CARMEN PARDO DE TAVERA Y LOPEZ MANZANO, PLAINTIFF AND APPELLEE, VS. EL HOGAR FILIPINO, INC., MAGDALENA ESTATE, INC. AND ERNEST BERG, DEFENDANTS; EL HOGAB FILIPINO, INC. AND MAGD…

A parcel of  land containing an area of 2,784  square meters  as  described in  transfer  certificate  of title No. 36234  issued on 6  September  1930 by  the office  of  the Register of Deeds in and for the City of Manila was registered  in the name of Andres Luna de Pardo de  Tavera, single; Carlos Pardo de Tavera, married to  Belen Ramirez; Gonzales; Maria Audotte  Pardo  de  Tavera  y Ramirez, 3 years of age, single; Roberto Pardo de Tavera y Ramirez, 9 years of age, single; and  Carmen Pardo de Tavera y Lopez  Manzano,  11 years of age,  single  (Exhibit  B). On 6 August 1930  the  co-owners agreed to organize a corporation under the name of  Tavera-Luna, Inc.  for the purpose of building a modern structure on the parcel of land’ and to  that  end they also agreed to accept shares of stock of the corporation to be organized in exchange for their respective shares  in  the parcel of  land  and building erected thereon to be transferred to tfi^f. corporation  (Exhibit  D-2).   On  12  August  1930  the  duly appointed guardian  of the minor Carmen Pardo  de  Tavera y Lopez  Manzano,  mother  of the minor,  filed a petition in the probate court  (Special  Proceeding  No. 34154)  praying for the approval of  the agreement  referred  to  (Exhibit D-2) and  seeking authority to accept shares  of stock of the  corporation  in  exchange for the share of the  minor  in the property (Exhibit D-l).   On 28 August 1930  the probate  court  approved  the agreement in so far as the minor Carmen Pardo de Tavera y Lopez Manzano was concerned and authorized the guardian to  accept the shares  of  stock of the  corporation in exchange for the share of the  minor in, the property (Exhibit E-l).  The Tavera-Luna, Inc., was  actually  incorporated on 14 December 1930 and the guardian of the minor Carmen  Pardo de Tavera y Lopez Manzano transferred  her share.in the  property on  16  January 1931. After the transfer  of  the shares of  the  co-owners in the property, transfer certificate of title No. 36234  (Exhibit B) was cancelled and in lieu thereof transfer certif- icate of titlel No. 37347 ill the name of Tavera-Luna,  Inc. was issued on 23 January  1931  (Exhibit H).  On  17 January 1931  upon application  of the  corporation,  El Hogar  Filipino,  Inc.,  a  loan  and  building  association, granted it a loan of P1,000,000 for the purpose of erecting a concrete building in lieu of  the  wooden building standing thereon.   This  loan was secured by a  first mortgage registered on the certificate. On  11 February 1932  an additional loan of P300.000 was obtained by the corporation from El Hogar Filipino, Inc. secured by a mortgage on the same  property.  The period  of the  first mortgage of P1,000,000 was extended.  Transfer certificate of title No. 37347 in the name of  Tavera-Luna,  Inc. (Exhibit H) was cancelled and  in lieu  thereof transfer certificate of title No. 40177 was issued  on 28 April 1932 in the name of Tavera-Luna, Inc., but the parcel of land was subdivided into several  lots with their respective  description  (Exhibit K).  Again, transfer certificate of title No.  40177 (Exhibit  K)  was  partially cancelled as to one  of the several lots  and transfer  certificate of title No.  41127 was issued in the name of  Tavera-Luna, Inc. on 25 August 1932  (Exhibit  K-l).  Thereafter,  partial cancellations were made of transfer certificate’ of title No. 40177 Exhibit K)  as  to some of the small lots  and transfer certificates  of title Nos. 41128, 43104,  43105, 43107, 43108, 43109 and 7276 were issued in the name of Tavera-Luna, Inc.  The  last certificates  of title  cover small parts of the original parcel  of land.  The larger part of the parcel of  land is described in transfer certificates of title Nos. 40177 (Exhibit K)  and 41127 (Exhibit  K-l).  Not long after the construction of the building known  as “Crystal Arcade” was finished, El  Hogar Filipino, Inc., the mortgagee, took  over the possession  and management of the property to  apply the rents, after deducting management expenses, to  the payment of the mortgagee  debt and on 28 September 1933  the mortgagee  foreclosed the mortgage .extrajudicially and purchased the whole  property at public auction sale  for P1,363,555.37 (Exhibits L and L-l).  The mortgagor having  failed  to redeem  the property,  the mortgagee consolidated its title and  the certificate of title Nos. 40177  (Exhibit K) and 41127  (Exhibit K-l)  in the name of Tavera-Luna,  Inc. were  cancelled and  in lieu thereof transfer certificates of  title Nos. 59596  (Exhibit M),  and 59570  (Exhibit M-l were  issued in the  name of the mortgagee, El Hogar Filipino, Inc. on  12 August 1940.  On 26  August 1943, nearly nine  months after the filing of the  original  complaint  in  this case, El  Hogar Filipino, Inc. .sold the whole property to Magdalena Estate, Inc.  for P1,400,000 in Japanese  war  notes (Exhibit  P). The  certificates  in the  name of  El Hogar Filipino, Inc. Nos. 59569  and  59570 (Exhibits M  and M-l) were cancelled and. lieu thereof transfer  certificates of title  Nos. 67102 and  67103 were issued in  the name of  Magdalena Estate,  Inc. on  26 August 1943   (Exhibits Qiand Q-l). On 22 September 1943 Magdalena Estate, Inc. “sold one third undivided share in the property to Ernest Berg for P466,S66.66  in in Japanese war notes  (Exhibit R).

On 17 November 1942, Carmen  Pardo de Tavera y Lopez Manzano brought an action in the Court of First Instance of Manila to annul the transfer  of her  right,  share and interest in the property made by  her  guardian  to Tavera- Luna, Inc.   However, before judgment could be rendered by the  Court, the battle for liberation of Manila  supervened: and  the record  of the case was destroyed.  After reconstitution  of the record of the  case,  amendment to the pleadings  to  include the Magdalena Estate,  Inc. and Ernest Berg to party-defendants  and trial on the merits, the Court of First Instance of Manila rendered judgment annulling the  order of the  probate court that had granted authority to the guardian of the  plaintiff to transfer her ward’s right, share interest in the parcel of land to Tavera- Luna,  Inc.  and   the transfer  thereof pursuant  thereto; the transfers  of  the ward’s share in the  property  to El Hogar Filipino,  Inc., Magdalena  Estate, Inc.  and Ernest Berg; the certificates of title issued to the transferees in so far as the ward’s share in the  property is  concerned; and ordering cancellation of transfer  certificates issued to the transferees  and  issuance of new  ones in the name of the transferees  and  the plaintiff with the  statement  in  the certificates to be  issued that plaintiff’s share in the property is two-ninths,  free from  any lien or  encumbrance,  and accounting of the income collected by the transferees during the periods of their respective possession of the property and payment or  delivery  thereof  to  the, plaintiff in  so far as her share in the property is  concerned.  The  defendants have appealed.

The point that  the plaintiff’s  action  is barred by  the statute of limitations is no longer urged,  because the plaintiff became  of age and released from guardianship  on 19 November 1940 (Exhibit N-l and 0-1) and the action was brought on 17 November 1942, or  within  the  period provided for in section 579, Act No. 190, which says:

No action for the recovery of any estate sold by a guardian  can be maintained by the “ward, or by any person claiming under him, unless it is commenced within three years next  after the termination of the guardianship,  or, when a legal disability to sue  exists by reason of minority or otherwise, at  the time when  the cause of action accrues, within three years next after  the removal of such disability.

The plaintiff  contends and the trial court  sustained  her claim that the  order of the probate court of  28  August 1930  (Exhibit  E-l) is a  nullity because the provisions of section 569,  Act No. 190, the law then in  force, were not complied with and for that reason  the probate court was without jurisdiction  to  order the transfer of  her share in the property to the corporation to be organized and’ formed.  She  alleges  and argues that as the petition which brought about the entry of the order of the probate court of 28  August 930 was not verified; it did  not  set forth the  condition of  the estate  of the ward  and  the facts and circumstances  upon  which  the  petition  was founded  tending to show  the necessity  or expediency of the sale  (transfer) ; the  Court  did not direct “the next of  kin  to the  ward,  and all  persons  interested in  the estate, to appear before the judge or court, at the time and place therein  specified, not less  than four nor more than eight weeks from the time of making such order, to show cause why an order  should not be granted  for  the sale or  such estate,”  the  order is a  nullity for  lack  of jurisdiction  of the court issuing it.

That  the  probate  court  in guardianship  proceedings No. 34154 entitled “Tutela de la menor  Carmen Pardo de Tavera y Lopez  Manzano,” had  jurisdiction over the petition  filed by the guardian admits  of no boubt.  Only upon the ground  of lack  of  jurisdiction  may  an order entered  by  a court be  assailed collaterally.  If  the court had jurisdiction, -irregularities in the proceedings which would or could invalidate the court’s order may be  assailed directly  by means of an appeal but not collaterally,^[1]  Lack of verification of. a  petition filed  in a probate  court  for the sale of  real property  belonging  to the  estate of a minor is not a jurisdictional defect.^[2]  It should have been attacked directly and  not  collaterally.^[3]   In her petition the guardian alleged that the transfer of her ward’s share in  the property  to the corporation then to be organized would be to  or for her benefit and she expected that the construction  of a new  building would enhance the value of  her ward’s share in the  property and increase  her income (Exhibits D-l and D-2).  No other consideration or motive could have prompted the guardian, mother of the minor, to file the petition.   It is not necessary for a grant of authority  to the guardian to sell the estate of the ward to  state  that the income “is insufficient to maintain the ward and his family or to  maintain or educate the ward when a  minor.”  It is enough,  as the other  alternative of the law provides, that “it appears  to  the satisfaction of the court that it  is for the benefit of the ward that his real  estate or some part thereof should be sold, and the proceeds thereof put  out at  interest, or invested  in some productive security.”^[4]   The petition of the guardian falls  under the last quoted part  of  section 569, Act No. 190.  That part of the section, requiring the probate court to enter an order directing the next of kin to the ward and all persons interested in the estate to appear before the court at a time and place therein specified, was substantially  complied with, because  the  next kin  to  the ward was her own guardian and mother and  all persons interested in the estate of the ward were her uncles and aunt  who  agreed to make the transfer of their respective shares in  the  property to the corporation,  Tavera-Luna, Inc.  Moreover,  “next  of kin” are those whose relationship is such that they are  entitled to share in the estate as distributees.^[5]   There were no creditors to the ward’s  estate.   Notice to “the next  of  kin to  the ward, and  all persons  interested in  the estate,  to  appear  before  the judge or court, at the time  and place therein specified,” was not necessary, because the next  of  kin to the ward and all persons  interested in the estate were  her mother and guardian, uncles and aunt.   Under these  circumstances we  are of  the  opinion  that that  part of the provision of section 569, Act No. 190, has been complied with. Hearing on the  petition, as required in said section does not necessarily mean that witnesses testify  or documents be produced or  exhibited.   If the  court be satisfied that the allegations of the petition are true and the interested persons tor  close  relatives  of the  ward did not  object because they  themselves  were interested in  the  scheme to organize a corporation to  which  all their shares  in the property  were to be  transferred,  the  provisions  of the law on  hearing were also complied with.  The conclusion arrived at renders it unnecessary for us to pass upon the question whether El  Hogar  Filipino,  Inc. was a purchaser for value and in good faith.  Suffice it to say that even if the loan was granted  when the certificate of title was still  in  the name of  the plaintiff and her co-owners,  the  fact  that  the  loan was  applied  for by. an entity that was in the process of organization  and by the same persons  who  were the  registered owners  of  the property, the mortgagee was  entitled to rely upon  the order of the  probate  court  granting authority  to  the guardian to make the transfer of the share of her ward in the property and was not bound to  inquire further to find out  whether there were irregularities  committed  or defects  or vices that would render  the order  null and void.^[1] So  also the question whether  the action  brought by Carlos Pardo de Tavera y Cembrano in his  own behalf and in behalf of the minor, the herein plaintiff-appellee, is res judiecda need not be passed upon.  Certainly, it would be awkward  for this Court to  review a final decree  or judgment which upheld the validity  of the mortgage  in favor of the  appellant, El Hogar Filipino, Inc.,  in  the case of  Carlos Pardo de Tavera  and  Carmen Pardo de Tavera  Manzano vs. El Hogar  Filipino,  Inc., 68  Phil., 712, and to declare null and void the order of the probate court as  far as the share in the property of the minor is concerned,  a declaration which  would  partly  reopen, review, reverse  or set  aside that final decree or judgment rendered by this Court.

This action would not have been brought if  the scheme and plan of the organizers or incorporators of the Tavera-Luna, Inc.  should have met with success.

The judgment appealed from  is reversed, the complaint dismissed,  with costs against the appellee.

Parás, C.  J., Bengzon, Montemayor, Reyes, A.,  Jugo, Bautista Angela, Labrador, Concepcion and Reyes, J. B. L., JJ., concur.

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^[1] Lerma vs. Antonio et  al., 6 Phil. 2S6, 239; Vicente et al. vs. Lucas ot al., G. R. No. L-6745, SI August 1964; Lessee of Robert  Grignon ot al., vs. Astor et-al.,  43  U. S. 319; and Thaw vs. Falls, 136 U.S. 519.

^[2] Ellsworth vs.  Hall, 12  N.W.  512; Hamiel vs. Donnely, 39 N.W. 210; Myers vs. McGavoek, 58 N.W. 522; and Ancel et al.  vs. So. 111. & Bridge Co., 122  S.W. 709.

^[3] Lerma vs. Antonio  et al., supra; Vicente et al. vs. Lucas et al., supra; Lessee of Robert  Grignon  et al. vs.  Astor  et al., supra; and Tliaw vs. Falls, supra.

^[4] Section 569, Act No. 190.

^[5] Lopez vs. Teodoro, 47 Off. Gaz. (Supp., 12) 188.

^[1] Esguerra vs. De Leon, ct al., 69 Phil., 493.