FIRST DIVISION

[G.R. No. L-5893. February 28, 1956.]

CARMEN PARDO DE TAVERA y LOPEZ MANZANO, Plaintif-Appellee, vs. EL
HOGAR FILIPINO, INC., MAGDALENA ESTATE, INC. and ERNEST
BERG, Defendants; EL HOGAR FILIPINO, INC. and MAGDALENA ESTATE,
INC., Defendants-Appellants.
DECISION
PADILLA, J.:
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 TaveraLuna, 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 the 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-1). 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-1). 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 certificate of title
No. 37347 in 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 TaveraLuna, 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
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certificate of title No. 41127 was issued in the name of Tavera-Luna, Inc. on 25
August 1932 (Exhibit K-1). 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-1). 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- 1). 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-1) 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-1 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-1) 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 Q and Q-1). On 22 September 1943 Magdalena Estate, Inc. sold one-third
undivided share in the property to Ernest Berg for P466,666.66 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 Plaintif to transfer her wards right,
share interest in the parcel of land to Tavera-Luna, Inc. and the transfer thereof
pursuant thereto;
the transfers of the wards 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 wards 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 Plaintif with the
statement in the certificates to be issued that Plaintifs share in the property is twoninths, 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 Plaintif in so far as her share in the property
is concerned. The Defendants have appealed.
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The point that the Plaintifs action is barred by the statute of limitations is no longer
urged, because the Plaintif became of age and released from guardianship on 19

November 1940 (Exhibit N-1 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:
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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 Plaintif contends and the trial court sustained her claim that the order of the
probate court of 28 August 1930 (Exhibit E-1) 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 1930 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.
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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 doubt. 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 courts 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 wards 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 wards share in the property and
increase her income (Exhibits D-1 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, TaveraLuna, 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

wards 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 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 or 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 Plaintif 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 Plaintif-Appellee,
is res judicata 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 theAppellee.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Jugo, Bautista Angelo,
Labrador, Concepcion and Reyes, J.B.L., JJ., concur.