[EFFECT OF TRANSACTION BY EACH CO-OWNER]
21 PHILIPPINE NATIONAL BANK V. CA, PEDRO BITANGA, FERNANDO
BITANGA, GREGORIO BITANGA, GUILLERMO BITANGA, CLARITA BITANGA
together with her husband AGRIPINO L. RABAGO and MELITONA LAGPACAN,
assisted by her husband JORGE MALACAS.
June257, 1980 | Guerrero, J. |
Doctrine: Insert doctrine here
Facts:
● Property in question originally belonged to the conjugal property of Inigo
Bitanga and Rosa Ver. The original certificate of title was issued to them and
inserted in the register of deeds of Ilocos Norte. However, this issuance was
only given on December 15, 1937 which was after Inigo died (September 25,
1935).
● Still before the issuance of the title, Rosa mortgaged the entire property in
favour of PNB on October 20, 1936 for the sum of 500 pesos. However, the
mortgaged lien was not annotated in the register of deeds when the original
certificate was issued. Nevertheless, the power of attorney in favour of PNB
stated that in the event Rosa defaults, it would have the capacity to take
possession of, and retain the property mortgaged, to sell or lease the same
or any part of it, and to do such other acts as necessary in the performance
of the power granted to the mortgagee. This PA was, on the other hand,
annotated on the original certificate title.
● Meanwhile, Rosa Ver defaulted in the fulfilment of her obligation with Manila
trading. So, MTC levied upon her share in the lot in question on December
13, 1939 and had the attachment annotated on the title. Rosa’s interest in
the lot in question was sold at a public auction and was sold to MTC as the
highest bidder. A deed of sale was executed in favour of MTC and was
again annotated on the title.
● MTC sold its rights over the lot to Santiago Sambrano and, again, had the
sale annotated on the title. One-half of the property passed into the hands of
MELITONA LAGPACAN, and her husband JORGE MALACAS.
● Meanwhile, Rosa failed to settle her obligation with PNB. Hence, PNB,
pursuant to the PA, sold the WHOLE LOT at a public auction. PNB became
the owner since it was the highest bidder. Rosa failed to redeem and PNB
consolidated its title over the lot. However, the consolidation was not
annotated on the owner’s duplicate title since Rosa failed to surrender it.
● On November 25, 1950, PNB filed a petition before the trial court which
asked that the original title over the land be declared null and void and
prayed that a new title be issued in its name. Trial court acted favourably on
PNB’s petition and ordered what was prayed for on October 2, 1951.
● On May 24, 1954, PNB sold the property to Felizardo Reyes. A new owner’s
duplicate title was issued in Reyes’s name.
● On May 17, 1954, the heirs of Heirs of Inigo Bitanga, filed a complaint before
the Court of First Instance of Ilocos Norte against the Philippine National
Bank, the Register of Deeds of Ilocos Norte and Felizardo Reyes, for
reconveyance of real property and damages, with a prayer for the issuance
of an ex-parte writ of preliminary injunction restraining and enjoining the PNB
and Felizardo Reyes from consummating the sale of the property in question
and prohibiting the Register of Deeds from registering the sale in favor of
Felizardo Reyes. the writ of preliminary injunction was issued. During the
pendency of the case, Melitona Lagpacan and Jorge Malacas, filed a Motion
to admit their complaint in intervention, alleging that they had a legal interest
in the subject matter of the case, and the same was granted.
● On November 16, 1960, the CFI ruled in favour of the heirs of Bitanga and
the Malacas spouses. It mentioned that the lot in question was conjugal in
nature; that half would go to the heirs and half would go to rosa ver. The
mortgage to PNB is not an existing lien since it did not have a special
mention in the decree of registration and that the acquisition of MTC was
valid and legal. Since the MTC acquisition was valid and legal, the sale
made to Sambrano is likewise valid and legal, as well as the sale to the
Malacas spouses.
● Felizardo Reyes was deemed not a purchaser in good faith and the trial
ordered the cancellation of the duplicate title in Reyes’ name.
● PNB and Reyes appealed to the CA. CA affirmed the judgment of the lower
court and ordered that new titles be issued in the names of the heirs of
Bitanga and spouses Malacas (half to the heirs and half to the Spouses). It
also mentioned that the new titles would be free from encumberance
regarding the claims of PNB and Reyes.
● PNB filed an M.R. to the CA but was denied, hence, the current petition.
● In this petition, respondents filed a motion to dismiss on the ground that the
CA decision became final and executory since Reyes failed to join PNB in
this recourse. Moreover, it assailed the issues of PNB because they were
questions of fact and not of law, hence, they are proper for the review of SC.
● SC denied petition initially but PNB filed an M.R. stating that it still has
interests in the property. SC reconsidered.
Issue:
1. W/N Rosa Ver could really mortgage the entire lot to PNB.
2. W/N the sale of PNB and/or the sale of MTC were valid.
Held:
1. NO.
● The lot was conjugal. When Inigo died, a co-ownership was established
between the heirs and Rosa Ver. Hence, Rosa cannot validly mortgage the
whole lot since it would prejudice the rights of her co-owners, the heirs.
2. PNB:NO; MTC:YES.
● One of the essential requisites to the contract of pledge and mortgage is that
the pledgor or mortgagor be the absolute owner of the thing. The effect of
the mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the TERMINATION OF
THE CO-OWNERSHIP. Thus, Rosa could only mortgage her share and not
the whole lot. She cannot give what is not hers.
● She only had usufructuary rights over the estate left by the husband. Not
being an owner, she cannot alienate or dispose of the objects included in the
usufruct. (as per the old civil code which was in force during the time of
Inigo’s death).
● Though there were tax declarations in the name of Rosa, it does not alter the
conjugality of the lot. Tax declarations are not sufficient evidences of title
and should not prejudice the rights of the co-owners. As far as the shares
are concerned, the respective shares of the co-owners were not included in
the mortgage.
 ● Thus, mortgage/subsequent sale to PNB and subsequent sale of PNB to
Reyes were invalid.
● On the other hand, there is no showing that the Manila Trading Company
(MTC) had any knowledge or notice of the prior mortgage in favor of the
PNB, hence, it may be safely presumed that it (MTC) acquired the rights of
Rosa Ver and Guillermo Bitanga as an innocent purchaser for value and free
from all incumbrances. From the MTC, the aforesaid rights of Rosa and
Guillermo passed to Santiago Sambrano, and from the latter, to the Malacas
Spouses. There is no question, therefore, as to spouses’ rights over the
property, as against the PNB or its transferee, Felizardo Reyes. The
intervenors merely stepped into the shoes of MTC, a prior purchaser in good
faith, and thereby became entitled to all the defenses available to said
Company, including those arising from the acquisition of the property in good
faith and for value.

Dispositive
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of
Appeals is hereby affirmed with modification in the sense that paragraph (d) is hereby
amended to read as follows:

(d) Since the issuance of Transfer Certificate of Title No. T2701, Exhibit "D" in
favor of the Philippine National Bank, and Transfer Certificate of Title No. T-3944,
Exhibit "16", in favor of Felizardo Reyes, was without legal basis, they are, therefore,
declared null and void and cancelled. The Register of Deeds is hereby ordered to
issue in hell of the foregoing transfer certificates of title another certificate of title in
the names of the private respondents as follows:

Undivided two-fifths (2/5) share to Pedro Bitanga, married to Agripina, Purisima

Fernando Bitanga, single, Gregorio Bitanga, single, and Clarita Bitanga, married to
Agripino L. Rabago, all of legal age, Filipino citizens, and residents of Laoag, Ilocos
Norte, and the remaining undivided three-fifths (3/5) share to the spouses Jorge
Maracas and Melitona Lagpacan, both of legal age, Filipino citizens, and residents of
Burgos, Ilocos Norte, free from incumbrance regarding the claims of the Philippine
National Bank and Felizardo Reyes, after payment of lawful fees.