Mercado v. Court of Appeals Facts: Plaintiff, Aurea Mercado used to work in the United States and is a legitimate sister of Nilo Mercado. Before she left for the US where she stayed up to 1984, she gave her brother Nilo cash money to buy a property close to UP because she planned to teach in the said university when she comes back. She was not given any receipt for the money handed to her brother. In 1967 1967,, she she was infor nforme med d thro throug ugh h lett letter er from from the the Philip Philippin pines es coming coming from from her mother mother and sister sister that that her brother Nilo had already purchased a property located at No. 181 Esteban Abada Street, Quezon City. She never saw the title of the property. In 1972, Nilo went to visit Aurea in the US. Aurea asked Nilo about the purchase of the property. The latter assured her that he would give her a paper with respect to that proper property ty.. In 1978, 1978, Nilo Nilo sent throug through h their mother mother an affidavit wherein he admitted the existence of co-ownership over the property Aurea told Nilo to pay for the lot and insisted that the land be partitioned because she committed the land as payment to a contractor for her school building in Davao. Nilo Mercado: 57 y.o. UP LAW LAW grad gradu uate ate and and a busi usiness nessm man in occupation. He decided to buy the subject property from Sps. Vargas using money out of his personal savings and money borrowed from his mother, sister, and Aurea. The Sps executed a Deed of Conditional Sale after he tendered the downpayment He applied for a housing loan with the SSS and upon its approval, a Deed of Absolute Sale was exec execut uted ed bet between een him him and the Sps. ps. He pai paid the amortization for the loan but the property was foreclosed by SSS. He was able to redeem the property. ISSUES/ HELD: Whether or not there was co-ownership between Nilo and Aurea. Yes Whether or not the co-ownersip was extinguished by the fact fact that that it was mortgage mortgaged, d, forecl foreclose osed d and it was only petitioner who caused the redemption of the property. No. Ratio: 1.
The affidavit executed by defendant was a high quality evidence which contains admission against intere interest st on the part of petiti petitione oner. r. As a lawyer lawyer,, petitioner cannot pretend that the plain meaning of his admission eluded his mind.
2.
Private respondent did not know of the mortgage of their co-owned property in favor of the SSS and the expiry date of its period of redemption. In other word words, s, priv privat ate e resp respon onden dentt did did not not volu volunt ntar ary y relinquish at any period of time her pro-indiviso share in the subject property.
Petition Petitioner, er, for his own benefit, benefit, borrowed borrowed money from the SSS and mortgaged the subject property to the SSS on June 5, 1967 without the knowl knowledg edge e and consen consentt of his co-ow co-owner ner,, herein herein pri private ate respo espond nden entt. Neces ecessa sarrily ily, priv rivate ate respondent could not have helped in the payment of the SSS loan nor could she have redeemed the subject property from the SSS. This is against the pronou pronounce ncemen mentt in Articl Article e 493 of the Civil Civil Code Code which says: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage mortgage it and even substitute substitute another another pers person on in its its enjo enjoym ymen ent, t, exce except pt when when person personal al rights rights are involv involved. ed. But But the the effect effect of the aliena alienatio tion n or mortg mortgage age,, with respect to the co-owners, shall be limite limited d to the the porti portion on which which may be allotted to him in the division upon the termination of the co-ownership .
A co-owner has the right to alienate his pro-indiviso share in the co-owned property even witho without ut the consent consent of the other other co-own co-owners ers but cannot cannot alienate alienate the shares shares of their co-owners. co-owners. No one can give what he does not have.
In Bailon-Casilao vs. Court of Appeals, the Court ruled that: since a co-owner is entitled to sell his undivided share, a sale of the entire property by one-coowner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property. Petitioner’s reliance on the ruling in Tan v. CA is erroneous. The ruling in that case is based on a different set of facts.In Tan, the heirs/ the coowners) allowed the one year redemption period to expire without redeeming their parents' former property and permitted the consolidation of ownership and the issuance of a new title, thereby allowing the extinguishment of the co-ownership.
