SPECIAL PROCEEDINGS (Atty.
Geraldine Quimosing-Tiu) 1
SETTLEMENT OF ESTATE
EXTRAJUDICIAL SETTLEMENT OF ESTATE (RULE 74)
GERILLA v. DE FIGURACION
SECOND DIVISION
G.R. No. 154322 August 22, 2006
EMILIA FIGURACION-GERILLA, Petitioner,
vs.
CAROLINA VDA. DE FIGURACION,* ELENA FIGURACION-
ANCHETA,* HILARIA A. FIGURACION, FELIPA FIGURACION-
MANUEL, QUINTIN FIGURACION and MARY FIGURACION-
GINEZ, Respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari,1 petitioner Emilia Figuracion-
Gerilla challenges the decision2 and resolution3of the Court of
Appeals (CA) affirming the decision of the Regional Trial Court
(RTC) of Urdaneta City, Pangasinan, Branch 49, which dismissed
her complaint for partition. The properties involved are two parcels of
land which belonged to her late father, Leandro Figuracion.
The facts of the case follow.4
Spouses Leandro and respondent Carolina Figuracion (now both
deceased) had six children: petitioner and respondents Elena
Figuracion-Ancheta (now deceased), Hilaria Figuracion, Felipa
Figuracion-Manuel, Quintin Figuracion and Mary Figuracion-Ginez.
On August 23, 1955, Leandro executed a deed of quitclaim over his
real properties in favor of his six children. When he died in 1958, he
left behind two parcels of land: (1) Lot 2299 of the Cadastral Survey
of Urdaneta consisting of 7,547 square meters with Transfer
Certificate of Title (TCT) No. 4221-P in the name of "Leandro
Figuracion, married to Carolina Adviento" and (2) Lot 705 of the
Cadastral Survey of Urdaneta with an area of 2,900 sq. m. with TCT
No. 4220-P also in the name of "Leandro Figuracion, married to
Carolina Adviento." Leandro had inherited both lots from his
deceased parents,5 as evidenced by Original Certificate of Title
(OCT) Nos. 16731 and 16610, respectively, issued by the Register
of Deeds of the Province of Pangasinan.
Leandro sold a portion of Lot 2299 to Lazaro Adviento, as a result of
which TCT No. 4221-P was cancelled and TCT No. 101331 was
issued to "Lazaro Adviento, married to Rosenda Sagueped" as
owner of the 162 sq. m. and "Leandro Figuracion, married to
Carolina Adviento" as owner of 7,385 sq. m. This lot continued to be
in the name of Leandro in Tax Declaration No. 616 for the year
1985.
What gave rise to the complaint for partition, however, was a dispute
between petitioner and her sister, respondent Mary, over the eastern
half of Lot 707 of the Cadastral Survey of Urdaneta with an area of
3,164 sq. m.
COMPILATION OF CASES
Lot 707 belonged to Eulalio Adviento, as evidenced by OCT No.
15867 issued on February 9, 1916. When Adviento died, his two
daughters, Agripina Adviento (his daughter by his first wife) and
respondent Carolina (his daughter by his second wife), succeeded
him to it. On November 28, 1961, Agripina executed a quitclaim in
favor of petitioner over the one-half eastern portion of Lot 707.
Agripina died on July 28, 1963, single and without any issue. Before
her half-sister’s death, however, respondent Carolina adjudicated
unto herself, via affidavit under Rule 74 of the Rules of Court, the
entire Lot 707 which she later sold to respondents Felipa and Hilaria.
The latter two immediately had OCT No. 15867 cancelled, on
December 11, 1962. A new title, TCT No. 42244, was then issued in
the names of Felipa and Hilaria for Lot 707.
In February 1971, petitioner and her family went to the United States
where they stayed for ten years. Returning in 1981, 6 she built a
house made of strong materials on the eastern half-portion of Lot
707. She continued paying her share of the realty taxes thereon.
It was sometime later that this dispute erupted. Petitioner sought the
extrajudicial partition of all properties held in common by her and
respondents. On May 23, 1994, petitioner filed a complaint in the
RTC of Urdaneta City, Branch 49, for partition, annulment of
documents, reconveyance, quieting of title and damages against
respondents, praying, among others, for: (1) the partition of Lots
2299 and 705; (2) the nullification of the affidavit of self-adjudication
executed by respondent Carolina over Lot 707, the deed of absolute
sale in favor of respondents Felipa and Hilaria, and TCT No. 42244;
(3) a declaration that petitioner was the owner of one-half of Lot 707
and (4) damages. The case was docketed as Civil Case No. U-5826.
On the other hand, respondents took the position that Leandro’s
estate should first undergo settlement proceedings before partition
among the heirs could take place. And they claimed that an
accounting of expenses chargeable to the estate was necessary for
such settlement.
On June 26, 1997,7 the RTC8 rendered judgment nullifying
Carolina’s affidavit of self-adjudication and deed of absolute sale of
Lot 707. It also declared Lots 2299 and 705 as exclusive properties
of Leandro Figuracion and therefore part of his estate. The RTC,
however, dismissed the complaint for partition, reconveyance and
damages on the ground that it could not grant the reliefs prayed for
by petitioner without any (prior) settlement proceedings wherein the
transfer of title of the properties should first be effected.
On appeal, the CA upheld the dismissal of petitioner’s action for
partition for being premature. The CA reversed the decision,
however, with respect to the nullification of the self-adjudication and
the deed of sale. Upholding the validity of the affidavit of self-
adjudication and deed of sale as to Carolina’s one-half pro-
indiviso share, it instead partitioned Lot 707. Dissatisfied,
respondents elevated the CA decision to this Court in G.R. No.
151334, entitled Carolina vda. de Figuracion, et al. v. Emilia
Figuracion-Gerilla.9
The issue for our consideration is whether or not there needs to be a
prior settlement of Leandro’s intestate estate (that is, an accounting
of the income of Lots 2299 and 705, the payment of expenses,
liabilities and taxes, plus compliance with other legal requirements,
etc.) before the properties can be partitioned or distributed.
Respondents claim that: (1) the properties constituting Leandro’s
estate cannot be partitioned before his estate is settled and (2) there
should be an accounting before anything else, considering that they
(respondents) had to spend for the maintenance of the deceased
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 2
COMPILATION OF CASES

Leandro Figuracion and his wife in their final years, which support
was supposed to come from the income of the properties. Among
other things, respondents apparently wanted petitioner to share in
the expenses incurred for the care of their parents during the ten
years she stayed in the United States, before she could get her part
of the estate while petitioner apparently wanted her gross share,
without first contributing to the expenses.
In any event, there appears to be a complication with respect to the
partition of Lot 705. The records refer to a case entitled Figuracion,
et al. v. Alejo currently pending in the CA. The records, however,
give no clue or information regarding what exactly this case is all
about. Whatever the issues may be, suffice it to say that partition is
premature when ownership of the lot is still in dispute.10
WHEREFORE, the petition is hereby DENIED. The Court of
Appeals’ decision and resolution in CA-G.R. CV No. 58290
are AFFIRMED in so far as the issue of the partition of Lots 2299
and 705 is concerned.
But with respect to Lot 707, we make no ruling on the validity of
Carolina vda. de Figuracion’s affidavit of self-adjudication and deed
of sale in favor of Felipa and Hilaria Figuracion in view of the fact
that Carolina vda. de Figuracion, et al. v. Emilia Figuracion-
Gerilla (G.R. No. 151334) is still pending in this Division.
Costs against petitioner.
SO ORDERED.

Petitioner faces a different problem with respect to Lot 2299. Section

1, Rule 69 of the Rules of Court provides:

SECTION 1. Complaint in action for partition of real estate. — A

person having the right to compel the partition of real estate may do
so as provided in this Rule, setting forth in his complaint the nature
and extent of his title and an adequate description of the real estate
of which partition is demanded and joining as defendants all other
persons interested in the property.

The right to an inheritance is transmitted immediately to the heirs by

operation of law, at the moment of death of the decedent. There is
no doubt that, as one of the heirs of Leandro Figuracion, petitioner
has a legal interest in Lot 2299. But can she compel partition at this
stage?

There are two ways by which partition can take place under Rule 69:
by agreement under Section 211 and through commissioners when
such agreement cannot be reached, under Sections 3 to 6. 12

Neither method specifies a procedure for determining expenses

chargeable to the decedent’s estate. While Section 8 of Rule 69
provides that there shall be an accounting of the real property’s
income (rentals and profits) in the course of an action for
partition,13 there is no provision for the accounting of expenses for
which property belonging to the decedent’s estate may be
answerable, such as funeral expenses, inheritance taxes and similar
expenses enumerated under Section 1, Rule 90 of the Rules of
Court.

In a situation where there remains an issue as to the expenses

chargeable to the estate, partition is inappropriate. While petitioner
points out that the estate is allegedly without any debt and she and
respondents are Leandro Figuracion’s only legal heirs, she does not
dispute the finding of the CA that "certain expenses" including those
related to her father’s final illness and burial have not been properly
settled.14 Thus, the heirs (petitioner and respondents) have to submit
their father’s estate to settlement because the determination of these
expenses cannot be done in an action for partition.

In estate settlement proceedings, there is a proper procedure for the

accounting of all expenses for which the estate must answer. If it is
any consolation at all to petitioner, the heirs or distributees of the
properties may take possession thereof even before the settlement
of accounts, as long as they first file a bond conditioned on the
payment of the estate’s obligations.15

PEREIRA v. CA
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-81147 June 20, 1989
VICTORIA BRINGAS PEREIRA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and RITA PEREIRA
NAGAC, respondents.
Benjamin J. Quitoriano for petitioner.
Linzag-Arcilla & Associates Law Offices for private respondent.
GANCAYCO, J.:
Is a judicial administration proceeding necessary when the decedent
dies intestate without leaving any debts? May the probate court
appoint the surviving sister of the deceased as the administratrix of
the estate of the deceased instead of the surviving spouse? These
are the main questions which need to be resolved in this case.
Andres de Guzman Pereira, an employee of the Philippine Air Lines,
passed away on January 3, 1983 at Bacoor, Cavite without a will. He
was survived by his legitimate spouse of ten months, the herein
petitioner Victoria Bringas Pereira, and his sister Rita Pereira Nagac,
the herein private respondent.
On March 1, 1983, private respondent instituted before Branch 19 of
the Regional Trial Court of Bacoor, Cavite, Special Proceeding No.
RTC-BSP-83-4 for the issuance of letters of administration in her
favor pertaining to the estate of the deceased Andres de Guzman
Pereira. 1 In her verified petition, private respondent alleged the
following: that she and Victoria Bringas Pereira are the only
surviving heirs of the deceased; that the deceased left no will; that
there are no creditors of the deceased; that the deceased left
several properties, namely: death benefits from the Philippine Air
Lines (PAL), the PAL Employees Association (PALEA), the PAL
Employees Savings and Loan Association, Inc. (PESALA) and the
Social Security System (SSS), as well as savings deposits with the
Philippine National Bank (PNB) and the Philippine Commercial and
Industrial Bank (PCIB), and a 300 square meter lot located at
Barangay Pamplona, Las Pinas, Rizal and finally, that the spouse of
the deceased (herein petitioner) had been working in London as an
auxiliary nurse and as such one-half of her salary forms part of the
estate of the deceased.
On March 23,1983, petitioner filed her opposition and motion to
dismiss the petition of private respondent 2 alleging that there exists
no estate of the deceased for purposes of administration and
praying in the alternative, that if an estate does exist, the letters of
administration relating to the said estate be issued in her favor as
the surviving spouse.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 3
COMPILATION OF CASES
In its resolution dated March 28, 1985, the Regional Trial Court,
appointed private respondent Rita Pereira Nagac administratrix of
the intestate estate of Andres de Guzman Pereira upon a bond
posted by her in the amount of Pl,000.00. The trial court ordered her
to take custody of all the real and personal properties of the
deceased and to file an inventory thereof within three months after
receipt of the order. 3
Not satisfied with the resolution of the lower court, petitioner brought
the case to the Court of Appeals. The appellate court affirmed the
appointment of private respondent as administratrix in its decision
dated December 15, 1987. 4
Hence, this petition for review on certiorari where petitioner raises
the following issues: (1) Whether or not there exists an estate of the
deceased Andres de Guzman Pereira for purposes of
administration; (2) Whether or not a judicial administration
proceeding is necessary where there are no debts left by the
decedent; and, (3) Who has the better right to be appointed as
administratrix of the estate of the deceased, the surviving spouse
Victoria Bringas Pereira or the surviving sister Rita Pereira Nagac?
Anent the first issue, petitioner contends that there exists no estate
of the deceased for purposes of administration for the following
reasons: firstly, the death benefits from PAL, PALEA, PESALA and
the SSS belong exclusively to her, being the sole beneficiary and in
support of this claim she submitted letter-replies from these
institutions showing that she is the exclusive beneficiary of said
death benefits; secondly, the savings deposits in the name of her
deceased husband with the PNB and the PCIB had been used to
defray the funeral expenses as supported by several receipts; and,
finally, the only real property of the deceased has been
extrajudicially settled between the petitioner and the private
respondent as the only surviving heirs of the deceased.
Private respondent, on the other hand, argues that it is not for
petitioner to decide what properties form part of the estate of the
deceased and to appropriate them for herself. She points out that
this function is vested in the court in charge of the intestate
proceedings.
Petitioner asks this Court to declare that the properties specified do
not belong to the estate of the deceased on the basis of her bare
allegations as aforestated and a handful of documents. Inasmuch as
this Court is not a trier of facts, We cannot order an unqualified and
final exclusion or non-exclusion of the property involved from the
estate of the deceased. 5
The resolution of this issue is better left to the probate court before
which the administration proceedings are pending. The trial court is
in the best position to receive evidence on the discordant
contentions of the parties as to the assets of the decedent's estate,
the valuations thereof and the rights of the transferees of some of
the assets, if any. 6 The function of resolving whether or not a certain
property should be included in the inventory or list of properties to be
administered by the administrator is one clearly within the
competence of the probate court. However, the court's determination
is only provisional in character, not conclusive, and is subject to the
final decision in a separate action which may be instituted by the
parties.7
Assuming, however, that there exist assets of the deceased Andres
de Guzman Pereira for purposes of administration, We nonetheless
find the administration proceedings instituted by private respondent
to be unnecessary as contended by petitioner for the reasons herein
below discussed.
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 4
COMPILATION OF CASES

The general rule is that when a person dies leaving property, the
same should be judicially administered and the competent court
should appoint a qualified administrator, in the order established in
Section 6, Rule 78, in case the deceased left no will, or in case he
had left one, should he fail to name an executor therein. 8 An
exception to this rule is established in Section 1 of Rule 74. 9 Under
this exception, when all the heirs are of lawful age and there are no
debts due from the estate, they may agree in writing to partition the
property without instituting the judicial administration or applying for
the appointment of an administrator.
Section 1, Rule 74 of the Revised Rules of Court, however, does not
preclude the heirs from instituting administration proceedings, even
if the estate has no debts or obligations, if they do not desire to
resort for good reasons to an ordinary action for 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 for partition, the
said provision does not compel them to do so if they have good
reasons to take a different course of action. 10 It should be noted that
recourse to an administration proceeding even if the estate has no
debts is sanctioned only if the heirs have good reasons for not
resorting to an action for partition. Where partition is possible, either
in or out of court, the estate should not be burdened with an
administration proceeding without good and compelling reasons. 11
Thus, it has been repeatedly held that when a person dies without
leaving pending obligations to be paid, his heirs, whether of age or
not, are not bound to submit the property to a judicial administration,
which is always long and costly, or to apply for the appointment of
an administrator by the Court. It has been uniformly held that in such
case the judicial administration and the appointment of an
administrator are superfluous and unnecessary proceedings . 12
Now, what constitutes "good reason" to warrant a judicial
administration of the estate of a deceased when the heirs are all of
legal age and there are no creditors will depend on the
circumstances of each case.
In one case, 13 We said:
We see no reason not to apply this doctrine to the case at bar. There
are only two surviving heirs, a wife of ten months and a sister, both
of age. The parties admit that there are no debts of the deceased to
be paid. What is at once apparent is that these two heirs are not in
good terms. The only conceivable reason why private respondent
seeks appointment as administratrix is for her to obtain possession
of the alleged properties of the deceased for her own purposes,
since these properties are presently in the hands of petitioner who
supposedly disposed of them fraudulently. We are of the opinion that
this is not a compelling reason which will necessitate a judicial
administration of the estate of the deceased. To subject the estate of
Andres de Guzman Pereira, which does not appear to be substantial
especially since the only real property left has been extrajudicially
settled, to an administration proceeding for no useful purpose would
only unnecessarily expose it to the risk of being wasted or
squandered. In most instances of a similar nature, 16 the claims of
both parties as to the properties left by the deceased may be
properly ventilated in simple partition proceedings where the
creditors, should there be any, are protected in any event.
We, therefore, hold that the court below before which the
administration proceedings are pending was not justified in issuing
letters of administration, there being no good reason for burdening
the estate of the deceased Andres de Guzman Pereira with the
costs and expenses of an administration proceeding.
With the foregoing ruling, it is unnecessary for us to delve into the
issue of who, as between the surviving spouse Victoria Bringas
Pereira and the sister Rita Pereira Nagac, should be preferred to be
appointed as administratrix.
WHEREFORE, the letters of administration issued by the Regional
Trial Court of Bacoor to Rita Pereira Nagac are hereby revoked and
the administration proceeding dismissed without prejudice to the
right of private respondent to commence a new action for partition of
the property left by Andres de Guzman Pereira. No costs.
SO ORDERED.

Again the petitioner argues that only when the heirs do not have any
dispute as to the bulk of the hereditary estate but only in the manner
of partition does section 1, Rule 74 of the Rules of Court apply and
that in this case the parties are at loggerheads as to the corpus of
the hereditary estate because respondents succeeded in
sequestering some assets of the intestate. The argument is
unconvincing, because, as the respondent judge has indicated,
questions as to what property belonged to the deceased (and
therefore to the heirs) may properly be ventilated in the partition
proceedings, especially where such property is in the hands of one
heir.

In another case, We held that if the reason for seeking an

appointment as administrator is merely to avoid a multiplicity of suits
since the heir seeking such appointment wants to ask for the
annulment of certain transfers of property, that same objective could
be achieved in an action for partition and the trial court is not justified
in issuing letters of administration. 14 In still another case, We did not
find so powerful a reason the argument that the appointment of the
husband, a usufructuary forced heir of his deceased wife, as judicial
administrator is necessary in order for him to have legal capacity to
appear in the intestate proceedings of his wife's deceased mother,
since he may just adduce proof of his being a forced heir in the
intestate proceedings of the latter.15

AVELINO v. CA
SECOND DIVISION
G.R. No. 115181 March 31, 2000
MARIA SOCORRO AVELINO, petitioner,
vs.
COURT OF APPEALS, ANGELINA AVELINO, SHARON
AVELINO, ANTONIO AVELINO, JR., TRACY AVELINO, PATRICK
MICHAEL AVELINO and MARK ANTHONY
AVELINO, respondents.
RESOLUTION
QUISUMBING, J.:
Before us is a petition for review on certiorari of the Decision of the
Court of Appeals dated February 16, 1994 in CA-G.R. SP No. 31574
as well as its Resolution dated April 28, 1994 denying petitioner's
Motion for Reconsideration. The assailed Decision affirmed the
Order of the Regional Trial Court of Quezon City, Branch 78, in Sp.
Proc. No. Q-91-10441 converting petitioner's petition for the
issuance of letters of administration to an action for judicial partition.
Petitioner Maria Socorro Avelino is a daughter and compulsory heir
of the late Antonio Avelino, Sr., and his first wife private respondent
Angelina Avelino.
The other private respondents, Sharon, Antonio Jr., Tracy, Patrick
and Mark Anthony all surnamed Avelino are likewise compulsory
heirs of Avelino, Sr. Sharon, an American, is the second wife of
Avelino Sr. The other private respondents are siblings of petitioner
Ma. Socorro.
The records reveal that on October 24, 1991, Ma. Socorro filed
before the Regional Trial Court of Quezon City, Branch 78, docketed
as SP Proc. No. Q-91-10441, a petition for the issuance of letters of
administration of the estate of Antonio Avelino, Sr., who died
intestate on April 10, 1989. She asked that she be appointed the
administrator of the estate.
On December 3, 1992, Angelina, and the siblings filed their
opposition by filing a motion to convert the said judicial proceedings
to an action for judicial partition which petitioner duly opposed.
On February 16, 1993, public respondent judge issued the assailed
Order which reads:
Acting on the "Motion to Convert Proceedings to Action for Judicial
Partition", considering that the petitioner is the only heir not
amenable to a simple partition, and all the other compulsory heirs
manifested their desire for an expeditious settlement of the estate of
the deceased Antonio Avelino, Sr., the same is granted.
WHEREFORE, the petition is converted into judicial partition of the
estate of deceased Antonio Avelino, Sr. The parties are directed to
submit a complete inventory of all the real and personal properties
left by the deceased. Set the hearing of the judicial partition on
APRIL 13, 1993, at 8:30 o'clock in the morning. Notify all the parties
and their counsel of this assignment.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 5
COMPILATION OF CASES
SO ORDERED.1
On March 17, 1993, petitioner filed a motion for reconsideration
which was denied in an Order dated June 16, 1993.
On July 23, 1993, Ma. Socorro filed before the Court of Appeals, a
petition for certiorari, prohibition, and mandamusalleging grave
abuse of discretion amounting to lack or excess of jurisdiction on the
part of the trial court, in granting private respondents' motion to
convert the judicial proceeding for the issuance of letters of
administration to an action for judicial partition. Her petition was
docketed as CA-G.R. SP No. 31574.
On February 18, 1994, the respondent appellate court rendered the
assailed decision, stating that the "petition is DENIED DUE
COURSE" and accordingly dismissed. 2
On March 1, 1994, petitioner duly moved for reconsideration, but it
was denied on April 28, 1994.
Hence, this petition. Petitioner assigns the following errors:
THE COURT OF APPEALS ERRED IN UPHOLDING THE LOWER
COURT'S FINDING THAT PARTITION IS PROPER UNDER THE
PREMISES.
ADMINISTRATION SHOULD BE THE PROPER REMEDY
PENDING THE DETERMINATION OF THE CHARACTER AND
EXTENT OF THE DECEDENT'S ESTATE.3
For resolution, we find that given the circumstances in this case, the
sole issue here is whether respondent appellate court committed an
error of law and gravely abused its discretion in upholding the trial
court's finding that a partition is proper.
Petitioner submits that: First, no partition of the estate is possible in
the instant case as no determination has yet been made of the
character and extent of the decedent's estate. She points to the
Court's ruling in Arcilles v.Montejo, 26 SCRA 197 (1969), where we
held that when the existence of other properties of the decedent is a
matter still to be reckoned with, administration proceedings are the
proper mode of resolving the same.4 In addition, petitioner contends
that the estate is in danger of being depleted for want of an
administrator to manage and attend to it.
Second, petitioner insists that the Rules of Court does not provide
for conversion of a motion for the issuance of letters of
administration to an action for judicial partition. The conversion of
the motion was, thus, procedurally inappropriate and should be
struck down for lack of legal basis.
When a person dies intestate, or, if testate, failed to name an
executor in his will or the executor so named is incompetent, or
refuses the trust, or fails to furnish the bond required by the Rules of
Court, then the decedent's estate shall be judicially administered and
the competent court shall appoint a qualified administrator in the
order established in Section 6 of Rule 78.5 The exceptions to this
rule are found in Sections 1 and 2 of Rule 746 which provide:
Sec. 1. Extrajudicial settlement by agreement between heirs. — If
the decedent left no will and no debts and the heirs are all of age or
the minors are represented by their judicial or legal representatives
duly authorized for the purpose, the parties may, without securing
letters of administration, divide the estate among themselves as they
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 6
COMPILATION OF CASES

see fit by means of a public instrument filed in the office of the may be attributed to the Court of Appeals when it found the trial
register of deeds, and should they disagree, they may do so in an court's action procedurally in order.
ordinary action of partition. . .
WHEREFORE, the petition is DENIED for lack of merit, and the
Sec. 2. Summary settlement of estates of small value. — Whenever assailed decision and resolution of the Court of Appeals in CA-G.R.
the gross value of the estate of a deceased person, whether he died SP No. 31574 are AFFIRMED. Costs against petitioner.
testate or intestate, does not exceed ten thousand pesos, and that
fact if made to appear to the Regional Trial Court having jurisdiction SO ORDERED.1âwphi1.nêt
of the estate by the petition of an interested person and upon
hearing, which shall be held not less than one (1) month nor more
than three (3) months from the date of the last publication of a notice
which shall be published once a week for three (3) consecutive
weeks in a newspaper of general circulation in the province, and
after such other notice to interested persons as the court may direct,
the court may proceed summarily, without the appointment of an
executor or administrator, and without delay, to grant, if proper,
allowance of the will, if any there be, to determine who are the
persons legally entitled to participate in the estate and to apportion
and divide it among them after the payment of such debts of the
estate as the court shall then find to be due; and such persons, in
their own right, if they are lawful age and legal capacity, or by their
guardians or trustees legally appointed and qualified, if otherwise,
shall thereupon be entitled to receive and enter into the possession
of the portions of the estate so awarded to them respectively. The
court shall make such order as may be just respecting the costs of
the proceedings, and all orders and judgments made or rendered in
the course thereof shall be recorded in the office of the clerk, and
the order of partition or award, if it involves real estate, shall be
recorded in the proper register's office.1awp++i1

The heirs succeed immediately to all of the rights and properties of

the deceased at the moment of the latter's death. 7 Section 1, Rule
74 of the Rules of Court, allows heirs to divide the estate among
themselves without need of delay and risks of being dissipated.
When a person dies without leaving pending obligations, his heirs,
are not required to submit the property for judicial administration, nor
apply for the appointment of an administrator by the court.8

We note that the Court of Appeals found that in this case "the
decedent left no debts and the heirs and legatees are all of
age."9 With this finding, it is our view that Section 1, Rule 74 of the
Rules of Court should apply.

In a last-ditch effort to justify the need for an administrator, petitioner

insists that there is nothing to partition yet, as the nature and
character of the estate have yet to be determined. We find, however,
that a complete inventory of the estate may be done during the
partition proceedings, especially since the estate has no debts.
Hence, the Court of Appeals committed no reversible error when it
ruled that the lower court did not err in converting petitioner's action
for letters of administration into an action for judicial partition.

Nor can we sustain petitioner's argument that the order of the trial
court converting an action for letters of administration to one for
judicial partition has no basis in the Rules of Court, hence
procedurally infirm. The basis for the trial court's order is Section 1,
Rule 74 of the Rules of Court. It provides that in cases where the
heirs disagree as to the partition of the estate and no extrajudicial
settlement is possible, then an ordinary action for partition may be
resorted to, as in this case. We have held that where the more
expeditious remedy of partition is available to the heirs, then the
heirs or the majority of them may not be compelled to submit to
administration proceedings. 10 The trial court appropriately converted
petitioner's action for letters of administration into a suit for judicial
partition, upon motion of the private respondents. No reversible error

TEVES v. CA
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 109963 October 13, 1999
HEIRS OF JOAQUIN TEVES: RICARDO TEVES, ARCADIA
TEVES, TOMAS ZAMORA, FELICIA TEVES, HELEN TEVES,
ALFREDO OSMEÑA, ROBERTO TEVES, JOAQUIN TEVES, III,
PETER TEVES, MILDRED TEVES, WILSON MABILOG, LEONILO
PATIGAYON, EDUARDO PATIGAYON, ALEXANDER
PATIGAYON, ALDRIN PATIGAYON, NOEL PATIGAYON, VICTOR
PATIGAYON, MA. TEVES PATERNO OCHOTORENA, EXEQUILA
TEVES, EMILIO JO, EMILIANA TEVES, MILAGROS TEVES,
EDSEL PINILI, VICENTE TEVES, EMILIANA ISO, ALBERTO
TEVES, ERLINDA TEVES, DIOSDADO TEVES, VICTORIA TEVES
AND VIVENCIO NARCISO, petitioners,
vs.
COURT OF APPEALS, HEIRS OF ASUNCION IT-IT NAMELY:
ELISA IT-IT, SUSANA IT-IT, NORBERTO IT-IT, ISA-AC IT-IT, JR.,
JAIME IT-IT, FELICITAS IT-IT, TERESITA IT-IT, ANTONIO
NODADO, CORAZON IT-IT, JIMMY LERO, DANILO IT-IT, EDITA
GAMORA, PACITA VAILOCES, CRIS VAILOCES, CECILIA
CIMAFRANCA and CECILIA FLOR CIMAFRANCA, respondents.
GONZAGA-REYES, J.:
Before us is a petition for review on certiorari assailing the
decision 1 of the Court of Appeals which was promulgated on August
18, 1992 affirming the July 11, 1991 decision 2 of Branch 38 of the
Regional Trial Court of Negros Oriental in favor of defendants-
appellees.
The facts, as culled from the pleadings of the parties herein and the
decision of the lower courts, are as follows:
Marcelina Cimafranca and Joaquin Teves had nine children, namely
Teotimo, Felicia, Pedro, Andres, Asuncion, Gorgonio, Cresenciano,
Arcadia and Maria. Andres, however, predeceased both his parents
and died without issue. After Marcelina Cimafranca and Joaquin
Teves died, intestate and without debts, in 1943 and 1953,
respectively, their children executed extrajudicial settlements
purporting to adjudicate unto themselves the ownership over two
parcels of land belonging to their deceased parents and to alienate
their shares thereto in favor of their sister Asuncion Teves. The
validity of these settlements executed pursuant to section 1 of Rule
74 of the Rules of Court is the primary issue in the present
case.1âwphi1.nêt
On May 9, 1984, plaintiffs-appellants Ricardo and Arcadia Teves
filed a complaint with the Regional Trial Court of Negros Oriental for
the partition and reconveyance of two parcels of land located in
Dumaguete, designated as Lots 769-A and 6409, against the heirs
of Asuncion Teves. The complaint was subsequently amended to
include Maria Teves and the heirs of Teotimo, Felicia, Pedro, and
Gorgonio Teves as plaintiffs and the spouses Lucresio Baylosis and
Pacita Nocete, and Cecilia Cimafranca-Gamos and Cecilia Flor
Cimafranca as defendants. 3 Plaintiffs-appellants alleged that
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 7
COMPILATION OF CASES
defendants-appellees, without any justifiable reason, refused to
partition the said parcels of land and to convey to plaintiffs their
rightful shares. 4
Lot 769, covered by Original Certificate of Title (OCT) No. 4682-
A, 5 is registered in the names of Urbana Cimafranca, one-fourth
(1/4) share, Marcelina Cimafranca, the wife of Joaquin Teves, one-
fourth (1/4) share, Domingo Villahermosa, one-eighth (1/8) share,
Antero Villahermosa, one-eighth (1/8) share, Cecilia Cimafranca,
one-eighth (1/8) share and Julio Cimafranca, one-eighth (1/8) share.
The present controversy involves only Marcelina Cimafranca's one-
fourth (1/4) share in the land, designated as Lot 769-A.
On June 13, 1956, Teotimo, Felicia, Pedro, Asuncion, Gorgonio and
Arcadia Teves executed a document entitled "Settlement of Estate
and Sale," 6 adjudicating unto themselves, in equal shares, Lot 769-
A and conveying their shares, interests and participations over the
same in favor of Asuncion Teves for the consideration of P425.00. A
similar deed denominated "Extrajudicial Settlement and Sale" 7 was
signed by Maria Teves on April 21, 1959. Under such deed, Maria
conveys her own share over Lot 769-A in favor of Asuncion Teves
for the consideration of P80.00. The two settlements were
denounced by the plaintiffs as spurious. The trial court summarized
the claims of the plaintiffs, viz —
. . . Maria Teves Ochotorena herself, denied having executed this
Extrajudicial Settlement and Sale over her share or interest in Lot
769 claiming that her signature in said document is a forgery. She
disowns her signature declaring that as a married woman she
always signs a document in her husband's family name. Further, she
declared that on the date she purportedly signed said document in
Dumaguete City before the notary public, she was in her home in
Katipunan, Zamboanga del Norte.
On Exhibit "G" which is likewise offered as Exhibit "3" for the
defendants, plaintiffs hold that said document is spurious claiming
that the signatures of Pedro Teves, Felicia Teves and Gorgonio
Teves are all forgeries. To support this allegation, Helen T. Osmena,
daughter of Felicia Teves and Erlinda Teves, daughter of Gorgonio
Teves were presented as witnesses. Being allegedly familiar with
the style and character of the handwriting of their parents these
witnesses declared unequivocally that the signatures of their parents
appearing on the document are forgeries.
In sum, plaintiffs argue that these fraudulent documents which
defendants rely in claiming ownership to the disputed properties are
all nullities and have no force in law and could not be used as basis
for any legal title. Consequently, in their view, they are entitled to the
reliefs demanded particularly, to their respective shares of the
disputed properties. 8
The other property in dispute is Lot 6409 which was originally
covered by OCT No. 9091 9 and was registered in the name of
Joaquin Teves and his two sisters, Matea and Candida Teves.
However, Matea and Candida died without issue, causing the entire
property to pass to Joaquin Teves. On December 14, 1971, Lot
6409 was adjudicated and divided in equal shares in a "Deed of
Extrajudicial Settlement & Sale" 10 executed by Joaquin Teves'
children — Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and Maria
Teves. In the same deed, the shares of these same heirs in Lot
6409 were sold to Asuncion Teves for P100.00. Asuncion Teves
took possession of the land and acquired title 11over the same on
March 22, 1972. After her death in 1981, her children, defendants-
appellees It-it herein, extrajudicially settled Asuncion Teves'
property, adjudicating unto themselves Lot 6409. 12 On July 20, 1983
a new transfer certificate of title 13 was issued in the names of

Asuncion Teves' children, namely Elisa, Susana, Norberto, Isaac,
Jaime, Felicitas, Teresita, Corazon, and Danilo, all surnamed It-it.
On July 2, 1984, the It-its sold Lot 6409 to defendants-appellees
Lucrecio Baylosis, Sr. and Pacita Nocete-Baylosis for
P20,000.00 14 and a transfer certificate of title 15 was issued in the
name of the Baylosis couple.
Plaintiffs-appellants claim that the Deed of Extrajudicial Settlement &
Sale covering Lot 6409 is also spurious. Their arguments were
discussed in the trial court's decision as follows —
Presented as Exhibit "D" and "1" for both the plaintiffs and
defendants respectively, is a document denominated as
"Extrajudicial Settlement and Sale" executed on December 4, 1971
by and among the heirs of Joaquin Teves and Marcelina
Cimafranca. This document which gave birth to TCT No. 5761 over
Lot 6409 registered in the name of Asuncion Teves It-it is
questioned by the plaintiffs as spurious for the following reasons:
1. Erasure of the word "quitclaim" is superimposed with the word
"sale" in handwriting.
2. The consideration of "One peso" stated in document is
intercalated with the word "hundred" in handwriting.
3. The signature of Maria Teves Ochotorena, Pedro Teves and
Felicia Teves are forgeries.
4. The thumbmark imposed on the name of Gorgonio Teves does
not actually belong to Gorgonio Teves who was an educated man
and skilled in writing according to his daughter.
Aside from these defects which would make said document null and
void, Arcadia Teves who is one of the living sisters of the mother of
the principal defendants although confirming the authenticity of her
signature averred that in reality no consideration was ever given to
her and that her impression of the said document was that she was
only giving her consent to sell her share of the land.
Plaintiffs likewise contend that as regards the share of Ricardo
Teves, son of Crescenciano Teves who predeceased Joaquin and
Marcelina, it was not at all affected in that extrajudicial settlement
and sale since neither Crescenciano Teves nor his son Ricardo
Teves participated in its execution.
xxx xxx xxx
Likewise, plaintiffs offered TCT No. 5761 for Lot 6409 registered in
the name of Asuncion Teves It-it as Exhibit "B" as proof that said
property was later titled in trust for all the heirs of Joaquin Teves and
which was used later as basis in effecting a deed of sale in favor of
co-defendant Lucresio Baylosis. In this light, the plaintiffs argue that
the sale of said property is a nullity for it was not only attended with
bad faith on the part of both the vendor and the vendee but primarily
the vendor had no right at all to part with said property which is
legally owned by others. 16
In answer to plaintiffs-appellants' charges of fraud, defendants-
appellees maintained that the assailed documents were executed
with all the formalities required by law and are therefore binding and
legally effective as bases for acquiring ownership or legal title over
the lots in question. Furthermore, it is contended that plaintiffs-
appellants have slept on their rights and should now be deemed to
have abandoned such rights. 17
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 8
COMPILATION OF CASES
The trial court ruled in favor of defendants-appellees and rendered
judgment dismissing the complaint with costs against plaintiffs-
appellants. As regards Lot 6409, the court declared that the
Extrajudicial Settlement and Sale executed by the heirs of Joaquin
Teves and Marcelina Cimafranca was duly executed with all the
formalities required by law, thus, validly conveying Lot 6409 in favor
of Asuncion Teves. Moreover, it stated that, even granting the truth
of the imputed infirmities in the deed, the right of plaintiffs-appellants
to bring an action for partition and reconveyance was already barred
by prescription. An action for the annulment of a partition must be
brought within four years from the discovery of the fraud, while an
action for the reconveyance of land based upon an implied or
constructive trust prescribes after ten years from the registration of
the deed or from the issuance of the title. The complaint in this case
was filed on May 9, 1984, exactly 12 years, 1 month and 17 days
after the issuance of the transfer certificate of title in the name of
Asuncion Teves on March 22, 1972. Thus, ownership over Lot 6409
rightfully belonged to defendants-appellees It-it.
Moreover, the trial court held that the extrajudicial settlements over
both Lots 6409 and 769, having been prepared and acknowledged
before a notary public, are public documents, vested with public
interest, the sanctity of which deserves to be upheld unless
overwhelmed by clear and convincing evidence. The evidence
presented by the plaintiffs to support their charges of forgery was
considered by the court insufficient to rebut the legal presumption of
validity accorded to such documents. 18
The Court of Appeals upheld the trial court's decision affirming the
validity of the extrajudicial statements, with a slight modification. It
disposed of the case, thus —
WHEREFORE, premises considered, the decision appealed from is
AFFIRMED with the modification in that herein defendant-appellees
are hereby ORDERED to partition Lot 769-A and deliver to plaintiff-
appellant Ricardo Teves one-eight (sic) (1/8) portion thereof
corresponding to the share of his deceased father Cresenciano
Teves. No costs.
The appellate court said that plaintiffs-appellants' biased and
interested testimonial evidence consisting of mere denials of their
signatures in the disputed instruments is insufficient to prove the
alleged forgery and to overcome the evidentiary force of the notarial
documents. It also ruled that the plaintiffs-appellants' claim over Lot
6409 was barred by prescription after the lapse of ten years from the
issuance of title in favor of Asuncion Teves, while their claim over
Lot 769-A is barred by laches since more than 25 years has
intervened between the sale to Asuncion Teves and the filing of the
present case in 1984.
The appellate court noted that the conveyance of Lot 769-A in favor
of Asuncion Teves did not affect the share of Cresenciano Teves as
he was not a signatory to the settlements. It also found that Ricardo
Teves, Cresenciano's heir, is in possession of a portion of Lot 769-A
and that defendants-appellees do no not claim ownership over such
portion. Thus, the defendants-appellees It-it were ordered to partition
and convey to Ricardo Teves his one-eighth share over Lot 769-
A.1âwphi1.nêt
As regards the extrajudicial settlement involving Lot 6409, although
it was found by the appellate court that Cresenciano Teves was also
not a signatory thereto, it held that it could not order the
reconveyance of the latter's share in such land in favor of his heir
Ricardo Teves because Cresenciano had predeceased Joaqin
Teves. Moreover, Ricardo Teves, by a deed simply denominated as
"Agreement" executed on September 13, 1955 wherein he was

represented by his mother, authorized the heirs of Joaquin Teves to
sell his share in Lot 6409. 19
Plaintiffs-appellants assailed the appellate court's decision upon the
following grounds —
I. IN CONSIDERING RICARDO TEVES AS BOUND BY THE
SIGNATURE OF HIS MOTHER, INSPITE OF DEATH OF
CRESENCIANO TEVES IN 1944; AND UNDER THE OLD CIVIL
CODE THE SPOUSE CANNOT INHERIT EXCEPT THE
USUFRUCT;
II. IN UPHOLDING SWEEPINGLY THE PRESUMPTION OF
REGULARITY OF NOTARIZED DEED, DESPITE CLEAR,
CONVINCING, SUBSTANTIAL AND SUFFICIENT EVIDENCE
THAT MARIA OCHOTORENA WAS IN MINDANAO; THE NOTARY
PULIC DID NOT KNOW MARIA OCHOTORENA AND THE
SIGNATURES OF THE OTHER HEIRS IN THE QUESTIONED
DOCUMENT ARE BELIED BY COMPARISON WITH THE
GENUINE SIGNATURE IN EXH. "E";
III. IN VALIDATING THE ONE PESO CONSIDERATION, INSPITE
OF NO OTHER VALUABLE CONSIDERATION, THE
SUPERIMPOSED P100 WAS UNILATERALLY INSERTED,
SHOWING FICTITIOUS AND SIMULATED CONSIDERATION; AND
IV. PRESCRIPTION DOES NOT START FROM A VOID
CONTRACT. 20
We affirm that the extrajudicial settlements executed by the heirs of
Joaquin Teves and Marcelina Cimafranca are legally valid and
binding.
The extrajudicial settlement of a decedent's estate is authorized by
section 1 of Rule 74 of the Rules of Court, which provides in
pertinent part
that —
If the decedent left no will and no debts and the heirs are all of age,
or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may,
without securing letters of administration, divide the estate among
themselves as they see fit by means of a public instrument filed in
the office of the register of deeds, . . .
xxx xxx xxx
Thus, for a partition pursuant to section 1 of Rule 74 to be valid, the
following conditions must concur: (1) the decedent left no will; (2) the
decedent left no debts, or if there were debts left, all had been paid;
(3) the heirs are all of age, or if they are minors, the latter are
represented by their judicial guardian or legal representatives; (4)
the partition was made by means of a public instrument or affidavit
duly filed with the Register of Deeds. 21
We uphold, finding no cogent reason to reverse, the trial and
appellate courts' factual finding that the evidence presented by
plaintiffs-appellants is insufficient to overcome the evidentiary value
of the extrajudicial settlements. The deeds are public documents
and it has been held by this Court that a public document executed
with all the legal formalities is entitled to a presumption of truth as to
the recitals contained therein. 22 In order to overthrow a certificate of
a notary public to the effect that the grantor executed a certain
document and acknowledged the fact of its execution before him,
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 9
COMPILATION OF CASES
mere preponderance of evidence will not suffice. Rather, the
evidence must be so clear, strong and convincing as to exclude all
reasonable dispute as to the falsity of the certificate. When the
evidence is conflicting, the certificate will be upheld. 23 The appellate
court's ruling that the evidence presented by plaintiffs-appellants
does not constitute the clear, strong, and convincing evidence
necessary to overcome the positive value of the extrajudicial
settlements executed by the parties, all of which are public
documents, being essentially a finding of fact, is entitled to great
respect by the appellate court and should not be disturbed on
appeal. 24
It is noted that the Deed of Extrajudicial Settlement & Sale covering
Lot 6409 purports to divide Joaquin Teves' estate among only six of
his heirs, namely Asuncion, Teotimo, Felisia, Gorgonio, Arcadia and
Maria Teves. 25 It does not mention nor bear the signatures of either
Pedro or Cresenciano Teves although they are both intestate heirs
of Joaquin Teves and as such, are entitled to a proportionate share
of the decedent's estate. Contrary to the ruling of the appellate court,
the fact that Cresenciano predeceased Joaquin Teves does not
mean that he or, more accurately, his heirs, lose the right to share in
the partition of the property for this is a proper case for
representation, wherein the representative is raised to the place and
degree of the person represented and acquires the rights which the
latter would have if he were living. 26
However, notwithstanding their non-inclusion in the settlement, the
action which Pedro and Cresenciano might have brought for the
reconveyance of their shares in the property has already prescribed.
An action for reconveyance based upon an implied trust pursuant to
article 1456 of the Civil Code prescribes in ten years from the
registration of the deed or from the issuance of the title. 27 Asuncion
Teves acquired title over Lot 6409 in 1972, but the present case was
only filed by plaintiffs-appellants in 1984, which is more than 10
years from the issuance of title. 28
The division of Lot 769-A, on the other hand, was embodied in two
deeds. The first extrajudicial settlement was entered into by
Teotimo, Felicia, Pedro, Gorgonio, Arcadia and Asuncion Teves in
1956 29, while the second deed was executed in 1959 by Maria
Teves. 30 Cresenciano was not a signatory to either settlement.
However, in contrast to the extrajudicial settlement covering Lot
6409, the two extrajudicial settlements involving Lot 769-A do not
purport to exclude Cresenciano from his participation in Lot 769-A or
to cede his share therein in favor of Asuncion. The settlement clearly
adjudicated the property in equal shares in favor of the eight heirs of
Marcelina Cimafranca. Moreover, the deeds were intended to
convey to Asuncion Teves only the shares of those heirs who affixed
their signatures in the two documents. The pertinent portions of the
extrajudicial settlement executed in 1956, of which substantively
identical provisions are included in the 1959 deed, provide —
xxx xxx xxx
5. That by virtue of the right of succession the eight heirs above
mentioned inherit and adjudicate unto themselves in equal shares
Lot No. 769-A and our title thereto is evidenced by the O.C. of Title
No. 4682-A of the Land Records of Negros Oriental.
THAT FOR AND IN CONSIDERATION of the sum of FOUR
HUNDRED TWENTY-FIVE (P425.00) PESOS, Philippine Currency
which we have received from ASUNCION TEVES; WE, Teotimo,
Felicia, Pedro, Gorgonio and Arcadia, all surnamed Teves, do
hereby sell, transfer and convey unto Asuncion Teves, married to
Isaac Itit, Filipino, of legal age and resident of and with postal
address in the City of Dumaguete, all our shares, interests and
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 10
COMPILATION OF CASES

participations over Lot 769-A of the subdivision plan, Psd, being a assert it either has abandoned it or declined to assert
portion of Lot No. 769 of the Cadastral Survey of Dumaguete, her it. 37 Thus, even assuming that plaintiffs-appellants had a defensible
heirs, successors and assigns, together with all the improvements cause of action, they are barred from pursuing the same by reason
thereon. of their long and inexcusable inaction.

xxx xxx xxx An extrajudicial settlement is a contract and it is a well-entrenched

doctrine that the law does not relieve a party from the effects of a
It has even been admitted by both parties that Ricardo Teves is in contract, entered into with all the required formalities and with full
possession of an undetermined portion of Lot 769-A and awareness of what he was doing, simply because the contract
defendants-appellees It-it do not claim ownership over his share in turned out to be a foolish or unwise investment. 38 Therefore,
the land. 31 Thus, contrary to the appellate court's ruling, there is no although plaintiffs-appellants may regret having alienated their
basis for an action for reconveyance of Ricardo Teves' share since, hereditary shares in favor of their sister Asuncion, they must now be
in the first place, there has been no conveyance. Ricardo Teves is considered bound by their own contractual acts.1âwphi1.nêt
entitled to the ownership and possession of one-eighth of Lot 769-A.
WHEREFORE, the August 18, 1992 decision of the Court of
Neither does Ricardo Teves have a right to demand partition of Lot Appeals is hereby AFFIRMED. No pronouncements as to costs.
769-A because the two extajudicial settlements have already
effectively partitioned such property. Every act which is intended to SO ORDERED.
put an end to indivision among co-heirs and legatees or devisees is
deemed to be a partition, although it should purport to be a sale, an
exchange, a compromise, or any other transaction. 32 The
extrajudicial settlements executed in 1956 and 1959 adjudicated Lot
769-A in equal shares unto the eight heirs of Marcelina Cimafranca.
Such a partition, which was legally made, confers upon each heir the
exclusive ownership of the property adjudicated to him. 33 Although
Cresenciano, Ricardo's predecessor-in-interest, was not a signatory
to the extrajudicial settlements, the partition of Lot 769-A among the
heirs was made in accordance with their intestate shares under the
law. 34

With regards to the requisite of registration of extrajudicial

settlements, it is noted that the extrajudicial settlements covering Lot
769-A were never registered. However, in the case of Vda. de
Reyes vs. CA, 35 the Court, interpreting section 1 of Rule 74 of the
Rules of Court, upheld the validity of an oral partition of the
decedent's estate and declared that the non-registration of an
extrajudicial settlement does not affect its intrinsic validity. It was
held in this case that —

[t]he requirement that a partition be put in a public document and

registered has for its purpose the protection of creditors and at the
same time the protection of the heirs themselves against tardy
claims. The object of registration is to serve as constructive notice to
others. It follows then that the intrinsic validity of partition not
executed with the prescribed formalities does not come into play
when there are no creditors or the rights of creditors are not
affected. Where no such rights are involved, it is competent for the
heirs of an estate to enter into an agreement for distribution in a
manner and upon a plan different from those provided by law.

Thus, despite its non-registration, the extrajudicial settlements

involving Lot 769-A are legally effective and binding among the heirs
of Marcelina Cimafranca since their mother had no creditors at the
time of her death.

Except for the portion of Lot 769-A occupied by Ricardo Teves, both
parcels of land have been and continue to be in the possession of
Asuncion Teves and her successors-in-interest. 36 Despite this, no
explanation was offered by plaintiffs-appellants as to why they
instituted the present action questioning the extrajudicial settlements
only in 1984, which is more than 25 years after the assailed
conveyance of Lot 769-A and more than 10 years after the issuance
of a transfer certificate of title over Lot 6409, both in favor of
Asuncion Teves. Such tardiness indubitably constitutes laches,
which is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to

HERNANDEZ v. ANDAL
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-273 March 29, 1947
CRESENCIA HERNANDEZ, plaintiff-appellee,
vs.
ZACARIAS ANDAL, defendant-appellant.
QUIRINO DIMASACAT, MARIA HERNANDEZ and AQUILINA
HERNANDEZ, intervenors-appellants.
Pedro Pañganiban y Tolentino for appellants.
Vicente Reyes Villavicencio for appellee.
TUASON, J.:
The plaintiff, Cresencia Hernandez, the intervenors, Maria and
Aquilina Hernandez, and Pedro and Basilia Hernandez who are not
parties here, are brother and sisters. They acquired in common by
descent from their father a parcel of land of which he died seized
and known as lot No. 120073 of the Batangas cadastral survey.
On January 23, 1944, the intervenors sold 1800 square meters of
this parcel, a portion which is particularly described in the deed of
conveyance Exhibit A, to Zacarias Andal, the defendant, and Andal's
wife in consideration of P860. This portion purports to be the
combined shares of the intervenors in the larger parcel, allotted to
them in a verbal partition alleged to have been made (time not
stated) among the five brother and sisters.
After the sale, on a date as to which the evidence is in disagreement
but which is not now important, the plaintiff attempted to repurchase
the land sold to Andal. According to her original complaint, dated
February 3, 1944, she offered the purchasers P150 as price of
repurchase, this being, according to that complaint, the amount
Andal had paid for Maria Hernandez's and Aquilina Hernandez's
shares, but Andal, it is alleged, refused to part with the property.
On April 8, the plaintiff filed a supplemental complaint. She alleged
that when the cause was called for trial on March 8, she announced
in open court that she was willing to repurchase her sister's share
from Andal for P860 and reimburse Andal for his expense; that
Andal asked for continuance until the 29th stating that he had made
other expenses; that on 29th she brought P860 to repurchase the
land in question but the case was again postponed because the
plaintiff's sisters had intervened; and that meanwhile, on the 26th,
Andal resold the land fictitiously to the vendors for P970.
It results that on the date last mentioned Andal executed a deed of
sale for P970 in favor of the intervenors, an amount which included
Andal's expenses as well as the normal sale price. The document of
repurchase gave as reason for the transaction the fact that it had
been agreed that in the event trouble should arise the sellers should
return to the buyer what they had received and pay the latter his
expenses.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 11
COMPILATION OF CASES
On February 14, 1944, the defendant filed his answer alleging that
Maria and Aquilina Hernandez had sold him their respective portions
of the inherited land for P860 and that he had no objection to
disposing of those portions in favor of the plaintiff for P860 plus the
expenses he had incurred in the execution of the deed of sale
amounting to P50, but that he was unwilling to accept P150, which
was all the plaintiff offered him besides his expenses.
On April 4, 1944, Maria and Aquilina Hernandez's answer in
intervention was filed. The intervenors alleged that there had been a
partition among them and their brother and sisters "with the share of
each delineated and marked, and after partition and delineation
everyone took exclusive, separate and independent possession of
his portion in the partition." They charged the plaintiff with bad faith
in that "it was upon her request for chance that the sale to the
defendant, about to take place last November, was delayed till
January of this year when she finally informed the intervenors that
they could sell to the defendant, or she could pay only P150 and
could not raise the amount of P860 offered by the defendant."
Cresencia Hernandez, the plaintiff, was the only witness to testify on
her own behalf. Substantially she reiterated the allegations in her
two complaints. Zacarias Andal, the defendant, also testified. He
said that he was in possession of the land in question until he
returned it to the intervenors. He declared that the plaintiff offered to
repurchase the land from him long after he had bought it, that is,
when she was about to file her action. He stated that after he came
from Candelaria, Tayabas, with the document of sale he showed it to
the plaintiff: that was on the 23rd of January. He was able to do this
because he lived near Cresencia and passed by her house on his
way home from Candelaria. He said that Cresencia Hernandez upon
being shown the document merely exclaimed, "Oh, so you already
have a document." When asked whether the land "described in the
complaint of the herein plaintiff has been the object of partition
among the co-owners Pedro, Basilia, Cresencia, Maria and Aquilina
surnamed Hernandez," counsel for the plaintiff objected on the
ground that the best evidence was the document of partition, and the
objection was sustained. The same objection and the same ruling
were made on the same ground when the witness was queried how
it was that the land he had bought from Maria and Aquilina
Hernandez had been specified in the deed of sale, Exhibit A.
In consequence of this ruling, counsel for the defendant and
intervenors did not call any more witnesses but only announced that
he had witnesses ready to prove that a parol partition among the five
brother and sisters had been made, mentioning the names of six
such witnesses. Counsel for the plaintiff again objected asserting
that "under the Rules of Court agreement affecting real estate may
not be proved except by means of writing subscribed by the person
against whom the proof is offered. "Upon this objection, the court
ruled that under Rules 74 and 123 of the Rules of Court (Statute of
Frauds) as well as under article 1248 of the Civil Code, parol
evidence of partition was inadmissible, adding that to decide the
case it had enough with the testimony and evidence offered by the
parties.
Thereafter the court handed down its decision declaring that the
resale of the land by Zacarias Andal in favor of Maria and Aquilina
Hernandez was illegal and in bad faith. It, however, did not seem to
have found as a fact the allegation that the resale was simulated.
The court then made this judgment:
(Deleted; In Spanish)

The defendant and the intervenors are appealing from the foregoing
decision and in their joint brief made one assignment of error:
The lower court erred in refusing to admit oral evidence for proving a
contract of partition among the heirs on the ground that it was not
admissible.
Before proceeding with a discussion of the questions raised we are
tempted to point up some seeming incongruities in the above-quoted
judgment. Although Zacarias Andal is no longer interested in the
case, as far as the land is concerned, and even though the
intervenors have become again the absolute owners and are now in
full possession of the property, while Andal has already gotten his
money back, the judgment would have Andal execute a deed of
resale in favor of the plaintiff and received from her the price of
repurchase. The judgment is silent as to the intervenors with
reference to the execution of the deed of sale or the receipt of the
sale price. And the lower court made no finding and expressed no
opinion as to whether the offer of P150 instead of P860, not to
mention Andal's expenses, by the plaintiff as price of repurchase
was sufficient compliance with article 1067 of the Civil Code on
which the court rested the plaintiff's cause of action.
However, in this decision we are concerned mainly with the
application of section 21 of Rule 123 and section 1 of Rule 74 both
of the Rules of Court. Article 1248 of the Civil Code has no bearing
on the case.
There is a conflict of authority as to whether an agreement of
partition is such a contract as is required to be in writing under the
statute of frauds. One line of authorities holds the affirmative view;
other authorities say no. The reason for the rule that excludes
partition from the operation of the statute of frauds is that partition is
not a conveyance but simply a separation and designation of that
part of the land which belongs to each tenant in common. (27 C.J.,
206.) The differences in the conclusions reached are "due perhaps
to varied phraseology of the statutes" in the several states. (40
Amer. Jur., 15.) However the case may be, as enacted in the
Philippines, first in section 335 of the former Code of Civil
Procedure, and now in Rule 123, section 21, of the Rules of Court,
the law has been uniformly interpreted in a long line of cases to be
applicable to executory and not to completed or executed contracts.
(27 C.J., 206.) In this jurisdiction performance of the contract takes it
out of the operation of the statute. (Gomez vs. Salcedo, 26 Phil.,
485; Almirol and Cariño vs. Monserrat, 48 Phil., 67.) The statute of
frauds does not declare the contracts therein enumerated void and
of no legal effect, but only makes ineffective the action for specific
performance. (Almirol and Cariño vs. Monserrat, supra.) In the
United States, even in those states where the affirmative view of the
question has been followed, "the weight of authority upholds the rule
that an oral partition is effective when several possession is taken
under it by the respective parties to the agreement." (27 C.J., 206.)
On general principle, independent and in spite of the statute of
frauds, courts of equity have enforced oral partition when it has been
completely or partly performed.
Regardless of whether a parol partition or agreement to partition is
valid and enforceable at law, equity will in proper cases, where the
parol partition has actually been consummated by the taking of
possession in severalty and the exercise of ownership by the parties
of the respective portions set off to each, recognize and enforce
such parol partition and the rights of the parties thereunder. Thus, it
has been held or stated in a number of cases involving an oral
partition under which the parties went into possession, exercised
acts of ownership, or otherwise partly performed the partition
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 12
COMPILATION OF CASES
agreement, that equity will confirm such partition and in a proper
case decree title in accordance with the possession in severalty.
In numerous cases it has been held or stated that parol partitions
may be sustained on the ground of estoppel of the parties to assert
the rights of a tenant in common as to parts of the land divided by
parol partition as to which possession in severalty was taken and
acts of individual ownership were exercised. And a court of equity
will recognize the agreement and decree it to be valid and effectual
for the purpose of concluding the right of the parties as between
each other to hold their respective parts in severalty.
A parol partition may also be sustained on the ground that the
parties thereto have acquiesced in and ratified the partition by taking
possession in severalty, exercising acts of ownership with respect
thereto, or otherwise recognizing the existence of the partition.
A number of cases have specifically applied the doctrine of part
performance, or have stated that a part performance is necessary, to
take a parol partition out of the operation of the statute of frauds. It
has been held that where there was a partition in fact between
tenants in common, and a part performance, a court of equity would
have regard to and enforce such partition agreed to by the parties.
(40 Amer. Jur., 15-18.)
It is on the effects of Rule 74, section 1, of the Rules of Court on a
parol partition that there are sharp divergences of opinion among the
members of this Court. This section reads:
If the decedent left no debts and the heirs and legatees are all of
age, or the minors are represented by their judicial guardians, the
parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public
instrument file in the office of the register of deeds, and should they
disagree, they may do so in an ordinary action of partition. If there is
only one heir or one legatee, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. It shall be presumed that the decedent left no debts if no
creditor files a petition for letters of administration within two years
after the death of the decedent.
It is contended that under this rule a verbal partition is entirely void
and cannot be validated by any acts of the parties short of the
execution of a public document and its registration.
As a general proposition, transactions, so far as they affect the
parties, are required to be reduced to writing either as a condition of
jural validity or as a means of providing evidence to prove the
transactions. Written form exacted by the statute of frauds, for
example, "is for evidential purposes only." (Domalagan vs. Bolifer,
33 Phil., 471.) The decisions of this Court which we have noticed
were predicated on this assumption. The Civil Code, too, requires
the accomplishment of acts or contracts in a public instrument, not in
order to validate the act or contract but only to insure its efficacy so
that after the existence of the acts or contracts has been admitted,
the party bound may be compelled to execute the document.
(Hawaiian Philippine Co. vs .Hernaez, 45 Phil., 746.)
Is section 1 of Rule 74 constitutive and not merely evidential of
partition? In other words, is writing the act that confers legal validity
upon the agreement? There are no indications in the phraseology of
this rule which justify an affirmative answer to these questions. It
must be noted that where the law intends a writing or other formality
to be the essential requisite to the validity of the transactions it says
so in clear and unequivocal terms. Thus, the statute of frauds as

originally enacted in England and as enacted in some of the states,
uses the words "utterly void" with statute transactions required to be
in writing are absolutely void and not merely voidable if not made in
the manner indicated. Again article 633 of the Civil Code says that
donation may be valid only when made in a public document. Article
146 of the Mortgage Law makes known its intention to have the
execution of a public instrument and its registration in the registry
indispensable to the validity of the contract by using this phrase: "in
order that voluntary mortgages may be legally created in a valid
manner." Article 1765 of the Civil Code also employs for the same
purpose similar expression with reference to the execution of a
public document: "in order that mortgage may be validly constituted."
And with respect to the formalities of last wills and testaments,
section 618 of Act No. 190 makes this emphatic statement: "No will
shall be valid to pass upon any estate real or personal nor change or
affect the same, unless it be written etc." Other examples might be
mentioned.
Section 1 of Rule 74 contains no such express or clear declaration
that the required public instruments is to be constitutive of a contract
of partition or an inherent element of its effectiveness as between
the parties. And this Court had no apparent reason, in adopting this
rule, to make the efficacy of a partition as between the parties
dependent on the execution of a public instrument and its
registration. On the other hand, the opposite theory is not without
reasonable support. We can think of possible factors against the
proposition that a public document and its registration were
contemplated as necessary ingredients to give life to a contract of
partition so that without them no oral partition can bind the parties.
1. In the first place, the Rules of Court of which the rule under
consideration forms a part were promulgated by the Judicial
Department under authority to deal with matters of procedure
exclusively. For this court to prescribe what is to be a binding
agreement between co-heirs in the settlement of their private affairs
which in no way affect the rights of third parties would be to
transcends its rule-making power. We bring out this limitation upon
the authority of this court to make rules, as an aid to interpretation,
as a method of arriving at the conclusion that section 1 of Rule 74
was meant to be remedial and not a rule of substantive law of far-
reaching importance and serious juridical and practical implications.
It is to be presumed that the framers of the Rules of Court realized
the bounds of this court's functions and did not intend to trespass on
purely substantive rights of the parties to the partition. To the extent
the execution and registration of a notarized instrument are made
essential elements to validity to protect innocent third parties, the
rule is legitimate and necessary; legitimate because decedent's
estate are placed under the jurisdiction of the courts to administer
and distribute. The interests of third parties eliminated, the rule loses
its character as one of procedure and practice and invades the
realm of substantive law.
Section 596 of Act No. 190, which is the precursor of section 1 Rule
74, is enlightening and instructive. The former after stating that heirs
may apportion and divide the estate among themselves as they may
see fit by agreement duly executed in writing by all of them, adds the
words "and not otherwise." These words, in our opinion, were
expressive of an intention to make the written formality inherent
element of the validity of a parol partition. But what is far more to the
point is that by logical process of deduction the elimination from the
new rule of the words "and not otherwise" imports the casting away
from the prescribed public document of its jural character which the
document enjoyed in the former code. At the same time, the
inclusion of the aforesaid words in the old provision serves to
emphasize the necessity of a positive and clear language if a given
contractual formality is to be the exclusive basis of the contract's
binding effect on the parties. It is of course unnecessary to say that
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 13
COMPILATION OF CASES
the attaching of jural character to the prescribed public instrument in
section 596 of Act No. 190 is no argument for contending that such
document must be clothed with the same raiment in the new Rules.
Act No. 190 was a mixture of procedural and substantive provisions,
having been enacted by the legislative body itself which, unlike this
court, was unhampered and untrammelled, except by the
fundamental law, in the choice of its subjects of legislation.
2. The civil law looks upon the role of public instruments in acts and
contracts with greater liberality with a view to better adaptation to
human frailties and idiosyncracies. In their blind faith in friends and
relatives, in their lack of experience and foresight, and their
ignorance, men, in spite of laws, will make and continue to make
verbal contracts. The advantages of an air-tight policy concerning
such contracts fall far short of compensating for the resulting
damage, injustice, inconveniences and confusion. So even though
articles 1278, 1279 and 1280 of the Civil Code have made
provisions for public instrument for all transactions and contracts
whose object is the creation, modification or extinction of real rights
in immovables, it has been recognized and held that verbal contracts
may be effective between the parties. A leading case on this subject
is Thunga Chui vs. Que Bentec (2 Phil., 561), Mr. Justice Williard
writing the decision. It was said in that case that when the essential
requisites for the existence of a contract are present, the contract is
binding upon the parties, and, although required to be in writing by
article 1280 of the Civil Code, the plaintiff can maintain an action
under article 1279 to compel the execution of a written instrument. It
says that "article 1279 does not impose an obligation, but confers a
privilege upon both contracting parties, and the fact that the plaintiff
has not made use of same does not bar his action." It further says
that article 1279, far from making the enforceability of the contract
dependent upon any special intrinsic form, recognizes its
enforceability by the mere act of granting the contracting parties an
adequate remedy whereby to compel the execution of public writing
or any other special form whenever such form is necessary in order
that contract may produce the effect which is desired according to
whatever its object. This doctrine was iterated and reiterated in a
series of decisions perhaps longer than that on any other legal topic.
And it has been extended even to verbal contracts involving land
registered under the Torrens Act. Do the Rules of Court adhere to
this salutary principle? We can perceive no sufficient ground for the
new Rules to depart from it. No considerations of public policy enter
into a partition of hereditary estate among co-heirs greater than
those involved in a contract between strangers which operates to
create, transmit, modify or extinguish property rights in land. If as
between strangers the creation, transmission, modification or
extinction of real rights may be lawfully effected by parol agreement
notwithstanding the requirement that it be put in writing, the new rule
could not be more intransigent when the transaction is between co-
heirs and there is no change of ownership but simply designation
and segregation of that part which belongs to each heir.
The requirement that a partition be put in a public document and
registered has, in our opinion, for its purpose the protection of
creditors and at the same time the protection of the heirs themselves
against tardy claims. Note that the last sentence of the section
speaks of debts and creditors. The object of registration is to serve
as constructive notice, and this means notice to others. It must
follow that the intrinsic validity of partition not executed with the
prescribed formalities does not come into play when, as in this case,
there are no creditors or the rights of creditors are not affected. No
rights of creditors being involved, it is competent for the heirs of an
estate to enter into an agreement for distribution in a manner and
upon a plan different from those provided by law.
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 14
COMPILATION OF CASES

It is said that the findings, conclusions and judgment in the appealed

decision are not assigned as errors and that for this reason the
appeal should be dismissed. We do not think that the premise of this
objection is exactly correct. The evidence on parol partition tendered
by the defendant and intervenors was ruled out and they specifically
complain of this exclusion as error. In this manner the assignment of
error squarely meets and attacks the opinion and judgment of the
trial court. A superficial analysis of the case will show that on the
validity of the alleged partition hangs the result of the entire litigation,
and on that validity depends in turn the competence of the excluded
evidence. These two interrelated points are the core of the whole
case. All other points are incidental to and revolve around them. If a
completed oral partition may be enforced, as the defendant and the
intervenors contend and as we opine, their evidence should be
allowed, and if allowed and it establishes their allegation, the
plaintiff's cause of action vanishes.

If the appellant's assignment of error be not considered a direct

challenge to the decision of the court below, we still believe that the
objection takes a narrow view of practice and procedure contrary to
the liberal spirit which pervades the Rules of Court. The first
injunction of the new Rules (Rule 1, section 2) is that they "shall be
liberally construed in order to promote their object and to assist the
parties in obtaining just, speedy, and inexpensive determination of
every action and proceeding." In line with the modern trends of
procedure, we are told that, "while an assignment of error which is
required by law or rule of court has been held essential to appellate
review, and only those assigned will be considered, there are a
number of cases which appear to accord to the appellate court a
broad discretionary power to waive the lack of proper assignment of
errors and consider errors not assigned. And an unassigned error
closely related to an error properly assigned, or upon which the
determination of the question raised by the error properly assigned
is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error." (4 C.J.S., 1734; 3
C.J., 1341, footnote 77.) At the least, the assignment of error,
viewed in this light, authorizes us to examine and pass upon the
decision of the court below.

The judgment is reversed and the case is remanded to the court of

origin for further proceeding and a new decision not incompatible
with this decision, with costs of this appeal against the appellee.

CUA v. VARGAS
SECOND DIVISION
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 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:
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 15
COMPILATION OF CASES
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.
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.
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
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.
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.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 16
COMPILATION OF CASES
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 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
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
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
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 17
COMPILATION OF CASES
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
because what respondents seek is to be subrogated to his rights as
a purchaser.
Finally, petitioner contends that the petition filed by respondents with
the CA should have been dismissed because the verification and
certificate of non-forum shopping appended to it were 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.
WHEREFORE, the petition is DENIED for lack of merit. Costs
against petitioner.
SO ORDERED.

SAMPILO v. CA
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-10474 February 28, 1958
BENNY SAMPILO and HONORATO SALACUP, petitioners,
vs.
THE COURT OF APPEALS and FELISA SINOPERA respondent.
Clodualdo P. Surio for petitioners.
Moises B. Ramos for respondents.
LABRADOR, J.:
Certiorari against decision of the Court of Appeals, Third Division,
affirming with slight modification a judgment of the Court of First
Instance of Pangasinan, declaring plaintiffs owners of one-half
portion of four parcels of land described in the complaint, with costs.
The judgment was rendered in an action instituted by Felisa
Sinopera, administrative of the estate of Teodoro Tolete, to recover
from defendants one-half share of the aforesaid parcels of land,
which, it is alleged belong to the deceased Teodoro Tolete.
According, to the facts found by the Court of Appeals, Teodoro
Tolete died intestate in January, 1945. He left for parcels of land,
lots Nos. 12006, 119967, 14352 and 12176 of the cadastral survey
of San Manuel, Pangasinan He left as heirs his widow, Leoncia de
Leon, and several nephews and nieces, children of deceased
brothers and sisters. On July 25, 1946, without any judicial
proceedings, his widow executed an affidavit stating that "the
deceased Teodoro Tolete left no children or respondent neither
ascendants or acknowledged natural children neither brother,
sisters, nephews or nieces, but the, widow Leoncia de Leon, the
legitimate wife of the deceased, the one and only person to inherit
the above properties" (Record on Appeal, p. 9). This affidavit was
registered in the Office of the Register of Deeds of Pangasinan. On
the same day, she executed a deed of sale of all the above parcels
of land in favor of Benny Sampilo for the sum of P10,000. This sale
was also registered in the Office of the Register of Deeds of
Pangasinan. On June 17, 1950, Benny Sampilo, in turn, sold the
said parcels of land to Honorato Salacup for P50,000 and this sale
was also registered in the Office of the Register of Deeds of
Pangasinan (See Annexes "A", "B", "C", attached to the complaint).
In March, 1950, Felisa Sinopera instituted proceedings for the
administration of the estate of Teodoro Tolete (Special Proceeding
No. 3694, Pangasinan), and having secured her appointment as
administratrix, brought the present action on June 20, 1950. Notice
of lis pendens was filed in the Office of the Register of Deeds and
said notice was recorded on certificates of title covering the said
properties on June 26, 1950. This notice, however, was subsequent
to the registration of the deed of sale, in favor of Honorato Salacup,
which took place on June 17, 1950.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 18
COMPILATION OF CASES
The complaint alleges that the widow Leoncia de Leon, had no right
to execute the affidavit of adjudication and that Honorato Salacup
acquired no rights to the lands sold to him, and that neither had
Benny Sampilo acquired any right to the said properties. Sampilo
and Salacup filed an amended answer alleging that the complaint
states no cause of action; that if such a cause exists the same is
barred by the statute of limitations; that defendants are innocent
purchasers for value; and that the complaint is malicious, frivolous
and spurious, intended to harass and inconvenience the defendants.
After trial the Court of First Instance rendered judgment for the
plaintiff, Felisa Sinopera, declaring that the affidavit of adjudication
Exhibit "A", the deed of sale Exhibit "B", and the deed of sale Exhibit
"C", are all null and void; declaring plaintiff owner of one-half portion
of the four parcels of land in question, and finally declaring that the
usufructuary rights of Leoncia de Leon to said properties are
terminated. The case was appealed to the Court of Appeals. This
court held that the annulment of the affidavit of adjudication, Exhibit
"A", by the trial court was correct but that the annulment of the deeds
Exhibits "B" and "C", insofar as one-half of the properties, conveyed
is concerned, and in adjudicating one-half of the same to the heirs of
the deceased, is premature. Hence, it modified the judgment,
declaring that Exhibits "B" and "C" are null and void only insofar as
the properties thereby conveyed exceed the portion that the
responds to Leoncia de Leon. Therefore, it ordered the defendants
to deliver to the plaintiff, in her capacity as administratrix of the
estate of Teodoro Tolete, for disposition according to the law, one-
half of the lands described in the complaint, but reserved to
Honorato Salacup the right to claim and secure adjudication in his
favor of whatever portion of said properties may correspond to
Leoncia de Leon and also his right to bring an action for the
damages that he may have suffered against Leoncia de Leon and
Benny Sampilo.
Benny Sampilo and Honorato Salacup have appealed to this Court
by certiorari and have assigned the following errors in their brief:
I
The Court of Appeals erred in affirming that respondent Felisa
Sinopera's right of action to recover her and her co-heirs'
participation to the lands in question had not prescribed at the time
the action to recover was filed.
II
The Court of Appeals erred in not finding that the petitioners are
innocent purchasers for value.
III
The Court of Appeals erred in aiming the lower court's denial of
petitioner's motion for new trial.
In support of the first assignment of error, it is argued that as the
action was instituted almost four years after the affidavit of
adjudication, Exhibit "A", was registered in the Office of the Register
of Deeds Of Pangasinan, the right of action of the administratrix has
prescribed and lapsed because the same was not brought within the
period of two years as Prescribed in Section 4 of Rule 74 of the
Rules of Court, and as decided in the cases of McMicking vs. Sy
Conbieng, 21 Phil., 211 and Ramirez vs. Gmur, 42 Phil., 855 869.

Section 4 of Rule 74 provides, in part, as follows:
SEC. 4. Liability of distributees and estate. — If it shall appear at any
time within two years after the settlement and distribution of an
estate in accordance with the provisions of either of the first two
sections of this rule, that an heir or other has been unduly deprived
of his lawful participation of the such heir or such other person may
compel the settlement estate in the courts in the manner hereinafter
provided for the purpose of satisfying such lawful participation. . . .
Section 1, which is mentioned in Section 4, reads as follows:
SEC. 1. Extrajudcial settlement by agreement between the heirs. —
If the decedent left no debts and the heirs and legatees are all of
age, or the minors are represented by their judicial guardians, the
parties may, without securing letters of administration, divide the
estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they
disagree, they may do so in an ordinary action of partition. If there is
only one heir or one legatee, he may adjudicate to himself the entire
estate by means of an affidavit filed in the office of the register of
deeds. It shall be presumed that the decedent left no debts if no
creditor files a petition for letters of administration within two years
after the death of the decedent.
It will be noted that the provision next above-quoted contains two
parts, the first referring to a case in which there are two or more
heirs interested in the estate of a deceased person, and the second
in which there is only one heir. The section was taken from Section
596 of the old Code of Civil Procedure (Act No. 190, as amended by
Act No. 2331). Said Section 596 as amended, was as follows:
SEC. 596. Settlement of Certain Intestates Without Legal
Proceedings. — Whenever all the heirs of a person who died
intestate are of lawful age and legal capacity and there are no debts
due from the estate, or all the debts have been paid the heirs may,
by agreement duly executed in writing by all of them, and not
otherwise, apportion and divide the estate among themselves, as
they may see fit, without proceedings in court.
We notice two significant provisions in Sections 1 and 4 of Rule 74.
In Section 1, it is required that if there are two or more heirs, both or
all of them should take part in the extrajudicial settlement. This
requirement is made more imperative in the old law (Section 596,
Act No. 190) by the addition of the clause "and not otherwise." By
the title of Section 4, the "distributees and estate" are indicates the
persons to answer for rights violated by the extrajudicial settlement.
On the other hand, it is also significant that no mention is made
expressly of the effect of the extrajudicial settlement on persons who
did not take part therein or had no notice or knowledge thereof.
There cannot be any doubt that those who took part or had
knowledge of the extrajudicial settlement are bound thereby. As to
them the law is clear that if they claim to have been in any manner
deprived of their lawful right or share in the estate by the
extrajudicial settlement, they may demand their rights or interest
within the period of two years, and both the distributes and estate
would be liable to them for such rights or interest. Evidently, they are
the persons in accordance with the provision, may seek to remedy,
the prejudice to their rights within the two-year period. But as to
those who did not take part in the settlement or had no notice of the
death of the decedent or of the settlement, there is no direct or
express provision is unreasonable and unjust that they also be
required to assert their claims within the period of two years. To
extend the effects of the settlement to them, to those who did not
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 19
COMPILATION OF CASES
take part or had no knowledge thereof, without any express legal
provision to that effect, would be violative of the fundamental right to
due process of law. In the case of Ramirez vs. Gmur, supra, cited by
the appellants in this case, we held:
It will be noted that while the law (see. 754) provides that the order
of distribution may be had upon the application of the executor or
administrator, or of a person interested in the estate, no provision is
made for notice, by publication or otherwise, of such application. The
proceeding, therefore, is to all intents and purposes ex parte. As will
be seen our law is very vague and incomplete; and certainly it
cannot be held that a purely ex parte proceeding, had without notice
by personal service or by publication, by which the court undertakes
to distribute the property of deceased persons, can be conclusive
upon minor heirs who are not represented therein.
The procedure outlined in Section 1 of Rule 74 of extrajudicial
settlement, or by affidavit, is an ex parte proceeding. It cannot by
any reason or logic be contended that such settlement or distribution
would affect third persons who had no knowledge either of the death
of the decedent or of the extrajudicial settlement or affidavit,
especially as no mention of such effect is made, either directly or by
implication. We have examined the two cases cited by appellants
and there is no similarity at all between the circumstances on which
the ruling therein had been predicated and those of the case at bar.
Following the above-quoted decision of this Court in the case of
Ramirez vs. Gmur, supra, we are of the opinion and so hold that the
provisions of Section 4 of Rule 74, barring distributees or heirs from
objecting to an extrajudicial partition after the expiration of two years
from such extrajudicial partition, is applicable only (1) to persons
who have participated or taken part or had notice of the extrajudicial
partition, and, in addition, (2) when the provisions of Section 1 of
Rule 74 have been strictly complied with, i.e., that all the persons or
heirs of the decedent have taken part in the extrajudicial settlement
or are represented by themselves or through guardians. The case at
bar fails to comply with both requirements because not all the heirs
interested have participated in the extrajudicial settlement, the Court
of Appeals having found that the decedent left aside from his widow,
nephews and nieces living at the time of his death.
The next contention of appellants is that plaintiff's action is barred by
the statute of limitations. The origin of the Provision (Section 4, Rule
74), upon which this contention is predicated, which is Section 596
of Act No. 190, fails to support the contention. In the first Place,
there is nothing therein, or in its source which shows clearly a
statute of limitations and a bar of action against third person's. It is
only a bar against the parties who had taken part in the extrajudicial
proceedings but not against third persons not Parties thereto. In the
second place, the statute of limitations is contained in a different
chapter of Act No. 190, Chapter XL, and if Section 596 of the Act
had been meant to be a statute of limitations, it would naturally have
been included in the chapter which defines the statute.
But even if Section 4 of Rule 74 is a statute of limitations, it is still
unavailing to the defendants. The action is one based on fraud, as
the widow of the deceased owner of the lands had declared in her
affidavit of partition that the deceased left no nephews or niece, or
other heirs except herself. Plaintiff's right which is based on fraud
and which has a period of four years (Section 43, par. 3, Act no.
190; Article 1146, Civil Code), does not appear to have lapsed the
action was instituted. Judicial proceedings where instituted in March,
1950 and these proceedings must have been instituted soon after
the discovery of fraud. In any case, the defendants have the burden
of proof as to their claim of the statute of limitations, which is their
defense, and they have not proved that when the action was
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 20
COMPILATION OF CASES

instituted, four years had already elapsed from the date that the
interested parties had actual knowledge of the fraud.

The second assignment of error, i.e., that the defendants-appellants

are innocent purchasers for value was rejected as unfounded by the
court of Appeals. Said court said.

The claim that defendants-appellants did not have sufficient

knowledge or notice of the claim of the heirs of Teodoro Tolete,
deceased, over the land in question does not find support in the
evidence of record. As regards defendant Benny Sampilo, it is an
admitted fact that he is a nephew of Leoncia de Leon and he had
been living with the latter. Both Benny Sampilo and the heirs of the
deceased who are claiming the property are residents of San
Manuel, Pangasinan. It is hard, therefore, to believe that Benny
Sampilo did not know the existence of said heirs, and that he was
not aware that they were nephews and nieces, children of the
deceased brothers, of the deceased Teodoro Tolete. The fact
furthermore that Benny Sampilo accompanied his aunt Leoncia de
Leon to Sison, Pangasinan, when the later saw Notary Public
Ladislao Villamil, who was the former's uncle, to have him prepare
the affidavit of adjudication Exhibit "A", and the deed of conveyance
Exhibit "B" by which on the same date she conveyed to Sampilo all
the property which she had adjudicated to herself, both of which she
acknowledged before said notary public, coupled with the fact that
there is no sufficient showing that the consideration for the
conveyance of P10,000 had in fact been paid, strengthens our belief
that said Benny Sampilo knew that the deceased Teodoro Tolete
had other heirs who may claim the property, and that the immediate
conveyance thereof to him was a strategem concocted to defeat the
former's rights. And as regards Honorato Salacup, while the claim
that no notice of lis pendens appeared annotated in the certificates
of title issued to Benny Sampilo when he acquired the property
might be true, for he purchased the property on June 17, 1950, and
the notice of lis pendens was noted on said certificates of title on
June 26, 1950, nevertheless, he cannot claim that he was a
purchaser in good faith for value of the property. It is well-settled rule
in this jurisdiction that a purchaser of registered lands who has
knowledge of facts which should put him upon inquiry and
investigate as to the possible defects of the title of the vendor and
fails to make such inquiry and investigation cannot claim that he as a
purchaser in good faith for value and he had acquired a valid title
thereto. Leung Yee vs. Strong Machinery Co., 37 Phil., 644;
Dayao vs. Diaz, G.R. L-4106, May 29, 1952.

Finding no error in the decision of the Court of Appeals, we hereby

affirm it in toto, with costs against the petitioners. So ordered.

ALCALA v. PABALAN
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6463 August 12, 1911
DAMASA ALCALA, plaintiff-appellee,
vs.
MODESTA PABALAN, PROCOPIO PABALAN, BASILIO
SALGADO and JUAN BANAY-BANAY, defendants-appellants.
Pedro Guevara for appellants.
No appearance for appellee.
JOHNSON, J.:
On the 11th day of June, 1910, the plaintiff and appellee presented a
petition in the Court of First Instance of the Province of La Laguna,
praying that she be appointed administratrix of the property
described in paragraph 4 of her petition.
After hearing the respective parties, the lower court appointed the
plaintiff as administratrix of said property. From that decision the
defendants appealed to this court and made several assignments of
error.
The undisputed facts, as presented by the record brought to this
court, seem to be as follows:
That on the 23rd day of April, 1897, Juan Banatin died, leaving a
widow (Damasa Alcala), the plaintiff herein, and seventeen nieces
and nephews, whose names are set out in the petition; that on the
13th day of June, 1897, the said widow and all of the seventeen
nieces and nephews, except Tranquilina Banatin, entered into a
voluntary agreement among themselves for the division "entre ellos,"
of all of the property left by the said Juan Banatin, deceased, except
the house described in paragraph 4 of the petition; that by the terms
of said agreement, the said house was to remain undivided; that the
widow (the plaintiff herein) should receive the one-half of the
usufruct of said house during her lifetime; that the other one-half of
the usufruct should be distributed equally among the other
seventeen heirs; that Francisco Salgado, one of the nephews,
should administer the said house, collecting the rents of the same
and deliver one-half to the widow (Damasa Alcala) and the other
one-half to the nieces and nephews; that Francisco Salgado, having
failed to pay to Damasa Alcala her share of the usufruct of said
property, was sued by her and a judgment was finally rendered
against him for the same. (Alcala vs. Salgado, 7 Phil. Rep., 151.) An
execution was issued upon said judgment and one-half of the
undivided property in question was sold some time in the year 1907,
to one Macario Decena. On the 22nd and 24th days of October,
1908 (see Exhibits 2 and 3), the said one-half of the property in
question was repurchased by the heirs of Francisco Salgado. The
money used in repurchasing the property by the heirs of Francisco
Salgado was the money of four of the heirs of Juan Banatin, to wit:
Modesta Pabalan, Procopio Pabalan, Basilio Salgado, and Juan
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 21
COMPILATION OF CASES
Banay-banay (see Exhibit 4 of the defendants herein), and not the
money of the heirs of Francisco Salgado. On the 25th day of
November, 1908, thirteen of the nieces and nephews or heirs of
Juan Banatin, by means of a public document, recognized the right
of the said Modesta Pabalan, Procopio Pabalan, Basilio Salgado,
and Juan Banay-banay as the owners of the one-half of the
undivided property in question. (See Exhibit 5.) On the 25th day of
November, 1908, sixteen of the heirs of the said Juan Banatin, by a
public document, unanimously appointed the said Modesta Pabalan
as "administradora" of all of the house in question, in substitution of
the said Francisco Salgado deceased. (See Exhibit 6.) Since the
25th day of November, 1908, until the commencement of the
present action, Modesta Pabalan had administered the property in
question, collected the rents of the same and had paid the one-half
of said rents to the plaintiff herein as the usufructuary of the one-half
of said property.
The first assignment of error made by the plaintiff is that "El juzgado
erro al estimar que la testamentaria del finado Juan Banatin no ha
finalizada."
With reference to this assignment of error, the heirs of Juan Banatin
were at perfect liberty to divide the estate among themselves,
assuming the responsibility of any debts which might exist. There is
no proof that any debts existed. After the actual division of the estate
among themselves they became the absolute owners of their
respective allotments and were tenants in common of that portion of
the property which remained pro indiviso. After the mutual
agreement among themselves for the division of the estate, either
actually distributing their respective shares or leaving the same
undivided, the property in question was no longer the property of the
estate of Juan Banatin, but the undivided property of the heirs. They
were tenant in common of that portion of the property which
remained undivided. As such tenants in common the majority of
them had a right to agree upon the appointment of an administrator
of their property. (Art. 398, Civil Code.) The property belonged to
them. They had a right to administer it.
The lower court in appointing the plaintiff and appellee as
administratrix of the property in question, evidently did so upon the
theory that the said property was still the property of the estate of
Juan Banatin. In this theory the lower court was mistaken. There
was nothing left of the estate of Juan Banatin to be administered.
The heirs by mutual agreement had divided the property among
themselves. There was no occasion and no reason for the
appointment of an administrator by the probate court, and, therefore,
the judgment of the lower court appointing Damasa Alcala as
administratrix of the estate of Juan Banatin for the purpose of
administering the property mentioned in paragraph 4 of the petition,
is hereby revoked.
We deem it unnecessary in the present case to discuss the right of a
usufructuary to manage or assist in managing or to administer the
property in usufruct which belongs to tenants in common. That
question is not presented in the present cause.
Without any finding as to costs, it is hereby directed that a judgment
be entered reversing the judgment of the lower court appointing
Damasa Alcala as administratrix of the property in question. It is so
ordered.
EXCLUDED HEIRS
SAMPILO v. CA
xxx

LLANERA v. LOPOS
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12588 August 25, 1959
ELIGIO LLANERA, plaintiff-appellant,
vs.
ANA LOPOS, ET AL., defendants-appellants.
Juan A. Baes for appellant.
Toribio P. Perez for appellees.
BAUTISTA ANGELO, J.:
Gorgonio Llanera died single and intestate on October 13, 1942. He
left an estate consisting of the proceeds of an insurance policy
amounting to $5,150.00. Upon the request of Remedios Ayque
Altavano who claimed to be a relative of the deceased, a petition for
settlement of his estate was filed in the Court of First Instance of
Albayon January 22, 1948, wherein one Elias Ayque was appointed
administrator of the estate. After hearing, the Court found that the
deceased died without parents, brothers, sisters, nephews or nieces,
but left the following relatives: Ana, Eustaquio, Julia and Maximina,
surnamed Lopos, brothers and sisters of Aniceta Lopos, who was
the mother of Gorgonio Llanera, and Casiana, Teodoro, Petronilo,
Cenen, Felix, Sotero and Ambrosia, all surnamed Lopos, first degree
cousin of the deceased, being the children of a brother and sister of
Aniceta Lopos. After all the expenses of administration had been
paid, the Court ordered the balance of the estate to be distributed
among said heirs thereby corresponding to the first group the sum of
P1,188.00 each, and to the second the sum of P1,188.00 each per
stirpes. And on May 28, 1949, the Court ordered the closure and
termination of the proceedings.
It developed later the however that the deceased had a brother by
the name of Zacarias who died on June 19,1935 leaving a son,
Eligio, who was born in Sta. Rosa, Laguna on July 17, 1925. And
when in 1953 Eligio came to know that his uncle Gorgonio died
leaving an insurance policy the proceeds of which were distributed in
the intestate proceedings instituted in the Court of First Instance of
Albay and were adjudicated to those who were not entitled thereto,
Eligio on September 30, 1954 filed a motion in said proceedings in
order to assert his claim over the property as the sole heir of the
deceased, which motion however he later withdrew because he
intended to file a separate civil action for the vindication of his right
in the proper court. And so on February 21, 1955, Eligio commenced
this action in the Court of First Instance of Laguna to recover the
proceeds of the insurance policy left by his uncle against those to
whom they were illegally adjudicated alleging that the latter
misrepresented that they were the only heirs of the deceased when
in fact they knew well that he left a nephew who was alive and was
the only one entitled to inherit his property.
Notwithstanding the fact that the defendants were duly served with
summons, except one, only Elias Ayque answered the complaint,
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 22
COMPILATION OF CASES
and so upon plaintiff's motion, they were declared in default. And
then the case was called for trial where not even Elias appeared, the
Court alloted the plaintiff to present his evidence. However, on
February 18, 1957, the Court rendered decision dismissing the
complaint on the ground that the venue was improperly laid and
plaintiff's cause of action had already prescribed. This appeal was
taken to this Court on purely questions of law.
In holding that the Court of First Instance of Laguna has no
jurisdiction to take cognizance of this case, the trial court said, "Rule
75 of the Rules of Court expressly provides that the Court of First
Instance of the province in which the decedent resided at the time of
his death should take cognizance of the proceedings for the
settlement of his estate to the exclusion of all other courts.
Considering that Gorgonio Llanera, at the time of his death was a
resident of Daraga, Albay, it follows that the Court of First Instance
of that province should have exclusive jurisdiction to settle his
estate. Any question, therefore, as to who are the persons who
should be presented to and decided by the Court of First Instance of
Albay.".
The flaw we find in this reasoning is that is presuposes that the
instant action is for the settlement of the estate of the deceased
Gorgonio Llanera. Such is not the case for his estate has already
been settled by the Court of First Instance of Albay so much so that
the proceedings were declared closed and terminated on May 28,
1949. The present action is to recover the property illegally
adjudicated to the defendants on the ground of fraud and being an
action in personam the same can be filed either at the residence of
any of the defendants or at the residence of the plaintiff, at the
election of the latter(sec. 1, Rule 5). Plaintiff chose to institute the
action in the Court of First Instance of Laguna, where he is a
resident, and so it is incorrect to say that the venue of the present
case has been improperly laid.
In holding that the present action has already prescribed, the trial
court also said: "The claim of the plaintiff, in the opinion of the Court,
was filed out of time. In summary settlement of the estate of a
deceased person, any heir deprived of his lawful participation therein
should file the corresponding petition in the court having jurisdiction
of the estate within two years after the settlement and distribution
thereof (sec. 4, Rule 74, Rules of Court).While the Rules of the
Court do not prescribed any time limit during which an heir deprived
of his lawful participation in the state of a person which was settled
in a regular testate or intestate proceeding, Article 1100 of the Civil
Code, however, provides that action for rescission on account of
"lesion" shall prescribe after four years from the time the partition
was made. Considering that judicial partition of the estate of
Gorgonio Llanera was made on May 17, 1949, hence plaintiff's
action was commenced beyond the prescriptive period provided by
law.".
Again, we find this reasoning incorrect, for it overlooks the fact that
the present action is not for rescission of a contract based on
"lesion" but an action to recover property based on fraud which
under our law may be filed within a period of four years from the
discovery of the fraud. (sec. 43 par. 3, Act 190). Since, as alleged in
the complaint, fraud was discovered only in 1953 and the action was
brought in 1955, it is clear that plaintiff's action has not yet
prescribed. It is therefore an error to dismiss the complaint based on
prescription.
Wherefore, the decision appealed from is reversed. The case is
remanded to the lower court for further proceedings, with costs
against appellees.

VILLALUZ v. NEME
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14676 January 31, 1963
CANDIDA VILLALUZ, ET AL., plaintiffs-appellants,
vs.
JUAN NEME and FELICISIMA VILLAFRANCA, defendants-
appellees.
Jose L. Lapak for plaintiffs-appellants.
Rosario B. Zono-Sunga for defendants-appellees.
PAREDES, J.:
This case was elevated to this Court "on purely questions of law."
The record discloses that Maria Rocabo died intestate on February
17, 1937, leaving a parcel of land granted her under Homestead
Patent No. 185321, issued on May 20, 1930, and covered by
Original Certificate of Title No. 217 (Exh. A), of the Register of
Deeds of Camarines Norte. She left three (3) daughters, named
Sinforosa, Patricia and Maria, surnamed Villaluz and grandchildren,
Candida, Emilia, Clemencia, Roberto and Isidra Villaluz, legitimate
children of her deceased son Pedro Villaluz; Isabelo and Teodoro
Napoles, legitimate sons of a deceased daughter; Severina Villaluz
and Sinforosa and Leonor Napoles, legitimate daughters of another
deceased daughter, Gregoria Villaluz.
After the approval of her application, but before granting of the
patent, on March 6, 1926, Maria Rocabo donated the southern
portion of the land to Maria, and the northern portion to Patricia, in
two notarial deeds donation (Exhibits 1 and 7), giving them the right
to present their deeds of donations to the Bureau of Lands. The said
donees accepted the donations and took actual possession of their
respective portions, but only Maria Villaluz remained on the entire
land because Patricia left. Maria cultivated and improved the land
from 1927 to 1938, inclusive. Maria and Patricia, however, forgot
and cared not to present the deeds of donation to the Bureau of
Lands. On March 27, 1930, the patent was granted and O.C.T. No.
217 was issued in the name of Maria Rocabo. Realizing that the
deeds of donation were not in accordance with the formalities
required by law, and because Sinforosa Villaluz, who had the
custody of the title would not surrender it to the donees, unless given
a share, upon the advise of a Notary Public, Carlos de Jesus, Maria,
Patricia and Sinforosa, on September 1, 1939, executed a deed of
extrajudicial partition (Exh. 2) among themselves, to the exclusion
and without the knowledge and consent of their nephews and
nieces, the herein plaintiffs-appellants, and in virtue thereof, O.C.T.
No. 217 was cancelled and Transfer Certificate of Title No. 269 was
issued in their names (Exh. 5) after having made representations
that they were the only heirs of their mother, Maria Rocabo. On
September 2, 1939, the 3 sisters declared the land for taxation
purposes (Exh. 4). On September 11, 1939, they sold the land to
Ramona Pajarillo, wife of Adriano Mago and Angela Pajarillo, wife of
defendant Juan Neme (Exh. 3). Ramona and Angela declared land
for taxation purposes in their names (Exh. 6). On August 3, 1953,
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 23
COMPILATION OF CASES
the heirs of Adriano and Ramona sold the undivided interest of the
latter to Juan Neme (Exh. 8), who, on August 8, 1953, sold the
southern half portion of the property in favor of defendant Felicisima
Villafranca (Exh. 13). Thereafter, the plaintiffs-appellants came to
know that the land which was in the administration of their aunts,
Sinforosa, Patricia and Maria, was already in the possession of the
defendants. After attempts of amicable settlement had failed, the
plaintiffs on June 3, 1954, filed a complaint for partition of said land
and recovery of their respective shares on the property and
accounting of the fruits thereof.
It also appears that the deeds of sale of the land in question
executed in favor of the defendants, had not been registered in favor
of the defendants and had not been recorded in accordance with
Public Land Act No. 141 and the Land Registration Law, Act No.
496; that the vendees failed to have their deed of sale (Exh. 3),
annotated on said T.C.T. No. 269, or have the title thereof
transferred in their names.
Wherefore, the parties respectfully pray that the foregoing stipulation
of facts be admitted and approved by this Honorable Court, without
prejudice to the parties adducing other evidence to prove their case
not covered by this stipulation of facts. 1äwphï1.ñët
After due trial, the lower court rendered judgment, dismissing the
complaint, with costs against the plaintiffs, and declaring the
defendants the owners of the land described in the complaint and in
the T.C.T. No. 269. Plaintiffs in their appeal, claim that the lower
court erred: (1) In not finding that the extrajudicial partition (Exh. 2),
only affected the partition of Sinforosa, Patricia and Maria, surnamed
Villaluz, on the land in question and not the participation of the
plaintiffs-appellants, as compulsory heirs of Maria Rocabo; (2) In
finding that plaintiffs-appellants are already barred from claiming
their participation thereon; and (3) In finding that defendants-
appellees are owners, with right of possession, of the said land.
The contention of the plaintiffs-appellants is meritorious. The
decision found to be an incontrovertible fact that the land in question
should be divided among the heirs of the decedent Sinforosa,
Patricia and Maria Villaluz and her grandchildren. Thus, the trial
Court said:
... The settlement of the estate of Maria Rocabo was summarily
effected by the extrajudicial partition executed September 1, 1939,
by the three surviving children to the exclusion of the plaintiffs who
were entitled to inherit by representation. By virtue of the
extrajudicial partition, Exhibit 1, the Original Certificate of Title No.
217 in the name of Maria Rocabo was cancelled and Transfer
Certificate of Title No. 269 was issued in lieu thereof in favor of
Sinforosa Villaluz, Patricia Villaluz and Maria Villaluz on September
6, 1939, to the prejudice of the plaintiffs. . . .
Furthermore, Maria having left no testament or last will, her heirs
succeeded to the possession and ownership of the land in question
from the time of her death (Art. 440, Old Civil Code, Art. 533, New
Civil Code; Lubrico v. Arbado, 12 Phil. 391). The deed of
extrajudicial partition (Exh. 2), was fraudulent and vicious, the same
having been executed among the 3 sisters, without including their
co-heirs, who had no knowledge of and consent to the same. The
partition, therefore, did not and could not prejudice the interest and
participation of the herein plaintiffs-appellants, and the sale of the
land to the defendants did not and could not also prejudice and
effect plaintiffs-appellants' interest and participation thereon. The
cancellation of O.C.T. No. 217 and the issuance of T.C.T. No. 269,
did not likewise prejudice the interest and the participation of the
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 24
COMPILATION OF CASES

plaintiffs-appellants. The three sisters could not have sold what did supposed deed of sale in their favor; in failing to annotate the sale
not belong to them. Nemo dat quod non habet. on the T.C.T. of the alleged donees, and in not asking that a transfer
certificate of title be issued in their (vendees') names. It may also be
The trial court held that under Sec. 4, Rule 73 of the Rules, the reasonably concluded that if they did not present the deed of sale for
plaintiffs' cause of action had already prescribed. This section, registration, it was because they knew that their vendors were not
however, refers only to the settlement and distribution of the estate the sole and only heirs so as to entitle them to the ownership of the
of the deceased by the heirs who make such partition among land in question.
themselves in good faith, believing that they are the only heirs with
the right succeed. In the case at bar, however, the surviving sisters IN VIEW HEREOF, the decision appealed from is hereby set aside,
could not have ignored that they had co-heirs, the children of the 3 and the case is remanded to the court of origin, for further and
brothers who predeceased their mother. Considering that Maria appropriate proceedings..
Rocabo died during the regime of the Spanish Civil Code, the
distribution of her properties should be governed by said Code,
wherein it is provided that between co-heirs, the act to demand the
partition of the inheritance does not prescribe. (Art 1965 [Old Civ.
Code]; Baysa, et al. v. Baysa, 53 Off. Gaz., 7282). Verily the 3 living
sisters were possessing the property as administratrices or trustees
for and in behalf of the other co-heirs, plaintiffs-appellants herein,
who have the right to vindicate their inheritance, regardless of the
lapse of time (Sevilla v. De los Angeles, L-7745; 51 Off. Gaz., 5590,
and case cited therein).

Moreover, the acquisition of the land in question is governed by the

Public Land Act No. 141 and the Land Registration Law Act No. 496.
And considering that the deed of sale had not been registered in
accordance with the said laws, the same did not constitute a
conveyance which would bind or affect the land, because the
registration of a voluntary sale of land is the operative act that
transmits or transfers title (Tuason v. Raymundo, 28 Phil.635).

Defendants-appellees further argue that the extrajudicial partition

should not be taken independently of the deeds of donation as in
fact, according to them, the crux of the case lies mainly in the two
deeds of donation, which enabled the donees to possess the land
and cut any and all rights of the plaintiffs-appellants to claim
participation therein. In other words, it is pretended that after the
alleged donations, the land in question was no longer a part of the
intestate estate of Maria Rocabo, and the plaintiffs-appellants could
no longer participate thereon. But the deeds of donation, according
to the trial court, were defective and inoperative, because they were
not executed in accordance with law. The trial court itself began to
count the period of prescription "after the execution of the
extrajudicial partition and the issuance of Transfer Certificate of Title
No. 269". The donees themselves know that the donations were
defective and inoperative, otherwise they would not have
subsequently decided to execute the deed of extrajudicial partition,
which also goes to show that the rights of the three sisters and the
vendees, stemmed from the said extrajudicial partition. The
defendants-appellees, finally argue that, this notwithstanding, the
subsequent registration of the land in the names of the two donees
and Sinforosa Villaluz pursuant to the extrajudicial partition on
September 1, 1939, and the subsequent sale thereof by the
registered owners to the defendants-appellees, on September 11,
1939, followed by the actual, adverse and continuous possession by
the vendees and successors for more than 10 years, before the
present complaint was filed, had barred the right of appellants to
recover title of the property and claim participation therein. Having
held that the three sisters were mere trustees of the property for the
benefit of the appellants, and it appearing that they had not
repudiated the trust, defendants-appellees' pretension in this respect
is without merit. The finding in the appealed decision that "there is
no evidence that the said defendants are not innocent purchasers
and for value" (good faith), is of no moment in the case at bar. As
heretofore adverted to, there was no effective sale at all, which
would affect the rights of the plaintiffs-appellants. Moreover, the lack
of good faith on the part of the defendants-appellees can reasonably
be inferred from thier conduct in not presenting for registration the

ANCOG v. CA
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 112260 June 30, 1997
JOVITA YAP ANCOG, and GREGORIO YAP, JR., petitioners,
vs.
COURT OF APPEALS, ROSARIO DIEZ, and CARIDAD
YAP, respondents.
MENDOZA, J.:
This is a petition for review of the decision 1 of the Court of Appeals
in CA-CR. No. CV-19650, affirming the dismissal by the Regional
Trial Court 2 of Bohol of an action for partition of a parcel of land
which petitioners had filed.
The land, with improvements thereon, was formerly the conjugal
property of the spouses Gregorio Yap and Rosario Diez. In 1946,
Gregorio Yap died, leaving his wife, private respondent Rosario
Diez, and children, petitioners Jovita Yap Ancog and Gregorio Yap,
Jr., and private respondent Caridad Yap as his heirs.
In 1954 and again 1958, Rosario Diez obtained loans from the Bank
of Calape, secured by a mortgage on the disputed land, which was
annotated on its Original Certificate of Title No. 622. When Rosario
Diez applied again for a loan to the bank, offering the land in
question as security, the bank's lawyer, Atty. Narciso de la Serna,
suggested that she submit an extrajudicial settlement covering the
disputed land as a means of facilitating the approval of her
application. The suggestion was accepted and on April 4, 1961, Atty.
de la Serna prepared an extrajudicial settlement, which the heirs,
with the exception of petitioner Gregorio Yap, Jr., then only 15 years
old, signed. The document was notarized by Atty. de la Serna on
April 12, 1961. As a result, OCT No. 622 was cancelled and Transfer
Certificate of Title No. 3447 (T-2411) was issued on April 13, 1961.
On April 14, 1961, upon the execution of a real estate mortgage on
the land, the loan was approved by the bank.
Rosario Diez exercised rights of ownership over the land. In 1985,
she brought an ejectment suit against petitioner Jovita Yap Ancog's
husband and son to evict them from the ground floor of the house
built on the land for failure to pay rent. Shortly thereafter, petitioner
Jovita Ancog learned that private respondent Rosario Diez had
offered the land for sale.
Petitioner Ancog immediately informed her younger brother,
petitioner Gregorio Yap, Jr., who was living in Davao, of their
mother's plan to sell the land. On June 6, 1985, they filed this action
for partition in the Regional Trial Court of Bohol where it was
docketed as Civil Case No. 3094. As private respondent Caridad
Yap was unwilling to join in the action against their mother, Caridad
was impleaded as a defendant.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 25
COMPILATION OF CASES
Petitioners alleged that the extrajudicial instrument was simulated
and therefore void. They claimed that in signing the instrument they
did not really intend to convey their interests in the property to their
mother, but only to enable her to obtain a loan on the security of the
land to cover expenses for Caridad's school fees and for household
repairs.
At the pre-trial conference, the parties stipulated:
1. That the parcel of land in question originally belonged to the
conjugal partnership of spouses Gregorio Yap and Rosario Diez
Yap;
2. That Gregorio Yap, Jr. is the legitimate child of spouses Gregorio
Yap and Rosario Diez Yap;
3. That Gregorio Yap is not a party in the execution of the Extra
Judicial Settlement of the Estate dated April 4, 1961;
4. That all the encumbrances found in TCT No. (3447) T-2411 which
is now marked as Exh. C for the plaintiffs and Exh. 2 for the
defendants as Entry No. 6719, 6720, 11561 and 11562 are admitted
by the plaintiffs subject to the condition that the Extra Judicial
Settlement of Estate dated April 4, 1961, was made by the parties
that the same was only for the purpose of securing a loan with the
Philippine National Bank. 3
The trial court rendered judgment dismissing petitioners' action. It
dismissed petitioners' claim that the extrajudicial settlement was
simulated and held it was voluntarily signed by the parties.
Observing that even without the need of having title in her name
Rosario Diez was able to obtain a loan using the land in question as
collateral, the court held that the extrajudicial settlement could not
have been simulated for the purpose of enabling her to obtain
another loan. Petitioners failed to overcome the presumptive validity
of the extrajudicial settlement as a public instrument.
The court instead found that petitioner Ancog had waived her right to
the land, as shown by the fact that on February 28,
1975, 4 petitioner's husband, Ildefonso Ancog, leased the property
from private respondent Diez. Furthermore, when the spouses
Ancog applied for a loan to the Development Bank of the Philippines
using the land in question as collateral, they accepted an
appointment from Rosario Diez as the latter's attorney-in-fact. 5
The court also found that the action for partition had already
prescribed. The registration of the land under private respondent
Rosario Diez's name amounted to a repudiation of the co-ownership.
Therefore, petitioners had ten (10) years from April 13, 1961 within
which to bring an action to recover their share in the property. While
it is true that petitioner Gregorio Yap, Jr. was a minor at the time the
extrajudicial settlement was executed, his claim, according to the
court, was barred by laches.
On appeal, the Court of Appeals upheld the validity of the
extrajudicial settlement and sustained the trial court's dismissal of
the case. The appellate court emphasized that the extrajudicial
settlement could not have been simulated in order to obtain a loan,
as the new loan was merely "in addition to" a previous one which
private respondent Diez had been able to obtain even without an
extrajudicial settlement. Neither did petitioners adduce evidence to
prove that an extrajudicial settlement was indeed required in order to
obtain the additional loan. The appellate court held that considering
petitioner Jovita Yap Ancog's educational attainment (Master of Arts
and Bachelor of Laws), it was improbable that she would sign the

settlement if she did not mean it to be such. Hence, this petition.
Petitioners contend that the Court of Appeals erred:
I. IN SUSTAINING THE TRIAL COURT RULING THAT THE
CONTESTED EXTRAJUDICIAL SETTLEMENT (EXHIBIT "B") IS
NOT A SIMULATED ONE;
II. IN BLOATING THE EDUCATIONAL BACKGROUND OF
PETITIONER JOVITA YAP ANCOG AND USING THE SAME AS
ARGUMENT AGAINST HER CLAIM THAT SAID EXHIBIT "B" WAS
INDEED A SIMULATED DOCUMENT;
III. IN SUSTAINING THE TRIAL COURT'S RULING THAT
PETITIONERS' ACTION FOR PARTITION HAS PRESCRIBED;
IV. IN RULING THAT PETITIONER GREGORIO YAP, JR., ONE OF
THE CO-OWNERS OF THE LITIGATED PROPERTY, HAD LOST
HIS RIGHTS TO THE PROPERTY THROUGH PRESCRIPTION OR
LACHES.
We hold that both the trial court and the Court of Appeals correctly
acted in upholding the extrajudicial settlement but erred in ruling that
petitioner Gregorio Yap, Jr. was barred by laches from recovering
his share in the property in question.
To begin with, it is settled that the findings of facts of the Court of
Appeals are conclusive upon the parties and are not reviewable by
this Court when they are an affirmation of the findings of the trial
court. 6 In this case, the trial court and the Court of Appeals found no
evidence to show that the extrajudicial settlement was required to
enable private respondent Rosario Diez to obtain a loan from the
Bank of Calape. Petitioners merely claimed that the extrajudicial
settlement was demanded by the bank.
To the contrary, that the heirs (Jovita Yap Ancog and Caridad Yap)
meant the extrajudicial settlement to be fully effective is shown by
the fact that Rosario Diez performed acts of dominion over the entire
Land, beginning with its registration, without any objection from
them. Instead, petitioner Jovita Ancog agreed to lease the land from
her mother, private respondent Rosario Diez, and accepted from her
a special power of attorney to use the land in question as collateral
for a loan she was applying from the DBP. Indeed it was private
respondent Diez who paid the loan of the Ancogs in order to secure
the release of the property from mortgage.
Petitioner Jovita Yap Ancog contends that she could not have
waived her share in the land because she is landless. For that
matter, private respondent Caridad Yap is also landless, but she
signed the agreement. 7 She testified that she did so out of filial
devotion to her mother.
Thus, what the record of this case reveals is the intention of Jovita
Ancog and Caridad Yap to cede their interest in the land to their
mother Rosario Diez. It is immaterial that they had been initially
motivated by a desire to acquire a loan. Under Art. 1082 of the Civil
Code, 8 every act which is intended to put an end to indivision
among co-heirs is deemed to be a partition even though it should
purport to be a sale, an exchange, or any other transaction.
We hold, however, that the Court of Appeals erred in ruling that the
claim of petitioner Gregorio Yap, Jr. was barred by laches. In
accordance with Rule 74, §1 9 of the Rules of Court, as he did not
take part in the partition, he is not bound by the settlement. 10 It is
uncontroverted that, at the time the extrajudicial settlement was
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 26
COMPILATION OF CASES
executed, Gregorio Yap, Jr. was a minor. For this reason, he was
not included or even informed of the partition.
Instead, the registration of the land in Rosario Diez's name created
an implied trust in his favor by analogy to Art. 1451 of the Civil Code,
which provides:
When land passes by succession to any person and he causes the
legal title to be put in the name of another, a trust is established by
implication of law for the benefit of the true owner.
In the case of O'Laco v. Co Cho Chit, 11 Art. 1451 was held as
creating a resulting trust, which is founded on the presumed
intention of the parties. As a general rule, it arises where such may
be reasonably presumed to be the intention of the parties, as
determined from the facts and circumstances existing at the time of
the transaction out of which it is sought to be established. 12 In this
case, the records disclose that the intention of the parties to the
extrajudicial settlement was to establish a trust in favor of petitioner
Yap, Jr. to the extent of his share. Rosario Diez testified that she did
not claim the entire property, 13 while Atty. de la Serna added that
the partition only involved the shares of the three participants. 14
A cestui que trust may make a claim under a resulting trust within 10
years from the time the trust is repudiated. 15Although the
registration of the land in private respondent Diez's name operated
as a constructive notice of her claim of ownership, it cannot be taken
as an act of repudiation adverse to petitioner Gregorio Yap, Jr.'s
claim, whose share in the property was precisely not included by the
parties in the partition. Indeed, it has not been shown whether he
had been informed of her exclusive claim over the entire property
before 1985 when he was notified by petitioner Jovita Yap Ancog of
their mother's plan to sell the property. 16
This Court has ruled that for prescription to run in favor of the
trustee, the trust must be repudiated by unequivocal acts made
known to the cestui que trust and proved by clear and conclusive
evidence. Furthermore, the rule that the prescriptive period should
be counted from the date of issuance of the Torrens certificate of
title applies only to the remedy of reconveyance under the Property
Registration Decree. 17 Since the action brought by petitioner Yap to
claim his share was brought shortly after he was informed by Jovita
Ancog of their mother's effort to sell the property, Gregorio Yap, Jr.'s
claim cannot be considered barred either by prescription or by
laches.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with the MODIFICATION that this case is REMANDED to the
Regional Trial Court for the determination of the claim of petitioner
Gregorio Yap, Jr.
SO ORDERED.

ARENAS v. ROCES
FIRST DIVISION
G.R. No. 147468 April 9, 2003
SPOUSES EDUARDO ARENAS DOMINGO & JOSEFINA
CHAVEZ DOMINGO, petitioners,
vs.
LILIA MONTINOLA ROCES, CESAR ROBERTO M. ROCES, ANA
INES MAGDALENA ROCES TOLENTINO, LUIS MIGUEL M.
ROCES, JOSE ANTONIO M. ROCES and MARIA VIDA
PRESENTACION ROCES, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari of the decision of the Court
of Appeals dated November 22, 2000 in CA-G.R. CV No. 62473,1 as
well as the resolution dated March 15, 2001, denying petitioners'
Motion for Reconsideration.2
The facts are not in dispute.
The spouses Cesar and Lilia Roces were the owners of two
contiguous parcels of land located on Arayat Street, Mandaluyong,
covered by Transfer Certificates of Title Nos. 57217 and 57218. 3 On
November 13, 1962, the Government Service Insurance System
(GSIS) caused the annotation of an affidavit of adverse claim on the
titles alleging that the spouses have mortgaged the same to it. 4
Subsequently, GSIS wrote a letter to Cesar Roces demanding the
surrender of the owner's duplicates of titles. When Roces failed to
comply, GSIS filed a petition with the then Court of First Instance of
Rizal, docketed as Civil Case No. R-1359, praying that the owner's
duplicates in Roces' possession be declared null and void and that
the Register of Deeds of Pasig be directed to issue new owner's
duplicates to GSIS.5 On September 5, 1977, the Court of First
Instance issued an order granting the petition.6 The order became
final and executory, and TCT Nos. 57217 (11663) and 57218
(11664) were issued in the name of GSIS.7
Cesar Roces died intestate on January 26, 1980. 8 He was survived
by his widow, Lilia Roces, and their children: Cesar Roberto Roces,
Ana Ines Magdalena Roces Tolentino, Luis Miguel M. Roces, Jose
Antonio Roces and Maria Vida Presentacion Roces, all of whom are
the respondents in this case.
On July 22, 1992, Reynaldo L. Montinola, a nephew of Lilia Roces,
executed an affidavit of self-adjudication over the Arayat properties.
He alleged that the properties were owned by the spouses Cesar
and Lilia Roces, both of whom died intestate, on September 13,
1987 and June 27, 1989, respectively; that the properties were
acquired during the existence of their marriage; that the spouses left
no heirs except the brother of Lilia Roces, who was his father; that
neither of the spouses left any will nor any debts; and that he was
the sole heir of the Roces spouses.9
On January 5, 1993, Montinola filed a petition against GSIS with the
Regional Trial Court of Pasig, docketed as Civil Case No. R-4743,
praying for the cancellation of TCT Nos. 57217 (11663) and 57218
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 27
COMPILATION OF CASES
(11664).10 During the trial, GSIS failed to produce any document
evidencing the alleged real estate mortgage by Roces of the
properties. Hence, the trial court rendered judgment in favor of
Montinola, declaring the owner's duplicates of TCT No. 57217
(11663) and 57218 (11664) as null and void and ordering the
Registry of Deeds of Mandaluyong to issue new owner's duplicates
of the said titles.11
GSIS did not appeal the aforesaid judgment; thus, the same became
final and executory. Accordingly, the Registry of Deeds of
Mandaluyong issued TCT No. 7299 in the name of Montinola in lieu
of TCT No. 57218 (11664).12
Sometime in July 1993, Montinola executed a deed of absolute sale
of the property covered by TCT No. 7299 in favor of petitioner
spouses Eduardo and Josefina Domingo.13 Thereafter, TCT No.
7673 was issued in the names of petitioners.
Both TCT Nos. 7299 and 7673 contained the following annotation:
Subject to the provision of Section 4, Rule 74 of the Rules of Court
with respect to the inheritance left by the deceased SPS. CESAR
ROCES & LILIA MONTINOLA.14
When respondents learned of the sale of the property to petitioners,
they filed a complaint against Montinola and petitioners with the
Regional Trial Court of Pasig. They argued that the affidavit of self-
adjudication was fraudulent because Montinola was not an heir of
the Roces spouses and it was not true that Lilia Roces was dead.
Therefore, the affidavit of self-adjudication, as well as the deed of
absolute sale, TCT No. 7299, and TCT No. 7673, all covering the
subject property, were null and void.15
In their answer, petitioners alleged that they were buyers in good
faith and that their action was barred by estoppel and laches. 16
After trial, the court a quo rendered judgment in favor of
respondents, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
against the defendant Reynaldo L. Montinola who is hereby ordered
to pay to the plaintiffs the following sums:
a) P1,200,000.00 as actual damages, with interest thereon at the
legal rate of six (6) per centum per annum until fully paid;
b) Moral damages in the sum of P100,000.00;
c) Exemplary damages in the sum of P50,000.00;
d) Attorney's fees in the reasonable amount of P30,000.00; and
costs.
The counterclaim of defendant spouses Eduardo and Josefina
Domingo is dismissed and the complaint against the Register of
Deeds is likewise dismissed without costs.
SO ORDERED.17
Respondents appealed to the Court of Appeals, reiterating the reliefs
prayed for in their complaint below.18 On November 22, 2000, the
Court of Appeals rendered the assailed Decision, the decretal
portion of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the appeal
is GRANTED. The Decision of the Court a quoappealed from is SET
ASIDE AND REVERSED. Another Decision is hereby rendered in
favor of the Appellants as follows:
1. The "Affidavit of Self-Adjudication" (Exhibit "G"), Transfer
Certificate of Title No. 7299 (Exhibits "N" and "22", Domingo), the
"Deed of Absolute Sale" (Exhibit "20") and Transfer Certificate of
Title No. 7673 (Exhibit "21") are hereby declared null and void.
2. Transfer Certificate of Title No. 57218 (11664), under the names
of Cesar P. Roces and Lilia Montinola, is hereby reinstated.
3. The Appellees are hereby ordered to pay, jointly and severally, to
the Appellants the amount of P50,000.00 as and by way of
attorney's fees.
4. Appellants' claims for actual, moral and exemplary damages are
dismissed.
5. The Appellee Reynaldo Montinola is hereby ordered to pay to the
Appellees Spouses Domingo the amount of P1,800,000.00, with
interest thereon at the rate of 12% per annum from the date of the
Decision of this Court until the said amount is paid in full by the said
Appellee, the other cross-claims of the Appellees, inter se, are
dismissed.
SO ORDERED.19
Petitioners filed a Motion for Reconsideration, 20 which was denied in
a Resolution dated March 15, 2000.21 Hence this petition, raising the
following errors:
1. THE COURT OF APPEALS ERRED IN HOLDING THAT THE
ANNOTATION IN THE TITLE REGARDING SEC. 4, RULE 74 IS AN
ENCUMBRANCE WHICH DISQUALIFIES PETITIONERS FROM
BEING INNOCENT PURCHASERS FOR VALUE;
2. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT IT
WAS RESPONDENTS WHO MADE IT POSSIBLE FOR
REYNALDO MONTINOLA TO PERPETUATE THE FRAUD AND,
THEREFORE, THEY SHOULD BE THE ONE TO BEAR
RESULTING DAMAGE;
3. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
RESPONDENTS HAVE NO EXISTING INTEREST IN THE
PROPERTY SINCE IT WAS PREVIOUSLY MORTGAGED AND
FORECLOSED BY THE G.S.I.S.; AND
4. THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS
LIABLE TO RESPONDENTS FOR ATTORNEY'S FEES, THEREBY
ADDING MORE INJURY TO THEIR MISFORTUNE.22
The petition lacks merit.
It is true that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely
on the title. He is charged with notice only of such burdens and
claims as are annotated on the title. However, this principle does not
apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the
lack of title in his vendor or of sufficient facts to induce a reasonably
prudent man to inquire into the status of the title of the property in
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 28
COMPILATION OF CASES
litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in
good faith.23
As stated above, the titles, namely, TCT Nos. 7299 and 7673,
contained annotations which made reference to the provisions of
Rule 74, Section 4 of the Rules of Court, viz:
SEC. 4. Liability of distributees and estate. — If it shall appear at any
time within two (2) years after the settlement and distribution of an
estate in accordance with the provisions of either of the first two
sections of this rule, that an heir or other person has been unduly
deprived of his lawful participation in the estate, such heir or such
other person may compel the settlement of the estate in the courts in
the manner hereinafter provided for the purpose of satisfying such
lawful participation. And if within the same time of two (2) years, it
shall appear that there are debts outstanding against the estate
which have not been paid, or that an heir or other person has been
unduly deprived of his lawful participation payable in money, the
court having jurisdiction of the estate may, by order for that purpose,
after hearing, settle the amount of such debts or lawful participation
and order how much and in what manner each distributee shall
contribute in the payment thereof, and may issue execution, if
circumstances require, against the bond provided in the preceding
section or against the real estate belonging to the deceased, or both.
Such bond and such real estate shall remain charged with a liability
to creditors, heirs, or other persons for the full period of two (2) years
after such distribution, notwithstanding any transfers of real estate
that may have been made.24
The foregoing rule clearly covers transfers of real property
to any person, as long as the deprived heir or creditor vindicates his
rights within two years from the date of the settlement and
distribution of estate. Contrary to petitioners' contention, the effects
of this provision are not limited to the heirs or original distributees of
the estate properties, but shall affect any transferee of the
properties.
In David v. Malay,25 it was held that the buyer of real property the
title of which contain an annotation pursuant to Rule 74, Section 4 of
the Rules of Court cannot be considered innocent purchasers for
value. In the same vein, the annotation at the back of TCT No. 7299
in this case referring to Rule 74, Section 4 of the Rules of Court was
sufficient notice to petitioners of the limitation on Montinola's right to
dispose of the property. The presence of an irregularity which
excites or arouses suspicion should prompt the vendee to look
beyond the certificate and investigate the title of the vendor
appearing on the face thereof.26 Purchasers of registered land are
bound by the annotations found at the back of the certificate of title.27
Hence, petitioners cannot be considered buyers in good faith and
cannot now avoid the consequences brought about by the
application of Rule 74, Section 4 of the Rules of Court.
Petitioner's claim that respondents were guilty of laches and
estoppel is likewise untenable. Laches is the failure or neglect, for
an unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done earlier.
The essential elements of laches are: (1) conduct on the part of
defendant or one under whom he claims, giving rise to the situation
complained of; (2) delay in asserting complainant's right after he had
knowledge of the defendant's conduct and after he has an
opportunity to sue; (3) lack of knowledge or notice on the part of the
defendant that the complainant would assert the right on which he
bases his suit; and (4) injury or prejudice to the defendant in the
event relief is accorded to the complainant.28
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 29
COMPILATION OF CASES

On the other hand, estoppel by laches arises from the negligence or

omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned
it or declined to assert it.29

In the case at bar, only four months elapsed from the time
respondents discovered Montinola's fraudulent acts, sometime in
May 1993, to the time they filed their complaint on September 6,
1993. This relatively short span of time can hardly be called
unreasonable, especially considering that respondents used this
period of time to investigate the transfers of the property.30 Delay is
an indispensable requisite for a finding of estoppel by laches, but to
be barred from bringing suit on grounds of estoppel and laches, the
delay must be lengthy and unreasonable.31 No unreasonable delay
can be attributed to respondents in this case.

WHEREFORE, in view of the foregoing, the instant petition for

review is DENIED. The decision and resolution of the Court of
Appeals in CA-G.R. No. CV No. 62473 are AFFIRMED in toto.

SO ORDERED.

LIABILITY UNDER RULE 74, SEC. 4
ARENAS v. ROCES
xxx
TAN v. BENOLIRAO
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 153820 October 16, 2009
DELFIN TAN, Petitioner,
vs.
ERLINDA C. BENOLIRAO, ANDREW C. BENOLIRAO, ROMANO
C. BENOLIRAO, DION C. BENOLIRAO, SPS. REYNALDO
TANINGCO and NORMA D. BENOLIRAO, EVELYN T. MONREAL,
and ANN KARINA TANINGCO,Respondents.
DECISION
Is an annotation made pursuant to Section 4, Rule 74 of the Rules of
Court (Rules) on a certificate of title covering real property
considered an encumbrance on the property? We resolve this
question in the petition for review on certiorari1 filed by Delfin Tan
(Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R.
CV No. 520332and the decision of the Regional Trial Court
(RTC)3 that commonly declared the forfeiture of his ₱200,000.00
down payment as proper, pursuant to the terms of his contract with
the respondents.
THE ANTECEDENTS
The facts are not disputed. Spouses Lamberto and Erlinda Benolirao
and the Spouses Reynaldo and Norma Taningco were the co-
owners of a 689-square meter parcel of land (property) located in
Tagaytay City and covered by Transfer Certificate of Title (TCT) No.
26423. On October 6, 1992, the co-owners executed a Deed of
Conditional Sale over the property in favor of Tan for the price of
₱1,378,000.00. The deed stated:
a) An initial down-payment of TWO HUNDRED (P200,000.00)
THOUSAND PESOS, Philippine Currency, upon signing of this
contract; then the remaining balance of ONE MILLION ONE
HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00)
PESOS, shall be payable within a period of one hundred fifty (150)
days from date hereof without interest;
b) That for any reason, BUYER fails to pay the remaining balance
within above mentioned period, the BUYER shall have a grace
period of sixty (60) days within which to make the payment, provided
that there shall be an interest of 15% per annum on the balance
amount due from the SELLERS;
c) That should in case (sic) the BUYER fails to comply with the terms
and conditions within the above stated grace period, then the
SELLERS shall have the right to forfeit the down payment, and to
rescind this conditional sale without need of judicial action;
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 30
COMPILATION OF CASES
d) That in case, BUYER have complied with the terms and
conditions of this contract, then the SELLERS shall execute and
deliver to the BUYER the appropriate Deed of Absolute Sale;
Pursuant to the Deed of Conditional Sale, Tan issued and delivered
to the co-owners/vendors Metrobank Check No. 904407 for
₱200,000.00 as down payment for the property, for which the
vendors issued a corresponding receipt.
On November 6, 1992, Lamberto Benolirao died intestate. Erlinda
Benolirao (his widow and one of the vendors of the property) and her
children, as heirs of the deceased, executed an extrajudicial
settlement of Lamberto’s estate on January 20, 1993. On the basis
of the extrajudicial settlement, a new certificate of title over the
property, TCT No. 27335, was issued on March 26, 1993 in the
names of the Spouses Reynaldo and Norma Taningco and Erlinda
Benolirao and her children. Pursuant to Section 4, Rule 74 of the
Rules, the following annotation was made on TCT No. 27335:
x x x any liability to credirots (sic), excluded heirs and other persons
having right to the property, for a period of two (2) years, with
respect only to the share of Erlinda, Andrew, Romano and Dion, all
surnamed Benolirao
As stated in the Deed of Conditional Sale, Tan had until March 15,
1993 to pay the balance of the purchase price. By agreement of the
parties, this period was extended by two months, so Tan had until
May 15, 1993 to pay the balance. Tan failed to pay and asked for
another extension, which the vendors again granted.
Notwithstanding this second extension, Tan still failed to pay the
remaining balance due on May 21, 1993. The vendors thus wrote
him a letter demanding payment of the balance of the purchase
price within five (5) days from notice; otherwise, they would declare
the rescission of the conditional sale and the forfeiture of his down
payment based on the terms of the contract.
Tan refused to comply with the vendors’ demand and instead wrote
them a letter (dated May 28, 1993) claiming that the annotation on
the title, made pursuant to Section 4, Rule 74 of the Rules,
constituted an encumbrance on the property that would prevent the
vendors from delivering a clean title to him. Thus, he alleged that he
could no longer be required to pay the balance of the purchase price
and demanded the return of his down payment.
When the vendors refused to refund the down payment, Tan,
through counsel, sent another demand letter to the vendors on June
18, 1993. The vendors still refused to heed Tan’s demand,
prompting Tan to file on June 19, 1993 a complaint with the RTC of
Pasay City for specific performance against the vendors, including
Andrew Benolirao, Romano Benolirao, Dion Benolirao as heirs of
Lamberto Benolirao, together with Evelyn Monreal and Ann Karina
Taningco (collectively, the respondents). In his complaint, Tan
alleged that there was a novation of the Deed of Conditional Sale
done without his consent since the annotation on the title created an
encumbrance over the property. Tan prayed for the refund of the
down payment and the rescission of the contract.
On August 9, 1993, Tan amended his Complaint, contending that if
the respondents insist on forfeiting the down payment, he would be
willing to pay the balance of the purchase price provided there is
reformation of the Deed of Conditional Sale. In the meantime, Tan
caused the annotation on the title of a notice of lis pendens.

On August 21, 1993, the respondents executed a Deed of Absolute
Sale over the property in favor of Hector de Guzman (de Guzman)
for the price of ₱689,000.00.
Thereafter, the respondents moved for the cancellation of the notice
of lis pendens on the ground that it was inappropriate since the case
that Tan filed was a personal action which did not involve either title
to, or possession of, real property. The RTC issued an order dated
October 22, 1993 granting the respondents’ motion to cancel the lis
pendens annotation on the title.
Meanwhile, based on the Deed of Absolute Sale in his favor, de
Guzman registered the property and TCT No. 28104 was issued in
his name. Tan then filed a motion to carry over the lis pendens
annotation to TCT No. 28104 registered in de Guzman’s name, but
the RTC denied the motion.
On September 8, 1995, after due proceedings, the RTC rendered
judgment ruling that the respondents’ forfeiture of Tan’s down
payment was proper in accordance with the terms and conditions of
the contract between the parties.4The RTC ordered Tan to pay the
respondents the amount of ₱30,000.00, plus ₱1,000.00 per court
appearance, as attorney’s fees, and to pay the cost of suit.
On appeal, the CA dismissed the petition and affirmed the ruling of
the trial court in toto. Hence, the present petition.
THE ISSUES
Tan argues that the CA erred in affirming the RTC’s ruling to cancel
the lis pendens annotation on TCT No. 27335. Due to the
unauthorized novation of the agreement, Tan presented before the
trial court two alternative remedies in his complaint – either the
rescission of the contract and the return of the down payment, or the
reformation of the contract to adjust the payment period, so that Tan
will pay the remaining balance of the purchase price only after the
lapse of the required two-year encumbrance on the title. Tan posits
that the CA erroneously disregarded the alternative remedy of
reformation of contract when it affirmed the removal of the lis
pendens annotation on the title.
Tan further contends that the CA erred when it recognized the
validity of the forfeiture of the down payment in favor of the vendors.
While admitting that the Deed of Conditional Sale contained a
forfeiture clause, he insists that this clause applies only if the failure
to pay the balance of the purchase price was through his own fault
or negligence. In the present case, Tan claims that he was justified
in refusing to pay the balance price since the vendors would not
have been able to comply with their obligation to deliver a "clean"
title covering the property.
Lastly, Tan maintains that the CA erred in ordering him to pay the
respondents ₱30,000.00, plus ₱1,000.00 per court appearance as
attorney’s fees, since he filed the foregoing action in good faith,
believing that he is in the right.
The respondents, on the other hand, assert that the petition should
be dismissed for raising pure questions of fact, in contravention of
the provisions of Rule 45 of the Rules which provides that only
questions of law can be raised in petitions for review on certiorari.
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 31
COMPILATION OF CASES
THE COURT’S RULING
The petition is granted.
No new issues can be raised in the Memorandum
At the onset, we note that Tan raised the following additional
assignment of errors in his Memorandum: (a) the CA erred in
holding that the petitioner could seek reformation of the Deed of
Conditional Sale only if he paid the balance of the purchase price
and if the vendors refused to execute the deed of absolute sale; and
(b) the CA erred in holding that the petitioner was estopped from
asking for the reformation of the contract or for specific performance.
The Court’s September 27, 2004 Resolution expressly stated that
"No new issues may be raised by a party in his/its Memorandum."
Explaining the reason for this rule, we said that:
The raising of additional issues in a memorandum before the
Supreme Court is irregular, because said memorandum is supposed
to be in support merely of the position taken by the party concerned
in his petition, and the raising of new issues amounts to the filing of
a petition beyond the reglementary period. The purpose of this rule
is to provide all parties to a case a fair opportunity to be heard. No
new points of law, theories, issues or arguments may be raised by a
party in the Memorandum for the reason that to permit these would
be offensive to the basic rules of fair play, justice and due process. 5
Tan contravened the Court’s explicit instructions by raising these
additional errors. Hence, we disregard them and focus instead on
the issues previously raised in the petition and properly included in
the Memorandum.
Petition raises a question of law
Contrary to the respondents’ claim, the issue raised in the present
petition – defined in the opening paragraph of this Decision – is a
pure question of law. Hence, the petition and the issue it presents
are properly cognizable by this Court.
Lis pendens annotation not proper in personal actions
Section 14, Rule 13 of the Rules enumerates the instances when a
notice of lis pendens can be validly annotated on the title to real
property:
Sec. 14. Notice of lis pendens.
In an action affecting the title or the right of possession of real
property, the plaintiff and the defendant, when affirmative relief is
claimed in his answer, may record in the office of the registry of
deeds of the province in which the property is situated a notice of the
pendency of the action. Said notice shall contain the names of the
parties and the object of the action or defense, and a description of
the property in that province affected thereby. Only from the time of
filing such notice for record shall a purchaser, or encumbrancer of
the property affected thereby, be deemed to have constructive
notice of the pendency of the action, and only of its pendency
against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled
only upon order of the court, after proper showing that the notice is
for the purpose of molesting the adverse party, or that it is not

necessary to protect the rights of the party who caused it to be
recorded.
The litigation subject of the notice of lis pendens must directly
involve a specific property which is necessarily affected by the
judgment.6
Tan’s complaint prayed for either the rescission or the reformation of
the Deed of Conditional Sale. While the Deed does have real
property for its object, we find that Tan’s complaint is an in
personam action, as Tan asked the court to compel the respondents
to do something – either to rescind the contract and return the down
payment, or to reform the contract by extending the period given to
pay the remaining balance of the purchase price. Either way, Tan
wants to enforce his personal rights against the respondents, not
against the property subject of the Deed. As we explained in
Domagas v. Jensen:7
The settled rule is that the aim and object of an action determine its
character. Whether a proceeding is in rem, or in personam, or quasi
in rem for that matter, is determined by its nature and purpose, and
by these only. A proceeding in personam is a proceeding to enforce
personal rights and obligations brought against the person and is
based on the jurisdiction of the person, although it may involve his
right to, or the exercise of ownership of, specific property, or seek to
compel him to control or dispose of it in accordance with the
mandate of the court. The purpose of a proceeding in personam is to
impose, through the judgment of a court, some responsibility or
liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or
actions to fasten a pecuniary liability on him.
Furthermore, as will be explained in detail below, the contract
between the parties was merely a contract to sell where the vendors
retained title and ownership to the property until Tan had fully paid
the purchase price. Since Tan had no claim of ownership or title to
the property yet, he obviously had no right to ask for the annotation
of a lis pendens notice on the title of the property.
Contract is a mere contract to sell
A contract is what the law defines it to be, taking into consideration
its essential elements, and not what the contracting parties call
it.8 Article 1485 of the Civil Code defines a contract of sale as
follows:
Art. 1458. By the contract of sale one of the contracting parties
obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.
The very essence of a contract of sale is the transfer of ownership in
exchange for a price paid or promised.9
In contrast, a contract to sell is defined as a bilateral contract
whereby the prospective seller, while expressly reserving the
ownership of the property despite delivery thereof to the prospective
buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed, i.e., full
payment of the purchase price.10 A contract to sell may not even be
considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the
fulfillment of a suspensive condition, because in a conditional
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 32
COMPILATION OF CASES
contract of sale, the first element of consent is present, although it is
conditioned upon the happening of a contingent event which may or
may not occur.11
In the present case, the true nature of the contract is revealed by
paragraph D thereof, which states:
xxx
d) That in case, BUYER has complied with the terms and conditions
of this contract, then the SELLERS shall execute and deliver to the
BUYER the appropriate Deed of Absolute Sale;
xxx
Jurisprudence has established that where the seller promises to
execute a deed of absolute sale upon the completion by the buyer of
the payment of the price, the contract is only a contract to
sell.12 Thus, while the contract is denominated as a Deed of
Conditional Sale, the presence of the above-quoted provision
identifies the contract as being a mere contract to sell.
A Section 4, Rule 74 annotation is an encumbrance on the property
While Tan admits that he refused to pay the balance of the purchase
price, he claims that he had valid reason to do so – the sudden
appearance of an annotation on the title pursuant to Section 4, Rule
74 of the Rules, which Tan considered an encumbrance on the
property.
We find Tan’s argument meritorious.
The annotation placed on TCT No. 27335, the new title issued to
reflect the extrajudicial partition of Lamberto Benolirao’s estate
among his heirs, states:
x x x any liability to credirots (sic), excluded heirs and other persons
having right to the property, for a period of two (2) years, with
respect only to the share of Erlinda, Andrew, Romano and Dion, all
surnamed Benolirao [Emphasis supplied.]
This annotation was placed on the title pursuant to Section 4, Rule
74 of the Rules, which reads:
Sec. 4. Liability of distributees and estate. - If it shall appear at any
time within two (2) years after the settlement and distribution of an
estate in accordance with the provisions of either of the first two
sections of this rule, that an heir or other person has been unduly
deprived of his lawful participation in the estate, such heir or such
other person may compel the settlement of the estate in the courts in
the manner hereinafter provided for the purpose of satisfying such
lawful participation. And if within the same time of two (2) years, it
shall appear that there are debts outstanding against the estate
which have not been paid, or that an heir or other person has
been unduly deprived of his lawful participation payable in
money, the court having jurisdiction of the estate may, by order
for that purpose, after hearing, settle the amount of such debts or
lawful participation and order how much and in what manner
each distributee shall contribute in the payment thereof, and
may issue execution, if circumstances require, against the bond
provided in the preceding section or against the real estate
belonging to the deceased, or both. Such bond and such real
estate shall remain charged with a liability to creditors, heirs, or other
persons for the full period of two (2) years after such distribution,

notwithstanding any transfers of real estate that may have been
made. [Emphasis supplied.]
Senator Vicente Francisco discusses this provision in his book The
Revised Rules of Court in the Philippines,13where he states:
The provision of Section 4, Rule 74 prescribes the procedure to be
followed if within two years after an extrajudicial partition or
summary distribution is made, an heir or other person appears to
have been deprived of his lawful participation in the estate, or some
outstanding debts which have not been paid are discovered. When
the lawful participation of the heir is not payable in money, because,
for instance, he is entitled to a part of the real property that has been
partitioned, there can be no other procedure than to cancel the
partition so made and make a new division, unless, of course, the
heir agrees to be paid the value of his participation with interest. But
in case the lawful participation of the heir consists in his share in
personal property of money left by the decedent, or in case unpaid
debts are discovered within the said period of two years, the
procedure is not to cancel the partition, nor to appoint an
administrator to re-assemble the assets, as was allowed under the
old Code, but the court, after hearing, shall fix the amount of such
debts or lawful participation in proportion to or to the extent of the
assets they have respectively received and, if circumstances
require, it may issue execution against the real estate belonging to
the decedent, or both. The present procedure is more expedient and
less expensive in that it dispenses with the appointment of an
administrator and does not disturb the possession enjoyed by the
distributees.14 [Emphasis supplied.]
An annotation is placed on new certificates of title issued pursuant to
the distribution and partition of a decedent’s real properties to warn
third persons on the possible interests of excluded heirs or unpaid
creditors in these properties. The annotation, therefore, creates a
legal encumbrance or lien on the real property in favor of the
excluded heirs or creditors. Where a buyer purchases the real
property despite the annotation, he must be ready for the possibility
that the title could be subject to the rights of excluded parties. The
cancellation of the sale would be the logical consequence where: (a)
the annotation clearly appears on the title, warning all would-be
buyers; (b) the sale unlawfully interferes with the rights of heirs; and
(c) the rightful heirs bring an action to question the transfer within the
two-year period provided by law.
As we held in Vda. de Francisco v. Carreon:15
And Section 4, Rule 74 xxx expressly authorizes the court to give to
every heir his lawful participation in the real estate "notwithstanding
any transfers of such real estate" and to "issue execution" thereon.
All this implies that, when within the amendatory period the realty
has been alienated, the court in re-dividing it among the heirs has
the authority to direct cancellation of such alienation in the same
estate proceedings, whenever it becomes necessary to do so. To
require the institution of a separate action for such annulment would
run counter to the letter of the above rule and the spirit of these
summary settlements. [Emphasis supplied.]
Similarly, in Sps. Domingo v. Roces,16 we said:
The foregoing rule clearly covers transfers of real property
to any person, as long as the deprived heir or creditor vindicates his
rights within two years from the date of the settlement and
distribution of estate. Contrary to petitioners’ contention, the effects
of this provision are not limited to the heirs or original distributees of
the estate properties, but shall affect any transferee of the
properties. [Emphasis supplied.]
SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 33
COMPILATION OF CASES
Indeed, in David v. Malay,17 although the title of the property had
already been registered in the name of the third party buyers, we
cancelled the sale and ordered the reconveyance of the property to
the estate of the deceased for proper disposal among his rightful
heirs.
By the time Tan’s obligation to pay the balance of the purchase price
arose on May 21, 1993 (on account of the extensions granted by the
respondents), a new certificate of title covering the property had
already been issued on March 26, 1993, which contained the
encumbrance on the property; the encumbrance would remain so
attached until the expiration of the two-year period. Clearly, at this
time, the vendors could no longer compel Tan to pay the balance of
the purchase since considering they themselves could not fulfill their
obligation to transfer a clean title over the property to Tan.
Contract to sell is not rescinded but terminated
What then happens to the contract?
We have held in numerous cases18 that the remedy of rescission
under Article 1191 cannot apply to mere contracts to sell. We
explained the reason for this in Santos v. Court of Appeals, 19 where
we said:
[I]n a contract to sell, title remains with the vendor and does not pass
on to the vendee until the purchase price is paid in full. Thus, in a
contract to sell, the payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed upon is not
a mere breach, casual or serious, but a situation that prevents
the obligation of the vendor to convey title from acquiring an
obligatory force. This is entirely different from the situation in a
contract of sale, where non-payment of the price is a negative
resolutory condition. The effects in law are not identical. In a contract
of sale, the vendor has lost ownership of the thing sold and cannot
recover it, unless the contract of sale is rescinded and set aside. In a
contract to sell, however, the vendor remains the owner for as long
as the vendee has not complied fully with the condition of paying the
purchase price. If the vendor should eject the vendee for failure to
meet the condition precedent, he is enforcing the contract and not
rescinding it. x x x Article 1592 speaks of non-payment of the
purchase price as a resolutory condition. It does not apply to a
contract to sell. As to Article 1191, it is subordinated to the
provisions of Article 1592 when applied to sales of immovable
property. Neither provision is applicable [to a contract to sell].
[Emphasis supplied.]
We, therefore, hold that the contract to sell was terminated when the
vendors could no longer legally compel Tan to pay the balance of
the purchase price as a result of the legal encumbrance which
attached to the title of the property. Since Tan’s refusal to pay was
due to the supervening event of a legal encumbrance on the
property and not through his own fault or negligence, we find and so
hold that the forfeiture of Tan’s down payment was clearly
unwarranted.
Award of Attorney’s fees
As evident from our previous discussion, Tan had a valid reason for
refusing to pay the balance of the purchase price for the property.
Consequently, there is no basis for the award of attorney’s fees in
favor of the respondents.
 SPECIAL PROCEEDINGS (Atty. Geraldine Quimosing-Tiu) 34
COMPILATION OF CASES

On the other hand, we award attorney’s fees in favor of Tan, since

he was compelled to litigate due to the respondents’ refusal to return
his down payment despite the fact that they could no longer comply
with their obligation under the contract to sell, i.e., to convey a clean
title. Given the facts of this case, we find the award of ₱50,000.00 as
attorney’s fees proper.

Monetary award is subject to legal interest

Undoubtedly, Tan made a clear and unequivocal demand on the

vendors to return his down payment as early as May 28, 1993.
Pursuant to our definitive ruling in Eastern Shipping Lines, Inc. v.
Court of Appeals,20 we hold that the vendors should return the
₱200,000.00 down payment to Tan, subject to the legal interest of
6% per annum computed from May 28, 1993, the date of the first
demand letter.1avvphi1

Furthermore, after a judgment has become final and executory, the

rate of legal interest, whether the obligation was in the form of a loan
or forbearance of money or otherwise, shall be 12% per annum from
such finality until its satisfaction. Accordingly, the principal obligation
of ₱200,000.00 shall bear 6% interest from the date of first demand
or from May 28, 1993. From the date the liability for the principal
obligation and attorney’s fees has become final and executory, an
annual interest of 12% shall be imposed on these obligations until
their final satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.

WHEREFORE, premises considered, we hereby GRANT the petition

and, accordingly, ANNUL and SET ASIDE the May 30, 2002
decision of the Court of Appeals in CA-G.R. CV No. 52033. Another
judgment is rendered declaring the Deed of Conditional Sale
terminated and ordering the respondents to return the ₱200,000.00
down payment to petitioner Delfin Tan, subject to legal interest of
6% per annum, computed from May 28, 1993. The respondents are
also ordered to pay, jointly and severally, petitioner Delfin Tan the
amount of ₱50,000.00 as and by way of attorney’s fees. Once this
decision becomes final and executory, respondents are ordered to
pay interest at 12% per annum on the principal obligation as well as
the attorney’s fees, until full payment of these amounts. Costs
against the respondents.

SO ORDERED.