ELENA, OSCAR, CELIA, TERESITA AND VIRGILIO, ALL SURNAMED LINDAIN, PETITIONERS, VS. THE HON. COURT OF APPEALS, SPOUSES APOLINIA VALIENTE AND FEDERICO ILA, RESPONDENTS.

This is a petition for review on certiorari of the
decision dated August 8, 1990 of the Court of Appeals which dismissed the
complaint for annulment of a sale of registered land, thereby reversing the
decision of the Regional Trial Court of San Jose City.

The facts of the case in a nutshell are as follows:

When the plaintiffs were still minors, they were already the
registered owners of a parcel of land covered by Transfer Certificate of Title
No. NT-63540 (Exh. D-1). On November 7,
1966 their mother, Dolores Luluquisin,
then already a widow and acting as guardian of her minor children, sold the
land for P2,000 under a Deed of Absolute Sale of Registered Land (Exh. 2) to
the defendants spouses Apolonia Valiente and Federico Ila. The Deed of Absolute Sale was registered in
the office of the Register of Deeds for the Province of Nueva
Ecija. TCT No. NT-66311 was issued to
the vendees, Apolonia Valiente and Federico Ila.

The defendants admitted that the property in question was sold to them by the mother of the minors as
evidenced by a Deed of Sale (Exh. B for the plaintiffs and Exh. 2 for the
defendants) and although at first they were reluctant to buy the property as
the sale would not be legal, the registered owners thereof being all minors,
upon advice of their counsel. the late
Atty. Arturo B. Pascual, and the counsel of Dolores Luluquisin, Atty. Eustaquio
Ramos, who notarized the
documents, that the property could be sold without the written authority of the
court, considering that its value was less than P2,000, they bought the
property and had it registered in their names under Certificate of Title No.
66311 (Exhibit C for the plaintiffs).

Plaintiffs contend, however, that the sale of the lot by their
mother to the defendants is null and void because it was made without judicial
authority and/or court approval.

The defendants, on the other hand, contend that the sale was valid,
as the value of the property was less than P2,000, and, considering the ages of
plaintiffs now, the youngest being 31 years old at the time of the filing of
the complaint, their right to rescind the contract which should have been
exercised four (4) years after reaching the age of majority, has already
prescribed.

On May 25, 1989, the Regional Trial Court of San Jose City
rendered a decision for the plaintiffs (now petitioners), the dispositive
portion of which reads:

“WHEREFORE, judgment is hereby rendered ordering the following:

“(1) Declaring the Deed of
Sale executed by the guardian Dolores Luluquisin in favor of the defendants spouses
Apolonia Valiente and Federico Ila over the property of the minors covered by
the TCT No. NT-66311 to be null and void;

“(2) Ordering defendants
Spouses Apolonia Valiente and Federico Ila to surrender to the Register of
Deeds of San Jose City Transfer Certificate of Title No. 66311;

“(3) Ordering the Register
of Deeds of San Jose City to cancel Transfer Certificate of Title No. 66311 in
the names of Spouses Apolonia Valiente and Federico Ila;

“(4) Ordering the Register
of Deeds to issue a new Transfer Certificate of Title in lieu of what was
ordered cancelled in the names of plaintiffs, namely: Elena, Oscar, Celia, Teresita and Virgilio, all surnamed Lindain;

“(5) Ordering the
defendants to vacate the lot covered by TCT No. NT-66311 and deliver the possession
of the same to the plaintiffs
subject however to the rights of the defendants as buyers, possessors and
builders in good faith;

“(6) Without cost.” (pp.
41- 42, Rollo.)

Upon appeal to the Court of Appeals, the decision was reversed and another one was
entered dismissing the complaint without pronouncement as to costs. The Court of Appeals applied the ruling of
this Court in Ortañez vs. Dela Cruz, O.G., Vol. 60, No. 24, pp. 3434, 3438­-3439, that:

“A father or mother acting as
legal administrator of the property of the child under parental
authority cannot, therefore, dispose of the child’s
property without judicial authority if it
is worth more than P2,000.00, notwithstanding
the bond that he has filed for the
protection of the child’s property. But
when the value of such property is
less than P2,000.00, the permission of
the court for its alienation or disposition
may be dispensed with. The father or mother, as the case may be, is allowed by law to
alienate or dispose of the same freely, subject only to the restrictions
imposed by the scruples of conscience.” (p. 64, Rollo.)

It upheld the sale and dismissed the complaint of the heirs who
thereupon filed this petition for review alleging that the Court of Appeals
erred in reversing the decision of the Regional Trial Court and in ordering the
dismissal of the petitioners’ complaint in total disregard of the findings of
facts of the trial court and contrary to the provisions of law on contracts and
guardianship.

The principal issue before us is whether judicial approval was
necessary for the sale of the minors’ property by their mother.

We find merit in the petition for review.

Art. 320 of the New Civil Code, which was already in force when
the assailed transaction occurred, provides:

“Art. 320. – The father, or
in his absence the mother, is the legal administrator of the property
pertaining to the child under parental authority. If the property is worth more than two thousand pesos, the father
or mother shall give a bond subject to the approval of the Court of First
Instance.”

Under the law, a parent, acting merely as the legal (as
distinguished from judicial) administrator of the property of his/her minor
children, does not have the power to dispose of, or alienate, the property of said children without judicial
approval. The powers and duties of the
widow as legal administrator of her minor children’s property as provided in
Rule 84 of the Rules of Court entitled, “General Powers and Duties of Executors
and Administrators” are only powers of possession and management. Her power to sell, mortgage, encumber or
otherwise dispose of the property of her minor children must proceed from the
court, as provided in Rule 89 which requires court authority and approval.

In the case of Visaya, et al. vs. Suguitan, et al., G.R. No.
L-8300, November 18, 1955, we held that:

“It is true that under Art. 320 of the new Civil Code the mother,
Juana Visaya, was the legal administrator of the property of her minor
children. But as such legal
administrator she had no power to
compromise their claims, for a compromise has always been deemed equivalent to an alienation (transigere est
alienate), and is an act of strict ownership that goes beyond mere
administration. Hence, Art. 2032 of
the new Civil Code provides:

“‘The Court’s approval is necessary in
compromises entered into by guardians, parents, absentee’s
representatives and administrators or executors
of decedent’s estates.’ (Emphasis sup­plied.)

“This restriction on the power of parents to compromise claims
affecting their children is in contrast
to the terms of Art. 1810 of the
old Civil Code that empowered parents to enter into such compromises, without
requiring court approval unless the amount involved was in excess of 2000
pesetas. At present, the Court[‘s]
approval is indispensable regardless
of the amount involved.” (Underscoring ours.)

In the recent case of Badillo vs. Ferrer, 152 SCRA 407, 409, this
Court stated:

“Surviving widow
has no authority or has acted beyond her powers in
conveying to the vendees the undivided
share of her minor children in the property as her
powers as the natural guardian covers only matters of administration and cannot include the power of disposition. and she should have first
secured court approval before alienation of
the property.”

The above ruling was a reiteration of Inton vs. Quintana, 81 Phil. 97.

The private respondents’ allegation that they are purchasers in
good faith as not credible for they knew from the very beginning that their
vendor, the petitioners’ mother, without court approval could not validly
convey to them the property of her minor children. Knowing her lack of judicial authority to
enter into the transaction, the private respondents acted in bad
faith when they went ahead and bought the land from her anyway.

One who acquires or purchases real property with knowledge of a
defect in the title of his vendor cannot claim that he acquired title thereto
in good faith as against the owner of the property or of an interest therein
(Gatioan vs. Gaffud, 27 SCRA 706).

The minors action for reconveyance has not yet prescribed for
“real actions over immovables prescribe after thirty years” (Art. 1141, Civil
Code). Since the sale took place in
1966, the action to recover the property had not yet prescribed when the
petitioners sued in 1987.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is set
aside and that of the Regional Trial Court of San Jose City dated May 25, 1989,
being correct, is hereby REINSTATED. Costs against the private respondents.

SO ORDERED.

Cruz, (Chairman), Medialdea, and
Bellosillo, JJ., concur.