G.R. No. L-25952 - Salvador vs. Sta. Maria

Celestino Salvador owned seven parcels of titled land and two parcels of untitled land in Bigaa, Bulacan.
In 1941, Celestino executed a deed of sale over these properties in favor of the spouses Alfonso Salvador and Anatolia Halili.

Alleging that the sale was void for lack of consideration, Celestino Salvador filed a suit for reconveyance of the parcels on May 12, 1955, against the vendees.
Celestino Salvador died testate on April 27, 1956.
As his alleged heirs, twenty-one persons were substituted in the reconveyance suit on May 18, 1956.
Simultaneously, special proceedings for the probate of his will and for letters testamentary were instituted, further complicating the status of the properties.

Dominador Cardenas was appointed as the special administrator of Celestino Salvador’s testate estate on June 11, 1956.
An inventory of the estate, including the subject parcels, was filed on September 4, 1956.
Celestino Salvador’s will was admitted to probate on September 7, 1956, appointing Cardenas as executor, with actual issuance of letters testamentary taking place on October 27, 1956.
Discrepancies arose as the will instituted twenty-three heirs, of whom some were not among the twenty-one substituted in the reconveyance suit and vice versa.

On November 26, 1956, the trial court (CFI of Bulacan, Br. I) rendered judgment ordering the defendants (Alfonso and Anatolia) to reconvey the parcels to the estate.
The defendants appealed, but on August 12, 1961, the Court of Appeals affirmed the reconveyance judgment, modifying it so that the reconveyance was to the twenty-one substituted heirs.
In separate proceedings, Lot 6 (one of the parcels) was sold on April 21, 1964 for P41,184.00, with the proceeds deposited in the Philippine National Bank, all subject to court order for the benefit of the estate.
On December 18, 1964, the defendants executed a deed of reconveyance in favor of Celestino Salvador’s estate; however, this deed was later revoked for failing to comply with the judgment.
Consequently, on September 30, 1965, a new deed of reconveyance was executed in favor of the twenty-one substituted heirs, and the corresponding title certificate (now TCT No. 63734) was issued in their names on December 9, 1965.

On December 7, 1965, the reconveyance court (Br. I) directed the Philippine National Bank to release the sale proceeds of P41,184.00 to the twenty-one plaintiffs.
Although the passbook containing the proceeds was delivered to the twenty-one heirs, the bank withheld the release pending instructions from the probate court (Br. II).

On March 1, 1966, the probate court (Br. II) approved claims against the estate amounting to P38,872.58, including taxes, attorneys’ fees, and a loan.
Later, on March 30, 1966, the probate court ordered the return of the passbook to the administrator and instructed the bank to release the required funds to pay the estate’s debts.
Dissatisfied with this order and unable to obtain reconsideration, the twenty-one substituted heirs filed a special civil action for certiorari on April 25, 1966, challenging the order directing payment of the estate debts from the sale proceeds and disputing the probate court’s power to dispose of the reconveyed properties.

Are the subject parcels of land and the proceeds from the sale of Lot 6 properties constituting Celestino Salvador’s estate, or do they belong outright to the twenty-one substituted heirs?

Does the final reconveyance judgment, which ordered reconveyance in favor of the twenty-one substituted heirs, bar the probate court or settlement court from disposing of the reconveyed properties and directing their use for payment of estate debts?

Can the heirs claim these properties as their own and distribute them among themselves free of any estate obligations, or are the properties held in trust for the satisfaction of the estate’s debts?