NILO A. MERCADO V CA AND AUREA A.

MERCADO
GR NO. 108952 JANUARY 26, 1995

FACTS:
The case involves a dispute over co-ownership rights between siblings, Nilo A. Mercado and
Aurea A. Mercado, of a property near the University of the Philippines. Aurea seeks to claim
her co-ownership rights over the property after Nilo mortgaged it to the Social Security
System (SSS) without the former’s consent. Subsequently, the property was foreclosed by
SSS but Nilo was able to redeem it using insurance proceeds from his property in Davao,
eventually claiming sole ownership based on the title and tax documents under his name.

ISSUE:
Whether or not Nilo’s mortgage and subsequent redemption of the property extinguished
Aurea’s co-ownership rights.

RULING:
No. Nilo’s admission of the existence of co-ownership between him and Aurea through an
affidavit was considered a high-quality evidence by the Court, citing Art. 493 which provides
that each co-owner has the right to alienate their pro-indiviso share in the co-owned property
without the consent of the other co-owners; however, a co-owner cannot alienate the shares
of the other co-owners. Therefore, since Aurea did not know about the mortgage or
redemption of the property, and she did not voluntarily relinquish her co-ownership rights,
Nilo’s mortgage and redemption of the property only affected his own share and not Aurea’s.
Relatively, since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner without the consent of the other co-owners is not entirely null and
void. However, only the rights of the co-owner-seller are transferred, thereby making the
buyer a co-owner of the property.
The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner
or co-owners who alienated their shares, but the DIVISION of the common property of the
co-owners who possessed and administered it.

NOTES:
 Petition for certiorari on CA decision declaring Aurea as co-owner of the lot with
TCT No. 123560.
 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 it and
even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or 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.
 The Court distinguished this case from a previous ruling in Tan v CA where the co-
owners allowed the redemption period of 1 year to expire and permitted the
consolidation of ownership in favor of a third party.
 Reconveyance- the return of the title to the original owner.
 Pro-indiviso share- each has a proportionate interest in the whole property rather than
a specified part of it.
 Nemo dat guod non habet – no one can give what he does not have