Case Summary (G.R. No. L-14429)
Factual Background
The parties stipulated that on July 14, 1956 Ramon Mercado and Pio D. Liwanag executed a Deed of Sale covering a divided half described by metes and bounds, comprising 2,196 square meters at P7.00 per square meter for a total of P15.372.00, of a parcel included in Transfer Certificate of Title No. 20805. The stipulation further recited that T.C.T. No. 20805, containing an area of 4,392 square meters, was issued in the names of Ramon Mercado and Basilia Mercado as co-owners pro-indiviso, and that the sale occurred without the knowledge and consent of Basilia Mercado.
Additional Agreed Facts
The parties agreed that an area of 391 square meters had been expropriated from the original property by the National Power Corporation in December, 1953 at P10.00 per square meter in an eminent domain case, but that the defendant learned of that expropriation only upon registration of the Deed of Sale. They also stipulated that, pursuant to the Deed of Sale, T.C.T. No. 32757 was issued in the names of Pio D. Liwanag and Basilia Mercado, and that the defendant produced a receipt dated July 14, 1956 and a promissory note for P10,000; the plaintiff denied receipt or payment and claimed the check was uncashed and in the custody of Atty. Eugenio de Gracia.
Procedural Posture and Stipulated Issue
The parties expressly submitted for resolution the sole issue of whether the Deed of Sale could be annulled based upon the stipulated facts in relation to Article 493 of the Civil Code, setting aside all other pleadings and issues. The trial court rendered judgment dismissing the complaint, holding the sale valid under Article 493, and the plaintiffs appealed.
Trial Court Ruling
The Court of First Instance found that under Article 493 a co-owner may alienate his undivided aliquot share and that the sale in question, as reflected in the title issued after registration, resulted in the appellee holding an undivided one-half interest together with Basilia Mercado. The trial court therefore dismissed the action for annulment of the deed.
Appellants' Contentions
Appellants contended that the deed purported to convey a determinate and segregated half of the property by metes and bounds and that a co-owner has no right to partition the property and convey a specific portion in that fashion. They argued that such a conveyance exceeded the vendor’s rights under Article 493 and therefore the deed should be annulled. Appellants also objected to the trial court’s reference to fraud in its dispositive paragraph, asserting that fraud had been eliminated by stipulation.
Supreme Court’s Analysis of Title and Article 493
The Court recognized the correct legal principle that a co-owner may dispose only of his undivided aliquot share and may not unilaterally carve out a determinate portion by metes and bounds, citing authorities such as Lopez v. Ilustre, Gonzales v. Ichon, and the commentary in Manresa. Nevertheless, the Court emphasized that upon registration the new Transfer Certificate of Title, No. 32757, did not reproduce the metes and bounds description in the deed but reflected Pio D. Liwanag and Basilia Mercado as co-owners pro-indiviso. The Court treated the title as the final and conclusive repository of the new co-owners’ rights and assessed the legality of the transaction in light of the title actually issued.
Application of Law to the Stipulated Facts
Because the registered title established that the appellee acquired only an undivided half interest, the transaction, as it operated in law and in title, fell within the scope of Article 493, which allows a co-owner to alienate his aliquot share. The Court therefore concluded that whatever indication in the deed suggested a segregated and determinate portion, the operative and controlling effect
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Parties and Procedural Posture
- Ramon Mercado and Basilia Mercado joined by her husband, Francisco Ronquillo were the plaintiffs and appellants in the trial court action seeking annulment of a deed of sale.
- Pio D. Liwanag was the defendant and appellee who acquired title following the deed of sale.
- The case was submitted to the trial court on a stipulation of facts and was appealed from the Court of First Instance of Rizal, Quezon City.
- The appeal reached the Supreme Court by certification from the Court of Appeals because the questions were purely legal.
Key Facts
- The parties stipulated that on July 14, 1956, Ramon Mercado and Pio D. Liwanag executed a Deed of Sale purporting to convey a divided half of a parcel containing 2,196 square meters at P7.00 per square meter for a total of P15,372.00.
- The land was originally covered by Transfer Certificate of Title No. 20805 showing an area of 4,392 square meters issued in the names of Ramon Mercado and Basilia Mercado as co-owners pro-indiviso.
- The sale was executed without the knowledge or consent of Basilia Mercado.
- A portion of 391 square meters had been expropriated by the National Power Corporation in December 1953, and this fact came to Pio D. Liwanag's attention only upon registration of the deed of sale.
- Following registration of the deed of sale, Transfer Certificate of Title No. 32757 was issued in the names of Pio D. Liwanag and Basilia Mercado as co-owners pro-indiviso.
- Pio D. Liwanag submitted a receipt and a promissory note dated July 14, 1956, which Ramon Mercado disclaimed as unpaid and uncashed.
Stipulated Documents
- The parties incorporated into the stipulation photostat copies of the Deed of Sale marked as Annex "A", the new Transfer Certificate of Title marked as Annex "B", the receipt marked as Annex "C", and the promissory note marked as Annex "D".
- The stipulation expressly presented for resolution only whether the Deed of Sale annexed as Annex "A" could be annulled under Article 493 of the Civil Code, and set aside other issues in the pleadings.