4. Deed of Extrajudicial Settlement of Estate

Good reasons

When all the heirs are of lawful age and there are no debts due from the estate, they may agree in writing to partition the property without instituting the judicial administration or applying for the appointment of an administrator.

It does not preclude the heirs from instituting administration proceedings, even if the estate has no debts or obligations, if they do not desire to resort for good reasons to an ordinary action for partition.

Recourse to an administration proceeding even if the estate has no debts is sanctioned only if the heirs have good reasons for not resorting to an action for partition. (Pereira v. CA, G.R. No. L-81147, 1989; Arcillas v. Montejo, G.R. No. L-21725, 1968)

Extrajudicial Settlement: on whom binding

Persons who did not participate nor had notice of an extrajudicial settlement would not be bound thereby. Publication that binds the world contemplates notice that has been sent out or issued before any deed of settlement, partition, or both, is agreed upon, and not after such an agreement has already been executed. (Cua v. Vagas, G.R. No. 156356, 2006)

When heirs may exercise right:

• There has been undue deprivation of lawful participation on the estate on the part of an heir or other interested person;
• There exist debts against the estate; or
• There has been undue deprivation of lawful participation payable in money on the part of an heir or other interested persons

Note: The 2-year period is not a prescriptive period. There is nothing [in Sec. 4] which shows clearly a statute of limitations and a bar of action against third persons. It is only a bar against the parties who had taken part in the extrajudicial proceedings but not against third persons not parties thereto (Sampilo and Salacup v. CA, G.R. No. L-10474, 1958).