Mercado v. Mercado
REITERATIONFacts
1. The Antecedents: This case concerns a dispute over a Quezon City property located at 181 Esteban Abada Street. Plaintiff Aurea A. Mercado, a retired professor residing in the United States, claims she provided her brother, defendant Nilo A. Mercado, with funds in 1964 to purchase this property for her upon her return to the Philippines. She alleges that her brother subsequently purchased the property and that she is a co-owner entitled to half of its value. Defendant Nilo A. Mercado, a lawyer and businessman, contends the property was purchased with his own savings, money borrowed from his mother and sister Esmeralda, and a P20,000.00 loan from Aurea. He asserts sole ownership, evidenced by the Transfer Certificate of Title (TCT) No. 123560 registered in his name and tax receipts. 2. Procedural History: Aurea A. Mercado filed a complaint seeking partition and reconveyance of one-half of the property. The Regional Trial Court ruled in favor of Aurea, declaring her a co-owner. Nilo A. Mercado appealed this decision to the Court of Appeals. The Court of Appeals affirmed the trial court's decision, upholding Aurea's claim of co-ownership. Nilo A. Mercado then filed a petition for certiorari with the Supreme Court. Initially, the Supreme Court denied the petition due to non-compliance with circulars, the raising of factual issues, and a lack of reversible error. A motion for reconsideration was also denied. However, a subsequent motion for leave to file a second motion for reconsideration was granted in the interest of justice, allowing the Court to reconsider the petition. 3. The Petition: The petitioner, Nilo A. Mercado, filed a petition for certiorari under Rule 45 of the Rules of Court, seeking to annul the decision of the Court of Appeals. Despite the initial denial, the Supreme Court granted further review, focusing on the crucial issue of whether co-ownership could be extinguished. Petitioner argued that even if the factual findings of the Court of Appeals were correct, the mortgage of the property to the Social Security System (SSS), its subsequent foreclosure, and his redemption of the property should have extinguished any co-ownership. He relied on the case of Tan v. Court of Appeals to support his claim that such actions terminated any existing co-ownership. The Supreme Court, however, found no merit in the petition, distinguishing the present case from Tan and affirming the co-ownership based on petitioner's own affidavit.
Issue(s)
Whether the Affidavit executed by petitioner Nilo A. Mercado constitutes sufficient proof of co-ownership. Whether the mortgage of the subject property to the SSS, its foreclosure, and subsequent redemption by petitioner Nilo A. Mercado extinguished private respondent Aurea A. Mercado's co-ownership.
Ruling
The petition is denied. The Decision of the Court of Appeals dated August 30, 1991, and its Resolution dated January 29, 1993, are affirmed.
Ratio Decidendi
On the issue of co-ownership based on the Affidavit: The Court sustained the finding of co-ownership based on petitioner Nilo A. Mercado's own Affidavit (Exh. "A") dated March 2, 1973. This affidavit explicitly stated that Nilo was a "co-owner" of the residential land with his sister Aurea A. Mercado, and that they shared equally in the property, including its encumbrances and liabilities. The Court emphasized that this affidavit contained an "admission against interest" on the part of the petitioner. As a lawyer, Nilo could not feign ignorance of the plain meaning of his admission. The affidavit was executed freely and voluntarily, serving as high-quality evidence of the co-ownership. The Court found no reason to disregard this clear admission of Nilo regarding the shared ownership of the property with his sister. On the issue of extinguishment of co-ownership due to mortgage, foreclosure, and redemption: The Court ruled that the mortgage of the subject property to the SSS, its foreclosure, and subsequent redemption by Nilo did not extinguish Aurea's co-ownership. The Court invoked Article 493 of the New Civil Code, which states that each co-owner has full ownership of his part and may alienate or mortgage it, but the effect of such alienation or mortgage is limited to his portion in the division upon termination of the co-ownership. The Court clarified that while a co-owner can sell his undivided share, he cannot alienate the shares of other co-owners, adhering to the principle of "Nemo dat quod non habet" (no one can give what he does not have). The Court distinguished the present case from Tan v. Court of Appeals, where the co-ownership was extinguished because the heirs allowed the redemption period to expire and ownership was consolidated in the bank. In this case, Aurea did not know of the mortgage or the redemption period, and thus did not voluntarily relinquish her share. To rule otherwise would reward Nilo for his act of mortgaging the property without Aurea's consent and potentially appropriating her share.
Main Doctrine
A co-owner's admission of co-ownership in an affidavit constitutes strong evidence thereof. A mortgage and subsequent foreclosure of a co-owned property by one co-owner without the other's knowledge does not extinguish the latter's co-ownership, as the prohibition against alienating another's share is based on the principle of 'Nemo dat quod non habet'.