Tecson vs. Fausto

A co-owner may sell only her lawful share; a sale beyond that share is void as to the excess under nemo dat quod non habet, and a purchaser who knew or should have known of the co-ownership defect cannot be an innocent purchaser for value. A second partition agreement procured through fraud and without the co-owners’ knowledge and consent is null and void as an absolute simulation, leaving the earlier partition agreement binding between the co-owners.

Atty. Agustin Fausto and Waldetrudes Fausto-Nadela were siblings; respondents are Atty. Fausto’s widow and children, while petitioners are Aurora L. Tecson and the spouses Jose and Leonila Tecson. Atty. Jose L. Tecson was a former governor, a long-time neighbor, and a close family friend of the Faustos. The litigation concerns Lot 2189 and the effect of a co-owner’s sale beyond her lawful share under the Torrens system.

Sometime in 1945, Atty. Agustin Fausto acquired in co-ownership with his sister Waldetrudes Fausto-Nadela Lot 2189, a 1,015-square-meter parcel at Jose Zulueta Street corner National Highway in Pagadian City, Zamboanga del Sur. In 1953, Atty. Fausto built his house on a portion of the lot. In 1970, after a cadastral proceeding, Atty. Fausto and Waldetrudes were recognized as co-owners, and OCT No. 734 was issued in their names, in undivided shares, as Waldetrudes Fausto, married to Leon Nadela, and Agustin Fausto, married to Isabel Pareja.

Not long after, the siblings decided to partition Lot 2189. Waldetrudes hired Engr. Ernesto D. Aguilar, who on March 25, 1974 prepared subdivision plan Psd-09-06-000110 (First Plan), dividing the lot into Lot 2189-A with 507 square meters and Lot 2189-B with 508 square meters. The Regional Director of the Bureau of Lands approved the First Plan on April 6, 1974. On April 15, 1974, Atty. Fausto and Waldetrudes executed an Agreement of Partition (First Partition Agreement) giving Waldetrudes absolute ownership of Lot 2189-A and Atty. Fausto separate dominion over Lot 2189-B. The First Partition Agreement was never registered with the Register of Deeds. On March 14, 1975, Atty. Fausto died and was survived by respondent Isabel Vda. de Fausto and their children, the other respondents.

On July 7, 1977, Waldetrudes entered into a Contract to Sell with Aurora L. Tecson, undertaking to sell, among others, her “ideal share” in Lot 2189 upon full payment. On July 28, 1977, Engr. Aguilar prepared a second subdivision plan, Psd-268803 (Second Plan), which changed the division: Waldetrudes’ Lot 2189-A of 507 square meters became Lot 2189-B with 964 square meters, while Atty. Fausto’s Lot 2189-B of 508 square meters became Lot 2189-A with 51 square meters. The Land Registration Commission approved the Second Plan on August 12, 1977. On September 28, 1977, respondents, as Atty. Fausto’s heirs, and Waldetrudes executed a Second Partition Agreement naming Waldetrudes owner of Lot 2189-B and respondents owners of Lot 2189-A. On May 8, 1978, Waldetrudes sold Lot 2189-B, with an area of 964 square meters, to Aurora.

The Register of Deeds refused registration of the Second Partition Agreement because several respondents—Jose, Romualdo, Elizabeth, and Victor—were still minors. Isabel commenced a guardianship proceeding to secure appointment as legal guardian of her minor children in connection with the Second Partition Agreement. On July 28, 1978, the guardianship court granted Isabel’s petition, and on January 17, 1980, it issued an order approving the Second Partition Agreement. On February 19, 1980, the Second Partition Agreement was registered; OCT No. 734 was cancelled; TCT No. T-4,335 covering Lot 2189-A was issued in Atty. Fausto’s name; and TCT No. T-4,336 covering Lot 2189-B was issued in Waldetrudes’ name. The sale to Aurora was also registered, and TCT No. T-4,336 was cancelled and replaced by TCT No. T-4,338 in Aurora’s name. On the same day, Aurora executed a Deed of Absolute Sale conveying Lot 2189-B to her brother, petitioner Atty. Jose L. Tecson, and the deed was registered. On February 20, 1980, TCT No. T-4,338 was cancelled and TCT No. T-4,342 was issued in Atty. Tecson’s name.

On May 28, 1987, respondents filed a Complaint for Declaration of Nullity of Documents, Titles, Reconveyance and Damages against Waldetrudes and the petitioners before the RTC of Pagadian City, seeking recovery of 457 square meters from TCT No. T-4,342. Respondents alleged that Atty. Fausto and Waldetrudes were co-owners in equal share; that the First Partition Agreement was the only true division; that Atty. Fausto was entitled to 508 square meters, not 51; and that Waldetrudes could sell only her 507-square-meter share, so the sale to petitioners was void as to the 457-square-meter excess. They impugned the Second Plan and Second Partition Agreement as Atty. Tecson’s fraudulent handiwork, claiming they were not involved in preparing the agreement, that Atty. Tecson presented it and told them it was needed to facilitate the sale of Waldetrudes’ share, that the agreement did not specify the exact areas and they were not furnished copies of the Second Plan, and that the guardianship proceeding was orchestrated and financed by Atty. Tecson. Petitioners, for their part, denied Atty. Tecson’s participation in preparing the instruments and insisted that the Second Plan and Second Partition Agreement were the voluntary and intelligent deeds of Waldetrudes and respondents; they claimed Lot 2189 was originally the conjugal property of Waldetrudes and Leon Nadela, that Atty. Fausto was never a co-owner, that the registered co-ownership was based merely on occupancy, and that Atty. Fausto’s interest was limited to the house on the 51-square-meter portion.

On October 20, 1988, Waldetrudes executed an affidavit confirming that she and Atty. Fausto were equal co-owners, that she sold only her 507-square-meter portion, and that Atty. Tecson maneuvered the resurvey that reduced Atty. Fausto’s share to 51 square meters; she joined the respondents as party-plaintiff, and on August 18, 1992 the trial court ordered her dropped as defendant and impleaded as plaintiff. Waldetrudes, Romualdo, Minerva, and Isabel testified during trial. The RTC considered petitioners innocent purchasers for value, while the CA found that Atty. Tecson was behind the execution of the Second Partition Agreement.

• Validity of the Second Plan and Second Partition Agreement: Petitioners argued that the Second Plan and Second Partition Agreement were valid, voluntary, and intelligent deeds of Waldetrudes and respondents, and denied that Atty. Tecson participated in their preparation.
• Nature of the Co-ownership: Petitioners argued that Waldetrudes and Atty. Fausto were not co-owners in equal share; Lot 2189 was originally the conjugal property of Waldetrudes and Leon Nadela; Atty. Fausto was never a co-owner; the registered co-ownership was based merely on occupancy; and Atty. Fausto’s interest was limited to the house on the 51-square-meter portion, so the Second Plan and Second Partition Agreement accurately reflected the true ownership.
• Innocent Purchaser for Value: Petitioners argued that Aurora relied on TCT No. T-4,336 in Waldetrudes’ name and Atty. Tecson relied on TCT No. T-4,338 in Aurora’s name, both covering 964 square meters, and that they did not know of the First Plan and First Partition Agreement when they purchased.

• Co-ownership and Shares: Respondents argued that Atty. Fausto and Waldetrudes were co-owners in equal share; the First Partition Agreement was the only true and binding division; Atty. Fausto was entitled to 508 square meters, not 51; Waldetrudes could sell only 507 square meters; and the sale to petitioners was void as to the 457-square-meter excess.
• Invalidity of the Second Plan and Second Partition Agreement: Respondents argued that the Second Plan and Second Partition Agreement were invalid because they were prepared without respondents’ knowledge or consent, Atty. Tecson deceived them into signing the agreement by telling them it was required to facilitate the sale of Waldetrudes’ share, the agreement did not specify the exact areas, they were not furnished copies of the Second Plan, and the guardianship proceeding was orchestrated and financed by Atty. Tecson.
• Reconveyance and Damages: Respondents sought nullification of the sale at least as to the excess and recovery of the 457 square meters from TCT No. T-4,342.

• Co-ownership and Shares: Whether Waldetrudes and Atty. Fausto were co-owners of Lot 2189 in equal shares.
• Validity of the Second Plan and Second Partition Agreement: Whether the Second Plan and Second Partition Agreement are valid and binding on Waldetrudes and respondents.
• Innocent Purchaser for Value: Whether Atty. Tecson is an innocent purchaser for value of the entire 964 square meters covered by TCT No. T-4,342.
• Recovery of the Excess Area: Whether respondents may recover the 457 square meters from TCT No. T-4,342 in Atty. Tecson’s name.

• Co-ownership and Shares: Yes. Waldetrudes and Atty. Fausto were co-owners in equal shares; OCT No. 734 stated they held the lot in undivided shares, and Article 485 of the Civil Code presumed equal portions absent proof to the contrary.
• Validity of the Second Plan and Second Partition Agreement: No. The Second Plan, prepared without the co-owners’ knowledge and consent, had no binding effect; the Second Partition Agreement was null and void as an absolute simulation, leaving the First Plan and First Partition Agreement valid.
• Innocent Purchaser for Value: No. Atty. Tecson knew or should have known of the co-ownership and was behind the execution of the defective Second Partition Agreement; he could not be an innocent purchaser for value.
• Recovery of the Excess Area: Yes. Waldetrudes could sell only her 507-square-meter share, so the sale of the 457-square-meter excess was void under nemo dat quod non habet, and respondents could recover it.

• Co-ownership and Shares: The SC anchored co-ownership on OCT No. 734, which stated that Waldetrudes and Atty. Fausto were co-owners in undivided shares. It held that the inscription carried more than sufficient weight to prove co-ownership. The petitioners’ bare assertion that Waldetrudes was sole beneficial owner had no proof; Tax Declaration No. 6521 could not prevail over OCT No. 734 as conclusive evidence of true ownership, citing Heirs of Leopoldo Vencilao, Sr. vs. Court of Appeals. Waldetrudes herself testified in the cadastral proceeding that Atty. Fausto was her co-owner, and in open court that they had co-equal shares. There was no evidence that the registered co-ownership was based merely on occupancy; OCT No. 734 stated “in undivided share” and was silent on the extent of shares. Under Article 485 of the Civil Code, portions of co-owners are presumed equal unless the contrary is proved. The SC thus ruled equal shares.
• Validity of the Second Plan and Second Partition Agreement: The SC agreed with the CA that Atty. Tecson was behind the execution of the Second Partition Agreement. He misled Waldetrudes and respondents into signing it without notice of the Second Plan, so they were misinformed as to its true nature. The SC relied on the positive testimonies of Romualdo, Minerva, and Isabel: Romualdo testified that Atty. Tecson brought the deed to their house and told them the area would be surveyed later; Minerva testified that Atty. Tecson instructed her to sign for Francisco and Maria Lilia Fausto to facilitate transfer of title and supplied residence certificate numbers; Isabel testified that Atty. Tecson brought the deed and told her to sign for subdivision purposes and that she did not remember filing the guardianship proceeding. The SC found no plausible explanation why a co-owner would gratuitously cede a substantial portion of his share, making the testimonies more credible than Atty. Tecson’s general denial. Consequently, the Second Plan, prepared without knowledge and consent of any co-owner, had no binding effect. The Second Partition Agreement was null and void as an absolute simulation under Article 1346, albeit induced by a third party: the fraud went into the very nature of the agreement, and Waldetrudes and respondents never intended to enter a new partition; their apparent consent was totally wanting. Being a complete nullity, it could not be ratified by lapse of time or approval by the guardianship court. The First Plan and First Partition Agreement remained the valid and binding division: Waldetrudes owned Lot 2189-A with 507 square meters, and Atty. Fausto owned Lot 2189-B with 508 square meters.
• Innocent Purchaser for Value: The SC identified the remaining bar as the principle of innocent purchaser for value under the Torrens system. Petitioners claimed Aurora relied on TCT No. T-4,336 and Atty. Tecson on TCT No. T-4,338, both defining Lot 2189-B as 964 square meters, and that they did not know of the First Plan and First Partition Agreement. The SC disagreed. Atty. Tecson was a long-time friend and neighbor of the Faustos; he considered Atty. Fausto a good friend and visited his house to play mahjong, so he knew Atty. Fausto had an actual interest in Lot 2189. Atty. Tecson presented the Second Partition Agreement to Waldetrudes and respondents; they were not involved in its preparation and had no knowledge of the Second Plan when they signed; and the agreement failed to state the specific areas allotted and did not mention the Second Plan. Being behind the execution, Atty. Tecson knew Lot 2189 was owned in common. The instrument’s unusual silence on the definite areas and the Second Plan revealed a deliberate attempt to conceal the unequal division. The need to conceal the disproportionate division could only be explained by his prior knowledge that the partition was defective for being contrary to the actual sharing. He was in bad faith and could not be an innocent purchaser; he may be charged with actual notice of the defect.
• Recovery of the Excess Area: Since the Second Partition Agreement was void and the First Partition Agreement remained binding, Waldetrudes was absolute owner of only 507 square meters. She could not convey the 964 square meters covered by Lot 2189-B; under nemo dat quod non habet, the sales to Aurora and then Atty. Tecson were void as to the 457-square-meter excess. Atty. Tecson was not an innocent purchaser for value, so the Torrens title in his name did not bar recovery. The SC therefore affirmed the CA’s order for reconveyance of the excess 457 square meters to respondents, with the damages awarded by the CA.

• Co-ownership presumed equal — Under Article 485 of the Civil Code, the portions of co-owners are presumed equal unless the contrary is proved. The SC applied this because OCT No. 734 stated co-ownership in undivided shares but did not specify the extent; Waldetrudes herself testified to co-equal shares, and petitioners offered no proof of unequal shares.
• Absolute simulation — Under Article 1346 of the Civil Code, an absolutely simulated or fictitious contract is void. The SC held the Second Partition Agreement void as an absolute simulation because Waldetrudes and respondents never intended to enter a new partition; they signed only because Atty. Tecson told them it was needed to facilitate the sale of Waldetrudes’ share, so consent was totally wanting.
• Nemo dat quod non habet — One cannot give what one does not have. A co-owner may sell only her lawful share; a sale beyond that share is void as to the excess. The SC applied this because Waldetrudes owned only 507 square meters under the First Partition Agreement, so the sale of 964 square meters was void as to the 457-square-meter excess.
• Innocent purchaser for value — A purchaser under the Torrens system must be in good faith and without notice of a defect in the seller’s title. One who knew or should have known of the co-ownership defect cannot claim that status. The SC applied this because Atty. Tecson was behind the simulated partition, knew of the co-ownership, and concealed the unequal division; he had actual notice of the defect.
• Second plan without co-owner consent — A subdivision plan prepared without the knowledge and consent of the co-owners has no binding effect on them. The SC applied this to the Second Plan, which drastically reduced Atty. Fausto’s share without the co-owners’ participation.
• Unregistered partition agreement — The First Partition Agreement, though never registered, remained the valid and binding division between the co-owners as against the later simulated partition. The SC used it to fix Waldetrudes’ share at 507 square meters and Atty. Fausto’s at 508 square meters.

• “The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved.” — The SC quotes Article 485 to presume equal shares because OCT No. 734 was silent on the extent of the co-owners’ portions.
• “The Second Partition Agreement is null and void as an absolute simulation, albeit induced by a third party.” — The SC invalidates the Second Partition Agreement because the fraud went into the nature of the contract and the co-owners never intended a new partition.
• “The Second Plan, having been prepared without the knowledge and consent of any of the co-owners of Lot 2189, have no binding effect on them.” — The SC holds that the drastic redivision in the Second Plan cannot bind the co-owners who did not participate in or consent to it.
• “Atty. Tecson cannot be considered as an innocent purchaser of the excess area of Lot 2189-B. Based on the facts and circumstances prevailing in this case, Atty. Tecson may be charged with actual notice of the defect plaguing the Second Partition Agreement.” — The SC rejects the innocent-purchaser defense because Tecson’s knowledge and role in the simulated partition gave him actual notice of the defect.

• Heirs of Leopoldo Vencilao, Sr. vs. Court of Appeals, G.R. No. 123713, April 1, 1998, 288 SCRA 574, 581-582 — Cited to support the rule that a tax declaration cannot prevail over an original certificate of title as conclusive evidence of ownership.

• Article 485, Civil Code — The portions of co-owners are presumed equal unless the contrary is proved; applied because OCT No. 734 was silent on the extent of shares and no contrary proof was offered.
• Article 1346, Civil Code — An absolutely simulated or fictitious contract is void; applied to nullify the Second Partition Agreement because the co-owners never intended a new partition.
• Article 1459, Civil Code — Nemo dat quod non habet; applied because Waldetrudes could convey only her 507-square-meter share, making the sale void as to the 457-square-meter excess.
• Section 10, Rule 39, Rules of Court — Cited in the CA dispositive as authority for the Clerk of Court to cause transfer if Atty. Tecson failed to reconvey; the SC affirmed the CA decision.