LEE vs.

RTC BRANCH 85
G.R. No. 146006; February 23, 2004

FACTS: Dr. Ortañez incorporated Philinterlife in 1956. At the time of the

company’s incorporation, Dr. Ortañez owned ninety percent (90%) of the
subscribed capital stock.

Dr. Ortañez died in 1980, and left behind a wife (Juliana), three legitimate
children (Rafael, Jose and Antonio) and five illegitimate children.

A few months after his death, Rafael filed a petition for letters of
administration of the intestate estate of Dr. Ortañez.

In 1982, the Presiding Judge of Branch 85 appointed Rafael and Jose as

joint special administrators of their father’s estate.

Subsequently, Rafael and Jose submitted an inventory of the estate of

their father which included, among other properties, 2,029 shares of stock
in Philinterlife.

In 1989, Juliana, decedent’s wife, claiming that she owned 1,014 shares
of stock as her conjugal share in the estate sold the same with right to
repurchase in favor of FLAG.

In 1991, Jose, claiming that he owned the remaining 1,011 Philinterlife

shares of stocks as his inheritance share in the estate, sold said shares
with right to repurchase also in favor of FLAG.

It appears that in 1982, Juliana, Rafael, and Jose entered into a MOA for
the extrajudicial settlement of the estate of Dr. 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 and by
Jose in favor of FLAG.

In 1995, the Court appointed Enderes, one of Dr. Ortañez’s illegitimate

child, as special administratrix of the Philinterlife shares of stock.

Enderes then filed an urgent motion to declare void ab initio the

memorandum of agreement.
The intestate court granted the motion and declared the MOA partially
void ab initio insofar as the transfer/waiver/renunciation of the Philinterlife
shares of stocks are concerned. The court also denied the approval of the
sale of Philinterlife shares of stocks as the same were entered into by
Juliana and Jose in their personal capacity without prior approval of the
Court.

Jose filed a petition for certiorari with the CA but his petition was denied.

ISSUE: W/N the sale of Philinterlife shares of stock made by Juliana and
Jose, in their personal capacities and without court approval, in favor of
FLAG is valid.

RULING: No. The sale of the property of the estate by an administrator

without the order of the probate court is void and passes no title to the
purchaser.

Although under Art. 533 of the Civil Code, an heir can sell his right,
interest, or participation in the property under administration; an heir may
only sell his ideal or undivided share in the estate, not any specific
property therein.

In the present case, Juliana and Jose sold specific properties of the estate
(1,014 and 1,011 shares of stock in Philinterlife) in favor of 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.