Adille vs. Court of Appeals

A co-owner who redeems the entire property held in common does not acquire exclusive ownership over it; the redemption does not terminate the co-ownership, and when the acquisition is attended by fraud or misrepresentation, the redeeming co-owner holds the shares of the other co-owners in an implied trust, with the prescriptive period for the beneficiary's action commencing only from the discovery of the fraud.

Lot 14694 of the Cadastral Survey of Albay, with an area of 11,325 square meters in Legaspi City, originally belonged to Felisa Alzul. She had one son, Rustico Adille, by her first husband Bernabe Adille, and five children—Emeteria, Teodorica, Domingo, Josefa, and Santiago Asejo—by her second husband Procopio Asejo. In 1939, Felisa sold the property under pacto de retro to third persons, with a three-year repurchase period. She died in 1942 without having redeemed it. During the subsisting redemption period, Rustico Adille, acting alone, repurchased the entire property using his own funds.

• Original Ownership and Sale: Felisa Alzul owned Lot 14694 as her private property. She had one child, Rustico Adille, from her first marriage, and five children from her second marriage to Procopio Asejo. In 1939, she sold the land under pacto de retro to third parties, with a three-year repurchase period.
• Death of Felisa and Redemption: Felisa died in 1942 without redeeming the property. During the remaining redemption period, petitioner Rustico Adille, acting alone, repurchased the entire property with his own funds.
• Extrajudicial Settlement and Registration: In 1955, petitioner executed an affidavit of extrajudicial settlement stating under oath that he was “the only heir and child of his mother Felisa.” By virtue of this affidavit, Original Certificate of Title No. 21137 in Felisa's name was canceled and a new certificate of title was issued exclusively in petitioner's name.
• Occupation and Demand: One of the private respondents, Emeteria Asejo, had been occupying a portion of the property. Efforts at amicable settlement failed. Petitioner, far from seeking her ejectment earlier, filed a counterclaim for eviction only after the private respondents instituted the suit.
• Commencement of Action: In 1974, the private respondents filed a complaint for partition with accounting, asserting that petitioner held the property as a trustee under an implied trust. Petitioner counterclaimed for Emeteria Asejo to vacate the portion she occupied.

• Exclusive Ownership by Redemption: Petitioner maintained that upon the failure of his co-heirs to join him in the redemption within the statutory period, the property devolved upon him exclusively, making him the absolute owner. He relied on Article 1515 of the old Civil Code (now Article 1613 of the Civil Code), which grants the vendee a retro the right to demand redemption of the entire property and to refuse partial redemption.

• Implied Trust: Respondents contended that petitioner, in redeeming the property, acted as a mere trustee on an implied trust for the benefit of all co-heirs. Consequently, they argued, the property remained subject to co-ownership, and they were entitled to partition and an accounting.

• Effect of Sole Redemption by One Co-owner: Whether a co-owner who redeems the entirety of the property held in common acquires exclusive ownership over it, thereby terminating the state of co-ownership.
• Implied Trust: Whether the redeeming co-owner, having obtained title through the false representation of being the sole heir, holds the property in an implied trust for the other co-heirs under Article 1456 of the Civil Code.
• Prescription and Repudiation: Whether the private respondents' action for partition and recovery of their shares, filed in 1974 nineteen years after petitioner registered title solely in his name in 1955, is barred by prescription or laches.

• Effect of Sole Redemption by One Co-owner: The redemption of the entire property by a single co-owner did not vest exclusive ownership in him. Article 1613 merely empowers the vendee a retro to refuse a partial redemption; it does not confer upon the redeeming co-owner the right to claim the whole property. Redemption is a necessary expense of preservation, and pursuant to Article 488, a co-owner who incurs it is entitled only to reimbursement from the other co-owners for their proportionate shares. The property remained under co-ownership, with the redemption merely preserving the res for all co-owners.
• Implied Trust: Petitioner's execution of an extrajudicial settlement falsely claiming to be the sole heir constituted fraud. Under Article 1456 of the Civil Code, “if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.” Petitioner thus held the shares of his co-heirs in implied trust. Registration of the property in his name alone did not convert him into the absolute owner; registration is not a mode of acquiring ownership but merely a notice of existing title.
• Prescription and Repudiation: The action was not barred. Termination of co-ownership by prescription requires a clear act of repudiation made known to the other co-owners, supported by clear and conclusive evidence, and open, continuous, exclusive, and notorious possession for the statutory period. Petitioner never communicated any repudiation; he deliberately kept his co-heirs in the dark by feigning sole heirship. Emeteria Asejo's uninterrupted possession of a portion of the land further negated a claim of exclusive adverse possession. Torrens title, while constructive notice of title, does not shield fraud, nor is registration equivalent to notice of repudiation. The prescriptive period for an action to enforce a constructive trust based on fraud commences upon discovery of the fraud, which occurred only during the litigation. Moreover, prescription is an affirmative defense requiring pleading, and petitioner did not raise it.

• Redemption by a Co-owner — A co-owner may redeem only his share under Article 1612. If he redeems the entire property, the co-ownership does not end; the redeemer does not become absolute owner. He is entitled to reimbursement from the other co-owners under Article 488 for their proportionate shares of the redemption expense, which is a necessary expense of preservation. The vendee a retro’s right under Article 1613 to refuse partial redemption does not transfer ownership of the whole to the sole redeeming co-owner.
• Repudiation of Co-ownership — To terminate co-ownership by prescription, the following requisites must concur: (1) a co-owner repudiates the co-ownership; (2) the act of repudiation is clearly made known to the other co-owners; (3) the evidence of repudiation is clear and conclusive; and (4) the repudiating co-owner has been in open, continuous, exclusive, and notorious possession for the period required by law. Registration under the Torrens system is not a substitute for clear communication of repudiation.
• Implied Trust under Article 1456 — When property is acquired through mistake or fraud, the acquirer is considered a trustee of an implied trust by operation of law for the benefit of the person from whom the property comes. A false affidavit of extrajudicial settlement claiming sole heirship constitutes fraud giving rise to such a trust.
• Prescription of Constructive Trust Based on Fraud — An action to enforce a constructive trust prescribes in ten years. Where the trust arises from fraud, the prescriptive period is reckoned from the discovery of the fraud, not from the date of registration, especially when the trustee's conduct was deliberately concealed.

• “The right of repurchase may be exercised by a co-owner with respect to his share alone. While the records show that the petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership.”
• “Registration of property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.”
• “Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive, and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law.”
• “It is no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title.”

• Santos v. Heirs of Crisostomo, 41 Phil. 3342 (1921) — Established the requisites for repudiation of co-ownership that must be satisfied before prescription can run; applied to find petitioner’s acts insufficient.
• Bargayo v. Camumot, 40 Phil. 857 (1920) — Reaffirmed the same rigorous requirements for repudiation of co-ownership; followed.
• Amerol v. Bagumbaran, G.R. No. 33261, September 30, 1987 — Held that a Torrens title does not furnish a shield for fraud; relied upon to reject the argument that registration insulated petitioner.
• Gerona v. De Guzman, No. L-19060, May 29, 1964, 11 SCRA 153 (1964) — Declared that actions to enforce a constructive trust prescribe in ten years and, in cases of fraud, the period runs from discovery; its rule was applied but the reckoning date was distinguished because registration did not start the period here.

• Article 488, Civil Code — Grants each co-owner the right to compel contribution from the others for necessary expenses of preservation. Applied to classify the redemption expense as a preservation cost, limiting petitioner’s remedy to reimbursement rather than ownership.
• Article 1612, Civil Code (Article 1514, old Civil Code) — Permits a co-owner to exercise the right of repurchase with respect to his share alone. Invoked to establish that redemption by one does not necessarily cover the whole.
• Article 1613, Civil Code (Article 1515, old Civil Code) — Gives the vendee a retro the right to demand redemption of the entire property and to refuse partial redemption. Interpreted as a protection for the vendee, not a grant of exclusive ownership to the sole redeeming co-owner.
• Article 1456, Civil Code — Provides that one who acquires property through mistake or fraud holds it in implied trust for the person from whom it came. Applied to petitioner, whose fraudulent affidavit of extrajudicial settlement gave rise to the trust.
• Section 31, Presidential Decree No. 1529 — Declares that a certificate of title serves as constructive notice to the whole world. Discussed but held insufficient to constitute repudiation of co-ownership or to defeat respondents’ claim, as registration does not cure fraud.

Yap (Chairman), Melencio-Herrera, Paras, and Padilla, JJ., concurred.