244 Supreme Court Reports Annotated: Liu vs. Loy, JR

7/28/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 438
244 SUPREME COURT REPORTS ANNOTATED

Liu vs. Loy, Jr.
*
G.R. No. 145982. September 13, 2004.
FRANK N. LIU, deceased, substituted by his surviving

spouse Diana Liu, and children, namely: Walter, Milton,
Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca
Liu Shui and Pearl Liu Rodriguez, petitioners, vs.
ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF
JOSE VAÑO, respondents.
Civil Law; Prior Contract to Sell; A prior contract to sell made

by a decedent during his lifetime prevails over a subsequent
contract of sale made by an administrator without probate court
approval.— As we held in our Decision, a prior contract to sell
made by the decedent during his lifetime prevails over a
subsequent contract of sale made by the administrator without
probate court approval. It is immaterial if the prior contract is a
mere contract to sell and does not immediately convey ownership.
Frank Liu’s contract to sell became valid and effective upon its
execution and bound the estate to convey the property upon full
payment of the consideration.
Special Proceedings; Rule 89 of the Rules of Court; Well-
settled is the rule that an administrator needs court approval to
sell estate property, otherwise the sale is void.—Well-settled is the
rule that an administrator needs court approval to sell estate
property, otherwise the sale is void. Court approval of the sale of
estate property is clearly required under Rule 89 of the Rules of
Court, which enumerates the instances when the court may allow
the sale or encumbrance of estate property. Section 7 of Rule 89 of
the Rules of Court even provides for the regulations for granting
authority to sell, mortgage or otherwise encumber estate
property.
Land Registration Act; Property Registration Decree; Court
Approval; Section 91 of Act No. 496, otherwise known as the Land
Registration Act, and Section 88 of P.D. No. 1529, Property
Registration Decree, specifically require court approval for any
sale of registered land by an executor or administrator.—More
importantly, Section 91 of Act No. 496 (Land Registration Act)
and Section 88 of Presidential Decree No. 1529 (Property
Registration Decree) specifically require
https://central.com.ph/sfsreader/session/0000017aedb681569fce6cc5000d00d40059004a/t/?o=False 1/14
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* SPECIAL FIRST DIVISION.
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VOL. 438, SEPTEMBER 13, 2004 245
Liu vs. Loy, Jr.
court approval for any sale of registered land by an executor or

administrator. The laws, Rules of Court, jurisprudence and
regulations explicitly require court approval before any sale of
estate property by an executor or administrator can take effect.
The purpose of requiring court approval is to protect creditors. In
this case, Frank Liu is a creditor, and he is the person the law
seeks to protect.
Land Registration; Buyers and registrants not in good faith;
The respondent buyers and registrants are not in good faith
considering that they bought from a seller who was not a
registered owner.— The Loys are not buyers and registrants in
good faith considering that they bought from a seller who was not
a registered owner. Teodoro Vaño signed both contracts of sale
but the titles to the lots sold were in the name of “Estate of Jose
Vaño.” And since the titles to Lot Nos. 5 and 6 were in name of
“Estate of Jose Vaño,” the Loys were on notice that court approval
was needed for the sale of estate property. The ex-parte motion for
the court approval of the sales filed by the Loys some seven or
eight years after the sales transaction reveals a less than honest
actuation, prompting the administratrix to object to the court’s
approval.
MOTION FOR RECONSIDERATION of a decision of the

Supreme Court.
The facts are stated in the resolution of the Court.

Arnel D. Naidas for petitioners.
Luis V. Diores for respondents Loys.
RESOLUTION
CARPIO, J.:
The Loys seek a reconsideration of the Decision dated 3

July 2003 of this Court declaring void the deeds of sale of
Lot Nos. 5 and 6 executed by Teodoro Vaño in favor of
Alfredo Loy, Jr. and Teresita Loy. We held that Lot Nos. 5
1
1
and 6 belong to Frank Liu since the probate court
approved his deeds
_______________
1 Subsequently substituted by his heirs.
246

Liu vs. Loy, Jr.
2
of sale in accordance with Section 8, Rule 89 of the Rules of
Court. The deeds of sale of the Loys lacked a valid probate
court approval. As a result, we ordered the Estate of Jose
Vaño to reimburse the Loys the amounts they paid for Lot
Nos. 5 and 6, with interest at 6% annually from 4 June
1976, the date of filing of the complaint, until finality of the
decision, and 12% annually thereafter until full payment.
The Court heard the parties on oral arguments on 10
March 2004 and granted them time to submit their
memoranda. Frank Liu filed his memorandum on 29 March
2004 while the Loys filed their memorandum on 25 March
2004 by registered mail.
The issues that the Loys raise in their motion for
reconsideration are not new. The Court already considered
and discussed extensively these issues in the assailed
Decision. We find no compelling reason to reconsider the
assailed Decision.
_______________
2 Section 8 of Rule 89 of the Rules of Court reads:
SEC. 8. When court may authorize conveyance of realty which deceased contracted
to convey. Notice. Effect of deed.—Where the deceased was in his lifetime under
contract, binding in law, to deed real property, or an interest therein, the court
having jurisdiction of the estate may, on application for that purpose, authorize
the executor or administrator to convey such property according to such contract,
or with such modifications as are agreed upon by the parties and approved by the
court; and if the contract is to convey real property to the executor or
administrator, the clerk of court shall execute the deed. The deed executed by such
executor, administrator or clerk of court shall be as effectual to convey the
property as if executed by the deceased in his lifetime; but no such conveyance
shall be authorized until notice of the application for that purpose has been given
personally or by mail to all persons interested, and such further notice has been
given, by publication or otherwise, as the court deems proper; nor if the assets in
the hands of the executor or administrator will thereby be reduced so as to prevent
a creditor from receiving his full debt or diminish his dividend.
247
VOL. 438, SEPTEMBER 13, 2004 247

Liu vs. Loy, Jr.
The Loys insist that the transaction between Teodoro Vaño

and Benito Liu, the predecessor-in-interest of Frank Liu, is
a contract to sell. In contrast, the transactions between
Teodoro Vaño and Alfredo Loy, Jr. and Teresita A. Loy
were contracts of sale. According to the Loys, the contract
to sell did not transfer ownership of Lot Nos. 5 and 6 to
Benito Liu or Frank Liu because it was only a promise to
sell subject to the full payment of the consideration. On the
other hand, the contracts of sale in favor of the Loys 3
transferred ownership, as the conveyances were absolute.
As we held in our Decision, a prior contract to sell made
by the decedent during his lifetime prevails over a
subsequent contract of sale made by the administrator
without probate court approval. It is immaterial if the prior
contract is a mere contract to sell and does not immediately
convey ownership. Frank Liu’s contract to sell became valid
and effective upon its execution and bound the estate to
convey the property upon full payment of the consideration.
4
It is apparent from Teodoro Vaño’s letter dated 16
October 1954 that the reason why Frank Liu stopped
further pay-
_______________
3 Rollo, pp. 373-374.

4 The letter reads (emphasis supplied):
Teodoro Vaño

Juana Osmeña Ext.

P.O. Box 61

Cebu City, Philippines
Oct. 16, 1954
Mr. Frank Liu

Southern Motors,

Davao Branch, Davao City
Dear Mr. Liu:
Some time last May, if I remember correctly, you offered to settle the
whole balance of your account if I can have the Titles transferred
immediately in your brother’s name, and to that of Mr. Pangalo’s. I cannot
blame you if you were disappointed
248

Liu vs. Loy, Jr.
ments on the lots, leaving a balance of P1,000, was because

Teodoro Vaño could not yet transfer the titles to Benito
Liu, the predecessor-in-interest of Frank Liu. It would
appear that Frank Liu and Teodoro Vaño lost contact with
each other thereafter and it was only on 25 January 1964
that Frank Liu wrote Teodoro Vaño informing the latter
that he was ready to pay the balance of the purchase price
of the lots. Teodoro Vaño did not reply to Frank Liu’s letter.
On 22 April 1966, Benito Liu sold to Frank Liu the lots,
including Lot Nos. 5 and 6, which Benito Liu purchased
from Teodoro Vaño on 13 January 1950. Frank Liu sent
three letters dated 21 March 1968, 7 June 1968 and 29
July 1968 to Teodoro Vaño reiterat-
_______________
then, to know that I could not have the titles transferred, even should
you have paid in full.
At that time however, without your knowledge, you were innocently
being made the tool of an intrigue, intended to put me in hot water, by
inducing me to put in writing what we have agreed verbally. I hope I have
explained the matter to your satisfaction.
However, last June 30, of this year, the Supreme Court, unanimously
concurred in the reversal of the decision of the Court of First Instance, as
regard the legality of the Will of my father. Now that the Will of my
Father has been declared legal, my opponents have lost their personality
in the case, and with it their power to harass me in court. Also, sometime
in the middle of July, also this year, the Supreme Court again declared
that all the sales I have made of the properties of my father were legal, and
that I should be empowered to have the titles transferred in the buyer’s
names, should they have paid in full. A few have already received their
titles. And yours can be had too in two days time from the time you have
paid in full.
With the best of wishes for your continued good health and prosperity
and that of your family’s, and hoping to hear from you soon, I remain,
Yours very truly,

Teodoro Vaño

(signed)
249
VOL. 438, SEPTEMBER 13, 2004 249

Liu vs. Loy, Jr.
ing his request for the execution of the deed of sale covering
the lots in his favor but to no avail. On 19 August 1968,
Teodoro Vaño sold Lot No. 6 to Teresita Loy and on 16
December 1969, he sold Lot No. 5 to Alfredo Loy, Jr. The
sales to the Loys were made after Frank Liu offered to pay
the balance of the purchase price of the lots and after he
repeatedly requested for the execution of the deeds of sale

in his favor.
The sale of the lots by Teodoro Vaño to Benito Liu was
valid. The sale was made by Teodoro Vaño on 13 January
1950 in his capacity as attorney-in-fact of Jose Vaño. The
sale to Benito Liu was made during the lifetime of Jose
Vaño, not after 5
the death of Jose Vaño who died on 28
January 1950. The power of attorney executed by Jose
Vaño in favor of Teodoro Vaño remained valid during the
lifetime of Jose Vaño. In his letter dated 16 October 1954,
Teodoro Vaño stated that on 30 June 1954, the Supreme
Court allowed the probate of the will of Jose Vaño. Teodoro
Vaño likewise mentioned in the letter that in July 1954,
the Supreme Court held that all the sales made by Teodoro
6
Vaño of the properties of his father were legal. Thus,
Benito Liu’s deed of sale in favor of Frank Liu covering the
lots sold to him by Teodoro Vaño constitutes a valid charge
or claim against the estate of Jose Vaño.
The Loys reiterate their contention that Teodoro Vaño,
as administrator and sole heir to the properties, can sell
the lots to them since the rights of an heir are transmitted
from the moment of death of the testator. Although a
property under estate proceedings cannot be sold without
judicial approval,
_______________
5 In the case of Vaño v. Vda. de Garces, 95 Phil. 333 (1954), involving

the last will and testament of Jose Vaño, it was mentioned that Jose Vaño
died on 28 January 1950. The Supreme Court allowed probate of the last
will and testament of Jose Vaño who bequeathed all his properties to his
son, Teodoro Ceblero Vaño.
6 See Exhibit “C”, Records, p. 64.
250

Liu vs. Loy, Jr.
the Loys allege that in their case, the probate court later
7
approved the sales to them, thereby ratifying the sales.
Well-settled is the rule that an administrator needs
court8 approval to sell estate property, otherwise the sale is
void. Court approval of the sale of estate property is clearly
required under Rule 89 of the Rules of Court, which
enumerates the instances when the court may allow the
sale or encumbrance of estate property. Section 7 of Rule
89 of the Rules of Court even provides for the regulations
for granting authority to 9
sell, mortgage or otherwise
encumber estate property.
_______________
7 Rollo, pp. 388-389.

8 Dillena v. Court of Appeals, No. L-77660, 28 July 1988, 163 SCRA
630; Manotok Realty, Inc. v. Court of Appeals, No. L-35367, 9 April 1987,
149 SCRA 174; Estate of Amadeo Matute Olave v. Hon. Reyes, 208 Phil.
678; 123 SCRA 767 (1983); Godoy v. Orellano, 42 Phil. 347 (1921).
9 Section 7, Rule 89 of the Rules of Court reads:
SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber

estate.—The court having jurisdiction of the estate of the deceased may authorize
the executor or administrator to sell personal estate, or to sell, mortgage, or
otherwise encumber real estate, in cases provided by these rules and when it
appears necessary or beneficial, under the following regulations:
(a) The executor or administrator shall file a written petition setting forth the
debts due from the deceased, the expenses of administration, the legacies, the
value of the personal estate, the situation of the estate to be sold, mortgaged, or
otherwise encumbered, and such other facts as show that the sale, mortgage, or
other encumbrance is necessary or beneficial;
(b) The court shall thereupon fix a time and place for hearing such petition, and
cause notice stating the nature of the petition, the reason for the same, and the
time and place of hearing, to be given personally or by mail to the persons
interested, and may cause such further notice to be given, by publication or
otherwise, as it shall deem proper;
251
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Liu vs. Loy, Jr.
10
More importantly, Section 91 11of Act No. 496 (Land
Registration Act) and Section 88 of Presidential Decree
No. 1529
_______________
(c) If the court requires it, the executor or administrator shall give an additional
bond, in such sum as the court directs, conditioned that such executor or
administrator will account for the proceeds of the sale, mortgage, or other
encumbrance;
(d) If the requirements in the preceding subdivisions of this section have been
complied with, the court, by order stating such compliance, may authorize the
executor or administrator to sell, mortgage, or otherwise encumber, in proper
cases, such part of the estate as is deemed necessary, and in case of sale the court
may authorize it to be public or private, as would be most beneficial to all parties
concerned. The executor or administrator shall be furnished with a certified copy
of such order;
(e) If the estate is to be sold at auction, the mode of giving notice of the time and
place of the sale shall be governed by the provisions concerning notice of execution
sale;
(f) There shall be recorded in the registry of deeds of the province in which the
real estate thus sold, mortgaged, or otherwise encumbered is situated, a certified
copy of the order of the court, together with the deed of the executor or
administrator for such real estate, which shall be as valid as if the deed had been
executed by the deceased in his lifetime.
10 Section 91 of Act No. 496 reads: SEC. 91. Except in case of a will
devising the land to an executor to his own use or upon some trust or
giving to the executor power to sell, no sale or transfer of registered land
shall be made by an executor or by an administrator in the course of
administration for the payment of debts or for any other purpose, except in
pursuance of an order of a court of competent jurisdiction obtained as
provided by law. (Emphasis supplied)
11 Section 88 of P.D. No. 1529 reads: SEC. 88. Dealings by
administrator subject to court approval.—After a memorandum of the will,
if any, and order allowing the same, and letters testamentary or letters of
administration have been entered upon the certificate of title as here
252

Liu vs. Loy, Jr.
(Property Registration Decree) specifically require court

approval for any sale of registered land by an executor or
administrator.
The laws, Rules of Court, jurisprudence and regulations
explicitly require court approval before any sale of estate
property by an executor or administrator can take effect.
The purpose of requiring court approval is to protect
creditors. In this case, Frank Liu is a creditor, and he is the
person the law seeks to protect.
The orders of the probate court dated 19 and 23 March
1976 approving the contracts of the Loys are void. The
orders did not ratify the sales because there was already a
prior order of the probate court dated 24 February 1976
approving the sale of Lot Nos. 5 and 6 to Frank Liu. Hence,
the probate court had already lost jurisdiction over Lot
Nos. 5 and 6 since the lots no longer formed part of the
Estate of Jose Vaño. In fact, the administratrix of the
estate filed a motion for reconsideration of the orders of the
probate court approving the contracts of the Loys because
she already executed a deed of sale covering Lot Nos. 5 and
6 in favor of Frank Liu.
The Loys impliedly admitted that their contracts of sale
dated 19 August 1968 and 16 December 1969 were
ineffective when they belatedly asked in 1976 for court
approval of the sales. If the Loys believed that their deeds
of sale in 1968 and 1969 were valid, they would not have
asked for court approval in 1976. By asking for court
approval, they necessarily admitted that without court
approval, the sale to them was ineffectual.
The Loys are not buyers and registrants in good faith

considering that they bought from a seller who was not a
registered owner. Teodoro Vaño signed both contracts of
sale but
_______________
inabove provided, the executor or administrator may alienate or encumber

registered land belonging to the estate, or any interest therein, upon approval of the
court obtained as provided by the Rules of Court. (Emphasis supplied)
253
VOL. 438, SEPTEMBER 13, 2004 253

Liu vs. Loy, Jr.
the titles to the lots sold were in the name of “Estate of

Jose Vaño.” And since the titles to Lot Nos. 5 and 6 were in
name of “Estate of Jose Vaño,” the Loys were on notice that
court approval was needed for the sale of estate property.
The exparte motion for the court approval of the sales filed
by the Loys some seven or eight years after the sales
transaction reveals a less than honest actuation, prompting
the administratrix to object to the court’s approval.
WHEREFORE, we DENY the motion for
reconsideration.
SO ORDERED.
Ynares-Santiago and Azcuna, JJ., concur.

Davide, Jr. (C.J., Chairman), See Dissenting
Opinion.
DISSENTING OPINION
DAVIDE, JR., C.J.:
Upon a deeper evaluation of the established facts in this

case, I am constrained to vote to grant the motion to
reconsider the Decision of 3 July 2003 and to deny the
instant petition.
I agree with both the trial court and the Court of
Appeals that the contract entered into on 13 January 1950
between Teodoro Vaño, as attorney-in-fact of Jose Vaño,
and Benito Liu, which is the source of petitioner Frank
Liu’s claim, is a contract to sell (an AGREEMENT, as the
introductory portion thereof begins) and not a contract of
sale. From the very beginning, however, it was petitioner
Frank Liu who was the real “buyer” of the seven lots, two of
which were covered by the agreement in favor of Cirilo
Pangalo, and the other five covered by the agreement in
favor of Benito Liu (Exh. “A”). The latter includes Lot Nos.
5 and 6. Thus, in footnote no. 6 of our decision of 3 July
2003, we said:
The contract between Teodoro Vaño and Cirilo Pangalo provides

that in case of death of the vendee, the contract shall be con-
254

Liu vs. Loy, Jr.
sidered as fully paid and a final deed of sale shall be made in

favor of the beneficiary, Frank N. Liu, provided vendee is not in
arrears of not more than two months. Also, in his letter to Frank
Liu, dated 1 January 1955, Teodoro Vaño stated that: “I have
addressed my letter to you because ever since 1949, it has always
been you I dealt with, and not Mr. B. Liu, neither with Mr. C.
Pangalo, though the last two gentlemen were the ones who signed
the agreements for the purchase of the lots.”
Paragraph 5 of the agreement in favor of Benito Liu

expressly provides:
Failure on the part of the VENDEE to pay three or more monthly

installments when the same fall due, VENDOR may cancel this
contract and VENDEE shall be only entitled to one-half (1/2) of
what he has paid.
And paragraph 4 thereof expressly provides:
4. The balance of P3,000 shall be paid by VENDEE at the rate of

P100.00 per month beginning with the end of January 1950 and
every month thereafter . . .
Neither Benito Liu nor Frank Liu complied with the

contract.
Thus, in our findings of facts in the Decision of 3 July
2003, we said:
Benito Liu subsequently paid installments totaling P2,900,

leaving a balance of P1,000. Apparently, Benito Liu stopped
further payments because Teodoro Vaño admitted his inability to
transfer the lot titles to Benito Liu. Later, in a letter dated 16
October 1954, Teodoro Vaño informed Frank Liu that the
Supreme Court had already declared valid the will of his father
Jose Vaño. Thus, Teodoro Vaño could transfer the titles to the
buyers’ names upon payment of the balance of the purchase price.
When Frank failed to reply, Teodoro Vaño sent him another
letter dated 1 January 1955, reminding him of his outstanding
balance. It appears that it was only after nine years that Frank
Liu responded through a letter dated 25 January 1964. In the
letter,
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VOL. 438, SEPTEMBER 13, 2004 255

Liu vs. Loy, Jr.
Frank Liu informed Teodoro Vaño that he was ready to pay the
balance of the purchase price of the seven lots. He requested for
the execution of a deed of sale of the lots in his name and the
delivery of the titles to him.
On 22 April 1966, Benito Liu sold to Frank Liu five lots (Lot
Nos. 5, 6, 13, 14 and 15 of Block 2) which Benito Liu purchased
from Teodoro Vaño. Frank Liu assumed the balance of P1,000 for
the five lots. Cirilo Pangalo likewise sold to Frank Liu the two lots
(Lot nos. 14 and 15 of Block 11) that Pangalo purchased from
Teodoro Vaño. Frank Liu likewise assumed the balance of P417
for the two lots.
On 21 March 1968, Frank Liu reiterated in a letter his request
for Teodoro Vaño to execute the deed of sale covering the seven
lots so he could secure the corresponding certificates of title in his
name. He also requested for the construction of the subdivision
roads pursuant to the original contract. In the letter, Frank Liu
referred to another letter, dated 25 June 1966, which he allegedly
sent to Teodoro Vaño. According to Frank Liu, he enclosed PBC
Check No. D-782290 dated 6 May 1996 for P1,417, which is total
balance of the accounts of Benito Liu and Cirilo Pangalo on the
seven lots. However, Frank Liu did not offer in evidence the letter
or the check. Frank Liu sent two other letters, dated 7 June 1968
and 29 July 1968, to Teodoro Vaño reiterating his request for the
execution of the deed of sale in his favor but to no avail.
It is clear then that the agreement to sell between Teodoro

Vaño as attorney-in-fact of Jose Vaño, made during the
lifetime of Jose Vaño, was validly cancelled or rescinded. It
follows that Benito Liu never became the owner of the lots
covered by the agreement. Consequently, he could not sell
the lots to petitioner Frank Liu on 22 April 1966.
Therefore, the sale in favor of the latter was null and void.
It could not bind the estate of Jose Vaño.
It would be grossly unfair and unjust that the estate of
Jose Vafio should be made bound to honor an agreement to
sell executed on 13 January 1950 in favor of Benito Liu
who never completed the payment for the agreed purchase
price. The so-called sale in favor of petitioner was only
made more than sixteen (16) years later, or on 22 April
1966, long after the death of Jose Vaño, and long after
Teodoro Vaño had lost
256

Liu vs. Loy, Jr.
his authority as attorney-in-fact because the power was not

coupled with interest. Jose Vaño’s death terminated
Teodoro’s power as attorney-in-fact.
Likewise, it follows that Benito Liu’s deed of sale in
petitioner’s favor did not constitute a charge or claim
against the estate of Jose Vaño.
Moreover, it is admitted that Teodoro Vaño was the sole
and only heir of Jose Vaño. In such capacity he could sell a
part of his rights, share and participation in the estate of
Jose Vaño. Such sale is not void, but may only be rendered
voidable in the event claims against estate may be
impaired.
Furthermore, one should not lose sight of the fact that
private respondents Alfredo Loy and Teresita Loy
registered the deeds of sale in their favor, were issued
transfer certificates of title in their names, declared the
lots in their names for taxation purposes, religiously paid
the taxes thereon, occupied the same and constructed a
house thereon. Upon the other hand, petitioner Frank Liu
did nothing of these. Article 1544 of the Civil Code
provides:
If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first
taken possession thereof in good faith, if it should be movable
property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription the ownership shall pertain to
the person who in good faith was first in the possession; and in
the absence thereof, to the person who presents the oldest title,
provided there is good faith.
The right of the Loys under the second and third

paragraphs of Article 1544 is sought to be defeated by the
claim that they acted in bad faith.
Again, petitioner Liu has not shown that the Loys had
acted with bad faith. On the contrary, no less than the
coun-
257
VOL. 438, SEPTEMBER 13, 2004 257

Liu vs. Loy, Jr.
sel for Frank Liu, Atty. Solon, candidly admitted in open

court that the latter has no “positive” evidence to prove bad
faith. Thus:
COURT
The plaintiff has some proof that the Loy spouses knew
of the former transaction?
ATTY. SOLON
Well, positive evidence, we do not have . . . because after
this transaction, the plaintiff already resided in Davao
and the communications were made between the
plaintiff and Teodoro Vaño by letters, but there was no
more pers onal communication. (TSN), 14 January
1977, 74-75).
More specifically, upon questioning by the court, Atty.

Solon admitted that the only possible evidence of bad faith
on the part of the Loys was the “filing for approval of a
deed of sale,” thus:
COURT
Your theory, Atty. Solon, is that the defendants Loys
are buyers in bad faith?
ATTY. SOLON
Yes, Your Honor.
COURT
That they knew the former defect and yet they
purchased the property?
ATTY. SOLON
Yes, Your Honor, to the extent of filing for approval of a
deed of sale. (TSN, 14 January 1977, 72-73).
On the other hand, petitioner Frank Liu’s acts proved that

he was the one who acted in bad faith. First, he did not
answer the letter of 16 October 1954 sent by Teodoro Vaño
(Exh. “C”). Second, he did not likewise respond to Teodoro
Vaño’s letter of 1 January 1955 (Exh. “D”). It was only on
25 January 1964 when Liu wrote a letter to Teodoro, but
only to express readiness to pay the balance of the
purchase price of the seven lots and request for the
execution of the deed of sale in
258

Liu vs. Loy, Jr.
his name (Exh. “E”). He did not pay. Then on 22 April 1966
and without paying the balance, he procured a deed of sale
for five (5) of the seven lots from Benito Liu. Yet, he still
did not pay the balance. And, it was only on 21 March 1968
that the petitioner reiterated in a letter to Teodoro Vaño
(Exh. “F”) his request for Teodoro to execute the deed of
sale. In this letter he mentioned having enclosed in a letter

dated 25 June 1966 of a PBC Check dated 6 May 1966 in
the amount of P1,417 for the unpaid balance. Yet, he could
not even offer in evidence either the letter or the check.
While it is true that he sent two letters dated 7 June 1968
and 29 July 1968 to Teodoro Vaño reiterating his request
for execution of the deed of sale, he did not make an offer
for the payment of the balance of the unpaid portion of the
consideration of the contract to sell.
If Frank Liu were sincere in his desire to pay the unpaid
balance of the agreed purchase price, he could have
consigned in court the amount due.
Finally, and probably to obtain relief from behind,
petitioner Frank Liu filed before the Davao Court of First
Instance on 2 December 1968 a complaint against Teodoro
Vaño for specific performance, execution of deed of absolute
sale, etc.
Needless to state, the evidence, the law and equity are
on the side of the respondents Alfredo Loy, Jr. and Teresita
Loy.
Accordingly, I vote to GRANT the Motion for
Reconsideration filed by respondents Alfredo Loy, Jr. and
Teresita Loy, and to DENY the instant petition.
Motion for reconsideration denied.
Note.—The need for approval by the probate court

exists only where specific properties of the estate are sold
and not when only ideal and indivisible shares of an heir
are disposed of. (Heirs of Pedro Escanlar vs. Court of
Appeals, 281 SCRA 176 [1997])
——o0o——
259
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244 Supreme Court Reports Annotated: Liu vs. Loy, JR

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244 Supreme Court Reports Annotated: Liu vs. Loy, JR

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7/28/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 438

244 SUPREME COURT REPORTS ANNOTATED

FRANK N. LIU, deceased, substituted by his surviving

Civil Law; Prior Contract to Sell; A prior contract to sell made

* SPECIAL FIRST DIVISION.

VOL. 438, SEPTEMBER 13, 2004 245

Liu vs. Loy, Jr.

court approval for any sale of registered land by an executor or

MOTION FOR RECONSIDERATION of a decision of the

The facts are stated in the resolution of the Court.

The Loys seek a reconsideration of the Decision dated 3

1 Subsequently substituted by his heirs.

246 SUPREME COURT REPORTS ANNOTATED

2 Section 8 of Rule 89 of the Rules of Court reads:

VOL. 438, SEPTEMBER 13, 2004 247

The Loys insist that the transaction between Teodoro Vaño

3 Rollo, pp. 373-374.

Juana Osmeña Ext.

Cebu City, Philippines

Oct. 16, 1954

Mr. Frank Liu

Davao Branch, Davao City

Dear Mr. Liu:

248 SUPREME COURT REPORTS ANNOTATED

ments on the lots, leaving a balance of P1,000, was because

VOL. 438, SEPTEMBER 13, 2004 249

repeatedly requested for the execution of the deeds of sale

5 In the case of Vaño v. Vda. de Garces, 95 Phil. 333 (1954), involving

250 SUPREME COURT REPORTS ANNOTATED

7 Rollo, pp. 388-389.

SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise encumber

VOL. 438, SEPTEMBER 13, 2004 251

252 SUPREME COURT REPORTS ANNOTATED

(Property Registration Decree) specifically require court

The Loys are not buyers and registrants in good faith

inabove provided, the executor or administrator may alienate or encumber

VOL. 438, SEPTEMBER 13, 2004 253

the titles to the lots sold were in the name of “Estate of

Ynares-Santiago and Azcuna, JJ., concur.

DAVIDE, JR., C.J.:

Upon a deeper evaluation of the established facts in this

The contract between Teodoro Vaño and Cirilo Pangalo provides

254 SUPREME COURT REPORTS ANNOTATED

sidered as fully paid and a final deed of sale shall be made in

Paragraph 5 of the agreement in favor of Benito Liu

Failure on the part of the VENDEE to pay three or more monthly

And paragraph 4 thereof expressly provides:

4. The balance of P3,000 shall be paid by VENDEE at the rate of

Neither Benito Liu nor Frank Liu complied with the

Benito Liu subsequently paid installments totaling P2,900,

VOL. 438, SEPTEMBER 13, 2004 255

It is clear then that the agreement to sell between Teodoro

256 SUPREME COURT REPORTS ANNOTATED

his authority as attorney-in-fact because the power was not

The right of the Loys under the second and third

VOL. 438, SEPTEMBER 13, 2004 257

sel for Frank Liu, Atty. Solon, candidly admitted in open

More specifically, upon questioning by the court, Atty.

On the other hand, petitioner Frank Liu’s acts proved that