G.R. No. 119777 & G.R. No. 120690 October 23, 1997
THE HEIRS OF PEDRO ESCANLAR, FRANCISCO HOLGADO and the SPOUSES DR. EDWIN A. JAYME and ELISA TAN-JAYME, petitioners, vs. THE 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, FREDISMINDA CARI-AN, the SPOUSES PAQUITO CHUA and NEY SARROSA-CHUA and THE REGISTER OF DEEDS OF NEGROS OCCIDENTAL, respondents.

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. Victoriana Cari-an was succeeded by her nephew, Gregorio Cari-an. After Gregorio died, his wife Generosa Martinez and their children (Rodolfo, Carmen, Leonardo, and Fredisminda Cari-an) were adjudged as heirs by representation to Victoriana’s estate. 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, Lot Nos. 1616 and 1617, formed part of the estate of Nombre and Cari-an. On September 15, 1978, Gregorio Cari-an’s heirs (private respondents Cari-an) executed a Deed of Sale of Rights, Interests and Participation over their one-half pro-indiviso share in the lots in favor of petitioners Pedro Escanlar and Francisco Holgado (who were concurrently the lessees) for P275,000.00. The deed stipulated it would become effective only upon court approval. A separate Deed of Agreement executed on the same date stated that petitioners paid P50,000.00, with the balance of P225,000.00 to be paid on or before May 1979, and failure to pay would result in cancellation of the sale with the P50,000.00 deemed as damages. Petitioners failed to pay the balance by May 31, 1979, but private respondents subsequently received at least 12 installment payments thereafter, with Rodolfo, Generosa, Carmen, and Fredisminda being fully paid for their individual shares, and the minor Leonell’s share being deposited with the court. Petitioners, as former lessees, remained in possession. On September 21, 1982, private respondents Cari-an, along with some heirs of Guillermo Nombre, sold their shares in eight parcels, including the subject lots, to spouses Paquito Chua and Ney Sarrosa Chua for P1,850,000.00. This sale was later approved by the probate court. Private respondents Cari-an then filed a case for cancellation of the 1978 sale against petitioners, alleging non-payment. Petitioners, in turn, sold their rights to the lots to spouses Dr. Edwin Jayme and Elisa Tan-Jayme on April 20, 1983. The probate court later closed the intestate estate, noting all properties had been disposed of by the heirs. The trial court nullified the 1978 sale for lack of court approval and full payment, upholding the 1982 sale to the Chuas. The Court of Appeals affirmed this decision.

ISSUE

Whether the Deed of Sale of Rights, Interests and Participation executed on September 15, 1978, by the heirs of Gregorio Cari-an in favor of petitioners Escanlar and Holgado is valid and enforceable.

RULING

No. The Supreme Court affirmed the decision of the Court of Appeals, declaring the September 15, 1978 Deed of Sale null and void. The Court held that the sale was subject to a suspensive condition—the approval of the probate court—as expressly stipulated in the deed itself. This condition was not fulfilled; the probate court never approved the sale. Consequently, the contract did not become effective. Furthermore, the Court found that the vendors (the Cari-an heirs) had effectively rescinded the contract due to the vendees’ failure to pay the balance by the stipulated deadline of May 31, 1979. While payments were accepted thereafter, these were merely installments on the outstanding balance and did not constitute a waiver of the right to rescind, especially since the vendors subsequently filed an opposition to the motion for court approval of the sale and later sold the property to the Chuas, acts which were inconsistent with an intention to continue with the first sale. The subsequent sale to the Chuas, which received court approval, was upheld. The Court also noted that the nature of the property sold was the vendors’ hereditary rights, not the physical property itself, and the sale of such rights by an heir does not require prior court approval to be valid. However, the enforceability of the contract in this case was defeated by the unfulfilled suspensive condition and the valid rescission by the vendors.