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THE HEIRS OF PEDRO ESCANLAR ET AL V.

CA 281 SCRA 176 (1997)


FACTS: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924
and 1938, respectively. Nombres heirs include his nephews and grandnephews.
Victoriana was succeeded by her late brothers son, Gregorio Cari-an.
1. After Gregorios death in 1971, his wife, Generosa Martinez and children (Rodolfo,
Carmen, Leonardo and Fredisminda) were adjudged as heirs by representation to
Victorianas estate. Leonardo passed away, leaving his widow, Nelly Chua vda. de Carian and minor Leonell as his heirs
2. 2 parcels of land, denominated by Lot 1616 and 1617, formed part of the estate of
Guillermo Nombre and Victoriana Cari-an.
3. In 1978, Gregorios heirs executed a deed of sale of rights, interests and participation in
favor of Pedro Escanlar and Francisco Holgado over the undivided share of
Victoriana for P275,000 to be paid to the heirs, except the share of the minor Leonell
Cari-an which shall be deposited to the Municipal Treasurer. Said contract of sale will
be effective only upon approval of CFI
4. Escanlar and Holgado, the vendees, were concurrently the lessees of the subject
property. In a deed of agreement executed by both parties confirming and affirming the
contract of sale, they stipulated the following:
a. That the balance of the purchase price (P225,000) shall be paid on or before May 1979
b. Pending complete payment thereof, the vendees shall not assign, sell, lease or
mortgage the rights, interests and participation thereof
c. In the event of nonpayment of the balance of said purchase price, the sum of P50,000
(down payment) shall be deemed as damages
5. Escanlar and Holgado were unable to pay the individual shares of the Cari-an heirs,
amounting to P55,000 each, on the due date. However, said heirs received at least 12
installment payments from Escanlar and Holgado after May 1979. Rodolfo was fully
paid by June 1979, Generosa Martinez, Carmen and Fredisminda were likewise fully
compensated for their individual shares. The minors share was deposited with the RTC
in September 1982.
6. Being former lessees, Escanlar and Holgado continued in possession of Lots 1616 and
Lots 1617. Interestingly, they continued to pay rent based on their lease contract.
7. Subsequently, Escanlar and Holgado sought to intervene in the probate proceedings of
Guillermo and Victoriana as buyers of Victorianas share. In 1982, the probate court
approved the motion filed by the heirs of Guillermo and Victoriana to sell their respective
shares in the estate. Thereafter, the Cari-ans, sold their shares in 8 parcels of land
including lots 1616 and 1617 to spouses Chua for P1.85 million.
8. The Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado
alleging the latters failure to pay the balance of the purchase price on the stipulated
date and that they only received a total of P132,551 in cash and goods.
9. Escanlar and Holgado averred that the Cari-ans, having been paid, had no right to resell
the subject lots and that the spouses Chua were purchasers in bad faith.
10. The trial court held in favor of the heirs of Cari-an citing that the sale between the
Cari-ans and Escanlar is void as it was not approved by the probate court which
was required in the deed of sale.

11. CA affirmed the same and cited that the questioned deed of sale of rights is a contract
to sell because it shall become effective only upon approval by the probate court and
upon full payment of the purchase price.
ISSUE: WON the non-happening of a condition affects the validity of the contract itself
HELD: No, the non-happening of a condition only affects the effectivity and not the
validity of the contract.
Under Art 1318 Civil Code, the essential requisites of a contract are: consent of the
contracting parties; object certain which is the subject matter of the contract and
cause of the obligation which is established. Absent one of the above, no
contract can arise. Conversely, where all are present, the result is a valid
contract. However, some parties introduce various kinds of restrictions or
modalities, the lack of which will not, however, affect the validity of the contract.
In the instant case, the Deed of Sale, complying as it does with the essential
requisites, is a valid one. However, it did not bear the stamp of approval of the
court. The contracts validity was not affected for in the words of the stipulation, this
Contract of Sale of rights, interests and participations shall become effective only upon
the approval by the Honorable Court In other words, only the effectivity and not
the validity of the contract is affected.
CONTRACT TO SELL VS. CONTRACT TO SALE
In contracts to sell, ownership is retained by the seller and is not to pass until the full
payment of the price. Such payment is a positive suspensive condition, the failure of
which is not a breach of contract but simply an event that prevented the obligation of the
vendor to convey title from acquiring binding force. To illustrate, although a deed of
conditional sale is denominated as such, absent a proviso that title to the property sold
is reserved in the vendor until full payment of the purchase price nor a stipulation giving
the vendor the right to unilaterally rescind the contract the moment the vendee fails to
pay within a fixed period, by its nature, it shall be declared a deed of absolute sale.
In a contract of sale, the non-payment of the price is a resolutory condition which
extinguishes the transaction that, for a time, existed and discharges the obligations
created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either
specific performance or rescission.
In the case at bar, the sale of rights, interests and participation as to portion
pro indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the
sellers did not reserve unto themselves the ownership of the property until full
payment of the unpaid balanceof P225,000.00; (2) there is no stipulation giving
the sellers the right to unilaterally rescind the contract the moment the buyer fails
to pay within the fixed period.
NEED OF PROBATE COURTS APPROVAL EXISTS WHERE SPECIFIC
PROPERTIES OF THE ESTATE ARE SOLD AND NOT WHEN IDEAL AND
INDIVISIBLE SHARES OF AN HEIR ARE DISPOSED OF

The need for approval by the probate court exists only where specific properties of the
estate are sold and not when only ideal and indivisible shares of an heir are disposed
of. In 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. The probate courts approval is necessary for
the validity of any disposition of the decedents 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. It must be recalled
that during the period of indivision of a decedents 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.
CONTRACTUAL STIPULATIONS CONSIDERED LAW BETWEEN PARTIES;
EXCEPTION: CONTEMPORANEOUS ACTS OF PARTIES
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
militates against this conclusion: (1) the evident intention of the parties appears to
be contrary to the mandatory character of said stipulation. 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, although the period to pay the balance of the purchase price
expired in May 1979, and leaving Escanlar and Holgado in possession of Lots 1616 and
1617 reveal their intention to effect the mutual transmission of rights and obligations.
The Cari-ans did not seek judicial relief until late 1982 or three years later; (2) the
requisite approval was virtually rendered impossible by the Cari-ans because
they opposed the motion for approval of the sale filed by Escanlar and Holgado,
and sued the latter for the cancellation of that sale. Having provided the obstacle
and the justification for the stipulated approval not to be granted, the Cari-ans should
not be allowed to cancel their first transaction with Escanlar and Holgado because of
lack of approval by the probate court, the lack of which is of their own making.