RULE 89 SALES, MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENTLAO V. GENATO, 137 SCRA 77 (1985) FACTS: On June 25, 1980, respondent administrator Sotero Dionisio, Jr., with due notice to all his co-heirs, filed with the Probate Court in Special Proceedings No. 842 a Motion for Authority to Sell certain properties of the deceased to settle the outstanding obligations of the estate. The Court granted the same. 1. Respondent-administrator pursuant to said authorization, sold to his son, Sotero Dionisio III, the subject property for P75,000.00 and on the same date, Sotero Dionisio III executed a deed of sale of the same property in favor of respondent William Go for a consideration of P80.000.00. 2. Respondent-heir Florida Nuqui, filed a Motion for Annulment/Revocation of the Deeds of Absolute Sale for the reasons that the sale and subsequent transfer of title of the property were made in violation of the court's order and that the consideration of the two sales were grossly inadequate as in fact many are willing to buy the property for P400,000.00. 3. Petitioner spouses filed a "Manifestation In Intervention of Interest to Purchase Property Authorized by the Court to be Sold", wherein they alleged that respondent-administrator, without revealing that the property had already been sold to William Go, entered into a Mutual Agreement of Promise to Sell to herein petitioners, for the amount of P220,000.00 and that petitioners already paid the earnest money in the amount of P70,000.00 4. Respondent Judge allowed all the interested parties to bid for the property at the highest obtainable price. Respondent Go offered to buy the property in the amount of P280,000.00. Petitioners counter-offered at P300,000.00. 5. An Amicable Settlement was made between Respondent Go and the other heirs to the exclusion of the petitioners. The RTC approved the amicable settlement and confirmed the 2 Deeds of Sale in question. ISSUE: WON the sale made by the respondent-administrator is valid HELD: No. Sotero Dionisio, Jr. is the Administrator of the estate of his deceased mother Rosenda Abuton. As such Administrator, he occupies a position of the highest trust and confidence, He is required to exercise reasonable diligence and act in entire good faith in the performance of that trust, Although he is not a guarantor or insurer of the safety of the estate nor is he expected to be infallible yet the same degree of prudence, care and judgment which a person of a fair average capacity and ability exercises in similar transactions of his own, serves as the standard by which his conduct is to be judged. In the discharge of his functions, the administrator should act with utmost circumspection in order to preserve the estate and guard against its dissipation so as not to prejudice its editors and the heirs of the decedents who are entitled to the net residue thereof. In the case at bar, the sale was made necessary "in order to settle other existing obligations of the estate No doubt, respondent Judge's questioned approval of the Compromise Agreement violates Article 1409 of the New Civil Code and cannot work to confirm nor serve to ratify a fictitious contract which is non-existent and void from the very beginning. The fact that practically all the heirs are parties-signatories to the said Compromise Agreement is of no moment. Their assent to such an illegal scheme does not legalize the same nor does it impose any obligation upon respondent Judge to approve the same to the prejudice not only of the creditors of the estate, and the government by the non-payment of the correct amount of taxes legally due from the estate. The offer by the petitioner of P300,000.00 for the purchase of the property in question does not appear seriously disputed on record. As against the price stated in the assailed Compromise Agreement the former amount is decidedly more beneficial and advantageous not only to the estate, the heirs of the descendants, but more importantly to its creditors, for whose account and benefit the sale was made. No satisfactory and convincing reason appeared given for the rejection and/or non-acceptance of said offer thus giving rise to a well-grounded suspicion that a collusion of some sort exists between the administrator and the heirs to defraud the creditors and the government. 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. in her capacity as judicial administratrix of the intestate estate of Julio Orellano. and since the dredge is under judicial control. The defendants Orellano alleged that the dredge in question was the property of the intestate estate of Julio Orellano. (Huse vs. The condition was that Godoy was to pay the whole price of the dredge within twenty days 1. does not confer on the purchaser a title which is available against a succeeding administrator. Then the appellee brought suit in the Court of First Instance against the Orellanos. Rambo. . appellant Felisa Pañgilinan executed a document giving the appellee. otherwise than by a direction to pay the debts of the testator.. MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT GODOY V.) The appellant was not. ORELLANO. In the sale of the property of an intestate estate for the benefit of the heirs. Guillermo. without the authority of an order of court. but the appellant failed to deliver the dredge. The RTC ordered the defendants to pay Eusebio A. 42 PHIL 347 (1921) FACTS: In consideration of P1. Godoy the sum of P2. 718. A sale and conveyance by executors without an order of the probate court.000 2. it is necessary to comply with the provisions of sections 717. or under an order of court which is void for want of jurisdiction. Eusebio A. the appelle was ready to make complete payment of the price. but not authorizing any sale of the realty. and 722 of the Code of Civil Procedure. or of a will. Unless compliance is had with the provisions of these sections. or contract to sell. or her promise to sell it is null and void. Before the expiration of twenty days.) A sale by an administrator of the personal property of the estate. and Paz. upon payment by him of the sum of P9. it could not be disposed of without judicial authority 3. ISSUE: WON the sale is valid HELD: No..RULE 89 SALES. (Wyatt's Adm'r vs. Alfredo. Jose.000. legally authorized to sell. 29 Ala. an option to buy a dredge (common property of the vendor and of the brothers Demetrio. is void. is null and void. any property belonging to said estate without the authority of the court. Godoy.000 with legal interest thereon but the complaint was dismissed. Den. 390. 85 Cal. under a will devising property to them in trust. and the contract entered into by her with the plaintiff. 510. the sale of the aforesaid dredge by the administratrix.000. praying that they be ordered to deliver the dredge. and passes no title to the purchase. all surnamed Orellano) for the sum of P10. without this authority. 190 provide when an executor or administrator of the estate of a deceased person may sell the property of the estate. on application of the executor or administrator.RULE 89 SALES. MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT BUENAVENTURA & DEL ROSAROP V. with the consent and approbation. may grant a license to sell. and legatees. the court. Sec 714 to 722 of Act No. and when the testator has not otherwise made sufficient provision for the payment of debts and charges against the estate. of the heirs. both real and personal. in opposition to the wishes of the heirs? HELD: Yes. for . devisees. that when the personal estate of the deceased is not sufficient to pay the debts and charges of administration without injuring the business of those interested. provides. Section 714. RAMOS. 43 PHIL 704 (1922) ISSUE: WON the lower court committed an error in authorizing the sale of the fishery in question. among other things. residing in the Philippine Islands. in writing. 1 Emilio was appointed as administrator of Trinidad estate. all surnamed Pahamotang. the lower court committed an error in granting the petition for permission to sell. 454 SCRA 681 (2005) FACTS: Melitona Pahamotang died. 2 However. Myrna. petitioners filed a case for the annulment of those contracts entered into by Agustin alleging that said contracts were entered without notices to the heirs of Pahamotong for the approval of those contracts by the intestate court. 190. 3 Rural Bank notified Emilio that the loan applications of his children had been approved. 470 SCRA 352 (2005) FACTS: Trinidad Laserna Orola died intestate. PNB. The requirements of Rule 89 ROC are mandatory and failure to give notice to the heirs would invalidate the authority granted by the intestate/probate court to mortgage or sell estate assets. . and petitioners filed an application with the Rural Bank for a financing loan. She was survived by her husband Agustin Pahamotang. Arguna and PLEI in which the intestate court granted. Isabelita. 10year-old Antonio. 2 Emilio. devisees and legatees as required by the Rules. ISSUE: WON the contract of sale and mortgage are valid HELD: No. Susana. Concepcion and herein petitioners Josephine and Eleonor. and other siblings. Angeline and Althea. and will not defeat any devise of land. and also committed an error in authorizing the sale and in confirming the sale after it was made. and their eight (8) children. 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. Here. The plaintiffs in the present case not having shown the existence of any of the facts or conditions under which the property in question might be sold under the above quoted provisions of Act No. it appears that petitioners were never notified of the several petitions filed by Agustin with the intestate court to mortgage and sell the estate properties of his wife. namely: Ana. RURAL BANK OF PONTEVEDRA. 1 Agustin filed before the intestate court the authority to sell and mortgage some of the properties for and in behalf of the estate of Pahamotong in favor PNB. MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT that purpose.RULE 89 SALES. in which case the assent of the devisee shall be required. She was survived by her husband Emilio Orola and their six minor children. Genoveva. 12-year-old Josephine. Corazon. PAMAHOTANG V. 4 Petitioners for and in behalf of his father Emilio Orola. if it clearly appears that such sale of real estate would be beneficial to the person interested. executed a Real Estate Mortgage as security for the payment of theirs loans. in lieu of personal estate. it is not only the contract itself which is null and void but also the order of the court authorizing the same. 16-year-old Manuel. namely. OROLA V. 5 to Alfredo Loy. because Teodoro Vaño. ISSUE: WON the contracts of the Loys’ are valid HELD: No. 405 SCRA 316 (2004) FACTS: The Loys seek a reconsideration of the Decision of the Supreme Court declaring void the deeds of sale of Lot Nos. Well-settled is the rule that an administrator needs court approval to sell estate property. The purpose of requiring court approval is to protect creditors. For the non-payment of the said loan Rural Bank extrajudicial foreclose the real estate mortgages. MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT 5 6 However. the predecessor-in-interest of Frank Liu. ISSUE: WON the real estate mortgages entered into by petitioners with Rural Bank were valid HELD: No. LOY. in the latter’s capacity as administrator of the estate. Hence. the probate court had already lost jurisdiction over Lot Nos. 1 Jose Vano and Benito Liu entered into a contract to sell of lots No. Benito Liu sold to Frank Liu Lot Nos. Frank Liu sent three letters to Teodoro Vaño reiterating his request for the execution of the deed of sale covering the lots in his favor but to no avail. otherwise the sale is void.RULE 89 SALES. could not yet transfer the titles to Benito Liu. Teodoro Vaño did not reply to Frank Liu’s letter. the real estate mortgage contracts were not submitted to the intestate estate courts for approval. Frank Liu is a creditor. Jr. Teodoro Vaño. they had no authority to execute the said Real Estate Mortgage Contracts for and in behalf of respondent Orola. Jr. Section 7 of Rule 89 of the Rules of Court even provides for the regulations for granting authority to sell. and he is the person the law seeks to protect. Under Section 7 of Rule 89 of the Rules of Court. as executor. only the executor or administrator of the estate may be authorized by the intestate estate court to mortgage real estate belonging to the estate. Angeline and Althea aware of the said loans. LIU V. In this case. 5 and 6 since the lots no longer formed part of the Estate of Jose Vaño. The respondents must have realized that the order of the intestate estate court authorizing petitioners Manuel. The orders did not ratify the sales because there was already a prior order of the probate court approving the sale of Lot Nos. 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. 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 who are the petitioners herein and only "acting as attorneys-in-fact of the administrator of the estate. It would appear that Frank Liu and Teodoro Vaño lost contact with each other thereafter and then Frank Liu wrote 3 4 5 Teodoro Vaño informing the latter that he was ready to pay the balance of the purchase price of the lots. 6 to Teresita Loy and Lot No. However. The sales to the Loys were made without court approval and after Frank Liu offered to pay the balance of the purchase price of the lots and after he repeatedly requested for the execution of the deeds of sale in his favor. the estate court had not appointed petitioners as attorneys-in-fact of respondent Emilio Orola empowered to execute the said contracts. mortgage or otherwise encumber estate property. The orders of the probate court approving the contracts of the Loys are void. Neither were Myrna. 5 and 6. sold Lot No. 2 Frank Liu stopped further payments on the lots. 5 and 6 executed by Teodoro Vaño in favor of Alfredo Loy. ." However. 5 and 6. and Teresita Loy. hence. 5 and 6 to Frank Liu. MORTGAGES AND OTHER ENCUMBRANCES OF PROPERTY OF DECEDENT .RULE 89 SALES.
Report "Rule 89 Sales Mortgages of the Property of the Decedent Digests"