G.R. No. 108228 February 1, 2001
SPOUSES MANUEL and SALVACION DEL CAMPO, petitioners, vs. HON. COURT OF APPEALS and HEIRS OF JOSE REGALADO, SR., respondents.

FACTS

The petitioners, Spouses Del Campo, derived title from a 1940 sale where co-owner Salome Bornales sold a definite portion of Lot 162, a property held in common with seven others, to Soledad Daynolo by metes and bounds. Daynolo and her heirs later mortgaged this portion to Jose Regalado, Sr., redeemed it, and subsequently sold it to the petitioners in 1951. The petitioners thereafter possessed the land, built a residence, and paid taxes. Meanwhile, Regalado, Sr. acquired the shares of other co-owners, secured a reconstituted title for the entire Lot 162, and subdivided it, obtaining a Transfer Certificate of Title (TCT No. 14566) for Lot 162-C-6, which included the 1,544-square-meter portion occupied by the petitioners.
In 1987, the petitioners filed an action for repartition, resurvey, and reconveyance against Regalado’s heirs, claiming their titled area erroneously encompassed the portion they purchased and possessed. The Regional Trial Court dismissed the complaint, ruling the 1940 sale by a co-owner of a specific part was void and that possession could not defeat a Torrens title. The Court of Appeals affirmed this decision.

ISSUE

The primary issue is whether the sale by a co-owner of a specific, delineated portion of an undivided property is valid and can support an action for reconveyance against a subsequent registered owner who obtained title through fraud or bad faith.

RULING

The Supreme Court reversed the lower courts and granted the petition. The legal logic proceeds from Article 493 of the Civil Code, which grants each co-owner full ownership over their ideal share, allowing its alienation. The Court clarified that a sale of a specific physical portion by a co-owner is not void per se. While such a sale cannot prejudice the other co-owners absent their consent to the specific partition, it is valid as between the seller and the buyer. The buyer effectively steps into the shoes of the co-owner with respect to that ideal share.
Crucially, the Court found that Jose Regalado, Sr. was in bad faith when he obtained title over the entire lot, including the portion already sold to and possessed by the petitioners’ predecessors. His prior transactions—first as mortgagee of the very same portion and later as a buyer of other co-owners’ shares—made him fully aware of the petitioners’ adverse claim. His failure to exclude the petitioners’ portion from his title application constituted fraud. Consequently, an implied trust was created in favor of the petitioners. Their action for reconveyance, based on this trust, is imprescriptible because they remained in continuous possession of the property. The Torrens title in Regalado’s name cannot be used as a shield for fraud, and reconveyance is the proper remedy to correct the wrongful registration.