Their case involved the properties inherited from Dado, deceased husband of Dora and father of Rommel, Gary, Nellie and Tessie. On August 22, 1977 they executed a Deed of Partial Partition distributing to each of them their shares consisting of several lots they inherited and previously held by them in common. In the said deed, the shares of said heirs in the mass of co-owned properties were concretely determined and they "mutually decided to end their-ownership pro-indiviso" over the said properties. Among the properties adjudicated to Rommel was the parcel of land situated in Taytay covered by TCT 495225 which is the subject of this case.
A day after the partition, or on August 23, 1977, the same parties to the Deed of Partial Partition executed a memorandum of agreement (MOA) wherein they agreed to share equally in the proceeds of the sale of the properties they have subdivided and individually titled. The tenor of this MOA was annotated at the back of TCT 495225 adjudicated to Rommel.
On May 16, 1980, Rommel executed a Special Power of Attorney in favor of Tom, husband of his sister Tessie authorizing him to obtain a loan of P104,000 from a financing company (SFC) to be secured by a real estate mortgage on the subject land. Thus on June 4, 1980, a Real Estate Mortgage was constituted on TCT 495225 to secure the loan obtained by Rommel thru Tom from SFC. Since the loan remained outstanding on maturity, SFC foreclosed the mortgage and emerged as the highest bidder at the extrajudicial foreclosure sale conducted by the Sheriff. When the property was not redeemed one year after the certificate of sale was registered, SFC consolidated its ownership over it and TCT 495225 was cancelled and a new TCT 514477 was issued in the name of SFC.
Sometime in January 1983, Nellie discovered that TCT 495225 was already cancelled by TCT 514477 in the name of SFC. So Nellie and her mother Dora, sister Tessie, and brother Gary sued SFC, the Sheriffs, the Register of Deeds and their brother Rommel for annulment of the mortgage and the foreclosure sale. They asserted that they were co-owners of the property with Rommel as evidenced by the MOA. Hence they argued that the mortgage was void since they did not consent thereto. Were they correct?
No. To be considered a co-owner, one must have a spiritual part of a thing which is not physically divided, or each of them is an owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract. Co-ownership is terminated upon judicial or extrajudicial partition of the properties owned in common. Partition in general, is the separation, division and assignment of a thing held in common among those to whom it may belong. Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition although it purports to be a sale, an exchange, a compromise or any other transaction.
In this case, from a reading of the provisions of the Deed of Partial Partition, no other meaning can be gathered other than that Rommel and his mother, brother and sisters had put an end to the co-ownership. Their shares in the mass of co-owned properties were concretely determined and distributed to each of them. There is nothing from the word of said deed which expressly or impliedly stated that they intended to remain as co-owners with respect to the disputed property that was adjudicated to Rommel or to any other properties for that matter. Since the validity and efficacy of the Deed was not disputed, it follows that Rommel acquired absolute ownership over the specific parcels of land assigned to him therein. As the absolute owner, he has the right to enjoy and dispose of the property or to constitute a mortgage thereon without securing the consent of his co-heirs.
On the other hand there is absolutely nothing in the MOA which diminishes Rommel’s right to alienate or encumber the properties allotted to him by the deed of partition. The parties therein only bound themselves to share in the proceed of the sale of the properties. The MOA does not direct re-conveyance of the properties to reinstate the common-ownership of the parties. To insist that the parties also intended to re-establish co-ownership after the properties had been partitioned is to read beyond the import of the MOA and to render nugatory the effects of partition, which is not the obvious intent of the parties (Cruz vs. Court of Appeals, et.al. G.R. 122904, April 15, 2005. 456 SCRA 165).