Spouses Rol vs. Racho

An extrajudicial settlement of estate executed without the knowledge and consent of a legal heir is null and void, and a co-owner may validly alienate only his undivided aliquot interest in co-owned property—not a definite portion thereof—without the unanimous consent of all co-owners; where the co-owner's intent to sell such aliquot interest is established through an oral contract supported by consideration, the conveyance of that inchoate share is valid, but a gratuitous transfer of a definite portion partakes of a donation of immovable property that must comply with the formal requisites of a public instrument and acceptance.

Loreto Urdas was the registered owner of Lot No. 1559, a 1,249-square-meter parcel of land in Gonzaga, Cagayan, covered by Original Certificate of Title No. O-1061. He died on August 6, 1963, without issue, leaving his four siblings—Fausto Urdas, Sr., Chita Urdas, Maria Urdas Baclig, and Isabel Urdas Racho—as his intestate heirs under Articles 1003 and 1004 of the Civil Code. Upon Loreto's death, the siblings became co-owners of the property in equal shares pursuant to Article 1078 of the Civil Code, each holding an inchoate one-fourth interest pending partition of the estate. No proper settlement proceedings were conducted; instead, three of the four siblings, together with Fausto's son Allan, executed an extrajudicial settlement with sale that purported to subdivide and alienate the property without Isabel's participation.

Loreto Urdas was the registered owner of Lot No. 1559, a 1,249-square-meter parcel of land in Gonzaga, Cagayan, covered by Original Certificate of Title No. O-1061. He died on August 6, 1963, without issue, leaving his siblings Fausto Urdas, Sr., Chita Urdas, Maria Urdas Baclig, and Isabel Urdas Racho as his intestate heirs. No proper settlement proceedings were conducted for his estate.

Sometime before the filing of the complaint, Isabel discovered that Lot No. 1559 had been subdivided into two equal 624.50-square-meter portions denominated as Lot Nos. 1559-A and 1559-B. She further discovered that, despite Loreto's death in 1963, petitioners Spouses Benny and Normita Rol had made it appear that Loreto sold the subdivided lots to them through a Deed of Absolute Sale of Portion of Registered Land dated September 1, 2006 and a Deed of Sale of a Portion of Land dated June 19, 2012, respectively. New titles—Transfer Certificates of Title Nos. T-156992 and 032-2012004566—were issued in petitioners' names. Isabel was constrained to file a complaint for reivindicacion and damages before the RTC against, inter alia, petitioners.

Petitioners, for their part, asserted that sometime in 1993, they were looking to purchase a parcel of land and met Fausto's wife Leoncia and son Allan, who offered to sell them one-half of Lot No. 1559 for ₱25,000.00, to which they agreed. On September 13, 1993, Fausto, Chita, Maria, and Allan executed an Extra-Judicial Settlement with Sale concerning the subject lot, whereby the lot was subdivided equally into Lot Nos. 1559-A and 1559-B; Lot No. 1559-A was adjudicated to Fausto, Chita, and Maria, who then sold it to petitioners for the aforementioned amount; and Lot No. 1559-B was adjudicated to Allan. Petitioners built a house on Lot No. 1559-A and occupied it peacefully. In 2010, petitioners purchased Lot No. 1559-B from Allan and Leoncia through a Deed of Sale of a Portion of Land dated September 26, 2011. Petitioners claimed open, continuous, and peaceful possession of Lot No. 1559-A since 1993 and Lot No. 1559-B since 2010, until Isabel filed the complaint in June 2013.

The RTC found the deeds of sale dated September 1, 2006 and June 19, 2012 void for being forgeries, as Loreto had died in 1963 and could not have signed those instruments. It also declared the EJSS void for having been executed without Isabel's knowledge and consent, and consequently voided the Deed of Sale dated September 26, 2011 as a subsequent transfer emanating from the EJSS. The RTC nonetheless found petitioners to be purchasers in good faith, requiring them to reconvey only 312.25 square meters to Isabel. On appeal, the CA affirmed the RTC but modified the ruling by declaring the sale by Fausto, Chita, and Maria to petitioners valid only as to their respective undivided interests in half of Lot No. 1559, deleting the award of actual damages, and ruling that petitioners were buyers in bad faith due to their failure to inquire into the capacity of the sellers and the whereabouts of Loreto, the registered owner.

• Validity of Acquisition: Petitioners maintained that they acquired Lot No. 1559-A and Lot No. 1559-B through valid deeds of sale, having purchased the former from Fausto, Chita, and Maria in 1993 for valuable consideration and the latter from Allan and Leoncia in 2010, and that they had been in open, continuous, and peaceful possession of the lots since 1993 and 2010, respectively.
• Innocent Purchasers for Value: Petitioners argued that they were purchasers in good faith, having acquired Lot No. 1559 for valuable consideration without knowledge that their title was a product of fraud.
• Laches: Petitioners contended that Isabel was guilty of laches, alleging that she knew of the sales for more than twenty years but failed to assert her right within a reasonable time.

• Validity of Conveyance: Whether the CA correctly ruled that the conveyance of Lot No. 1559 to petitioners is null and void, except as to the portion in Lot No. 1559-A pertaining to Fausto, Chita, and Maria which is deemed valid.
• Status of the EJSS: Whether the Extra-Judicial Settlement with Sale dated September 13, 1993 is valid notwithstanding the exclusion of Isabel, a co-heir.
• Co-owner's Right to Alienate: Whether a co-owner may validly sell a definite portion of co-owned property without the consent of all co-owners, or only his undivided aliquot interest.
• Gratuitous Adjudication to a Non-Heir: Whether the adjudication of Lot No. 1559-B to Allan, a non-heir, in the EJSS is valid.
• Innocent Purchaser for Value: Whether petitioners may be considered innocent purchasers for value notwithstanding the forged deeds and the EJSS executed without Isabel's consent.
• Laches: Whether Isabel's claim is barred by laches.

• Validity of Conveyance: No. The conveyance of definite portions of Lot No. 1559 to petitioners is null and void, except that Fausto, Chita, and Maria's sale of their undivided aliquot interest to petitioners is recognized as valid to the extent of 3/8 of the whole property.
• Status of the EJSS: No. The EJSS is null and void for having been executed without the knowledge and consent of Isabel, a legal heir and co-owner of Loreto's intestate estate.
• Co-owner's Right to Alienate: No. A co-owner may not sell a definite portion of co-owned property without the consent of all co-owners; he may alienate only his undivided aliquot interest, limited to the portion that may be allotted to him upon partition.
• Gratuitous Adjudication to a Non-Heir: No. The gratuitous conveyance of a definite portion to Allan partakes of a donation of immovable property, which must be made in a public instrument with acceptance in the same deed or a separate public instrument; since the only document of record is the void EJSS, the donation is void.
• Innocent Purchaser for Value: No. Petitioners were put on guard when they learned that the property was registered in the name of another person with whom they were not dealing; their failure to question the authority of the sellers negated their claim of good faith.
• Laches: No. Isabel's claim is not barred by laches, petitioners' allegation that she knew of the sales for more than twenty years being unsubstantiated by evidence on record.

• Validity of Conveyance: The forged deeds purportedly executed by Loreto in 2006 and 2012 are null and void, it being impossible for a person who died in 1963 to have signed instruments decades later. The EJSS is likewise null and void because it was executed without the knowledge and consent of Isabel, a co-heir. A deed of extrajudicial partition executed to the total exclusion of any legal heir who had no knowledge of or consent to its execution is fraudulent, vicious, and a total nullity, producing no effect whatsoever either against or in favor of anyone. Consequently, the subdivision of Lot No. 1559 into Lot Nos. 1559-A and 1559-B and the alienation of those definite portions are null and void. However, the Court recognized that Fausto, Chita, and Maria intended to sell one-half of their inchoate interest over Lot No. 1559 to petitioners—not through the EJSS but via an oral contract of sale—and in fact received proper compensation therefor. The elements of a contract of sale (consent, determinate subject matter, and price certain in money) were present. Thus, petitioners validly acquired one-half of Fausto, Chita, and Maria's aggregate three-fourths interest, or a total of 3/8 interest, over Lot No. 1559.

• Status of the EJSS: The EJSS was executed by Fausto, Chita, Maria, and Allan without Isabel's knowledge or consent. Under a consistent catena of cases, an extrajudicial partition that totally excludes a legal heir is a total nullity. Isabel, as a sibling of Loreto, was a legal heir under Articles 1003 and 1004 of the Civil Code, entitled to an equal share in the estate. Her exclusion rendered the EJSS fraudulent and void, and all acts flowing from it—including the subdivision and the adjudications—produced no legal effect.

• Co-owner's Right to Alienate: Pursuant to Article 493 of the Civil Code, each co-owner has full ownership of his part and may alienate, assign, or mortgage it, but the effect of the alienation with respect to the co-owners is limited to the portion that may be allotted to him upon partition. Relying on Cabrera vs. Ysaac, the Court held that if alienation precedes partition, a co-owner cannot sell a definite portion of the land without the consent of all co-owners; he can sell only his undivided interest. The undivided interest is the "ideal or abstract quota" or "proportionate share," while the definite portion refers to specific metes and bounds, usually determined only during judicial or extrajudicial partition. Because the EJSS attempted to convey definite portions without Isabel's consent, those conveyances were void. But because Fausto, Chita, and Maria were free to dispose of their undivided aliquot shares, their intent to sell one-half of their inchoate interest to petitioners was recognized as valid through an oral contract of sale.

• Gratuitous Adjudication to a Non-Heir: The adjudication of Lot No. 1559-B to Allan was gratuitous and thus partook of a donation of real property. Under Article 749 of the Civil Code and established jurisprudence, a donation of immovable property must be contained in a public instrument, and acceptance must be made in the same deed or in a separate public instrument. The only document of record purporting to comply with these requisites was the EJSS, which was null and void. Consequently, the donation to Allan was void, and Allan and Leoncia's subsequent sale of the same portion to petitioners had no legal effect under the maxim nemo dat quod non habet. Fausto, Chita, and Maria retained their remaining inchoate interest of 1/8 each.

• Innocent Purchaser for Value: An innocent purchaser for value is one who buys property without notice that another person has a right to or interest in it, and who pays a full and fair price at the time of purchase or before receiving notice of another's claim. The CA correctly observed that petitioners should have been put on guard when they learned that the property was registered in the name of Loreto, a person with whom they were not dealing. Their failure to question the authority of the sellers and to investigate the whereabouts of the registered owner negated their claim of good faith.

• Laches: Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier. Petitioners' allegation that Isabel knew of the sales for more than twenty years was self-serving and unsubstantiated by evidence. Absent clear and convincing proof, Isabel's claim could not be barred by laches, particularly since she was deprived of her hereditary share without her knowledge or consent.

• Nullity of Extrajudicial Settlement Excluding a Legal Heir — A deed of extrajudicial partition executed to the total exclusion of any legal heir who had no knowledge of and consent to its execution is fraudulent, vicious, and a total nullity. It produces no effect whatsoever either against or in favor of anyone. In this case, the EJSS was void because Isabel, a co-heir and co-owner of Loreto's intestate estate, was excluded therefrom.

• Co-Owner's Right to Alienate: Aliquot Interest vs. Definite Portion — Before partition, a co-owner may alienate only his undivided, aliquot interest (the "ideal or abstract quota" or "proportionate share") in co-owned property, and not a definite portion defined by specific metes and bounds. A sale of a definite portion requires the unanimous consent of all co-owners because it operates to partition the land with respect to the selling co-owner. The effect of any alienation is limited to the portion that may be allotted to the co-owner upon termination of the co-ownership (Article 493, Civil Code). In this case, Fausto, Chita, and Maria could not sell a definite half of Lot No. 1559 to petitioners, but their intent to sell one-half of their inchoate interest was recognized as valid through an oral contract of sale supported by consideration.

• Donation of Immovable Property: Formal Requisites — A donation of immovable property must be made in a public instrument, and acceptance must be made either 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, noted in both instruments (Article 749, Civil Code). The essential elements are: (a) reduction of the donor's patrimony; (b) increase in the donee's patrimony; (c) animus donandi; (d) the donation in a public document; and (e) acceptance in the same deed or a separate public instrument. In this case, the gratuitous adjudication of Lot No. 1559-B to Allan partook of a donation but failed to comply with these requisites, as the only document was the void EJSS.

• Forged Deeds Are Null and Void — Forged deeds of sale are null and void and convey no title. A person who died in 1963 could not have executed deeds of sale in 2006 and 2012; those instruments are forgeries and produce no legal effect.

• Inchoate Rights of Heirs Before Partition — Under Article 777 of the Civil Code, rights to succession are transmitted from the moment of death of the decedent. Under Article 1078, where there are two or more heirs, the whole estate is, before partition, owned in common by such heirs. Although an heir's right over the property of the decedent is inchoate as long as the estate has not been fully settled and partitioned, the law allows a co-owner to exercise rights of ownership over such inchoate right. In this case, because the EJSS was invalidated, Loreto's estate had yet to undergo proper settlement, and ownership of Lot No. 1559 remained in the estate, with the parties holding only inchoate interests.

• Innocent Purchaser for Value — An innocent purchaser for value is one who buys property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of purchase or before receiving notice of another's claim. A buyer is put on guard when the property is registered in the name of a person other than the seller, and failure to inquire into the seller's authority negates good faith.

• Laches — Laches is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier. It is not established by self-serving, unsubstantiated allegations; clear and convincing proof is required.

• "If the alienation precedes the partition, the co-owner cannot sell a definite portion of the land without consent from his or her co-owners. He or she could only sell the undivided interest of the co-owned property. As summarized in Lopez v. Illustre, '[i]f he is the owner of an undivided half of a tract of land, he has a right to sell and convey an undivided half, but he has no right to divide the lot into two parts, and convey the whole of one part by metes and bounds.'" — This passage, quoted from Cabrera vs. Ysaac, articulates the controlling doctrine on the distinction between a co-owner's alienable aliquot interest and a non-alienable definite portion, the central legal question in this case.

• "Hence, prior to partition, a sale of a definite portion of common property requires the consent of all co-owners because it operates to partition the land with respect to the co-owner selling his or her share. The co-owner or seller is already marking which portion should redound to his or her autonomous ownership upon future partition." — This passage explains the rationale for requiring unanimous consent: a sale of a definite portion effectively pre-partitions the property, prejudicing the rights of non-consenting co-owners.

• "Otherwise stated, absent any proper settlement proceeding for Loreto's estate due to the nullity of the EJSS, the ownership of Lot No. 1559 remains in the said estate, with the aforementioned parties only having inchoate interests therein." — This passage states the Court's ultimate disposition: because the EJSS was void, the estate was never properly settled, and ownership remained with the decedent's estate, with the parties holding only inchoate interests pending partition.

• Cabrera vs. Ysaac, 747 Phil. 187 (2014) — Controlling precedent on the rule that a co-owner may alienate only his undivided interest, not a definite portion, without the consent of all co-owners. The Court quoted extensively from this decision to establish the distinction between aliquot interest and definite portion.

• Tolentino vs. Spouses Latagan, 761 Phil. 108 (2015) — Cited for the doctrine that forged deeds of sale are null and void and convey no title.

• Cruz vs. Cruz, G.R. No. 211153, February 28, 2018 — Cited among a catena of cases holding that an extrajudicial partition excluding a legal heir is fraudulent, vicious, and a total nullity.

• Fullido vs. Grilli, 781 Phil. 840 (2016) — Cited for the proposition that a void extrajudicial settlement produces no effect whatsoever either against or in favor of anyone.

• Heirs of Salvador Hermosilla vs. Spouses Remoquillo, 542 Phil. 390 (2007) — Cited for the maxim nemo dat quod non habet, applied to hold that Allan's void transfer to petitioners produced no legal effect.

• Leong vs. See, 749 Phil. 314 (2014) — Cited for the definition of an innocent purchaser for value.

• Pangasinan vs. Disonglo-Almazora, 762 Phil. 492 (2015) — Cited for the definition of laches.

• Alejandrino vs. CA, 356 Phil. 851 (1998) — Cited for the doctrine that although an heir's right over the decedent's property is inchoate before settlement and partition, the law allows a co-owner to exercise rights of ownership over such inchoate right.

• Article 493, Civil Code — Provides that each co-owner has full ownership of his part and may alienate, assign, or mortgage it, but the effect of the alienation or mortgage with respect to the co-owners is limited to the portion that may be allotted to him upon division. Applied to hold that Fausto, Chita, and Maria could alienate only their undivided aliquot interests, not definite portions of Lot No. 1559.

• Article 777, Civil Code — Provides that rights to succession are transmitted from the moment of death of the decedent. Applied to establish that the heirs acquired inchoate rights over Lot No. 1559 upon Loreto's death in 1963.

• Article 1078, Civil Code — Provides that where there are two or more heirs, the whole estate of the decedent is, before partition, owned in common by such heirs. Applied to establish co-ownership among the four siblings over Lot No. 1559.

• Articles 1003 and 1004, Civil Code — Provide that collateral relatives succeed to the entire estate when there are no descendants, ascendants, illegitimate children, or surviving spouse, and that brothers and sisters of the full blood inherit in equal shares. Applied to establish that Loreto's four siblings were his intestate heirs, each entitled to an equal one-fourth share.

• Article 749, Civil Code — Requires that a donation of immovable property be made in a public instrument, with acceptance in the same deed or in a separate public instrument. Applied to hold that the gratuitous adjudication of Lot No. 1559-B to Allan, partaking of a donation, was void for noncompliance with these formal requisites.

Gesmundo, Lopez, and Rosario, JJ., concurred.

• Lazaro-Javier, J. — The case text indicates that Lazaro-Javier, J. filed a Concurring and Dissenting Opinion, but the substance of that opinion is not included in the provided text. The specific points of concurrence and dissent cannot be determined from the material provided.