G.R. No. 101949 - The Holy See vs. Rosario, Jr.

Felipe Prudencio married twice, first to Elena Antonio and later to Teodora Abad.
From the first marriage, Felipe and Elena had five children: Valentina, Eusebia, Paula, Florentina, and Avelina; from the second, they had two children: Felipe Prudencio, Jr. and Leonora.
The couple Felipe and Elena acquired a 13.0476-hectare (130,476 sq. m.) parcel of land (the Cagayan lot) at Sitio Abbot, Barrio Imurung, Baggao, Cagayan, covered by Original Certificate of Title No. 1343.

Upon Elena’s death, Felipe and their children became co-owners of the lot.
After Felipe died intestate during his second marriage, Teodora, Prudencio, Jr., and Leonora executed a Deed of Extra-Judicial Partition of the Estate with a waiver of rights in favor of Teodora, despite acknowledging that the lot was acquired during Felipe and Elena’s marriage.
The partition purportedly declared that Felipe and Elena had no children to inherit the property, thereby excluding the children from the first marriage (Florentina, Avelina, and the represented heirs of Valentina, Eusebia, and Paula).
The partition was published in newspapers in 1969, and subsequently, title to the Cagayan lot was transferred to Teodora’s name under Transfer Certificate of Title (TCT) No. 14306.

On May 16, 1972, Teodora sold the Cagayan lot to Spouses Isidro Cepeda and Salvacion Divini, which resulted in the cancellation of TCT No. 14306 and the issuance of TCT No. 184375 in the names of the Cepeda spouses.
On August 25, 1972, the Cepeda spouses sold the property to the petitioner, the Roman Catholic Bishop of Tuguegarao, who was later issued TCT No. T-20084.
The petitioner, though asserting to be an innocent purchaser for value and having relied on title verification by his lawyer, later faced claims regarding the existence of other heirs and defects in the partition process.

On September 15, 1972, respondents-appellees (the heirs from Felipe’s first marriage, including Florentina and Avelina and their descendants Ernesto Penalber and Rodrigo Talang) filed a complaint for partition with reconveyance.
They claimed that they were fraudulently deprived of their rightful shares in the Cagayan lot due to the invalid extra-judicial partition that excluded them.
The respondents-appellees asserted that the partition improperly allocated the lot solely to Teodora and her children from the second marriage and, as a result, misrepresented the true ownership; hence, they sought reconveyance of the portion of the lot corresponding to their actual shares.

The RTC, in a decision dated August 15, 2002, declared the extra-judicial partition null and void, holding that Teodora and her children could not exclude the children from Felipe’s first marriage.
It ruled that only 33,550 sq. m. of the parcel—representing Teodora’s valid, undivided share—could be legally sold.
The RTC ordered the petitioner to reconvey the balance of approximately 99,924.6 sq. m. to the respondents-appellees as they were the rightful co-owners.

In its October 21, 2008 decision, the CA addressed the sole issue of whether the petitioner was a bona fide purchaser for value.
The CA found that the petitioner failed to prove his good faith due to inadequate investigation beyond the documents provided by Spouses Cepeda.
The CA affirmed the RTC’s ruling with modification by declaring that the petitioner would retain only Teodora’s share (33,550 sq. m.) while the remaining 96,926 sq. m. (modified from the RTC’s original 99,924.6 sq. m.) must be reconveyed to the respondents-appellees.

The Supreme Court ultimately denied the petition, affirming the lower courts’ decisions that excluded the rightful heirs from the valid partition.
It reiterated that a seller can only transfer as much as he legally owns, and no one can transfer a greater interest than what is possessed.
While recognizing the petitioner’s claim of being an innocent purchaser for value, the Court held that the exclusion of rightful heirs rendered the extra-judicial partition fraudulent and void.
The decision further ordered partitioning of the Cagayan lot among the rightful heirs and provided for the return of monies paid by the petitioner for the portion corresponding to the respondents-appellees’ share.

Whether the extra-judicial partition executed by Teodora, Prudencio, Jr., and Leonora—excluding the children of Felipe from his first marriage—was valid and binding.
Whether the publication and alleged waiver of rights by Prudencio, Jr. and Leonora suffice to bar the claims of the excluded heirs.

Whether the petitioner, as a purported innocent purchaser for value, could acquire ownership beyond the share legally transferable by Teodora.
Whether the investigative diligence of the petitioner’s counsel was sufficient to affirm his good faith, considering that the seller (Teodora through Spouses Cepeda) did not own the entire title due to the nullity of the partition.

Whether the excluded heirs, who did not participate in the extra-judicial settlement, are entitled to reclaim their rightful shares despite subsequent sales made in good faith by the seller.
How the doctrine of nemo dat quod non habet applies in the context of the sale of co-owned property when one co-owner attempts to dispose of the entire property without the consent of the others.

Whether the issuance of new titles (TCTs) in the name of Teodora, Spouses Cepeda, and subsequently the petitioner, could override the defect in the partition and sale.
The role of registration as mere evidence of title and not a conferment of impermissible rights beyond what was legally possessed.