G.R. No. 119310 February 3, 1997
JULIETA V. ESGUERRA, petitioner, vs. COURT OF APPEALS and SURESTE PROPERTIES, INC., respondents.

FACTS

Petitioner Julieta Esguerra and her husband were involved in a case for administration of conjugal property. They entered into a judicially-approved compromise agreement with V. Esguerra Construction Co., Inc. (VECCI). The agreement stipulated that VECCI would sell several specified properties, including Esguerra Building II, and after settling its obligations, remit fifty percent of the net proceeds to Julieta. A dispute arose regarding the building’s rentals, ultimately resolved by the Supreme Court in favor of Julieta, affirming her one-half ownership interest.
Meanwhile, VECCI sold Esguerra Building II to respondent Sureste Properties, Inc. Julieta filed a motion to nullify the sale, arguing she was not notified or consulted about its terms despite being a co-owner. The Regional Trial Court declared the sale valid only as to VECCI’s one-half share but unenforceable as to Julieta’s half. The Court of Appeals reversed, holding the sale entirely valid and binding on Julieta.

ISSUE

May a co-owner contest a sale made pursuant to a court-approved compromise agreement without her knowledge? Is a corporate secretary’s certification of authorizing resolutions sufficient for a buyer, or must the buyer investigate further?

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s order. On the first issue, the compromise agreement did not constitute an absolute waiver of Julieta’s right to be consulted on the sale’s specifics. While she consented to the eventual sale of the property, the agreement did not strip her of her rights as a co-owner under Article 493 of the Civil Code. A co-owner may alienate only their proportionate share, and any alienation beyond that is limited to that share. Since Julieta was not consulted on the price and terms, the sale was unenforceable as to her undivided interest.
On the second issue, the Court ruled that Sureste was not a buyer in good faith. A corporate secretary’s certification is merely prima facie evidence of a resolution’s adoption. Given the annotation of a notice of lis pendens on the title, which served as constructive notice of the pending litigation and Julieta’s claim, Sureste was duty-bound to investigate further. It could not rely blindly on the certification but was required to inquire into the authority and circumstances of the sale, especially since it was aware of the compromise agreement. Its failure to do so precluded a finding of good faith. Consequently, the sale was valid only as to VECCI’s one-half share.