FACTS : The parties entered into a Contract to Sell on July 19, 1993 involving a 35,426-square-meter parcel of land in Bulacan for ₱23,026,900.00. Respondent Kinsonic Philippines, Inc. paid ₱8,000,000.00 and spent ₱700,000.00 to convert the property from agricultural to industrial use. When respondent later tendered the remaining balance, petitioners refused to accept payment, claiming that the contract had already been automatically rescinded due to respondent's failure to pay within the 60-day period provided in the agreement. Respondent consequently filed an action for specific performance or, alternatively, for the refund of its payments and reimbursement of its expenses.
During the proceedings, respondent successfully obtained a summary judgment from the Court of Appeals ordering petitioners to execute the deed of sale upon full payment of the purchase price or, alternatively, to refund the ₱8,000,000.00 already paid and reimburse the ₱700,000.00 conversion expenses with legal interest. The Supreme Court later denied petitioners' challenge to the summary judgment, rendering it final and executory. Upon remand, the RTC awarded respondent ₱200,000.00 as attorney's fees and ₱50,000.00 as exemplary damages.
On appeal, petitioners argued for the first time that the case should have included the administrator of the estates of the original owners as an indispensable party, that the sale violated Article 130 of the Family Code due to the lack of liquidation of the conjugal partnership, and that summary judgment was improper. The Court of Appeals rejected these arguments, holding that they were raised too late and that the earlier summary judgment had already become final and immutable. It likewise ruled that no administrator had been appointed and that the indispensable parties were only those who executed the Contract to Sell. However, the CA deleted the award of exemplary damages, finding that no compensatory damages had been awarded to justify such relief.
The case involved Article 130 of Executive Order No. 209 (Family Code of the Philippines), which governs the liquidation of the conjugal partnership before the disposition of conjugal property. Petitioners invoked this provision to challenge the validity of the sale, but the Court held that the issue could no longer be entertained because it was raised only on appeal and the prior judgment upholding the Contract to Sell had already attained finality under the doctrine of immutability of judgments.
ISSUE : 1) WON administrator of the estates/conjugal partnership of the Spouses Manzano is an indispensable party to the proceedings relative to respondent's Complaint before the trial court
HELD : The Supreme Court denied the petition and affirmed the Court of Appeals, holding that the administrator of the estates or conjugal partnership of the deceased spouses was not an indispensable party to the action for specific performance and sum of money. The Court explained that no probate or intestate proceedings had been instituted and no administrator had been appointed. Hence, there was no existing administrator whose absence could divest the courts of jurisdiction. At most, a future administrator would only be a necessary party because his interest in the property is separable from the contractual rights and obligations of the parties to the Contract to Sell.
The Court likewise ruled that petitioners could no longer question the validity of the Contract to Sell, the alleged lack of liquidation of the conjugal partnership, or the propriety of the summary judgment because these issues were raised only on appeal and after the earlier summary judgment had already become final and executory. The Court found no evidence on record showing that the Contract to Sell was patently void or that the courts lacked jurisdiction. Moreover, petitioners failed to substantiate their allegations with the necessary documents and merely attempted to introduce new theories after judgment had become final.
The Court further held that, even assuming there were defects in the sale, petitioners were barred by estoppel and the doctrine of clean hands. Having actively participated in the execution of the Contract to Sell, accepted substantial payments from respondent, and allowed respondent to incur expenses for the property's conversion, petitioners could not later repudiate the transaction to evade their contractual obligations. Accordingly, the Court affirmed the CA's decision sustaining the award of attorney's fees while deleting exemplary damages.
Although the Court acknowledged that Article 130 of the Family Code (Executive Order No. 209) requires the liquidation of the conjugal partnership before any disposition of conjugal property and that unauthorized sales of estate property may be void under Rule 89 of the Rules of Court, it held that these provisions did not warrant relief in this case. Petitioners failed to timely invoke these issues before the trial court and did not prove facts showing the patent nullity of the Contract to Sell. The Court instead applied the rules on indispensable and necessary parties under Sections 7 and 8, Rule 3 of the Rules of Court, as well as the doctrines of immutability of judgments and estoppel, in denying the petition.
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