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FIRST DIVISION

[ G.R. No. 211153, February 28, 2018 ]

AMPARO S. CRUZ; ERNESTO HALILI; ALICIA H. FLORENCIO;

DONALD HALILI; EDITHA H. RIVERA; ERNESTO HALILI, JR.; AND
JULITO HALILI, PETITIONERS, V. ANGELITO S. CRUZ, CONCEPCION
S. CRUZ, SERAFIN S. CRUZ, AND VICENTE S. CRUZ, RESPONDENTS.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] seeks to set aside the June 25, 2013
Decision[2] and January 29, 2014 Resolution[3] of the Court of Appeals (CA) in CA G.R.
CV. No. 96345 which, respectively, granted herein respondents' appeal and reversed
the June 1, 2010 Decision[4] of the Regional Trial Court of San Mateo, Rizal, Branch 75
(RTC) in Civil Case No. 1380-98 SM, and denied petitioners' motion for reconsideration
thereto.

Factual Antecedents

In an Amended Complaint[5] filed on April 6, 1999 and docketed with the RTC as Civil
Case No. 1380-98 SM, respondents Angelito S. Cruz, Concepcion S. Cruz.
(Concepcion), and Serafin S. Cruz alleged that they - together with their siblings,
petitioner Amparo S. Cruz (Amparo) and Antonia Cruz (Antonia) inherited a 940-
square-meter parcel of land (the subject property) from their late parents, spouses
Felix and Felisa Cruz, which land was covered by Original Certificate of Title No. ON-
658, that on July 31, 1986, the parties executed a deed of extrajudicial settlement of
estate covering the subject property, on the agreement that each heir was to receive an
equal portion of the subject property as mandated by law; that in 1998, when the
subject property was being subdivided and the subdivision survey plan was shown to
respondents, they discovered that Antonia was allocated two lots, as against one (1)
each for the respondents; that Antonia's allocation of two lots contravened the
agreement among the heirs that they would receive equal shares in the subject
property; that Amparo and Antonia were able to perpetrate the fraud by inducing
Concepcion - who was illiterate - to sign the deed of extrajudicial settlement of estate,
which was written in the English language, without previously reading and explaining
the contents thereof to the latter; that Amparo and Antonia fraudulently took
advantage of Concepcion's ignorance and mental weakness, deceiving and cajoling her
into signing the deed of extrajudicial settlement, to her damage and injury; and that
Antonia passed away, but left as her heirs herein petitioners Ernesto Halili, Alicia H.
Florencio, Donald Halili, Editha H. Rivera, Ernesto Halili, Jr. and Julito Halili, who are in
possession of the two lots allocated to Antonia. Respondents thus prayed, as follows:

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In view of the foregoing, it is respectfully prayed that after due hearing,

judgment be rendered as follows:

1. Declaring null arid void the extra-judicial settlement executed

by the parties on July 31, 1986;

2. Declaring one of the lots adjudicated to defendant Antonia

Cruz-Halili to the common fund;

3. For such other relief just and equitable under the

circumstances;

4. To pay the cost of this suit.[6]

In their Answer,[7] petitioners prayed for dismissal, claiming that the July 31, 1986
deed of extrajudicial settlement of estate had been voluntarily and freely executed by
the parties, free from vitiated consent; that respondents' cause of action has
prescribed; that the complaint failed to state a cause of action; and that no earnest
efforts toward compromise have been made. By way of counterclaim petitioners prayed
for an award of moral and exemplary damages, attorney's fees, and costs of suit.

Ruling of the Regional Trial Court

After trial, the RTC rendered its Decision dated June 1, 2010, pronouncing as follows:

From the foregoing, the main issue is whether or not the extrajudicial
settlement is null and void on grounds of fraud, deceit, misrepresentation or
mistake.

xxxx

Besides, while the Extra-Judicial Settlement was executed and signed on

July 13, 1986[8] x x x, and alleged fraud was discovered on May 12, 1986
when subdivision survey was conducted x x x and defendants started to
build their houses x x x this petition was filed only on August 14, 1998 or
more than 10 years from date of execution or date of discovery of alleged
fraud. Under Art. 1144 Civil Code, actionable documents prescribes [sic] in
10 years. However, if a property is allegedly acquired thru fraud or mistake,
the person obtaining it is, by force of law, considered an implied trustee for
the benefit of the person deprived of it, in which case the action based
thereon is 10 years from date of registration of the extra-judicial settlement
or issuance of new certificate of title (Art. 1456 Civil Codex x x). Hence, this
petition is not barred by prescription. As the period is not too long nor short,
laches has not yet set in.

Moreover, fraud, as basis of the Complaint, is not delineated therein with

particularity. Under Sec. 5 Rule 8, fraud must be alleged specifically, not
generally. Nonetheless, apart from such allegations, no clear and convincing
evidence was presented by plaintiffs. For one, while plaintiff Concepcion
Cruz. Enriquez is admittedly only grade 3 and could hardly understand
English as what is written in the extra-judicial settlement which was not

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even allegedly fully explained to her, it appears that she can absolutely read
and write, and understand English albeit not fully. And as she is deeply
interested in her inheritance share, she is aware of the import and
consequences of what she executed and signed. For the past 10 years, there
is no way she could feign ignorance of the alleged fraud and make passive
reactions or complaint thereof. Being adversely interested in the property,
her apprehensions were purely in the state of her mind, if not unilateral and
afterthought.

Secondly, just like any other contracts, parties in an extra-judicial

settlement are given wide latitude to stipulate terms and conditions they feel
fair and convenient beneficial to one and prejudicial to the other. By tradition
and good customs, equality is relaxed if only to buy peace, or out of
compassion or courtesy. So long as not contrary to strict provisions of the
law, the supremacy of contracts shall be respected.

Being consensual, extra-judicial settlement is deemed perfected once mutual

consent is manifested. Notarization being a mere formality, whatever its
infirmity cannot invalidate a contract but at most, merely ensue to
administrative sanction on the part of their notary. Even so, unless a strong
clear and convincing evidence is shown, a document, one appeared
notarized [sic], becomes a public document. As between a public document
and mere allegations of plaintiffs, the former prevails x x x.

Thirdly, for the past 10 years from 1996 [sic] when they forged an extra-
judicial settlement and defendants admittedly started constructing their
house and even made a subdivision survey, plaintiffs also occupied their
allotted lots but never complain [sic] and even attended their reunions x x x.
Other heirs also waived or sold shares to Amparo and Antonia Cruz x x x.
Parties were even unified and unanimous in surrendering dominion of their
parents' ancestral house in favor of Antonia Cruz alone x x x. As such, two
lots would necessarily accrue to Antonia Cruz, and only one lot each should
belong to other heirs. If the heirs are contented and unanimously
conformable, it is quite absurd that only plaintiff Concepcion Cruz-Enriquez
was disagreeable and yet, after the lapse of 10 years. Her conduct then
belies her present claim of being defrauded and prejudiced x x x. And in the
interpretation of stipulations, clarification may be had from such subsequent
acts of the parties x x x. Even so, in case of conflict or dual interpretations,
its validity shall be preferred x x x.

Fourthly, other than simply alleging that her sisters Amparo Cruz and
Antonia Cruz prepared the extra-judicial settlement, and made a house-to-
house visit to have it signed by their brothers and sisters including plaintiff
Concepcion Cruz-Enriquez, no other independent facts aliunde has [sic] been
adduced to substantiate or the least corroborate actual fraud. Fraud cannot
be presumed. It must be proven. Mere allegation is not evidence. Rather, if
ever both defendants were eager to have it signed, their motive appears to
be solely to reduce in writing their imperfect title over a thing already pre-
owned.

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Peremptorily, following the tenet "allegata et non probata," he who alleges

has the burden of proof. Thus, the burden of proof lies on the pleader. He
cannot be allowed to draw preponderance of evidence on the weakness of
the respondent. Otherwise, the relief being sought must necessarily fail x x
x Hence, this case must be dismissed.

And as plaintiffs filed this petition relying on their unilateral perception that
plaintiff Concepcion Cruz-Enriquez was prejudiced by the 2 lots for
defendant Antonia Cruz, they and defendants shall each bear their own costs
of litigation and defense.

WHEREFORE, premises considered, the Complaint is hereby ordered

DISMISSED. Costs de-officio.

SO ORDERED.[9] (Citations omitted)

Ruling of the Court of Appeals

Respondents appealed before the CA, which completely reversed and set aside the
RTC's judgment and the parties' deed of extrajudicial settlement. The appellate court
held:

The sole issue in this case is whether the consent given by appellant
Concepcion to the subject extrajudicial settlement of estate was given
voluntarily.

We hold that it was not.

Although the action commenced by appellants before the trial court was a
declaration of nullity of the deed of extrajudicial settlement of estate,the
case was clearly an action to annul the same. A distinction between an
action for annulment and one for declaration of nullity of an agreement is
called for.

An action for annulment of contract is one filed where consent is vitiated by

lack of legal capacity of one of the contracting parties, or by mistake,
violence, intimidation, undue influence or fraud. By its very nature,
annulment contemplates a contract which is voidable, that is, valid until
annulled. Such contract is binding on all the contracting parties until
annulled and set aside by a court of law. It may be ratified. An action for
annulment of contract has a four year prescriptive period.

On the other hand, an action tor declaration of nullity of contract

presupposes a void contract or one where a1l of the requisites prescribed by
law for contracts are present but the cause, object or purpose is contrary to
law, morals, good customs, public order or public policy, prohibited by law or
declared by law to be void. Such contract as a rule produces no legal and
binding effect even if it is not set aside by direct legal action. Neither may it
be ratified. An action for the declaration of nullity of contract is
imprescriptible.

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The appellants' pleading was for declaration of nullity of the deed of

extrajudicial settlement of estate. However, this did not necessarily mean
that appellants' action was dismissible.

Granting that the action filed by appellants was incompatible with their
allegations, it is not the caption of the pleading but the allegations that
determine the nature of the action. The court should grant the relief
warranted by the allegations and the proof even if no such relief is prayed
for. In this case, the allegations in the pleading and the evidence adduced
point to no other remedy but to annul the extrajudicial settlement of estate
because of vitiated consent.

The essence of consent is the agreement of the parties on the terms of the
contract, the acceptance by one of the offer made by the other. It is the
concurrence of the minds of the parties on the object and the cause which
constitutes the contract. The area of agreement must extend to all points
that the parties deem material or there is no consent at all.

To be valid, consent must meet the following requisites: (a) it should be

intelligent, or with an exact notion of the matter to which it refers; (b) it
should be free; and (c) it should be spontaneous. Intelligence in consent is
vitiated by error; freedom by violence, intimidation or undue influence; and
spontaneity by fraud.

Here, appellant Concepcion clearly denied any knowledge of the import and
implication of the subject document she signed, the subject extra-judicial
settlement. She asserted that she does not understand English, the
language in which the terms of the subject document she signed was
written. To quote a part of her testimony, translated in English, as follows:

Q: Did you have occasion to read that document before

you affixed your signature on it?
A: The document was written in English and me as well as
my brothers and sisters, we trusted our younger sister,
Sir.

Q: That is why you signed the document even though you

did not understand the same?
A: Yes, sir.

Court:
Did you not ask your younger sister Amparo to read
this document considering it was in English? I will
reform the question.

Q: But you don't know how to read English?

A: No, your Honor.

Q: When you saw that the document was in English, did

you not ask your younger sister to read the document
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before you affixed your signature?

A: No, your Honor.

Q: Why did you not ask Amparo to read the document to

you considering that it was in English and you don't
understand English?
A: Parti-partihan daw po at nagtiwala ako, your Honor.

Appellant Concepcion invoked Articles 24 and 1332 of the Civil Code of the
Philippines, which provide:

ART. 24. In all contractual, property or other relations, when one

of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age
or other handicap, the courts must be vigilant tor his protection.

ART. 1332. When one of the parties is unable to read, or if the

contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show
that the terms thereof have been fully explained to the former. x
xx

Article 1332 was a provision taken from [A]merican law, necessitated by the
fact that there continues to be a fair number of people in this country
without the benefit of a good education or documents have been written in
English or Spanish. Thee provision was intended to protect a party to a
contract disadvantaged by illiteracy, ignorance, mental weakness or some
other handicap. It contemplates a situation wherein a contract is entered
into but the consent of one of the contracting parties is vitiated by mistake
or fraud committed by the other.

Thus, in case one of the parties to a contract is unable to read and fraud is
alleged, the person enforcing the contract must show that the terms thereof
have been fully explained to the former. Where a party is unable to read,
and he expressly pleads in his reply that he signed the voucher in question
'without knowing its contents which have not been explained to him,' this
plea is tantamount to one of mistake or fraud in the execution of the
voucher or receipt in question and the burden is shifted to the other party to
show that the former fully understood the contents of the document; and if
he fails to prove this, the presumption of mistake (if not fraud) stands
unrebutted and controlling.

Here, at the time appellant Concepcion signed the document in question,

she was with appellee Amparo. Appellant could not possibly have read the
contents of the extra-judicial settlement and could not have consented to a
contract whose terms she never knew nor understood. It cannot be
presumed that appellant Concepcion knew the contents of the extra-judicial
settlement. Article 1332 of the Civil Code is applicable in these
circumstances.

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Although under Art. 1332 there exists a presumption of mistake or error

accorded by law to those who have not had the benefit of a good education,
one who alleges any defect or the lack of a valid consent to a contract must
establish the same by full, clear and convincing evidence, not merely by
preponderance of evidence. Hence, even as the burden of proof shifts to the
defendants x x x to rebut the presumption of mistake, the plaintiff x x x who
allege(s) such mistake (or fraud) must show that his personal circumstances
warrant the application of Art. 1332.

In this case, the presumption of mistake or error on the part of appellant

Concepcion was not sufficiently rebutted by appellees. Appellees failed to
offer any evidence to prove that the extrajudicial settlement of estate was
explained in a language known to the appellant Concepcion, i.e. in Pilipino.
Clearly, appellant Concepcion, who only finished Grade 3, was not in a
position to give her free, voluntary and spontaneous consent without having
the document, which was in English, explained to her in the Pilipino. She
stated in open court that she did not understand English. Her testimony as
quoted above is instructive.

Due to her limited educational attainment, appellant Concepcion could not

understand the document in English. She wanted to seek assistance.
However, due to the misrepresentation, deception and undue pressure of her
sister appellee Amparo, petitioner signed the document. Appellant
Concepcion was assured that she would receive her legitimate share in the
estate of their late parents.

Later on, appellant Concepcion found out that appellee Antonia received two
(2) lots compared to her siblings, including appellant Concepcion, who
respectively received one (1) lot each. This was a substantial mistake clearly
prejudicial to the substantive interests of appellant Concepcion in her
parent's estate. There is no doubt that, given her lack of education,
appellant Concepcion is protected by Art. 1332 of the Civil Code. There is
reason to believe that, had the provisions of the extrajudicial agreement
been explained to her in the Pilipino language, she would not have
consented to the significant and unreasonable diminution of her rights.

Atty. Edgardo C. Tagle, the officer who notarized the extrajudicial settlement
did not state that he explained the contents to all the parties concerned, The
records or the subject document for that matter, do not reflect that he
explained the contents of the document to appellant Concepcion nor to the
other parties in a language or dialect known to all of them. Significantly, the
appellants even denied their presence during the notarization of the
document.

Therefore, the presumption of mistake under Article 1332 is controlling,

having remained unrebutted by appellees. The evidence proving that the
document was not fully explained to appellant Concepcion in a language
known to her, given her low educational attainment, remained
uncontradicted by appellees x x x the consent of petitioner was invalidated
by a substantial mistake or error, rendering the agreement voidable. The
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deed of extrajudicial settlement between appellants and appellees should

therefore be annulled and set aside on the ground of mistake.

In Rural Bank of Caloocan, Inc. v. Court of Appeals, the Supreme Court

ruled that a contract may be annulled on the ground of vitiated consent,
even if the act complained of is committed by a third party without the
connivance or complicity of one of the contracting parties. It found that a
substantial mistake arose from the employment of fraud or
misrepresentation. The plaintiff in that case was a 70-year old unschooled
and unlettered woman who signed an unauthorized loan obtained by a third
party on her behalf. The Court annulled the contract due to a substantial
mistake which invalidated her consent.

By the same reasoning, if it is one of the contracting parties who commits

the fraud or misrepresentation, such contract may all the more be annulled
due to substantial mistake.

In Remalante v. Tibe, the Supreme Court ruled that misrepresentation to an

illiterate woman who did not know how to read and write, nor understand
English, is fraudulent. Thus, the deed of sale was considered vitiated with
substantial error and fraud. x x x

xxxx

Evidently, the applicable prescriptive period to institute the action to annul

the deed of extrajudicial settlement was four (4) years counted from the
discovery of fraud as held in the case of Gerona v. De Guzman.[10] The
records show that appellants' complaint was filed on 17 August 1998 or
twelve (12) years from the execution of the deed. However, as appellants
are deemed to have obtained constructive notice of the fraud upon the
publication of the same in a newspaper on June 5, 10 and 27, 1995, this
Court rules that the present action has not prescribed.

Based on the foregoing, the trial court erred in ruling as it did. WHEREFORE,
premises considered, the appealed Decision dated 1 June 2010 of the
Regional Trial Court (RTC), Branch 75, San Mateo, Rizal is REVERSED. The
extrajudicial settlement of the estate of Felix Cruz is hereby ANNULLED and
SET ASIDE.

SO ORDERED.[11] (Other citations omitted)

Petitioners filed their Motion for Reconsideration, which was denied via the second
assailed January 29, 2014 Resolution. Hence, the instant Petition.

In a November 9, 2015 Resolution,[12] this Court resolved to give due course to the
Petition.

Issues

Petitioners claim that the CA erred in ruling that the respondents' cause of action for
annulment has not prescribed, and that it ignored contemporaneous and subsequent

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acts of respondents indicating the absence of fraud or vitiation of consent in the

execution of the deed of extrajudicial settlement of the estate of Felix Cruz.

Petitioners' Arguments

In their Petition and Reply[13] seeking reversal of the assailed CA dispositions,

petitioners essentially insist that respondents' cause of action for annulment has
prescribed, since they filed Civil Case No. 1380-98 SM only in 1998, or 12 years after
the execution of the deed of extrajudicial settlement of estate on July 31, 1986; that
pursuant to Article 1144 of the Civil Code,[14] a cause of action based upon a written
contract - such as the subject deed of extrajudicial settlement - must be brought within
10 years from the execution thereof; that even assuming that the four-year
prescriptive period based on fraud applies as the CA ruled, respondents' cause of action
already prescribed, as the case was filed only in 1998, while the supposed fraud may
be said to have been discovered in 1986, when they learned of the survey being
conducted on the subject property; that respondents' actions belied their claim, in that
they did not object when petitioners built their home on the lots allotted to them and
never registered any objection even during family gatherings and occasions; that the
subject deed of extrajudicial settlement - being a notarized document - enjoys the
presumption of regularity and integrity, and may only be set aside by clear and
convincing evidence of irregularity; that it is a matter of judicial notice that a pre-war
third-grader has the education of a high school student; and that the findings of the
trial court must be given weight and respect.

Respondents' Arguments

In their Comment[15] seeking denial of the Petition, respondents reiterate the

correctness of the CA's assailed Decision; that the deed of extrajudicial settlement,
being written in English, was calculated to defraud Concepcion - who could not read nor
write in said language; that owing to the fact that she trusted petitioners, who were her
sisters, she was cajoled into signing the deed without knowing it contents; that the
deed was notarized in the absence of most of the parties thereto; that the prescriptive
period to be applied is not the 10-year period under Article 1144, but the four year
period as held by the CA, to be computed from the discovery of the fraud - since
respondents discovered the fraud only in 1998; and that the factual issues raised by
petitioners have been passed upon by the CA, and are thus not reviewable at this
stage.

Our Ruling

The Court denies the Petition.

The present action involves a situation where one heir was able - through the expedient
of an extrajudicial settlement that was written in a language that is not understood by
one of her co-heirs - to secure a share in the estate of her parents that was greater
than that of her siblings, in violation of the principle in succession that heirs should
inherit in equal shares.

Thus, Antonia - represented in this case by her surviving heirs - received two lots as
against her siblings, including respondent Concepcion, who respectively received only

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one lot each in the subject 940 square-meter property. This she was able to achieve
through the subject 1986 deed of extrajudicial settlement - which was written in
English, a language that was not known to and understood by Concepcion given that
she finished only Grade 3 elementary education. With the help of Amparo, Antonia was
able to secure Concepcion's consent and signature without the benefit of explaining the
contents of the subject deed of extrajudicial settlement. For this reason, Concepcion did
not have adequate knowledge of the contents and ramifications of the subject deed of
extrajudicial settlement; she was left unaware of the sharing arrangement contained
therein, and realized it only when Antonia attempted to subdivide the subject property
in 1998, and the plan of subdivision survey was shown to Concepcion- which revealed
that Antonia obtained two lots. Consequently, Concepcion filed Civil Case No. 1380-98
SM on August 17, 1998.

In short, this is a simple case of exclusion in legal succession, where co-heirs were
effectively deprived of their rightful share to the estate of their parents who died
without a will - by virtue of a defective deed of extrajudicial settlement or partition
which granted a bigger share to one of the heirs and was prepared in such a way that
the other heirs would be effectively deprived of discovering and knowing its contents.

Under the law, "[t]he children of the deceased shall always inherit from him in their
own right, dividing the inheritance in equal shares."[16] In this case, two of
Concepcion's co-heirs renounced their shares in the subject property; their shares
therefore accrued to the remaining co-heirs, in equal shares as well.[17]

In Bautista v. Bautista,[18] it was held that —

As gathered from the above-quoted portion of its decision, the Court of

Appeals applied the prescriptive periods for annulment on the ground of
fraud and for reconveyance of property under a constructive trust.

The extra-judicial partition executed by Teofilos co-heirs was invalid,

however. So Segura v. Segura[19] instructs:

x x x The partition in the present case was invalid because it

excluded six of the nine heirs who were entitled to equal shares
in the partitioned property. Under the rule, 'no extra-judicial
settlement shall be binding upon any person who has not
participated therein or had no notice thereof.' As the partition was
a total nullity and did not affect the excluded heirs, it was not
correct for the trial court to hold that their right to challenge the
partition had prescribed after two years x x x

The deed of extra-judicial partition in the case at bar being invalid, the
action to have it annulled does not prescribe.

The above pronouncement was reiterated in Neri v. Heirs of Hadji Yusop Uy,[20] where
the Court ruled:

Hence, in the execution of the Extra-Judicial Settlement of the Estate with

Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion

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should have participated. Considering that Eutropia and Victoria were

admittedly excluded and that then minors Rosa and Douglas were not
properly represented therein, the settlement was not valid and binding upon
them and consequently, a total nullity.

Section 1, Rule 74 of the Rules of Court provides:

SECTION 1. Extrajudicial settlement by agreement between heirs.

-xxx

The fact of the extrajudicial settlement or administration shall be

published in a newspaper of general circulation in the manner
provided in the next succeeding section; but no extrajudicial
settlement shall be binding upon any person who has not
participated therein or had no notice thereof. x x x

The effect of excluding the heirs in the settlement of estate was further
elucidated in Segura v. Segura, thus:

It is clear that Section 1 of Rule 74 does not apply to the partition

in question which was null and void as far as the plaintiffs were
concerned. The rule covers only valid partitions. The partition in
the present case was invalid because it excluded six of the rune
heirs who were entitled to equal shares in the partitioned
property. Under the rule 'no extrajudicial settlement shall be
binding upon any person who has not participated therein or had
no notice thereof.' As the partition was a total nullity and did not
affect the excluded heirs, it was not correct for the trial court to
hold that their right to challenge the partition had prescribed
after two years from execution...

However, while the settlement of the estate is null and void, the subsequent
sale of the subject properties made by Enrique and his children, Napoleon,
Alicia and Visminda, in favor of the respondents is valid but only with
respect to their proportionate shares therein. It cannot be denied that these
heirs have acquired their respective shares in the properties of Anunciacion
from the moment of her death and that, as owners thereof, they can very
well sell their undivided share in the estate.

xxxx

On the issue of prescription, the Court agrees with petitioners that the
present action has not prescribed in so far as it seeks to annul the
extrajudicial settlement of the estate. Contrary to the ruling of the CA the
prescriptive period of 2 years provided in Section 1 Rule 74 of the Rules of
Court reckoned from the execution of the extrajudicial settlement finds no
application to petitioners Eutropia, Victoria and Douglas, who were deprived
of their lawful participation in the subject estate. Besides.. an 'action or
defense for the declaration of the inexistence of a contract does not
prescribe' in accordance with Article 1410 of the Civil Code. (Citations
omitted)
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Then again, in The Roman Catholic Bishop of Tuguegarao v. Prudencio,[21] the above
pronouncements were echoed, thus:

Considering that respondents-appellees have neither knowledge nor

participation in the Extra-Judicial Partition, the same is a total
nullity. It is not binding upon them. Thus, in Neri v. Heirs of Hadji Yusop
Uy, which involves facts analogous to the present case, we ruled that:

[I]n the execution of the Extra-Judicial Settlement of the Estate

with Absolute Deed of Sale in favor of spouses Uy, all the heirs of
Anunciacion should have participated. Considering that Eutropia
and Victoria were admittedly excluded and that then minors Rosa
and Douglas were not properly represented therein, the
settlement was not valid and binding upon them and
consequently, a total nullity.

xxx

The effect of excluding the heirs in the settlement of estate was

further elucidated in Segura v. Segura, thus:

It is clear that Section 1 of Rule 74 does not apply to

the partition in question which was null and void as far
as the plaintiffs were concerned. The rule covers only
valid partitions. The partition in the present case was
invalid because it excluded six of the nine heirs who
were entitled to equal shares in the partitioned
property. Under the rule 'no extrajudicial settlement
shall be binding upon any person who has not
participated therein or had no notice thereof.' As the
partition was a total nullity and did not affect the
excluded heirs, it was not correct for the trial court to
hold that their right to challenge the partition had
prescribed after two years from its execution x x x
(Emphasis supplied; citations omitted)

Thus, while the CA was correct in ruling in favour of Concepcion and setting aside the
subject deed of extrajudicial settlement, it erred in appreciating and ruling that the
case involved fraud - thus applying the four-year prescriptive period - when it should
have simply held that the action for the declaration of nullity of the defective deed of
extrajudicial settlement does not prescribe, under the circumstances, given that the
same was a total nullity. Clearly, the issue of literacy is relevant to the extent that
Concepcion was effectively deprived of her true inheritance, and not so much that she
was defrauded.

With the foregoing disposition, the other issues raised by the petitioners are deemed
resolved.

WHEREFORE, the Petition is DENIED. The subject July 31, 1986 Extrajudicial
Settlement of Estate is hereby DECLARED NULL AND VOID, and thus ANNULLED
and SET ASIDE. Costs against the petitioners.
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SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Jardeleza, and Tijam, JJ., concur.

[1] Rollo, pp. 6-24.

[2] Id. at 47-61; penned by Associate Justice Socorro B. Inting and concurred in by

Associate Justices Jose C. Reyes, Jr. and Mario V. Lopez.

[3] Id. at 79-110.

[4] Id. at 40-46; penned by Presiding Judge Manuel R. Taro.

[5] Id. at 25-30.

[6] Id. at 28.

[7] Id. at 31-38.

[8] Should be "July 31, 1986."

[9] Rollo, pp. 43-46.

[10] 120 Phil. 149 (1964).

[11] Rollo, pp. 52-60.

[12] Id. at 123-124.

[13] Id. at 113-121.

[14] Art. 1144. The following actions must be brought within ten years from the time

the right of action accrues:

(1) Upon a written contract;

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

[15] Rollo, pp. 95-106.

[16] CIVIL CODE, Article 980.

[17] CIVIL CODE, Article 1015. Accretion is a right by virtue of which, when two or more

persons are called to the same inheritance, devise or legacy, the part assigned to the
one who renounces or cannot receive his share, or who died before the testator, is
added or incorporated to that of his co-heirs, co-devisees, or colegatees.

Article 1018. In legal succession the share of the person who repudiates the inheritance
shall always accrue to his co-heirs.

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Article 1019. The heirs to whom the portion goes by the right of accretion take it in the
same proportion that they inherit.

Article 1020. The heirs to whom the inheritance accrues shall succeed to all the rights
and obligations which the heir who renounced or could not receive it would have had.

[18] 556 Phil. 40, 46 (2007).

[19] 247-A Phil. 449, 456 (1988).

[20] 697 Phil. 217, 225-230 (2012).

[21] G.R. No. 187942, September 7, 2016, 802 SCRA 319, 331-332.

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