G.R. No. L-41847 December 12, 1986
CATALINO LEABRES, petitioner, vs. COURT OF APPEALS and MANOTOK REALTY, INC., respondents.

FACTS

Catalino Leabres purchased a subdivision lot in May 1950 from Vicente Legarda, the surviving spouse and later special administrator of the estate of Clara Tambunting de Legarda, making a partial payment of P1,000.00 evidenced by a receipt. The estate was subsequently placed under probate court jurisdiction. The court-authorized administrator, Philippine Trust Company, later sold the entire subdivision, including the lot Leabres claimed, at a public auction. Manotok Realty, Inc. was the winning bidder, and the sale was judicially approved in 1959, leading to the issuance of new titles in its name. Leabres, who remained in possession, filed a complaint in 1966 to quiet title and recover possession.
During the proceedings, Leabres failed to appear at a scheduled hearing. The trial court dismissed his complaint for failure to prosecute and proceeded to resolve Manotok’s counterclaim for ejectment and damages based on evidence already presented. Leabres moved for reconsideration, arguing he was denied his day in court, but this was denied. The Court of Appeals affirmed the trial court’s decision ordering Leabres to vacate the property, pay monthly rental compensation, and cover attorney’s fees.

ISSUE

The primary issues were: (1) whether Leabres was denied due process when his complaint was dismissed and the counterclaim resolved; (2) whether the receipt constituted a valid and enforceable contract of sale binding on the estate; and (3) whether Leabres was a possessor in good faith.

RULING

The Supreme Court denied the petition and affirmed the assailed judgment. On procedural due process, the Court held that the dismissal of the complaint for failure to prosecute under Rule 17, Section 3 was within the trial court’s discretion, with no abuse shown. Leabres had filed an answer to the counterclaim, so a declaration of default was unnecessary, and he was represented by counsel at a prior hearing, thus receiving his day in court.
On the substantive issue, the Court ruled the receipt dated May 2, 1950, did not constitute a valid contract of sale. It lacked essential requisites: there was no stated total purchase price, no agreement on installment terms, and thus no meeting of the minds on a determinate subject matter for a price certain. Furthermore, the sale by Legarda was executed without probate court approval at a time when the estate was already under custodia legis. Such an unauthorized sale could not bind the estate. Leabres’s proper recourse was to present his claim to the probate court for inclusion and approval, which he failed to do.
Finally, Leabres could not be considered a possessor in good faith. Manotok’s title was registered under the Torrens system. Leabres’s continued possession after the judicial sale and issuance of a new title to Manotok, despite knowledge of these proceedings, constituted gross negligence, precluding a claim of good faith.