Godoy vs. Orellano, et al.

A judicial administrator has no legal authority to sell, or contract to sell, any property belonging to the estate without prior authority of the court; any such contract is null and void. The administrator's power of attorney from the heirs cannot cure the defect because the court has exclusive jurisdiction to authorize the sale of estate property.

The dredge in question belonged to the intestate estate of Julio Orellano, which was pending in the Court of First Instance of Manila. Felisa Pañgilinan was the judicial administratrix of the estate. The defendants were the heirs of Julio Orellano, including minors and a married woman whose husband had not consented to the power of attorney. The estate was under judicial control, and the Code of Civil Procedure prescribed specific proceedings before an administrator could validly sell estate property.

On January 13, 1919, Felisa Pañgilinan, in consideration of P1,000 received from Eusebio A. Godoy, executed a document giving Godoy an option to buy a dredge for P10,000. The document stated that the dredge was the common property of Pañgilinan and the Orellano siblings — Demetrio, Jose, Guillermo, Alfredo, and Paz. The option required Godoy to pay the whole price within twenty days. The option was granted pursuant to a power of attorney executed by her co-owners, who reserved the right to ratify any sale or option granted by Pañgilinan as their attorney-in-fact. The co-owners did not ratify the option contract. Before the twenty-day period expired, Godoy was ready to make complete payment, but Pañgilinan failed to deliver the dredge.

Godoy then brought suit against Pañgilinan and the Orellano heirs, praying for delivery of the dredge upon payment of P9,000, damages of P10,000, and return of the P1,000 should the sale become impossible. The Orellano defendants answered with a general denial and special defense that the dredge was property of the intestate estate of Julio Orellano, pending in the Court of First Instance of Manila, under Pañgilinan's administration; that the dredge was under judicial control and could not be disposed of without judicial authority; and that some heirs were minors and one was a married woman who had not obtained her husband's consent to the power of attorney.

Pañgilinan filed a separate answer alleging that the dredge was estate property of which she was administratrix; that the plaintiff, defendants, and notary all knew these facts and led her to believe she had authority to dispose of the dredge; that she applied to the probate court for permission to sell the dredge for P10,000; that her co-defendants opposed the motion, prompting her to request a public auction, which the court authorized; that the dredge was sold at public auction for P10,000; that she never refused delivery but the court would not authorize it; and that she was ready to return the P1,000, which the plaintiff refused.

The evidence established that the dredge belonged to the intestate estate of Julio Orellano, father of the defendants, with Pañgilinan as judicial administratrix; that when she contracted with Godoy, she had no court authority; and that the plaintiff knew the dredge belonged to the estate under court control.

• Lack of Court Authority: The appellant Pañgilinan argued that as judicial administratrix, she was not legally authorized to sell or contract to sell estate property without court authority, and that the contract she entered into with the plaintiff was therefore null and void.
• Good Faith and Readiness to Return Consideration: Pañgilinan argued that she never refused delivery of the dredge, that the court would not authorize delivery, and that she was at all times ready to return the P1,000 received from the plaintiff, having tendered it several times.

• Admission of Lack of Authority: The appellee Godoy admitted in his brief "that the dredge in question being a part of the intestate estate of Julio Orellano, it cannot be disposed of by any person without the proper authority of the court, in accordance with the existing laws."
• Demand for Performance: Godoy argued that he was ready to make complete payment of the price within the option period but the appellant failed to deliver the dredge, entitling him to damages and return of the P1,000.

• Authority of the Administratrix: Whether Felisa Pañgilinan, as judicial administratrix of the intestate estate of Julio Orellano, was legally authorized to sell or contract to sell the dredge belonging to the estate without prior authority of the court.
• Validity of the Contract: Whether the option contract entered into by Pañgilinan with Godoy, without court authority, was null and void.

• Authority of the Administratrix: No. Pañgilinan was not, in her capacity as judicial administratrix, legally authorized to sell or contract to sell any property belonging to the estate without the authority of the court, pursuant to sections 717, 718, and 722 of the Code of Civil Procedure.
• Validity of the Contract: Yes, the contract was null and void. The sale or promise to sell estate property by the administratrix without compliance with the statutory requirements is void and passes no title.

• Authority of the Administratrix: The Court held that in the sale of property of an intestate estate for the benefit of the heirs, it is necessary to comply with sections 717, 718, and 722 of the Code of Civil Procedure. These sections prescribe the proceedings to be had before an administrator may sell personal or real property and the conditions under which such property may be disposed of. Unless compliance is had with these provisions, the sale of the dredge by the administratrix, or her promise to sell it, is null and void. The Court cited American authorities holding that a sale by executors without an order of the probate court is void and passes no title, and that a sale by an administrator without court authority does not confer title available against a succeeding administrator.

• Validity of the Contract: The Court reasoned that the court has exclusive jurisdiction to authorize the sale of estate properties. The power of attorney executed by the heirs in favor of the administratrix, without court authority, has no legal effect. This is especially so because two of the heirs were under age, and the others did not ratify the option contract as provided in the power of attorney. The Court noted that the appellee himself admitted that the dredge, being part of the intestate estate, could not be disposed of by any person without proper court authority. Accordingly, the contract entered into by the administratrix without such authority is null and void, and the judgment appealed from was reversed with the complaint dismissed.

• Administrator's Authority to Sell Estate Property — A judicial administrator has no authority to sell or contract to sell estate property without prior court approval. The court has exclusive jurisdiction to authorize such sales, and any sale or promise to sell made without compliance with the statutory requirements is null and void. The heirs' power of attorney in favor of the administrator cannot cure the defect, particularly where some heirs are minors and others have not ratified the contract.

• "In the sale of the property of an intestate estate for the benefit of the heirs, it is necessary to comply with the provisions of sections 717, 718, and 722 of the Code of Civil Procedure. The said sections prescribed the proceedings to be had before an administrator of an intestate or testate estate may sell personal or real property and also the conditions under which the personal or real property pertaining to an estate may be sold or disposed of by the administrator. Unless compliance is had with the provisions of these sections, the sale of the aforesaid dredge by the administratrix, or her promise to sell it is null and void." — This passage states the controlling statutory framework and the core rule that non-compliance with the Code of Civil Procedure renders the administrator's sale or promise to sell void.

• "Under the law, the court has exclusive jurisdiction to authorize the sale of properties like the one under consideration and the power of attorney executed by the heirs of Orellano in favor of the administratrix, without authority of court, has no legal effect, and this is the more so, since two of the said heirs are under age, and the others did not ratify the option contract, as provided in the aforesaid power of attorney." — This passage establishes that the court's exclusive jurisdiction over estate property sales cannot be supplanted by the heirs' power of attorney, especially where minors are involved and ratification is lacking.

• "A sale and conveyance by executors without an order of the probate court, under a will devising property to them in trust, but not authorizing any sale of the realty, otherwise than by a direction to pay the debts of the testator, is void, and passes no title to the purchase. (Huse vs. Den, 85 Cal., 390.)" — This quotation from American jurisprudence supports the rule that sales without probate court authority are void and pass no title.

• Huse vs. Den, 85 Cal., 390 — Cited as persuasive authority for the proposition that a sale by executors without an order of the probate court is void and passes no title to the purchaser.
• Wyatt's Adm'r vs. Rambo, 29 Ala., 510 — Cited as persuasive authority for the proposition that a sale by an administrator without court authority does not confer title available against a succeeding administrator.

• Section 717, Code of Civil Procedure — Prescribes the proceedings to be had before an administrator may sell personal or real property of the estate; non-compliance renders the sale void.
• Section 718, Code of Civil Procedure — Prescribes additional conditions under which estate property may be sold or disposed of by the administrator.
• Section 722, Code of Civil Procedure — Prescribes further requirements for the disposition of estate property by the administrator.

Johnson, Araullo, Street, and Avanceña, JJ., concurred.