Nufable v. Nufable
REITERATIONFacts
The Antecedents: Edras Nufable died on August 9, 1965, survived by his four children: Angel Custodio, Generosa, Vilfor, and Marcelo. His Last Will and Testament was admitted to probate on March 30, 1966. Subsequently, on June 6, 1966, the heirs submitted a Settlement of Estate, agreeing that the parcel of land in Poblacion, Manjuyod, Negros Oriental, would remain undivided for community ownership, respecting the conditions in the will. They also stated they had no objections to the disposition of their shares and had already taken possession thereof. However, two months prior, on March 15, 1966, Angel Custodio and his wife Aquilina mortgaged the entire property to the Development Bank of the Philippines (DBP). This mortgage led to foreclosure by DBP on February 26, 1973, with DBP becoming the successful bidder. On January 11, 1980, Nelson Nufable, son of Angel Custodio, purchased the property from DBP. Procedural History: Generosa, Vilfor, and Marcelo filed a complaint on July 25, 1985, seeking to annul fraudulent transactions, quiet title, and recover damages against Nelson Nufable, his wife Silmor, and his mother Aquilina. They prayed that the Deed of Sale from DBP to Nelson be declared null and void concerning their three-fourths (3/4) rights, and that these rights be declared as belonging to them. The defendants contended that Angel Nufable was the exclusive owner, mortgaged the property, it was foreclosed by DBP, and Nelson subsequently bought it from DBP. They also claimed the Deed of Sale from Angel and Aquilina to the plaintiffs was fictitious. The trial court ruled in favor of the defendants. Upon appeal, the Court of Appeals reversed the trial court's decision, declaring the plaintiffs as rightful co-owners of three-fourths (3/4) of the property and Nelson Nufable entitled to one-fourth (1/4) portion, with no award for damages. The Court of Appeals denied the motion for reconsideration. The Petition: Petitioners Nelson, Silmor, and Aquilina Nufable filed a petition for review on certiorari, arguing that the Court of Appeals erred in considering the probate of the will as controlling and in not considering that DBP became the absolute owner from whom Nelson acquired the property, thus requiring DBP's title to be declared void first.
Issue(s)
Whether the probate of the Last Will and Testament of Edras Nufable and its subsequent settlement are pertinent to determining the ownership rights of petitioner Nelson Nufable, who purchased the land from the Development Bank of the Philippines (DBP). Whether the Development Bank of the Philippines (DBP) acquired absolute and exclusive ownership of the land through foreclosure and consolidation, and if petitioner Nelson Nufable, as its buyer, can be deprived of ownership without declaring the bank's title void. Whether DBP is an indispensable party to the case.
Ruling
The petition is denied. The Court of Appeals did not commit reversible error in its decision. The respondents (Generosa, Vilfor, and Marcelo) are declared rightful co-owners of three-fourths (3/4) of the subject property, and petitioner Nelson Nufable is entitled to one-fourth (1/4) portion.
Ratio Decidendi
On the pertinence of the Will and Settlement of Estate: The Court held that the probate of the Last Will and Testament of Edras Nufable and the subsequent approval of the Settlement of Estate were pertinent. The heirs themselves agreed in the settlement that the property would remain undivided for community ownership, respecting the testator's will. This agreement, approved by the court, established the co-ownership among the heirs. Furthermore, under Article 777 of the Civil Code, successional rights are transmitted from the moment of death. Therefore, when Angel Custodio mortgaged the property on March 15, 1966, after Edras's death, Angel's right was limited to his 1/4 pro indiviso share, as the other heirs had already acquired their respective successional rights. The mortgage of the entire property by Angel was thus invalid concerning the shares of the other co-owners. The Court reiterated the well-entrenched rule that a co-owner can only alienate his pro indiviso share in the co-owned property, as a co-owner cannot alienate the shares of other co-owners, based on the principle that "no one can give what he does not have." On DBP's acquisition of ownership and the need to annul its title: The Court clarified that while DBP foreclosed the mortgage and consolidated ownership, this was only effective as to Angel Custodio's 1/4 share. For the remaining 3/4 pro indiviso share, DBP merely held the property in trust for the rightful owners, the private respondents. This is consistent with the principle that a foreclosure sale is only effective if the mortgagor has title to the property being foreclosed. When petitioner Nelson Nufable purchased the property from DBP, he stepped into DBP's shoes and acquired only the rights and obligations DBP had, which included holding the 3/4 portion in trust for the private respondents. The Court cited Article 1451 and 1456 of the Civil Code regarding implied trusts, and the case of Noel v. Court of Appeals, which held that a buyer at a public auction acquires only the interest of the judgment debtor, with the other half impressed with a constructive trust for the heirs. Registration of property does not extinguish existing co-ownership, and DBP's consolidation of title did not terminate the co-ownership. On DBP as an indispensable party: The Court ruled that DBP was not an indispensable party. The petitioners never raised the issue of DBP's non-inclusion in their Answer, thus waiving the defense under Section 2, Rule 9 of the Rules of Court. Even if not waived, the Court found that petitioners' interest was distinct and separable from DBP's. A final determination of the action could be had without DBP's presence, as the core issue was the determination of co-ownership rights among the Nufable heirs, not the legality of DBP's foreclosure itself, which the private respondents did not question. The petitioners' interest was in the property they purchased from DBP, and their rights and obligations could be adjudicated without affecting DBP.
Main Doctrine
A co-owner's right to mortgage a property is limited to his pro indiviso share; a mortgage of the entire property without the consent of other co-owners is not binding on their shares. Registration of property does not extinguish existing co-ownership, and a buyer at a foreclosure sale may hold the property in trust for the rightful owners of the shares not validly encumbered.