Specpro Case Digests

Facts:

• The petitioner in this case filed a case of partition despite the existence of debts of the decedent.

Issue:

The petitioner urges that their action for partition and liquidation may be maintained, notwithstanding that there are pending obligations of the estate, subject to the taking of adequate measures either for the payment or the security of its creditors. Is his contention correct?

Held:

No.

There is no question that the law allows the partition of the estate of a deceased person by the heirs, extrajudicially or through an ordinary action for partition, without the filing of a special proceeding and the appointment of an administrator for the purpose of the settlement of said estate, but this they may do only "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 reason is that where the deceased dies without pending obligations, there is no necessity for the appointment of an administrator to administer the estate for them and to deprive the real owners of their possession to which they are immediately entitled

The situation is different, however, where the deceased left pending obligations. In such cases, such obligations must be first paid or compounded with the creditors before the estate can be divided among the heirs; and unless they reach an amicable settlement as to how such obligations should be settled, the estate would inevitably be submitted to administration for the payment of such debts. As compared to ordinary partition, the regular estate proceedings offer the advantage of requiring all creditors of the deceased to disclose themselves and submit their respective claims within a comparatively short period (12 months under Rule 87, unless claims are contingent), otherwise, they are forever barred; while in ordinary judicial partitions the creditors' claims are only extinguished by the expiration of the period of extinctive prescription. An heir, therefore, may have an interest in making sure that the share allocated to him will be freed from invisible claims, so that creditors may not later appear and initiate the very estate proceedings sought to be avoided, and he may properly object to an action for partition on this ground.

Unless, therefore, all the heirs are agreeable to assuming personal liability for all the decedent's obligations, those known as well as those undisclosed, regular estate proceedings can not be avoided.

Appellants claim that there is nothing that would prevent the trial court from directing and ordering that the pending obligations of the estate be paid first, or that they should constitute as liens on the respective shares to be received by the heirs. In other words, appellants propose that the administration of the estate for the purpose of paying off its debts be accomplished right in this partition suit, with either the Court performing the duties of the administrator, or an administrator appointed to take care of such debts, as prayed for in their complaint. Obviously, an ordinary action for partition can not be converted into a proceeding for the settlement of the estate of a deceased, without compliance with the procedure outlined by Rules 79-90 of the Rules of Court, especially the provisions on publication and notice to creditors.

PEREGRINA REBONG, petitioner vs. FIDEL IBAÑEZ, Judge of First Instance of Laguna, respondent.

(A very short case. Need not be digested. The Following is a reproduction of the original case)

This is a petition for certiorari against the respondent judge of the Court of First Instance of Laguna on the ground that the latter acted in excess of jurisdiction or with grave abuse of discretion in denying the petition for cancellation of the lien or annotation on the certificate of title issued to the petitioner, of a land extrajudicially inherited by him as the only heir of her predecessors in interest to the effect that the property described in the title is subject to the claims of the creditors and other heirs of the deceased Jose Rebong and Maria Rebong within two years from July 9, 1947, in accordance with sections 1 and 4, Rule 74 of the Rules of Court.

The petitioner based her petition on section 112 of Act No. 496 and offered to file a bond of P5,000, the estimated value of the above mentioned property to answer for such contingent claims.

The pertinent part of said section 112 of Act No. 496 provides:

"SEC. 112. * * * Any registered owner or other person in interest may at any time apply by petition to the court, upon the ground that registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; or that new interests have arisen or been created which do not appear upon the certificate; * * * and the court shall have jurisdiction to hear and determine the petition after notice to all parties in interest, and may order the entry of a new certificate, the entry or cancellation of a memorandum upon a certificate or grant any other relief upon such terms and conditions, requiring security if necessary, as it may deem proper; * * *."

According to the above quoted provisions, the court "may order the entry of a new certificate, the entry or cancellation of a memorandum upon a certificate or grant any other relief upon such terms and conditions, requiring security if necessary," upon application of a registered owner on "the ground that registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased, or that new interests have arisen or been created which do not appear upon the certificate."

Applying these provisions to the present case, it is evident that, since the registered or annotated contingent interest of the creditors or other heirs of the petitioner's predecessors in interest, established by section 4 of Rule 74, has not yet terminated or ceased, for the period of two years from July 9, 1947, have not yet elapsed, the respondent judge had no jurisdiction or power to order the cancellation of said lien or annotation as prayed by the petitioner. Neither section 4, Rule 74, of the Rules of Court, nor section 112 of Act No. 496 authorizes the substitution of a bond for a lien or registered interest of any description, whether vested, expedient, inchoate or contingent, which have not yet terminated or ceased.

In view of the foregoing, it is plain that the respondent judge has not acted in excess of jurisdiction nor with grave abuse of discretion, but in conformity with the law, in denying the petitioner's petition, and the petition for certiorari is therefore denied.

Intestate estate of the deceased LUZ Garcia PABLO G. UTULO, applicant and appellee, vs. LEONA PASION VIUDA DE GARCIA, oppositor and appellant.

Facts:

• Juan Garcia Sanchez died intestate, Leona Pasion Vda. de Garcia, the surviving spouse and the herein oppositor, was appointed judicial administratrix. • The said deceased left legitimate children, named Juan Garcia, jr., Patrocinio Garcia and Luz Garcia who, with the widow, are the presumptive forced heirs. • Luz Garcia married the applicant Pablo G. Utulo and during the pendency of the administration proceedings of the said deceased, she died in the said province without any legitimate descendants, her only forced heirs being her mother and her husband.

• The latter commenced in the same court the judicial administration of the property of his deceased wife, stating in his petition that her only heirs were he himself and his mother-in-law, the oppositor, and that the only property left by the deceased consisted in the share due her from the intestate of her father, Juan Garcia Sanchez, and asking that he be named administrator of the property of said deceased.

• The oppositor (mother of the decdent) objected to the petition, opposing the judicial administration of the property of her daughter and the appointment of the applicant as administrator. She alleged that inasmuch as the said deceased left no indebtedness, there was no occasion for the said judicial administration; but she stated that should the court grant the administration of the property, she should be appointed the administratrix thereof inasmuch as she had a better right than the applicant.

Issues:

1. Is judicial administration is proper in this case?

2. Who has the better right to be the administrator, the husband or the mother?

Held:

1. As to the first question, we have section 642 of the Code of Civil Procedure providing in part that "if no executor is named in the will, or if a person dies intestate, administration shall be granted" etc. This provision enunciates the general rule that when a person dies leaving property in the Philippine Islands, his property should be judicially administered and the competent court should appoint a qualified administrator, in the order established in the section, in case the deceased left no will, or in case he had left one should he fail to name an executor therein. This rule, however, is subject to the exceptions established by sections 596 and 597 of the same Code, as finally amended.

According to the first, 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. According to the second, if the property left does not exceed six thousand pesos, the heirs may apply to the competent court, after the required publications, to proceed with the summary partition and, after paying all the known obligations, to partition all the property constituting the inheritance among themselves pursuant to law, without instituting the judicial administration and the appointment of an administrator.

Construing the scope of section 596, this court 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.

There is no weight in the argument adduced by the appellee to the effect that his appointment as judicial administrator is necessary so that he may have legal, capacity to appear in the intestate of the deceased Juan Garcia Sanchez. As he would appear in the said intestate by the right of representation, it would suffice for him to allege in proof of his interest that he is a usufructuary forced heir of his deceased wife who, in turn, would be a forced heir and an interested and necessary party if she were living. In order to intervene in said intestate and to take part in the distribution of the property it is not necessary that the administration of the property of his deceased wife be instituted-an administration which will take up time and occasion inconveniences and unnecessary expenses.

2. Since there is no need for judicial administration, there is no need to determine who has the better right to administer the estate of the decedent.

CRESENCIA HERNANDEZ, plaintiff and appellee, VS. ZACARIAS ANDAL, defendant and appellant. QUIRINO DIMASACAT, MARIA HERNANDEZ and AQUILINA HERNANDEZ, intervenors and appellants.

Facts:

• Plaintiff and the intervenors were siblings. They inherited a parcel of land from their father.

• The intervenors sold their share to Andal, allegedly for P150

• The plaintiff now sought to repurchase the said parts of the land. However, Andal refused, even when she offered a higher price which is P860.

• Then, Andal allegedly made a simulated sale back to the intervenors.

• Now, plaintiff sought brought the action to repurchase the land from Andal.

• The intervenors’ and Andal’s defense: They said that there was already partition between the siblings. According to the facts there was a document of partition, however it was not presented in trial. (I think they invoked this defense in order to show that there was already a termination of the co-ownership, therefore plaintiff’s right to redeem was already extinguished)

• During trial, when the defendant and intervenors tried to present witnesses to prove such partition, the counsel of the plaintiff objected invoking the best evidence rule. The document of partition is the best evidence of the terms of partition.

Issues:

The defendant and intervenors now assail that the trial court was in error in denying the admissibility of their evidence proving the existence of the partition due to the fact that the partition should be put into writing. Are their contentions correct?

Held:

Yes.

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.)

APPLICABLE ONLY TO EXECUTORY CONTRACTS.

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.)

ORAL PARTITION ENFORCED IN EQUITY WHEN PERFORMED

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.

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 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.)

SECTION 1 OF RULE 74, NOT CONSTITUTIVE BUT MERELY EVIDENTIAL OF PARTITION.

Section 1 of Rule 74 contains no express or clear declaration that the public instrument therein required 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 de-pendent on the execution of a public instrument and its registration. The 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.

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 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.

MARIA VDA. DE REYES, EFREN REYES, ELVIRA REYES, TIMBOL, ERLINDA REYES-VALERIO, ERNESTO REYES, ELIZABETH REYES, ALEX, RAFAEL II, EMELINA and EVELYN, all surnamed REYES, represented by their mother,MARIA VDA. DE REYES, petitioners, vs. THE COURT OF APPEALS AND SPOUSES DALMACIO GARDIOLA and ROSARTO MARTILLANO, respondents.

Facts:

• During his lifetime, one Gavino Reyes owned a parcel of land of approximately 70 hectares, more or less, located at Sangayad, Ulong-Tubig, Carmona, Cavite. He sought to bring said land under the operation of the Torrens System of registration of property. Unfortunately, he died in 1921 without the title having been issued to him. The application was prosecuted by his son, Marcelo Reyes, who was the administrator of his property. • In 1936 the above property was surveyed and subdivided by Gavino's heirs (Exh. "6").

In the subdivision plan, each resultant lot was earmarked, indicated for and assigned to a specific heir. It appears therein that two lots, one of which is Lot No. 1A-14 (Exh. "6-A"), were allotted to Rafael Reyes, Sr., one of Gavino's children. Per testimony of Juan Poblete, the children thereafter secured tax declarations for their respective shares. • In 1941, or about twenty (20) years after the death of Gavino, the original certificate of title for the whole property-OCT No. 255-was issued. It was, however, kept by Juan Poblete, son-inlaw of Marcelo Reyes, who was by then already deceased.

The heirs of Gavino were not aware of this fact. • On 3 December 1943, Rafael Reyes, Sr. sold a parcel of land with an area of 23,431 square meters, more or less, to private respondent Dalmacio Gardiola (Exh. "5"). According to the vendee, this parcel corresponds to Lot No.1-A-14 of the subdivision plan aforestated. The deed of sale, however, did not specifically mention Lot No. I-A-14. The vendee immediately took possession of the property and started paying the land taxes therein. • In 1967, the surviving heirs gave effect to the subdivision plan created on 1936.

They formally partitioned the property. Therefore, the heirs received their share of this land. Including Rafael Reyes, Jr. Son of Rafael Sr. TCTs were issued to him representing the land which should have been received by his father. • Now, the heirs of Rafael Jr. sued Gardiola, saying that they are the true owners of the land, as shown by the torrens title over the land. • Gardiola’s defense was that he bought the land from Rafael Sr. and that Rafael Jr. could not have inherited this land for it was disposed of by his father way before he inherited it. • The trial court ruled in favor of Rafael Jr.’s heirs. Stating that there was no evidence that the Gavino’s children had a written partition agreement. CA reversed. Issue:

Is the CA correct in reversing the trial court?

Held:

No.

The Court of Appeals correctly held that the partition made by the children of Gavino Reyes in 1936, although oral, was valid and binding. There is no law that requires partition among heirs to be in writing to be valid.24 In Hernandez vs. Andal, supra, this Court, interpreting Section 1 of Rule 74 of the Rules of Court, held that the 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.

There is nothing in said section from which it can be inferred that a writing or other formality is an essential requisite to the validity of the partition. Accordingly, an oral partition is valid. Barcelona, et al. vs. Barcelona, et al., supra, provides the reason why oral partition is valid and why it is not covered by the Statute of Frauds: partition among heirs or renunciation of an inheritance by some of them is not exactly a conveyance of real property for the reason that it does not involve transfer of property from one to the other, but rather a confirmation or ratification of title or right of property by the heir renouncing in favor of another heir accepting and receiving the inheritance. Additionally, the validity of such oral partition in 1936 has been expressly sustained by this Court in the Resolution of 20 August 1990 in G.R. No. 92811.25

But even if We are to assume arguendo that the oral partitio executed in 1936 was not valid for some reason or another, we would still arrive at the same conclusion for upon the death of Gavino Reyes in 1921, his heirs automatically became co-own, era of his 70-hectare parcel of land. The rights to the succession. are transmitted horn the moment of death of the decedent,26 The estate of the decedent would then be held in co-ownership by the heirs. The co-heir or co-owner may validly dispose of his share or interest in the property subject to the condition that the portion disposed of is eventually allotted to him in the division upon termination of the co-ownership.

In the case at bar, the lot sold by Rafael Reyes, Sr. to private respondent Dalmacio Gardiola is his share in the estate of his deceased father, Gavino Reyes. It is the same property which was eventually adjudicated to his son and heir, Rafael Reyes, Jr., represented in turn by his heirs-petitioners herein-in the extrajudicial settlement of 1967.

The same did not operate to divest the vendee of the share of Rafael Reyes, Sr. in the estate of Gavino. Petitioners, as mere successors-in-interest of Rafael Reyes, Jr., son of Rafael Reyes, Sr., can only acquire that which Rafael, Jr. could transmit to them upon his death. The latter never became the owner of Lot No. 1-A-14 because it was sold by his father in 1943. The issuance of TCT No. T-27257 in the name of Rafael Reyes, Jr., in so far as Lot No. 1-14-A is concerned, was clearly erroneous because he never became its owner. An extrajudicial settlement does not create a right in favor of an heir.

As this Court stated in the Barcelona case, 28 it is but a confirmation or ratification of title or right to property. Thus, since he never had any title of right to Lot No. 1-14-A, the mere execution of the settlement did not improve his condition, and the subsequent registration of the deed did not create any right or vest any title over the property in favor of the petitioners as heirs of Rafael Reyes, Jr, The latter cannot give them what he never had before. Nemo dare potest quod non habet.

There is one more point that should be stressed here. Petitioners' immediate predecessor-in-interest, Rafael Reyes, Jr., never took any action against private respondents from the time his father sold the lot to the latter. Neither did petitioners bring any action to recover from private respondents the owner. ship and possession of the lot from the time Rafael Reyes, Jr. died. As categorically admitted by petitioners in their complaint and amended complaint, it was only in or about September 1969 when, after the delivery of TCT No. 27257 by Candido Hebron to them, that they definitely discovered that they were the owners of the property in question.

And yet, despite full knowledge that private respondents were in actual physical possession of the property, it was only about thirteen and onehalf (13 1/2) years later that they decided to file an action for recovery of possession. As stated earlier, the original complaint was filed in the trial court on 14 March 1983. There was then absolutely no basis for the trial court to place the burden on private respondents to bring an action for reconveyance within four (4) years from their discovery of the issuance of the transfer certificate of title in the name of Rafael Reyes, Jr.

In the matter of the INTESTATE ESTATE of PAZ E. SIGUION TORRES, Deceased, ALBERTO S. TORRES, petitioner and appellant vs. CONCHITA TORRES and ANGEL S. TORRES, oppositors and appellees.

Facts:

• Alberto Torres prayed for the issuance of letters of administration in his favor, for the administration of Paz Siguion Torres’, his father, estate. • Conchita Torres opposed this saying that there was already an extrajudicial partition between the heirs pursuant to the rules of court. • Then Alberto then averred that the attempts actually designate their respective shares had failed, and properties of considerable value were not included in the partition. • He also then averred that there was a P50,000 debt of the estate • The trial court dismissed Alberto’s petition.

Issue:

Is the trial court correct in ruling that the judicial settlement of the estate of the deceased is not necessary in this case?

Held:

Yes.

It appears from the pleadings filed herein that the petition to place the estate under administration was predicated mainly on the alleged inability of the heirs to agree on a physical division of the properties. The alleged existence of an indebtedness and noninclusion in the list incorporated in the deed of extrajudicial partition, of certain properties that form part of the estate, seemed to be merely an afterthought as the reference to them was made only in the answer to the opposition and motion for dismissal of the petition, and is riot made under oath.

There is also no allegation as to the particulars of the debt and the omitted properties sufficient to identify them. In the circumstances, we agree with the lower court that a special proceeding for the settlement of the estate of the deceased is not here necessary.

This is not to overlook the allegation that the estate has an outstanding obligation of P50,000.00. It is to be noted, however, that appellant, as heretofore observed, did not specify from whom and in what manner the said debt was contracted. Indeed, the bare allegation that "the estate has an existing debt of P50,000.00 from third persons" cannot be considered a concise statement to constitute a cause of action. It must be for this reason that the lower court, notwithstanding the existence of such averment in appellant's supplemental answer to the opposition, dismissed the petition filed by said appellant.

Nor does the unverified statement that there are other properties, not included in the deed of extrajudicial partition in the possession of one of the heirs, justify the institution of an administration proceeding because the same questions that may arise as to them, viz. the title thereto, and their partition, if proven to belong to the intestate, can be properly and expeditiously litigated in an ordinary action of partition.

PEDRO ERMAC, and his children, ELENA, CARLOS, ANTONIO, LUCIANO', HILARIO, INDALECIO and FRANCISCA, all surnamed ERMAC, petitioners, vs. CENON MEDELO and JUDGE HERNANDO PINEDA as presiding judge of Branch II of the LANAO DEL NORTE Court of First Instance, respondents.

Facts:

• Potenciano Ermac and Anastacia Mariquit died leaving a parcel of land. • Their heirs filed for the summary settlement of the estate. They presented a plan of partition. • Pedro Ermac sought to exclude Lot 1327 from the estate as it belongs to him and his wife. The court denied it saying that they should file a separate suit. • They filed a separate suit. The probate court approved the partition despite the objection of Pedro saying that the court should await the outcome of their separate suit.

Issue:

Whether or not the trial court should have waited for the outcome of the separate suit?

Held:

No.

The policy of the law is to terminate proceedings for the settlement of the estate of deceased persons with the least loss of time. This is specially true with small estates for which the rules provide precisely a summary procedure dispensing with the appointment of an administrator together with the other involved and cumbersome steps ordinarily required in tha determination of the assets of the deceased and the persons entitled to inherit therefrom and the payment of his obligations. Definitely, the probate court is not the best forum for the resolution of adverse claims of ownership of any property ostensibly belonging to the decedent's estate.

1 While there are settled exceptions to this rule as applied to regular administration proceedings,2 it is not proper to delay the summary settlement of a deceased person just because an heir or a third person claims that certain properties do not belong to the estate but to him.3 Such claim must be ventilated in an independent action, and the probate court should proceed to the distribution of the estate, if there are no other legal obstacles to it, for after all, such distribution must always be subject to the results of the suit. For the protection of the claimant, the appropriate step is to have the proper annotation of lis pendens entered.

BENNY SAMPILO and HONORATO SALACUP, petitioners, vs. THE COURT OF APPEALS and FELISA SINOPERA respondents.

Facts:

• Teodoro Tolete died, leaving his wife and nephews and nieces who are children of his deceased brothers and sisters.

• His wife executed an affidavit of self-adjudicating saying that Teodoro had no children or dependents, neither ascendants or acknowledged natural children, neither brothers, sisters, nephews and nieces..

• Then, his wife sold the property to Sampilo, then Sampilo sold it to Salacup.

• Sinopera instituted estate proceedings asking for letters of administration. She alleged that Teodoro’s wife, Leonicia de Leon has no right to execute the affidavit of self adjudication for there are other heirs aside from her.

• The trial court ruled in favor of Sinopera. The CA modified the ruling stating that the affidavit of Leonicia is null and void, but the subsequent sales are valid insofar as it is not above Leonicia’s share from Teodoro’s estate.

Issues:

The petitioners now argue that Sinopera’s cause of action has already prescribed because according to the rules of court, person’s deprived of their right due to the partition or self adjudication must bring their action within two years from the date of partition or self-adjudication. Is their contention correct?

Held:

No. The said rule applies only to persons who participated in the said proceedings and does not prejudice those who did not have the chance to participate.

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 Indicated was the persons to answer for right 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 bad 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 distributees and estate would be liable to them for such rights or interest.

Evidently, they are the persons who, 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 setlement, there is no direct or express provision, and it is unreasonable and unjust that they also be required to assert their claims within the period extend the effects of the settlement to the two years. To to them, to those who did no t 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 law.

The procedure outlined in Section 1 of Rule 74 of exrajudicial settlement or by affidavit, is ail 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 extrajudicialy 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.

The two year rule 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.

GENOVEVA BELTRAN, ET AL., plaintiffs and appellees, vs. CORAZON AYSON and FABIAN JIMENEZ, defendants and appellants.

Facts:

• Macario Beltran died. Then, his wife, Corazon Ayson and Jose de la Cruz executed an deed of partition apportioning the estate amongst themselves.

• Thereafter, nephews and nieces of the deceased appeared sought to set aside the extra-judicial partition.

• The defendants-appellants now are saying that the plaintiffs’ rights has already prescribed because the case was filed beyond two years from the date of the partition.

Issues:

Whether or not the cause of action of the plaintiffs already prescribed?

Held:

No.

This Court has previously ruled out such contention in the similar case of Sampilo, et al. vs. Court of Appeals, et al., 103 Phil., 70; 55 Off. Gaz., 5772., wherein the case of McMicking vs.. Sy Con Bieng, supra, was also cited by the appellants therein:

"* * *the provisions of Section 4 of Rule 74, barring distributees or heirs from objecting to an 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 next contention of appellants is that plaintiffs 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 sources, which shows clearly a statute of limitations and a bar of action against third persons.

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."

In the instant case, both requirements were not complied with, because not all the interested heirs have participated in the extrajudicial settlement, it being admitted that the deceased left, aside from his widow, appellant Corazon Ayson, and his half-brother, Jose de la Cruz, nephews, nieces and a sister living at the time of his death, and that the latter heirs were not aware of the deed of extrajudicial partition until shortly before the filing of their complaint (pars. 4 and 6, Stipulation of Facts).

Neither is Section 43, par. 3, of Act 190 (now Article 1146, New Civil Code), also invoked by appellants, applicable to the facts of the case. Assuming that there was fraud as the widow and half-brother of the deceased had declared in the deed of extrajudicial partition that they are the sole surviving and exclusive heirs of the late Macario Beltran, it does not appear that the fouryear period have elapsed when the action was instituted. It is interesting to note that the court a quo rejected the contention of appellees that appellant

Corazon Ayson executed the deed of extrajudicial partition fraudulently and in bad faith, while the parties stipulated that the appellees were not aware of the deed of extrajudicial partition until shortly before the filing of their complaint.

LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL, DIBARATUN MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners, vs. MOLOK BAGUMBARAN, respondent.

Facts:

• Bagumabaran sought to eject the petitioners from the parcel land registered to his name. He got it through a free patent and subsequently registered it in his name obtaining a Torrens title. • The petitioners interposed a counterclaim stating that Bagumbaran applied for a free patent through fraud, knowing that the said land was already subject to a previous application for free patent. • The trial court said that indeed there was fraud, however, it dismissed the counterclaim of the petitioners because, according to the trial court, their action has prescribed. For 4 four years has already lapsed from the date of the issuance of the Torrens title. Even though Bagumbaran acquired the property through fraud, it was adjudicated to him due to prescription.

Issue:

The petitioners contend that the prescriptive period is 10 years and not 4 years. Therefore, if it is 10 years, their action can still prosper because they brought the same 9 years after the issuance of the Torrens title. Is their contention correct?

Held:

Yes.

Indubitably, the act of respondent in misrepresenting that he was in actual possession and occupation of the property in question, obtaining a patent and Original Certificate of Title No. P-466 in his name, created an implied trust in favor of the actual possessor of the said property.

In this case, the land in question was patented and titled in respondent's name by and through his false pretenses. Molok Bagumbaran fraudulently misrepresented that he was the occupant and actual possessor of the land in question when he was not because it was Liwalug Datomanong. Bagumbaran falsely Pretended that there was no prior applicant for a free patent over the land but there was-Liwalug Datomanong.

By such fraudulent acts, Molok Bagumbaran is deemed to hold the title of the property in trust and for the benefit of petitioner Liwalug Datomanong. Notwithstanding the irrevocability of the Torrens title already issued in the name of respondent, he, even being already the registered owner under the Torrens system, may still be compelled under the law to reconvey the subject property to Liwalug Datomanong. After all, the Torrens system was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad faith.

Further, contrary to the erroneous claim of the respondent,9 reconveyance does not work to set aside and put under review anew the findings of facts of the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property, in this case the title thereof, which has been wrongfully or erroneously registered in another person's name, to its rightful and legal owner,10 or to one with a better right. That is what reconveyance is all about.

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property.16 The only discordant note, it seems, is Balbin vs. Medalla,17 which states that the prescriptive period for a reconveyance action is four years.

However, this variance can be explained by the erroneous reliance on Gerona vs. de Guzman.18 But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190, was applied, the new Civil Code not coming into effect until August 30,1950 as mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article 1456, are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an action for reconveyance of title of real property acquired under false pretenses.

Regarding the jurisprudence invoked by the respondent to support its claim that the 4 year period applies:

Significantly, the three cases cited by the respondent to buttress his position and support the ruling of the trial court have a common denominator, so to speak. The cause of action assailing the frauds committed and impugning the Torrens titles issued in those cases, all accrued prior to the effectivity of the present Civil Code. The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950, and in Ramirez, 1944. It must be remembered that before August 30, 1950, the date of the effectivity of the new Civil Code, the old Code of Civil Procedure (Act No. 190) governed prescription. It provided:

SEC. 43. Other civil actions; how limited.-Civil actions other than for the recovery of real property can only be brought within the following periods after the right of action accrues:

x x xx x x x x x

3. Within four years: x x x An action for relief on the ground of fraud, but the right of action in such case shall not be deemed to have accrued until the discovery of the fraud;

x x xx x x x x x

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription, Article 1144 of the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law; (3) Upon a judgment.