This case underscores a critical principle in property law: a buyer’s good faith does not override the rights of excluded heirs in an estate. The Supreme Court affirmed that an extrajudicial partition fraudulently excluding heirs is void, and subsequent sales, even to innocent purchasers, are valid only to the extent of the seller’s rightful share. The ruling clarifies that rightful heirs can recover their shares, emphasizing the importance of due diligence in estate settlements and property transactions. This decision protects inheritance rights, ensuring fairness and equity in property ownership transfers.

Unraveling Inheritance: Can a Church Claim Land Sold After a Faulty Family Agreement?

The Roman Catholic Bishop of Tuguegarao sought to retain ownership of a piece of land in Cagayan, purchased from Spouses Cepeda, who in turn acquired it from Teodora Abad. The root of the controversy lay in an extrajudicial partition where Teodora, the second wife of Felipe Prudencio, declared herself and her children as the sole heirs, effectively excluding Felipe’s children from his first marriage. These excluded heirs challenged the sale, claiming their rightful shares in the property. The central legal question was whether the Bishop, as a buyer in good faith, could maintain ownership despite the flawed partition that preceded the sale.

The Supreme Court anchored its decision on the principle of nemo dat quod non habet—no one can give what they do not have. This principle dictates that the validity of a sale is contingent on the seller’s ownership rights. Since Teodora’s claim to the entire property stemmed from a fraudulent extrajudicial partition, she could only legally transfer her actual share. The Court emphasized that the good faith of the subsequent buyers, including the Bishop, was immaterial. What mattered was the fundamental defect in the origin of the title. The Court stated, “The good faith or bad faith of petitioner is immaterial in resolving the present petition. A person can only sell what he owns or is authorized to sell; the buyer can as a consequence acquire no more than what the seller can legally transfer.”

The Court examined the validity of the extrajudicial partition in light of Article 979, 980, and 981 of the Civil Code, which establish the rights of all children, regardless of the marriage they come from, to inherit from their parents. The extrajudicial partition violated these provisions by falsely declaring Teodora and her children as the only heirs, thereby depriving the children from Felipe’s first marriage of their inheritance. The Court quoted Rule 74, Section 1 of the Rules of Court, highlighting that an extrajudicial settlement is not binding on individuals who did not participate or receive notice. In this case, the excluded heirs had no knowledge or involvement in the partition, rendering it invalid concerning their rights.

The Court addressed the argument that the extrajudicial partition did not fall under the void contracts listed in Article 1409 of the Civil Code. Citing Constantino v. Heirs of Pedro Constantino, Jr., the Court clarified that an extrajudicial settlement aimed at excluding co-heirs from their rightful inheritance is indeed void because it has an unlawful purpose or object. The Court asserted that, “Teodora, Prudencio, Jr. and Leonora acted in bad faith when they declared that they are the only living heirs of Felipe, despite knowing that Felipe had children in his first marriage. It is well-settled that a deed of extrajudicial partition executed without including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and vicious.”

While the extrajudicial partition was deemed void, the sales to Spouses Cepeda and the Bishop were not entirely nullified. The Court applied Article 493 of the Civil Code, which governs the rights of co-owners. Teodora, as a co-owner, had the right to sell her undivided interest in the property. The sale to Spouses Cepeda was valid only to the extent of Teodora’s share. Consequently, the subsequent sale to the Bishop only transferred Teodora’s pro indiviso share, with the Bishop holding the remaining shares under an implied constructive trust for the benefit of the rightful heirs.

The Supreme Court outlined the proper distribution of shares based on the conjugal nature of the property and the inheritance rights of the heirs. The Cagayan lot was deemed conjugal property of Elena (Felipe’s first wife) and Felipe. Upon Elena’s death, one-half went to Felipe as his conjugal share, and the other half formed part of Elena’s estate, to be divided among Felipe and her four children. Upon Felipe’s subsequent death, his share was to be divided among Teodora, Prudencio Jr., Leonora, and the children from his first marriage. The Court meticulously calculated each heir’s share. Petitioner, whose title over the Cagayan lot is ultimately derived from Teodora, is therefore entitled only to 55,918.29 sq. m. Thus, petitioner should return to respondents-appellees the 74,557.72 sq. m. of the Cagayan lot which corresponds to respondents-appellees’ rightful share as heirs of Felipe and Elena.

The Court addressed the potential unfairness to the Bishop, who purchased the property in good faith. In the interest of fairness, justice and equity, the Court granted the Bishop’s cross-claim against Spouses Cepeda, ordering them to return the value paid for the portion of land that rightfully belonged to the excluded heirs. This ruling aims to balance the protection of inheritance rights with the principles of equity and unjust enrichment.

FAQs

What was the key issue in this case?	The central issue was whether a buyer in good faith could retain ownership of property acquired through a sale originating from a fraudulent extrajudicial partition that excluded rightful heirs.
What is an extrajudicial partition?	An extrajudicial partition is a process by which heirs divide the estate of a deceased person among themselves without going to court, provided there is no will and no debts.
What does ‘nemo dat quod non habet’ mean?	‘Nemo dat quod non habet’ means ‘no one can give what they do not have,’ a legal principle stating that a seller cannot transfer more rights than they possess.
What happens if an heir is excluded from an extrajudicial partition?	If an heir is excluded, the extrajudicial partition is not binding on them and is considered a total nullity with respect to their rights to the estate.
Can a buyer in good faith acquire valid title from a seller with a defective title?	A buyer in good faith can only acquire a valid title to the extent of the seller’s actual ownership rights, meaning they cannot acquire what the seller does not rightfully own.
What is the effect of registering a property title?	Registration of a property title serves as evidence of ownership but does not guarantee ownership if the underlying transaction is invalid; it does not improve a defective title.
What recourse does a buyer have if they purchase property from a seller who did not have full ownership?	The buyer can pursue a cross-claim against the seller to recover the amount paid for the portion of the property that the seller did not rightfully own, plus legal interest.
What is a constructive trust?	A constructive trust is an equitable remedy imposed by law when a person holding title to property has an obligation to convey it to another, preventing unjust enrichment.
What are the rights of co-owners of a property?	Each co-owner has the right to sell their undivided interest in the property, but a sale of the entire property without the consent of all co-owners only transfers the selling co-owner’s share.
How is property divided when a spouse dies?	In the Philippines, conjugal property is divided, with one-half going to the surviving spouse as their conjugal share and the other half forming part of the deceased’s estate, to be divided among the heirs.

In conclusion, this case reaffirms the paramount importance of protecting inheritance rights and ensuring fairness in property transactions. It serves as a reminder that due diligence and adherence to legal procedures are essential in estate settlements and property sales. The ruling underscores that good faith alone cannot cure defects in title arising from fraudulent or unlawful origins.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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: THE ROMAN CATHOLIC BISHOP OF TUGUEGARAO VS. FLORENTINA PRUDENCIO, G.R. No. 187942, September 07, 2016