G.R. No. 108947 September 29, 1997
ROLANDO SANCHEZ, FLORIDA MIERLY SANCHEZ, ALFREDO T. SANCHEZ and MYRNA T. SANCHEZ, petitioners, vs. THE HONORABLE COURT OF APPEALS, ROSALIA S. LUGOD, ARTURO S. LUGOD, EVELYN LUGOD-RANISES and ROBERTO S. LUGOD, respondents.

FACTS

Maria Villafranca died on September 29, 1967. Her daughter, Rosalia S. Lugod, filed a petition for letters of administration over her mother’s estate and the estate of her father, Juan C. Sanchez, who was senile. Juan C. Sanchez died on October 21, 1968. The illegitimate children of Juan C. Sanchez (petitioners Rolando, Florida Mierly, Alfredo, and Myrna, all surnamed Sanchez) filed a petition for letters of administration over his intestate estate, which was opposed by Rosalia. On October 30, 1969, Rosalia and the petitioners, assisted by counsel, executed a compromise agreement to divide the properties of Juan C. Sanchez. This was modified by a memorandum of agreement on April 13, 1970. Years later, the petitioners filed motions in the trial court seeking, among others, annulment of the compromise agreement on the ground of fraud. The trial court, in a decision dated June 26, 1991, declared the compromise agreement ineffective for lack of court approval, nullified certain deeds of sale executed by Juan C. Sanchez and Maria Villafranca in favor of Rosalia and her children as simulated and fictitious, ordered the partition of the estates, and awarded damages and attorney’s fees against Rosalia. The trial court later declared its decision final and executory. Rosalia and her children (private respondents) filed a petition for certiorari with the Court of Appeals, which granted the petition. The Court of Appeals annulled the trial court’s decision and orders, declared the compromise agreement valid and binding even without court approval, and deemed the special proceedings closed.

ISSUE

1. Whether a petition for certiorari, in lieu of appeal, is the proper remedy to correct orders of a probate court nullifying deeds of sale and passing upon title to properties.
2. Whether a compromise agreement partitioning inherited properties is valid even without the approval of the trial court hearing the intestate estate.

RULING

1. Yes, certiorari was the proper remedy. The trial court, in nullifying the deeds of sale and declaring them simulated, effectively passed upon the ownership of the properties, which is beyond its jurisdiction as a probate court limited to matters of settlement and administration. This constituted grave abuse of discretion amounting to lack or excess of jurisdiction, correctible by certiorari. Furthermore, the private respondents were denied due process as the vendees (Arturo, Evelyn, and Roberto Lugod) were not parties to the intestate proceedings, and the trial court annulled the deeds without affording them their day in court.
2. Yes, the compromise agreement is valid and binding even without court approval. The approval of the probate court is not a requirement for the validity of a compromise agreement among heirs over the inheritance. Such an agreement is a contract recognized under the Civil Code, and its validity is determined by the law on contracts, not by the Rules of Court on compromise judgments. The agreement was executed by the parties with the assistance of their respective counsels, and there was no showing it was contrary to law, morals, good customs, public order, or public policy. The trial court therefore erred in disregarding it for lack of approval. The Court of Appeals correctly declared the agreement valid and binding.