Ulay vs. Bustamante

A sale of a specific, determinate portion of unpartitioned co-owned property by fewer than all co-owners is not void ab initio but is valid and effective only to the extent of the aggregate pro-indiviso shares of the selling co-owners, subrogating the buyer to the sellers' interests and making the buyer a co-owner to that limited extent, without prejudice to the rights of the non-consenting co-owners who retain their undivided shares.

Spouses Candido and Candida Bustamante owned a 19-hectare unregistered parcel of land designated as Lot No. 1089 in Taba, La Paz, Carmen, Davao, covered by Homestead Application No. 46102. The land passed to their son Eugenio Bustamante, who died intestate in 1938, leaving his surviving spouse Juana and five children (Victoria, Gregoria, Salome, Ramon, and Adelaida). On November 15, 1977, Juana and her children executed a Deed of Extrajudicial Partition (DEP) dividing the remaining 11 hectares equally among themselves (1.9379 hectares each), with specific positions indicated in a sketch attached to the deed. A survey conducted on December 7, 1979, inadvertently interchanged the designations of Juana's and Gregoria's shares in the approved subdivision plan. Original Certificate of Title (OCT) No. P-17509 was subsequently issued in Gregoria's name over Lot No. 1089-E (which was Juana's share per the DEP). Despite this error, Juana and Gregoria continued to possess their respective shares according to the DEP designations until their deaths. Juana later cohabited with Arturo Remillano, producing two children (Emelita and Felicitas), while Gregoria had eight children who inherited her share.

• The Property and Original Partition: Lot No. 1089 was a 19-hectare unregistered land originally owned by Spouses Candido and Candida Bustamante, inherited by their son Eugenio. Upon Eugenio's death, his surviving spouse Juana and their five children (Victoria, Gregoria, Salome, Ramon, and Adelaida) executed a Deed of Extrajudicial Partition (DEP) on November 15, 1977, dividing the remaining 11 hectares equally among themselves (1.9379 hectares each), with specific positions indicated in a sketch.
• The Erroneous Subdivision: A survey conducted on December 7, 1979, resulted in an approved subdivision plan that inadvertently interchanged the designations of Juana's and Gregoria's shares. Original Certificate of Title (OCT) No. P-17509 was subsequently issued in Gregoria's name over Lot No. 1089-E (which was Juana's share per the DEP). Despite this, Juana and Gregoria continued to possess their respective shares according to the DEP designations.
• Subsequent Transfers: Upon Gregoria's death, her share (Lot No. 1089-F per DEP) was inherited by her eight children (the Gregoria Heirs). Juana's share (Lot No. 1089-E per DEP) passed to her children with Arturo Remillano (the Remillanos): Emelita and Felicitas.
• The Deed of Exchange: On April 5, 1999, four Gregoria Heirs (Ernesto, Erlinda, Amelia, and Hilyn) and Emelita (purportedly representing the Remillanos) executed a Deed of Exchange, swapping their rights over Lots 1089-E and 1089-F to conform to the DEP.
• The Deed of Sale: On January 16, 2001, the same four Gregoria Heirs executed a Deed of Sale conveying a specific 9,689-square-meter portion of Lot No. 1089-F to petitioner Jesus Ulay for P60,000.00.
• The Conflict: On May 3, 2001, Maranguyod Bustamante (widow of Ramon, one of the Bustamantes) entered the 9,689-sq.m. portion and erected a pre-fabricated house. Jesus demanded she vacate, but she refused.
• The Affidavit of Waiver: On September 17, 2004, the Remillanos executed an Affidavit of Waiver, purportedly waiving their rights over Lot No. 1089-F in favor of Jesus, Dionisia, and Roger (Gregoria Heirs), assigning specific portions to each.
• Registration: On December 23, 2004, OCT No. P-41507 was issued in Jesus' name over the 9,689-sq.m. portion.
• Lower Court Findings: The RTC declared the Deed of Sale and Deed of Exchange void, dismissed the Recovery case, and ordered reconveyance. The CA affirmed the nullity of the Deed of Sale but declared the Deed of Exchange valid and the Affidavit of Waiver void in its entirety.

• Lack of Cause of Action: Petitioner Jesus Ulay maintained that the Bustamantes had no cause of action because Lot No. 1089-F was Gregoria's share under the DEP, which she exclusively passed to her children (the Gregoria Heirs), and thus the Bustamantes had no interest therein.
• Validity of the Deed of Sale: Jesus argued that the lower courts committed reversible error in declaring the Deed of Sale and OCT No. P-41507 void, contending that he was a buyer in good faith and that the sale should be upheld.

• Prejudice to Co-heirs: The Bustamantes countered that their rights were prejudiced when the Remillanos exchanged Lot No. 1089-F with the Gregoria Heirs and subsequently sold a portion to Jesus, arguing that these transactions affected their inherited interests.
• Lack of Good Faith: Respondents argued that Jesus was not a buyer in good faith because he was aware that Juana had several other children who did not participate in the sale, and that the sale of a specific portion of unpartitioned land required the consent of all co-owners.

• Binding Effect of Partition Documents: Whether the Deed of Extrajudicial Partition (DEP) or the subsequent subdivision plan should prevail in determining the rights of the parties.
• Validity of the Deed of Exchange: Whether the Deed of Exchange dated April 5, 1999, executed by some Gregoria Heirs and Emelita Remillano-Comendador is valid.
• Validity of the Deed of Sale: Whether the Deed of Sale dated January 16, 2001, conveying a specific portion of Lot No. 1089-F to Jesus Ulay is valid.
• Validity of the Affidavit of Waiver: Whether the Affidavit of Waiver dated September 17, 2004, executed by the Remillanos is valid.
• Rights of Co-owners: Whether the sale of a specific portion of unpartitioned co-owned property by fewer than all co-owners affects the rights of non-consenting co-owners.

• Prevailing Document: The DEP prevails over the erroneous subdivision plan. The DEP is a binding contract enforceable against the parties and their successors-in-interest, and the subsequent subdivision plan containing an inadvertent error in lot designations cannot amend it. The fact that Juana and Gregoria continued possession according to the DEP confirms its validity.
• Deed of Exchange: The Deed of Exchange is declared invalid but immaterial (a surplusage), as it attempted to restore possession of lots that the parties never lost under the valid DEP. The Gregoria Heirs never lost ownership of Lot No. 1089-F, and the Remillanos never owned it to convey.
• Affidavit of Waiver: The Affidavit of Waiver is declared invalid. The Remillanos could not validly waive rights over Lot No. 1089-F because they never owned it, and the Gregoria Heirs never lost their ownership thereof.
• Deed of Sale: The Deed of Sale is valid but only to the extent of the pro-indiviso shares of the four Gregoria Heirs who executed it (Ernesto, Erlinda, Amelia, and Hilyn). Under Article 493 of the Civil Code, a co-owner may alienate only his or her undivided share, and the effect is limited to the portion allotted upon partition. Jesus was subrogated to the sellers' aggregate pro-indiviso share (approximately one-half of Lot No. 1089-F), making him a co-owner to that extent, but the sale cannot bind the shares of the non-consenting Gregoria Heirs (Veneranda, Dionisia, Roger, and Estelita).
• Co-ownership Structure: Jesus holds a one-half (1/2) pro-indiviso share (4,844.50 sq.m.), while Veneranda, Dionisia, Roger, and Estelita each retain one-eighth (1/8) pro-indiviso shares (1,211.125 sq.m. each) in the 9,689-sq.m. lot covered by OCT No. P-41507.
• Ejectment and Improvements: Maranguyod Bustamante is ordered to vacate the premises as a builder in bad faith under Article 449 of the Civil Code, having knowingly built on land belonging to others. The improvements redound to the co-ownership.
• Registration Expenses: The non-selling co-owners (Veneranda, Dionisia, Roger, and Estelita) are ordered to pay Jesus their proportionate shares of the registration fees and expenses for OCT No. P-41507.

• Preeminence of Deed of Extrajudicial Partition over Erroneous Subdivision Plan — A duly executed deed of extrajudicial partition constitutes a binding contract that determines the rights of heirs and their successors-in-interest. A subsequent subdivision plan containing an inadvertent error in lot designations cannot amend or supersede the binding contractual partition, especially where the parties continued possession in accordance with the deed.
• Limited Effect of Sale by Co-owner of Specific Portion — Under Articles 493 and 491 of the Civil Code, a co-owner may sell only his or her undivided (pro-indiviso) share in co-owned property. A sale of a specific, determinate portion of unpartitioned co-owned property by fewer than all co-owners is not void ab initio but is ineffective to the extent it exceeds the sellers' aggregate shares. The buyer is subrogated only to the sellers' pro-indiviso interests and becomes a co-owner to that limited extent, while the non-consenting co-owners retain their undivided shares (Estoque v. Pajimula; Bailon-Casilao v. Court of Appeals; Bulatao v. Estonactoc).
• Estoppel in Co-ownership Sales — A selling co-owner is estopped from disavowing the sale to the extent of his or her pro-indiviso share, and the sale is valid as to that share under Article 493 of the Civil Code.
• Torrens System as Evidence, Not Mode of Acquisition — Registration under the Torrens system does not create or vest title; a certificate of title is merely evidence of ownership. It cannot protect a usurper from the true owner or permit enrichment at the expense of others (Naval v. Court of Appeals).
• Action for Ejectment by Co-owner — Under Article 487 of the Civil Code, any one of the co-owners may bring an action in ejectment (including accion publiciana or accion reivindicatoria) without joining all other co-owners, the suit being deemed instituted for the benefit of all.
• Builder in Bad Faith — He who builds on the land of another in bad faith loses what is built without right to indemnity under Article 449 of the Civil Code.

• "As between the DEP undertaken by the Bustamantes on the one hand, and the subdivision plan which contained an inadvertent error on the other, the DEP must prevail. The subdivision plan cannot, as it does not, amend the DEP because that is the binding contract to which all the heirs agreed, whereas the subdivision plan was shown to have been made with an unintended error." — On the primacy of the contractual partition over the erroneous survey.
• "The Deed of Sale in favor of Jesus is therefore valid but only up to the extent of the pro-indiviso shares of Ernesto, Amelia, Erlinda, and Hilyn, as the four Gregoria Heirs who were the sellers in the Deed of Sale. By virtue of said Deed of Sale, Jesus has therefore been subrogated to the shares of Ernesto, Amelia, Erlinda, and Hilyn to the extent of 9,689 sq. m., pro-indiviso, that he purchased from them, thereby also making him a co-owner of Lot No. 1089-F to that same extent." — On the limited validity of the sale to the extent of the sellers' shares.
• "While under Article 493 of the New Civil Code, each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto and he may alienate, assign or mortgage it, and even substitute another person in its enjoyment, the effect of the alienation or the mortgage with respect to the co-owners, shall be limited, by mandate of the same article, to the portion which may be allotted to him in the division upon the termination of the co-ownership." — On the limitation of a co-owner's power to alienate.
• "A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others." — On the nature of Torrens title.

• Estoque v. Pajimula, No. L-24419, July 15, 1968, 24 SCRA 59 — Controlling precedent establishing that a sale of a specific portion of co-owned property by a co-owner without consent of others is not invalid but merely ineffective, becoming effective only to the extent of the seller's share or upon subsequent acquisition of the other shares by the seller.
• Bailon-Casilao v. Court of Appeals, G.R. No. 78178, April 15, 1988, 160 SCRA 738 — Followed for the principle that a sale of the entire property by one co-owner without consent transfers only the seller's undivided share, making the buyer a co-owner, and that the proper remedy is partition, not nullification.
• Bulatao v. Estonactoc, G.R. No. 235020, December 10, 2019 — Followed for the reconciliation of Article 493 with the requirement of co-owner consent, and for the application of estoppel to validate sales to the extent of the seller's pro-indiviso share.
• Naval v. Court of Appeals, G.R. No. 167412, February 22, 2006, 483 SCRA 102 — Cited for the principle that a certificate of title is merely evidence of ownership and does not foreclose the possibility of co-ownership with persons not named therein.
• National Bank v. Garcia, G.R. No. 182839, June 2, 2014, 724 SCRA 280 — Cited for the rule that a co-owner has no right to sell a concrete, specific part of the thing owned in common until actual partition.
• Cabrera v. Ysaac, G.R. No. 166790, November 19, 2014, 740 SCRA 612 — Distinguished and followed for the principle that a co-owner cannot sell a definite portion of co-owned property without consent of all co-owners.

• Article 487, Civil Code — Allows any one of the co-owners to bring an action in ejectment, deemed instituted for the benefit of all.
• Article 491, Civil Code — Requires unanimous consent of co-owners for alterations in the thing owned in common.
• Article 493, Civil Code — Grants co-owners full ownership of their part and the right to alienate it, but limits the effect of alienation to the portion allotted upon partition.
• Article 1078, Civil Code — Provides that where there are two or more heirs, the whole estate is owned in common before partition.
• Article 1082, Civil Code — Deems every act intended to put an end to indivision as a partition.
• Article 448, 449, 450, and 451, Civil Code — Provisions governing builders in good faith and bad faith.
• Article 1396, Civil Code — Provides that ratification cleanses the contract from all its defects from the moment it was constituted.
• Article 1431, Civil Code — Defines estoppel as rendering admissions conclusive upon the person making them.
• Article 1434, Civil Code — Provides that when a non-owner sells and later acquires title, such title passes by operation of law to the buyer.
• Rule 45, Rules of Court — Mode of review by the Supreme Court.
• Rule 69, Rules of Court — Action for partition.

Peralta, C.J., Carandang, Zalameda, and Gaerlan, JJ.