Augusto vs. Dy

A surviving spouse in a conjugal partnership of gains may validly alienate only his undivided share in the conjugal property, consisting of his one-half share upon dissolution of the partnership plus his share as legal heir of the deceased spouse; sales by a co-owner or subsequent transferee affect only their respective undivided shares and are void insofar as they prejudice the rights of prior purchasers in good faith of such shares.

Spouses Sixto Silawan and Marcosa Igoy owned Lot No. 4277 (5,327 sqm) in Lapu-Lapu City, registered under Original Certificate of Title (OCT) No. RO-3456. Marcosa died on October 5, 1931, leaving Sixto and their sole legitimate child, Roberta Silawan. Sixto died on December 29, 1968. During his lifetime, Sixto executed various deeds of sale purporting to convey portions of the property. In 2001, Roberta executed an Extrajudicial Settlement adjudicating the entire property to herself as "sole and only heir" and confirming the prior sales made by Sixto. Based on this document, the Register of Deeds issued Transfer Certificates of Title (TCTs) in 2001 to Roberta, Nicomedes Augusto, Gomercindo Jimenez, and Marcelino Paquibot. In 2002, Antonio Carlota Dy filed a complaint for nullity of deeds and titles, claiming ownership of a 2,363.5 sqm portion through a chain of sales tracing back to Sixto. Mario Dy subsequently intervened, claiming a 1,332.5 sqm portion through a separate chain of sales also originating from Sixto.

Nature of the Property and Title: Lot No. 4277, containing 5,327 square meters and located in Lapu-Lapu City, was originally registered in the names of spouses Sixto Silawan and Marcosa Igoy under OCT No. RO-3456. The spouses were married prior to the effectivity of the Family Code and had no marriage settlement, rendering their property relations governed by the conjugal partnership of gains. They had one legitimate child, petitioner Roberta Silawan. Marcosa died on October 5, 1931, and Sixto died on December 29, 1968.

Chain of Alienations from Sixto: On March 31, 1965, Sixto sold the entire 5,327 sqm lot to Severino Silawan (married to Cornelia Gungob). Severino subsequently sold portions to two different buyers: on May 7, 1964 (as annotated), he sold 2,663.5 sqm to Isnani Maut and Lily Silawan; on September 15, 1965, he sold the remaining 2,663.5 sqm to Mariano Silawan (married to Consorcia Ocomen).

Sales by Isnani and Lily: On September 16, 1966, Isnani and Lily sold their 2,663.5 sqm portion to Filomeno Augusto and Lourdes Igot. Filomeno and Lourdes subsequently sold 2,363.5 sqm to Antonio Carlota Dy on November 25, 1989, and the remaining 300 sqm to Nicomedes Augusto and Gaudencia Augusto in October 1989.

Sales by Mariano: Mariano Silawan executed three sales of his portion: (1) on July 18, 1968, he sold 1,332.5 sqm to Nicolas Aying and Maura Augusto, who later sold to Gomercindo Jimenez on February 16, 1978; (2) on July 14, 1987, he sold 1,332.5 sqm to Marcelino Paquibot; and (3) in May 1990, he sold 1,332.5 sqm to Rodulfo Augusto and Gloria Pinote, who subsequently sold to Mario Dy on May 23, 1994.

Extrajudicial Settlement and Issuance of TCTs: On June 27, 2001, Roberta executed an "Extrajudicial Settlement By Sole and Only Heir with Confirmation of the Deed of Absolute Sale[s]," adjudicating the entire Lot No. 4277 to herself and confirming the sales made by Sixto. Based on this document and a Deed of Partition among petitioners, the Register of Deeds cancelled OCT No. RO-3456 and issued TCT Nos. 48562-48565 in favor of spouses Nicomedes and Gaudencia Augusto (300 sqm), Gomercindo Jimenez (1,331 sqm), Marcelino Paquibot (1,332.50 sqm), and Roberta Silawan (2,363.50 sqm).

Proceedings Below: Antonio Dy filed his complaint on July 16, 2002, tracing his title through the chain from Sixto to Severino to Isnani/Lily to Filomeno. Mario Dy intervened, tracing his title through Severino to Mariano to Rodulfo. Petitioners failed to attend the pre-trial conference, resulting in their declaration in default and the presentation of respondents' evidence ex parte. The RTC granted the complaint, nullifying the Extrajudicial Settlement and all subsequent transfers, and ordered a new partition. The CA affirmed, finding that Roberta could not unilaterally rescind Sixto's sales and that the documents were fraudulently executed.

• Propriety of Default: The trial court erred in refusing to lift the order of default despite petitioners' explanation that their counsel's calendar was lost, depriving them of the opportunity to present evidence.

• Priority in Time and Registration: Respondents' own evidence, specifically OCT No. RO-3456, showed that petitioners' transactions were made earlier than those of respondents and were duly registered and annotated on the mother title, giving them priority as first registrants.

• Good Faith Purchasers: Petitioners were buyers in good faith and for value, and the trial court could not summarily declare their transactions fraudulent without evidence.

• Impropriety of Relief to Mario Dy: The courts below erred in granting relief to Mario Dy and in sustaining the partition order, as the specific sales supporting his claim were defective.

• Invalidity of Root Title: Antonio Dy argued that Roberta's Extrajudicial Settlement had no basis because when she executed it, the property had already been sold by Sixto to Severino in 1965, and he (Antonio) had acquired his portion through subsequent transfers from Severino's vendees.

• Fraudulent Execution: The Extrajudicial Settlement and accompanying documents were executed fraudulently because Roberta falsely declared herself the sole heir and adjudicated the entire property to herself, despite the existence of prior purchasers.

• Nullity of Subsequent Sales: The sales by Mariano to Marcelino and Rodulfo were invalid because Mariano had already parted with his share in earlier transactions, and the buyers were not in good faith as they purchased from non-registered owners.

• Procedural Due Process: Whether the trial court properly declared petitioners in default and allowed ex parte presentation of evidence.

• Validity of Sixto's Sale: Whether Sixto Silawan's sale of the entire conjugal property to Severino Silawan in 1965 was valid in its entirety.

• Extent of Valid Sales: Whether the subsequent sales by Severino to Isnani/Lily and Mariano, and the further sales by Mariano to Nicolas, Marcelino, and Rodulfo, were valid to the extent of the transferor's undivided share.

• Good Faith of Purchasers: Whether Marcelino Paquibot, Rodulfo Augusto, and Mario Dy qualified as purchasers in good faith.

• Validity of Extrajudicial Settlement: Whether Roberta Silawan's Extrajudicial Settlement adjudicating the entire property to herself as "sole and only heir" was valid.

• Effect of Registration: Whether the issuance of TCTs under the Torrens System validated the otherwise void transfers.

• Procedural Due Process: The declaration of default was proper. Rule 18, Section 5 of the 1997 Rules of Court mandates that failure of the defendant to appear at pre-trial allows the plaintiff to present evidence ex parte. Petitioners' explanation—that their counsel lost his calendar—constituted inexcusable negligence and carelessness regarding the mandatory nature of pre-trial conferences, which serve to simplify and expedite trials.

• Validity of Sixto's Sale: The sale by Sixto to Severino was valid only as to Sixto's undivided three-fourths share (3,995.25 sqm) and void as to the remaining one-fourth (1,331.75 sqm). Upon Marcosa's death in 1931, the conjugal partnership dissolved. Under Article 996 of the Civil Code, Sixto inherited one-fourth of Marcosa's half, giving him a total three-fourths undivided share (his original one-half plus one-fourth from Marcosa). Roberta inherited the remaining one-fourth. Sixto could not validly sell Roberta's undivided share.

• Extent of Valid Sales:

  • Severino's sale of 2,663.5 sqm to Isnani and Lily was valid as it fell within the 3,995.25 sqm Severino validly acquired.
  • Severino's sale of 2,663.5 sqm to Mariano was valid only as to the remaining 1,331.75 sqm of Severino's share; the excess was void under the principle prior tempore, potior jure (first in time, stronger in right), favoring Isnani and Lily as first vendees.
  • Mariano's sale of 1,332.5 sqm to Nicolas Aying was valid as to Mariano's entire 1,331.75 sqm share (the slight discrepancy in area being inconsequential), and Nicolas' subsequent sale to Gomercindo Jimenez was likewise valid.

  • Mariano's sales to Marcelino Paquibot (July 14, 1987) and Rodulfo Augusto (May 1990) were void in toto under the principle nemo dat quod non habet (no one gives what he does not have), as Mariano had already alienated his entire share to Nicolas in 1968.

  • Good Faith of Purchasers: Marcelino, Rodulfo, and Mario were not purchasers in good faith. A purchaser in good faith buys property without notice of another's rights and pays a fair price before notice of adverse claims. One who buys from a person who is not the registered owner is not a purchaser in good faith, as the fact of registration in another's name places the buyer on inquiry notice as to the status of the property.

  • Validity of Extrajudicial Settlement: The Extrajudicial Settlement was void insofar as Roberta adjudicated the entire property to herself. She was entitled only to the one-fourth undivided share inherited from Marcosa, which Sixto had never validly sold. The Confirmation of Sales embodied in the document was struck down as unnecessary because Sixto, as owner of his undivided share, had the right to dispose of it during his lifetime without ratification from his heirs.

  • Effect of Registration: Registration under the Torrens System does not create or vest title; it is merely evidence of ownership. The issuance of TCTs in favor of petitioners did not foreclose the possibility that the property was co-owned by others or held in trust, and thus could not validate the void sales.

• Conjugal Partnership of Gains and Succession — Under Article 119 of the Civil Code, in the absence of marriage settlements, conjugal partnership of gains governs property relations. Upon the death of one spouse, the partnership dissolves. Under Article 996, if a widow or widower and legitimate children are left, the surviving spouse has in the succession the same share as each child. Thus, the surviving spouse retains his one-half share from the conjugal property and inherits an additional one-fourth of the deceased spouse's half, while the child inherits the remaining one-fourth, creating co-ownership over the undivided shares.

• Effect of Sale by a Co-owner — A co-owner may validly alienate only his undivided share in the co-owned property. The sale affects only his proportionate share, and the transferee acquires only what would correspond to the grantor in the partition of the thing owned in common. The sale is void insofar as it prejudices the rights of other co-owners or prior purchasers of such shares.

• Prior Tempore, Potior Jure — As between two purchasers of the same undivided share from the same vendor, the one who is first in time is preferred in right, absent allegations of who first possessed or registered in good faith.

• Nemo Dat Quod Non Habet — No one can transfer a better title than he himself possesses. A person can sell only what he owns or is authorized to sell; the buyer can acquire no more than what the seller can legally transfer. Thus, a second sale of property already alienated to a first buyer is void.

• Purchaser in Good Faith — A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair price before he or she has notice of the adverse claims and interest of another person in the same property. One who buys from a person who is not a registered owner is not a purchaser in good faith.

• Torrens System — Registration is not a mode of acquiring ownership. A certificate of title is merely evidence of ownership or title over the particular property described therein. Its issuance does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.

• "The pre-trial cannot be taken for granted. It is not a mere technicality in court proceedings for it serves a vital objective: the simplification, abbreviation and expedition of the trial, if not indeed its dispensation."

• "This Court has ruled in many cases that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale."

• "Prior tempore, potior jure."

• "A person can sell only what he owns or is authorized to sell; the buyer can as a consequence, acquire no more than what the seller can legally transfer. No one can give what he does not have — nemo dat quod non habet."

• "Registering a piece of land under the Torrens System does not create or vest title, because registration is not a mode of acquiring ownership. To be sure, a certificate of title is merely an evidence of ownership or title over the particular property described therein."

• Benavidez v. Salvador, 723 Phil. 332 (2013) — Cited for the rule that failure to appear at pre-trial without valid excuse allows ex parte presentation of evidence.

• Taningco v. Register of Deeds of Laguna, 115 Phil. 374 (1962) — Applied for the principle that upon the death of one spouse in a conjugal partnership, the surviving spouse's share becomes vested in him.

• In Re: Santillon v. Miranda, 121 Phil. 1351 (1965) — Followed for the interpretation of Article 996 of the Civil Code regarding equal sharing between surviving spouse and legitimate children.

• Torres, Jr. v. Lapinid, 748 Phil. 587 (2014) — Cited for the rule that a co-owner's sale affects only his undivided share.

• Cuizon v. Remoto, 509 Phil. 258 (2005) — Applied for the doctrine of prior tempore, potior jure.

• Nool v. Court of Appeals, 342 Phil. 106 (1997) — Cited for the principle that nemo dat quod non habet.

• Dy v. Aldea, G.R. No. 219500, August 9, 2017 — Applied for the rule that registration under the Torrens system does not create title.

• Article 119, Civil Code — Governs property relations in the absence of marriage settlements, establishing the conjugal partnership of gains.

• Article 996, Civil Code — Provides that if a widow or widower and legitimate children are left, the surviving spouse has in the succession the same share as that of each of the children.

• Article 1078, Civil Code — States that where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs.

• Rule 18, Section 5, 1997 Rules of Civil Procedure — Mandates that failure of the defendant to appear at pre-trial shall be cause to allow the plaintiff to present evidence ex parte.

Carpio (Senior Associate Justice, Chairperson), Perlas-Bernabe, Jardeleza, and Caguioa, JJ.