Bailon-Casilao vs. Court of Appeals

A sale of the entire co-owned property by less than all co-owners without the consent of the others transfers only the vendors’ undivided shares, making the buyer a co-owner; the proper remedy of the aggrieved co-owners is an action for partition, which is imprescriptible and cannot be barred by laches if the co-owners lacked knowledge of the sale, had no opportunity to institute suit, and the buyer was in bad faith.

Six siblings — Rosalia, Gaudencio, Sabina, Bernabe, Nenita, and Delia, all surnamed Bailon — were registered co-owners, each with a one-sixth undivided interest, of a 48,849-square-meter parcel of land in Sorsogon covered by Original Certificate of Title No. 1771, issued on June 12, 1931. The administration of the land was entrusted to Rosalia, the eldest, who possessed and enjoyed its produce while her siblings resided outside Sorsogon. Rosalia, together with Gaudencio, sold the entire property without the knowledge or consent of the other co-owners. After a series of transfers, the two parcels were acquired by Celestino Afable, Sr., who had possession of the certificate of title prior to the sale and was aware that it listed six co-owners, not merely the two vendors. Petitioners only learned of the unauthorized alienations in 1981 when Delia Bailon-Casilao returned to Sorsogon, prompting the filing of the present action.

Nature of the Property and Co-ownership: A parcel of land with an area of 48,849 square meters in Sorsogon was covered by Original Certificate of Title No. 1771, issued on June 12, 1931, in the names of Rosalia, Gaudencio, Sabina, Bernabe, Nenita, and Delia Bailon as co-owners each holding a 1/6 undivided share. Gaudencio and Nenita were deceased; Nenita was represented by her children Luz, Emma, and Nilda. Bernabe left for China in 1931 and was never heard from again.

Administration and Possession: The co-owners entrusted the care and management of the land to Rosalia Bailon, the eldest sibling, who remained in Sorsogon. The other co-owners resided elsewhere: Delia left Sorsogon in 1942 upon marriage and returned only in 1983; Sabina lived in Zamboanga. Rosalia appropriated the produce of the land, which was insufficient for her daily consumption, and she undertook the payment of real property taxes.

Unauthorized Alienations: On August 23, 1948, Rosalia and Gaudencio Bailon sold a 16,283-square-meter portion to Donato Delgado. On May 13, 1949, Rosalia alone sold the remaining 32,566-square-meter portion to Ponciana V. Aresgado de Lanuza. On the same day, Lanuza acquired the 16,283-square-meter portion from Delgado. On December 3, 1975, John Lanuza, acting under a special power of attorney from his wife Ponciana, sold both parcels to Celestino Afable, Sr. Each deed of sale misrepresented the land as unregistered.

Tax Declarations: The land was successively declared for taxation in the name of Ciriaca Dellamas (mother of the registered co-owners), then Rosalia Bailon in 1924, Donato Delgado in 1936, Ponciana de Lanuza in 1962, and finally Celestino Afable, Sr. in 1983.

Afable’s Prior Knowledge of Title Defect: Even before the purchase, Afable had the original certificate of title in his possession because the property had been mortgaged to him by Ponciana Aresgado. He admitted that in 1975 he discovered the title was in the names of several persons. He subsequently filed a petition in the Court of First Instance of Sorsogon to cancel the title and transfer it to his name, which was denied because only two of the six co-owners signed the deeds of sale. He also later approached petitioner Delia Bailon-Casilao to sign a document intended to cure the title’s defect.

Discovery and Filing of Suit: In 1981, Delia Bailon-Casilao returned to Sorsogon, discovered the unauthorized sales, and, together with the other petitioners, promptly filed the complaint for recovery of property and damages on March 13, 1981.

• Laches Not Established: Petitioners argued that laches could not bar their action because they had no knowledge of the unauthorized sale made by Rosalia Bailon and had no opportunity to institute suit until 1981, when the sale was discovered. They contended that the administration of the land had been entrusted to Rosalia precisely because they lived far from Sorsogon; upon learning of the sale, they immediately filed the case.
• Proper Remedy Is Partition: Petitioners maintained that the sale by a co-owner without their consent transferred only the vendors’ undivided shares, making the buyer a co-owner, and that the proper action was for partition, not recovery of possession, and such action is imprescriptible under Article 494 of the Civil Code.
• Prescription Cannot Run Against Co-owners: They asserted that as co-owners of registered land, prescription could not lie in their favor against the registered title under Act No. 496, and that the imprescriptibility of a Torrens title extends to heirs who step into the shoes of the decedent.

• Laches Barred the Action: Respondent Afable contended that petitioners’ inaction for decades, during which the land was possessed successively by transferees and eventually by him, amounted to laches, effectively barring their claim. He invoked the ruling in Mejia de Lucaz v. Gamponia that an action to recover registered land may be barred by laches.
• Prescription as to Heirs: Afable argued that the heirs of Nenita Bailon (Luz, Emma, and Nilda), not being registered owners, could not invoke the imprescriptibility of a Torrens title; relying on Pasion v. Pasion, he maintained that prescription should run against them.

• Effect of Sale by a Co-owner and Proper Remedy: Whether the sale of the entire co-owned property by only two co-owners without the consent of the others is null and void, and whether the appropriate remedy of the non-consenting co-owners is recovery of possession or partition.
• Prescription: Whether the action of the co-owners — particularly the heirs of Nenita Bailon, who are not registered owners — is barred by prescription.
• Laches: Whether the petitioners are chargeable with laches that would effectively bar their action.

• Effect of Sale and Proper Remedy: The sale was not null and void. Under Article 493 of the Civil Code, a co-owner may alienate only his or her undivided share; a sale of the entire property without the consent of the other co-owners transfers only the share of the selling co-owner, making the buyer a co-owner of the property. The proper action of the non-consenting co-owners is not nullification or recovery of possession but partition under Rule 69 of the Revised Rules of Court, because the substitute buyer becomes a legitimate proprietor and possessor in joint ownership. This principle was settled as early as Mainit v. Bandoy and Ramirez v. Bautista.

• Prescription: The action for partition is imprescriptible. Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-ownership and may demand partition of the thing owned in common at any time; the same provision declares that no prescription shall lie in favor of a co-owner so long as he recognizes the co-ownership. This interpretation was affirmed in Budiong v. Bondoc. In addition, the land being registered under the Torrens system, Act No. 496 expressly prohibits the acquisition of title to registered land by prescription or adverse possession. As to the heirs of Nenita Bailon, who are not themselves registered owners, prescription is equally unavailing because hereditary successors step into the shoes of the decedent by operation of law and the title undergoes no change upon transmission mortis causa. The distinction drawn in Pasion v. Pasion applies only to transferees other than direct heirs or complete strangers; the doctrine in Atus v. Nunez and Umbay v. Alecha — that prescription cannot lie against hereditary successors of a registered owner — was controlling.

• Laches: The defense of laches was unavailing. Although the first and fourth elements (conduct giving rise to the complaint and potential prejudice to defendant) were present, the second and third elements were absent. There was no delay attended by knowledge and opportunity to sue: petitioners had no notice of the unauthorized sales because the administration of the land was entrusted to Rosalia, the eldest sibling, and they resided outside Sorsogon; they discovered the sale only in 1981 and immediately filed suit. The third element — lack of knowledge on the defendant’s part that the complainant would assert a right — was also missing, as Afable had actual knowledge of the title’s defect. He possessed the certificate of title before the purchase and knew it listed six co-owners, yet the deeds were signed by only two. Despite this, he failed to make the inquiry expected of a reasonably cautious person, making him a buyer in bad faith who took the property at his own risk. Laches, being an equitable defense grounded on public policy against stale demands, is principally a question of the inequity or unfairness of permitting a claim to be enforced. A party with unclean hands who purchased with knowledge of a defective title cannot invoke it.

• Effect of a Co-owner’s Sale of the Entire Property — Under Article 493 of the Civil Code, a co-owner may alienate only his undivided share; a sale of the whole property by one or some co-owners without the consent of the others does not render the sale void, but transfers only the vendor’s share, making the buyer a co-owner. The proper remedy of the non-consenting co-owners is an action for partition under Rule 69, not recovery of possession, because the buyer becomes a legitimate joint owner (see Punsalan v. Boon Liat, Ramirez v. Bautista, Mainit v. Bandoy).

• Imprescriptibility of Partition Action — Article 494 of the Civil Code grants each co-owner the right to demand partition at any time; the action for partition is imprescriptible, and no prescription runs in favor of a co-owner who recognizes the co-ownership. Prescription of an action to recover registered land is also barred by Act No. 496, which provides that no title adverse to the registered owner can be acquired by prescription or adverse possession.

• Extension of Imprescriptibility to Heirs — The imprescriptibility of a Torrens title extends to the registered owner’s hereditary successors, because they merely step into the shoes of the decedent by operation of law and the title undergoes no change upon transmission mortis causa. The restrictive ruling in Pasion v. Pasion — that only the registered owner can invoke imprescriptibility — applies only to transferees other than direct heirs or complete strangers.

• Elements of Laches — Laches requires four elements: (1) conduct on the part of the defendant giving rise to the situation complained of; (2) delay by the complainant in asserting a right, with knowledge or notice of the defendant’s conduct and an opportunity to sue; (3) lack of knowledge or notice on the defendant’s part that the complainant would assert the right; and (4) injury or prejudice to the defendant if relief is granted. Laches is not a mere question of time but principally an issue of the inequity of permitting a stale claim to be enforced; it operates to bar recovery only when the delay is unreasonable and prejudicial (citing Tijam v. Sibonghanoy, Go China Gun v. Co Cho).

• Bad Faith Purchaser and Laches — A purchaser who has actual knowledge of facts that would impel a reasonably cautious person to inquire further — such as notice that the certificate of title lists co-owners other than the vendors — is a buyer in bad faith and takes the property at his own risk. The equitable defense of laches requires clean hands and cannot be invoked by a party who purchased the property with notice of the defects in the vendor’s title (citing Gonzales v. IAC).

• “Art. 493. Each co-owner shall have the full ownership of his part and of the acts and benefits pertaining thereto, and he may therefore alienate assign or mortgage it and even substitute another person in its enjoyment … But the effect of the alienation or 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.” — The foundation for the rule that a co-owner’s sale of the whole property vests in the buyer only the seller’s undivided share.

• “(N)o co-owner shall be obliged to remain in the co-ownership. Such co-owner may demand at anytime the partition of the thing owned in common, insofar as his share is concerned.” (Art. 494) — Affirmance of the imprescriptibility of the action for partition.

• “Prescription is unavailing not only against the registered owner but also against his hereditary successors, because they merely step into the shoes of the decedent by operation of law and are merely the continuation of the personality of their predecessor-in-interest.” — From Umbay v. Alecha, settling that the heirs of a registered co-owner enjoy the same imprescriptibility shield.

• “Laches has been defined as the failure or neglect, for an unreasonable length of time to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.” — From Tijam v. Sibonghanoy, underscoring that mere lapse of time does not constitute laches.

• “The doctrine of ‘laches’ or of ‘stale demands’ is based upon grounds of public policy which requires for the peace of society, the discouragement of stale claims and unlike the statute of limitations, is not a mere question of time but is principally a question of inequity or unfairness of permitting a right or claim to be enforced or asserted.” — From Tijam v. Sibonghanoy, clarifying the equitable nature of laches.

• “a person dealing with a registered land has a right to rely upon the face of the Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautions man to make such inquiry.” — From Gonzales v. IAC, applied to deem Afable a buyer in bad faith.

• Punsalan v. Boon Liat, 44 Phil. 320 (1923) — Established that a co-owner who sells the entire property as his own affects only his share, not the shares of the non-consenting co-owners; followed.

• Ramirez v. Bautista, 14 Phil. 528 (1909) — Held that the transferee gets only what would correspond to his grantor upon partition and that the proper remedy is partition, not recovery of possession; applied.

• Mainit v. Bandoy, 14 Phil. 730 (1910) — Reiterated that the non-consenting co-owners’ remedy is division of the common property, not nullification of the sale or recovery of possession; applied.

• Budiong v. Bondoc, G.R. No. L-27702, Sept. 9, 1977, 79 SCRA 241 — Affirmed that the action for partition under Article 494 is imprescriptible; relied upon.

• Tijam v. Sibonghanoy, G.R. No. L-21450, April 25, 1968, 23 SCRA 29 — Provided the definition and essential character of laches as a question of inequity, not mere time; applied.

• Go China Gun v. Co Cho, 96 Phil. 622 (1955) — Enumerated the four elements of laches; applied.

• Umbay v. Alecha, G.R. No. 67284, March 18, 1985, 135 SCRA 427 — Held that prescription is unavailing against hereditary successors; followed.

• Atus v. Nunez, 97 Phil. 762 — Established that transmission mortis causa does not change the character of the title, so prescription cannot run against heirs of a registered owner; followed.

• Pasion v. Pasion, G.R. No. L-15757, May 31, 1961, 2 SCRA 486 — Distinguished; its restriction of imprescriptibility to the registered owner applies only to transferees who are not direct heirs.

• Gonzales v. IAC, G.R. No. 69622, January 29, 1988 — Applied the exception to the Torrens title reliance rule when the buyer has actual knowledge of facts requiring further inquiry.

• Article 493, Civil Code — Defines a co-owner’s right to alienate his undivided share and limits the effect of alienation to the portion allotted to the seller upon partition. Applied to characterize Afable as a co-owner of the disputed land.

• Article 494, Civil Code — Proclaims that no co-owner shall be obliged to remain in the co-ownership and that partition may be demanded at any time; declares that prescription does not lie in favor of a co-owner who recognizes the co-ownership. Formed the basis for holding the action imprescriptible.

• Act No. 496 (Land Registration Act) — Provides that no title to registered land in derogation of the registered owner may be acquired by prescription or adverse possession. Invoked to defeat prescription against the co-owners.

• Rule 69, Revised Rules of Court — Governs actions for partition and was identified as the proper recourse for non-consenting co-owners.

• Article 777, New Civil Code (and Article 657, Old Civil Code) — Transmission of property to heirs by operation of law. Applied to support the rule that hereditary successors enjoy the same imprescriptibility as the registered decedent.

Fernan, Gutierrez, Jr., Feliciano, and Bidin, JJ., concur.