Ulay v. Bustamante
REITERATIONFacts
The Antecedents: Spouses Bustamante owned Lot 1089, which was inherited by their son Eugenio. After Eugenio's death, his widow Juana and five children executed a Deed of Extrajudicial Partition (DEP) in 1977, dividing the land into six portions of 1.9379 hectares each. A 1979 subdivision plan inadvertently interchanged the designations of Lot 1089-E (intended for Juana) and Lot 1089-F (intended for Gregoria). Despite this error, Juana and Gregoria possessed the lots according to the DEP. Gregoria later obtained Original Certificate of Title (OCT) No. P-17509 for Lot 1089-E based on the erroneous plan. Procedural History: After Juana and Gregoria died, their heirs attempted to rectify the error. Four of Gregoria's eight heirs and one of Juana's heirs (Emelita) executed a Deed of Exchange. Subsequently, the same four Gregoria heirs sold a specific 9,689-sq. m. portion of Lot 1089-F to Jesus Ulay, who obtained OCT No. P-41507. Maranguyod Bustamante (widow of Juana's son Ramon) occupied the lot. Ulay filed for recovery of possession, while the Bustamantes filed for annulment of deeds and reconveyance. The Regional Trial Court (RTC) ruled in favor of the Bustamantes, nullifying Ulay's sale and title. The Court of Appeals (CA) affirmed with modifications, holding the DEP binding but still nullifying Ulay's sale. The Petition: Jesus Ulay filed a Rule 45 petition before the Supreme Court, arguing that the Bustamantes had no cause of action regarding Lot 1089-F because it belonged to Gregoria's heirs under the DEP. He contended that the lower courts committed reversible error in declaring his Deed of Sale and OCT No. P-41507 void, asserting that he purchased the land from Gregoria's heirs who were the rightful owners of that specific portion.
Issue(s)
Whether the Deed of Extrajudicial Partition (DEP) prevails over the subsequent erroneous subdivision plan. Whether the Deed of Exchange and Affidavit of Waiver executed by the heirs are valid. Whether the Deed of Sale of a specific portion of unpartitioned co-owned property is valid; and whether Ulay, as a co-owner, has the authority to bring an action in ejectment. Whether Maranguyod Bustamante is a builder in good faith entitled to reimbursement for improvements.
Ruling
The Petition is PARTLY GRANTED. The Supreme Court declared the Deed of Exchange and Affidavit of Waiver invalid as they were surplusage. However, it declared the Deed of Sale in favor of Jesus Ulay VALID but only to the extent of the pro-indiviso shares of the four sellers. Ulay is declared a co-owner of Lot 1089-F. Maranguyod Bustamante is ordered to vacate the premises and is not entitled to reimbursement for improvements.
Ratio Decidendi
On Issue 1: The Court ruled that the Deed of Extrajudicial Partition (DEP) is a binding contract enforceable against the parties and their successors-in-interest. It cannot be altered by a subsequent subdivision plan containing a clearly erroneous interchanging of lot designations. The parties' intent, as expressed in the DEP and confirmed by their actual possession of the lots during their lifetimes, must prevail over the technical error in the survey. Registration under the Torrens System does not vest title but merely evidences it; thus, the erroneous title issued to Gregoria did not strip Juana of her rightful share. The Court emphasized that a certificate of title cannot be used to protect a usurper from the true owner. On Issue 2: The Deed of Exchange and Affidavit of Waiver were deemed invalid or immaterial surplusage. Since the DEP already established the rightful ownership and possession, the Deed of Exchange was unnecessary because it attempted to restore possessions that were never legally lost despite the erroneous plan. Similarly, the Affidavit of Waiver was ineffectual because the affiants (Juana's heirs) could not cede Lot 1089-F to Gregoria's heirs, as Gregoria's heirs already owned it under the DEP. The Court noted that the Remillanos could not cede to the Gregoria Heirs what the latter never lost, nor could they cede to Jesus Ulay what they did not own. On Issue 3: Applying Article 493 of the Civil Code, the Court held that a co-owner has full ownership of his part and of the fruits and benefits pertaining thereto, and he may alienate it, but the effect is limited to the portion allotted to him upon partition. While a co-owner cannot sell a concrete or determinate part of the thing owned in common, such a sale is not null and void. Instead, it is effective to the extent of the seller's pro-indiviso share. Consequently, Ulay became a co-owner of Lot 1089-F, subrogated to the interests of the four heirs who sold their shares to him. The Court calculated that since four out of eight heirs sold their interests, Ulay acquired a one-half pro-indiviso share of the lot. Under Article 487 of the Civil Code, any one of the co-owners may bring an action in ejectment, which covers all kinds of actions for the recovery of possession, including accion publiciana. As a valid co-owner by virtue of the partial validity of the sale, Ulay had the authority to seek the recovery of the property from Maranguyod. Such an action is deemed instituted for the benefit of all co-owners, and the Court ordered the Registry of Deeds to annotate the names of the other co-owners on Ulay's title to reflect the true pro-indiviso interests. On Issue 4: Maranguyod Bustamante was classified as a builder in bad faith. As the widow of Ramon (Juana's son), her interest was limited to Lot 1089-E (Juana's share), yet she occupied Lot No. 1089-F. She was aware that her mother-in-law owned a different lot from the one she occupied. Under Article 449 of the Civil Code, a builder in bad faith loses what is built without right of indemnity. Therefore, she must vacate the premises and is not entitled to reimbursement for the pre-fabricated house she erected. The Court found that all improvements introduced by her must redound to the benefit of the co-ownership.
Main Doctrine
The Supreme Court emphasizes that a Deed of Extrajudicial Partition (DEP) is a binding contract that prevails over a subsequent subdivision plan containing an inadvertent error, especially when the parties' actual possession aligns with the DEP. Furthermore, while a co-owner cannot adjudicate to himself a definite portion of land owned in common until actual partition, a sale of a specific portion is not void. Instead, the principle of estoppel bars the disposing co-owner from disavowing the sale to the full extent of his undivided share, making the buyer a co-owner of the property. Registration under the Torrens System does not create or vest title; it is merely evidence of ownership and cannot be used to protect a usurper from the true owner.