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NAPOLEON D. NERI v. HEIRS OF HADJI YUSOP UY

FACTS:

Anunciacion Neri had seven children, two from her first marriage and five from her second marriage with Enrique Neri. During their marriage, Anunciacion and Enrique acquired several homestead properties. Anunciacion died intestate in 1977. In 1979, Enrique and his children from his second marriage executed an Extra-Judicial Settlement of the Estate with Absolute Deed of Sale, adjudicating and conveying the homestead properties to the heirs of spouses Hadji Yusop Uy and Julpha Ibrahim Uy.

In 1996, the children of Enrique filed a complaint to annul the sale, alleging that it violated the prohibited period. The Regional Trial Court ruled in favor of the children, declaring the sale void due to the exclusion of two heirs and Enrique's lack of authority to sell the shares of his minor children. However, the Court of Appeals reversed the decision, holding that while the excluded heirs could recover their legitimes, the sale was valid with respect to Enrique and his children.

The petitioners, the excluded heirs, filed a petition for review arguing that the CA erred in upholding the validity of the extrajudicial settlement as to their shares and in not annulling the settlement with respect to the shares of the minors. The Supreme Court granted the petition, finding the settlement null and void as to the excluded heirs but valid as to the shares of Enrique and his children.

ISSUES:

  1. Whether the partition in question was null and void.

  2. Whether the subsequent sale made by certain heirs in favor of the respondents is valid.

  3. Whether Enrique, as the natural guardian of his minor children, had the authority to dispose of their shares in the estate.

  4. Whether the sale entered into by Enrique in behalf of his minor children is enforceable.

  5. Whether the extrajudicial settlement of the estate is valid and binding on all parties.

  6. Whether the Absolute Deed of Sale in favor of the spouses Uy is valid.

  7. Who are the lawful owners of the 3/16 portions of the subject homestead properties.

RULING:

  1. The partition in question was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property. The right of the excluded heirs to challenge the partition did not prescribe after two years from its execution.

  2. While the settlement of the estate is null and void, the subsequent sale made by certain heirs in favor of the respondents is valid but only with respect to their proportionate shares in the properties.

  3. Enrique, as the natural guardian of his minor children, did not have the authority to dispose of their shares in the estate.

  4. The sale entered into by Enrique in behalf of his minor children is unenforceable unless ratified by them upon reaching the age of majority.

  5. The extrajudicial settlement of the estate is declared null and void.

  6. The Absolute Deed of Sale in favor of the spouses Uy is declared valid.

  7. Eutropia D. Illut-Cockinos, Victoria D. Illut-Piala and Douglas D. Neri are declared as the lawful owners of the 3/16 portions of the subject homestead properties.

PRINCIPLES:

  • Section 1 of Rule 74 does not apply to null and void partitions.

  • No extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.

  • The subsequent sale of an estate is valid with respect to the proportionate shares of the selling heirs.

  • The natural guardian of a minor under parental authority does not have the power to dispose or encumber the property of the minor.

  • Contracts entered into by someone without authority or legal representation are unenforceable unless ratified.

  • Ratification of a contract means voluntarily adopting and giving sanction to an unauthorized act, which makes the contract binding retroactively.

  • Ratification of a settlement of the estate and subsequent sale purges all defects in the conveyance.

  • A person can only sell what they own or are authorized to sell.

  • Co-owners are entitled to full ownership of their respective shares and may alienate, assign, or mortgage it.

  • The effect of an alienation or mortgage with respect to co-owners is limited to the portion which may be allotted to them in the division upon the termination of the co-ownership.

  • Property acquired through mistake or fraud creates an implied trust for the benefit of the person from whom the property comes.

  • Actions or defenses for the declaration of the inexistence of a contract do not prescribe.

  • The action to recover property held in trust prescribes after 10 years from the time the cause of action accrues, which is from the time of actual notice in case of an unregistered deed.