Agabbao v. CA
G.R. No. 146006. February 23, 2004
Dr. Juvencio P. Ortañez incorporated the Philippine International Life Insurance
Company, Inc. on July 6, 1956. At the time of the company’s incorporation, Dr. Ortañez
owned ninety percent (90%) of the subscribed capital stock.
On July 21, 1980, Dr. Ortañez died. He left behind a wife, three legitimate
children and five illegitimate children.
It appears that several years before (but already during the pendency of the
intestate proceedings, Juliana Ortañez and her two children, Special Administrators
Rafael and Jose Ortañez, entered into a memorandum of agreement for the
extrajudicial settlement of the estate of Dr. Juvencio Ortañez, partitioning the estate
(including the Philinterlife shares of stock) among themselves. This was the basis of the
number of shares separately sold by Juliana Ortañez on April 15, 1989 (1,014 shares)
and by Jose Ortañez on October 30, 1991 (1,011 shares) in favor of herein petitioner
FLAG.
ISSUE: Whether the decedent’s heir could dispose of the specific properties belonging
to decedent’s estate without approval of the intestate court.
NO.The Court held that Juliana Ortañez, and her three sons, Jose, Rafael and
Antonio, all surnamed Ortañez, invalidly entered into a memorandum of agreement
extrajudicially partitioning the intestate estate among themselves, despite their
knowledge that there were other heirs or claimants to the estate and before final
settlement of the estate by the intestate court. Since the appropriation of the estate
properties by Juliana Ortañez and her children was invalid, the subsequent sale thereof
by Juliana and Jose to a third party (FLAG), without court approval, was likewise void.
An heir can sell his right, interest, or participation in the property under
administration under Art. 533 of the Civil Code which provides that possession of
hereditary property is deemed transmitted to the heir without interruption from the
moment of death of the decedent. However, an heir can only alienate such portion of
the estate that may be allotted to him in the division of the estate by the probate or
intestate court after final adjudication, that is, after all debtors shall have been paid or
the devisees or legatees shall have been given their shares. This means that an heir
may only sell his ideal or undivided share in the estate, not any specific property therein.
In the present case, Juliana Ortañez and Jose Ortañez sold specific properties of the
estate (1,014 and 1,011 shares of stock in Philinterlife) in favor of petitioner FLAG. This
they could not lawfully do pending the final adjudication of the estate by the intestate
court because of the undue prejudice it would cause the other claimants to the estate,
as what happened in the present case.
Juliana Ortañez and Jose Ortañez sold specific properties of the estate, without
court approval. It is well-settled that court approval is necessary for the validity of any
disposition of the decedent’s estate.
