THE HEIRS OF PEDRO ESCANLAR, FRANCISCO HOLGADO and the SPOUSES DR. EDWIN A.

JAYME and ELISA TAN-JAYME, petitioners,

G.R. No. 120690 October 23, 1997

FRANCISCO HOLGADO and HRS. OF PEDRO ESCANLAR, namely BERNARDO, FELY, SONIA,
LILY, DYESEBEL and NOEMI all surnamed ESCANLAR, petitioners,
vs.
HON. COURT OF APPEALS, GENEROSA MARTINEZ, CARMEN CARI-AN, RODOLFO CARI-AN,
NELLY CHUA CARI-AN, for herself and as guardian ad litem of her minor son, LEONELL C. CARI-
AN, and SP. PAQUITO CHUA and NEY SARROSA CHUA and REGISTER OF DEEDS OF NEGROS
OCCIDENTAL, respondents.

FACTS:

Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and 1938,
respectively. Nombre's heirs include his nephews and grandnephews. Victoriana Cari-an was succeeded
by her late brother's son, Gregorio Cari-an. The latter was declared as Victoriana's heir in the estate
proceedings for Nombre and his wife (Special Proceeding No. 7-7279). 1 After Gregorio died in 1971, his
wife, Generosa Martinez, and children, Rodolfo, Carmen, Leonardo and Fredisminda, all surnamed Cari-
an, were also adjudged as heirs by representation to Victoriana's estate. 2 Leonardo Cari-an passed
away, leaving his widow, Nelly Chua vda. de Cari-an and minor son Leonell, as his heirs.

Two parcels of land, denominated as Lot No. 1616 and 1617 of the Kabankalan Cadastre with an
area of 29,350 square meters and 460,948 square meters, respectively, formed part of the estate of
Nombre and Cari-an.

On September 15, 1978, Gregorio Cari-an's heirs, herein collectively referred to as private
respondents Cari-an, executed the Deed of Sale of Rights, Interests and Participation worded as follows:

NOW, THEREFORE, for and in consideration of the sum of TWO HUNDRED SEVENTY-
FIVE THOUSAND (P275,000.00) Pesos, Philippine Currency, to be paid by the VENDEES to the
VENDORS, except the share of the minor child of Leonardo Cari-an, which should be deposited
with the Municipal Treasurer of Himamaylan, Province of Negros Occidental, by the order of the
Court of First Instance of Negros Occidental, Branch VI, Himamaylan, by those presents, do
hereby SELL, CEDE, TRANSFER and CONVEY by way of ABSOLUTE SALE, all the RIGHTS,
INTERESTS and PARTICIPATION of the Vendors as to the one-half (1/2) portion pro-indiviso of
Lots Nos. 1616 and 1617 (Fishpond), of the Kabankalan Cadastre, pertaining to the one-half (1/2)
portion pro-indiviso of late Victoriana Cari-an unto and in favor of the Vendees, their heirs,
successors and assigns;

ISSUES:

1) Declaring the following contracts null and void and of no effect:

b) The Deed of Agreement, dated Sept. 15, 1978, executed by the plaintiffs in
favor of the defendants, Pedro Escanlar and Francisco Holgado (Exh. "A,"
Plaintiffs)

c) The Deed of Sale, dated April 20, 1983, executed by the defendants in favor of
the fourth-party defendants, Dr. Edwin Jayme and Elisa Tan Jayme

d) The sale of leasehold rights executed by the defendants in favor of the fourth-
party defendants

2) Declaring the amount of Fifty Thousand Pesos (P50,000.00) paid by the defendants to the
plaintiffs in connection with the Sept. 15, 1978 deed of sale, as forfeited in favor of the plaintiffs,
but ordering the plaintiffs to return to the defendants whatever amounts they have received from
the latter after May 3, 1979 and the amount of Thirty Five Thousand Two Hundred Eighteen &
75/100 (P35,218.75) 15 deposited with the Treasurer of Himamaylan, Negros Occidental, for the
minor Leonell C. Cari-an —

3) Declaring the deed of sale, dated September 23, 1982, executed by Lasaro Nombre, Victorio
Madalag, Domingo Campillanos, Sofronio Campillanos, Generosa Vda. de Martinez, Carmen
Cari-an, Rodolfo Cari-an, Nelly Chua Vda. de Cari-an, for herself and as guardian ad litem of the
minor Leonell C. Cari-an, and Fredisminda Cari-an in favor of the third-party defendants and
fourth-party plaintiffs, spouses Dr. Paquito Chua and Ney Sarrosa Chua (Exh. "2"-Chua) as legal,
valid and enforceable provided that the properties covered by the said deed of sale are subject of
the burdens of the estate, if the same have not been paid yet.

4) Ordering the defendants Francisco Holgado and Pedro Escanlar and the fourth-party
defendants, spouses Dr. Edwin Jayme and Elisa Tan Jayme, to pay jointly and severally the
amount of One Hundred Thousand Pesos (P100,000.00 as moral damages and the further sum
of Thirty Thousand Pesos (P30,000.00) as attorney's fees to the third-party defendant spouses,
Dr. Paquito Chua and Ney Sarrosa-Chua.

5) Ordering the fourth-party defendant spouses, Dr. Edwin Jayme and Elisa Tan Jayme, to pay to
the third-party defendants and fourth-party plaintiffs, spouses Dr. Paquito Chua and Ney Sarrosa-
Chua, the sum of One Hundred Fifty Seven Thousand Pesos (P157,000.00) as rentals for the
riceland and Three Million Two Hundred Thousand Pesos (P3,200,000.00) as rentals for the
fishpond from October, 1985 to July 24, 1989 plus the rentals from the latter date until the
property shall have been delivered to the spouses Dr. Paquito Chua and Ney Sarrosa-Chua;

6) Ordering the defendants and the fourth-party defendants to immediately vacate Lots Nos. 1616
and 1617, Kabankalan Cadastre;

7) Ordering the defendants and the fourth-party defendants to pay costs.

RULING:

In the case of Dillena v. Court of Appeals the Court declared that it is within the
jurisdiction of the probate court to approve the sale of properties of a deceased person by his prospective
heirs before final adjudication. It is settled that court approval is necessary for the validity of any
disposition of the decedent's estate. However, reference to judicial approval cannot adversely affect the
substantive rights of the heirs to dispose of their ideal share in the co-heirship and/or co-ownership
among the heirs. 30 It must be recalled that during the period of indivision of a decedent's estate, each
heir, being a co-owner, has full ownership of his part and may therefore alienate it. But the effect of the
alienation with respect to the co-owners shall be limited to the portion which may be allotted to him in the
division upon the termination of the
co-ownership.

From the foregoing, it is clear that hereditary rights in an estate can be validly sold without need
of court approval and that when private respondents Cari-an sold their rights, interests and participation in
Lot Nos. 1616 and 1617, they could legally sell the same without the approval of the probate court.

As a general rule, the pertinent contractual stipulation (requiring court approval) should be
considered as the law between the parties. However, the presence of two factors militate against this
conclusion. First, the evident intention of the parties appears to be contrary to the mandatory character of
said stipulation. 33 Whoever crafted the document of conveyance, must have been of the belief that the
controversial stipulation was a legal requirement for the validity of the sale. But the contemporaneous and
subsequent acts of the parties reveal that the original objective of the parties was to give effect to the
deed of sale even without court approval. Receipt and acceptance of the numerous installments on the
balance of the purchase price by the Cari-ans and leaving petitioners in possession of Lot Nos. 1616 and
1617 reveal their intention to effect the mutual transmission of rights and obligations. It was only after
private respondents Cari-an sold their shares in the subject lots again to the spouses Chua, in September
1982, that these same heirs filed the case at bar for the cancellation of the September 1978 conveyance.
Worth considering too is the fact that although the period to pay the balance of the purchase price expired
in May 1979, the heirs continued to accept payments until late 1979 and did not seek judicial relief until
late 1982 or three years later.

Second, we hold that the requisite approval was virtually rendered impossible by the Cari-ans
because they opposed the motion for approval of the sale filed by petitioners and sued the latter for the
cancellation of that sale. The probate court explained:

(e) While it is true that Escanlar and Holgado filed a similar motion for the approval of Deed of
Sale executed by some of the heirs in their favor concerning the one-half (1/2) portions of Lots
1616 and 1617 as early as November 10, 1981, yet the Court could not have favorably acted
upon it, because there exists a pending case for the rescission of that contract, instituted by the
vendors therein against Pedro Escanlar and Francisco Holgado and filed before another branch
of this Court. Until now, this case, which attacks the very source of whatever rights or interests
Holgado and Escanlar may have acquired over one-half (1/2) portions of Lots Nos. 1616 and
1617, is pending resolution by another court. Otherwise, if this Court meddles on these issues
raised in that ordinary civil action seeking for the rescission of an existing contract, then, the act
of this Court would be totally ineffective, as the same would be in excess of its jurisdiction.

Having provided the obstacle and the justification for the stipulated approval not to be granted,
private respondents Cari-an should not be allowed to cancel their first transaction with petitioners
because of lack of approval by the probate court, which lack is of their own making.

3. With respect to rescission of a sale of real property, Article 1592 of the Civil Code governs:

In the sale of immovable property, even though it may have been stipulated that upon
failure to pay the price at the time agreed upon the rescission of the contract shall of right take
 place, the vendee may pay, even after the expiration of the period, as long as no demand for
rescission of the contract has been made upon him either judicially or by a notarial act . After the
demand, the court may not grant him a new term. (Emphasis added)

In the instant case, the sellers gave the buyers until May 1979 to pay the balance of the purchase
price. After the latter failed to pay installments due, the former made no judicial demand for rescission of
the contract nor did they execute any notarial act demanding the same, as required under Article 1592.
Consequently, the buyers could lawfully make payments even after the May 1979 deadline, as in fact they
paid several installments to the sellers which the latter accepted. Thus, upon the expiration of the period
to pay, the sellers made no move to rescind but continued accepting late payments, an act which cannot
but be construed as a waiver of the right to rescind. When the sellers, instead of availing of their right to
rescind, accepted and received delayed payments of installments beyond the period stipulated, and the
buyers were in arrears, the sellers in effect waived and are now estopped from exercising said right to
rescind.

4. The matter of full payment is another issue taken up by petitioners. An exhaustive review of the records
of this case impels us to arrive at a conclusion at variance with that of both the trial and the appellate
courts.

The sole witness in the cancellation of sale case was private respondent herein Fredisminda
Cari-an Bustamante. She initially testified that after several installments, she signed a receipt for the full
payment of her share in December 1979 but denied having actually received the P5,000.00 intended to
complete her share. She claims that Escanlar and Holgado made her sign the receipt late in the afternoon
and promised to give the money to her the following morning when the banks opened. She also claimed
that while her brother Rodolfo
Cari-an's share had already been fully paid, her mother Generosa Martinez only received P28,334.00 and
her sister-in-law Nelly Chua vda. de Cari-an received only P11,334.00. Fredisminda also summed up all
the installments and came up with the total of P132,551.00 from the long list on a sheet of a calendar
which was transferred from a small brown notebook. She later admitted that her list may not have been
complete for she gave the receipts for installments to petitioners Escanlar and Holgado. She thus claimed
that they were defrauded because petitioners are wealthy and private respondents are poor.

However, despite all her claims, Fredisminda's testimony fails to convince this Court that they
were not fully compensated by petitioners. Fredisminda admits that her mother and her sister signed their
individual receipts of full payment on their own and not in her presence. The receipts presented in
evidence show that Generosa Martinez was paid P45,625.00; Carmen Cari-an , P45,625.00; Rodolfo
Cari-an , P47,500.00 on June 21, 1979; Nelly Chua vda. de Cari-an, P11,334.00 and the sum of
P34,218.00 was consigned in court for the minor Leonell Cari-an. Fredisminda insists that she signed a
receipt for full payment without receiving the money therefor and admits that she did not object to the
computation. We find it incredible that a mature woman like Fredisminda Cari-an, would sign a receipt for
money she did not receive. Furthermore, her claims regarding the actual amount of the installments paid
to her and her kin are quite vague and unsupported by competent evidence. She even admits that all the
receipts were taken by petitioner Escanlar. Worth noting too is the absence of supporting testimony from
her co-heirs and siblings Carmen Cari-an, Rodolfo Cari-an and Nelly Chua vda. de Cari-an.

The trial court reasoned out that petitioners, in continuing to pay the rent for the parcels of land
they allegedly bought, admit not having fully paid the Cari-ans. Petitioners' response, that they paid rent
until 1986 in compliance with their lease contract, only proves that they respected this contract and did
not take undue advantage of the heirs of Nombre and Cari-an who benefited from the lease. Moreover, it
is to be stressed that petitioners purchased the hereditary shares solely of the Cari-ans and not the entire
lot.
 The foregoing discussion ineluctably leads us to conclude that the
Cari-ans were indeed paid the balance of the purchase price, despite having accepted installments
therefor belatedly. There is thus no ground to rescind the contract of sale because of non-payment.

5. Recapitulating, we have held that the September 15, 1978 deed of sale of rights, interests and
participations is valid and that the sellers-private respondents Cari-an were fully paid the contract price.
However, it must be emphasized that what was sold only the Cari-an's hereditary shares in Lot Nos. 1616
and 1617 being held pro indiviso by them and is thus a valid conveyance only of said ideal shares.
Specific or designated portions of land were not involved.

Consequently, the subsequent sale of 8 parcels of land, including Lot Nos. 1616 and 1617, to the
spouses Chua is valid except to the extent of what was sold to petitioners in the September 15, 1978
conveyance. It must be noted however, that the probate court in Special Proceeding No. 7-7279 desisted
from awarding the individual shares of each heir because all the properties belonging to the estate had
already been sold. Thus it is not certain how much private respondents Cari-an were entitled to with
respect to the two lots, or if they were even going to be awarded shares in said lots.

The proceedings surrounding the estate of Nombre and Cari-an having attained finality for nearly
a decade now, the same cannot be re-opened. The protracted proceedings which have undoubtedly left
the property under a cloud and the parties involved in a state of uncertainty compels us to resolve it
definitively.

The decision of the probate court declares private respondents Cari-an as the sole heirs by
representation of Victoriana Cari-an who was indisputably entitled to half of the estate.There being no
exact apportionment of the shares of each heir and no competent proof that the heirs received unequal
shares in the disposition of the estate, it can be assumed that the heirs of Victoriana Cari-an collectively
are entitled to half of each property in the estate. More particularly, private respondents Cari-an are
entitled to half of Lot Nos. 1616 and 1617, i.e. 14,675 square meters of Lot No. 1616 and 230,474 square
meters of Lot No. 1617. Consequently, petitioners, as their successors-in-interest, own said half of the
subject lots and ought to deliver the possession of the other half, as well as pay rents thereon, to the
private respondents Ney Sarrosa Chua and Paquito Chua but only if the former (petitioners) remained in
possession thereof.

The rate of rental payments to be made were given in evidence by Ney Sarrosa Chua in her
unrebutted testimony on July 24, 1989: For the fishpond (Lot No. 1617) — From 1982 up to 1986, rental
payment of P3,000.00 per hectare; from 1986-1989 (and succeeding years), rental payment of
P10,000.00 per hectare. For the riceland (Lot No. 1616) — 15 cavans per hectare per year; from 1982 to
1986, P125.00 per cavan; 1987-1988, P175.00 per cavan; and 1989 and succeeding years, P200.00 per
cavan.

WHEREFORE, the petitions are hereby GRANTED. The decision of the Court of Appeals under
review is hereby REVERSED AND SET ASIDE. The case is REMANDED to the Regional Trial Court of
Negros Occidental, Branch 61 for petitioners and private respondents Cari-an or their successors-in-
interest to determine exactly which 1/2 portion of Lot Nos. 1616 and 1617 will be owned by each party, at
the option of petitioners. The trial court is DIRECTED to order the issuance of the corresponding
certificates of title in the name of the respective parties and to resolve the matter of rental payments of the
land not delivered to the Chua spouses subject to the rates specified above with legal interest from date
of demand.