Roman Catholic Bishop of Tuguegarao vs. Prudencio

An extrajudicial settlement of estate that fraudulently excludes heirs who did not participate in or have notice of the partition is void and inexistent from the beginning; consequently, a purchaser from the heir who obtained title through such void partition cannot acquire ownership over the excluded heirs' shares even if the purchaser is an innocent purchaser for value, as a seller cannot transfer more rights than she possesses and registration does not vest title better than what the seller actually has.

Felipe Prudencio married Elena Antonio and had five children: Valentina, Eusebia, Paula, Florentina, and Avelina. During this marriage, they acquired a 13.0476-hectare parcel of land in Baggao, Cagayan. Upon Elena's death, Felipe and their children became co-owners of the property. Felipe subsequently married Teodora Abad and had two more children, Felipe Jr. and Leonora. When Felipe died intestate, Teodora and her children executed an extrajudicial partition declaring themselves the sole heirs, falsely stating that Felipe had no children with Elena. They waived their rights in favor of Teodora, who obtained title and sold the entire property to Spouses Isidro Cepeda and Salvacion Divini, who in turn sold it to the Roman Catholic Bishop of Tuguegarao. The children and grandchildren from Felipe's first marriage, excluded from the partition, filed an action for partition and reconveyance.

• Felipe Prudencio married Elena Antonio and begot five children: Valentina, Eusebia, Paula, Florentina, and Avelina.
• During the marriage of Felipe and Elena, they acquired a 13.0476-hectare parcel of land located at Sitio Abbot, Barrio Imurung, Baggao, Cagayan, covered by Original Certificate of Title No. 1343.
• Upon Elena's death, Felipe and their five children became co-owners of the property.
• Felipe contracted a second marriage with Teodora Abad and had two children: Felipe Prudencio Jr. and Leonora.
• Felipe died intestate during his second marriage.
• On October 20, 1969, Teodora, Prudencio Jr., and Leonora executed a Deed of Extra-Judicial Partition of the Estate of the late Felipe with Waiver of Rights, falsely declaring that Felipe had no children with Elena and that they were the only living heirs by operation of law.
• Prudencio Jr. and Leonora waived their rights over the property in favor of Teodora, and the partition was published in the Daily Mirror on October 22, 29, and November 5, 1969.
• Transfer Certificate of Title No. 14306 was issued in Teodora's name covering the entire Cagayan lot.
• On May 16, 1972, Teodora sold the entire Cagayan lot to Spouses Isidro Cepeda and Salvacion Divini, and TCT No. 184375 was issued in their favor.
• On August 25, 1972, Spouses Cepeda sold the Cagayan lot to petitioner Roman Catholic Bishop of Tuguegarao for P16,500.00, and TCT No. T-20084 was issued in petitioner's name.
• On September 15, 1972, respondents-appellees (Florentina, Avelina, and the children of deceased siblings Valentina and Eusebia) filed a Complaint for Partition with Reconveyance alleging they were fraudulently deprived of their rightful shares in the estate of Felipe and Elena.
• Respondents claimed entitlement to 10.2512 hectares representing their collective shares from the estates of both Elena and Felipe.
• Petitioner filed an Answer with Cross-Claim asserting it was an innocent purchaser for value and that its lawyer had verified the title of Spouses Cepeda, while seeking indemnity from Spouses Cepeda should reconveyance be ordered.

• Petitioner contends it is an innocent purchaser for value who bought the property in good faith without knowledge of any defect in the title of Spouses Cepeda.
• It asserts that its lawyer, Atty. Pedro R. Perez Jr., verified the title and ownership of Spouses Cepeda before the purchase, and that Spouses Cepeda were in possession of the property at the time of sale.
• It argues that the Extra-Judicial Partition is not void under Article 1409 of the Civil Code because it does not fall within the enumeration of inexistent and void contracts.
• It seeks cross-relief against Spouses Cepeda for reimbursement of the purchase price plus interest and damages based on the warranty clause in the deed of sale in the event reconveyance is ordered.

• Respondents assert they are the legitimate children and grandchildren of Felipe Prudencio by his first marriage to Elena Antonio.
• They argue that they became co-owners of the Cagayan lot upon Elena's death (inheriting her conjugal share) and upon Felipe's death (inheriting his conjugal share).
• They contend that the Extra-Judicial Partition is void for having excluded them fraudulently and without their knowledge or consent, arrogating to Teodora not only Felipe's share but also the shares belonging to respondents.
• They pray for declaration of ownership over their pro indiviso shares and reconveyance thereof from petitioner, plus moral and exemplary damages and attorney's fees.

• Procedural: N/A
• Substantive Issues:
  • Whether the Extra-Judicial Partition executed by Teodora and her children, which excluded the heirs from the first marriage, is valid and binding upon the excluded heirs.
  • Whether the excluded heirs may recover their shares from petitioner who claims to be an innocent purchaser for value.
  • Whether petitioner is a buyer in good faith and for value.
  • Whether the sales to Spouses Cepeda and subsequently to petitioner are valid as to the entire property or only limited to Teodora's share.
  • How the Cagayan lot should be properly partitioned among the heirs according to the rules on intestate succession and conjugal partnership.

• Procedural: N/A
• Substantive:
  • The Extra-Judicial Partition is void ab initio under Article 1409(1) of the Civil Code because its purpose of excluding the rightful heirs from the first marriage is contrary to law, morals, good customs, public order, and public policy; it is not binding upon respondents who had neither knowledge nor participation therein.
  • The principle of nemo dat quod non habet applies: the good faith or bad faith of the purchaser is immaterial because a seller cannot transfer more rights than she possesses; registration does not vest title better than what the seller actually has.
  • The sale of the entire property by Teodora to Spouses Cepeda, and by the latter to petitioner, is valid only to the extent of Teodora's undivided share (55,918.29 sq. m.); the transfer of the shares belonging to respondents (74,557.72 sq. m.) is void.
  • Petitioner holds the respondents' shares under an implied constructive trust and is ordered to reconvey 74,557.72 square meters to respondents-appellees.
  • Spouses Cepeda are ordered to return to petitioner the amount paid corresponding to the 74,557.72 square meters with legal interest at 12% per annum from October 14, 1972 until June 30, 2013, and 6% per annum from July 1, 2013 until finality of the decision, and 6% per annum thereafter until full satisfaction.
  • The case is remanded to the Regional Trial Court for proper partition of the property in accordance with the decision.

• Nemo dat quod non habet — The principle that no one can give what he does not have; a seller cannot transfer ownership of property she does not own, and the buyer acquires no more than what the seller can legally transfer, rendering the purchaser's good faith irrelevant as to the excluded portions.
• Extra-Judicial Settlement under Rule 74, Section 1 of the Rules of Court — Provides that no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof; a partition excluding heirs who had no knowledge or consent is a total nullity not subject to ratification.
• Void Contracts under Article 1409(1) of the Civil Code — Contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are inexistent and void from the beginning and cannot be validated by time or ratification.
• Rights of Co-Owners under Article 493 of the Civil Code — Each co-owner has full ownership of his part and may alienate it, but the effect is limited to the portion allotted to him upon termination of co-ownership; a sale by one co-owner without consent transfers only the seller's share, making the buyer a co-owner to that extent.
• Registration does not vest title — Land registration laws do not give the holder any better title than what he actually has; a certificate of title is merely evidence of title and cannot validate a purchase of property which is null and void as to shares not owned by the seller.

• "Nemo dat quod non habet. Thus, the good faith or bad faith of petitioner is immaterial in resolving the present petition. A person can only sell 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 extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof."
• "A co-owner is entitled to sell his undivided share; hence, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void and only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the property."
• "Registration does not vest title, for it is merely the evidence of such title. Our land registration laws do not give the holder any better title than what he actually has."

• Segura v. Segura, G.R. No. L-29320, September 19, 1988 — Cited for the principle that the right of excluded heirs to recover does not depend on the good faith or bad faith of the purchaser but on the fact of ownership (nemo dat quod non habet), and that an invalid partition excluding heirs is not covered by the two-year prescriptive period under Rule 74.
• Neri v. Heirs of Hadji Yusop Uy, G.R. No. 194366, October 10, 2012 — Applied to hold that an extrajudicial settlement excluding certain heirs who did not participate or consent is not valid and binding upon them and is a total nullity.
• Constantino v. Heirs of Pedro Constantino, Jr., G.R. No. 181508, October 2, 2013 — Cited to establish that deeds of extrajudicial settlement executed with the intent to exclude co-heirs of their rightful shares are void and inexistent under Article 1409(1) of the Civil Code.
• Vda. De Figuracion v. Figuracion-Gerilla, G.R. No. 151334, February 13, 2013 — Applied to explain that a sale of the entire co-owned property by one co-owner without consent transfers only the seller's pro indiviso share, and the buyer merely steps into the shoes of the vendor as co-owner.
• Heirs of Romana Ingjug-Tiro v. Casals, G.R. No. 134718, August 20, 2001 — Cited for the principle that registration does not vest title and land registration laws do not give the holder any better title than what he actually has.
• Reillo v. San Jose, G.R. No. 166393, June 18, 2009 — Cited to support that a deed of extrajudicial partition executed without including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and vicious.

• Rule 74, Section 1 of the Rules of Court — Governs extrajudicial settlement by agreement between heirs and explicitly states that no extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof.
• Article 1409(1) of the Civil Code — Declares contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy as inexistent and void from the beginning.
• Articles 979, 980, and 981 of the Civil Code — Provide that all legitimate children succeed their parents without distinction as to sex or age, even from different marriages, and inherit in equal shares, with descendants of deceased children inheriting by right of representation.
• Article 493 of the Civil Code — Defines the rights of co-owners, stating that each has full ownership of his part and may alienate it, but the effect is limited to the portion allotted to him in the division upon termination of co-ownership.
• Articles 175 and 185 of the Civil Code — Govern the dissolution and liquidation of the conjugal partnership of gains upon the death of a spouse, requiring equal division of the net remainder between the spouses or their respective heirs.
• Article 996 of the 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.