Cruz vs. Cruz

A waiver of inheritance rights executed by parents who have already acquired the decedent's properties by operation of law operates as a donation inter vivos of those properties, valid upon substantial compliance with the requisites of Article 749 of the Civil Code. Corollarily, a trial court order dismissing a complaint attains finality when no motion for reconsideration or appeal is taken within fifteen days from receipt, and an heir unduly deprived of a lawful participation must act within the two-year period under Rule 74, Section 4 of the Rules of Court.

Luis and Rosita Cruz had six children: Felix, Robin, Osias, Henry, Doris, and Judy. Judy died single and intestate in 2004, leaving two parcels of land in Davao City; under Article 887 of the Civil Code, her parents succeeded to her estate as legal and secondary compulsory heirs, and under Article 428 the owner of property may dispose of a thing subject only to limitations established by law. The instruments later executed within the family were measured against Article 749 of the Civil Code, which governs the form and requisites of donations of immovable property, and against Rule 74, Section 4 of the Rules of Court, which fixes a two-year period within which an heir unduly deprived of a lawful participation may compel settlement of the estate.

Luis and Rosita Cruz had six children: Felix, Robin, Osias, Henry, Doris, and Judy. Judy died on December 11, 2004, single and intestate, leaving two parcels of land in Davao City — the first with an area of 690 square meters covered by Transfer Certificate of Title No. T-265567, and the second with an area of 536 square meters covered by TCT No. T-265123. Because Judy left no descendants, her parents Luis and Rosita succeeded to her estate by operation of law.

Beginning in 2005, the family executed a series of instruments over the two lots. On May 9, 2005, Doris executed a waiver of rights relinquishing her rights, interests, and participation over both lots in favor of Robin and Osias as her co-heirs. On May 16, 2005, Rosita executed a Waiver of Rights relinquishing her rights, interests, and participation over the first and second lots in favor of Robin and Osias. Luis did the same on May 31, 2005. On the very same day that Luis executed his waiver, Robin and Osias entered into an Extrajudicial Partition and Settlement of Estate distributing the first and second lots between themselves. On July 19, 2005, new titles were issued in their names: the first lot under TCT No. T-265567 was placed under Robin's name and replaced with TCT No. T-387176, while the second lot under TCT No. T-265123 was placed under Osias' name and replaced with TCT No. T-387177. Felix and Henry executed their own waivers over the same lots on October 4, 2007, on the same terms. All the waiver instruments were admittedly prepared by Felix as the lawyer of the family.

Rosita died on July 13, 2009. On December 17, 2012, Felix filed a Complaint seeking the declaration of nullity of the extrajudicial partition and settlement of estate executed by Robin and Osias, the cancellation of the titles issued to them, and other reliefs. An Amended Complaint followed on January 21, 2013, in which Felix stated that his cause of action was based on his being an heir of Rosita. Felix contended that the subject properties received by Luis and Rosita from Judy's estate were invalidly transferred to Robin and Osias based on the waivers executed by their parents; that Robin and Osias had no authority to execute the extrajudicial settlement and partition the lots to themselves; and that the properties remained part of Rosita's estate upon her death, which he is entitled to as a co-heir. As heir and co-owner, he argued that the extrajudicial settlement should be voided under Article 1410 of the Civil Code, which provides that an action or defense for the declaration of the inexistence of a contract does not prescribe.

Osias disputed the cause of action and prayed for dismissal on the affirmative defenses of (a) failure to state a cause of action, (b) failure to comply with Article 151 of the Family Code, (c) estoppel, and (d) laches. Robin averred that the cause of action was barred by prescription, the four-year period to annul the extrajudicial partition and settlement of estate having lapsed, and by laches, more than seven years having passed from 2005. Felix then sought leave to file a Second Amended Complaint, alleging that he was unaware of the waivers executed by Luis and Rosita and seeking their declaration as void; the RTC denied the motion for procedural defects, as did his motion for reconsideration. On August 20, 2013, Felix filed another Motion for Leave to File Third Amended Complaint raising the same grounds and praying for the same reliefs.

In its February 1, 2017 Order, the RTC denied the Motion to Admit the Third Amended Complaint and dismissed the case against Osias based on his affirmative defenses, specifically Felix's failure to comply with the condition precedent of exerting earnest efforts toward a compromise before instituting the Complaint. Although Felix submitted copies of the minutes of confrontation before the Lupong Tagapamayapa dated August 23, 2010 and September 6, 2010, the RTC found that what transpired was not connected to the present case but related instead to an unlawful detainer case previously filed by Robin against Felix. The RTC further held that Felix was estopped from questioning Osias' proprietary rights over the lots because he executed a waiver over them after Robin and Osias had executed their extrajudicial settlement, and that his failure to take immediate action after Osias registered the lots — which registration it deemed notice to the whole world — barred him by prescription and laches. Felix's motion for reconsideration was denied in the October 23, 2017 Order for being filed out of time, and the RTC held that the dismissal as to Osias was final and executory; it also found that the verdict applied to Robin, who had virtually the same defenses, and set the hearing for the counterclaims.

On appeal, the CA found that the registry receipts bearing RD 652 776 856 ZZ and RD 652 776 860 ZZ, indicating March 8, 2017 as the date of posting, pertained only to the date of mailing of the motion to the counsels of Osias and Robin, respectively, and that the certification from the Davao City Central Post Office stating that the office was closed on March 16, 2017 was insufficient to establish that the motion was filed on March 8, 2017. The CA likewise found that the barangay conciliation minutes showed that only Robin and Felix attended and that the confrontation involved an unlawful detainer case. On the substance of the waivers, the CA found that when Luis and Rosita executed their waivers in favor of Robin and Osias, the same amounted to a donation inter vivos; that although Robin and Osias did not expressly show acceptance, they executed the extrajudicial settlement of estate on the very same day Luis made his waiver and thereafter applied for registration and transfer of the properties in their names, which constituted substantial compliance with the rules on donations inter vivos and was indicative of acceptance; that the waivers of Felix and his other siblings were ineffectual because they had no existing right over the lots, it being Luis and Rosita who succeeded to Judy's estate; and that Felix was estopped from impugning the validity of waivers he himself had prepared.

• Void Waivers: Felix argued that the waivers executed by Rosita and Luis in favor of Robin and Osias were void, as these were executed renouncing their right to inherit from Judy but were not valid conveyances of ownership over the subject properties.
• Absence of Acceptance and Authority: Felix pointed out that the extrajudicial partition and settlement of estate executed by Robin and Osias cannot be construed as an acceptance of their supposed inheritance, since they cannot inherit what they are not entitled to, and thus the instrument did not vest any right or title in their favor.
• Defective Donation: Felix contended that even if the waivers were treated as a donation, the requisites for the donation of an immovable property were not met and the element of animus donandi was not established, there being no indication of the cause of the renunciation and no acceptance by Robin and Osias, so that the properties remained part of Rosita's estate after her death, to which he may inherit as an heir.
• Impugnment of the Extrajudicial Settlement: Felix maintained that Robin and Osias had no authority to execute the extrajudicial settlement and partition the first and second lots to themselves, and that the settlement should be voided under Article 1410 of the Civil Code, an action for the declaration of the inexistence of a contract not being subject to prescription.

• Validity of the Transfer: Robin and Osias maintained that the CA was correct in upholding the validity of the transfer of ownership and title over the subject properties in their favor through the waivers executed by their parents.
• Real Party-in-Interest: They argued that the subject properties never formed part of Rosita's estate at the time Felix filed his Amended Complaint and that, therefore, Felix is not a real party-in-interest.
• Estoppel: They contended that Felix is estopped from assailing the validity of the extrajudicial partition and settlement of estate in view of the waiver he executed with their other siblings, Doris and Henry, over the subject properties.
• Laches: They emphasized that laches applies as regards their ownership over the properties, which had been settled as early as July 19, 2005 through the transfer of the titles under their names.
• Finality and Counterclaim: They raised that the CA did not err in affirming the RTC's denial of Felix's appeal due to the finality of the February 1, 2017 Order, and in proceeding to hear Osias' compulsory counterclaim, the resolution of which is not dependent on the outcome of the main case.

• Finality of the February 1, 2017 Order: Whether the CA erred in affirming the RTC's denial of Felix's appeal on the ground that the RTC's February 1, 2017 Order had already attained finality.
• Estoppel, Prescription, and Laches: Whether Felix is estopped from impugning the validity of the extrajudicial settlement on the ground of prescription and laches.
• Effect of the Waivers of Rights: Whether the waiver of rights executed by Luis and Rosita effectively transferred ownership of the subject lots in favor of Robin and Osias.
• Validity of the Extrajudicial Settlement and Partition: If the waivers were effective, whether the subsequent execution of the Extrajudicial Settlement and Partition by Robin and Osias was valid.
• Compulsory Counterclaim: Whether the CA erred in upholding the RTC's September 17, 2019 Order, which denied petitioner's motion to set aside order and suspend proceedings, and the February 7, 2020 Order, which denied his motion for reconsideration and allowed the hearing of Osias' compulsory counterclaim in Civil Case No. 34,818-2012.

• Finality of the February 1, 2017 Order: No. The February 1, 2017 Order attained finality when no motion for reconsideration or appeal was taken within fifteen days from receipt, pursuant to Rule 37, Section 1 of the Rules of Court, and the denial of due course to the Notice of Appeal was proper.
• Estoppel, Prescription, and Laches: Yes. Felix is estopped from impugning the waivers he himself prepared, and the nullity complaint was instituted more than seven years after the execution of the Extrajudicial Settlement and Partition, well beyond the two-year period under Rule 74, Section 4 of the Rules of Court.
• Effect of the Waivers of Rights: Yes. The waivers executed by Luis and Rosita, though so denominated, were donations inter vivos that validly transferred ownership of the subject lots to Robin and Osias under Article 749 of the Civil Code.
• Validity of the Extrajudicial Settlement and Partition: Yes. Robin and Osias validly executed the notarized Extrajudicial Settlement and Partition over properties already donated to them, and their registration and titling of the lots constituted acceptance made known to the donors.
• Compulsory Counterclaim: No error. The RTC properly proceeded to hear Osias' compulsory counterclaim, which arises out of the same transaction as the opposing party's claim and can stand for independent adjudication despite the final dismissal of the main complaint.

• Finality of the February 1, 2017 Order: A judgment or final order of the RTC is deemed final and executory when no motion for reconsideration or appeal is taken within fifteen days from receipt of the questioned ruling. Felix failed to adduce proof that he adequately moved for reconsideration of the February 1, 2017 Order. The registry receipts bearing RD 652 776 856 ZZ and RD 652 776 860 ZZ, indicating March 8, 2017 as the date of posting, pertained only to the date of mailing of the motion to the counsels of Osias and Robin, respectively, and did not establish filing with the court; neither did the certification from the Davao City Central Post Office that the office was closed on March 16, 2017 suffice to prove that the motion was filed on March 8, 2017. Absent competent proof of timely filing, the RTC Order is deemed final, and this factual determination binds the Court. As a threshold matter, the consolidated Petitions questioned the CA's appreciation of facts and assessment of evidence, but petitions under Rule 45 are limited to the review of errors of law, and none of the recognized exceptions was present.

• Estoppel, Prescription, and Laches: Felix instituted the nullity complaint more than seven years after the execution of the Extrajudicial Settlement and Partition, well beyond the two-year period contemplated under Rule 74, Section 4 of the Rules of Court, which allows an heir or other person unduly deprived of a lawful participation in an estate to compel settlement within two years after distribution. Independently, Felix and his siblings Henry and Doris admitted executing their respective waivers over their interests in the subject properties; because the properties had already been donated by Luis and Rosita, those subsequent waivers reflected an intention to relinquish any interest over the properties, including the pursuit of any right or claim in connection with them. Felix was further estopped from impugning Robin and Osias' valid titles, given his admission that he prepared the instruments for himself and his siblings, Doris and Henry; he cannot disclaim the instrument's true import by characterizing it as a donation of future inheritance, since the waivers in substance amounted to a donation of properties already acquired by Luis and Rosita from Judy.

• Effect of the Waivers of Rights: Judy, the owner of the lots formerly under TCT No. T-265567 and TCT No. T-265123, died unmarried, so the rule on intestacy applied; upon her death and by operation of law, her parents Luis and Rosita succeeded to her estate as her legal and secondary compulsory heirs. Under the Civil Code, the title or rights to a deceased person's property are immediately passed to the heirs upon death, and the heirs' rights become vested without need for them to be declared "heirs." The owner of property has the right to dispose of a thing without limitations other than those established by law. Luis and Rosita had therefore already succeeded to Judy's estate, by operation of law, when they executed the waivers as owners of the subject properties, and they had the right and capacity to dispose of the same. On the contention that the waivers were not valid donations, Article 749 of the Civil Code requires, for the validity of a donation of an immovable: (a) the essential reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; (c) the intent to do an act of liberality or animus donandi; (d) that the donation be contained in a public document; and (e) that acceptance be made in the same deed or in a separate public instrument, with notice to the donor in authentic form and notation in both instruments if acceptance is made separately. These requisites were sufficiently complied with. The donations were made during the lifetime of Luis and Rosita, resulting in the reduction of their properties as donors and an increase in the patrimonies of Robin and Osias as donees; the wording of the waivers revealed that Luis and Rosita acknowledged their being heirs to Judy and freely and voluntarily relinquished and waived their rights and interests over the subject properties in favor of Robin and Osias without consideration; they expressly authorized the transfer to their sons of ownership over the properties and their improvements, as well as registration; and the waivers were contained in a public document, having been acknowledged before a notary public. The language and tenor of the instruments evinced the intention to donate. Robin and Osias thereafter executed a notarized Extrajudicial Settlement and Partition over the same properties and proceeded to register them and secure new titles in their names — acts consistent with acceptance embodied in a public instrument — and such acceptance was made known to the donors, Luis and Rosita, who were the very parties who executed the notarized waivers expressly authorizing the transfer. For these reasons, Felix failed to establish a right superior to that of respondents over the subject properties.

• Validity of the Extrajudicial Settlement and Partition: Because Luis and Rosita had already transferred ownership of the lots to Robin and Osias by donation inter vivos, the subject properties no longer formed part of Rosita's estate at the time Felix filed his Amended Complaint, and the subsequent notarized Extrajudicial Settlement and Partition executed by Robin and Osias over properties already donated to them was valid. The registration of the properties and the issuance of new titles in their names, coupled with the express authorization to transfer contained in the waivers, supplied the acceptance required for a valid donation and confirmed the transfer of ownership.

• Compulsory Counterclaim: A compulsory counterclaim arises out of the same transaction constituting the subject matter of the opposing party's claim. With the dismissal of the main complaint having attained finality, the RTC properly proceeded to hear Osias' counterclaim. Osias' counterclaim is not dependent on the survival of the main Complaint for the declaration of nullity of the extrajudicial settlement and partition, since it can stand for independent adjudication by the court; it sought the payment of damages, attorney's fees, and costs arising from the filing of the action and may be adjudicated based on evidence independent of the merits of Felix's complaint. The pendency of the CA proceedings invoked by Felix did not, by itself, warrant suspension, especially absent a clear showing that continuation would render the issues before the higher court moot.

• Requisites of a donation of immovable property — Under Article 749 of the Civil Code, a donation of an immovable is valid only upon compliance with five requisites: (a) the essential reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; (c) the intent to do an act of liberality or animus donandi; (d) the donation must be contained in a public document; and (e) the acceptance thereof must be made in the same deed or in a separate public instrument, and if made in a separate instrument, the donor must be notified thereof in an authentic form, to be noted in both instruments. The Court applied the requisites to the waivers executed by Luis and Rosita, finding all of them sufficiently complied with.
• Waiver of inheritance rights as a donation inter vivos — An instrument denominated as a waiver of rights or waiver of inheritance rights, executed by heirs who have already acquired the decedent's properties by operation of law, is in substance a donation inter vivos of properties already acquired and not a renunciation of a future inheritance. The Court so characterized the waivers of Luis and Rosita in favor of Robin and Osias, holding that the language and tenor of the instruments evinced an intention to donate.
• Vesting of heirs' rights upon death — Under the Civil Code, the title or rights to a deceased person's property are immediately passed to the heirs upon death, and the heirs' rights become vested without need for them to be declared "heirs." Because Judy died unmarried and intestate, Luis and Rosita succeeded to her estate as legal and secondary compulsory heirs by operation of law, and thus had the right and capacity to dispose of the properties when they executed the waivers.
• Right of ownership and disposal — Under Article 428 of the Civil Code, the owner of property has the right to dispose of a thing without limitations other than those established by law. This sustained the validity of the dispositions made by Luis and Rosita as owners of the lots.
• Finality of judgments — A judgment or final order of the RTC is deemed final and executory when no motion for reconsideration or appeal is taken within fifteen days from receipt of the questioned ruling under Rule 37, Section 1 of the Rules of Court. The failure of Felix to timely file a motion for reconsideration clothed the February 1, 2017 Order with finality, and the denial of due course to the Notice of Appeal was proper.
• Two-year period for relief of a deprived heir — Under Rule 74, Section 4 of the Rules of Court, an heir or other person unduly deprived of a lawful participation in an estate may compel settlement of the estate within two years after the settlement and distribution of the estate. Felix's complaint, filed more than seven years after the execution of the Extrajudicial Settlement and Partition, was well beyond this period.
• Estoppel against the preparer of an instrument — A party who himself prepared the instruments by which his siblings waived their interests over the subject properties cannot disclaim the instrument's true import by characterizing it as a donation of future inheritance. Felix was estopped from impugning the validity of the waivers he had prepared.
• Compulsory counterclaim surviving dismissal of the main complaint — A compulsory counterclaim arises out of the same transaction constituting the subject matter of the opposing party's claim and may stand for independent adjudication by the court even after the dismissal of the main complaint has attained finality. The RTC therefore properly proceeded to hear Osias' counterclaim for damages, attorney's fees, and costs.
• Rule 45 limited to errors of law — Petitions for Review on Certiorari under Rule 45 are limited to the review of errors of law, and the Court is not obliged to review all over again the evidence adduced in the court a quo. The exceptions to this rule were not present in the case.

• "Under the Civil Code, in order for a donation of an immovable property to be valid, the following elements must be present: (a) the essential reduction of the patrimony of the donor; (b) the increase in the patrimony of the donee; (c) the intent to do an act of liberality or animus donandi; (d) the donation must be contained in a public document; and (e) that the acceptance thereof be made in the same deed or in a separate public instrument; if acceptance is made in a separate instrument, the donor must be notified thereof in an authentic form, to be noted in both instruments." — This is the Court's canonical enumeration of the requisites of a donation of immovable property under Article 749 of the Civil Code, which supplied the framework for testing the validity of the waivers executed by Luis and Rosita.
• "That I have no interest whatsoever to inherit any portion of said lands; hence, I hereby renounce, relinquish, and abandon forever whatever right, interest and participation over said two (2) parcels of land and its improvement thereon in favor of my sons, Robin G. Cruz and Osias G. Cruz, who are likewise heirs to inherit the belongings of the decedent." — Quoted from the waiver instruments, this language was the basis for the Court's holding that the documents, though denominated as waivers, were in substance donations inter vivos evincing the donors' intent to transfer ownership to Robin and Osias.
• "It is well-established that a judgment or final order of the RTC is deemed final and executory when no motion for reconsideration or appeal is taken within 15 days from receipt of the questioned ruling." — This states the ratio for the threshold ruling that the February 1, 2017 Order had attained finality, foreclosing Felix's appeal against Osias and rendering the dismissal of the complaint final and executory.
• "Under the Civil Code, the title or rights to a deceased person's property are immediately passed to his or her heirs upon death and the heirs' rights become vested without need for them to be declared 'heirs.'" — This defines the doctrine of vesting of successional rights upon death, which established that Luis and Rosita became owners of the subject lots by operation of law and therefore had the capacity to donate them.

• Heirs of Gregorio Lopez vs. Development Bank of the Philippines, 747 Phil. 427, 437 (2014) — Cited as the controlling authority for the rule that the title or rights to a deceased person's property are immediately passed to the heirs upon death and become vested without need for a declaration of heirship, which underpinned the holding that Luis and Rosita owned the subject lots when they executed the waivers.
• Bonilla vs. Barcena, 163 Phil. 516, 520 (1976) — Cited in Heirs of Gregorio Lopez as the antecedent authority for the immediate vesting of successional rights upon the decedent's death.
• Heirs of Florencio vs. Heirs of De Leon, 469 Phil. 459, 474 (2004) — Cited together with Article 749 of the Civil Code as the authority for the requisites of a valid donation of immovable property, which the Court applied in upholding the waivers as donations inter vivos.

• Article 887, Civil Code — Cited for the rule on legal and secondary compulsory heirs, which made Luis and Rosita the successors to Judy's estate upon her death as her parents, she having died unmarried and without descendants.
• Article 428, Civil Code — Cited for the owner's right to dispose of a thing without limitations other than those established by law, which supported the holding that Luis and Rosita had the right and capacity to dispose of the subject properties.
• Article 749, Civil Code — Cited for the requisites of a donation of immovable property; the Court found that the waivers executed by Luis and Rosita substantially complied with these requisites and were therefore valid donations inter vivos.
• Article 1410, Civil Code — Invoked by Felix for the proposition that an action or defense for the declaration of the inexistence of a contract does not prescribe; the Court did not sustain the argument, holding instead that the action was barred by the two-year period under Rule 74, Section 4 and by estoppel and laches.
• Article 151, Family Code — Cited as the condition precedent requiring earnest efforts toward a compromise before instituting suit among family members; the RTC dismissed the complaint against Osias for Felix's failure to comply with it, and the CA affirmed.
• Rule 37, Section 1, Rules of Court — Cited for the rule that a judgment or final order of the RTC is deemed final and executory when no motion for reconsideration or appeal is taken within fifteen days from receipt, the ground for holding the February 1, 2017 Order final.
• Rule 74, Section 4, Rules of Court — Quoted in full and applied; it fixes a two-year period after settlement and distribution within which an heir or other person unduly deprived of a lawful participation may compel settlement of the estate, and charges the bond and the deceased's real estate with liability for that period. Felix's complaint, filed more than seven years after the extrajudicial settlement, was time-barred.
• Rule 45, Rules of Court — Cited for the rule that petitions for review are limited to the review of errors of law and that the Court is not obliged to re-examine the evidence adduced below, subject to exceptions none of which were present.
• Rule 65, Rules of Court — The procedural vehicle for the two Petitions for Certiorari filed by Felix assailing the denial of his Notice of Appeal and the orders allowing the hearing of Osias' compulsory counterclaim, both of which the CA denied for lack of merit.

Leonen, SAJ. (Chairperson), Lazaro-Javier, Kho, Jr., and Villanueva, JJ., concur.