Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-26170

January 27, 1969

THE GOVERNMENT SERVICE INSURANCE SYSTEM, plaintiff,

vs.
SUSANA, ROMUALDO, JULIAN, MACARIO A., MOISES, MACARIO, C., ADRIANO,
CELESTINA and LUISA, all surnamed CUSTODIO, defendants.
Ernesto Escobar for plaintiff.
Jalandoni and Jamir for defendant-cross-claimant-appellee Susana Custodio.
Manuel T. Muro for other defendants-cross-claimants-appellees.
REYES, J.B.L., J.:
Originally elevated to the Court of Appeals, this case was certified to this Supreme Court as
one involving only questions of law.
Proceedings were initiated on 10 June 1958, in the Court of First Instance of Rizal, by the
Government Service Insurance System (a non-stock corporation created by Commonwealth Act
186) by a complaint in interpleader (docketed as Civil Case No. 5037) for the determination of
who, among the several defendants, is entitled to the retirement benefits, in the amount of
P8,339.36, that fell due to a deceased member of the System, one Simeon Custodio.
Defendant-cross-claimant-appellee Susana Custodio, a surviving sister of the decedent and the
aunt of the other defendants, claims to be the sole beneficiary thereof; but her nephews and
nieces contest her recognition as such and claim to be entitled to share in the proceeds by right
of representation of their deceased fathers, who are three (3) brothers of the late Simeon. These
nephews and nieces (defendants-cross-claimants-appellees in this case) are the following:
Macario, C., Macario A., Luisa, David, Romualdo, Julian, Moises, Adriano and Celestina, all
surnamed "Custodio".
After responsive pleadings were filed, and the issues joined, a pre-trial was held but the parties
failed to arrive at an amicable settlement. They, however, submitted a stipulation of facts, as
follows:

1. That the late SIMEON CUSTODIO, who during his lifetime was a member of the Retirement
Insurance Fund administered by plaintiff GOVERNMENT SERVICE INSURANCE SYSTEM, died
intestate at Tanay, Rizal, on February 16, 1957;
2. That said SIMEON CUSTODIO was survived by his only sister, SUSANA CUSTODIO and his
nephews and nieces, namely ROMUALDO, JULIAN, MACARIO A., MOISES, MACARIO, C.,
ADRIANO, CELESTINA, LUISA and DAVID, all surnamed CUSTODIO;
3. That shortly after the death of SIMEON CUSTODIO, there was found among his personal
belongings an undated and unsigned application form for Retirement accomplished by said
SIMEON CUSTODIO wherein his sister, SUSANA CUSTODIO was named the beneficiary,
although said application form was never submitted to the Government Service Insurance
System. Photostat copy of said application for retirement is hereto attached as Annex "A" and
made an integral part of this Stipulation of Facts;1awphil.t
4. That on July 7, 1957, at the residence of Leon K. Tongohan, son-in-law of Susana Custodio
at Tanay, Rizal, SUSANA, ROMUALDO, JULIAN, MACARIO A., MOISES, ADRIANO, and
CELESTINA, all surnamed CUSTODIO, and JULIA TONGOHAN executed a document entitled
"Extra Judicial Settlement of Estate Among Heirs' which provides, among other things that "(c)
For any amount due the decedent SIMEON CUSTODIO, holder of GSIS policy No. 73557, our
Aunt Susana Custodio as the decedent's only living sister, is hereby recognized by the
aforementioned heirs as the sole and only beneficiary of the decedent SIMEON CUSTODIO,
and giving unto our Aunt Susana Custodio the right to file, sign and receive whatever retirement
pay under Republic Act 660, as amended by Rep. Acts Nos. 728 and 1123, and other
amendments thereto". Copy of said Extra Judicial Settlement of Estate Among Heirs, which
consist of four (4) pages, without, page 5, is hereto attached as Annex "B" and made an integral
part of this Stipulation of Facts;
5. That on July 8, 1957 ROMUALDO, JULIAN, MOISES, MACARIO A., ADRIANO, CELESTINA,
LUISA and MACARIO, C. all surnamed CUSTODIO, wrote a letter to the Manager of the
Government Service Insurance System stating, among other things that they "inadvertently
signed on July 7, 1957, without properly having understood, a document whereby it was made
to appear therein that the aforementioned persons are waiving their claim on the benefits legally
accruing to the aforementioned deceased". A duplicate copy of said letter is hereto attached as
Annex "C" and made an integral part of this Stipulation."
It will thus be noted from the stipulation of facts and its annexes that the deceased retiree,
Simeon Custodio had one (1) sister, appellee Susana Custodio and three (3) brothers, namely,
Vicente, Crispin and Jacinto, who had predeceased him; that the appellants are the children of
these brothers; that two (2) among these children are both named "Macario" (Macario A. and
Macario C.; that the children, Macario C., Luisa, and David Custodio did not sign the deed of

extrajudicial settlement; and that Macario C. is the only child of Crispin, while Luisa and David
are two (2) of the six (6) children of Jacinto.
From her opposition to the motion for reconsideration dated 20 April 1960, appellee Susana
Custodio made clear her non-opposition to the division of the estate where Macario C. Luisa
and David would share per stirpes (Record on Appeal, pages 55-56).
In submitting their Stipulation of Facts for approval, the parties prayed the trial court "to resolve
the questions of law raised in said stipulation of facts".
On 2 January 1960, the trial court approved the Stipulation of Facts and required the
interpleading defendants to submit their memoranda "within fifteen (15) days on a question of
law", with the understanding that the case shall be considered submitted for decision on said
issue after the filing of the memoranda or upon expiration of the period herein required".
Without submitting other evidence, the defendants-claimants filed their respective memoranda,
and, on 10 March 1960, the trial court rendered its decision in favor of appellee Susana
Custodio, holding that her designation as beneficiary in the unsigned application form for
retirement benefits, which was not filed with the Government Service Insurance System prior to
the death of the employee, as required by regulations, was invalid; but that, nonetheless, she is
entitled to the retirement benefit to the exclusion of the appellants nephews and nieces because
the latter had recognized her as sole beneficiary in the deed of extrajudicial settlement executed
on 7 July 1957, which is to be presumed regular in the absence of evidence of fraud or mistake
attending its execution.
Appellants nephews and nieces moved to reconsider, and on denial, they appealed to the
Court of Appeals. Finding no question of fact involved in the case, but only questions of law,
said appellate court certified the appeal to the Supreme Court.
Appellants' first assignment of error is well-taken; that the intestate heirs, Macario C., Luisa
and David Custodio who did not sign the deed of extrajudicial settlement, not be considered as
having recognized Susana Custodio, as the only beneficiary of Simeon's retirement money.
There is no evidence the case having been submitted for decision below solely on a stipulation
of facts, that these non-signatory heirs had agreed, or accepted other benefits under the deed of
partition, as appellee now claims. Susana Custodio did not oppose their separate motion for
reconsideration and, actually, even prayed that said motion be granted (Record on Appeal, page
56), although the court denied it just the same. These three (3) heirs should inherit per stirpes,
in accordance with Article 1005 of the Civil Code. As Macario C. Custodio (as distinguished
from Macario A., who signed the agreement) is the only child of Crispin, said Macario C. inherits
by representation the one-fourth () share pertaining to his father, while Luisa and David

Custodio being two (2) of six (6) children of Jacinto, are each entitled to a sixth of one-fourth
(1/6 x 1/4) equivalent to 1/24 of the hereditary mass.
The other assigned errors are:
II. The trial court erred in not taking into consideration the circumstances surrounding the
preparation and signing of the "Extrajudicial Settlement of Estate Among Heirs', Annex "B" of the
Stipulation of Facts, as circumstantial evidence of the fraud by means of which the signatures of
appellants Romualdo, Julian, Macario A., Moises, Adriano and Celestina, all surnamed Custodio
were secured, and in not holding that, consequently, said Annex "B" is null and void.
III. The trial court erred in not holding that the appellants Romualdo, Julian, Macario A., Moises,
Adriano and Celestina, all surnamed Custodio are also entitled to share as intestate heirs in the
proceeds due Simeon Custodio from the Government Service Insurance System.
Under these alleged errors, appellants contend that fraud or mistake rendered null and void the
deed of extrajudicial settlement, such vice of consent being shown by the pretended badges of
fraud, as follows: the fact that David Custodio was not made a party to the extrajudicial
settlement nor mentioned in its recitals; the failure to secure the signatures not only of David but
also of Luisa and Macario C. Custodio; the repudiation by the appellants of the extrajudicial
settlement that they had signed just one day after its execution; the fact that Leon Tongohan, the
son-in-law of Susana Custodia apparently had some intervention in the execution of the deed;
and the adjudication in favor of Susana Custodio of an alleged unconscionable bulk of the
estate.
The Court of Appeals, in its resolution certifying the case to this Court, did not consider these
assigned errors as ones properly of fact within its appellate jurisdiction on the following grounds:
the covenanting parties, in asking for the approval of the trial court of their stipulation of facts,
had prayed that the questions of law arising from the facts stipulated be resolved by the court;
the parties did not submit any evidence; and fraud was not specifically alleged in the pleadings.
We affirm the action taken by the Court of Appeals in certifying the appeal to us. Even if the
five (5) circumstances stated by the appellant be held to be indicative of fraud or mistake, and
infirming the deed of extrajudicial settlement, the stark fact is that the existence of fraud or
mistake was not stipulated (Miranda vs. Tiangco, et al., 96 Phil. 526). Appellants' raising the
issue of fraud or mistake without having specifically stipulated or pleaded the same, constitutes
and unfair surprise upon their adversary, besides being in violation of the rule that fraud be
specifically pleaded (Rule 9, Section 9, Rules of Court). Therefore, this plea of fraud or error is
not allowable, being deemed waived by the lack of proper averment.

At any rate, the circumstances now stressed by the heirs who have actually signed the deed of
partition, and who have been allocated properties therein, fall short of evidencing fraud or
mistake. The failure to secure the signatures of Luisa, David, and Macario Custodio could not
have escaped their co-heirs, now appellants, and it is unfair to lay blame therefor on Susana
Custodio. The intervention of Leon Tongohan, her son-in-law, is without particular significance,
since none of the signers was illiterate, nor was the deed notarized by him. As to the appellants'
having repudiated their signatures, the same was a self-serving act, more indicative of a belated
intention to squirm out of a disadvantageous transaction, after they entered it with open eyes,
which is no ground for setting the same aside (Noble vs. City of Manila, 67 Phil. 1). Certainly, it
should take much weightier proof to invalidate a written instrument (cf. Mendezona vs. Phil.
Sugar Estates, 41 Phil. 493; Bank of the Phil. Is. vs. Fidelity Surety Co., 51 Phil. 57).
FOR THE FOREGOING REASONS, the appealed judgment is hereby affirmed, with the
modification that Macario C. Custodio is declared entitled to a share of one-fourth (1/4), and
Luisa Custodio and David Custodio to a share of one-twenty-fourth (1/24) each, of the
retirement benefits. No costs.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano,
Teehankee and Barredo, JJ., concur.