Special Proceedings

CUA vs. VARGAS G.R. No. 156536 October 31, 2006 Rule 74, Extrajudicial Settlement

 

FACTS:

A parcel of residential land was left behind by the late Paulina Vargas. A notarized Extra Judicial Settlement Among Heirs was executed by and among the heirs, partitioning and adjudicating unto themselves the lot in question and was published for 3 weeks.

An Extra Judicial Settlement Among Heirs with Sale was again executed by and among the same heirs over the same property and also with the same sharings. Only 5 of the 9 heirs signed the document and their respective shares were sold to Joseph Cua, petitioner herein.

After knowing of such sale to petitioner, Gloria Vargas tried to redeem the property.

When the offer to redeem was refused, Gloria Vargas and her children filed a case for annulment of Extra Judicial Settlement and Legal Redemption of the lot with the MTC.

The MTC dismissed the complaint, declaring the Deed of Extra Judicial Settlement Among Heirs with Sale valid and binding.

The RTC affirmed the MTC decision.

The CA reversed the ruling of both lower courts, declaring that the Extra Judicial Settlement Among Heirs and the Extra Judicial Settlement Among Heirs with Sale were void and without any legal effect.

The CA held that, pursuant to Section 1, Rule 74 of the Rules of Court, 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.

Petitioner argued among others, that 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.

 

ISSUE:

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.

 

RULING:

 

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. It contemplates a notice that has been sent out or issued before any deed of settlement and/or partition is agreed upon (i.e., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition), and not after such an agreement has already been executed as what happened in the instant case with the publication of the first deed of extrajudicial settlement among heirs.

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.

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.

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, 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.

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.

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.

 

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