G.R. No. 156536 – 536 Phil.

1082 – 506 SCRA 374 – Remedial Law – Special

Proceedings – Settlement of Estate – Rule 74; Extrajudicial Settlement – An
extra-judicial settlement does not bind heirs that did not participate therein

Paulina Vargas died intestate leaving behind a parcel of land. Paulina’s

heirs executed an extra-judicial settlement but only five of the heirs
signed it. The other four, including Gloria Vargas, did not sign the extra-
judicial settlement (EJS). The copy of the EJS was published in a newspaper
of general circulation.

Thereafter in February 1994, the same heirs who signed again executed
another EJS with deed of sale in favor of Joseph Cua.

In June 1995, Gloria learned about the sale to Cua. She also learned about
the publication of the EJS. She then wrote a letter to Cua exercising her
right to redeem the property.

Cua refused to reconvey the property to Gloria. Cua argued that the EJS
had been published yet Gloria did nothing; that her 30-day period, under
Article 1088 of the Civil Code, to redeem had lapsed.

Thereafter, Gloria filed an action to annul the EJS with Sale before the MTC
of Virac, Catanduanes. The MTC and the RTC ruled in favor of Cua. The
Court of Appeals reversed the decisions of the MTC and the RTC. Cua now
appeals before the Supreme Court averring, among others, that the MTC
had no jurisdiction over the case because the action was one which is
incapable of pecuniary estimation.

ISSUE: Whether or not the EJS bound Gloria.

HELD: No. 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.
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.

The heirs who actually participated in the EJS may still sell their hereditary
rights though. But insofar as the heirs who did not participate, the
property is still unpartitioned. Hence, for those who did not participate,
they may exercise their right to redeem under Article 1088 of the Civil
Code:

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.

SIDE ISSUE: The MTC had no jurisdiction and lack of jurisdiction is a

defense that may be raised at any time of the proceeding, may Cua still
raise the MTC’s lack of jurisdiction?

No more. Cua is already estopped. In fact, he won in the MTC. He did not
immediately question the jurisdiction of the MTC. Cua actively participated
in the proceedings below and sought affirmative ruling from the lower
courts to uphold the validity of the sale to him of a portion of the subject
property embodied in the extrajudicial settlement among heirs. Having
failed to seasonably raise this defense, he cannot, under the peculiar
circumstances of this case, be permitted to challenge the jurisdiction of
the lower court at this late stage. While it is a rule that a jurisdictional
question may be raised at any time, an exception arises where estoppel
has already supervened. He is only raising the issue because he lost on
appeal.

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