.

The widow or administratrix did not render an accounting of the sum of P70,007.93 which she received from Plan. Only Federico among her seven children questioned the sale. She died on September 18, 1969, more than four years and eight months after the sale. More than a year after her death, on August 6, 1971, she was succeeded by Milagros Bautista-Alcantara as administratrix, the same heir who took part in consummating the sale to Plan; the other six children, including Federico, signified their conformity to her appointment. As there was no movement in the case for an unreasonable length of time, Judge Catolico in his order of March 22, 1973 ordered it archived until an interested party moves for the termination thereof. In a motion and supplementary motion dated August 27 and September 3, 1973, Milagros asked that her bond be reduced to P500, alleging that the two lots and theater were sold by her mother with the approval of the court and the proceeds of the sale were used to pay the claims of the creditors; Federico and the other five children signified their conformity to Milagros' motions.

Instead of asking the court to act on his petition for relief from the orders authorizing and approving the sale, Federico on July 13, 1965 filed a separate action against Plan, Civil Case No. N-806, to nullify the sale, without impleading his mother, brothers and sisters. Judge Catolico dismissed the action without prejudice on February 4, 1971, ruling that the nullity of the sale as to Federico's 1/16 share should be resolved in the intestate proceeding. On June 13, 1974, after his mother's death, Federico sued Plan again for nullification of the sale, Civil Case No. N-2145; Judge Vallejos dismissed the complaint on October 7, 1974, reiterating the ruling of Judge Catolico. Less than a year later, on April 1, 1975, Federico for the third time filed a separate action against Plan, Civil Case No. 2282, to annul the sale. After trial, Judge Fule dismissed the case on the same ground, namely, that his remedy is in the intestate proceeding. Federico appealed to the Court of Appeals, which reversed Judge Fule's decision, declared void the agreement to sell and the sale, ordered Plan to reconvey to Federico the disputed property for P140,000 and to pay him P3,000 a month from December 22, 1964 up to the time the possession of the property is turned over to Federico, with legal interest from that date until fully paid, plus P50,000 as attorney's fees, based on Article 1088 of the Civil Code.

• Lack of Legal Basis for Reconveyance: Petitioner Plan argued that the Appellate Court erred in ordering reconveyance of the disputed property to Federico upon payment of P140,000 and payment of P3,000 a month as income, as such judgment was bereft of factual and legal basis.
• No Prayer for Reconveyance: Petitioner pointed out that Federico did not pray for reconveyance in his complaint, as he prayed instead for receivership, for nullification of the agreement to sell and the sale itself, and for the refund by Plan of all the income received from the property from the time he possessed it in the concept of owner.
• No Legal Redemption: Petitioner maintained that Article 1088 of the Civil Code does not justify legal redemption in this case because it refers to sale of hereditary rights, and not to specific properties, for the payment of the debts of the decedent's estate as to which there is no legal redemption.

• Nullity of Sale: Federico argued that the sale was void because there was no compliance with section 7, Rule 89 of the Rules of Court, and that counsel for the administratrix misrepresented to the court that all the heirs had approved of the sale and that there was fraud in not giving notice to the heirs of the proposed sale.
• Right to Redeem: Federico relied on Article 1088 of the Civil Code to justify his redemption of the property, and cited the case of Tagle and Ignacio, Jr. vs. Manalo in support of his position that he could pursue his remedy in a separate action.

• Jurisdiction over the Sale's Validity: Whether Federico Bautista could nullify in a separate action, instead of in the intestate proceeding for his deceased father's estate, the sale of two conjugal lots with the theater thereon made by his mother as administratrix to Amorante Plan with the authorization and approval of the probate court.
• Right of Legal Redemption: Whether Article 1088 of the Civil Code justifies legal redemption of property sold by the administratrix with probate court approval to pay estate debts.
• Propriety of the Appellate Court's Order: Whether the Appellate Court erred in ordering Plan to reconvey the disputed property to Federico upon payment of P140,000 and to pay him P3,000 a month as income from December 22, 1964.

• Jurisdiction over the Sale's Validity: No. Federico's remedy is in the intestate proceeding where his petition for relief has been pending for nearly twenty years; he should amend it by impleading the present administratrix and Plan himself, and the probate court has jurisdiction over Plan as a forced intervenor.
• Right of Legal Redemption: No. Article 1088 of the Civil Code does not justify legal redemption in this case because it refers to sale of hereditary rights, and not to specific properties, for the payment of the debts of the decedent's estate as to which there is no legal redemption.
• Propriety of the Appellate Court's Order: No. The Appellate Court's judgment ordering reconveyance and monthly income payments is bereft of factual and legal basis, as Federico did not pray for reconveyance in his complaint and was not the owner of the property in 1964.

• Jurisdiction over the Sale's Validity: The Court agreed with Judges Fule, Catolico and Vallejos that Federico's remedy is in the intestate proceeding where his petition for relief has been pending for nearly twenty years. He should amend it by impleading the present administratrix and Plan himself and serving copies of the petition upon them. Plan, as the purchaser of the disputed property, is a forced intervenor in the intestate proceeding and should answer the amended petition for the annulment of the sale; the probate court has jurisdiction over him. Federico should also ask for an accounting of the P70,007.93 received by his mother, and his brothers and sisters should be served with copies of the amended petition. The case of Tagle and Ignacio, Jr. vs. Manalo, cited by Federico, is not in point because the testamentary proceeding in that case was already closed and the purchaser did not want to be pulled into the probate proceeding; here, the purchaser had no objection to litigating the validity of the sale in the intestate proceeding. The probate court, having authorized and approved the sale, should resolve the issue as to its validity, and if all the interested parties are heard, an amicable settlement may be reached.

• Right of Legal Redemption: The Court held that Article 1088 of the Civil Code does not justify legal redemption in this case because it refers to sale of hereditary rights, and not to specific properties, for the payment of the debts of the decedent's estate as to which there is no legal redemption. Citing Abarro vs. De Guia, 72 Phil. 245, the Court stated that in the administration and liquidation of the estate of a deceased person, sales ordered by the probate court for payment of debts are final and not subject to legal redemption; unlike in ordinary execution sales, there is no legal provision allowing redemption in the sale of property for payment of debts of a deceased person. Such sale is not the one contemplated in article 1067, now article 1088 of the Civil Code, citing Vda. de Mendoza, 69 Phil. 155. The Court also cited Jimenez vs. Jimenez, 67 Phil. 263, where it was held that an heir could not be allowed to redeem property sold at public auction for the payment of the decedent's debts, because properties of a decedent which are sold at public auction for the payment of his debts are not subject to redemption.

• Propriety of the Appellate Court's Order: The Court held that the Appellate Court erred in ordering Plan to reconvey the disputed property to Federico Bautista upon payment of P140,000 and to pay him P3,000 a month as income from December 22, 1964. Said judgment is bereft of factual and legal basis. Federico did not pray for reconveyance in his complaint; he was not the owner of the property in 1964; and he prayed for receivership, for nullification of the agreement to sell and the sale itself, and for the refund by Plan of all the income which he received from the property from the time he possessed it in the concept of owner.

• Sales by Probate Court for Payment of Debts Are Final and Not Subject to Legal Redemption — In the administration and liquidation of the estate of a deceased person, sales ordered by the probate court for payment of debts are final and not subject to legal redemption. Unlike in ordinary execution sales, there is no legal provision allowing redemption in the sale of property for payment of debts of a deceased person. The Court applied this doctrine to hold that Federico could not redeem the property sold by his mother as administratrix with probate court approval.

• Exclusivity of Probate Court Jurisdiction over Challenges to Court-Approved Sales — An heir who seeks to nullify a sale of estate property authorized and approved by the probate court must pursue his remedy in the intestate proceeding itself, not in a separate civil action. The probate court, having authorized and approved the sale, should resolve the issue as to its validity, and the purchaser is a forced intervenor in the intestate proceeding.

• Article 1088 of the Civil Code Applies Only to Sales of Hereditary Rights — Article 1088 of the Civil Code refers to the sale of hereditary rights, not to specific properties sold for the payment of the debts of the decedent's estate. Such sales are not the ones contemplated in article 1067, now article 1088 of the Civil Code, and therefore do not give rise to a right of legal redemption.

• "In the administration and liquidation of the estate of a deceased person, sales ordered by the probate court for payment of debts are final and not subject to legal redemption. Unlike in ordinary execution sales, there is no legal provision allowing redemption in the sale of property for payment of debts of a deceased person." — This passage, quoting Abarro vs. De Guia, states the controlling doctrine that probate court-ordered sales for payment of estate debts are not subject to legal redemption, which is the core ratio decidendi of the case.

• "Article 1088 of the Civil Code does not justify legal redemption in this case because it refers to sale of hereditary rights, and not to specific properties, for the payment of the debts of the decedent's estate as to which there is no legal redemption." — This passage defines the scope of Article 1088 and explains why it cannot be invoked to support Federico's claim of redemption over the specific properties sold to pay estate debts.

• "We hold that the Appellate Court erred in ordering Plan to reconvey the disputed property to Federico Bautista upon payment of P140,000 and to pay him P3,000 a month as income from December 22, 1964. Said judgment is bereft of factual and legal basis." — This passage states the Court's rejection of the Appellate Court's reconveyance order, which lacked factual and legal support because Federico did not pray for reconveyance and was not the owner of the property in 1964.

• Abarro vs. De Guia, 72 Phil. 245 — Controlling precedent cited for the doctrine that sales ordered by the probate court for payment of debts are final and not subject to legal redemption, unlike ordinary execution sales.

• Vda. de Mendoza, 69 Phil. 155 — Cited to support the proposition that a sale of specific property for payment of estate debts is not the sale contemplated in article 1067, now article 1088 of the Civil Code.

• Jimenez vs. Jimenez, 67 Phil. 263 — Followed as precedent holding that properties of a decedent sold at public auction for the payment of his debts are not subject to redemption by an heir.

• Tagle and Ignacio, Jr. vs. Manalo, 105 Phil. 1123 — Distinguished; not in point because the testamentary proceeding in that case was already closed and the purchaser did not want to be pulled into the probate proceeding, whereas in the instant case the purchaser had no objection to litigating the validity of the sale in the intestate proceeding.

• Article 1088, Civil Code — The Court held that this provision, which refers to the sale of hereditary rights, does not justify legal redemption of specific properties sold for the payment of the debts of the decedent's estate.

• Article 1067, Civil Code — Referred to as the predecessor of Article 1088, which likewise does not contemplate sales of specific properties for payment of estate debts.

• Section 7, Rule 89, Rules of Court — Cited by Federico as the basis for his claim that the sale was void for non-compliance with its requirements regarding notice to heirs; the Court did not directly rule on this provision but directed that the issue be resolved in the intestate proceeding.

Makasiar (Chairman), Concepcion Jr., Escolin, and Cuevas, JJ., concurred.

• Abad Santos, J. (concurring) — While voting to set aside the decision of the Intermediate Appellate Court and sustain that of the trial court, Justice Abad Santos could not go along with the suggestions in the main opinion that Federico should question the sale in the intestate proceedings and ask for an accounting of the money received by his mother. He expressed that Federico is better advised to let things as they are out of respect for his mother, noting the painfulness of children litigating over their inheritance especially when a surviving parent is involved. As to the accounting, he noted that the only person who could really make it is Federico's mother, who is gone, and that Federico practically assented to an "accounting" when he gave his conformity to Milagros' motions which stated that the proceeds of the sale were used to pay the claims of creditors.