Vagilidad vs. Vagilidad

A co-owner may validly sell a definite portion of co-owned property by metes and bounds before partition, affecting only his aliquot share; a subsequent sale of the same property by the co-owner is void for lack of ownership, and the second buyer who registered in bad faith cannot invoke the protection of Article 1544 on double sale or the indefeasibility of the Torrens title.

The parties are relatives: Gabino Vagilidad Jr. is the nephew of Wilfredo Vagilidad. The subject property, Lot No. 1253-B, measuring 1,604 square meters in Atabay, San Jose, Antique, was originally part of Lot No. 1253, a 4,280-square-meter parcel owned by Zoilo Labiao under Original Certificate of Title No. RO-2301 issued on March 3, 1931. Zoilo died in 1931, leaving as heirs his children Loreto, Efren, and Priscilla, who remained co-owners of the undivided property. The dispute arose from two successive sales of the same portion: Loreto's sale to Gabino Jr. on May 12, 1986, and Loreto's sale of the same portion to Wilfredo on December 7, 1989.

Zoilo Labiao owned a 4,280-square-meter parcel of land designated as Lot No. 1253 in Atabay, San Jose, Antique, covered by Original Certificate of Title No. RO-2301 issued on March 3, 1931. Zoilo died sometime in 1931, leaving as heirs his children Loreto, Efren, and Priscilla, who remained co-owners of the undivided property for decades.

On May 12, 1986, Loreto sold a 1,604-square-meter portion of Lot No. 1253 to Gabino Vagilidad Jr., his nephew, as evidenced by a Deed of Absolute Sale. The Bureau of Internal Revenue issued a certification on the same date exempting the transfer from capital gains tax, the property being classified as an ordinary asset. Gabino Jr. paid real estate taxes on the subject parcel in 1987. On July 31, 1987, Gabino Jr. filed a Petition for the Surrender of TCT No. T-16694 with the RTC of San Jose City, docketed as Cadastral Case No. 87-731-A, to compel Loreto to surrender the owner's copy of the title so that the property could be transferred to Gabino Jr.'s name. The case was sent to the archives on March 21, 1994 after the parties appeared to have reached an amicable settlement without the knowledge of their counsels.

Meanwhile, on January 20, 1987, Loreto, Efren, and Priscilla executed an Extrajudicial Settlement of Estate adjudicating the entire Lot No. 1253 to Loreto, with the co-heirs declaring they had previously received their respective shares from the estate of their parents Zoilo and Purificacion. On January 29, 1987, TCT No. T-16693 was issued in the names of all three heirs, but on the same date it was cancelled and TCT No. T-16694 was issued in Loreto's name alone. A subdivision plan for Lot No. 1253 was approved, resulting in the creation of Lot Nos. 1253-A, 1253-B, 1253-C, and 1253-D.

On December 7, 1989, two deeds were executed and notarized by Atty. Warloo Cardenal, both bearing the same notarial entry — Document No. 236, Page No. 49, Book No. XI, Series of 1989. The first was a Deed of Absolute Sale whereby Gabino Jr. sold Lot No. 1253-B to his uncle, Wilfredo Vagilidad. According to Gabino Jr., this sale was executed without consideration at Wilfredo's request, allegedly for loan purposes, with an agreement that the property would be returned when needed. The second was a Deed of Absolute Sale of a Portion of Land executed by Loreto in favor of Wilfredo, covering the same 1,604-square-meter property. Febe Mabuhay, Atty. Cardenal's secretary who prepared both documents, testified that she was instructed to assign the same document number to both deeds and that she noticed the similarity in the technical descriptions of the property in both documents. Atty. Ernesto Estoya, then Clerk of Court of the RTC of Antique, testified that the notarial entry for Document No. 236 could not be found in the files, with an unexplained gap between Document No. 235 and Document No. 239.

On February 15, 1990, the sale to Wilfredo was registered under Entry No. 180425, and TCT No. T-18023 was issued in his name. Thereafter, Wilfredo and his wife Lolita mortgaged the property to the Philippine National Bank for a ₱150,000 loan on October 24, 1991, and later to the Development Bank of the Philippines for a ₱200,000 loan. Both mortgages were eventually cancelled after payment.

On September 29, 1995, spouses Gabino Jr. and Dorothy Vagilidad filed a Complaint for Annulment of Document, Reconveyance and Damages against spouses Wilfredo and Lolita, claiming ownership of Lot No. 1253-B and alleging that the December 7, 1989 deed was void for want of consideration and for lack of consent of Gabino Jr.'s spouse. The defendants claimed lawful ownership based on the December 7, 1989 sale from Loreto, which was registered and resulted in the issuance of TCT No. T-18023. The trial court ruled in favor of Wilfredo, finding that Loreto could not have validly sold a divided portion to Gabino Jr. in 1986 because the property had not yet been partitioned. The Court of Appeals reversed, holding that Loreto's 1986 sale was valid as a disposition of his pro-indiviso share, rendering the 1989 sale to Wilfredo void, and finding that Wilfredo, Loreto, and Atty. Cardenal had connived to deprive Gabino Jr. of the property.

• Determinate Object: Petitioners contended that the Deed of Absolute Sale between Loreto and Gabino Jr. did not have a determinate object, citing discrepancies between the description of Lot No. 1253 in the 1986 deed and Lot No. 1253-B in the 1989 deed, including the statement in the 1986 deed that the property was "not registered" under the Land Registration Act or the Spanish Mortgage Law. They relied on Articles 1349 and 1460 of the Civil Code to argue that absent a determinate object, the contract is void.
• Double Sale: Petitioners argued that the appellate court should have upheld Wilfredo's title under Article 1544 of the Civil Code and the doctrine of double sale, asserting that Wilfredo was a buyer in good faith who registered the property and obtained the Torrens title without seeing any encumbrance at the back of the title, and was therefore not bound to go beyond the certificate of title.
• Prescription: Petitioners contended that the action for reconveyance based on fraud had prescribed under Article 1391 of the Civil Code, which provides a four-year prescriptive period from the discovery of fraud, citing Gerona vs. De Guzman.
• Damages: Petitioners argued that the award of moral damages, attorney's fees, and litigation expenses was erroneous and that the alleged connivance between Atty. Cardenal and Wilfredo lacked basis.
• Validity of First Sale: Petitioners maintained that Loreto could only sell his aliquot share in the undivided inheritance at the time of the 1986 sale, not a divided part designated by metes and bounds, and that the appellate court could not presume that Loreto's aliquot part was the parcel designated as Lot No. 1253-B since the subdivision plan was approved only on January 19, 1987.

• Ownership and Validity of First Sale: Respondents claimed to be the lawful owners of Lot No. 1253-B, having acquired it from Loreto on May 12, 1986, and alleged that the December 7, 1989 Deed of Absolute Sale in favor of Wilfredo was null and void for want of consideration and for lack of consent of Gabino Jr.'s spouse, Dorothy.
• Fraud and Connivance: Respondents asserted that Wilfredo had requested Gabino Jr. to transfer ownership of the property to Wilfredo's name for loaning purposes, with an agreement that the land would be returned when needed, and that after Wilfredo was able to mortgage the property, he refused to return it despite demands.

• Determinate Object: Whether the Deed of Absolute Sale between Loreto and Gabino Jr. dated May 12, 1986 has a determinate object as required by Articles 1349 and 1460 of the Civil Code.
• Double Sale: Whether Wilfredo is entitled to the protection of Article 1544 of the Civil Code on double sale as a buyer who registered the property in good faith.
• Validity of Co-Owner's Sale Before Partition: Whether Loreto could validly sell a definite portion of the co-owned property by metes and bounds before partition.
• Prescription: Whether the action for reconveyance based on fraud prescribes in four years under Article 1391 or in ten years under Article 1144 of the Civil Code.
• Damages: Whether the award of moral damages, attorney's fees, and litigation expenses was proper.

• Determinate Object: Yes. The object of the May 12, 1986 Deed of Absolute Sale was determinate; Lot No. 1253 as described therein and Lot No. 1253-B as described in the December 7, 1989 deed refer to the same property, as shown by their identical technical descriptions, boundaries, and area.
• Double Sale: No. Wilfredo cannot invoke Article 1544 because he registered the property in evident bad faith, as demonstrated by the fraudulent notarization scheme, the same notarial entry for two deeds involving the same property, and his knowledge that Gabino Jr. had no title to transfer.
• Validity of Co-Owner's Sale Before Partition: Yes. A co-owner has full ownership of his pro-indiviso share and may alienate a definite portion of the co-owned property before partition; the sale affects only his aliquot share and does not require the consent of co-heirs.
• Prescription: No, the action had not prescribed. An action for reconveyance based on an implied or constructive trust under Article 1456 prescribes in ten years under Article 1144, not four years under Article 1391; the complaint filed on September 26, 1995 was well within ten years from the February 15, 1990 registration.
• Damages: Yes. The award of moral damages, attorney's fees, and litigation expenses was proper, the evidence showing that petitioners committed bad faith and connived to deprive respondents of their lawful title.

• Determinate Object: The Court compared the technical descriptions in both deeds and found them identical in boundaries and area (1,604 square meters). The description in the 1986 deed that the property was "not registered" under the Land Registration Act was a stray description uncorroborated by any evidence, appearing solely on the deed and left unexplained by Loreto, who signed it as vendor. The trial court itself traced the origin of Lot No. 1253-B from Zoilo's OCT No. RO-2301 through the subdivision and titling process, demonstrating that the subject parcel was originally part of Zoilo's registered lot. Petitioners failed to proffer any evidence that Loreto owned properties other than Lot No. 1253 to support their claim that the objects of the two deeds were different. Accordingly, the determinate object requirement of Articles 1349 and 1460 was satisfied.

• Double Sale: Article 1544 grants ownership to the buyer who in good faith first records immovable property in the Registry of Property. However, the protection requires good faith, which was absent here. Four circumstances established Wilfredo's bad faith: (1) the two deeds executed on December 7, 1989 — one from Gabino Jr. to Wilfredo and one from Loreto to Wilfredo — bore the same notarial entry number, indicating a deliberate scheme; (2) the testimony of disinterested witness Febe Mabuhay, Atty. Cardenal's secretary, established that she was instructed to assign the same document number to both deeds and noticed the similarity in the property descriptions; (3) the notarial record itself was missing the entry for Document No. 236, with an unexplained gap between Document Nos. 235 and 239; and (4) Gabino Jr.'s testimony that the scheme was designed to deprive him of his property was corroborated by the fact that Wilfredo used the title as collateral for bank loans shortly after registration. Because Wilfredo registered in bad faith, Article 1544 was inapplicable.

• Validity of Co-Owner's Sale Before Partition: Under the Civil Code, co-ownership gives each co-owner an ideal or abstract quota in the entire property before partition. A co-owner has full ownership of his pro-indiviso share and may alienate, assign, or mortgage it without the consent of co-heirs. The sale of a definite portion by metes and bounds before partition does not render the sale void; it is legally recognized to the extent of the co-owner's aliquot share. Although Loreto's aliquot share was approximately 1,426 square meters (one-third of 4,280), and he sold 1,604 square meters, the excess would affect only his share and not those of non-consenting co-owners. However, the co-heirs subsequently waived all their rights and interests over Lot No. 1253 in favor of Loreto in the January 20, 1987 Extrajudicial Settlement of Estate, curing any deficiency. Consequently, when Loreto purported to sell the same portion to Wilfredo on December 7, 1989, he was no longer the owner, and the sale was void under the principle that no one can give what he does not have.

• Prescription: The Court clarified that an action for reconveyance based on an implied or constructive trust prescribes in ten years under Article 1144 of the Civil Code, not four years under Article 1391. Although Wilfredo's TCT became indefeasible after one year from registration, the fraud in its issuance created an implied trust in favor of Gabino Jr. under Article 1456, which provides that property acquired through mistake or fraud creates an implied trust for the benefit of the true owner. The four-year period in Gerona vs. De Guzman was explained as having been applied under the old Code of Civil Procedure because the fraud in that case was discovered before the New Civil Code took effect on August 30, 1950. Under the present Civil Code, Article 1144 governs actions upon an obligation created by law, including the obligation to reconvey arising from an implied trust. The complaint filed on September 26, 1995 was well within ten years from the February 15, 1990 registration of Wilfredo's title.

• Damages: The Court found clear evidence of bad faith in the execution of the December 7, 1989 Deed of Absolute Sale of Portion of Land. The appellate court reasonably inferred from the series of events that Wilfredo, Loreto, and Atty. Cardenal connived to deprive Gabino Jr. and Dorothy of Lot No. 1253-B, justifying the award of moral damages. Attorney's fees were likewise proper because respondents were compelled to litigate and incur expenses to protect their interests by reason of petitioners' unjustified acts.

• Co-Owner's Right to Alienate Pro-Indiviso Share — A co-owner has full ownership of his pro-indiviso share and may alienate, assign, or mortgage it, and substitute another person for its enjoyment, even before partition and without the consent of co-heirs. The sale of a definite portion of co-owned property by metes and bounds before partition is valid to the extent of the co-owner's aliquot share; if the co-owner sells more than his share, the sale affects only his share and not those of non-consenting co-owners. In this case, Loreto validly sold 1,604 square meters to Gabino Jr. on May 12, 1986 as co-owner, and any excess over his one-third aliquot share (approximately 1,426 square meters) was cured by the co-heirs' waiver of their rights in the January 20, 1987 Extrajudicial Settlement.

• Double Sale Under Article 1544 — Article 1544 provides that if immovable property is sold to different vendees, ownership belongs to the person who in good faith first recorded it in the Registry of Property. The protection of Article 1544 requires good faith in registration. In this case, Wilfredo's registration was tainted with bad faith — fraudulent notarization, identical notarial entries for two deeds over the same property, missing notarial records, and knowledge that Gabino Jr. had no title to transfer — precluding reliance on the double sale doctrine.

• Implied Trust and Prescription of Reconveyance — Under Article 1456, property acquired through mistake or fraud creates an implied trust for the benefit of the true owner. An action for reconveyance based on such implied or constructive trust prescribes in ten years under Article 1144(2) (obligation created by law), not four years under Article 1391. The ten-year period runs from the date of registration of the Torrens title. The four-year period under the old Code of Civil Procedure applies only to fraud discovered before the New Civil Code took effect on August 30, 1950.

• Registration Does Not Confer Ownership — Registration of property is not a means of acquiring ownership. The indefeasibility of a Torrens title cannot be invoked to protect a usurper from the true owner or to shield the commission of fraud. Wilfredo's registered title could not prevail over Gabino Jr.'s prior valid acquisition because the registration was effected in bad faith.

• "LORETO sold the subject property to GABINO, JR. on May 12, 1986 as a co-owner. LORETO had a right, even before the partition of the property on January 19, 1987, to transfer in whole or in part his undivided interest in the lot even without the consent of his co-heirs. This right is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person for its enjoyment." — This passage articulates the ratio decidendi on the validity of a co-owner's sale of a definite portion of undivided property before partition.

• "Registration of property is not a means of acquiring ownership. Its alleged incontrovertibility cannot be successfully invoked by WILFREDO because certificates of title cannot be used to protect a usurper from the true owner or be used as a shield for the commission of fraud." — This formulation is frequently cited to distinguish the indefeasibility of the Torrens title from the substantive question of ownership, especially where fraud attends registration.

• "An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise." — This is the canonical statement from Salvatierra vs. Court of Appeals adopted by the Court, establishing the ten-year prescriptive period for reconveyance actions founded on implied trust under the present Civil Code.

• "Based on the principle that 'no one can give what he does not have,' LORETO could not have validly sold to WILFREDO on December 7, 1989 what he no longer had." — This passage applies the nemo dat quod non habet principle to invalidate the second sale, forming the logical bridge between the validity of the first sale and the nullity of the second.

• Lopez vs. Vda. De Cuaycong, 74 Phil. 601 (1944) — Followed. Held that the fact that an agreement purported to sell a concrete portion of a co-owned property does not render the sale void, for the binding force of a contract must be recognized as far as legally possible. Applied to uphold the validity of Loreto's sale of a definite portion by metes and bounds before partition.
• Salvatierra vs. Court of Appeals, G.R. No. 107797, August 26, 1996, 261 SCRA 45 — Followed. Established that an action for reconveyance based on an implied or constructive trust prescribes in ten years under Article 1144, not four years, and clarified that Gerona vs. De Guzman's four-year period was based on the old Code of Civil Procedure because the fraud was discovered before the New Civil Code took effect.
• Nufable vs. Nufable, G.R. No. 126950, July 2, 1999, 309 SCRA 692 — Cited for the doctrine that a co-owner has full ownership of his pro-indiviso share and may alienate it without the consent of co-heirs.
• Oliveras vs. Lopez, No. L-29727, December 14, 1988, 168 SCRA 431 — Cited for the principle that before partition, no individual co-owner can claim title to any definite portion; all that a co-owner has is an ideal or abstract quota in the entire property.
• Adille vs. Court of Appeals, 157 SCRA 455 (1988) — Cited for the doctrine that registration of property is not a means of acquiring ownership and that certificates of title cannot be used to protect a usurper or shield fraud.
• Bailon-Casilao vs. Court of Appeals, 160 SCRA 738 (1988) — Cited for the rule that if a co-owner sells more than his aliquot share, the sale affects only his share and not those of non-consenting co-owners.
• Gerona vs. De Guzman, No. L-19060, May 29, 1964, 11 SCRA 153 — Distinguished. Petitioners relied on this case for the four-year prescriptive period, but the Court explained that the four-year period was applied under the old Code of Civil Procedure because the fraud was discovered before the New Civil Code took effect.

• Article 1349, Civil Code — Provides that the object of every contract must be determinate as to its kind, and that the fact that quantity is not determinate is not an obstacle if it can be determined without need of a new contract. Applied to test whether the 1986 Deed of Absolute Sale had a determinate object; the Court found the requirement satisfied.
• Article 1460, Civil Code — Defines a thing as determinate when particularly designated or physically segregated from all others of the same class, and provides that the requisite is satisfied if the thing is capable of being made determinate without a new agreement. Applied in conjunction with Article 1349 to uphold the validity of the 1986 sale.
• Article 1544, Civil Code — Governs double sale, providing that for immovable property, ownership belongs to the person who in good faith first recorded it in the Registry of Property. Petitioners' reliance was rejected because Wilfredo registered in bad faith.
• Article 1456, Civil Code — Provides that property acquired through mistake or fraud creates an implied trust for the benefit of the person from whom the property comes. Applied to establish an implied trust in favor of Gabino Jr. arising from the fraudulent registration of Wilfredo's title, thereby grounding the ten-year prescriptive period.
• Article 1144, Civil Code — Provides that actions upon an obligation created by law must be brought within ten years from the time the right of action accrues. Applied as the prescriptive period for the reconveyance action based on the implied trust under Article 1456.
• Article 1391, Civil Code — Provides a four-year prescriptive period for annulment based on fraud, counted from discovery. Petitioners' reliance was rejected; the Court clarified that this article governs annulment of contracts, not reconveyance based on implied trust.

Justice Angelina Sandoval-Gutierrez, Justice Renato C. Corona, Justice Adolfo S. Azcuna, and Justice Cancio C. Garcia concurred. No separate concurring opinions were written.