Topic: RULE 90, Settlement of Estate - Transmission of Property Prior the Approval of Probate Court

Case Title: Spouses Salitico vs. Felix

DOCTRINE

There is no legal bar to an heir disposing of his/her hereditary share immediately after such death.

While an heir may dispose and transfer his/her hereditary share to another person, before the transferee may compel the issuance of
a new certificate of title covering specific property in his/her name, a final order of distribution of the estate or the order in
anticipation of the final distribution issued by the testate or intestate court must first be had.

FACTS

By virtue of a document entitled Huling Habilin ni Amanda H. Burgos dated May 7, 1986, the subject property was inherited by the
niece of Amanda, Resurreccion, as a devisee. Thereafter, Resurreccion, as the new owner of the subject property, executed a
document entitled Bilihang Tuluyan ng Lupa dated November 10, 1998, which transferred ownership over the parcel of land in favor
of the petitioners Sps. Salitico. The latter then took possession of said property.

Subsequently, a proceeding for the probate of the Huling Habilin was undertaken before the RTC, Branch 22 (Probate Court). The
Huling Habilin was filed and presented before the Probate Court, which approved it on February 6, 2008. The Probate Court likewise
issued a Certificate of Allowance on January 12, 2009.

On March 9, 2010, the petitioners Sps. Salitico received a demand letter requiring them to vacate the subject property and surrender
possession over it to the respondent heirs. To protect their interest over the subject property, the petitioners Sps. Salitico executed an
Affidavit of Adverse Claim dated March 1 fi, 2009, which was however denied registration by the respondent RD on November 3,
2009.

On June 6, 2014, the RTC rendered its Decision dismissing the Complaint for lack of cause of action. RTC found that Resurreccion
had indeed validly sold the subject property which she inherited from Amanda to the petitioners Sps. Salitico. Nevertheless, the
RTC held that the action filed by the petitioners Sps. Salitico is premature on the ground that it was not shown that the Probate
Court had already fully settled the Estate of Amanda, even as it was not disputed that the Huling Habilin had already been allowed
and certified.

On appeal, the CA likewise dismissed the case citing Sec. 1, Rule 75 of the Rules of Court which states that no will shall pass either
real or personal estate unless it is proved and allowed in the proper court. The CA also cited Sec. 1 of Rule 90, which states that no
distribution shall be allowed until the payment of debts, funeral charges, and expenses of administration, allowance to the widow,
and inheritance tax have been made, unless the distributees or any of them give a bond in a sum fixed by the court conditioned on
the payment of the said obligations.

ISSUE

1. Was the Court of Appeals correct in affirming RTC’s decision which dismissed petitioner’s complaint for lack of cause of action?
2. May the petitioner compel the Register of Deeds to cancel OCT P-1908 and issue a new title in the name of the petitioners?

HELD

1. NO. Article 777 of the New Civil Code, which is substantive law, states that the rights of the inheritance are transmitted from the
moment of the death of the decedent. Article 777 operates at the very moment of the decedent's death--meaning that the
transmission by succession occurs at the precise moment of death and, therefore, at that precise time, the heir is already legally
deemed to have acquired ownership of his/her share in the inheritance, "and not at the time of declaration of heirs, or partition, or
distribution." Thus, there is no legal bar to an heir disposing of his/her hereditary share immediately after such death.

Therefore, as a consequence of the valid contract of sale entered into by the parties, Resurreccion had the obligation to deliver the
subject property to the petitioners Sps. Salitico. Considering that a valid sale has been entered into in the instant case, there is no
reason for the respondent heirs to withhold from the petitioners Sps. Salitico the owner's duplicate copy of OCT P-1908. To reiterate,
Resurreccion already sold all of her interest over the subject property to the petitioners Sps. Salitico. Therefore, the respondent heirs
have absolutely no rhyme nor reason to continue possessing the owner's duplicate copy of OCT P-1908.
2. NO. According to Section 92 of P.D. 1529 (Property Registration Decree), with respect to the transfer of properties subject of testate
or intestate proceedings, a new certificate of title in the name of the transferee shall be issued by the Register of Deeds only upon the
submission of a certified copy of the partition and distribution, together with the final judgment or order of the court approving the
same or otherwise making final distribution, supported by evidence of payment of estate tax or exemption therefrom, as the case
may be.

Further, under Section 91 of P.D. 1529, even without an order of final distribution from the testate/intestate court and in anticipation
of a final distribution of a portion or the whole of the property, the Register of Deeds may be compelled to issue the corresponding
certificate of title to the transferee only when the executor/administrator of the estate submits a certified copy of an order from the
court having jurisdiction of the testate or intestate proceedings directing the executor/administrator to transfer the property to the
transferees.

The aforementioned sections of P.D. 1529 are in perfect conjunction with Sec. 1, Rule 90 of the Rules of Court, which states that the
actual distribution of property subject to testate or intestate proceedings, i.e. the issuance of a new title in the name of the
distributees, shall occur only when the debts, funeral charges, and expenses of administration, the allowance to the widow, and
inheritance tax, if any, chargeable to the estate, have been paid. Only then can the testate or intestate court assign the residue of the
estate to the persons entitled to the same.

Under Sec. 1 of Rule 90, the testate or intestate court may also order the distribution of the property pending the final order of
distribution if the distributees give a bond in a sum fixed by the court conditioned upon the payment of the aforesaid obligations
within such time as the court directs, or when provision is made to meet those obligations.

Hence, under the applicable provisions of P.D. 1529 and the Rules of Court, it is only upon the issuance by the testate or intestate
court of the final order of distribution of the estate or the order in anticipation of the final distribution that the certificate of title
covering the subject property may be issued in the name of the distributees.

Reading Article 777 of the Civil Code together with the pertinent provisions of P.D. 1529 and the Rules of Court, while an heir may
dispose and transfer his/her hereditary share to another person, before the transferee may compel the issuance of a new certificate
of title covering specific property in his/her name, a final order of distribution of the estate or the order in anticipation of the final
distribution issued by the testate or intestate court must first be had.

NOTES

WHEREFORE, the appeal is hereby PARTIALLY GRANTED . The Decision dated October 19, 2017 and Resolution dated June 7,
2018 of the Court of Appeals Twelfth Division and Former Special Twelfth Division, respectively, in CA-G.R. CV No. 105166 are
PARTIALLY REVERSED. Judgment is hereby rendered ordering the respondents Heirs of Resurreccion Martinez Felix to DELIVER
the owner's duplicate copy of Owner's Certificate of Title No. P-1908 to the petitioners Sps. Salitico.

With respect to the petitioners Sps. Salitico's prayer compelling the Register of Deeds to cancel OCT P-1908 and issue a new
certificate of title in their favor, for the reasons stated above, the said prayer is DENIED.
Justice Caguioa Cases (Special Proceedings and SCA)|3G & 3D | A.Y. 2019 - 2020