Extraordinary Development Corp. v. Samson-Bico
REITERATIONFacts
The Antecedents: Apolonio Ballesteros and Maria Membrebe owned a parcel of land, which upon their death, was inherited by their children Juan M. Ballesteros and Irenea Ballesteros. The heirs of Juan and Irenea became co-owners of the property. On April 16, 2002, the heirs of Juan, without the consent of the heirs of Irenea (respondents Herminia F. Samson-Bico and Ely B. Flestado), executed a Deed of Absolute Sale over the entire property in favor of Extraordinary Development Corporation (EDC) for P2,974,800.00. Prior to this sale, the respondents had informed EDC of their co-ownership claim. EDC proceeded to register the sale and transfer the tax declaration to its name, prompting the respondents to file a complaint for annulment of contract, cancellation of tax declaration, and reconveyance of possession with damages. Procedural History: The respondents filed a Complaint for Annulment of Contract and Tax Declaration No. 00-BI-030-3512 and Reconveyance of Possession with Damages before the Regional Trial Court (RTC) of Binangonan, Rizal. The RTC ruled in favor of the respondents, declaring the Deed of Absolute Sale null and void to the extent of one-half of the property, canceling the tax declaration in EDC's name, ordering reconveyance of one-half of the property to the respondents, and awarding damages and attorney's fees. EDC appealed to the Court of Appeals (CA), which affirmed the RTC's decision with modifications. The CA declared the Deed of Absolute Sale valid only to the extent of one-half of the property, ordered the heirs of Juan to return one-half of the purchase price to EDC, and deleted the award of moral and exemplary damages and attorney's fees. EDC then filed the present petition for review before the Supreme Court. The Petition: Extraordinary Development Corporation (EDC) filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the decision of the Court of Appeals. EDC argues that the respondents failed to present sufficient evidence to prove their co-ownership claim over one-half of the subject property. Furthermore, EDC maintains that it is an innocent purchaser in good faith and for value, and that the respondents acted in bad faith. EDC seeks to have the Deed of Absolute Sale declared valid in its entirety and to have its claim of ownership over the whole property recognized.
Issue(s)
Whether respondents sufficiently proved their co-ownership over one-half of the subject property. Whether the Deed of Absolute Sale executed by the heirs of Juan in favor of EDC is valid with respect to the entire property or only to the extent of the sellers' aliquot share, and whether EDC can claim the status of a buyer in good faith and for value. Whether the trial court committed a denial of due process against EDC by submitting the case for resolution without affording it the opportunity to present evidence. Whether the order of reconveyance and the award of damages were proper.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals in toto. The Court held that respondents successfully established their co-ownership over one-half of the subject property through clear testimony and judicial admissions made by the heirs of Juan. The Deed of Absolute Sale was declared valid only to the extent of the undivided one-half share of the heirs of Juan, as they could not sell what they did not exclusively own. EDC could not claim to be a buyer in good faith for unregistered land, and it was not denied due process as it was afforded ample opportunities to be heard but failed to present its evidence due to its own fault. The Court also affirmed the order for the heirs of Juan to return one-half of the purchase price to EDC to prevent unjust enrichment.
Ratio Decidendi
On the establishment of co-ownership: The Court found that respondents convincingly established their co-ownership over one-half of the subject property. This was supported by the clear testimony of Herminia Bico, which was corroborated by the judicial admissions made by the heirs of Juan in their Answer to the Complaint and during the hearing. Specifically, the heirs of Juan admitted that respondents were co-owners by virtue of succession and that their mother, Irenea, was a co-owner along with Juan. The Court emphasized that judicial admissions conclusively bind the party making them and do not require further proof, unless shown to be a palpable mistake. The documentary evidence, such as baptismal and death certificates, further supported the lineage and relationships presented. On the validity of the Deed of Absolute Sale and the status of EDC as a buyer in good faith: The Court reiterated the principle that a co-owner has the absolute right to dispose of their pro indiviso share. However, the effect of such alienation, with respect to other co-owners, is limited to the portion that may be allotted to the seller in the eventual partition of the property. Applying the principle of nemo dat quod non habet (no one can give what one does not have), the heirs of Juan could only validly sell their undivided one-half share. Consequently, EDC, as the buyer, merely stepped into the shoes of its sellers and could not acquire a better right than what they possessed. The Court also debunked EDC's claim of being a buyer in good faith, stating that this defense is generally applicable to registered land, not unregistered land where the buyer is expected to exercise greater diligence. The fact that respondents had previously informed EDC of the co-ownership further negated EDC's claim of good faith. On the issue of denial of due process: The Court found no denial of due process. Despite numerous postponements, EDC, through its counsel, repeatedly failed to appear or present its evidence. The trial court had explicitly warned the defendants, including EDC, that their right to present evidence would be waived if they failed to secure new counsel and appear. The Court held that when a party is afforded several opportunities to be heard but fails to avail of them due to their own fault or choice, their claim of denial of due process must fail. EDC was not deprived of its day in court; it simply failed to utilize the opportunities provided. On the reconveyance and return of purchase price and the award of damages: The Court affirmed the appellate court's modification of the RTC's ruling regarding reconveyance, finding it equitable to order the heirs of Juan to return one-half of the purchase price to EDC to prevent unjust enrichment. The Court agreed with the Court of Appeals in deleting the award of moral and exemplary damages and attorney's fees, as these awards were found to be unsubstantiated by legal and factual bases in the records of the case.
Main Doctrine
A co-owner may validly dispose of their undivided share in a property, but the sale is only effective as to their aliquot share and does not bind the other co-owners who did not consent. A buyer of an unregistered land cannot claim to be a buyer in good faith if they had knowledge of the co-ownership.