Special Rules and Proceedings: Rule 74
Rule 74. Summary Settlement of Estates
(Sections 1 to 5)
RULE 74
Summary Settlement of Estate
Section 1. Extrajudicial settlement by agreement between heirs. —
If the decedent left no will and no debts and the heirs are all of age,
or the minors are represented by their judicial or legal representatives
duly authorized for the purpose,
the parties may without securing letters of administration,
divide the estate among themselves as they see fit
by means of a public instrument filed in the office of the register of deeds,
and should they disagree,
they may do so in an ordinary action of partition.
If there is only one heir, he may adjudicate to himself the entire estate
by means of an affidavit filled in the office of the register of deeds.
The parties to an extrajudicial settlement,
whether by public instrument or by stipulation in a pending action for partition,
or the sole heir who adjudicates the entire estate to himself by means of an affidavit
shall file, simultaneously with and as a condition precedent
to the filing of the public instrument, or stipulation in the action for partition,
or of the affidavit in the office of the register of deeds,
a bond with the said register of deeds,
in an amount equivalent to the value of the personal property involved
as certified to under oath by the parties concerned
and conditioned upon the payment of any just claim
that may be filed under section 4 of this rule.
It shall be presumed that the decedent left no debts
if no creditor files a petition for letters of administration
within two (2) years after the death of the decedent.
The fact of the extrajudicial settlement or administration
shall be published in a newspaper of general circulation
in the manner provided in the next succeeding section;
but no extrajudicial settlement shall be binding upon any person
who has not participated therein or had no notice thereof.
Extrajudicial settlement by agreement between heirs.
Applicable:
The decedent left no will.
The decedent left no debts.
All heirs are of legal age or minors represented by legal guardians.
Modes:
Extrajudicial Settlement:
Heirs can divide the estate among themselves through a public instrument filed with the Register of Deeds.
If heirs disagree, they may file an ordinary action for partition.
Affidavit of Self-Adjudication:
The sole heir may adjudicate the entire estate to themselves via an affidavit filed with the Register of Deeds.
Bond Requirement:
Before filing the public instrument, stipulation, or affidavit, the parties must post a bond equivalent to the value of the personal property.
Bond ensures payment of valid claims that may arise under Section 4.
Presumption of No Debts:
If no creditor files for letters of administration within two (2) years from the decedent’s death, it is presumed that the decedent had no debts.
Publication Requirement:
The extrajudicial settlement must be published in a newspaper of general circulation.
once a week for three consecutive weeks
Not binding on individuals who did not participate or had no notice of the settlement.
Extrajudicial settlement by agreement
In order to afford the decedent's heirs a cost-efficient manner of settling the estate, the Rules of Court has provided them with the option of doing so without court intervention.
The rationale behind this provision is that when a person dies without leaving pending obligations to be paid, the decedent's heirs, whether of age or not, are not bound to submit the property to a judicial administration and the appointment of an administrator are superfluous and unnecessary proceedings.
This, however, does not preclude the heirs from resorting to judicial settlement of the estate if they do not desire to resort for good reasons to an ordinary action of partition.
The provision on extrajudicial settlement is not mandatory or compulsory. In fact, the heirs are given the discretion to pursue this course of action, provided only that the requisites therefor are present.
Section 1 allows the heirs to divide the estate among themselves as they may see fit, or to resort to an ordinary action of partition, and it does not compel them to do so if they have good reasons to take a different course of action.
Section 1, Rule 74 provides that in cases where the heirs disagree as to the partition of the estate and no extrajudicial settlement is possible, then an ordinary action for partition may be resorted to.
Where the more expeditious remedy of partition is available to the heirs, then the heirs or majority of them may not be compelled to submit to administration proceedings.
An ordinary partition refers to the division of property among co-owners or heirs through judicial proceedings. It involves filing a case in court to determine the rightful shares and to order the distribution of the property. It is governed by Rule 69 of the Rules of Court.
Requisites for extrajudicial settlement
Before the heirs may avail themselves of this provision, the following requisites must be met:
Decedent died intestate;
There are no outstanding debts at time of settlement;
Heirs are all of legal age or minors represented by judicial guardians or legal representatives;
The settlement is made in a public instrument or by means of an affidavit, in case of a sole heir, duly filed with Register of Deeds;
Publication of the extrajudicial settlement in newspaper of general circulation in the province once a week for three consecutive weeks; and
Filing of a bond equivalent to value of personal property posted with Register of Deeds.
Note:
With respect to real estate, there shall be a lien on the real estate in favor of the creditors, heirs, or other persons for two (2) years after the distribution.
This lien shall continue notwithstanding any transfer of real estate.
In order for the provision on extrajudicial settlement to come into play, it is indispensable that the decedent left no will. If the decedent left a will, both substantive and procedural law mandate that the will be presented and admitted into probate, and the estate be distributed in accordance with the decedent's wishes.
The heirs cannot disregard the decedent's disposition of one's estate by resorting to extrajudicial settlement as this is contrary to public policy.
The law enjoins the probate of the will and public policy requires it, because unless the will is probated and notice thereof given to the whole world, the right of a person to dispose of his property by will may be rendered nugatory.
Absent legatees and devisees, or such of them as may have no knowledge of the will, could be cheated of their inheritance through the collusion of some of the heirs who might agree to the partition of the estate among themselves to the exclusion of others.
If the decedent left a will and no debts, and heirs desire to make an extrajudicial partition of the estate, they must first present the will to the court for probate and divide the estate in accordance with the will.
Portugal v. Portugal-Beltran, "G.R. No. 155555, August 16, 2006:
The respondent executed an affidavit of self-adjudication on the mistaken belief that she was the sole heir of the decedent.
The Supreme Court, in a case of annulment of title initiated by the coheirs, characterized extrajudicial settlement of estate as follows:
"Rule 74, Section 1 is an exception to the general rule that when a person dies leaving a property, it should be judicially administered and the competent court should appoint a qualified administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he failed to name an executor therein."
If the heirs disagree on how they will distribute the decedent's estate, their remedy would be to file an ordinary action for Partition in accordance with Rule 69.
As to the second requisite, Section 1 provides for the presumption that the decedent left no debts.
In order for this presumption to arise, no creditor should have filed a petition for letters of administration within two years after the decedent's death.
Affidavit of self-adjudication by sole heir
The form of the extrajudicial settlement depends on the number of heirs.
If the decedent left more than one heir, the settlement must be made in a public instrument.
If the decedent left only one heir, it suffices that the heir executes an affidavit of self-adjudication.
The provision is clear that an affidavit of self-adjudication is allowed only where the decedent left a sole heir.
This was clarified by the Supreme Court in In the Matter of the Intestate Estate of Delgado.
In the Matter of the Intestate Estate of Delgado:
The case involved the estate of Josefa Delgado. Josefa was married to Guillermo Rustia, with whom she had no children.
Guillermo executed an affidavit of self-adjudication upon the death of his wife. Josefa, however, was also succeeded by her full-blood siblings as intestate heirs.
In annulling Guillermo's affidavit of self-adjudication, the Supreme Court held:
Since Josefa Delgado had heirs other than Guillermo Rustia, Guillermo could not have validly adjudicated Josefa's estate all to himself. Rule 74, Section 1 of the Rules of Court is clear. Adjudication by an heir of the decedent's entire estate to himself by means of an affidavit is allowed only if he is the sole heir to the estate.
Since it is an indispensable requisite that the decedent died intestate, necessarily, only the decedent's intestate heirs have the right to extrajudicially settle the estate. It would be incongruous for a person who is not called to the decedent's succession as an intestate heir to participate and derive any right from the extrajudicial settlement.
Can the heirs enter into an oral partition of the decedent's estate notwithstanding the requisite that the extrajudicial settlement must be contained in a public instrument?
Yes. The Supreme Court recognized the validity of an oral partition in Vda de Reyes v. Court of Appeals."
Vda de Reyes v. Court of Appeals, G.R No. 92436, July 21, 1991:
There is nothing in Section 1, Rule 74 from which it can be inferred that a written instrument or other formality is an essential requisite to the validity of the partition.
Accordingly, an oral partition is valid.
Likewise, while the rule is unequivocal when it says that the public instrument or the affidavit of self-adjudication, must be filed with the Register of Deeds, this is really for the protection of the heirs. Failure to file the extrajudicial settlement or the affidavit of self-adjudication does not affect its validity when there are no creditors or when no rights of creditors are involved.
Hernandez v. Andal, the Supreme Court, G.R. No. L-273, March 29, 1947:
The requirement that a partition be put in a public document and registered has, in our opinion, for its purpose the protection of creditors and at the same time the protection of the heirs themselves against tardy claims. Note that the last sentence of the section speaks of debts and creditors. The object of registration is to serve as constructive notice, and this means notice to others.
It must follow that the intrinsic validity of partition not executed with the prescribed formalities does not come into play when, as in this case, there are no creditors or the rights of creditors are not affected. No rights of creditors being involved, it is competent for the heirs of an estate to enter into an agreement for distribution in a manner and upon a plan different from those provided by law.
Registration, therefore, notifies third parties who wish to acquire the property that it is subject to an encumbrance of two (2) years, counted from the date of distribution of the estate to the heirs.
It is further required under Section 2 of Rule 74 that the extrajudicial settlement be published in a newspaper of general circulation once a week for three consecutive weeks.
Compliance with the publication requirement does not bind persons who have not participated in or who had no notice of the extrajudicial settlement.
Extrajudicial settlement - on whom binding
The procedure outlined in Section 1 of Rule 74 is an ex parte proceeding.
An ex parte proceeding is a legal action where one party appears in court without the other party
The rule plainly states, however, that persons who did not participate nor had notice of an extrajudicial settlement will not be bound thereby.
Publication that binds the world contemplates a notice that has been sent out or issued before any deed of settlement, partition, or both is agreed upon (i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition), and not after such an agreement has already been executed.
The publication of the settlement does not constitute constructive notice to the heirs who had no knowledge or did not take part in it because the same was notice after the fact of execution. The requirement of publication is geared for the protection of creditors and was never intended to deprive heirs of their lawful participation in the decedent's estate.
Filing of bond
The last requisite for extrajudicial settlement is for the parties to simultaneously file a bond with and as a condition precedent to the filing of the public instrument, stipulation in the action for partition, or of the affidavit of self-adjudication in the office of the Register of Deeds.
The amount of the bond shall be equivalent to the value of the personal property involved, which shall be certified to under oath by the parties concerned.
It shall be conditioned upon the payment of any just claim that may be filed under Section 4 of Rule 74.
Bond is required only when personal property is involved in the extrajudicial settlement.
Real estate is subject to lien in favor of creditors, heirs or other persons for two years from distribution of estate, notwithstanding any transfers of real estate that may have been made.
When the heirs opt for judicial partition
Spouses Villafria v. Plazo, G.R. No. 187524, August 5, 2015:
Pedro L. Rinoza died intestate, leaving several heirs, including his children with his first wife, respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, as well as several properties including a resort, and a family home, and the land on which it stands.
The heirs filed a Complaint for Judicial Partition with Annulment of Title and Recovery of Possession.
Particularly, the complaint alleged:
that Pedro died intestate;
that respondents, together with their co-heirs, are all of legal age, with the exception of one who is represented by a judicial representative duly authorized for the purpose;
that the heirs enumerated are the only known heirs of Pedro;
that there is an account and description of all real properties left by Pedro;
that Pedro's estate has no known indebtedness; and
that respondents, as rightful heirs to the decedent's estate, pray for the partition of the same in accordance with the laws of intestacy.
The petitioner opposed the petition and maintains that since respondents' complaint alleged the following causes of action, the same is actually one for settlement of estate and not of judicial partition.
Is the case an action for settlement of estale and not for judicial partition?
The petition is for judicial partition.
It is true that some of respondents' causes of action pertaining to the properties left behind by the decedent Pedro, his known heirs, and the nature and extent of their interests thereon may fall under an action for settlement of estate. However, a complete reading of the complaint would readily show that, based on the nature of the suit, the allegations therein, and the relief’s prayed for, the action, is clearly one for judicial partition with annulment of title and recovery of possession.
As can be gleaned from the foregoing provisions, the allegations of respondents in their complaint are but customary, in fact, mandatory, to a complaint for partition of real estate. It is clear, therefore, that based on the allegations of the complaint, the case is one for judicial partition. That the complaint alleged causes of action identifying the heirs of the decedent, properties of the estate, and their rights thereto, does not perforce make it an action for settlement of estate.
The general rule is that when a person dies intestate, or, if testate, failed to name an executor in his will or the executor so named is incompetent, or refuses the trust, fails to furnish the bond equipped by the Rules of Court, then the decedent's estate shall be judicially administered and the competent court shall appoint a qualified administrator the order established in Section 6 of Rule 78 of the Rules of Court. An exception to this rule, however, is found in the aforequoted Section 1 of Rule 4 wherein the heirs of a decedent, who left no will and no debts due from is estate, may divide the estate either extrajudicially or in an ordinary action or partition without submitting the same for judicial administration nor applying for the appointment of an administrator by the court. The reasons that where the deceased dies without pending obligations, there is no necessity for the appointment of an administrator to administer the estate for them and to deprive the real owners of their possession to which they are immediately entitled.
In this case, it was expressly alleged in the complaint, and was not disputed, that Pedro died without a will, leaving his estate without any ending obligations. Thus, contrary to petitioner’s contention, respondents were under no legal obligation to submit the subject properties of the estate of a special proceeding for settlement of intestate estate, and are, in fact, encouraged to have the same partitioned, judicially or extrajudicially.
That the complaint contained allegations inherent in an action for settlement of estate does not mean that there was a prohibited joined of causes of action for questions as to the estate's properties as well as a determination of the heirs, their status as such, and the nature and extent of their titles to the estate, may also be properly ventilated in partition proceedings alone. In fact, a complete inventory of the estate may likewise be done during the partition proceedings, especially since the estate has no debts. Indeed, where the more expeditious remedy of partition is available to the heirs, then they may not be compelled to submit to administration proceedings, dispensing of the risks of delay and of the properties being dissipated.
Moreover, the fact that respondents' complaint also prayed for the annulment of title and recovery of possession does not strip the trial court off of its jurisdiction to hear and decide the case. Asking for the annulment of certain transfers of property could very well be achieved in an action for partition, as can be seen in cases where courts determine the parties' rights arising from complaints asking not only for the partition of estates but also for the annulment of titles and recovery of ownership and possession of property.
Indeed, an action for partition does not preclude the settlement of the issue of ownership. In fact, the determination as to the existence of the same is necessary in the resolution of an action for partition. The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper. An action for partition, therefore, is premised on the existence or non-existence of co-ownership between the parties. Unless and until the issue of co-ownership is definitively resolved, it would be premature to effect a partition of an estate.
Section 2. Summary settlement of estate of small value. —
Whenever the gross value of the estate of a deceased person,
whether he died testate or intestate,
does not exceed ten thousand pesos,
and that fact is made to appear
to the Court of First Instance having jurisdiction of the estate
by the petition of an interested person and upon hearing,
which shall be held
not less than one (1) month nor more than three (3) months
from the date of the last publication of a notice
which shall be published once a week for three (3) consecutive weeks
in a newspaper of general circulation in the province, and
after such other notice to interest persons as the court may direct,
the court may proceed summarily,
without the appointment of an executor or administrator,
and without delay, to grant, if proper,
allowance of the will, if any there be,
to determine who are the persons legally entitled
to participate in the estate, and
to apportion and divide it among them
after the payment of such debts of the estate
as the court shall then find to be due;
and such persons, in their own right,
if they are of lawful age and legal capacity,
or by their guardians or trustees legally appointed and qualified,
if otherwise, shall thereupon be entitled
to receive and enter into the possession of the portions
of the estate so awarded to them respectively.
The court shall make such order as may be
just respecting the costs of the proceedings,
and all orders and judgments made or rendered in the course thereof
shall be recorded in the office of the clerk,
and the order of partition or award,
if it involves real estate,
shall be recorded in the proper register's office.
Summary settlement of estate of small value
Applicability:
The decedent's estate (testate or intestate) has a gross value not exceeding ₱10,000.
Procedure:
Filing of Petition – An interested person must file a petition before the Court of First Instance (CFI) with jurisdiction.
Publication Requirement – Notice must be published once a week for three (3) consecutive weeks in a newspaper of general circulation in the province.
Hearing – The hearing shall be held not less than one (1) month and not more than three (3) months from the last publication date.
Court Action – The court may summarily:
Allow the will (if any)
Determine the legal heirs.
Apportion and distribute the estate without appointing an executor or administrator.
Order the payment of debts due from the estate.
Distribution of Estate:
If the heirs are of legal age and capacity, they receive their shares directly.
If heirs are minors or incapacitated, their guardians/trustees shall receive their share.
Recording of Orders:
All orders and judgments must be recorded in the clerk's office.
If the order involves real estate, it must also be recorded in the Register of Deeds.
Unlike extrajudicial settlement, summary settlement of estate may be chosen by the heirs regardless of whether the decedent died testate or intestate.
The following requisites must be present before the heirs may make use of this provision:
The complaint must allege that the gross value of the estate of the deceased does not exceed P10,000.00;
A bond has been duly filed in an amount fixed by the court; and
A proper hearing is held not less than one month nor more than three months from the date of last publication of the notice.
In connection with Section 1, Rule 73, it. was mentioned that the jurisdiction over estate proceedings depends on the gross value of the estate in question.
By virtue of Section 2, Rule 74, summary settlement of estates of small value appears to be within the exclusive jurisdiction of Municipal Trial Courts since the gross value of the estate must not exceed P10,000.00.
In other words, the gross value of summary settlement of estates shall necessarily fall within the jurisdiction of the Municipal Trial Courts, which has jurisdiction over all matters of estate where the gross estate does not exceed either P300,000.00 or P400,000.00, if within Metro Manila.
Summary settlement of estate may be initiated by the heirs, creditors, or other interested persons filing a petition with the court.
Thereafter, the petition must be published in a newspaper of general circulation once a week for three consecutive weeks. Notice must also be given to other interested persons as may be directed by the court.
It is only after compliance with these publication and notice requirements that the court may hear the petition. Specifically, the hearing on the petition must be held not less than one month nor more than three months from the date of the last publication of the notice.
During the hearing, the court may proceed summarily and even without the appointment of an executor and administrator.
The court may also admit the will, if there is any, into probate.
It may likewise determine the heirs and the persons legally entitled to participate in the estate.
Once the court determines who are entitled to participate in the estate, it shall order the payment of debts if there be any if it finds them due, after which it may apportion and divide the estate among those entitled thereto.
The heirs, in their own right, who are of lawful age and legal capacity, or by their legal guardians or trustees legally appointed or qualified, may then be entitled to receive and enter into possession of the portion of the estate awarded to them.
The powers of the court over summary settlement of estate are not limited to the foregoing.
It also has the power to make orders as may be just with regard to the cost of the proceedings, as well as the power to order the recording in the office of the clerk of all orders and judgments made or rendered in the course of the hearings.
Likewise, it may order that the same be recorded in the office of the Register of Deeds when the estate involves real estate.
The Supreme Court has declared that a third person should not be allowed to claim title and ownership against the decedent in the summary proceedings.
Ermac v. Medelo, G.R. No L-32281. June 19, 1975:
The policy of the law is to terminate proceedings for the settlement of the estate of deceased persons with the least loss of time. This is specially true with small estates for which the rules provide precisely a summary procedure dispensing with the appointment of an administrator together with the other involved and cumbersome steps ordinarily required in the determination of the assets of the deceased and the persons entitled to inherit therefrom and the payment of his obligations.
Definitely, the probate court is not the best forum for the resolution of adverse claims of ownership of any property ostensibly belonging to the decedent's estate. While there are settled exceptions to this rule as applied to regular administration proceedings, it is not proper to delay the summary settlement of a deceased person just because an heir or a third person claims that certain properties do not belong to the estate but to him. Such claim must be ventilated in an independent action and the probate court should proceed to the distribution of the estate, if there are no other legal obstacles to it for after all, such distribution must always be subject to the results of the suit. For the protection of the claimant the appropriate step is to have the proper annotation of lis pendens entered.
Distinction between extrajudicial settlement and summary settlement of estate of small value
The distinctions between Sections 1 and 2 of Rule 74 are as follows:
Extrajudicial Settlement
No court intervention required
The value of the estate is immaterial
Allowed only in intestate succession
There must be no outstanding debts at the time of the settlement of the estate
Resorted to at the instance of and by agreement of all heirs
Amount of bond is equivalent to the value of the personal property
Summary Settlement
Judicial adjudication although summary
Gross value of the estate must not exceed P10,000
Allowed in both testate and intestate succession
Available even if there are debts; it is the court which will make provision for its payment
May be instituted by any interested party, even a creditor of the estate without the consent of all the heirs
Amount of bond is to be determined by the court
Section 3. Bond to be filed by distributees. —
The court, before allowing a partition
in accordance with the provisions of the preceding section,
may require the distributees,
if property other than real is to be distributed,
to file a bond in an amount to be fixed by court,
conditioned for the payment of any just claim
which may be filed under the next succeeding section.
Under Section 3, it is only when personal property is involved in the summary settlement of estate that the distributees are required to file a bond, the amount of which shall be fixed by the court.
The bond is conditioned for the payment of any just claim that may be filed pursuant to Section 4.
Section 4. Liability of distributees and estate. —
If it shall appear at any time within two (2) years
after the settlement and distribution of an estate
in accordance with the provisions
of either of the first two sections of this rule,
that an heir or other person has been unduly deprived
of his lawful participation in the estate,
such heir or such other person
may compel the settlement of the estate in the courts
in the manner hereinafter provided
for the purpose of satisfying such lawful participation.
And if within the same time of two (2) years,
it shall appear that there are debts outstanding against the estate
which have not been paid,
or that an heir or other person
has been unduly deprived of his lawful participation
payable in money,
the court having jurisdiction of the estate may,
by order for that purpose, after hearing,
settle the amount of such debts or lawful participation
and order how much and in what manner
each distributee shall contribute in the payment thereof,
and may issue execution, if circumstances require,
against the bond provided in the preceding section
or against the real estate belonging to the deceased, or both.
Such bond and such real estate shall remain charged
with a liability to creditors, heirs, or other persons
for the full period of two (2) years after such distribution,
notwithstanding any transfers of real estate that may have been made.
Liability of distributees and estate.
Time Limit:
Within two (2) years after the settlement and distribution of the estate under extrajudicial or summary settlement.
Grounds:
Undue Deprivation of Lawful Participation –
If an heir or another person was wrongfully excluded, they may compel the judicial settlement of the estate.
Outstanding Debts –
If unpaid debts arise within two (2) years, the court may:
Determine the amount owed.
Order how much each distributee must contribute to payment.
Enforcement of Liabilities:
The court may issue execution against:
The bond posted during extrajudicial settlement.
The real estate of the deceased.
Both bond and real estate, if necessary.
Effect on Transfers of Real Estate:
Any transfers of real estate do not extinguish liability.
The estate remains charged with liability to creditors, heirs, or other claimants for two (2) years after distribution.
Remedies of aggrieved parties after the extrajudicial or summary
settlement of estate
Section 4 provides for three instances when an heir may be compelled to settle the decedent's estate in court:
There has been undue deprivation of lawful participation on the estate on the part of an heir or other interested person;
There exists debts against the estate; or
There has been undue deprivation of lawful participation payable in money on the part of an heir or other interested person.
Thus, an heir or interested person who was able to participate either in the extrajudicial or summary settlement of estate of the decedent has a period of two years after the settlement and distribution to assail its validity.
The prescriptive period stated under Section 4 applies only to persons who participated, took part in, or had notice of the settlement of, the estate provided under Rule 74. Persons who did not participate in the extrajudicial or summary settlement of estate are not bound by the same.
It may be argued that the publication of the extrajudicial settlement or the petition for the summary settlement of the estate constitutes notice to the world and thereby precludes claims not initiated within the two-year period.
This argument has been struck down by the Supreme Court, saying that publication of the settlement does not constitute constructive notice to the heirs who had no knowledge or did not take part in it.
This is especially true for extrajudicial settlement, where publication is made after the fact of its execution, when the heirs had already executed the extrajudicial settlement.
What then is the remedy of an heir who is deprived of one's share in the estate because one did not participate, take part, or had no notice of the settlement of the estate?
An heir may file an action for reconveyance within ten years, which is based on an implied or constructive trust.
This implied or constructive trust is an obligation created by law, which an interested person may enforce within the ten-year prescriptive period.
This prescriptive period shall commence upon the issuance of a new title over the property in question, or from the time of actual notice in case of unregistered deed.
Notwithstanding the alleged existence of fraud in excluding certain heirs from the settlement of estate, the Supreme Court has held that the prescriptive period is ten years, and not four years counted from discovery, as stated in Gerona v. De Guzman, G.R. No. L-19060, May 29, 1964.
The Gerona doctrine was already abandoned in at least three cases.
The ten-year prescriptive period was reiterated in the following case:
Neri vs. Heirs of Uy, G.R. No. 194366, October 10, 2012:
During her lifetime, Anunciacion Neri (Anunciacion) had seven children, two from her first marriage with Gonzalo Illut (Gonzalo), namely, Eutropia and Victoria, and five from her second marriage with Enrique Neri (Enrique), the petitioners.
Throughout the marriage of spouses Enrique and Anunciacion, they acquired several homestead properties located in Samal, Davao del Norte (Samal Properties).
When Anunciacion died intestate, Enrique, in his personal capacity and as natural guardian of some of petitioner Rosa and Douglas, and the other petitioners, executed an ExtraJudicial Settlement of the Estate with Absolute Deed of Sale.
They adjudicated among themselves the Samal Properties and thereafter conveyed them to Spouses Uy.
Subeequently, the petitioners sought the annulment of the sale of the Samal Properties as having been sold within the prohibited period. Eutropia and Victoria joined in the annulment proceedings since they were excluded and deprived of their legitimes.
The trial court voided the sale since Eutropia and Victoria were deprived of their hereditary rights and that Enrique had no authority to sell the shares of his minor children.
However, the Court of Appeals held that the extrajudicial settlement and sale were valid and binding as against Porique and bie children.
It further held that it was unconscionable to deprive the Spouses Uy of their property after 17 years, since Eutropia and Victoria fled their action more than two years from their knowledge that they were excluded as heirs.
Was the Extra-Judicial Settlement of Estate with Absolute Deed of Sale valid?
NO. In the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion Should have participated. Considering that Eutropia and Victoria were admittedly excluded and that then minors Rosa and Douglas were not properly represented therein, the settlement was not valid and binding uponthem and consequently, a total nullity.
The effect of excluding the heirs in the settlement of estate was further elucidated in Segura v. Segura, thus:
It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. Under the rule "no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof." As the partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years from its execution…
However, while the settlement of the estate is null and void, the subsequent sale of the subject properties made by Enrique and his children, Napoleon, Alicia and Visminda, in favor of the respondents is valid but only with respect to their proportionate shares therein. It cannot be denied that these heirs have acquired their respective shares in the properties of Anunciacion from the moment of her death and that, as owners thereof, they can very well sell their undivided share in the estate.
With respect to Rosa and Douglas who were minors at the time of the execution of the settlement and sale, their natural guardian and father, Enrique, represented them in the transaction. However, on the basis of the laws prevailing at that time, Enrique was merely clothed with powers of administration and bereft of any authority to dispose of their 2/16 shares in the estate of their mother, Anunciacion.
The disputed sale entered into by Enrique in behalf of his minor children without the proper judicial authority, unless ratified by them upon reaching the age of majority, is unenforceable in accordance with Articles 1317 and 1403(1) of the Civil Code. Records, however, show that Rosa had ratified the extrajudicial settlement of the estate with absolute deed of sale.
Considering, thus, that the extrajudicial settlement with sale is invalid and therefore, not binding on Eutropia, Victoria and Douglas, only the shares of Enrique, Napoleon, Alicia, Visminda and Rosa in the homestead properties have effectivelybeen disposed in favor of spouses Uy.
On the issue of prescription, the Court agrees with petitioners that the present action has not prescribed in so far as it seeks to annul the extrajudicial settlement of the estate. Contrary to the ruling of the CA, the prescriptive period of 2 years provided in Section 1 Rule 74 of the Rules of Court reckoned from the execution of the extrajudicial settlement finds no application to petitioners Eutropia, Victoria and Douglas, who were deprived of their lawful participation in the subject estate. Besides, an "action or defense for the declaration of the inexistence of a contract does not prescribe" in accordance with Article 1410 of the Civil Code.
However, the action to recover property held in trust prescribes after 10 years from the time the cause of action accrues, which is from the time of actual notice in case of unregistered deed. In this case, Eutropia, Victoria and Douglas claimed to have knowledge of the extrajudicial settlement with sale after the death of their father, Enrique, in 1994 which spouses Uy failed to refute. Hence, the complaint filed in 1997 was well within the prescriptive period of 10 years.
An exception carved out by jurisprudence is that an action for reconveyance is imprescriptible when the plaintiff, the legal owner, and not the defendant registered owner, is in possession of the land to be reconveyed.
It must, however, be remembered that reconveyance can no longer be availed of once the property has passed to an innocent purchaser for value. The aggrieved heirs may hence sue for damages against their co-heirs who have perpetrated the fraud."
In Reillo v. San Jose," the deed of extrajudicial settlement allegedly excluded some of the heirs, who had no knowledge of,and thus, did not consent thereto. The remedy resorted to by the excluded heirs, which was upheld by the Supreme Court, was an action for annulment of said deed.
In the following case, it was held that such an action for annulment of extrajudicial settlement is imprescriptible:
Bautista vs. Bautista G.R. No. 160556, Auguat 3, 2007:
Teodora Rosario owned a parcel of land in Pangasinan (the property). She died intestate, leaving behind her spouse Isidro Bautista (Isidro) and five children, namely: Teofilo Bautista (Teofilo), Alegria Bautista (Alegria), Angelica Bautista (Angelica), Pacita Bautista (Pacita) and Gil Bautiata (Gil).
Isidro, Pacita, Gil, Alegria, and Angelica executed a Deed of Extra-Judicial Partition. Teofilo was excluded from the partition.
Alegria and Angelica, who, under the Deed of Extra- Judicial Partition, acquired all of the property, sold the same to Pacita and her common-law husband Pedro Tandoc (Pedro). Pacita, with Pedro's conformity, later conveyed the property in favor of Cesar Tamondong, Pedro's nephew.
Teofilo thereafter filed a complaint against Alegria, Angelica, Pedro (by this time, Pacita was already dead). Priscilla (wife of his deceased brother. Gil), and Gil's children. Teofilo claimed that he was defrauded and that the sale between Paci ta and Cesar Tamondong was fictitious.
The Court of Appeals ruled chat Teofilo's action has already prescribed
Has Teofilo's right to nullify the Deed of Extrajudicial Partition already prescribed?
NO. The Deed of Extrajudicial Partition in the case at bar being invalid, the action to have it annulled does not prescribe.
Since the deed of extrajudicial partition is invalid, it transmitted no rights to Teofilo's coheirs. Consequently, the subsequent transfer by Angelica and Alegria of the property to Pacita and her husband Pedro, as well as the transfer of the property to Cesar Tamondong is invalid, hence, conferring no rights upon the transferees under the principle of nemod at quod non habet.
Of similar import is a later case, viz.:
Macababbad, Jr. v. Masirog, G.R. No. 161237. January 14, 2009:
The deceased spouses Pedro Masirag (Pedro) and Pantaleona Tulauan (Pantaleona) were the original registered owners of Lot No. 4144. They had eight children: Valeriano, Domingo, Pablo, Victoria, Vicenta, Inicio, Maxima, and Maria.
Respondents Fernando, Faustina, Corazon, and Leonor Masirag are the children of Valeriano and Alfora Goyagoy, while Leoncio is the son of Vicenta and Braulio Goyagoy. The respondents allegedly did not know of the demise of their respective parents.
It appeared that the petitioners falsified a document entitled Extra-judicial Settlement with Simultaneous Sale of Portion of Registered Land (Lot 4144) dated December 3, 1967" (the extrajudicial settlement of estate and sale) so that the respondents were deprived of their shares in Lot No. 4144.
The document purportedly bore the respondents' signatures, making them appear to have participated in the execution of the document when they did not. The document ostensibly conveyed the subject property to Macababbad for the sum of P1,800.00.
Lot No. 4144 was registered in the names of its new owners. Subsequently, Macababbad registered portions of Lot No. 4144 in his name and sold other portions to third parties. Chua filed a petition for the issuance of a title evidencing his ownership over a subdivided portion of Lot No. 4144 covering 803.60 square meters.
Thus, the respondents filed an action for quieting of title, nullity of titles, reconveyance, damages and attorney's fees against the petitioners.
The trial court dismissed the complaint because there was failure to implead indispensable parties, namely, the other heirs of Pedro and Pantaleona and the persons who have already acquired title to portions of the subject property in good faith.
On appeal, however, the CA ruled that the respondents' cause of action had not prescribed, because "in assailing the extrajudicial partition as void, the [respondents] have the right to bring the action unfettered by a prescriptive period.
Does the issuance of the certificates of titles in the name of petitioners convert the action lo one of reconveyance of titled land which, under settled jurisprudence, prescribes in 10 years?
NO. Precedents say it does not; the action remains imprescriptible, the issuance of the certificates of titles notwithstanding. Ingjug-Tiro is instructive on this point:
Article 1458 of the New Civil Code provides: "By the contract of sale one of the contracting parties obligates himself of transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent." It is essential that the vendors be the owners of the property sold otherwise they cannot dispose that which does not belong to them. As the Romans put it: "Nemo dat quod non habet." No one can give more than what he has. The sale of the realty to respondents is null and void insofar as it prejudiced petitioners' interests and participation therein. At best, only the ownership of the shares of Luisa, Maria and Guillerma in the disputed property could have been transferred to respondents.
Consequently, respondents could not have acquired ownership over the land to the extent of the shares of petitioners. The issuance of a certificate of title in their favor could not vest upon them ownership of the entire property; neither could it validate the purchase thereof which is null and void. Registration does not vest title; it is merely the evidence of such title. Our land registration laws do not give the holder any better title than what he actually has. Being null and void, the sale to respondents of the petitioners' shares produced no legal effects whatsoever.
Similarly, the claim that Francisco Ingjug died in 1963 but appeared to be a party to the Extrajudicial Settlement and Confirmation of Sale executed in 1967 would be fatal to the validity of the contract, if proved by clear and convincing evidence. Contracting parties must be juristic entities at the time of the consummation of the contract. Stated otherwise, to form a valid and legal agreement it is necessary that there be a party capable of contracting and party capable of being contracted with. Hence, if any one party to a supposed contract was already dead at the time of its execution, such contract is undoubtedly simulated and false and therefore null and void by reason of its having been made after the death of the party who appears as one of the contracting parties therein. The death of a person terminates contractual capacity.
In actions for reconveyance of the property predicated on the fact that the conveyance complained of was null and void ab initio, a claim of prescription of action would be unavailing. "The action or defense for the declaration of the inexistence of a contract does not prescribe." Neither could laches be invoked in the case at bar. Laches is a doctrine in equity and our courts are basically courts of law and not courts of equity. Equity, which has been aptly described as "justice outside legality," should be applied only in the absence of, and never against, statutory law. Aequetas nunguam contravenit legis. The positive mandate of Art. 1410 of the New Civil; Code conferring imprescriptibility to actions for declaration of the inexistence of a contract should preempt and prevail over all abstract arguments based only on equity. Certainly, laches cannot be set up to resist the enforcement of an imprescriptible legal right, and petitioners can validly vindicate their inheritance despite the lapse of time. The respondents’ action is therefore imprescriptible and the CA committed no reversible error in so ruling.
Was the trial court's dismissal of the complaint for fa ilure to implead indispensable parties proper?
YES. Rule 3, Section 11 of the Rules of Court provides that neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action.
In an action for reconveyance, all the owners of the property sought to be recovered are indispensable parties. Thus, if reconveyance were the only relief prayed for, impleading petitioners Macababbad and the spouses Chua and Say would suffice. On the other hand, under the claim that the action is for the declaration of the nullity of extrajudicial settlement of estate and sale, all of the parties who executed the same should be impleaded for a complete resolution of the case. This case, however, is not without its twist on the issue of impleading indispensable parties as the RTC never issued an order directing their inclusion. Under this legal situation, particularly in light of Rule 3, Section 11 of the Rules of Court, there can be no basis for the immediate dismissal of the action.
The rulings in Bautista and Macababbad were based on Article 1410 of the Civil Code, which reads:
"The action or defense for the declaration of the inexistence of a contract does not prescribe."
Among the contracts that are inexistent and void from the beginning under Article 1409 are:
"(2) Those which are absolutely simulated or fictitious."
A ruling on prescription necessarily requires an analysis of the cause of action of the plaintiff in a case. Thus, although the word "reconveyance" may appear in the title of the complaint, but it is clear from the allegations that the complainants never intended to part with the property, as their signatures in the disputed instrument were forged, such complaint is one for annulment and not merely for reconveyance. It is, therefore, imprescriptible.
Section 5. Period for claim of minor or incapacitated person. —
If on the date of the expiration of the period of two (2) years
prescribed in the preceding section
the person authorized to file a claim
is a minor or mentally incapacitated,
or is in prison or outside the Philippines,
he may present his claim within one (1) year
after such disability is removed.
Carreon vs. Agcaoili (1 SCRA 521)
During the marriage of Bonifacio Carreon and Celerina Dauag, a parcel of registered land was acquired.
Upon Carreon's death in 1946, Celerina executed an affidavit of self-adjudication, declaring herself as the sole heir and obtaining a new transfer certificate of title (TCT) in her name, with an annotation subjecting the title to Section 4, Rule 74 of the Rules of Court.
Celerina mortgaged half of the land to the Philippine National Bank (PNB) for a loan. Later, she sold the entire property to Rufo Agcaoili, who paid the full purchase price, settled the mortgage, and obtained a new TCT in his name.
Years later, in 1955, Celerina’s children with her deceased husband sued Agcaoili, claiming the sale was actually a mortgage and seeking to recover half of the property.
The trial court ruled against them, prompting their appeal.
Whether Rufo Agcaoili was a purchaser in bad faith and if he holds the property in trust for the children of Celerina Dauag.
There was no proof that Agcaoili was aware of any flaw in Celerina’s title or that he had knowledge of her children’s rights.
Fraud must be proven by clear and sufficient evidence, and none was presented against Agcaoili.
The lien under Section 4, Rule 74, which protected the rights of heirs for two years, had already expired when the sale was executed and registered.
Since Agcaoili was a purchaser in good faith who relied on the Torrens title, he acquired a valid and indefeasible title to the land.
Hernandez vs. Andal (GR No. L-273, March 29, 1974, 78 Phil 196)
The Hernandez siblings inherited Lot No. 120073 in Batangas from their father.
On January 23, 1944, Maria and Aquilina Hernandez sold 1,800 sqm of the land to Zacarias Andal and his wife for P860. This portion was allegedly allotted to them in a verbal partition among the five siblings.
Cresencia Hernandez attempted to repurchase the land but initially only offered P150. On April 8, 1944, she claimed she later offered P860 plus expenses, but the land had already been resold.
On March 26, 1944, Andal resold the land to the intervenors Maria and Aquilina Hernandez for P970, which included his expenses.
Defendant Andal admitted willingness to resell to Cresencia for P860 plus P50 in expenses but rejected the P150 offer.
The intervenors alleged a formal partition had already occurred and that Cresencia initially delayed the sale before ultimately failing to match Andal’s offer.
RTC: Declared the resale of the land by Andal to Maria and Aquilina Hernandez as illegal and void.
Ordered Andal to execute a deed of resale in favor of Cresencia Hernandez upon payment of P860 plus P50 for expenses.
Dismissed damages claims from both parties.
The applicability of Section 21, Rule 123, and Section 1, Rule 74 of the Rules of Court was examined.
Whether a partition agreement must be in writing under the statute of frauds.
Under Philippine law, an oral partition that has been performed is valid and enforceable.
Equity courts may recognize and enforce oral partitions if parties have taken possession and exercised ownership.
Effect of Rule 74, Section 1 on Parol Partition
Some justices argued that under Rule 74, a verbal partition is entirely void unless executed in a public document and registered.
Others contended that the rule is procedural rather than substantive and does not invalidate oral partitions between heirs when no creditors are affected.
The Rules of Court do not expressly require writing for the validity of a partition between heirs.
The purpose of requiring a public instrument and registration is to protect creditors, not to invalidate oral partitions per se.
The Supreme Court reversed the lower court’s decision. The case was remanded for further proceedings and a new judgment consistent with this decision.
Portugal vs. Portugal-Beltran (GR No. 155555, August 16, 2005)
Petitioners Isabel P. Portugal and her son, Jose Douglas Portugal Jr., challenged the Court of Appeals' decision affirming the RTC of Caloocan City’s dismissal of their complaint for annulment of title due to lack of cause of action and jurisdiction.
In 1942, Jose Q. Portugal married Paz Lazo.
In 1948, he later married petitioner Isabel de la Puerta.
In 1949, Isabel gave birth to Jose Douglas Portugal Jr.
In 1950, Paz gave birth to Aleli (Leonila Perpetua Aleli Portugal).
In 1968, Portugal and his siblings executed a Deed of Extra-Judicial Partition, granting Portugal sole ownership of a 155 sq. m. parcel of land in Caloocan. The Registry of Deeds issued TCT No. 34292 in Portugal’s name, indicating him as married to Paz Lazo.
In 1984, Paz died.
In 1985, Portugal died intestate.
In 1988, respondent Leonila Portugal-Beltran executed an Affidavit of Adjudication, declaring herself as the sole heir and obtaining a new TCT in her name.
In 1996, upon learning of these events, petitioners filed a complaint seeking to annul the Affidavit of Adjudication and the transfer of title.
Petitioners claimed Leonila was not related to Portugal and falsely represented herself as his heir.
RTC: Dismissed the case, citing that petitioners had not established their status as heirs through special proceedings and lacked legal standing.
CA: Affirmed the RTC’s decision, ruling that heirship must be determined in a special proceeding, not an ordinary civil action.
Whether petitioners must first institute a special proceeding to determine their status as heirs before pursuing the annulment of respondent’s Affidavit of Adjudication and the Transfer Certificate of Title (TCT) issued in her name.
Special Proceeding Not Always Required
Determination of heirship should be made in a special proceeding.
If special proceedings are pending, or necessary but not yet filed, heirship should be determined therein.
If estate proceedings are closed or a putative heir has lost the right to be declared in probate, an ordinary civil action may be filed for the annulment of partition or adjudication.
In this case, since only one parcel of land was involved, requiring a special proceeding would be impractical, costly, and unnecessary.
The trial court already assumed jurisdiction and allowed the presentation of evidence during pre-trial.
The trial court must evaluate evidence and resolve the following issues:
Validity of the two marriages of the deceased.
Who between Jose Portugal Jr. (plaintiff) and Leonila P. Beltran (defendant) is the legal heir.
Validity of TCT No. 159813.
Entitlement of plaintiffs to their claims.
Delgado Vda. Dela Rosa vs. Heirs of Marciana Rustia Vda. De Damian (GR No. 155733, January 27, 2006, 48 SCRA 334)
This case involves the settlement of the intestate estates of Guillermo Rustia and Josefa Delgado.
The claimants are divided into two groups:
the alleged heirs of Josefa Delgado, consisting of her half- and full-blood siblings, nephews, nieces, and other relatives, and
the alleged heirs of Guillermo Rustia, including his sisters, nephews, nieces, an illegitimate child, and an ampun-ampunan (de facto adopted child).
Josefa Delgado was the natural child of Felisa Delgado and Lucio Campo, with five full-blood siblings.
Felisa had a prior son, Luis Delgado, with Ramon Osorio, but the legitimacy of their marriage is disputed.
The legitimacy of this marriage determines whether Luis Delgado and his heirs can inherit from Josefa’s estate.
Petitioners argue that no marriage took place.
Respondents insist that the absence of records does not disprove marriage.
In 1972, Josefa Delgado died without a will.
In 1973, Guillermo Rustia later executed an affidavit of self-adjudication over Josefa’s estate.
A key issue is whether Guillermo Rustia and Josefa Delgado were legally married.
Petitioners claim they merely lived together and cite the absence of a marriage record and documents, such as a civil registry record and a baptismal certificate referring to Josefa as “SeΓ±orita.”
Respondents argue they were married on June 3, 1919, and lived as husband and wife for over 50 years, presenting supporting documents such as a passport, certificate of identity, and property titles naming Josefa as Guillermo’s wife.
Guillermo Rustia and Josefa Delgado had no children but raised Guillermina Rustia Rustia and Nanie Rustia as ampun-ampunan.
Guillermo had an illegitimate child, Guillerma Rustia, with Amparo Sagarbarria.
Guillerma claims open and continuous recognition as Guillermo’s daughter, citing documents like Josefa’s obituary and her university records.
Respondents counter that she was never legally acknowledged, making her ineligible to inherit.
In 1974, Guillermo Rustia filed a petition to adopt Guillermina Rustia Rustia, declaring he had no legitimate or acknowledged natural children.
In 1974, Guillermo Rustia died without a will, leaving behind his sisters and the children of his predeceased brother as potential heirs.
In 1975, Luisa Delgado vda. de Danao, daughter of Luis Delgado, petitioned for the administration of Josefa and Guillermo’s estates.
Guillermo’s sisters, his brother’s heirs, and Guillermina Rustia Rustia, opposed arguing that Luisa and her co-claimants were barred from inheriting under succession laws.
Guillerma Rustia later intervened, claiming she was Guillermo’s only direct descendant.
Whether Guillermo Rustia and Josefa Delgado had a valid marriage.
Presumption of Marriage
Under Rule 131, Section 3 of the Rules of Court, a man and woman cohabiting as husband and wife are presumed to be married.
Guillermo Rustia and Josefa Delgado cohabited for over 50 years, were publicly known as spouses, and legal documents referred to them as married.
A marriage contract is primary evidence, but its absence does not disprove a marriage.
The petitioners failed to rebut the legal presumption of marriage.
Who the legal heirs of each decedent are.
The Lawful Heirs of Josefa Delgado
Josefa Delgado and her siblings were illegitimate children of their mother, Felisa Delgado. Since they were all illegitimate, they could inherit from each other.
Only Josefa’s surviving full or half-siblings (or their children) were entitled to her estate. Grandnephews and grandnieces were excluded from inheriting.
The trial court was tasked with determining Josefa’s lawful heirs.
Guillermo Rustia, as her spouse, was entitled to half of her estate under Article 1001 of the Civil Code.
The Lawful Heirs of Guillermo Rustia
Guillerma Rustia claimed to be Guillermo Rustia’s illegitimate child but failed to prove legal recognition. Recognition required either:
Compulsory acknowledgment (e.g., open and continuous possession of child status).
Voluntary recognition (e.g., an authentic written acknowledgment).
Guillerma’s claim based on a report card and obituary was insufficient as evidence.
Another claimant, Guillermina Rustia Rustia, was not legally adopted and was also excluded.
Guillermo Rustia’s lawful heirs were his surviving sisters, nieces, and nephews.
Who should be appointed as administrator of their estates.
Administration of the estate follows Rule 78, Section 6 of the Rules of Court, prioritizing the spouse or next of kin.
Joint administrators were appointed:
Carlota Delgado vda. de la Rosa (for Josefa Delgado’s heirs).
A nominee from Guillermo Rustia’s nephews and nieces
Adjudication by an heir of the decedent’s entire estate to himself by means of an affidavit is allowed only if he is the sole heir of the estate.
Since Josefa Delgado had heirs other than Guillermo Rustia, Guillermo could not have validly adjudicated Josefa’s estate all to himself.
Rule 74, Section 1 of the Rules of Court is clear. Adjudication by an heir of the decedent’s entire estate to himself by means of an affidavit is allowed only if he is the sole heir to the estate.
Cua vs. Vargas (GR No. 156356, October 31, 2006)
The late Paulina Vargas left a parcel of residential land in San Juan, Virac, Catanduanes.
In February 1994, an Extra Judicial Settlement Among Heirs was executed by some heirs, partitioning the property, but not all heirs signed. It was published in Catanduanes Tribune for three weeks.
In November 1994, a second Extra Judicial Settlement Among Heirs with Sale was executed, where the shares of the signing heirs were sold to Joseph Cua, the petitioner.
Gloria Vargas, unaware of both settlements, discovered the sale when the house was demolished in May 1995. Gloria Vargas claims that the sale was void as she was not notified.
MTC: Dismissed Gloria’s complaint, upheld the sale to Joseph Cua, ruling the partition was valid and binding.
RTC: Affirmed MTC's decision.
CA: Reversed the lower court decisions, declaring both settlements void due to lack of Gloria's participation and consent.
Cua argued that the publication of the partition served as constructive notice to Gloria, implying her consent.
Ex Parte Proceeding (Rule 74):
Section 1 of Rule 74 outlines that heirs who do not participate or are unaware of an extrajudicial settlement are not bound by it.
It contemplates a notice that has been sent out or issued before any deed of settlement and/or partition is agreed upon (i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition), and not after such an agreement has already been executed as what happened in the instant case with the publication of the first deed of extrajudicial settlement among heirs.
Publication of the settlement after execution does not constitute valid notice to non-participating heirs.
Validity of Sale and Redemption:
Heirs who participated in the sale are bound by it, but non-participating heirs have the right to redeem their shares.
Written notice is mandatory for starting the redemption period under Article 1088 of the Civil Code.
Actual knowledge of the sale does not substitute for written notice.
Petitioner in Bad Faith:
Petitioner knew that not all heirs participated in the settlement and sale, making his claim of good faith invalid.
The sale was incomplete as the property had not yet been partitioned.
Spouses Villafria vs. Plazo (GR No. 187524, August 5, 2015)
In 1989, Pedro L. Rifioza died intestat, leaving multiple heirs, including children from his first marriage, Ma. Gracia R. Plazo and Ma. Fe Alaras.
He owned several properties, including a resort and a family home in Nasugbu, Batangas.
In March 1991, respondents discovered that Pedro's second wife, Benita Tenorio, and other heirs sold the properties to petitioners, spouses Francisco Villafria and Maria Butiong, without the respondents' knowledge or consent.
Benita showed a document she believed evidenced a sale, but it actually referred to a loan repayment by Pedro and Benita.
Respondents, upon inquiry, found no record of the transaction at the Register of Deeds and noticed some cottages at the resort had been demolished.
Respondents filed a complaint for judicial partition, annulment of the titles, and recovery of possession, claiming the sale was unauthorized.
Petitioners argued they acted in good faith and presented documents including an Extra-Judicial Settlement and Deed of Sale which were allegedly notarized.
RTC: Nullified the documents due to notarization irregularities and failure to present proper witnesses, ordering the return of the properties to the respondents.
CA: Affirmed the trial court’s decision, stating that the Deed of Sale was invalid due to issues with notarization, execution, and authenticity.
Whether the Extra-Judicial Settlement and Deed of Sale were valid and enforceable.
Partition of an estate.
The respondents' complaint is for judicial partition with annulment of title and recovery of possession, not a special proceeding for the settlement of estate.
The case involves the partition of real estate and determination of ownership, which can include annulment of title, as part of the partition proceedings.
Relevant Rules and Procedures:
Section 1, Rule 74: Provides for extrajudicial settlement of estate by heirs when there are no debts, and heirs are all of age. A partition may also be filed as an ordinary action.
Section 1, Rule 69: Pertains to a complaint for partition, outlining the required description of the property and parties involved.
In this case, the respondents' complaint contains the necessary elements for an action for partition (heirs, property, and absence of debt).
Partition proceedings do not necessitate a separate special proceeding for the determination of heirship if the parties have already presented evidence on the matter.
Jurisdiction of the Court
The trial court has jurisdiction over the case since the action involves the annulment of title and partition of property, both of which are within the scope of the Regional Trial Court (RTC).
Even though the complaint seeks annulment, it is properly filed under the partition suit, and the RTC has the jurisdiction to resolve it.
Validity of Sale and Ownership Claims:
Petitioners failed to substantiate the authenticity of the documents regarding the sale of property (e.g., undated documents, forged signatures, unregistered instruments).
The petitioners' actions, such as demolishing cottages and building improvements, raise doubts about their claim to ownership.
The claim of good faith is not credible due to the defective instruments and the petitioners' knowledge of potential flaws in their title.
Teves vs. Court of Appeals (GR No. 109963, October 13, 1999)
Marcelina Cimafranca and Joaquin Teves had nine children: Teotimo, Felicia, Pedro, Andres (who died without issue), Asuncion, Gorgonio, Crescenciano, Arcadia, and Maria.
After their deaths in 1943 (Marcelina) and 1953 (Joaquin), their children executed extrajudicial settlements to divide their parents' property, two parcels of land.
In 1956, Teotimo, Felicia, Pedro, Asuncion, Gorgonio, and Arcadia Teves executed a “Settlement of Estate and Sale,” transferring their shares of Lot 769-A to Asuncion Teves for P425.00.
In 1959, Maria Teves executed a similar “Extrajudicial Settlement and Sale,” conveying her share of Lot 769-A to Asuncion for P80.00.
In 1971, Lot 6409 was similarly settled, with the heirs selling their shares to Asuncion Teves for P100.00.
In 1984, Ricardo and Arcadia Teves filed a complaint for partition and reconveyance of land against the heirs of Asuncion Teves.
Plaintiffs argued that the settlement documents were forged.
RTC: Ruled in favor of the defendants, asserting the validity of the documents and rejecting the plaintiffs' claims of fraud.
CA: Affirmed the trial court's decision, with a modification.
Whether the extrajudicial settlements executed by the heirs of Joaquin Teves and Marcelina Cimafranca are valid.
The Extrajudicial Settlements are Valid
Courts upheld the extrajudicial settlements as valid as they were executed with all the legal formalities required by law.
Public documents are presumed true unless clear, strong, and convincing evidence proves otherwise.
An extrajudicial settlement is a contract and cannot be invalidated simply due to regret or dissatisfaction with the outcome.
Plaintiffs are bound by their prior agreement, regardless of the perceived unfairness.
Intrinsic Validity of Unregistered Settlements
The non-registration of the extrajudicial settlements covering Lot 769-A did not affect their intrinsic validity.
The requirement of registration is for the protection of creditors and heirs against tardy claims. Since Marcelina Cimafranca had no creditors, the settlements were binding among the heirs despite their non-registration.
Laches and Delayed Action
Plaintiffs filed the case over 25 years after the conveyance of Lot 769-A and over 10 years after the issuance of the title for Lot 6409.
This delay constitutes laches (negligence in asserting rights), barring the claim.
Gerona vs. De Guzman (GR No. L-19060, May 29, 1964, 11 SCRA 153)
Petitioners Ignacio, Maria Concepcion, Francisco, and Delfin Gerona are the legitimate children of Domingo Gerona and Placida de Guzman.
Placida de Guzman was the legitimate daughter of Marcelo de Guzman and his first wife, Teodora de la Cruz.
Marcelo de Guzman remarried Camila Ramos, with whom he had several children (respondents).
After Marcelo's death, respondents executed a deed of "extra-judicial settlement" in 1948, fraudulently excluding petitioners as forced heirs and transferring properties solely to themselves.
Petitioners sought to annul the extra-judicial settlement, asserting fraud and demanding their rightful share (1/8th) of the estate. They also demanded reconveyance of the properties and sought damages.
Respondents claimed Placida de Guzman was a spurious child of Marcelo de Guzman and that petitioners’ claim was barred by the statute of limitations.
CFI: Dismissed the petitioners' case, citing that the action was time-barred due to prescription.
Ruled that Placida was a legitimate child of Marcelo de Guzman. The properties in question belonged to the conjugal partnership of Marcelo and Camila.
Petitioners argued that the statute of limitations did not apply, as they only discovered the fraud in 1956 or 1957 and filed the case in 1958.
Whether the four-year prescriptive period for filing an action based on fraud began to run from the discovery of the fraud in 1956 or 1957.
Although partition actions typically don’t prescribe, the fraudulent act of respondents (claiming exclusive heirship and securing new titles) set up an adverse title.
The action for partition is subject to the statute of limitations when the defendants hold the property under an adverse title.
The statute of limitations for annulment of the deed (based on fraud) began when the deed was registered on June 25, 1948, which was constructive notice.
Petitioners had four years from this date to file the case.
The complaint was filed more than 10 years after the deed’s registration, and thus, was time-barred.
Neri vs. Heirs of Uy (GR No. 194366, October 10, 2012)
Anunciacion Neri had 7 children:
2 from her first marriage (Eutropia and Victoria with Gonzalo Illut) and
5 from her second marriage (Napoleon, Alicia, Visminda, Douglas, and Rosa with Enrique Neri).
Anunciacion and Enrique acquired several homestead properties in Samal, Davao del Norte
In 1977, Anunciacion passed away intestate.
In 1979, Enrique and his children (Napoleon, Alicia, Visminda, Rosa, and Douglas) executed an Extra-Judicial Settlement and Absolute Deed of Sale of the homestead properties to the spouses Hadji Yusop Uy and Julpha Ibrahim Uy for ₱80,000.
In 1996, Enrique's children filed a complaint to annul the sale, arguing it violated the prohibitory period for homestead sales and that Eutropia and Victoria were excluded from the sale.
The heirs of the Uy spouses denied the claims, citing the sale occurred beyond the 5-year prohibitory period.
RTC: Annulled the settlement and sale, ruling Eutropia and Victoria were excluded and the sale of minors' shares was invalid.
CA: Reversed the RTC ruling, validating the settlement and sale but allowing Eutropia and Victoria to claim their legitimes.
Whether the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale is valid.
Exclusion of Heirs
The Extra-Judicial Settlement was invalid because Eutropia and Victoria were excluded, and minors Rosa and Douglas were not properly represented by Enrique.
Sale was valid only for the shares of Enrique, Napoleon, Alicia, Visminda, and Rosa, as they had the right to sell their respective portions.
Rosa ratified the sale, but Douglas did not.
Laches and Prescription
The action for annulment was not barred by prescription, as it was filed within the 10-year period for trust actions.
The excluded heirs were not bound by the settlement.
The action to recover property held in trust prescribes after 10 years, which had not yet lapsed when the complaint was filed in 1997.
The heirs of Uy became co-owners of the properties with Eutropia, Victoria, and Douglas, holding the latter’s shares under an implied constructive trust. The amount paid for their shares must be returned with legal interest.
Bautista vs. Bautista (GR No. 160556, August 3, 2007)
Teodora Rosario owned a 211.80-square meter property in San Carlos City, Pangasinan.
In 1970, Teodora passed away intestate, leaving behind her spouse Isidro Bautista and five children: Teofilo, Alegria, Angelica, Pacita, and Gil.
In 1981, Isidro and four of his children (Pacita, Gil, Alegria, Angelica) executed a Deed of Extra-Judicial Partition, with Isidro waiving his share in favor of the four children. Teofilo was excluded.
Alegria and Angelica sold half of the property to Pacita and her common-law husband Pedro Tandoc. Pacita and Pedro later obtained tax declarations and title of the property.
In 1993, Pacita and Pedro sold half of the property to Cesar Tamondong.
In 1994, Teofilo filed a complaint for annulment of documents, partition, recovery of ownership, possession, and damages, claiming fraud and invalidity of the Deed of Extra-Judicial Partition and the sale to Cesar Tamondong.
Defendants claimed they were unaware of the fraudulent nature of the documents and argued that the sale to Cesar Tamondong was valid.
RTC: Ruled in favor of Teofilo, declaring the documents null and void and ordering partition of the property among the heirs.
CA: Reversed the RTC decision, dismissing the complaint on grounds of prescription, arguing that Teofilo had failed to file the complaint within the prescribed period after discovering the fraud.
Whether the Deed of Extra-Judicial Partition is valid despite Teofilo’s exclusion.
The Deed of Extra-Judicial Partition was invalid.
The Deed of Extra-Judicial Partition was invalid because it excluded Teofilo, a compulsory heir.
Under the law, no extra-judicial settlement is binding on a person who did not participate or receive notice.
Prescription not applicable.
Since the partition was invalid, the action to annul it does not prescribe. The Court of Appeals erred in applying the prescriptive periods for annulment and reconveyance.
The subsequent transfers of the property by Alegria, Angelica, Pacita, and Pedro were also invalid, as they had no valid rights to transfer under the principle of nemo dat quod non habet (no one can give what they do not have).