THE HEIRS OF PEDRO ESCANLAR ET AL V. CA 281 SCRA 176 Victoriana as buyers of Victorianas share.

In 1982, the
(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 Cari-an 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
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.

4. Escanlar and Holgado, the vendees, were concurrently ISSUE: WON the non-happening of a condition affects the
the lessees of the subject property. In a deed of agreement validity of the contract itself
executed by both parties confirming and affirming the
HELD: No, the non-happening of a condition only affects the
contract of sale, they stipulated the following:
effectivity and not the validity of the contract.
a. That the balance of the purchase price (P225,000) shall
Under Art 1318 Civil Code, the essential requisites of a
be paid on or before May 1979
contract are: consent of the contracting parties; object
b. Pending complete payment thereof, the vendees shall certain which is the subject matter of the contract and
not assign, sell, lease or mortgage the rights, interests and cause of the obligation which is established. Absent one
participation thereof of the above, no contract can arise. Conversely, where all
are present, the result is a valid contract. However, some
c. In the event of nonpayment of the balance of said
parties introduce various kinds of restrictions or
purchase price, the sum of P50,000 (down payment) shall
modalities, the lack of which will not, however, affect the
be deemed as damages
validity of the contract.
5. Escanlar and Holgado were unable to pay the individual
In the instant case, the Deed of Sale, complying as it does
shares of the Cari-an heirs, amounting to P55,000 each, on
with the essential requisites, is a valid one. However, it did
the due date. However, said heirs received at least 12
not bear the stamp of approval of the court. The contracts
installment payments from Escanlar and Holgado after May validity was not affected for in the words of the stipulation,
1979. Rodolfo was fully paid by June 1979, Generosa
this Contract of Sale of rights, interests and
Martinez, Carmen and Fredisminda were likewise fully
participations shall become effective only upon the
compensated for their individual shares. The minors share
approval by the Honorable Court In other words, only
was deposited with the RTC in September 1982.
the effectivity and not the validity of the contract is
6. Being former lessees, Escanlar and Holgado continued affected.
in possession of Lots 1616 and Lots 1617. Interestingly, they
continued to pay rent based on their lease contract.
CONTRACT TO SELL VS. CONTRACT TO SALE
7. Subsequently, Escanlar and Holgado sought to
intervene in the probate proceedings of Guillermo and
In contracts to sell, ownership is retained by the seller and CONTRACTUAL STIPULATIONS CONSIDERED LAW BETWEEN
is not to pass until the full payment of the price. Such PARTIES; EXCEPTION: CONTEMPORANEOUS ACTS OF
payment is a positive suspensive condition, the failure of PARTIES
which is not a breach of contract but simply an event that
As a general rule, the pertinent contractual stipulation
prevented the obligation of the vendor to convey title from
(requiring court approval) should be considered as the law
acquiring binding force. To illustrate, although a deed of
between the parties. However, the presence of two factors
conditional sale is denominated as such, absent a proviso
militates against this conclusion:(1) the evident intention of
that title to the property sold is reserved in the vendor until
the parties appears to be contrary to the mandatory
full payment of the purchase price nor a stipulation giving
character of said stipulation. Whoever crafted the
the vendor the right to unilaterally rescind the contract the
document of conveyance, must have been of the belief
moment the vendee fails to pay within a fixed period, by its
that the controversial stipulation was a legal requirement
nature, it shall be declared a deed of absolute sale.
for the validity of the sale. But the contemporaneous and
In a contract of sale, the non-payment of the price is a subsequent acts of the parties reveal that the original
resolutory condition which extinguishes the transaction objective of the parties was to give effect to the deed of sale
that, for a time, existed and discharges the obligations even without court approval.
created thereunder. The remedy of an unpaid seller in a
contract of sale is to seek either specific performance or
rescission. Receipt and acceptance of the numerous installments on
the balance of the purchase price by the Cari-ans, although
In the case at bar, the sale of rights, interests and
the period to pay the balance of the purchase price expired
participation as to portion pro indiviso of the 2 subject
in May 1979, and leaving Escanlar and Holgado in
lots is a contract of salefor the reasons that (1) the sellers
possession of Lots 1616 and 1617 reveal their intention to
did not reserve unto themselves the ownership of the
effect the mutual transmission of rights and obligations. The
property until full payment of the unpaid balance of
Cari-ans did not seek judicial relief until late 1982 or three
P225,000.00; (2) there is no stipulation giving the sellers
years later;(2) the requisite approval was virtually
the right to unilaterally rescind the contract the moment
rendered impossible by the Cari-ans because they
the buyer fails to pay within the fixed period.
opposed the motion for approval of the sale filed by
NEED OF PROBATE COURTS APPROVAL EXISTS WHERE Escanlar and Holgado, and sued the latter for the
SPECIFIC PROPERTIES OF THE ESTATE ARE SOLD AND NOT cancellation of that sale. Having provided the obstacle and
WHEN IDEAL AND INDIVISIBLE SHARES OF AN HEIR ARE the justification for the stipulated approval not to be
DISPOSED OF granted, the Cari-ans should not be allowed to cancel their
first transaction with Escanlar and Holgado because of lack
The need for approval by the probate court exists only of approval by the probate court, the lack of which is of their
where specific properties of the estate are sold and not
own making.
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.