Title
Bailon-Casilao vs. Court of Appeals
Case
G.R. No. 78178
Decision Date
Apr 15, 1988
Co-owners dispute land sale validity; Supreme Court rules laches inapplicable, upholds partition as remedy, affirms sale valid only for sellers' shares.
sale of property
consent
action for partition

Case Summary (G.R. No. 78178)

Factual Background

The disputed lot was originally registered in the names of Rosalia, Gaudencio, Sabina, Bernabe, Nenita and Delia Bailon as co-owners, each holding a one-sixth share. Gaudencio and Nenita were deceased at the time of suit, and Nenita was represented by her children, petitioners Luz, Emma and Nilda. Bernabe left for China in 1931 and had not been heard from. On August 23, 1948, Rosalia and Gaudencio sold a portion of the land measuring 16,283 square meters to Donato Delgado. On May 13, 1949, Rosalia sold the remaining 32,566 square meters to Ponciana V. Aresgado de Lanuza, and on the same date Lanuza acquired from Delgado the 16,283 square meters. On December 3, 1975 John Lanuza, under a special power of attorney from his wife Ponciana, sold the two parcels to Celestino Afable, Sr. The deeds of sale recited that the property was not registered under Act No. 496, although it in fact was. The land’s tax declarations had been made in various names through the years, with the last registration in the name of Afable, Sr. in 1983.

Procedural History

Petitioners filed the action for recovery of property and damages on March 13, 1981. Afable answered asserting acquisition by prescription and laches and later filed a third-party complaint against Rosalia Bailon for damages. The Court of First Instance rendered judgment recognizing Afable as co-owner by virtue of purchases from Rosalia and Gaudencio, declaring the other parties pro-indiviso co-owners, ordering segregation to terminate co-ownership, restoring possession to the plaintiffs of their respective shares, and awarding damages and attorney’s fees. The Court of Appeals affirmed the trial court insofar as it held that prescription did not lie against the petitioners, but applied the equitable doctrine of laches and dismissed the complaint. Petitioners sought relief by certiorari to the Supreme Court.

Issue Presented

The principal issue was whether the equitable doctrine of laches barred the petitioners’ action to recover their shares in the registered property. Subsidiary to that question was the legal effect of a sale by one or more co-owners of the entire property without the consent of the other co-owners and the proper remedy available to the aggrieved co-owners.

Parties' Contentions

Petitioners contended that a sale by one co-owner affected only that co-owner’s undivided share and that the buyer thereby became a co-owner; the correct remedy was an action for partition under Rule 69, not recovery of possession, and neither prescription nor laches could bar such an action. They asserted they had no knowledge of the sales and no opportunity to institute suit until 1981, when Delia returned and discovered the transactions. Afable maintained that he acquired title by prescription and that petitioners slept on their rights, invoking laches and relying on precedents such as Mejia de Lucaz v. Gamponia.

Trial Court Ruling

The Court of First Instance found that Afable validly bought the two one-sixth undivided shares of Rosalia and Gaudencio and therefore became a co-owner. The court declared the remaining persons as pro-indiviso co-owners with one-sixth shares each, ordered segregation and partition by a geodetic engineer, directed the defendant to restore plaintiffs’ possession of their respective shares and all attributes of absolute dominion, and ordered payment of P5,000 as damages, P2,000 as attorney’s fees, and costs.

Ruling of the Court of Appeals

The Court of Appeals affirmed the trial court’s determination that prescription did not lie against the petitioners because they were co-owners and successors of the original vendors. Nevertheless, the appellate court held that an action to recover registered land may be barred by laches and, applying Mejia de Lucaz v. Gamponia, concluded that the petitioners were guilty of laches and dismissed their complaint.

Supreme Court Ruling and Disposition

The Supreme Court granted the petition for certiorari, set aside the decision of the Court of Appeals, and reinstated the decision of the trial court. The Court held that petitioners’ action was not barred by either prescription or laches and that Afable could not successfully invoke laches as an equitable defense because he lacked clean hands.

Legal Basis and Reasoning

The Court reviewed the rights of a co-owner under Article 493 of the Civil Code, observing that a co-owner may alienate his part but that the effect of alienation with respect to the other co-owners is limited to the selling co-owner’s portion. The Court relied on earlier holdings, including Punsalan v. Boon Liat, Ramirez v. Bautista, and Mainit v. Bandoy, to reaffirm that a sale by a co-owner of the entire thing, without consent, transfers only his undivided share and makes the buyer a co-owner. Consequently, the proper remedy of the aggrieved co-owners is an action for partition under Rule 69, not an action for nullification of sale or for recovery of possession from a legitimate purchaser in joint ownership. The Court explained that an action for partition is imprescriptible under Article 494 of the Civil Code, as interpreted in Budlong v. Bondoc, and that Act No. 496 expressly precludes acquisition of registered land by prescription. The Court rejected respondents’ reliance on Pasion v. Pasion, distinguishing it as inapplicable to heirs who step into the registered owner’s shoes; the Court cited Atus v. Nunez and Umbay v. Alecha to hold that imprescriptibility applies equally to hereditary successors.

On the question of laches, the Court recited the four elements established in Go Chi Gun v. Co Cho: conduct giving rise to the complained situation, delay with knowledge and opportunity to sue, lack of knowledge on the defendant’s part that the complainant would assert the right, and prejudice to the defendant. The Court found that the first and fourth elements were present but that the second and third were missing. The petitioners had no notice of Rosalia’s sales because they had entrusted administration of the land to Rosalia, who alone managed the property while the other co-owners resided elsewhere or were absent. Delia returned only in 1981 and immediately filed suit. Thus the petitioners lacked earlier knowledge and earlier opportunity to sue. Conversely, Afable had actual knowledge that the title was in several

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