G.R. No. L-11835; October 30, 1958
Fernando Hermosa, Jr., as Judicial Administrator of the Intestate Estate of the deceased, Fernando Hermosa, Sr., plaintiff-appellant, vs. Alfonso Zobel y Roxas, defendant-appellee.

FACTS

Fernando Hermosa, Sr. owned real estate in San Sebastian, Spain, inherited from his parents. Upon his death on December 19, 1944, intestate proceedings were instituted in Samar. His heirs were his daughter Luz Hermosa (appointed administratrix) and his grandson, Fernando Hermosa, Jr. The probate court granted the administratrix permission to sell the Spanish property. After failed attempts at public auction and private sale, the heirs approached Alfonso Zobel as a buyer. Zobel was unwilling to negotiate with the heirs directly or through a judicial process. To facilitate the sale, the heirs, Luz and Fernando Jr., executed a deed of cession and adjudication on November 18, 1947, transferring the property solely to Luz Hermosa. They jointly petitioned the probate court, which approved the deed on November 21, 1947. Subsequently, Luz Hermosa, now the sole owner, negotiated with Zobel. They agreed on a real sale price of P20,000. However, to protect Zobel’s investment from a Spanish legal right of repurchase by the lessee (which could be exercised at an official exchange rate), the deed of sale executed on December 10, 1947, stated a price of P80,000. To avoid tax implications for the vendor on the inflated price, a memorandum was made stating that P60,000 had been received during the Japanese occupation (1942-1944), with the remaining P20,000 paid in installments, completed by April 27, 1948. Luz Hermosa died on December 26, 1953. Fernando Hermosa, Jr. was appointed administrator in her place. Upon discovering the deed showed an P80,000 price but only P20,000 was reported to the court, Fernando Jr., as judicial administrator of Fernando Hermosa, Sr.’s estate, demanded from Zobel the alleged P60,000 balance. Upon Zobel’s refusal, he filed this action on May 28, 1954, seeking specific performance or rescission of the sale, plus damages.

ISSUE

1. Whether Fernando Hermosa, Jr., in his capacity as judicial administrator of the estate of Fernando Hermosa, Sr., has the legal capacity or personality to bring an action for specific performance or rescission of the sale executed by Luz Hermosa (in her personal capacity) in favor of Alfonso Zobel.
2. Whether the deed of cession and adjudication executed by Fernando Hermosa, Jr. (then a minor) in favor of Luz Hermosa is valid.
3. Whether the action for rescission, if available, has prescribed.

RULING

1. No, the plaintiff lacks capacity to sue. The action was instituted by Fernando Hermosa, Jr. as administrator of the estate of Fernando Hermosa, Sr. The property subject of the sale, however, had already been adjudicated solely to Luz Hermosa by virtue of the court-approved deed of cession. Therefore, the property ceased to be part of Fernando Hermosa, Sr.’s estate. The sale was executed by Luz Hermosa in her personal capacity. Consequently, the only parties with interest to challenge that sale would be the administrator of Luz Hermosa’s own estate or her heirs, none of whom are parties to this case (citing Article 1311 of the New Civil Code).
2. The deed of cession is valid, and the plaintiff is estopped from challenging it. The Court rejected the contention that the cession was void due to Fernando Jr.’s minority at the time (he was 20 years, 11 months, and 3 days old). Citing Mercado vs. Espiritu, the Court held that sales by minors near the age of majority are valid and cannot be annulled. Furthermore, Fernando Jr. and Luz Hermosa jointly petitioned the probate court for approval of the cession, explaining the reasons for it, and the court granted its approval. By seeking and obtaining court approval, Fernando Jr. is estopped from later disputing its validity. The Court also noted that in a prior affidavit, Fernando Jr. had represented himself as being of legal age.
3. Yes, the action for rescission has prescribed. Assuming, for argument’s sake, that Fernando Hermosa, Jr. had a right to seek rescission, such action has already prescribed. He attained majority on January 7, 1948. Under Article 1389 of the New Civil Code, an action for rescission based on incapacity prescribes in four years from the removal of the incapacity. The present action was filed on May 28, 1954, which is more than four years after he reached the age of majority.
DISPOSITIVE PORTION:
The decision of the lower court dismissing the complaint is AFFIRMED. However, the award of moral damages (P1,000) and attorney’s fees (P500) to the defendant is DELETED, as the Court found the plaintiff’s filing of the action was not done in bad faith or with deliberate intent to harass, but rather based on a belief (though mistaken) that a balance was owed. No pronouncement as to costs.