RUSTICO ADILLE, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA ASEJO AND SANTIAGO ASEJO, RESPONDENTS.

Adille versus Asejo

The Case

This is the case of Adille versus Asejo, a dispute among half-brothers and half-sisters over a parcel of land in Legaspi City that originally belonged to their mother. The petitioner, Rustico Adille, is the only child of the mother's first marriage; the private respondents, the Asejo siblings, are her children by her second marriage. After the mother died without redeeming land she had sold with a right to repurchase, Rustico redeemed it alone, then executed an extrajudicial settlement declaring himself the sole heir and secured the title in his own name. The Asejo siblings sued for partition and accounting, and the case matters because it settles a question every co-ownership problem turns on: may one co-owner, by redeeming or registering the common property in his own name, make himself its exclusive owner? The Court answers no, and builds the answer on the law of co-ownership, implied trust, and prescription.

Procedural History

The Asejo siblings filed a complaint for partition with accounting before the Court of First Instance of Albay. Rustico answered and counterclaimed, asking that Emeteria Asejo, who was occupying a portion of the land, be ordered to vacate. The trial court ruled for Rustico: it held that he had become the absolute owner, that he was not a trustee, dismissed the complaint, and ordered Emeteria to vacate. The plaintiffs appealed, and the Court of Appeals reversed the trial court and ruled for them. Rustico then came to the Supreme Court by way of certiorari. The Supreme Court required the private respondents to comment, gave due course to the petition, and directed the parties to file briefs; only the petitioner filed one, and the case was submitted for decision.

Facts

The land, a lot of some eleven thousand three hundred twenty-five square meters in Legaspi City, belonged originally to Felisa Alzul as her own private property. She married twice. By her first husband, Bernabe Adille, she had one child, Rustico Adille, the petitioner. By her second husband, Procopio Asejo, she had the private respondents. In 1939 Felisa sold the property with a right to repurchase, the period of repurchase being three years. She died in 1942 without having redeemed it.

After her death, but still within the redemption period, Rustico repurchased the property by himself alone, shouldering the expenses. He then executed a deed of extrajudicial partition in which he represented himself to be the only heir and child of his mother. On the strength of that deed, the certificate of title in his mother's name was transferred to his name alone, in 1955.

After efforts at compromise failed, the Asejo siblings filed suit for partition with accounting in 1974, on the theory that Rustico was merely a trustee under an implied trust when he redeemed. Rustico countered that the property had devolved upon him because his co-heirs failed to join him in the redemption within the period required by law, and he sought to eject Emeteria from the portion she occupied.

Issues

• Whether or not a co-owner who redeems the whole of the common property, shouldering the expenses, thereby acquires exclusive ownership over it.
• Whether or not the registration of the property in the petitioner's name alone terminated the existing co-ownership.
• Whether or not the petitioner became a trustee of the property for the benefit of the private respondents under an implied trust.
• Whether or not prescription barred the private respondents' claim, filed in 1974 over property registered in 1955.

Applicable Provisions

Article 488 of the Civil Code provides:

Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

This is the provision that lets one co-owner advance a necessary expense, such as redemption, and then collect reimbursement from the others, without thereby becoming sole owner.

Article 1456 of the Civil Code provides:

If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

This is the provision that makes the petitioner a trustee for his co-heirs because of the fraud that attended his registration of the property.

Ruling

On the first issue, the Court held that there is no merit in the petition. The right of repurchase may be exercised by a co-owner with respect to his share alone. While the petitioner redeemed the property in its entirety and shouldered the expenses, that did not make him the owner of all of it, and it did not put an end to the existing state of co-ownership. Redemption is a necessary expense, and under Article 488 a co-owner who incurs it may collect reimbursement from the rest. The property therefore remains in a condition of co-ownership.

On the second issue, the Court held that the petitioner's success in securing title in his own name did not terminate the co-ownership. Registration of property is not a means of acquiring ownership; it operates as a mere notice of existing title, that is, if there is one. The Torrens title does not furnish a shield for fraud.

On the third issue, the Court held that the petitioner is a trustee of the property on behalf of the private respondents. Fraud attended the registration, because his pretension in the affidavit of extrajudicial settlement that he was the sole heir betrayed a clear effort to defraud his brothers and sisters and to exercise sole dominion over the property. Article 1456 therefore applies. The Court noted the Court of Appeals' view that he acted either as a gestor of the property for his co-heirs or for his exclusive benefit; the evidence points to the second, and in either case he remains liable to them.

On the fourth issue, the Court held that prescription had not set in. Prescription as a mode of terminating co-ownership must be preceded by repudiation, and repudiation must be clearly made known to the other co-owners, proved by clear and conclusive evidence, and followed by open, continuous, exclusive, and notorious possession for the period required by law. The petitioner kept the private respondents in the dark by feigning sole heirship, and Emeteria was still occupying a portion of the land. Registration is constructive notice of title, but it is not notice of repudiation. The Court held that the private respondents' right commenced from the time they actually discovered the fraud, which was apparently only during the progress of the litigation. The Court added that prescription is an affirmative defense that must be pleaded in a motion to dismiss or in the answer, and the petitioner never raised it.

Doctrine

First, the right of repurchase may be exercised by a co-owner with respect to his share alone; redemption of the whole by one co-owner does not vest ownership of the whole in him, and does not terminate the co-ownership. He may only demand reimbursement under Article 488.

Second, registration under the Torrens system is not a mode of acquiring ownership; it is mere notice of an existing title, and it does not shield fraud.

Third, where a co-owner acquires property through fraud, as by falsely declaring himself sole heir, he becomes a trustee of an implied trust for the benefit of the persons from whom the property comes, under Article 1456.

Fourth, prescription does not run against co-owners unless there is repudiation clearly made known to them, proved by clear and conclusive evidence, coupled with open, continuous, exclusive, and notorious possession for the required period. The period for enforcing a constructive trust runs from actual discovery of the fraud, not from registration.

Disposition

The petition was denied, and the decision of the Court of Appeals was affirmed in its entirety, with no pronouncement as to costs.

Remember This

The line to memorize is that redemption by one co-owner of the whole property does not make him its owner, for registration is not a mode of acquiring ownership and does not shield fraud. Examiners use this case on co-ownership and redemption, on implied trusts arising from fraud, and on the requisites of repudiation as the starting point of prescription among co-owners.