TL;DR
The Supreme Court affirmed that when co-owners sell a property without the consent of all other co-owners, the sale is valid only for the selling co-owner’s share. This means a buyer only acquires the rights of the selling co-owners and becomes a co-owner themselves, not the sole owner of the entire property. The ruling underscores that no one can sell what they do not fully own, protecting the rights of all co-owners. Purchasers must conduct thorough due diligence to verify ownership and co-ownership status before buying property in the Philippines, especially unregistered land.
Dividing the Inheritance: When Selling Shared Land Requires Everyone’s Say
This case, Extraordinary Development Corporation v. Herminia F. Samson-Bico and Ely B. Flestado, revolves around a land dispute rooted in inheritance and co-ownership. The central legal question is: can heirs who are co-owners of a property sell the entire property without the consent of the other co-owners? The descendants of Apolonio Ballesteros and Maria Membrebe inherited a parcel of land. Apolonio and Maria had two children: Juan and Irenea. Juan’s heirs (the Ballesteros heirs) sold the entire property to Extraordinary Development Corporation (EDC) without the consent of Irenea’s heirs (Samson-Bico and Flestado, the respondents). Respondents sued to annul the sale, arguing their rights as co-owners were violated.
The Regional Trial Court (RTC) and the Court of Appeals (CA) both found in favor of the respondents, albeit with modifications. The Supreme Court (SC) ultimately affirmed the CA’s decision, solidifying key principles of co-ownership in Philippine property law. The SC’s decision hinged on established legal doctrines concerning co-ownership and the limits of a co-owner’s right to alienate property. Article 493 of the Civil Code is crucial here. It explicitly states:
Art. 493. Each co-owner shall have the full ownership of his part 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 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.
This provision clearly outlines a co-owner’s right to dispose of their pro indiviso share. The Court emphasized the principle of nemo dat quod non habet – no one can give what they do not have. The Ballesteros heirs could only validly sell their undivided share of the property, not the entire parcel, because they did not own it exclusively. Judicial admissions played a significant role in the Court’s decision. Both in their Answer and in court testimony, the Ballesteros heirs admitted the co-ownership with the respondents. These admissions, under Section 4, Rule 129 of the Rules of Court, are conclusive and do not require further proof. EDC’s claim of being a buyer in good faith was rejected by the appellate court and the Supreme Court. The courts reasoned that the property was unregistered land, and the good faith defense primarily applies to registered land where buyers rely on clean titles. Moreover, EDC was notified of the co-ownership by the respondents prior to the sale, further undermining their claim of good faith.
The Supreme Court highlighted that due process was not violated, as EDC was given ample opportunity to present its case but failed to do so due to the absence of their counsel on multiple occasions. Consequently, the SC upheld the CA’s ruling that the Deed of Absolute Sale was valid only to the extent of the Ballesteros heirs’ one-half share. EDC became a co-owner with the respondents. The Ballesteros heirs were ordered to return half of the purchase price to EDC to prevent unjust enrichment, as they sold more than they were entitled to. Damages and attorney’s fees initially awarded by the RTC were removed by the CA and affirmed by the SC due to lack of sufficient evidence.
FAQs
| What is the main legal principle in this case? | A co-owner can only sell their undivided share of a co-owned property without the consent of other co-owners. A sale by one co-owner is valid only to the extent of their share. |
| What happens when co-owners sell the whole property without everyone’s consent? | The sale is valid only for the selling co-owners’ portion. The buyer becomes a co-owner, not the sole owner, and the non-consenting co-owners retain their rights. |
| What is a ‘judicial admission’ and how was it used in this case? | A judicial admission is a statement made by a party in court proceedings that is considered conclusive. In this case, the Ballesteros heirs’ admission of co-ownership in their Answer and testimony was used against them. |
| What does ‘nemo dat quod non habet’ mean? | It’s a Latin phrase meaning ‘no one can give what they do not have.’ This principle means a seller can only transfer the rights they actually possess. |
| Was EDC considered a buyer in good faith? | No, because the property was unregistered, and they were informed of the co-ownership before the sale. The good faith defense is stronger for registered land. |
| What was the outcome for EDC? | EDC became a co-owner of the property, owning the share previously belonging to the Ballesteros heirs. They are also entitled to a partial refund of the purchase price. |
| What is the practical takeaway for property buyers? | Conduct thorough due diligence to verify ownership and co-ownership, especially for unregistered land. Ensure all co-owners consent to a sale to avoid legal disputes. |
For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.
Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Extraordinary Development Corporation v. Herminia F. Samson-Bico and Ely B. Flestado, G.R. No. 191090, October 13, 2014
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