Title
B. Sta. Rita and Co., Inc. vs. Gueco
Case
G.R. No. 193078
Decision Date
Aug 28, 2013
A dispute over a land sale between Gueco and B. Sta. Rita, involving claims of conditional sale, unpaid balance, and legal standing of intervenors, resolved by SC due to lack of legal personality and res judicata.

Case Digest (G.R. No. 151400)
Expanded Legal Reasoning Model

Facts:

  • Background and Transaction
    • On April 11, 2000, respondent Angeline M. Gueco purchased four parcels of land from petitioner B. Sta. Rita & Co., Inc. through its then president, Ben Sta. Rita.
    • The subject properties, located in Barangay San Juan de Mata, Tarlac City, were evidenced by a deed of absolute sale and covered by Transfer Certificate of Title Nos. T-137998, T-191599, T-191600, and T-191601.
    • The sale was for a total consideration of P1,000,000.00, even though later issues regarding the true nature of the transaction emerged.
  • Disputed Nature of the Sale Transaction
    • In their answer in a petition for surrender of titles (Civil Case No. 9245), B. Sta. Rita and its corporate secretary Edgardo Kanapi contended that:
      • The transaction was a conditional sale for a total of P25,000,000.00.
      • Gueco had demanded that the subject deed be labeled as a deed of absolute sale merely to secure funds for a downpayment.
      • Gueco only paid a partial amount (P1,565,000.00 in her version, though the original sale price indicated P1,000,000.00).
      • B. Sta. Rita retained possession of the properties until the death of Ben Sta. Rita in 2001, after which Gueco took possession and appropriated the harvest.
    • B. Sta. Rita and its representatives prayed that the sale be construed as conditional, resulting in rescission of the transaction, restoration of possession to the corporation, and the imposition of damages on Gueco.
  • Procedural History and Related Cases
    • Surrender of Titles Case
      • Gueco filed a petition in October 2001 for the surrender of the subject titles, leading to the filing of Civil Case No. 9245 before RTC Branch 64.
    • Derivative Suit and Reformation Case
      • On July 30, 2003, the Sta. Ritas, alleged heirs of Ben Sta. Rita and shareholders of B. Sta. Rita, instituted a derivative suit (Civil Case No. 9532) for reformation, rescission of contract, and quieting of title against Gueco.
      • They claimed that the sale was conditional—at a consideration of P25,000,000.00 with only an advance payment of P1,000,000.00—and that the subject deed was executed solely to help Gueco secure a loan.
      • The Sta. Ritas later moved to intervene in the surrender of titles case based on the similarity of issues and parties.
    • Motions and Court Orders
      • Gueco, as defendant in the reformation case, moved to dismiss the complaint on the ground that the Sta. Ritas lacked requisite legal personality and had not complied with the condition precedent for a derivative suit.
      • RTC Branch 63 denied Gueco’s motion to dismiss and later admitted a complaint-in-intervention by Arlene Sta. Rita Kanapi (wife of Edgardo) on March 5, 2004.
      • The two cases (surrender of titles and reformation) were eventually consolidated before RTC Branch 63.
      • On July 30, 2004, the CA dismissed the reformation case due to the Sta. Ritas’ lack of legal personality and failure to meet procedural requirements as a derivative suit.
      • The Sta. Ritas filed a motion for reconsideration, which was denied, and subsequently filed a petition for review on certiorari with the Court.
  • Trial Court and Court of Appeals Rulings
    • RTC Ruling
      • On December 8, 2005, RTC Branch 63 issued a Joint Decision rescinding the sale transaction and directing the return of P1,000,000.00 to Gueco.
      • The RTC held that the parties intended not a contract of sale but a mere contract to sell, citing:
        • The delayed delivery of titles and possession.
ii. The continued payment of real estate taxes by B. Sta. Rita.
  • Despite the rescission, because Gueco had paid the amount, it was ordered to be refunded with interest.
  • Court of Appeals (CA) Ruling
    • On January 21, 2010, the CA reversed and set aside the RTC Joint Decision.
    • It held that with the final dismissal of the reformation case, only the surrender of titles case remained.
    • The CA determined that rescinding the sale transaction in favor of the Sta. Ritas amounted to reversible error under the law of the case and res judicata.
    • Following this decision, Arlene, purportedly representing B. Sta. Rita and the Heirs of Edgardo, moved for reconsideration, which was denied on July 26, 2010.
  • Contentions Raised by Arlene and the Heirs of Edgardo
    • They insist that:
      • The dismissal of the reformation case should not affect their complaint-in-intervention.
      • The CA erred in applying the doctrine of res judicata in reversing the RTC decision.
      • The sale transaction should have been treated as an equitable mortgage given the nominal consideration paid.
    • They also contend that Arlene should be allowed to file on behalf of B. Sta. Rita despite not being an original party.

Issues:

  • Legal Personality and Standing
    • Whether Arlene and the Heirs of Edgardo, as intervenors in the dismissed reformation case, have independent legal standing to appeal the CA Decision.
    • Whether they can be adversely affected by a judgment in a case in which they were not parties, specifically the surrender of titles case.
  • Res Judicata and the Doctrine of the Law of the Case
    • Whether the dismissal of the reformation case necessarily precludes reconsideration of the issues by Arlene and the Heirs of Edgardo due to the doctrine of res judicata.
    • Whether the reversal by the CA was correct given that rescission was a main issue in the reformation case.
  • Characterization of the Sale Transaction
    • Whether the transaction should be considered an absolute sale, a conditional sale, or, as argued by Arlene, an equitable mortgage, considering the insufficiency of the purchase price relative to the true market value or intended transaction.
  • Proper Corporate Representation
    • Whether Arlene had the legal authority to file an appeal on behalf of B. Sta. Rita, given the corporate requirement that such actions be undertaken by the board of directors or duly authorized officers.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
Unlock Full Case Digest

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster—building context before diving into full texts.

About Privacy Terms