Reyes vs. Court of Appeals

An oral partition of an estate among heirs is valid and binding even without compliance with the formal requirements of Rule 74 of the Rules of Court, because partition is not a conveyance but a confirmation of title; and a co-heir may validly alienate his pro-indiviso share in the estate, with the effect of such alienation limited to the portion ultimately allotted to him upon partition. Consequently, a Torrens title issued pursuant to an extrajudicial settlement that adjudicates to an heir property already sold by his predecessor cannot vest ownership in that heir or his successors-in-interest, as an extrajudicial settlement merely confirms pre-existing rights and cannot create title where none existed.

Gavino Reyes owned approximately 70 hectares of land in Sangayad, Ulong-Tubig, Carmona, Cavite, which he sought to bring under the Torrens System of registration. He died in 1921 before any title was issued; his son Marcelo Reyes prosecuted the application. In 1941, approximately twenty years after Gavino's death, Original Certificate of Title No. 255 was issued for the entire property, but it was kept by Juan Poblete, Marcelo's son-in-law, without the knowledge of Gavino's other heirs. The property was surveyed and subdivided in 1936 among Gavino's children, with specific lots assigned to each heir. Rafael Reyes, Sr., one of Gavino's children, was allotted two lots including Lot No. 1-A-14. On December 3, 1943, Rafael Reyes, Sr. sold a parcel of land to private respondent Dalmacio Gardiola, who immediately took possession and began paying taxes. In 1967, the grandchildren of Gavino Reyes executed a Deed of Extrajudicial Settlement of Estate based on the 1936 subdivision plan, adjudicating the lot originally intended for the deceased Rafael Reyes, Sr. to his son Rafael Reyes, Jr., resulting in the issuance of TCT No. 27257.

During his lifetime, Gavino Reyes owned a parcel of land of approximately 70 hectares located at Sangayad, Ulong-Tubig, Carmona, Cavite. He sought to bring the property under the Torrens System of registration but died in 1921 before any title was issued. His son, Marcelo Reyes, prosecuted the application as administrator of the estate. In 1936, the property was surveyed and subdivided among Gavino's heirs pursuant to a subdivision plan (Exh. "6"), with each resultant lot assigned to a specific heir. Two lots, including Lot No. 1-A-14 (Exh. "6-A"), were allotted to Rafael Reyes, Sr., one of Gavino's children. The children thereafter secured tax declarations for their respective shares.

In 1941, approximately twenty years after Gavino's death, Original Certificate of Title No. 255 was issued for the entire property. It was kept by Juan Poblete, son-in-law of the deceased Marcelo Reyes, without the other heirs' knowledge. On December 3, 1943, Rafael Reyes, Sr. sold a parcel of land with an area of 23,431 square meters to private respondent Dalmacio Gardiola (Exh. "5"). The deed of sale described the land as "na aking minana sa aking ama" (inherited from my father) but did not specifically mention Lot No. 1-A-14, as neither party was aware of the existence of OCT No. 255 at that time. Gardiola immediately took possession of the property and began paying land taxes thereon. In 1945, Juan Poblete reconstituted the original certificate of title, resulting in OCT (0-4358) RO-255.

On October 21, 1967, the heirs of Gavino Reyes executed a Deed of Extrajudicial Settlement of Estate (Exh. "D") based on the 1936 subdivision plan. The lot originally intended for Rafael Reyes, Sr., who was already deceased, was adjudicated to his only son and heir, Rafael Reyes, Jr. Private respondent Rosario Martillano signed the deed in representation of her deceased mother, Marta Reyes, a daughter of Gavino Reyes. As a result, OCT RO-255 was cancelled and several transfer certificates of title were issued to the respective adjudicatees, including TCT No. 27257 in the name of Rafael Reyes, Jr. covering Lot No. 1-A-14. The transfer certificates were kept by one Candido Hebron. On January 10, 1969, some heirs filed an annulment of partition case (Civil Case No. 1267) before the Court of First Instance of Cavite City, which was dismissed on September 18, 1969, with Hebron ordered to deliver the titles to the concerned heirs.

After obtaining TCT No. 27257 from Hebron, petitioners, as successors-in-interest of Rafael Reyes, Jr., filed on March 14, 1983 a complaint for recovery of possession or, alternatively, for indemnification, accounting, and damages against private respondents. They alleged that they had discovered they were the lawful owners of Lot No. 1-A-14 and had made repeated demands for respondents to vacate, the last on October 8, 1982, and that they had been deprived of possession since September 1969. Private respondents answered that they were the owners, having bought the lot from Rafael Reyes, Sr., that the issuance of TCT No. 27257 was null and void, that they had been in possession and paying taxes, and that petitioners were barred by prescription and laches. The complaint was later amended to implead spouses Ricardo M. Gardiola and Emerita Gardiola, who had redeemed the property from foreclosure by the Rural Bank of Carmona. The trial court ruled for petitioners, but the Court of Appeals reversed, finding the oral partition of 1936 valid and the land sold identical to Lot No. 1-A-14, and declaring private respondents the lawful owners.

• Validity of 1967 Extrajudicial Settlement: Petitioners argued that the Court of Appeals erred in holding that the 1967 extrajudicial settlement was of no moment because the property had already been partitioned in 1936, contending that TCT No. 27257 covers two parcels of land and that ownership of one parcel was confirmed by the Supreme Court in G.R. No. 79882.
• Constructive Notice from Registration: Petitioners maintained that private respondent Rosario Martillano was a party to the 1967 extrajudicial settlement, which was duly registered in the Registry of Deeds, and that such registration is the operative act that gives validity to the transfer and constitutes constructive notice to the whole world, the binding effect of which the Court cannot disregard.
• Indefeasibility of Torrens Title: Petitioners contended that the Court of Appeals' declaration that private respondents are the lawful owners militates against the indefeasible and incontrovertible character of the Torrens title, and that any action for reconveyance had already prescribed.
• Conflicting Findings of Fact: In supplemental arguments, petitioners asserted that the Court of Appeals' factual findings were contrary to those of the trial court and contradicted by the evidence on record, warranting Supreme Court review, and that the appellate court misapprehended the facts and based its findings on speculation, conjecture, and surmises.
• Collateral Attack on Title: Petitioners argued that private respondents' attack on petitioners' title constituted a collateral attack, which is not allowed, and that even if permitted, the same had already prescribed and was barred.

• Ownership by Purchase: Respondents countered that they were the owners of the lot in question, having purchased it from Rafael Reyes, Sr. in 1943, and that they had been in continuous possession and had been paying land taxes thereon.
• Nullity of TCT No. 27257: Respondents argued that the issuance of TCT No. 27257 was null and void because the property had already been sold by Rafael Reyes, Sr. before the 1967 extrajudicial settlement, and that the sale was known to Rafael Reyes, Jr.
• Prescription and Laches: Respondents asserted that petitioners were barred by prescription and/or laches, noting that petitioners waited approximately thirteen and one-half years from discovery of their alleged ownership in September 1969 before filing the action in March 1983.

• Validity of Oral Partition: Whether the Court of Appeals erred in holding that the oral partition of Gavino Reyes's estate among his children in 1936 was valid and binding despite the absence of a written instrument.
• Identity of the Property Sold: Whether the Court of Appeals erred in finding that the parcel of land sold by Rafael Reyes, Sr. to private respondent Dalmacio Gardiola in 1943 was the same as Lot No. 1-A-14 covered by TCT No. 27257.
• Effect of Extrajudicial Settlement and Torrens Title: Whether the 1967 extrajudicial settlement and the subsequent issuance of TCT No. 27257 in the name of Rafael Reyes, Jr. vested ownership in petitioners despite the prior sale by Rafael Reyes, Sr.

• Validity of Oral Partition: Yes. The oral partition of 1936 was valid and binding, there being no law requiring partition among heirs to be in writing for validity, and the formal requirements of Rule 74 serving only to protect creditors and provide constructive notice.
• Identity of the Property Sold: Yes. The land sold by Rafael Reyes, Sr. to Dalmacio Gardiola was identical to Lot No. 1-A-14, the discrepancy in description being attributable to the use of layman's language in the deed of sale based on Tax Declaration No. 4766, as opposed to the technical description in the Torrens title.
• Effect of Extrajudicial Settlement and Torrens Title: No. The 1967 extrajudicial settlement and TCT No. 27257 did not vest ownership in Rafael Reyes, Jr. or his heirs, because Rafael Reyes, Sr. had already sold the property in 1943; an extrajudicial settlement merely confirms pre-existing title and cannot create rights where none existed.

• Validity of Oral Partition: The Court relied on the principle that there is no law requiring partition among heirs to be in writing to be valid. Citing Hernandez vs. Andal, the Court explained that the requirement under Section 1 of Rule 74 that a partition be put in a public document and registered has for its purpose the protection of creditors and the protection of heirs against tardy claims, with registration serving as constructive notice. The intrinsic validity of a partition not executed with the prescribed formalities does not come into play when no creditors' rights are affected. Citing Barcelona vs. Barcelona, the Court further explained that partition among heirs is not exactly a conveyance of real property because it does not involve transfer of property from one to another but rather a confirmation or ratification of title or right of property by the heir renouncing in favor of another. The validity of the 1936 oral partition was also expressly sustained by the Court in its Resolution of August 20, 1990 in G.R. No. 92811, a related case involving the same property and the same partition. Even assuming arguendo that the oral partition was invalid, the Court held that the same conclusion would follow because upon Gavino's death in 1921, his heirs automatically became co-owners under Article 777 of the Civil Code, and under Article 493, each co-owner has full ownership of his part and may alienate the same, with the effect of such alienation limited to the portion ultimately allotted to him upon partition.

• Identity of the Property Sold: The trial court erred in concluding that the land sold was not identical to Lot No. 1-A-14 based on a discrepancy in descriptions. The discrepancy arose because the deed of sale described the property in layman's language based on Tax Declaration No. 4766, the only evidence of title available to Rafael Reyes, Sr. at the time of the 1943 sale, as neither he nor Gardiola was aware of OCT No. 255. The description in the deed of sale, however, corresponded exactly to Lot No. 1-A-14 in the 1936 subdivision plan. Moreover, petitioners themselves conceded that the property claimed by private respondents, acquired by sale from Rafael Reyes, Sr., was none other than Lot No. 1-A-14, as their own complaint sought recovery of the very property in respondents' possession.

• Effect of Extrajudicial Settlement and Torrens Title: Rosario Martillano's participation in the 1967 extrajudicial settlement did not place private respondents in estoppel, as she signed in representation of her deceased mother, Marta Reyes, not for and on behalf of her husband, Dalmacio Gardiola. The settlement did not divest the vendee of the share of Rafael Reyes, Sr. Petitioners, as successors-in-interest of Rafael Reyes, Jr., could only acquire what Rafael, Jr. could transmit, and Rafael, Jr. never became owner of Lot No. 1-A-14 because his father had sold it in 1943. The issuance of TCT No. 27257 in his name was clearly erroneous. An extrajudicial settlement does not create a right in favor of an heir but merely confirms or ratifies pre-existing title; since Rafael, Jr. never had title to the lot, the settlement and its registration could not vest any right in petitioners. The principle nemo dare potest quod non habet — no one can give what he does not have — applies. Furthermore, neither Rafael Reyes, Jr. nor petitioners took any action against private respondents from the time of the 1943 sale, and petitioners waited approximately thirteen and one-half years from their alleged discovery of ownership in September 1969 before filing suit in March 1983, providing no basis for the trial court to burden respondents with a prescription period for reconveyance.

• Validity of Oral Partition — An oral partition of an estate among heirs is valid and binding even without compliance with the formal requirements of Rule 74 of the Rules of Court. The requirement that a partition be in a public document and registered serves only to protect creditors and to provide constructive notice to third parties; the intrinsic validity of the partition is not affected by the absence of such formalities when no creditors' rights are involved. Partition is not a conveyance but a confirmation or ratification of title, and therefore is not covered by the Statute of Frauds. The Court applied this doctrine to uphold the 1936 oral partition of Gavino Reyes's estate, finding that the subdivision plan and the tax declarations secured by the heirs evidenced such partition.

• Co-ownership and Alienation of Pro-Indiviso Shares — Upon the death of the decedent, rights to the succession are transmitted to the heirs, who become co-owners of the estate. Under Article 493 of the Civil Code, each co-owner has full ownership of his part and may alienate the same, but the effect of such alienation is limited to the portion ultimately allotted to him upon partition. The Court applied this principle to hold that Rafael Reyes, Sr. validly sold his pro-indiviso share to Dalmacio Gardiola in 1943, and that the portion sold corresponded to the lot later adjudicated to him in the subdivision plan.

• Nature of Extrajudicial Settlement — An extrajudicial settlement of estate does not create a right in favor of an heir but merely confirms or ratifies pre-existing title or right to property. It cannot vest title where none existed. The Court applied this doctrine to hold that the 1967 extrajudicial settlement could not vest ownership of Lot No. 1-A-14 in Rafael Reyes, Jr. or his heirs, because Rafael Reyes, Sr. had already sold the property in 1943, and Rafael, Jr. therefore never acquired any title to it.

• Nemo Dare Potest Quod Non Habet — No one can give what he does not have. Successors-in-interest can only acquire what their predecessor could transmit. The Court applied this maxim to hold that petitioners, as heirs of Rafael Reyes, Jr., could not acquire ownership of Lot No. 1-A-14 because Rafael, Jr. himself never owned it, having been sold by his father before the extrajudicial settlement.

• "There is no law that requires partition among heirs to be in writing to be valid." — This passage states the ratio decidendi on the validity of oral partition, articulating the controlling rule that the absence of a written instrument does not invalidate a partition among heirs when no creditors' rights are affected.

• "Partition among heirs or renunciation of an inheritance by some of them is not exactly a conveyance of real property for the reason that it does not involve transfer of property from one to the other, but rather a confirmation or ratification of title or right of property by the heir renouncing in favor of another heir accepting and receiving the inheritance." — This passage, quoted from Barcelona vs. Barcelona, provides the canonical formulation of why oral partition is valid and why it falls outside the Statute of Frauds, a principle frequently cited in subsequent jurisprudence on succession and partition.

• "An extrajudicial settlement does not create a light [right] in favor of an heir. As this Court stated in the Barcelona case, it is but a confirmation or ratification of title or right to property." — This passage defines the nature and limitation of an extrajudicial settlement, establishing that it cannot confer title where none existed and that registration thereof cannot create rights beyond what the heir actually possessed.

• "The latter cannot give them what he never had before. Nemo dare potest quod non habet." — This passage applies the maxim to the facts, encapsulating the principle that successors-in-interest acquire only what their predecessor could legitimately transmit, and that a Torrens title erroneously issued cannot cure the absence of underlying ownership.

• Hernandez vs. Andal, 78 Phil. 176 (1967) — Controlling precedent on the validity of oral partition. The Court interpreted Section 1 of Rule 74 of the Rules of Court as requiring a public document and registration only for the protection of creditors and heirs against tardy claims, not as an essential requisite for the intrinsic validity of a partition. Followed and applied to uphold the 1936 oral partition.

• Barcelona vs. Barcelona, 100 Phil. 251 — Controlling precedent explaining why oral partition is valid and not covered by the Statute of Frauds, on the ground that partition is not a conveyance but a confirmation or ratification of title. Followed and applied to define the nature of extrajudicial settlement as merely confirmatory.

• Ramirez vs. Bautista, 14 Phil. 528 — Precedent on co-ownership, holding that every co-heir has absolute ownership of his share in community property and may alienate the same, with the effect limited to the portion allotted upon partition. Followed and applied under Article 493 of the Civil Code.

• Spouses Durumpili vs. Court of Appeals and Spouses Gardiola, G.R. No. 92811 (Resolution of Aug. 20, 1990) — Related case involving the same Gavino Reyes estate, the same 1936 oral partition, and the same 1967 extrajudicial settlement. The Court's resolution therein expressly sustained the validity of the oral partition and upheld the rights of vendees who purchased from individual heirs. Followed as persuasive authority on identical facts and issues.

• Article 777, Civil Code — Provides that the rights to the succession are transmitted from the moment of the death of the decedent. Applied to establish that upon Gavino Reyes's death in 1921, his heirs automatically became co-owners of his estate, even before the issuance of the Torrens title in 1941.

• Article 493, Civil Code — Provides that each co-owner has full ownership of his part and may alienate or mortgage the same, with the effect of such alienation limited to the portion allotted to him upon termination of co-ownership. Applied to uphold the validity of Rafael Reyes, Sr.'s sale of his pro-indiviso share to Dalmacio Gardiola in 1943.

• Section 1, Rule 74, Rules of Court — Governs extrajudicial partition of estates, requiring that the partition be in a public document and registered. Interpreted in Hernandez vs. Andal as serving to protect creditors and provide constructive notice, not as an essential requisite for the intrinsic validity of a partition. Applied to uphold the validity of the 1936 oral partition despite non-compliance with formal requirements.

• Article 1358, Civil Code — Requires that acts which have for their object the creation, transmission, modification, or extinguishment of real rights over immovable property must appear in a public instrument. Cited in the related G.R. No. 92811 resolution as being only for convenience and not for validity or enforceability as between the parties themselves.

Fernan, C.J., Gutierrez, Jr., Feliciano, and Bidin, JJ., concurred.