FELIX G. CRUZ, PETITIONER, VS. ROBIN CRUZ, OSIAS G. CRUZ, AND JOHN DOES, RESPONDENTS.

Cruz versus Cruz

The Case

This is a consolidated petition for review on certiorari brought by Felix Cruz against his brothers Robin Cruz and Osias Cruz, together with unnamed persons styled as John Does. The action below was one for declaration of nullity of an extrajudicial partition and settlement of estate, cancellation of transfer certificates of title, reconveyance, injunction, and damages, all arising from two parcels of land in Davao City that originally belonged to the siblings' deceased sister, Judy. The case matters because it gathers in one decision the rules a reviewee must command: the finality of a dismissal order, the two-year period to question an extrajudicial settlement, the earnest-efforts requirement under Article 151 of the Family Code, and the doctrine that a so-called waiver of inheritance rights may in truth be a donation inter vivos, valid once the elements of donation are present.

Procedural History

Felix filed his complaint before Branch 14 of the Regional Trial Court of Davao City. In an order dated the first of February 2017, that court dismissed the complaint against Osias on the strength of his affirmative defenses, chiefly the failure to comply with a condition precedent, and it denied Felix's motion to admit a third amended complaint. In an order dated the twenty-third of October 2017, the same court denied Felix's motion for reconsideration and dismissed the case against Robin on the same grounds. Felix then filed a notice of appeal. The trial court refused to give it due course as against Osias, holding that the February 2017 order had become final and executory, but allowed it as against Robin.

Three proceedings thus reached the Court of Appeals. The appeal against Robin was docketed as a special case, and in it the appellate court affirmed the dismissal. A petition for certiorari under Rule 65 challenged the trial court's refusal to give due course to the notice of appeal as against Osias, and that petition was denied. A third petition for certiorari, with a prayer for a temporary restraining order and a writ of preliminary injunction, challenged the orders of Branch 10 of the same trial court, to which the case had been re-raffled after the inhibition of the presiding judge, allowing the hearing of Osias' compulsory counterclaim to proceed. That petition was likewise denied. The Court of Appeals consolidated the three petitions, denied them all, and denied Felix's motion for reconsideration. Felix then elevated the matter to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Luis and Rosita Cruz had six children: Felix, Robin, Osias, Henry, Doris, and Judy. Judy died single and intestate in December 2004, leaving two parcels of land in Davao City, one covered by a transfer certificate of title and the other by another. Because she left no descendants, her parents Luis and Rosita succeeded to her estate by operation of law.

In May 2005, Rosita executed a waiver of rights relinquishing her rights, interests, and participation over both lots in favor of Robin and Osias. Luis executed a similar waiver later that same month. On the very day Luis executed his waiver, Robin and Osias entered into an extrajudicial partition and settlement of estate distributing the two lots between themselves. New titles were issued in their names in July 2005, one lot under Robin and the other under Osias. Doris executed her own waiver in May 2005, and Felix and Henry executed theirs in October 2007. All the waiver instruments were prepared by Felix himself, as the lawyer of the family. Rosita died in July 2009.

In December 2012, Felix filed the complaint, later amended, asserting that the lots had been invalidly transferred through the waivers and that they remained part of Rosita's estate upon her death, in which he was entitled to share as a co-heir. Osias raised failure to state a cause of action, failure to comply with Article 151 of the Family Code, estoppel, and laches. Robin raised prescription and laches, noting that more than seven years had passed since 2005. The trial court dismissed the case, and the Court of Appeals affirmed.

Issues

• Whether or not the Court of Appeals erred in affirming the trial court's denial of Felix's appeal on the ground that the February 2017 order had already attained finality.
• Whether or not Felix is estopped from impugning the validity of the extrajudicial settlement on the ground of prescription and laches.
• Whether or not the waivers of rights executed by Luis and Rosita effectively transferred ownership of the subject lots in favor of Robin and Osias.
• Whether or not, if the answer is in the affirmative, the subsequent execution of the extrajudicial settlement and partition by Robin and Osias was valid.
• Whether or not the Court of Appeals erred in upholding the trial court's orders allowing the hearing of Osias' compulsory counterclaim to proceed.

Applicable Provisions

Article 151 of the Family Code provides:

No suit between members of the same family shall prosper unless it should appear from the verified complaint or petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such efforts were in fact made, the case must be dismissed.

This is the condition precedent the trial court found unfulfilled, because the barangay confrontation Felix invoked concerned an unlawful detainer case and not this dispute.

Section 4 of Rule 74 of the Rules of Court provides:

If it shall appear at any time to the court in which proceedings are pending that a partition and distribution has been made without notice to any heir or other person interested, or that such partition and distribution was made without the knowledge of such heir or other person interested, the court may, upon the petition of such heir or other person interested, and after hearing, set aside the partition and distribution and order a new partition and distribution to be made.

This is the provision whose two-year period the Court invokes against Felix, since he sued more than seven years after the extrajudicial settlement.

Ruling

On the first issue, the Court held that the February 2017 order had attained finality. A judgment or final order of the Regional Trial Court becomes final and executory when no motion for reconsideration or appeal is taken within fifteen days from receipt of the ruling. The registry receipts Felix relied upon proved only the date of mailing to opposing counsel, not the date of filing with the court, and the post office certification did not by itself establish timely filing. Absent competent proof, the dismissal became final, and the refusal to give due course to the notice of appeal was proper.

On the second issue, the Court held that Felix was barred. He instituted the nullity complaint more than seven years after the execution of the extrajudicial settlement and partition, well beyond the two-year period under Section 4 of Rule 74. He was also estopped, having himself prepared the waiver instruments for his siblings and himself, and he could not disclaim their true import.

On the third issue, the Court held that Luis and Rosita validly donated the lots to Robin and Osias. Upon Judy's death, her rights passed to her parents by operation of law, and their rights became vested without need of a declaration that they were heirs. As owners, they had the right and capacity to dispose of the properties. Although the instruments were denominated waivers of inheritance rights, their language showed the intent to donate, for the donors acknowledged their being heirs, freely relinquished their rights in favor of their sons without consideration, and expressly authorized the transfer of ownership and registration. The elements of a donation of immovable property were sufficiently complied with: the reduction of the donors' patrimony, the increase of the donees' patrimony, the intent to do an act of liberality, the public document, and acceptance, which was shown by the notarized extrajudicial settlement and the registration of the properties, made known to the donors themselves.

On the fourth issue, the Court held that the extrajudicial settlement and partition executed by Robin and Osias was valid, since the properties had already been donated to them and they were no longer part of Rosita's estate. On the fifth issue, the Court held that the trial court did not err in proceeding with the hearing of Osias' compulsory counterclaim, as its resolution did not depend on the outcome of the main case. The petitions were denied.

Doctrine

A final order of the Regional Trial Court becomes final and executory when no motion for reconsideration or appeal is taken within fifteen days from receipt. Proof of mailing to opposing counsel is not proof of filing with the court, and a dismissal that has attained finality may no longer be disturbed.

An action to set aside an extrajudicial settlement and partition must be brought within the two-year period under Section 4 of Rule 74, counted from the settlement, and an heir who prepares the very instruments he later attacks is estopped from impugning them.

An instrument styled as a waiver of inheritance rights may be treated in substance as a donation inter vivos where its language shows liberality, the reduction of the donor's patrimony, the increase of the donee's patrimony, execution in a public document, and acceptance made known to the donor. The owner of property has the right to dispose of it without limitations other than those established by law, and heirs who succeed by operation of law may dispose of the inheritance even before any judicial declaration of heirship.

Disposition

The consolidated petitions were denied, and the decision and resolution of the Court of Appeals were affirmed, so that Robin and Osias prevailed and the dismissal of the complaint and the validity of the titles in their names stood.

Remember This

Memorize this line: a waiver of inheritance rights in favor of named children, executed in a public document and accepted by them, is a valid donation inter vivos, not a void renunciation of a future inheritance. Examiners use this case on the finality of orders and the two-year period under Rule 74, and on distinguishing a donation from a waiver of future inheritance.