Neri vs Heirs of Hadji Yusop Uy
GR No 194366
October 10, 2012
Anunciacion, had seven children, 2 from her 1st marriage (Eutropia and Victoria), and 5 from her 2nd husband, Enrique (Napoleon, Alicia, Visminda, Douglas, and Rosa). Anunciacion and Enrique acquired several homestead properties and when Anunciacion died, Enrique in his personal capacity and as natural guardian of his two minor children Rosa and Douglas, together with, Napoleon, Alicia, and Visminda executed an Extra-Judicial Settlement of the Estate with Absolute Deed of Sale (1979) adjudicating among themselves the said homestead properties, and thereafter, sold the properties to the late spouses Uy for consideration of Php80,000.
In 1996, the children of Enrique filed a complaint for annulment of the said sale against spouses Uy, assailing the validity of the sale for having been sold within the prohibitive period, as well as for having been executed depriving the legitimes of Eutropia and Victoria, the children of Anunciacion from her first marriage.
Uy countered that the sale took place beyond the 5-year prohibitory period from the issuance of the homestead patents. They also denied knowledge of Eutropia and Victoria being excluded in the extra-judicial settlement and sale of the subject properties, and interposed further the defense of prescription and laches.
On October 25, 2004, RTC rendered a decision annulling the extra-judicial settlement of estate with Absolute Deed of Sale. It ruled that the sale is void because Eutropia and Victoria were deprived of their hereditary rights and that Enrique had no judicial authority to sell the shares of his minor children, Rosa and Douglas. RTC likewise rejected the defenses of laches and prescription raised by spouses Uy, who claimed possession of the subject properties for 17 years, holding that co-ownership rights are imprescriptible.
On appeal, however, CA reserved and set aside RTC decision.
1) Whether Enrique may sell co-owned property by him on behalf of his children in absence of judicial authority
2) Whether the action for the annulment of sale has prescribed
1) No. The petitioners are entitled to inherit from Anunciacion in equal shares pursuant to Articles 979 and 980 of the Civil Code. Hence, in the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion should have participated. Considering that Eutropia and Victoria were excluded and that then minors Rosa and Douglas were not properly represented therein, the settlement was not valid and binding upon them and consequently, a total nullity.
Doctrine: Parents should apply for judicial guardianship in order for them to sell properties of their children. Even the parents of their minor children are bound to post bond.
With respect to Rosa and Douglas who were minors at the time of the execution of the settlement and sale, their NATURAL GUARDIAN and father, Enrique, represented them in the transaction. However, on the basis of the laws prevailing at that time, Enrique was merely clothed with POWERS OF ADMINISTRATION and bereft of any authority to dispose of their 2/16 shares in the estate of their mother, Anunciacion.
Power of dominion, is granted by law only to a JUDICIAL GUARDIAN of the ward’s property and even then only with court’s prior approval secured in accordance with the proceedings set forth by the Rules.
Consequently, the disputed sale entered into by Enrique in behalf of his minor children without the proper judicial authority, unless ratified by them upon reaching the age of majority, is unenforceable in accordance with Art. 1317 and 1403(1) of the Civil Code.
2) No. On the issue of prescription, the Court agrees with petitioners that the present action has not prescribed in so far as it seeks to annul the extrajudicial settlement of the estate. Contrary to the ruling of the CA, the prescriptive period of 2 years provided in Section 1 Rule 74 of the Rules of Court reckoned from the execution of the extrajudicial settlement finds no application to petitioners Eutropia, Victoria and Douglas, who were deprived of their lawful participation in the subject estate. Besides, an “action or defense for the declaration of the inexistence of a contract does not prescribe” in accordance with Article 1410 of the Civil Code.
Records show that Rosa had ratified the extrajudicial settlement of the estate with absolute deed of sale. The same, however, is not true with respect to Douglas for lack of evidence showing ratification.
THEREFORE, the extrajudicial settlement with sale is invalid and not binding on Eutropia, Victoria and Douglas. Consequently, spouses Uy or their substituted heirs became pro indiviso co-owners of the homestead properties with Eutropia, Victoria and Douglas, who retained title to their respective shares.
New Civil Code
ART. 979. Legitimate children and their descendants succeed the parents and other ascendants, without distinction as to sex or age, and even if they should come from different marriages.
ART. 980. The children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal shares.
Art. 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe. The action or defense for the declaration of inexistence or absolute nullity of a void or inexistent contract is imprescriptible.
Rules of Court
Rule 74, Section 1. Extrajudicial settlement by agreement between heirs. – x x x
The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof. (Underscoring added)