Augusto v. Dy
REITERATIONFacts
1. The Antecedents: The core dispute revolves around Lot No. 4277, a 5,327 square meter parcel of land originally registered in the names of spouses Sixto and Marcosa Silawan. Respondent Antonio Carlota Dy claims ownership of a portion of this land, tracing his acquisition through a series of sales originating from Sixto Silawan. Specifically, Antonio asserts he purchased a 2,363-square meter portion on November 25, 1989, from Filomeno and Lourdes Augusto, who had previously acquired it from Isnani and Lily Maut, who in turn bought it from Severino Silawan. Severino Silawan had acquired the entire lot from Sixto Silawan on March 31, 1965. Respondent Mario Dy also claims ownership of a portion, tracing his acquisition through a sale from Rodulfo and Gloria Pinote, who bought it from Mariano Silawan, who had purchased a portion from Severino Silawan. 2. Procedural History: Antonio Dy initiated this case on July 16, 2002, by filing a Complaint for Declaration of Nullity of Deeds, Titles, Tax Declaration with Partition and/or Recovery of Shares against petitioners Nicomedes Augusto, Gomercindo Jimenez, Marcelino Paquibot, Roberta Silawan, and the Register of Deeds of Lapu-Lapu City. Antonio alleged that Transfer Certificates of Title (TCTs) had been issued to the petitioners for portions of Lot No. 4277, despite his prior purchase. These TCTs were allegedly issued based on an Extrajudicial Settlement by Sole and Only Heir with Confirmation of Deeds of Absolute Sale executed by Roberta Silawan on June 27, 2001, which superseded the original certificate of title. Mario Dy intervened, also claiming ownership of a portion. At the pre-trial conference, the petitioners and their counsel failed to appear, leading the Regional Trial Court (RTC) to declare them in default and allow Antonio to present evidence ex parte. The RTC rendered a decision on November 9, 2012, declaring several documents, including Roberta's Extrajudicial Settlement and the resulting TCTs, null and void, and ordering a new partition of the property. The petitioners appealed to the Court of Appeals (CA), which affirmed the RTC's decision in its entirety on November 20, 2014. The CA denied their subsequent Motion for Reconsideration on June 2, 2015. 3. The Petition: The petitioners are before the Supreme Court via a petition for review on certiorari, arguing that the CA erred in affirming the RTC's decision. They contend that the CA failed to address the propriety of the trial court's refusal to lift the order of default, despite their explanation that their counsel lost his calendar. They also argue that the CA overlooked evidence suggesting their transactions were earlier and duly registered on the original certificate of title, making them first registrants and buyers in good faith. Furthermore, they claim the CA failed to address the impropriety of granting relief to respondent Mario Dy and erred in sustaining the partition ordered by the RTC. The core of their petition challenges the validity of the default order and the cancellation of their titles, asserting that their claims were not properly considered due to the procedural default.
Issue(s)
Whether the RTC correctly declared the petitioners in default and allowed the respondents to present evidence ex parte. Whether the Extrajudicial Settlement executed by Roberta Silawan and the subsequent Transfer Certificates of Title (TCTs) issued to the petitioners are valid. Whether the sales and conveyances of Lot No. 4277, originating from Sixto Silawan, were valid up to the extent of the sellers' rightful shares; and whether Marcelino Paquibot, Rodulfo Augusto, and Mario Dy were purchasers in good faith. Whether Roberta Silawan was entitled to adjudicate the entire Lot No. 4277 unto herself. Whether the partition ordered by the RTC and affirmed by the CA is proper.
Ruling
The Supreme Court ruled that the RTC did not err in declaring the petitioners in default, as their excuse for non-appearance at the pre-trial was not justifiable. The Court modified the decision of the CA, declaring certain deeds of sale valid and others void, and ordered a new partition of Lot No. 4277. The dispositive portion states: The Deed of Absolute Sale dated February 16, 1978 executed by Nicolas Aying, married to Maura Augusto in favor of Gomercindo Jimenez to the extent of 1,331.75 square meters of Lot No. 4277 is declared VALID; The Deed of Absolute Sale dated November 25, 1989 executed by Filomeno Augusto in favor of Antonio Carlota Dy involving 2,363.5 square meters of Lot No. 4277 is declared VALID; The Deed of Absolute Sale dated October 10, 1989 executed by Filomeno Augusto in favor of Nicomedes Augusto involving 300 square meters of Lot No. 4277 is declared VALID; The Deed of Absolute Sale dated July 14, 1987 executed by Mariano Silawan in favor of Marcelino Paquibot is declared VOID; The Deed of Absolute Sale dated May 23, 1994 executed by Rodulfo Augusto in favor of Mario Dy is declared VOID; and The Extrajudicial Settlement by Sole and Only Heir executed by Roberta Silawan insofar as the 1,331.75 square meters representing one-fourth of her undivided share in Lot No. 4277 is declared VALID. The Confirmation of Sale embodied in the said document is STRUCK DOWN. Consequently, the Register of Deeds of Lapu-Lapu City is ORDERED to CANCEL all Transfer Certificates of Title issued replacing OCT No. RO-3456 and ISSUE new ones in accordance with this Decision.
Ratio Decidendi
On the propriety of declaring petitioners in default: The Court held that the RTC did not err in allowing respondents to present evidence ex parte because petitioners failed to attend the pre-trial conference without a valid excuse. The explanation that their counsel lost his calendar was deemed insufficient, indicating carelessness and indifference. The Court reiterated that pre-trial is mandatory and crucial for case expedition, and failure to attend without justification leads to the loss of the right to present evidence. On the validity of the Extrajudicial Settlement and subsequent TCTs: The Court found Roberta Silawan's Extrajudicial Settlement to be void insofar as she adjudicated the entire property to herself. The property was conjugal, and upon Marcosa's death, it became co-owned by Sixto and Roberta. Sixto could only dispose of his undivided share. Therefore, Roberta was only entitled to one-fourth of the property, not the entirety. Consequently, the TCTs derived from this void settlement were also ordered cancelled. On the validity of sales and conveyances and the status of purchasers: The Court meticulously traced the chain of sales. It held that Sixto's sale to Severino was valid only up to Sixto's three-fourths undivided share (3,995.25 sq m), and void as to Roberta's one-fourth share (1,331.75 sq m). Severino's sale to Isnani and Lily of 2,663.5 sq m was valid as it fell within Severino's acquired share. However, Severino's subsequent sale to Mariano of another 2,663.5 sq m was only valid up to the remaining 1,331.75 sq m of Severino's interest, applying the principle of prior tempore potior jure in favor of Isnani. All subsequent sales by Isnani and Lily to Filomeno, and by Filomeno to Antonio and Nicomedes, were deemed valid as they pertained to the portion Filomeno validly owned. Mariano's sales were deemed valid only up to his acquired 1,331.75 sq m share; his subsequent sales to Marcelino and Rodulfo were void as he had nothing more to sell. The Court ruled that Marcelino, Rodulfo, and Mario could not claim to be purchasers in good faith. They purchased property registered in another person's name, which should have put them on inquiry. The principle of nemo dat quod non habet (one cannot give what one does not have) was applied, rendering their purchases void as they prejudiced the rights of prior valid transferees like Gomercindo. On Roberta's entitlement to the property: The Court clarified that Roberta, as the sole legitimate child, was entitled to one-fourth of the property, representing her inheritance from her mother, Marcosa. She could not claim any portion of her father Sixto's share that he had already validly sold during his lifetime. Thus, her adjudication of the entire property was erroneous. On the partition of the property: Based on the valid transfers, the Court ordered a new partition. Gomercindo Jimenez was allocated 1,331.75 sq m, Antonio and Jean Dy were allocated 2,363.5 sq m, Nicomedes and Gaudencia Augusto were allocated 300 sq m, and Roberta Silawan was allocated 1,331.75 sq m. The Court emphasized that registration under the Torrens system is not a mode of acquiring ownership but merely evidence of it, and thus, all TCTs based on the erroneous partition were ordered cancelled and new ones issued.
Main Doctrine
The validity of subsequent sales and conveyances of property is limited to the extent of the seller's validly acquired share. A co-owner can only sell their undivided share, and subsequent transferees acquire only what the seller legally possessed. The principle of 'prior tempore potior jure' applies in cases of double sales of the same property, favoring the first vendee. Registration under the Torrens system does not create title but merely serves as evidence thereof.