SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
EN BANC
G.R. No. L-19064             January 31, 1964
IN THE MATTER OF THE INTESTATE ESTATE OF PAZ E.
SIGUION TORRES, deceased,  petitioner likewise alleged that the estate has an existing debt of
ALBERTO S. TORRES, petition-appellant,  P50,000.00 from third persons, a fact which he claimed was not
vs.
CONCHITA TORRES and ANGEL S. TORRES, oppositors-
appellees.
Tolentino and Garcia for oppositor-appellee Angel S. Torres.
Narciso Peña for oppositor-appellee Conchita Torres.
BARRERA, J.:
In a petition filed in the Court of First Instance of Rizal (Pasay
branch) on January 4, 1961, Alberto S. Torres, claiming to be one
of the four legitimate children of Paz E. Siguion Torres who died
intestate on December 18, 1959, prayed for the issuance in his
favor of letters of administration in connection with the properties
left by the decedent, with an aggregate value of about P300,000.00.
It was also alleged therein that petitioner was unaware of any
existing debt or obligation contracted by the deceased or by her
estate, from any of the heirs or from third persons.
This petition was opposed by Conchita Torres, one of the heirs, on
the ground that the appointment of an administrator is unnecessary
in view of the fact that on January 27, 1960, the heirs of the
deceased (including petitioner) had already entered into an
extrajudicial partition and settlement of the estate, pursuant to
Section 1 of Rule 74 of the Rules of Court. This was answered by
petitioner who, while admitting that such extrajudicial partition was
signed by the heirs, contended that attempts at the actual
1
designation of their respective shares had failed thus needing the
court's intervention. It was also claimed that some properties of
considerable value were not included in said extrajudicial partition.
In a supplemental answer to the opposition, subsequently filed,
incorporated in the petition, through oversight. Petitioner, however,
offered to amend the petition before presentation of evidence, with
leave of court. On July 21, 1961, the court, finding that an
extrajudicial settlement had already been entered into by the heirs,
dismissed the petition. Hence, the institution of the present appeal.
Petitioner-appellant does not controvert the execution of an
extrajudicial deed of partition of the estate, which, according to
appellee, contains the following provisions:
1. That they (Alberto, Angel, Eduardo and Conchita, all surnamed
Torres) are the only legitimate children who survive the deceased
Paz Siguion Vda. de Torres;
xxx     xxx     xxx
3. That the said decedent died without leaving any will and her only
surviving heirs are the aforementioned parties who are her
legitimate children;
4. That the deceased left no debts;
xxx     xxx     xxx
6. That pursuant to Section 1, Rule 74 of the Rules of Court and in
view of the difficulty of making a physical division of the above
properties, the parties have agreed to settle the aforementioned
estate by continuing the co-ownership on all the above properties in
the following proportion:
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

Alberto Torres — ¼ undivided interest  Thus, where the decedent left no debts and heirs or legatees are all
Angel Torres — ¼ undivided interest  of age, as in this case, there is no necessity for the institution of
Eduardo Torres — ¼ undivided interest  special proceedings and the appointment of an administrator for the
Conchita Torres — ¼ undivided interest (Emphasis supplied.) settlement of the estate, because the same can be effected either
extrajudicially or through an ordinary action for partition. (Guico, et
It appears from the pleadings filed therein that the petition to place
al. v. Bautista, et al., L-14921, December 31, 1960). If there is an
the estate under administration was predicated mainly on the
actual necessity for court intervention, as contended by appellant, in
alleged inability of the heirs to agree on a physical division of the
view of the heirs' failure to reach an agreement as to how the estate
properties. The alleged existence of an indebtedness and non-
would be divided physically, the latter, under the aforequoted Rule,
inclusion in the list incorporated in the deed of extrajudicial partition,
have still the remedy of an ordinary action for partition.
of certain properties that form part of the estate, seemed to be
merely an afterthought as the reference to them was made only in This is not to overlook the allegation that the estate has an
the answer to the opposition and motion for dismissal of the outstanding obligation of P50,000.00. It is to be noted, however,
petition, and is not made under oath. There is also no allegation as that appellant, as heretofore observed, did not specify from whom
to the particulars of the debt and the omitted properties sufficient to and in what manner the said debt was contracted. Indeed, the bare
identify them. In the circumstances, we agree with the lower court allegation that, "the estate has an existing debt of P50,000.00 from
that a special proceeding for the settlement of the estate of the third persons" cannot be considered as concise statement to
deceased is not here necessary. constitute a cause of action. It must be for this reason that the lower
court, notwithstanding the existence of such averment in appellant's
Section 1, Rule 74 of the Rules of Court, provides:
supplemental answer to the opposition, dismissed the petition filed
SECTION 1. Extra-judicial settlement by agreement between heirs. by said appellant.
— If the decedent left no debts and the heirs and legatees are all of
Nor does the unverified statement that there are other properties
age or the minors are represented by their judicial guardians, the
not included in the deed of extrajudicial partition in the possession
parties may, without securing letters of administration, divide the
of one of the heirs, justify the institution of an administration
estate among themselves as they see fit by means of a public
proceeding because the same questions that may arise as to
instrument filed in the office of the Register of Deeds, and should
them, viz, the title there and their partition, if proven to belong to the
they disagree, they may do so in an ordinary action of partition. If
intestate, can be properly and expeditiously litigated in an ordinary
there is only one heir or one legatee, he may adjudicate to himself
action of partition.
the entire estate by means of an affected affidavit filed in the office
of the Register of Deeds. It shall be presumed that the decedent left WHEREFORE, finding no error in the order appeal from, the same
no debts if no creditor files a petition for letters of administration is hereby affirmed, with costs against the appellant. So ordered.
within two years after the death of the decedent.1äwphï1.ñët

2
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
EN BANC
G.R. No. L-21725 November 29, 1968
AURELIO ARCILLAS, petitioner,
vs.
HON. GREGORIO D. MONTEJO, Judge of the Court of First
Instance of Zamboanga, MODESTA ALFARO, GERONIMO
ARCILLAS and VICENTE ARCILLAS, respondents.
Antonio J. Calvento for petitioner.
T. de los Santos for respondents.
MAKALINTAL, J.:
Filed before the Court of First Instance of Zamboanga on November
12 and 16, 1962, respectively, are two separate petitions having
direct and special reference to Lot No. 276. This lot, covered by
Transfer Certificate of Title No. RT-244 (2155 (0-656), forms a
major part of the estate of the late Eustaquio Arcillas who died
intestate on March 8, 1958 in the City of Zamboanga.
In the petition dated November 12 Geronimo Arcillas, one of the
heirs of the deceased, sought the cancellation of TCT No. RT-244
in the name of the deceased and prayed for the issuance of a new
certificate of title in the names of the heirs in the enumerated
proportions alleged in the petition. It was claimed that at various
dates after the death of the deceased, several transactions affecting
Lot No. 276 transpired, prominent among which were the separate
sales of their respective shares and participation in Lot No. 276
3
executed by four (4) other children of the deceased in favor of co-
heir Vicente Arcillas. Invoking section 112 of Act No. 496 (Land
Registration Act), Geronimo Arcillas argued that the proportion of
each heir's participation in said lot should be accurately reflected in
a new certificate of title. But before any other material pleading
could be filed with respect to this petition, five (5) other children of
the deceased filed the November 16 petition aforementioned. This
later petition, docketed as Special Proceeding No. 632, prayed for
the issuance of letters of administration in favor of herein petitioner
preparatory to the final settlement of the deceased's estate.
Paragraphs 3 and 4 of this later petition, insofar as pertinent to this
case, read:
3. That the deceased left an estate consisting of real property
in Zamboanga City with a probable value of not less than SIX
THOUSAND PESOS (P6,000.00), Philippine Currency;
4. That as far as petitioners know, the deceased left no debts
remaining unpaid;
In the meantime, on November 23, 1962 herein petitioner filed his
opposition to the November 12 petition on the ground that inasmuch
as Lot No. 276 — the subject matter thereof — was included in the
estate of the deceased for which a petition for administration had
actually been filed and was awaiting resolution, that petition (the
one dated November 12) should be held in abeyance until after
Special Proceeding No. 632 was closed and terminated.
Recognizing then the merit of petitioner's ground, respondent Judge
issued an order on December 1, 1963 temporarily holding in
abeyance resolution of the November 12 petition until the
termination of the intestate proceedings.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

Meanwhile, in his answer to the November 16 petition (Sp. Proc. Judge from proceeding with the hearing of the "cadastral motion"
No. 632) Geronimo Arcillas, this time joined by Vicente Arcillas and dated November 12, 1962.
the widow Modesta Alfaro, opposed the issuance of letters of
The issues to be determined are whether respondent Judge acted
administration to herein petitioner, arguing that inasmuch as Lot No.
properly (1) in dismissing the administration proceedings under the
276 was the only property left by the deceased and the deceased
authority of section 1, rule 74 of the New Rules of Court upon
left no debts, the petition for administration was improper. However
averments that the estate left no debts and all the heirs entitled to
petitioner, in his reply on January 18, 1963, insisted that there were
share in its distribution are all of age and (2) in maintaining that the
still other properties of the estate of the deceased besides Lot No.
"cadastral motion" brought under the provision of section 112 of the
276; he likewise took issue with respondents' view that
Land Registration Act was the more proper proceeding under the
administration proceedings could be dispensed with asserting,
circumstances.
firstly, that there was no unanimity among the heirs for extrajudicial
partition and, secondly, that some of the heirs had been unduly Under section 1, Rule 74 of the New Rules of Court, if the decedent
deprived of their participation in the estate. left no will and no debts and the heirs and legatees are all of age, or
the minors are represented by their judicial guardians, the parties
On March 8, 1963 respondent court denied the November 16
may, without securing letters of administration, divide the estate
petition for the issuance of letters of administration and at the same
among themselves as they see fit by means of a public instrument
time gave due course to the November 12 petition. Reasoned the
filed in the office of the Register of Deeds and should they disagree,
court: "... to obviate the necessity of spending uselessly which
they may do so in an ordinary action of partition. And primarily
would only deplete the funds of the estate; to avoid unnecessary
anchored on the proposition that inasmuch as in the present case
delay in the partition of the property involved herein, and following
the minimum requirements of the aforementioned section obtain,
the doctrines established by the Honorable Supreme Court in
i.e. the decedent left no will and no debts and the heirs are all of
several cases of the same nature, which is in consonance with the
age, respondents claim that there is no necessity for the institution
provisions of Section 1, Rule 74 of the Rules of Court, the court is of
of special proceedings and the appointment of an administrator for
the opinion that the herein petition (should) be denied and (holds
the settlement of the estate for the reason that it is superfluous and
that) the cadastral motion of the oppositor Geronimo Arcillas
unnecessary. In other words, respondents apparently view section
covering the same property is the most expedient and proper
1 of Rule 74 as mandatory upon the heirs so long as the deceased
action."
left no will nor any pending obligations to be paid and his heirs are
Unable to have this order reconsidered petitioner filed the instant all of age.
petition for certiorari with mandamus and preliminary injunction. On
We cannot entirely agree with the respondents. On a similar
December 2, 1963, upon filing by petitioner of the required bond,
contention in the past, we had occasion to explain in Rodriguez, et
we issued a writ of preliminary injunction enjoining respondent
al. v. Tan, et al., 92 Phil. 273:

4
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
... section I does not preclude the heirs from instituting
administration proceedings, even if the estate has no debts or
obligation, if they do not desire to resort for good reasons to an
ordinary action of partition. While 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, it does not compel them to do so if they
have good reasons to take a different course of action. Said section
is not mandatory or compulsory as may be gleaned from the use
made therein of the word may. If the intention were otherwise the
framer of the rule would have employed the word shall as was done
in other provisions that are mandatory in character. Note that the
word may its used not only once but in the whole section which
indicates an intention to leave the matter entirely to the discretion of
the heirs.
Having decided to institute administration proceedings instead of
resorting to the less expensive modes of settlement of the estate,
i.e. extrajudicial settlement or ordinary action for partition, the heirs
may not then be rebuffed in the exercise of their discretion granted
under section 1 of Rule 74 of the Rules of Court merely on the
ground that the expenses usually common in administration
proceedings may deplete the funds of the estate. The resultant
delay and necessary expenses incurred thereafter are
consequences which must be deemed to have been voluntarily
assumed by the heirs themselves so that they may not in the future
be heard to complain of these matters. Besides, the truth or veracity
of petitioner's claim as to the alleged existence of other properties
of the deceased aside from the lot in question can be more
adequately ascertained in administration proceedings rather than in
any other action.
Understandably the allowance of the hearing of the "cadastral"
motion, supposedly brought under the authority of section 112 of
5
Act 496, cannot be sustained. While this section authorizes, among
others, a person in interest to ask the court for any erasure,
alteration, or amendment of a certificate of title "upon the ground
that registered interests of any description, whether vested,
contingent, expectant, or inchoate have terminated and ceased,"
and apparently the November 12 petition comes within its scope,
such relief can only be granted if there is unanimity among the
parties, or there is no adverse claim or serious objection on the part
of any party in interest; otherwise the case becomes controversial
and should be threshed out in an ordinary case or in the case
where the incident properly belongs (see Puguid v. Reyes, L-21311,
August 10, 1967 and the cases cited therein). In the instant case
the obvious lack of unanimity among the parties in interest,
manifestly demonstrated by petitioners' express objection to the
cancellation of TCT No. RT-244, sufficiently removes the November
12 petition from the scope of section 112 of Act 496. Besides, the
proceedings provided in the Land Registration Act are summary in
nature and hence inadequate for the litigation of issues which
properly pertain to the case where the incident belongs.
IN VIEW OF THE FOREGOING, judgment is hereby rendered
setting aside the appealed orders and directing respondent Judge
or whoever is presiding the court below to reinstate Special
Proceedings No. 632; the writ of preliminary injunction previously
issued enjoining respondent Judge from proceeding with the
hearing of the "cadastral" motion dated November 12, 1962 is
hereby made permanent. Costs against respondents, except
respondent Judge.
Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro,
Fernando and Capistrano, JJ., concur.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
G.R. No. 156536             October 31, 2006
JOSEPH CUA, petitioner, 
vs.
GLORIA A. VARGAS, AURORA VARGAS, RAMON VARGAS,
MARITES VARGAS, EDELINA VARGAS AND GEMMA
VARGAS, respondents.
DECISION
AZCUNA, J.:
This is a petition for review under Rule 45 of the Rules of Court
seeking the reversal of the decision1 dated March 26, 2002, and the
resolution2 dated December 17, 2002, of the Court of Appeals in
CA-G.R. SP No. 59869 entitled "Gloria A. Vargas, Aurora Vargas,
Ramon Vargas, Marites Vargas, Edelina Vargas and Gemma
Vargas v. Joseph Cua."
The facts are as follows:
A parcel of residential land with an area of 99 square meters
located in San Juan, Virac, Catanduanes was left behind by the late
Paulina Vargas. On February 4, 1994, a notarized Extra Judicial
Settlement Among Heirs was executed by and among Paulina
Vargas' heirs, namely Ester Vargas, Visitacion Vargas, Juan
Vargas, Zenaida V. Matienzo, Rosario V. Forteza, Andres Vargas,
Gloria Vargas, Antonina Vargas and Florentino Vargas, partitioning
and adjudicating unto themselves the lot in question, each one of
them getting a share of 11 square meters. Florentino, Andres,
Antonina and Gloria, however, did not sign the document. Only
Ester, Visitacion, Juan, Zenaida and Rosario signed it. The Extra
6
Judicial Settlement Among Heirs was published in the Catanduanes
Tribune for three consecutive weeks.3
On November 15, 1994, an Extra Judicial Settlement Among Heirs
with Sale4 was again executed by and among the same heirs over
the same property and also with the same sharings. Once more,
only Ester, Visitacion, Juan, Zenaida and Rosario signed the
document and their respective shares totaling 55 square meters
were sold to Joseph Cua, petitioner herein.
According to Gloria Vargas, the widow of Santiago Vargas and one
of respondents herein, she came to know of the Extra Judicial
Settlement Among Heirs with Sale dated November 16, 1994 only
when the original house built on the lot was being demolished
sometime in May 1995.5 She likewise claimed she was unaware
that an earlier Extra Judicial Settlement Among Heirs dated
February 4, 1994 involving the same property had been published
in the Catanduanes Tribune.6
After knowing of the sale of the 55 square meters to petitioner,
Gloria Vargas tried to redeem the property, with the following
letter7 sent to petitioner on her behalf:
29th June 1995
Mr. Joseph Cua
Capilihan, Virac, Catanduanes
Sir:
This is in behalf of my client, Ms. Aurora Vargas,8 (c/o Atty.
Prospero V. Tablizo) one of the lawful heirs of the late Paulina
Vargas, original owner of Lot No. 214 of Virac, Poblacion covered
by ARP No. 031-0031 in her name.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
I understand that a document "Extra Judicial Settlement Among
Heirs with Sale" was executed by some of my client's co-heirs and
alleged representatives of other co-heirs, by virtue of which
document you acquired by purchase from the signatories to the said
document, five (5) shares with a total area of fifty-five square
meters of the above-described land.
This is to serve you notice that my client shall exercise her right of
legal redemption of said five (5) shares as well as other shares
which you may likewise have acquired by purchase. And you are
hereby given an option to agree to legal redemption within a period
of fifteen (15) days from your receipt hereof.
Should you fail to convey to me your agreement within said 15-day-
period, proper legal action shall be taken by my client to redeem
said shares.
Thank you.
Very truly yours,
(Sgd.)
JUAN G. ATENCIA
When the offer to redeem was refused and after having failed to
reach an amicable settlement at the barangay level,9 Gloria Vargas
filed a case for annulment of Extra Judicial Settlement and Legal
Redemption of the lot with the Municipal Trial Court (MTC) of Virac,
Catanduanes against petitioner and consigned the amount
of P100,000 which is the amount of the purchase with the Clerk of
Court on May 20, 1996.10 Joining her in the action were her children
with Santiago, namely, Aurora, Ramon, Marites, Edelina and
Gemma, all surnamed Vargas.
7
Subsequently, Carlos Gianan, Jr. and Gloria Arcilla, heirs of the
alleged primitive owner of the lot in question, Pedro Lakandula,
intervened in the case.11
Respondents claimed that as co-owners of the property, they may
be subrogated to the rights of the purchaser by reimbursing him the
price of the sale. They likewise alleged that the 30-day period
following a written notice by the vendors to their co-owners for them
to exercise the right of redemption of the property had not yet set in
as no written notice was sent to them. In effect, they claimed that
the Extra Judicial Settlement Among Heirs and the Extra Judicial
Settlement Among Heirs with Sale were null and void and had no
legal and binding effect on them.12
After trial on the merits, the MTC rendered a decision13 in favor of
petitioner, dismissing the complaint as well as the complaint-in-
intervention for lack of merit, and declaring the Deed of Extra
Judicial Settlement Among Heirs with Sale valid and binding. The
MTC upheld the sale to petitioner because the transaction
purportedly occurred after the partition of the property among the
co-owner heirs. The MTC opined that the other heirs could validly
dispose of their respective shares. Moreover, the MTC found that
although there was a failure to strictly comply with the requirements
under Article 1088 of the Civil Code14 for a written notice of sale to
be served upon respondents by the vendors prior to the exercise of
the former's right of redemption, this deficiency was cured by
respondents' actual knowledge of the sale, which was more than 30
days before the filing of their complaint, and their consignation of
the purchase price with the Clerk of Court, so that the latter action
came too late. Finally, the MTC ruled that respondents failed to
establish by competent proof petitioner's bad faith in purchasing the
portion of the property owned by respondents' co-heirs.15
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
On appeal, the Regional Trial Court (RTC), Branch 42, of Virac,
Catanduanes affirmed the MTC decision in a judgment dated
November 25, 1999. The matter was thereafter raised to the Court
of Appeals (CA).
The CA reversed the ruling of both lower courts in the assailed
decision dated March 26, 2002, declaring that the Extra Judicial
Settlement Among Heirs and the Extra Judicial Settlement Among
Heirs with Sale, dated February 4, 1994 and November 15, 1994,
respectively, were void and without any legal effect. The CA held
that, pursuant to Section 1, Rule 74 of the Rules of Court, 16 the
extrajudicial settlement made by the other co-heirs is not binding
upon respondents considering the latter never participated in it nor
did they ever signify their consent to the same.
His motion for reconsideration having been denied, petitioner filed
the present petition for review.
The issues are:
Whether heirs are deemed constructively notified and bound,
regardless of their failure to participate therein, by an extrajudicial
settlement and partition of estate when the extrajudicial settlement
and partition has been duly published; and,
Assuming a published extrajudicial settlement and partition does
not bind persons who did not participate therein, whether the written
notice required to be served by an heir to his co-heirs in connection
with the sale of hereditary rights to a stranger before partition under
Article 1088 of the Civil Code17 can be dispensed with when such
co-heirs have actual knowledge of the sale such that the 30-day
period within which a co-heir can exercise the right to be
subrogated to the rights of a purchaser shall commence from the
date of actual knowledge of the sale.
8
Petitioner argues, as follows:
Firstly, the acquisition by petitioner of the subject property
subsequent to the extrajudicial partition was valid because the
partition was duly published. The publication of the same
constitutes due notice to respondents and signifies their implied
acquiescence thereon. Respondents are therefore estopped from
denying the validity of the partition and sale at this late stage.
Considering that the partition was valid, respondents no longer
have the right to redeem the property.
Secondly, petitioner is a possessor and builder in good faith.
Thirdly, the MTC had no jurisdiction over the complaint because its
subject matter was incapable of pecuniary estimation. The
complaint should have been filed with the RTC.
Fourthly, there was a non-joinder of indispensable parties, the co-
heirs who sold their interest in the subject property not having been
impleaded by respondents.
Fifthly, the appeal to the CA should have been dismissed as it was
not properly verified by respondents. Gloria Vargas failed to indicate
that she was authorized to represent the other respondents
(petitioners therein) to initiate the petition. Moreover, the verification
was inadequate because it did not state the basis of the alleged
truth and/or correctness of the material allegations in the petition.
The petition lacks merit.
The procedure outlined in Section 1 of Rule 74 is an ex
parte proceeding. The rule plainly states, however, that persons
who do not participate or had no notice of an extrajudicial
settlement will not be bound thereby.18 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
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

participate in the said deed of extrajudicial settlement and partition),
and not after such an agreement has already been executed19 as
what happened in the instant case with the publication of the first
deed of extrajudicial settlement among heirs.
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. In this connection, the records of the
present case confirm that respondents never signed either of the
settlement documents, having discovered their existence only
shortly before the filing of the present complaint. Following Rule 74,
these extrajudicial settlements do not bind respondents, and the
partition made without their knowledge and consent is invalid
insofar as they are concerned.
This is not to say, though, that respondents' co-heirs cannot validly
sell their hereditary rights to third persons even before the partition
of the estate. The heirs who actually participated in the execution of
the extrajudicial settlements, which included the sale to petitioner of
their pro indiviso shares in the subject property, are bound by the
same. Nevertheless, respondents are given the right to redeem
these shares pursuant to Article 1088 of the Civil Code. The right to
redeem was never lost because respondents were never notified in
writing of the actual sale by their co-heirs. Based on the provision,
there is a need for written notice to start the period of redemption,
thus:
Should any of the heirs sell his hereditary rights to a stranger before
the partition, any or all of the co-heirs may be subrogated to the
rights of the purchaser by reimbursing him for the price of the
sale, provided they do so within the period of one month from
the time they were notified in writing of the sale by the
vendor. (Emphasis supplied.)
It bears emphasis that the period of one month shall be reckoned
from the time that a co-heir is notified in writing by the vendor of the
actual sale. Written notice is indispensable and mandatory,20 actual
knowledge of the sale acquired in some other manner by the
redemptioner notwithstanding. It cannot be counted from the time
advance notice is given of an impending or contemplated sale. The
law gives the co-heir thirty days from the time written notice of the
actual sale within which to make up his or her mind and decide to
repurchase or effect the redemption.21
Though the Code does not prescribe any particular form of written
notice nor any distinctive method for written notification of
redemption, the method of notification remains exclusive, there
being no alternative provided by law.22This proceeds from the very
purpose of Article 1088, which is to keep strangers to the family out
of a joint ownership, if, as is often the case, the presence of
outsiders be undesirable and the other heir or heirs be willing and in
a position to repurchase the share sold.23
It should be kept in mind that the obligation to serve written notice
devolves upon the vendor co-heirs because the latter are in the
best position to know the other co-owners who, under the law, must
be notified of the sale.24 This will remove all uncertainty as to the
fact of the sale, its terms and its perfection and validity, and quiet
any doubt that the alienation is not definitive.25 As a result, the party
notified need not entertain doubt that the seller may still contest the
alienation. 26
Considering, therefore, that respondents' co-heirs failed to comply
with this requirement, there is no legal impediment to allowing

9
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
respondents to redeem the shares sold to petitioner given the
former's obvious willingness and capacity to do so.
Likewise untenable is petitioner's contention that he is a builder in
good faith. Good faith consists in the belief of the builder that the
land the latter is building on is one's own without knowledge of any
defect or flaw in one's title.27Petitioner derived his title from the
Extra Judicial Settlement Among Heirs With Sale dated November
15, 1994. He was very much aware that not all of the heirs
participated therein as it was evident on the face of the document
itself. Because the property had not yet been partitioned in
accordance with the Rules of Court, no particular portion of the
property could have been identified as yet and delineated as the
object of the sale. This is because the alienation made by
respondents' co-heirs was limited to the portion which may be
allotted to them in the division upon the termination of the co-
ownership. Despite this glaring fact, and over the protests of
respondents, petitioner still constructed improvements on the
property. For this reason, his claim of good faith lacks credence.
As to the issue of lack of jurisdiction, petitioner is estopped from
raising the same for the first time on appeal. Petitioner actively
participated in the proceedings below and sought affirmative ruling
from the lower courts to uphold the validity of the sale to him of a
portion of the subject property embodied in the extrajudicial
settlement among heirs. Having failed to seasonably raise this
defense, he cannot, under the peculiar circumstances of this case,
be permitted to challenge the jurisdiction of the lower court at this
late stage. While it is a rule that a jurisdictional question may be
raised at any time, an exception arises where estoppel has already
supervened.
Estoppel sets in when a party participates in all stages of a case
before challenging the jurisdiction of the lower court. One cannot
10
belatedly reject or repudiate its decision after voluntarily submitting
to its jurisdiction, just to secure affirmative relief against one's
opponent or after failing to obtain such relief. The Court has, time
and again, frowned upon the undesirable practice of a party
submitting a case for decision and then accepting the judgment,
only if favorable, and attacking it for lack of jurisdiction when
adverse.28
Petitioner's fourth argument, that there is a non-joinder of
indispensable parties, similarly lacks merit. An indispensable party
is a party-in-interest without whom there can be no final
determination of an action and who is required to be joined as either
plaintiff or defendant.29 The party's interest in the subject matter of
the suit and in the relief sought is so inextricably intertwined with the
other parties that the former's legal presence as a party to the
proceeding is an absolute necessity. Hence, an indispensable party
is one whose interest will be directly affected by the court's action in
the litigation. In the absence of such indispensable party, there
cannot be a resolution of the controversy before the court which is
effective, complete, or equitable.30
In relation to this, it must be kept in mind that the complaint filed by
respondents ultimately prayed that they be allowed to redeem the
shares in the property sold by their co-heirs. Significantly, the right
of the other heirs to sell their undivided share in the property to
petitioner is not in dispute. Respondents concede that the other
heirs acted within their hereditary rights in doing so to the effect that
the latter completely and effectively relinquished their interests in
the property in favor of petitioner. Petitioner thus stepped into the
shoes of the other heirs to become a co-owner of the property with
respondents. As a result, only petitioner's presence is absolutely
required for a complete and final determination of the controversy
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

because what respondents seek is to be subrogated to his rights as WHEREFORE, the petition is DENIED for lack of merit. Costs
a purchaser. against petitioner.
Finally, petitioner contends that the petition filed by respondents SO ORDERED.
with the CA should have been dismissed because the verification
Puno, J., Chairperson, Sandoval-Gutierrez, Corona, and Garcia,
and certificate of non-forum shopping appended to it were
JJ., concur.
defective, citing specifically the failure of respondent Gloria Vargas
to: (1) indicate that she was authorized to represent her co-
respondents in the petition, and (2) state the basis of the alleged
truth of the allegations.
The general rule is that the certificate of non-forum shopping must
be signed by all the plaintiffs or petitioners in a case and the
signature of only one of them is insufficient.31 Nevertheless, the
rules on forum shopping, which were designed to promote and
facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert their own
ultimate and legitimate objective. Strict compliance with the
provisions regarding the certificate of non-forum shopping merely
underscores its mandatory nature in that the certification cannot be
altogether dispensed with or its requirements completely
disregarded.32 Under justifiable circumstances, the Court has
relaxed the rule requiring the submission of such certification
considering that although it is obligatory, it is not jurisdictional. 33
Thus, when all the petitioners share a common interest and invoke
a common cause of action or defense, the signature of only one of
them in the certification against forum shopping substantially
complies with the rules.34 The co-respondents of respondent Gloria
Vargas in this case were her children. In order not to defeat the
ends of justice, the Court deems it sufficient that she signed the
petition on their behalf and as their representative.

11
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
G.R. No. 194366               October 10, 2012
NAPOLEON D. NERI, ALICIA D. NERI-MONDEJAR, VISMINDA
D. NERI-CHAMBERS, ROSA D. NERI-MILLAN, DOUGLAS D.
NERI, EUTROPIA D. ILLUT-COCKINOS AND VICTORIA D.
ILLUT-PIALA, Petitioners, 
vs.
HEIRS OF HADJI YUSOP UY AND JULPHA* IBRAHIM
UY, Respondents.
DECISION
PERLAS-BERNABE, J.:
In this Petition for Review on Certiorari1 under Rule 45 of the Rules
of Court, petitioners Napoleon D. Neri (Napoleon), Alicia D. Neri-
Mondejar (Alicia), Visminda D. Neri-Chambers (Visminda), Rosa D.
Neri-Millan (Rosa), Douglas D. Neri (Douglas), Eutropia D. Illut-
Cockinos (Eutropia), and Victoria D. Illut-Piala (Victoria) seek to
reverse and set aside the April 27, 2010 Decision2 and October 18,
2010 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
01031-MIN which annulled the October 25, 2004 Decision4 of the
Regional Trial Court (RTC) of Panabo City, Davao del Norte and
instead, entered a new one dismissing petitioners’ complaint for
annulment of sale, damages and attorney’s feesagainst herein
respondents heirs of spouses Hadji Yusop Uy and Julpha Ibrahim
Uy (heirs of Uy).
The Facts
During her lifetime, Anunciacion Neri (Anunciacion) had seven
children, two (2) from her first marriage with Gonzalo Illut (Gonzalo),
namely: Eutropia and Victoria, and five (5) from her second
marriage with Enrique Neri (Enrique), namely: Napoleon, Alicia,
Visminda, Douglas and Rosa. Throughout the marriage of spouses
12
Enrique and Anunciacion, they acquired several homestead
properties with a total area of 296,555 square meters located in
Samal, Davao del Norte, embraced by Original Certificate of Title
(OCT) Nos. (P-7998) P-21285 , (P-14608) P-51536and P-20551 (P-
8348)7 issued on February 15, 1957, August 27, 1962 and July 7,
1967, respectively.
On September 21, 1977, Anunciacion died intestate. Her husband,
Enrique, in his personal capacity and as natural guardian of his
minor children Rosa and Douglas, together with Napoleon, Alicia,
and Vismindaexecuted an Extra-Judicial Settlement of the Estate
with Absolute Deed of Sale8 on July 7, 1979, adjudicating among
themselves the said homestead properties, and thereafter,
conveying themto the late spouses Hadji Yusop Uy and Julpha
Ibrahim Uy (spouses Uy)for a consideration of ₱ 80,000.00.
On June 11, 1996, the children of Enrique filed a complaint for
annulment of saleof the said homestead properties against spouses
Uy (later substituted by their heirs)before the RTC, docketed as
Civil Case No.96-28, assailing the validity of the sale for having
been sold within the prohibited period. Thecomplaint was later
amended to include Eutropia and Victoriaas additional plaintiffs for
having been excluded and deprived of their legitimes as childrenof
Anunciacion from her first marriage.
In their amended answer with counterclaim, the heirs of Uy
countered that the sale took place beyond the 5-year prohibitory
period from the issuance of the homestead patents. They also
denied knowledge of Eutropia and Victoria’s exclusionfrom the
extrajudicial settlement and sale of the subject properties, and
interposed further the defenses of prescription and laches.
The RTC Ruling
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
On October 25, 2004, the RTC rendered a decision ordering,
among others, the annulment of the Extra-Judicial Settlement of the
Estate with Absolute Deed of Sale. It ruled that while the sale
occurred beyond the 5-year prohibitory period, the sale is still void
because Eutropia and Victoria were deprived of their hereditary
rights and that Enrique had no judicial authority to sell the shares of
his minor children, Rosa and Douglas.
Consequently, it rejected the defenses of laches and prescription
raised by spouses Uy, who claimed possession of the subject
properties for 17 years, holding that co-ownership rights are
imprescriptible.
The CA Ruling
On appeal, the CAreversed and set aside the ruling of the RTC in
its April 27, 2010 Decision and dismissed the complaint of the
petitioners. It held that, while Eutropia and Victoria had no
knowledge of the extrajudicial settlement and sale of the subject
properties and as such, were not bound by it, the CA found it
unconscionable to permit the annulment of the sale considering
spouses Uy’s possession thereof for 17 years, and thatEutropia and
Victoriabelatedlyfiled their actionin 1997, ormore than two years
fromknowledge of their exclusion as heirs in 1994 when their
stepfather died. It, however, did not preclude the excluded heirs
from recovering their legitimes from their co-heirs.
Similarly, the CA declared the extrajudicial settlement and the
subsequent saleas valid and binding with respect to Enrique and
hischildren, holding that as co-owners, they have the right to
dispose of their respective shares as they consider necessary or
fit.While recognizing Rosa and Douglas to be minors at that time,
they were deemed to have ratified the sale whenthey failed to
13
question it upon reaching the age of majority.Italso found laches to
have set in because of their inaction for a long period of time.
The Issues
In this petition, petitioners imputeto the CA the following errors:
I. WHEN IT UPHELDTHE VALIDITY OF THE "EXTRA JUDICIAL
SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF
SALE" AS FAR AS THE SHARES OF EUTROPIA AND VICTORIA
WERE CONCERNED, THEREBY DEPRIVING THEM OF THEIR
INHERITANCE;
II. WHEN IT DID NOT NULLIFY OR ANNUL THE "EXTRA
JUDICIAL SETTLEMENT OF THE ESTATE WITH ABSOLUTE
DEED OF SALE" WITH RESPECT TO THE SHARESOF ROSA
AND DOUGLAS, THEREBY DEPRIVING THEM OF THEIR
INHERITANCE; and
III. WHEN IT FOUND THAT LACHES OR PRESCRIPTION HAS
SET IN.
The Ruling of the Court
The petitionis meritorious.
It bears to stress that all the petitioners herein are indisputably
legitimate children of Anunciacion from her first and second
marriages with Gonzalo and Enrique, respectively, and
consequently, are entitled to inherit from her in equal shares,
pursuant to Articles 979 and 980 of the Civil Code which read:
ART. 979. Legitimate children and their descendants succeed the
parents and other ascendants, without distinction as to sex or age,
and even if they should come from different marriages.
xxx
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

ART. 980. The children of the deceased shall always inherit from SECTION 1. Extrajudicial settlement by agreement between
him in their own right, dividing the inheritance in equal shares. heirs. – x x x
As such, upon the death of Anunciacion on September 21, 1977, The fact of the extrajudicial settlement or administration shall be
her children and Enrique acquired their respective published in a newspaper of general circulation in the manner
inheritances,9 entitling them to their pro indiviso shares in her whole provided in the next succeeding section; but no extrajudicial
estate, as follows: settlement shall be binding upon any person who has not
participated therein or had no notice thereof. (Underscoring added)
Enrique 9/16 (1/2 of the conjugal assets + 1/16)
The effect of excluding the heirs in the settlement of estate was
Eutropia 1/16 further elucidated in Segura v. Segura,10 thus:
It is clear that Section 1 of Rule 74 does not apply to the partition in
Victoria 1/16 question which was null and void as far as the plaintiffs were
concerned. The rule covers only valid partitions. The partition in the
Napoleon 1/16
present case was invalid because it excluded six of the nine heirs
who were entitled to equal shares in the partitioned property. Under
Alicia 1/16
the rule "no extrajudicial settlement shall be binding upon any
person who has not participated therein or had no notice thereof."
Visminda 1/16
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
Rosa 1/16
challenge the partition had prescribed after two years from its
Douglas 1/16 execution…
However, while the settlement of the estate is null and void, the
Hence, in the execution of the Extra-Judicial Settlement of the
subsequent sale of the subject propertiesmade by Enrique and his
Estate with Absolute Deed of Sale in favor of spouses Uy, all the
children, Napoleon, Alicia and Visminda, in favor of the respondents
heirs of Anunciacionshould have participated. Considering that
isvalid but only with respect to their proportionate shares therein.It
Eutropia and Victoria were admittedly excluded and that then
cannot be denied that these heirs have acquired their respective
minors Rosa and Douglas were not properly represented therein,
shares in the properties of Anunciacion from the moment of her
the settlement was not valid and binding uponthem and
death11 and that, as owners thereof, they can very well sell their
consequently, a total nullity.
undivided share in the estate.12
Section 1, Rule 74 of the Rules of Court provides:
With respect to Rosa and Douglas who were minors at the time of
the execution of the settlement and sale, their natural guardian and

14
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

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.
Articles 320 and 326 of the Civil Code, the laws in force at the time
of the execution of the settlement and sale, provide:
ART. 320. The father, or in his absence the mother, is the legal
administrator of the property pertaining to the child under parental
authority. If the property is worth more than two thousand pesos,
the father or mother shall give a bond subject to the approval of the
Court of First Instance.
ART. 326. When the property of the child is worth more than two
thousand pesos, the father or mother shall be considered a
guardian of the child’s property, subject to the duties and
obligations of guardians under the Rules of Court.
Corollarily, Section 7, Rule 93 of the Rules of Court also provides:
SEC. 7. Parents as Guardians. – When the property of the child
under parental authority is worth two thousand pesos or less, the
father or the mother, without the necessity of court appointment,
shall be his legal guardian. When the property of the child is worth
more than two thousand pesos, the father or the mother shall be
considered guardian of the child’s property, with the duties and
obligations of guardians under these Rules, and shall file the
petition required by Section 2 hereof. For good reasons, the court
may, however, appoint another suitable persons.
Administration includes all acts for the preservation of the property
and the receipt of fruits according to the natural purpose of the
thing. Any act of disposition or alienation, or any reduction in the
substance of the patrimony of child, exceeds the limits of
administration.13 Thus, a father or mother, as the natural guardian of
the minor under parental authority, does not have the power to
dispose or encumber the property of the latter. Such power is
granted by law only to a judicial guardian of the ward’s property and
even then only with courts’ prior approval secured in accordance
with the proceedings set forth by the Rules of Court.14
Consequently, 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,15 is
unenforceable in accordance with Articles 1317 and 1403(1) of the
Civil Code which provide:
ART. 1317. No one may contract in the name of another without
being authorized by the latter or unless he has by law a right to
represent him.
A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his
powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party.
ART. 1403. The following contracts are unenforceable, unless they
are ratified:
(1) Those entered into the name of another person by one who has
been given no authority or legal representation, or who has acted
beyond his powers;
xxx
Ratification means that one under no disability voluntarily adopts
and gives sanction to some unauthorized act or defective
proceeding, which without his sanction would not be binding on him.

15
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
It is this voluntary choice, knowingly made, which amounts to a
ratification of what was theretofore unauthorized, and becomes the
authorized act of the party so making the ratification.16 Once ratified,
expressly or impliedly such as when the person knowingly received
benefits from it, the contract is cleansed from all its defects from the
moment it was constituted,17 as it has a retroactive effect.
Records, however, show that Rosa had ratified the extrajudicial
settlement of the estate with absolute deed of sale. In Napoleon
and Rosa’s Manifestation18 before the RTC dated July 11, 1997,they
stated:
"Concerning the sale of our parcel of land executed by our father,
Enrique Neri concurred in and conformed to by us and our other
two sisters and brother (the other plaintiffs), in favor of Hadji Yusop
Uy and his spouse Hadja Julpa Uy on July 7, 1979, we both
confirmed that the same was voluntary and freely made by all of us
and therefore the sale was absolutely valid and enforceable as far
as we all plaintiffs in this case are concerned;" (Underscoring
supplied)
19 
In their June 30, 1997 Joint-Affidavit, Napoleon and Rosa also
alleged:
"That we are surprised that our names are included in this case
since we do not have any intention to file a case against Hadji
Yusop Uy and Julpha Ibrahim Uy and their family and we respect
and acknowledge the validity of the Extra-Judicial Settlement of the
Estate with Absolute Deed of Sale dated July 7, 1979;"
(Underscoring supplied)
Clearly, the foregoing statements constitutedratification of the
settlement of the estate and the subsequent sale, thus, purging all
the defects existing at the time of its execution and legitimizing the
conveyance of Rosa’s 1/16 share in the estate of Anunciacion to
16
spouses Uy. The same, however, is not true with respect to
Douglas for lack of evidence showing ratification.
Considering, thus, that the extrajudicial settlement with sale is
invalid and therefore, not binding on Eutropia, Victoria and Douglas,
only the shares ofEnrique, Napoleon, Alicia, Visminda and Rosa in
the homestead properties have effectivelybeen disposed in favor of
spouses Uy. "A person can only sell what he owns, or is authorized
to sell and the buyer can as a consequence acquire no more than
what the sellercan legally transfer."20 On this score, Article 493 of
the Civil Codeis relevant, which provides:
Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate,
assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect
of the alienation or the mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the
division upon the termination of the co-ownership.
Consequently, spouses Uy or their substituted heirs became pro
indiviso co-owners of the homestead properties with Eutropia,
Victoria and Douglas, who retained title to their respective 1/16
shares. They were deemed to be holding the 3/16 shares of
Eutropia, Victoria and Douglas under an implied constructive trust
for the latter’s benefit, conformably with Article 1456 of the Civil
Code which states:"if property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property
comes." As such, it is only fair, just and equitable that the amount
paid for their shares equivalent to ₱ 5,000.0021 each or a total of ₱
15,000.00 be returned to spouses Uy with legal interest.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

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,22 which is
from the time of actual notice in case of unregistered deed.23 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.
WHEREFORE, the instant petition is GRANTED. The April 27,
2010 Decision and October 18, 2010 Resolution of the Court of
Appeals are REVERSED and SET ASIDE and a new judgment is
entered:
3. Declaring Eutropia D. Illut-Cockinos, Victoria D. Illut-Piala and
Douglas D. Neri as the LAWFUL OWNERSof the 3/16 portions of
the subject homestead properties, covered by Original Certificate of
Title Nos. (P-7998) P-2128, (P-14608) P-5153 and P-20551 (P-
8348); and
4. Ordering the estate of the late Enrique Neri, as well as Napoleon
Neri, Alicia D. Neri-Mondejar, Visminda D. Neri-Chambers and
Rosa D. Neri-Millan to return to the respondents jointly and
solidarily the amount paid corresponding to the 3/16 shares of
Eutropia, Victoria and Douglas in the total amount of ₱ 15,000.00,
with legal interest at 6% per annum computed from the time of
payment until finality of this decision and 12% per annum thereafter
until fully paid.
No pronouncement as to costs.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson

1. Declaring the Extra-Judicial Settlement of the Estate of MARIANO C. DEL

ARTURO D. BRION
Anunciacion Neri NULL and VOID; CASTILLO
Associate Justice
Associate Justice
2. Declaring the Absolute Deed of Sale in favor of the late spouses
Hadji Yusop Uy and Julpha Ibrahim Uy as regards the 13/16 total JOSE PORTUGAL PEREZ
shares of the late Enrique Neri, Napoleon Neri, Alicia D. Neri- Associate Justice
Mondejar, Visminda D. Neri-Chambers and Rosa D. Neri- ATTESTATION
Millan VALID;

17
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

I attest that the conclusions in the above Decision had been

reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairperson's Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's
Division.
MARIA LOURDES P. A. SERENO
Chief Justice

18
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
G.R. No. 211153, February 28, 2018
AMPARO S. CRUZ; ERNESTO HALILI; ALICIA H. FLORENCIO;
DONALD HALILI; EDITHA H. RIVERA; ERNESTO HALILI, JR.;
AND JULITO HALILI, Petitioners, v. ANGELITO S. CRUZ,
CONCEPCION S. CRUZ, SERAFIN S. CRUZ, AND VICENTE S.
CRUZ, Respondents.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 seeks to set aside the June
25, 2013 Decision2 and January 29, 2014 Resolution3 of the Court
of Appeals (CA) in CA G.R. CV. No. 96345 which, respectively,
granted herein respondents' appeal and reversed the June 1, 2010
Decision4 of the Regional Trial Court of San Mateo, Rizal, Branch
75 (RTC) in Civil Case No. 1380-98 SM, and denied petitioners'
motion for reconsideration thereto.
Factual Antecedents
In an Amended Complaint5 filed on April 6, 1999 and docketed with
the RTC as Civil Case No. 1380-98 SM, respondents Angelito S.
Cruz, Concepcion S. Cruz. (Concepcion), and Serafin S. Cruz
alleged that they - together with their siblings, petitioner Amparo S.
Cruz (Amparo) and Antonia Cruz (Antonia) inherited a 940-square-
meter parcel of land (the subject property) from their late parents,
spouses Felix and Felisa Cruz, which land was covered by Original
Certificate of Title No. ON-658, that on July 31, 1986, the parties
executed a deed of extrajudicial settlement of estate covering the
subject property, on the agreement that each heir was to receive an
equal portion of the subject property as mandated by law; that in
1998, when the subject property was being subdivided and the
subdivision survey plan was shown to respondents, they discovered
19
that Antonia was allocated two lots, as against one (1) each for the
respondents; that Antonia's allocation of two lots contravened the
agreement among the heirs that they would receive equal shares in
the subject property; that Amparo and Antonia were able to
perpetrate the fraud by inducing Concepcion - who was illiterate - to
sign the deed of extrajudicial settlement of estate, which was written
in the English language, without previously reading and explaining
the contents thereof to the latter; that Amparo and Antonia
fraudulently took advantage of Concepcion's ignorance and mental
weakness, deceiving and cajoling her into signing the deed of
extrajudicial settlement, to her damage and injury; and that Antonia
passed away, but left as her heirs herein petitioners Ernesto Halili,
Alicia H. Florencio, Donald Halili, Editha H. Rivera, Ernesto Halili,
Jr. and Julito Halili, who are in possession of the two lots allocated
to Antonia. Respondents thus prayed, as follows:
In view of the foregoing, it is respectfully prayed that after due
hearing, judgment be rendered as follows:
1. Declaring null arid void the extra-judicial settlement executed by
the parties on July 31, 1986;
2. Declaring one of the lots adjudicated to defendant Antonia Cruz-
Halili to the common fund;
3. For such other relief just and equitable under the circumstances;
4. To pay the cost of this suit.6
In their Answer,7 petitioners prayed for dismissal, claiming that the
July 31, 1986 deed of extrajudicial settlement of estate had been
voluntarily and freely executed by the parties, free from vitiated
consent; that respondents' cause of action has prescribed; that the
complaint  failed to state a cause of action; and that no earnest
efforts toward compromise have been made. By way of
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
counterclaim petitioners prayed for an award of moral and
exemplary damages, attorney's fees, and costs of suit.
Ruling of the Regional Trial Court
After trial, the RTC rendered its Decision dated June 1, 2010,
pronouncing as follows:
From the foregoing, the main issue is whether or not the
extrajudicial settlement is null and void on grounds of fraud, deceit,
misrepresentation or mistake.
xxxx
Besides, while the Extra-Judicial Settlement was executed and
signed on July 13, 19868 x x x, and alleged fraud was discovered on
May 12, 1986 when subdivision survey was conducted x x x and
defendants started to build their houses x x x this petition was filed
only on August 14, 1998 or more than 10 years from date of
execution or date of discovery of alleged fraud. Under Art. 1144
Civil Code, actionable documents prescribes [sic] in 10 years.
However, if a property is allegedly acquired thru fraud or mistake,
the person obtaining it is, by force of law, considered an implied
trustee for the benefit of the person deprived of it, in which case the
action based thereon is 10 years from date of registration of the
extra-judicial settlement or issuance of new certificate of title (Art.
1456 Civil Codex x x). Hence, this petition is not barred by
prescription. As the period is not too long nor short, laches has not
yet set in.
Moreover, fraud, as basis of the Complaint, is not delineated therein
with particularity. Under Sec. 5 Rule 8, fraud must be alleged
specifically, not generally. Nonetheless, apart from such allegations,
no clear and convincing evidence was presented by plaintiffs. For
one, while plaintiff Concepcion Cruz. Enriquez is admittedly only
20
grade 3 and could hardly understand English as what is written in
the extra-judicial settlement which was not even allegedly fully
explained to her, it appears that she can absolutely read and write,
and understand English albeit not fully. And as she is deeply
interested in her inheritance share, she is aware of the import and
consequences of what she executed and signed. For the past 10
years, there is no way she could feign ignorance of the alleged
fraud and make passive reactions or complaint thereof. Being
adversely interested in the property, her apprehensions were purely
in the state of her mind, if not unilateral and afterthought.
Secondly, just like any other contracts, parties in an extra-judicial
settlement are given wide latitude to stipulate terms and conditions
they feel fair and convenient beneficial to one and prejudicial to the
other. By tradition and good customs, equality is relaxed if only to
buy peace, or out of compassion or courtesy. So long as not
contrary to strict provisions of the law, the supremacy of contracts
shall be respected.
Being consensual, extra-judicial settlement is deemed perfected
once mutual consent is manifested. Notarization being a mere
formality, whatever its infirmity cannot invalidate a contract but at
most, merely ensue to administrative sanction on the part of their
notary. Even so, unless a strong clear and convincing evidence is
shown, a document, one appeared notarized [sic], becomes a
public document. As between a public document and mere
allegations of plaintiffs, the former prevails x x x.
Thirdly, for the past 10 years from 1996 [sic] when they forged an
extra-judicial settlement and defendants admittedly started
constructing their house and even made a subdivision survey,
plaintiffs also occupied their allotted lots but never complain [sic]
and even attended their reunions x x x. Other heirs also waived or
sold shares to Amparo and Antonia Cruz x x x. Parties were even
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
unified and unanimous in surrendering dominion of their parents'
ancestral house in favor of Antonia Cruz alone x x x. As such, two
lots would necessarily accrue to Antonia Cruz, and only one lot
each should belong to other heirs. If the heirs are contented and
unanimously conformable, it is quite absurd that only plaintiff
Concepcion Cruz-Enriquez was disagreeable and yet, after the
lapse of 10 years. Her conduct then belies her present claim of
being defrauded and prejudiced x x x. And in the interpretation of
stipulations, clarification may be had from such subsequent acts of
the parties x x x. Even so, in case of conflict or dual interpretations,
its validity shall be preferred x x x.
Fourthly, other than simply alleging that her sisters Amparo Cruz
and Antonia Cruz prepared the extra-judicial settlement, and made
a house-to-house visit to have it signed by their brothers and sisters
including plaintiff Concepcion Cruz-Enriquez, no other independent
facts aliunde has [sic] been adduced to substantiate or the least
corroborate actual fraud. Fraud cannot be presumed. It must be
proven. Mere allegation is not evidence. Rather, if ever both
defendants were eager to have it signed, their motive appears to be
solely to reduce in writing their imperfect title over a thing already
pre-owned.
Peremptorily, following the tenet "allegata et non probata," he who
alleges has the burden of proof. Thus, the burden of proof lies on
the pleader. He cannot be allowed to draw preponderance of
evidence on the weakness of the respondent. Otherwise, the relief
being sought must necessarily fail x x x Hence, this case must be
dismissed.
And as plaintiffs filed this petition relying on their unilateral
perception that plaintiff Concepcion Cruz-Enriquez was prejudiced
by the 2 lots for defendant Antonia Cruz, they and defendants shall
each bear their own costs of litigation and defense.
21
WHEREFORE, premises considered, the Complaint is hereby
ordered DISMISSED. Costs de-officio.
SO ORDERED.9 (Citations omitted)
Ruling of the Court of Appeals
Respondents appealed before the CA, which completely reversed
and set aside the RTC's judgment and the parties' deed of
extrajudicial settlement. The appellate court held:
The sole issue in this case is whether the consent given by
appellant Concepcion to the subject extrajudicial settlement of
estate was given voluntarily.
We hold that it was not.
Although the action commenced by appellants before the trial court
was a declaration of nullity of the deed of extrajudicial settlement of
estate,the case was clearly an action to annul the same. A
distinction between an action for annulment and one for declaration
of nullity of an agreement is called for.
An action for annulment of contract is one filed where consent is
vitiated by lack of legal capacity of one of the contracting parties, or
by mistake, violence, intimidation, undue influence or fraud. By its
very nature, annulment contemplates a contract which is voidable,
that is, valid until annulled. Such contract is binding on all the
contracting parties until annulled and set aside by a court of law. It
may be ratified. An action for annulment of contract has a four year
prescriptive period.
On the other hand, an action tor declaration of nullity of contract
presupposes a voidcontract or one where a1l of the requisites
prescribed by law for contracts are present but the cause, object or
purpose is contrary to law, morals, good customs, public order or
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

public policy, prohibited by law or declared by law to be void. Such document she signed was written. To quote a part of her testimony,
contract as a rule produces no legal and binding effect even if it is translated in English, as follows:
not set aside by direct legal action. Neither may it be ratified. An
action for the declaration of nullity of contract is imprescriptible. Q: Did you have occasion to read that document before you
affixed your signature on it?
The appellants' pleading was for declaration of nullity of the deed of
extrajudicial settlement of estate. However, this did not necessarily A: The document was written in English and me as well as my
mean that appellants' action was dismissible. brothers and sisters, we trusted our younger sister, Sir.
Granting that the action filed by appellants was incompatible with
their allegations, it is not the caption of the pleading but the    
allegations that determine the nature of the action. The court should
grant the relief warranted by the allegations and the proof even if no Q: That is why you signed the document even though you did
such relief is prayed for. In this case, the allegations in the pleading not understand the same?
and the evidence adduced point to no other remedy but to annul the
extrajudicial settlement of estate because of vitiated consent. A: Yes, sir.

The essence of consent is the agreement of the parties on the

 
terms of the contract, the acceptance by one of the offer made by
the other. It is the concurrence of the minds of the parties on the
Court:
object and the cause which constitutes the contract. The area of
agreement must extend to all points that the parties deem material
Did you not ask your younger sister Amparo to read this
or there is no consent at all.
document considering it was in English? I will reform the
To be valid, consent must meet the following requisites: (a) it should question.
be intelligent, or with an exact notion of the matter to which it refers;
(b) it should be free; and (c) it should be spontaneous. Intelligence    
in consent is vitiated by error; freedom by violence, intimidation or
undue influence; and spontaneity by fraud. Q: But you don't know how to read English?
Here, appellant Concepcion clearly denied any knowledge of the
A: No, your Honor.
import and implication of the subject document she signed, the
subject extra-judicial settlement. She asserted that she does not
understand English, the language in which the terms of the subject    

22
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
Q: When you saw that the document was in English, did you not
ask your younger sister to read the document before you
affixed your signature?
A: No, your Honor.
   
Q: Why did you not ask Amparo to read the document to you
considering that it was in English and you don't understand
English?
A: Parti-partihan daw po at nagtiwala ako, your Honor.
Appellant Concepcion invoked Articles 24 and 1332 of the Civil
Code of the Philippines, which provide:
ART. 24. In all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or
other handicap, the courts must be vigilant tor his protection.
ART. 1332. When one of the parties is unable to read, or if the
contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show that
the terms thereof have been fully explained to the former. x x x
Article 1332 was a provision taken from [A]merican law,
necessitated by the fact that there continues to be a fair number of
people in this country without the benefit of a good education or
documents have been written in English or Spanish. Thee provision
was intended to protect a party to a contract disadvantaged by
illiteracy, ignorance, mental weakness or some other handicap. It
contemplates a situation wherein a contract is entered into but the
23
consent of one of the contracting parties is vitiated by mistake or
fraud committed by the other.
Thus, in case one of the parties to a contract is unable to read and
fraud is alleged, the person enforcing the contract must show that
the terms thereof have been fully explained to the former. Where a
party is unable to read, and he expressly pleads in his reply that he
signed the voucher in question 'without knowing its contents which
have not been explained to him,' this plea is tantamount to one of
mistake or fraud in the execution of the voucher or receipt in
question and the burden is shifted to the other party to show that
the former fully understood the contents of the document; and if he
fails to prove this, the presumption of mistake (if not fraud) stands
unrebutted and controlling.
Here, at the time appellant Concepcion signed the document in
question, she was with appellee Amparo. Appellant could not
possibly have read the contents of the extra-judicial settlement and
could not have consented to a contract whose terms she never
knew nor understood. It cannot be presumed that appellant
Concepcion knew the contents of the extra-judicial settlement.
Article 1332 of the Civil Code is applicable in these circumstances.
Although under Art. 1332 there exists a presumption of mistake or
error accorded by law to those who have not had the benefit of a
good education, one who alleges any defect or the lack of a valid
consent to a contract must establish the same by full, clear and
convincing evidence, not merely by preponderance of evidence.
Hence, even as the burden of proof shifts to the defendants x x x to
rebut the presumption of mistake, the plaintiff x x x who allege(s)
such mistake (or fraud) must show that his personal circumstances
warrant the application of Art. 1332.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

In this case, the presumption of mistake or error on the part of
appellant Concepcion was not sufficiently rebutted by appellees.
Appellees failed to offer any evidence to prove that the extrajudicial
settlement of estate was explained in a language known to the
appellant Concepcion, i.e. in Pilipino. Clearly, appellant
Concepcion, who only finished Grade 3, was not in a position to
give her free, voluntary and spontaneous consent without having
the document, which was in English, explained to her in the Pilipino.
She stated in open court that she did not understand English. Her
testimony as quoted above is instructive.
Due to her limited educational attainment, appellant Concepcion
could not understand the document in English. She wanted to seek
assistance. However, due to the misrepresentation, deception and
undue pressure of her sister appellee Amparo, petitioner signed the
document. Appellant Concepcion was assured that she would
receive her legitimate share in the estate of their late parents.
Later on, appellant Concepcion found out that appellee Antonia
received two (2) lots compared to her siblings, including appellant
Concepcion, who respectively received one (1) lot each. This was a
substantial mistake clearly prejudicial to the substantive interests of
appellant Concepcion in her parent's estate. There is no doubt that,
given her lack of education, appellant Concepcion is protected by
Art. 1332 of the Civil Code. There is reason to believe that, had the
provisions of the extrajudicial agreement been explained to her in
the Pilipino language, she would not have consented to the
significant and unreasonable diminution of her rights.
Atty. Edgardo C. Tagle, the officer who notarized the extrajudicial
settlement did not state that he explained the contents to all the
parties concerned, The records or the subject document for that
matter, do not reflect that he explained the contents of the
document to appellant Concepcion nor to the other parties in a
language or dialect known to all of them. Significantly, the
appellants even denied their presence during the notarization of the
document.
Therefore, the presumption of mistake under Article 1332 is
controlling, having remained unrebutted by appellees. The evidence
proving that the document was not fully explained to appellant
Concepcion in a language known to her, given her low educational
attainment, remained uncontradicted by appellees x x x the consent
of petitioner was invalidated by a substantial mistake or error,
rendering the agreement voidable. The deed of extrajudicial
settlement between appellants and appellees should therefore be
annulled and set aside on the ground of mistake.
In Rural Bank of Caloocan, Inc. v. Court of Appeals, the Supreme
Court ruled that a contract may be annulled on the ground of
vitiated consent, even if the act complained of is committed by a
third party without the connivance or complicity of one of the
contracting parties. It found that a substantial mistake arose from
the employment of fraud or misrepresentation. The plaintiff in that
case was a 70-year old unschooled and unlettered woman who
signed an unauthorized loan obtained by a third party on her behalf.
The Court annulled the contract due to a substantial mistake which
invalidated her consent.
By the same reasoning, if it is one of the contracting parties who
commits the fraud or misrepresentation, such contract may all the
more be annulled due to substantial mistake.
In Remalante v. Tibe, the Supreme Court ruled that
misrepresentation to an illiterate woman who did not know how to
read and write, nor understand English, is fraudulent. Thus, the
deed of sale was considered vitiated with substantial error and
fraud. x x x

24
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
xxxx
Evidently, the applicable prescriptive period to institute the action to
annul the deed of extrajudicial settlement was four (4) years
counted from the discovery of fraud as held in the case of Gerona
v. De Guzman.10 The records show that appellants' complaint was
filed on 17 August 1998 or twelve (12) years from the execution of
the deed. However, as appellants are deemed to have obtained
constructive notice of the fraud upon the publication of the same in
a newspaper on June 5, 10 and 27, 1995, this Court rules that the
present action has not prescribed.
Based on the foregoing, the trial court erred in ruling as it did.
WHEREFORE, premises considered, the appealed Decision dated
1 June 2010 of the Regional Trial Court (RTC), Branch 75, San
Mateo, Rizal is REVERSED. The extrajudicial settlement of the
estate of Felix Cruz is hereby ANNULLED and SET ASIDE.
SO ORDERED.11 (Other citations omitted)
Petitioners filed their Motion for Reconsideration, which was denied
via the second assailed January 29, 2014 Resolution. Hence, the
instant Petition.
In a November 9, 2015 Resolution,12 this Court resolved to give due
course to the Petition.
Issues
Petitioners claim that the CA erred in ruling that the respondents'
cause of action for annulment has not prescribed, and that it
ignored contemporaneous and subsequent acts of respondents
indicating the absence of fraud or vitiation of consent in the
execution of the deed of extrajudicial settlement of the estate of
Felix Cruz.
25
Petitioners' Arguments
In their Petition and Reply13 seeking reversal of the assailed CA
dispositions, petitioners essentially insist that respondents' cause of
action for annulment has prescribed, since they filed Civil Case No.
1380-98 SM only in 1998, or 12 years after the execution of the
deed of extrajudicial settlement of estate on July 31, 1986; that
pursuant to Article 1144 of the Civil Code,14 a cause of action based
upon a written contract - such as the subject deed of extrajudicial
settlement - must be brought within 10 years from the execution
thereof; that even assuming that the four-year prescriptive period
based on fraud applies as the CA ruled, respondents' cause of
action already prescribed, as the case was filed only in 1998, while
the supposed fraud may be said to have been discovered in 1986,
when they learned of the survey being conducted on the subject
property; that respondents' actions belied their claim, in that they
did not object when petitioners built their home on the lots allotted
to them and never registered any objection even during family
gatherings and occasions; that the subject deed of extrajudicial
settlement - being a notarized document - enjoys the presumption
of regularity and integrity, and may only be set aside by clear and
convincing evidence of irregularity; that it is a matter of judicial
notice that a pre-war third-grader has the education of a high school
student; and that the findings of the trial court must be given weight
and respect.
Respondents' Arguments
In their Comment15 seeking denial of the Petition, respondents
reiterate the correctness of the CA's assailed Decision; that the
deed of extrajudicial settlement, being written in English, was
calculated to defraud Concepcion - who could not read nor write in
said language; that owing to the fact that she trusted petitioners,
who were her sisters, she was cajoled into signing the deed without
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
knowing it contents; that the deed was notarized in the absence of
most of the parties thereto; that the prescriptive period to be applied
is not the 10-year period under Article 1144, but the four year period
as held by the CA, to be computed from the discovery of the fraud -
since respondents discovered the fraud only in 1998; and that the
factual issues raised by petitioners have been passed upon by the
CA, and are thus not reviewable at this stage.
Our Ruling
The Court denies the Petition.
The present action involves a situation where one heir was able -
through the expedient of an extrajudicial settlement that was written
in a language that is not understood by one of her co-heirs - to
secure a share in the estate of her parents that was greater than
that of her siblings, in violation of the principle in succession that
heirs should inherit in equal shares.
Thus, Antonia - represented in this case by her surviving heirs -
received two lots as against her siblings, including respondent
Concepcion, who respectively received only one lot each in the
subject 940 square-meter property. This she was able to achieve
through the subject 1986 deed of extrajudicial settlement - which
was written in English, a language that was not known to and
understood by Concepcion given that she finished only Grade 3
elementary education. With the help of Amparo, Antonia was able
to secure Concepcion's consent and signature without the benefit of
explaining the contents of the subject deed of extrajudicial
settlement. For this reason, Concepcion did not have adequate
knowledge of the contents and ramifications of the subject deed of
extrajudicial settlement; she was left unaware of the sharing
arrangement contained therein, and realized it only when Antonia
attempted to subdivide the subject property in 1998, and the plan of
26
subdivision survey was shown to Concepcion- which revealed that
Antonia obtained two lots. Consequently, Concepcion filed Civil
Case No. 1380-98 SM on August 17, 1998.
In short, this is a simple case of exclusion in legal succession,
where co-heirs were effectively deprived of their rightful share to the
estate of their parents who died without a will - by virtue of a
defective deed of extrajudicial settlement or partition which granted
a bigger share to one of the heirs and was prepared in such a way
that the other heirs would be effectively deprived of discovering and
knowing its contents.
Under the law, "[t]he children of the deceased shall always inherit
from him in their own right, dividing the inheritance in equal
shares."16 In this case, two of Concepcion's co-heirs renounced
their shares in the subject property; their shares therefore accrued
to the remaining co-heirs, in equal shares as well.17
In Bautista v. Bautista,18 it was held that —
As gathered from the above-quoted portion of its decision, the Court
of Appeals applied the prescriptive periods for annulment on the
ground of fraud and for reconveyance of property under a
constructive trust.
The extra-judicial partition executed by Teofilos co-heirs was
invalid, however. So Segura v. Segura19 instructs:
x x x 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 extra-judicial 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
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
hold that their right to challenge the partition had prescribed after
two years x x x
The deed of extra-judicial partition in the case at bar being invalid,
the action to have it annulled does not prescribe.
The above pronouncement was reiterated in Neri v. Heirs of Hadji
Yusop Uy,20 where the Court ruled:
Hence, 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 upon them and
consequently, a total nullity.
Section 1, Rule 74 of the Rules of Court provides:
SECTION 1. Extrajudicial settlement by agreement between heirs. -
xxx
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. x x x
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 rune heirs
who were entitled to equal shares in the partitioned property. Under
27
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
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.
xxxx
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. (Citations omitted)
Then again, in The Roman Catholic Bishop of Tuguegarao v.
Prudencio,21 the above pronouncements were echoed, thus:
Considering that respondents-appellees have neither knowledge
nor participation in the Extra-Judicial Partition, the same is a
total nullity. It is not binding upon them. Thus, in Neri v. Heirs of
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)
Hadji Yusop Uy, which involves facts analogous to the present
case, we ruled that:
[I]n 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 upon them and consequently, a total
nullity.
xxx
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 x x x (Emphasis supplied; citations omitted)
Thus, while the CA was correct in ruling in favour of Concepcion
and setting aside the subject deed of extrajudicial settlement, it
erred in appreciating and ruling that the case involved fraud - thus
applying the four-year prescriptive period - when it should have
simply held that the action for the declaration of nullity of the
defective deed of extrajudicial settlement does not prescribe, under
the circumstances, given that the same was a total nullity. Clearly,
28
the issue of literacy is relevant to the extent that Concepcion was
effectively deprived of her true inheritance, and not so much that
she was defrauded.
With the foregoing disposition, the other issues raised by the
petitioners are deemed resolved.
WHEREFORE, the Petition is DENIED. The subject July 31, 1986
Extrajudicial Settlement of Estate is hereby DECLARED NULL
AND VOID, and thus ANNULLED and SET ASIDE. Costs against
the petitioners.
SO ORDERED.
Sereno, C.J., (Chairperson), Leonardo-De
Castro, Jardeleza, and Tijam, JJ., concur. 
Endnotes:
14
 Art. 1144. The following actions must be brought within ten years
from the time the right of action accrues:
(1) Upon a written contract; 
(2) Upon an obligation created by law;
(3) Upon a judgment.
16
 CIVIL CODE, Article 980.
17
 CIVIL CODE, Article 1015. Accretion is a right by virtue of which,
when two or more persons are called to the same inheritance,
devise or legacy, the part assigned to the one who renounces or
cannot receive his share, or who died before the testator, is added
or incorporated to that of his co-heirs, co-devisees, or colegatees.
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

Article 1018. In legal succession the share of the person who

repudiates the inheritance shall always accrue to his co-heirs.
Article 1019. The heirs to whom the portion goes by the right of
accretion take it in the same proportion that they inherit.
Article 1020. The heirs to whom the inheritance accrues shall
succeed to all the rights and obligations which the heir who
renounced or could not receive it would have had.

G.R. No. L-11156             February 23, 1961

PURA CARREON, ET AL., plaintiffs-appellants, 
vs.

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 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

RUFO AGCAOILI and LOURDES SANTIAGO, defendants-
appellees.
Domingo R. Maddumba for plaintiffs-appellants.
Meris, Moya, Revilla & Gaffud for defendant-appellee.
Nillo and Tiburcio for the other defendant-appellee.
BAUTISTA ANGELO, J.:
During the marriage of Bonifacio Carreon and Celerina Dauag the
registered land subject of this case was acquired. After the death of
Carreon, his widow Celerina executed on September 24, 1946, an
affidavit adjudicating to herself alone the said land. She declared in
said document that she was the only heiress of her husband. The
original certificate of title covering the land was cancelled and a
transfer certificate was issued in her name. There was however
annotated on her certificate a lien to the effect that her title was
subject to Section 4 of Rule 74 of the Rules of Court.
On September 25, 1946, she borrowed P1,200.00 from the
Philippine National Bank guaranteed by a mortgage on one-half of
the land. A memorandum of the mortgage was annotated on her
transfer certificate. After the maturity of the loan, she requested a
certain Mr. Pintang to look for a buyer of the land for P3,000.00.
One by the name of Rufo Agcaoili was found. The latter made an
advance payment of Pl,500.00 and the balance was paid in full on
October 13, 1947. The loan from the bank was paid, the mortgage
was released and the deed of absolute sale executed in his favor
was registered.1 A new transfer certificate of title was issued in the
name of Agcaoili.
On February 19, 1955, the children of Celerina with the deceased
husband filed a complaint against the spouses Agcaoili seeking to
have the deed of sale executed by their mother declared as one of
mortgage and to recover one half pro-indiviso of the land described
in the complaint. Simultaneous with the filing of said complaint,
Celerina filed an action for intervention which was dismissed by the
trial court.
Defendants filed a motion for summary judgment upon the plea that
the main averments of the complaint even if admitted do not
constitute a cause of action and supported their plea with certain
documentary evidence. Plaintiffs filed an opposition on the ground
that there was a genuine issue which could not be determined
unless a trial is had. The trial court, however, allowed the parties to
submit evidence in support of their contentions and after a careful
analysis thereof found for defendants holding that plaintiffs, claim
has no legal basis.
As may be gleaned from the appellants' assignments of error, the
present appeal is predicated on the arguments that appellees were
buyers in bad faith; that there existed a trust relationship between
them and appellants, and that such being the case, the action
against appellees is imprescriptible.
There is no clear proof that when Rufo Agcaoili bought the land he
knew of any flaw in the title of Celerina Dauag. The mere fact that
he was a townmate of Celerina is not sufficient basis to conclude
that he knew that she had children by her first husband. It has been
shown that since 1920 Rufo Agcaoili has been an enlisted man in
the Philippine constabulary and seldom come home to visit his
relatives. A man of such a situation cannot be expected to know the
relatives and children of his vendor even if they are townmates,.
Fraud cannot be presumed. It must be established by clear and
sufficient evidence. Here every indication is that Agcaoili bought the
land in all good faith oblivious of the source of its acquisition.
If fraud had been committed such was perpetrated by Celerina,
appellants' mother. By her action she induced Agcaoili to believe

30
 SPECIAL PROCEEDINGS (ESTATE SETTLEMENT PRELIMINARIES)

that she was the absolute owner of the land which bore a torrens full period of two years after such distribution, notwithstanding any
title. In dealing with it he merely relied on such title. He was not transfers of the real estate that may have been made.
required to do more. He is only charged with notice of the burdens
The above lien is effective only for a period of two years. From
which are noted on the face of said title. So, after he bought the
September 28, 1946, when a transfer certificate of title was issued
land and a new title was issued in his name, he became a
to Celerina, to September 8, 1949 when the deed of sale in favor of
purchaser thereof for value and a holder of a good and valid title.2
Agcaoili was issued and registered, more than two years had
On the transfer certificate of title issued to Agcaoili there was elapsed We sustain the lower court's opinion that thenceforth the
annotated a statement that it was subject to Section 4, Rule 74 of right to have such lien cancelled became vested on appellee
the Rules of Court. This was an annotation carried over from Agcaoili and that the same had become functus oficio.3 And there
Celerina's transfer certificate. Section 4, Rule 74, provides the being no fraud in the transaction on the part of appellee, nor proof
following: that he knew of any legal infirmity in the title of his vendor, we find
no reason to apply the proposition that he is deemed to be holding
SEC. 4. Liability of distributees and estate. — If it shall appear at
the land in trust for the children of Celerina Dauag.
any time within two years after the settlement and distribution of an
estate in accordance with the provisions of either of the first two WHEREFORE, the decision appealed from is affirmed, without
sections of this rule, that an heir or other person has been unduly pronouncement as to costs.
deprived of his lawful participation in the estate, such heir or such
Bengzon, Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera,
other person may compel the settlement of the estate in the courts
Paredes and Dizon, JJ., concur.
in the manner hereinafter provided for the purpose of satisfying
such lawful participation. And if within the same time of two 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

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