Spouses del Campo vs. Court of Appeals

A sale by a co-owner of a definite, physically segregated portion of an undivided co-owned property is not void; it transfers the vendor’s undivided interest to the buyer, who becomes a co-owner, provided the portion sold does not exceed the vendor’s ideal share. Where a co-owner obtains registration of the entire property in his name despite knowledge of another’s prior possession and claim, fraud attends the registration, creating an implied trust and rendering an action for reconveyance imprescriptible so long as the true owner remains in undisturbed possession.

Lot 162 of the Cadastral Survey of Pontevedra, Capiz, with an area of 27,179 square meters, was originally registered under Original Certificate of Title No. 18047 in the names of eight siblings surnamed Bornales, each holding an aliquot share. In 1940, one co-owner, Salome Bornales, sold a specific portion of her 4/16 share to Soledad Daynolo by metes and bounds. Soledad went into possession and later mortgaged the portion to Jose Regalado, Sr. In 1948, Salome and two other co-owners sold 24,993 square meters of the same lot to Regalado. Soledad’s heirs redeemed the mortgage in 1951 and immediately sold the identical portion to petitioners spouses Del Campo, who continued in open, continuous possession. Regalado subsequently caused reconstitution of the original title and had the entire property registered in his name, subdividing it and obtaining Transfer Certificate of Title No. 14566 covering Lot 162-C-6, which embraced the area occupied by petitioners.

• The Co-ownership: Lot 162 was registered under OCT No. 18047 in the names of Salome (4/16), Consorcia (4/16), Alfredo (2/16), Maria (2/16), Jose (1/16), Quirico (1/16), Rosalia (1/16), and Julita (1/16), all surnamed Bornales.

• Sale of a Definite Portion to Soledad Daynolo (1940): On July 14, 1940, Salome Bornales sold a portion of her 4/16 share to Soledad Daynolo for P200.00. The Deed of Absolute Sale described the portion by metes and bounds and contained a sketch. Salome, Consorcia, and Alfredo signed the deed. Soledad immediately took possession and built a house on the land.

• Mortgage to Jose Regalado, Sr. (1947): Soledad and her husband Simplicio Distajo mortgaged the same portion to Jose Regalado, Sr. as security for a P400.00 debt, evidenced by a Deed of Mortgage dated May 1, 1947.

• Sale of the Larger Lot to Regalado (1948): On April 14, 1948, Salome, Consorcia, and Alfredo sold 24,993 square meters of Lot 162 to Jose Regalado, Sr.

• Redemption and Sale to Petitioners (1951): On May 4, 1951, Simplicio Distajo, as heir of the deceased Soledad, paid the mortgage debt and redeemed the mortgaged portion. Regalado executed a Deed of Discharge of Mortgage in favor of Soledad’s heirs. On the same date, those heirs sold the redeemed portion to petitioners spouses Manuel and Salvacion Del Campo for P1,500.00. Petitioners took physical possession and later declared the land for taxation.

• Reconstitution and Titling in Regalado’s Name: Jose Regalado, Sr. caused the reconstitution of the original certificate of title. The reconstituted OCT No. RO-4541 initially reflected the shares of the original co-owners, but title was later transferred to Regalado alone. He subdivided the property, and on February 24, 1977, obtained TCT No. 14566 covering Lot 162-C-6 with an area of 11,732 square meters, which included the portion possessed by petitioners.

• Complaint for Reconveyance (1987): Petitioners filed a complaint for repartition, resurvey, and reconveyance against the heirs of Regalado, alleging ownership of 1,544 square meters within Lot 162-C-6 that had been erroneously included in Regalado’s title. They claimed continuous possession since 1951. Summons was served on Regalado’s widow and two children; the widow and one child were declared in default, while Antonio Regalado filed an answer but presented no evidence.

• Trial Court and Court of Appeals Rulings: The trial court dismissed the complaint, holding that Salome could not validly sell an undivided part by metes and bounds and that mere possession could not defeat a Torrens title. The Court of Appeals affirmed.

• Validity of Sale of Definite Portion: Petitioner argued that the sale by Salome of a concrete, metes-and-bounds portion of the co-owned lot did not render the sale void, and that they acquired rights that must be respected.

• Estoppel: Petitioner maintained that the heirs of Jose Regalado, Sr. were estopped from denying petitioners’ right and title because Regalado had accepted the same portion as mortgage security and later executed a discharge of mortgage, thereby recognizing the ownership of petitioners’ predecessor-in-interest.

• Invalidity of Sale: Respondent contended that a co-owner cannot validly sell a definite physical portion of an undivided co-owned property prior to partition; thus, the sale by Salome to Soledad was void and conveyed no right to petitioners.

• Indefeasibility of Torrens Title: Respondent argued that the Torrens title in the name of Regalado was indefeasible and could not be defeated by mere possession or tax declarations.

• Validity of Sale of Definite Portion: Whether the sale by a co-owner of a physically segregated, metes-and-bounds portion of an undivided co-owned property is void.

• Estoppel: Whether the heirs of Regalado are estopped from denying petitioners’ ownership over the disputed area.

• Entitlement to Reconveyance: Whether petitioners are entitled to repartition, resurvey, and reconveyance of the portion included in respondent’s certificate of title.

• Validity of Sale of Definite Portion: The sale was not void. Under Article 493 of the Civil Code, a co-owner has full ownership of his pro-indiviso share and may alienate it. The sale of a concrete portion does not ipso facto nullify the transaction; the contract must be given effect to the extent legally possible (“quando res non valet ut ago, valeat quantum valere potest”). Because the portion sold did not exceed Salome’s 4/16 ideal share, the sale transferred her undivided interest to Soledad, who thereby became a co-owner of Lot 162. Consequently, the subsequent sale by Salome, Consorcia, and Alfredo to Regalado in 1948 transferred only their remaining share (10/16 less Salome’s previously alienated portion). Regalado merely became a co-owner to that extent and could not have acquired the entire property, including the share already conveyed to Soledad and later to petitioners.

• Estoppel: Respondents were estopped from denying petitioners’ ownership. Regalado had accepted the very same portion as mortgage security in 1947, thereby recognizing Soledad’s ownership, and executed a discharge of mortgage in 1951 after the supposed sale of the whole lot to him. By virtue of estoppel by deed, a party to a deed and his privies are precluded from asserting any right in derogation of the deed or denying the truth of material facts asserted in it. Regalado’s knowledge of petitioners’ possession and his failure to disclose it during registration proceedings constituted actual fraud.

• Entitlement to Reconveyance: Petitioners were entitled to reconveyance. Their uninterrupted possession of the definite portion for 36 years (from 1951 to the filing of the complaint in 1987) without objection from Regalado had the effect of a partial partition, giving them a better right to the area they occupied. The registration of the entire property in Regalado’s name was attended by fraud because he knowingly omitted petitioners’ actual possession, thereby creating an implied trust in their favor. The action for reconveyance based on an implied trust is imprescriptible when the true owners remain in undisturbed possession, being in the nature of a suit for quieting of title. The Torrens title could not shield a usurper from the true owner.

• Validity of Sale of a Definite Portion by a Co-owner: A co-owner’s sale of a specific, metes-and-bounds portion of an undivided co-owned property is not void per se. Pursuant to the principle “quando res non valet ut ago, valeat quantum valere potest,” the contract must be recognized and enforced to the extent legally possible. If the portion sold does not exceed the vendor’s ideal share, the buyer acquires the vendor’s undivided interest and becomes a co-owner, stepping into the shoes of the vendor. The sale does not confer ownership of the specific physical area but an abstract ideal share equivalent to the consideration given. Requisites for the application of this doctrine: (a) the vendor is a co-owner; (b) the object is a physically segregated portion defined by metes and bounds; (c) the portion sold does not exceed the vendor’s aliquot share in the co-ownership; and (d) the sale is given effect as a transfer of the vendor’s undivided interest.

• Co-owner’s Power of Disposition: Article 493 of the Civil Code grants each co-owner full ownership of his pro-indiviso share and the right to alienate, assign, or mortgage it, and to substitute another person in its enjoyment. A sale by one co-owner of the entire property as if it were his own transfers only his undivided share, making the buyer a co-owner, without affecting the shares of the non-consenting co-owners. The principle of “nemo dat quod non habet” applies: no one can transfer more rights than he has.

• Partial Partition by Long Undisturbed Possession: Where a co-owner or a transferee of an undivided share is permitted to occupy a definite portion of the co-owned property and such possession remains undisturbed for a period too long to be ignored, the possession ripens into a partial partition, entitling the possessor to that definite portion. The rule is founded on the maxim “potior est conditio possidentis” (better is the condition of the possessor). (Vda. de Cabrera v. Court of Appeals, 267 SCRA 339)

• Estoppel by Deed: A party to a deed and his privies are precluded from asserting, as against the other party and his privies, any right or title in derogation of the deed, or from denying the truth of any material fact asserted in it. The acceptance of a mortgage from a mortgagor who declares absolute ownership estops the mortgagee and his successors from later denying that ownership.

• Fraud in Registration and Implied Trust: The knowing failure or intentional omission to disclose another person’s actual physical possession during land registration proceedings constitutes actual fraud. Such fraud in the issuance of a certificate of title creates an implied trust in favor of the person defrauded, consistent with Article 1456 of the Civil Code. An action for reconveyance based on an implied trust ordinarily prescribes in ten years. However, when the true owner remains in undisturbed possession, the action is imprescriptible, being in the nature of a suit to quiet title.

• “The fact that the agreement in question purported to sell a concrete portion of the hacienda does not render the sale void, for it is a well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so. ‘Quando res non valet ut ago, valeat quantum valere potest.’” — This passage, adopted from Lopez v. Vda. de Cuaycong, anchors the Court’s holding that a co-owner’s sale of a definite portion is not void.

• “Since the co-owner/vendor’s undivided interest could properly be the object of the contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common.” — This defines the precise legal effect of the sale of a definite portion by a co-owner.

• “Such undisturbed possession had the effect of a partial partition of the co-owner property which entitles the possessor to the definite portion which he occupies.” — The Court applies the doctrine from Vda. de Cabrera to protect the long-standing possession of petitioners.

• “Failure and intentional omission to disclose the fact of actual physical possession by another person during registration proceedings constitutes actual fraud. Likewise, it is fraud to knowingly omit or conceal a fact, upon which benefit is obtained to the prejudice of a third person.” — This establishes the basis for the implied trust and the right to reconveyance.

• “An action for reconveyance based on an implied trust ordinarily prescribes in ten years. But when the right of the true and real owner is recognized, expressly or implicitly such as when he remains undisturbed in his possession, the said action is imprescriptible, it being in the nature of a suit for quieting of title.” — This clarifies the prescriptibility rule critical to petitioners’ success.

• Lopez v. Vda. de Cuaycong, 74 Phil. 601 (1944) — Followed as controlling authority for the principle that a co-owner’s sale of a definite portion is not void but must be given effect to the extent legally possible; the maxim “quando res non valet ut ago, valeat quantum valere potest” was applied.

• Vda. de Cabrera v. Court of Appeals, 267 SCRA 339 (1997) — Applied for the rule that long, undisturbed possession of a definite portion by a co-owner or transferee effects a partial partition, giving the possessor a better right.

• Heirs of Manuel A. Roxas v. Court of Appeals, 270 SCRA 309 (1997) — Cited for the definition of actual fraud in registration proceedings as the intentional omission to disclose another’s possession.

• Nufable v. Nufable, 309 SCRA 692 (1999) — Cited to reinforce that a co-owner has full ownership of his pro-indiviso share and the right to alienate it.

• Tomas Claudio Memorial College, Inc. v. Court of Appeals, 316 SCRA 502 (1999) — Followed for the proposition that a sale of the entire property by one co-owner transfers only his undivided share, making the buyer a co-owner.

• David v. Malay, G.R. No. 132644, November 19, 1999 — Relied upon to hold that an action for reconveyance based on implied trust is imprescriptible when the true owner remains in possession.

• Esquivias v. Court of Appeals, 272 SCRA 803 (1997) — Cited for the principle that certificates of title confirm existing title and cannot be used as a shield for fraud or to protect a usurper from the true owner.

• Article 493, Civil Code: “Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.” Applied to validate Salome’s sale of part of her undivided share and to limit Regalado’s acquisition to the remaining shares of the selling co-owners.

• Article 1456, Civil Code (implied trust): Although not expressly cited, the Court’s ruling that fraud in registration created an implied trust in favor of petitioners rests on this article, which provides that property acquired through fraud is held in trust for the person defrauded.

Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concurred.