G.R. No. 570 : January 23, 1903
ROBERTO ROA Y ALBURO, plaintiff-appellee, vs. NICASIO VELOSO, defendant-appellant.

FACTS:
In March 1876, Don Antonio Roa petitioned the Court of First Instance of Cebu for an extension to pay his debts. His creditors, in a meeting called for the purpose, accepted his written proposition, which was subsequently approved by the court. The proposition provided for a five-year extension, with Don Antonio Samson acting as guarantor and administrator of Roa’s property. All property of both Roa and Samson was mortgaged to secure the obligations. Clause 6 of the proposition stated that Samson could acquire any of Roa’s property for himself at two-thirds of its appraised value and, as owner, could convey or mortgage it, but would be liable to the creditors for the amount; any surplus after paying the guaranteed credits would belong to Roa.

Upon Roa’s death in February 1886, Samson, by a public instrument dated May 19, 1886, conveyed a specific estate (originally belonging to Roa and appraised at $24,809.64) to the defendant, Nicasio Veloso. The purchase price was set off against a debt Veloso owed to Roa, which by then amounted to $4,800.

In 1896, the plaintiff, Roberto Roa y Alburo, a grandson and heir of Don Antonio Roa, filed an action seeking to annul the 1886 conveyance and recover the estate for himself and his co-heirs. The trial court annulled the conveyance, ordered the cancellation of its inscription, and directed the estate to be delivered to the creditors. The defendant appealed.

ISSUE:
Whether the conveyance of the estate by Don Antonio Samson to the defendant, Nicasio Veloso, in 1886 was valid and sufficient to transfer title, based on the proper construction of Clause 6 of the proposition approved in the 1876 debt extension proceedings.

RULING:
The Supreme Court REVERSED the judgment of the lower court and DISMISSED the action.

The Court construed Clause 6 as consisting of two distinct parts. The first part gave Samson the right to purchase any of Roa’s property for himself at two-thirds of its appraised value. The second part, separate and complete in itself, granted Samson, as administrator, the right to sell any of the property as owner, accounting to the creditors for the price received. The Court rejected the appellee’s contention that the second part was merely a continuation of the first, meaning Samson could only sell property he had first elected to purchase for himself.

The Court based its interpretation on three main reasons:
1. Adopting the appellee’s construction would render the second part of the clause superfluous, as Samson would already have the right to dispose of property he had lawfully purchased and paid for.
2. The phrase “su importe” (its amount) in the clause, referring to Samson’s liability to the creditors, is inconsistent with the appellee’s view. If it referred to the purchase price under the first part, it would be unnecessary; if it referred to a sale price to a third party, it would nullify Samson’s right to purchase for himself, as he would have to account for the full sale proceeds regardless.
3. The clause providing for any surplus to be returned to Roa indicated that the property was not to be kept intact but could be sold by Samson to pay the debts.

The Court found that the 1886 conveyance was executed by Samson in his capacity as administrator and liquidator, availing himself of the authority under Clause 6. As such, he had the right to dispose of the estate, and the conveyance was sufficient to transfer title to the defendant. While the plaintiff or creditors might have rights to demand an accounting from Samson’s heirs regarding the administration, no such rights could be asserted against the defendant, who was declared the lawful owner of the property.