Dear PAO,

My parents died in an accident two years ago. I returned from the United States a month ago and discovered that my siblings had signed an Extrajudicial Settlement of the Estate (EJS) of my deceased parents to which I was not a signatory. It was also not notarized. I am the youngest of five siblings, and I am hurt that they excluded me. What is the effect of the unnotarized EJS that they executed, as well as their action of excluding me?

Allison

Dear Allison,

Extrajudicial settlement of estate is a method of settling a deceased person’s estate, in which the deceased’s estate is distributed among one’s lawful heirs who all agree on how the estate will be divided and without the need of going to court. Section 1, Rule 74 of the Rules of Court states:

“Section 1. Extrajudicial settlement by agreement between heirs. — If the decedent left no will and no debts, and the heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized for the purpose, the parties may without securing letters of administration, divide the estate among themselves as they see fit by means of a public instrument filed in the office of the register of deeds, and should they disagree, they may do so in an ordinary action of partition. Xxx

“The parties to an extrajudicial settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit shall file, simultaneously with and as a condition precedent to the filing of the public instrument, or stipulation in the action for partition, or of the affidavit in the office of the register of deeds, a bond with the said register of deeds, in an amount equivalent to the value of the personal property involved as certified to under oath by the parties concerned and conditioned upon the payment of any just claim that may be filed under Section 4 of this rule. It shall be presumed that the decedent left no debts if no creditor files a petition for letters of administration within two years after the death of the decedent.

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

In the case of Spouses Pontigon vs. Heirs of Sanchez (GR 221513, Dec. 5, 2016, penned by Associate Justice Jose Perez), the Supreme Court concluded that a public instrument is not required for the validity of an extrajudicial settlement, to wit:

“The irregularity in the notarization is not fatal to the validity of the Extrajudicial Settlement. For even the absence of such formality would not necessarily invalidate the transaction embodied in the document — the defect merely renders the written contract a private instrument rather than a public one.

“While Art. 1358 of the New Civil Code seemingly requires that contracts transmitting or extinguishing real rights over immovable property should be in a public document, hornbook doctrine is that the embodiment of certain contracts in a public instrument is only for convenience.

“It is established in jurisprudence that non-observance of the prescribed formalities does not necessarily excuse the contracting parties from complying with their respective obligations under their covenant, and merely grants them the right to compel each other to execute the proper deed.” (Emphasis ours)

Nevertheless, it has become necessary to register the extrajudicial settlement as a public instrument. Therefore, as a rule, when the Deed of Extrajudicial Settlement of the Estate is not notarized and is in a private instrument, it is still valid, but notarization of the instrument may be required for registration purposes.

Moreover, in the case of Segura vs. Segura (GR L-29320, Sept. 19, 1988), the Supreme Court, speaking through Associate Justice Isagani Cruz, further explained that a person who had no knowledge or had not participated in the extrajudicial settlement is not bound thereby. “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.'”

Thus, the Deed of Extrajudicial Settlement of the Estate signed by your siblings is invalid as it excluded you — one of the compulsory heirs. You may question the said deed and any partition that they may have executed pursuant thereto.

We hope that we are able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

We appreciate your trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].