G.R. No. 128574 - Universal Robina Sugar Milling Corp. vs. Heirs of Teves

Case Digest (G.R. No. 128574)
Expanded Legal Reasoning Model

Facts:

Background of the Estate and Initial Transactions

Andres Abanto owned two parcels of land in Campuyo, Manjuyod, Negros Oriental:

One parcel (55,463 square meters) was registered under Transfer Certificate of Title (TCT) No. H-37.
The other parcel (193,789 square meters) was unregistered.

Andres Abanto died on February 16, 1973, and his heirs executed, on October 19, 1974, an "Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale."
Under the settlement:

The unregistered lot was sold to United Planters Sugar Milling Company, Inc. (UPSUMCO).
The registered lot (TCT No. H-37) was sold to Angel M. Teves for a total consideration of P115,000.00.

The sale, in which the properties were adjudicated unto the respective parties, was not registered with the Registry of Deeds.

Use of the Property and Subsequent Developments

In a gesture of courtesy toward his uncle, UPSUMCO’s founder, Teves permitted UPSUMCO to use his lot (the one covered by TCT No. H-37) for pier and loading facilities.

This permission was free of charge but subject to UPSUMCO should shoulder the real property taxes and that its occupation would coincide with its corporate existence.

UPSUMCO subsequently constructed a guesthouse and pier on the property.
Later, UPSUMCO’s properties were acquired by the Philippine National Bank (PNB), which then transferred the properties to the Asset Privatization Trust (APT).
APT sold the properties, including the disputed lot, to Universal Robina Sugar Milling Corporation (URSUMCO), which took possession of these properties.

Dispute on the Ownership and Possession of the Lot

Upon learning of URSUMCO’s acquisition, Angel Teves formally demanded that the corporation either restore possession of his lot or account for the corresponding rentals.

Teves argued that his permission for UPSUMCO’s temporary use was subject to the condition that such use was only until UPSUMCO’s dissolution.
Teves maintained that his lot, being sold to him through the extrajudicial settlement, was not mortgaged nor included among the foreclosed properties acquired by URSUMCO.

URSUMCO countered that it acquired the right to occupy the property from UPSUMCO, which in turn had purchased it from Andres Abanto.

URSUMCO emphasized that the property was merely placed in the name of Angel Teves, as evidenced by the "Deed of Transfer and Waiver of Rights and Possession" dated November 26, 1987.
The document indicated that UPSUMCO transferred to URSUMCO its application for agricultural and foreshore lease, with reference to lands adjoining the "titled property of Andres Abanto" that was in the name of Teves.

Judicial Proceedings and Findings

On June 18, 1992, Angel Teves filed a complaint for recovery of possession of real property with damages against URSUMCO before the Regional Trial Court (RTC) in Dumaguete City.

Although Teves died on September 4, 1992, his heirs substituted him as the party of interest.

The RTC, in its decision rendered on April 6, 1994, ruled:

Teves was declared the owner of the parcel of land covered by TCT No. H-37.
URSUMCO was directed to vacate the portions of the property not occupied by the guesthouse and pier.
The guesthouse and pier were declared the property of URSUMCO, which acquired them in good faith as a builder.
Teves was granted an option (under Article 448 of the New Civil Code) either to appropriate the improvements on payment of indemnity or to compel URSUMCO to buy the land subject to a rent adjustment.
URSUMCO was ordered to pay reasonable attorney’s fees and the costs of the suit.

URSUMCO appealed the RTC ruling and the Court of Appeals affirmed the decision.

The appellate court held that the extrajudicial settlement constituted a contract of sale rather than a mere contract to sell.
It found that ownership passed to Teves upon the parties’ consent and payment of the agreed price, notwithstanding the non-registration of the sale.

Issues Raised in the Petition for Review

URSUMCO, as petitioner, raised several issues on certiorari:

Whether the respondents (Teves and his heirs) established a cause of action against petitioner.
Whether URSUMCO had the legal capacity to question the validity of the sale.
Whether the complaint should have been dismissed based on the failure to observe barangay conciliation requirements.

URSUMCO contended that:

The extrajudicial settlement was merely a promise to sell, not an absolute deed, and thus did not transfer ownership.
The contract of sale was void for lack of consideration because the total price was not clearly allocated to the lot covered by TCT No. H-37.
The non-registration of the sale rendered it unenforceable against third parties.

Both the RTC and the Court of Appeals rejected these arguments and affirmed that a valid contract of sale had been executed, transferring absolute ownership of the lot to Teves.

Issues:

Whether the respondents (Angels Teves and his heirs) established a valid cause of action against URSUMCO despite URSUMCO’s claim to ownership based on property acquisition from UPSUMCO.
Whether URSUMCO, as a corporate entity, had the legal capacity and standing to question the validity of the sale between the Abanto heirs and Angel Teves.
Whether the failure to refer the case to the barangay — pursuant to the Katarungang Pambarangay Law — warranted the dismissal of the complaint.

Ruling:

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Ratio:

(Subscriber-Only)

Doctrine:

(Subscriber-Only)

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Case Digest (G.R. No. 128574) Core Legal Reasoning Model Expanded

Facts:

Case Digest (G.R. No. 128574) Expanded Legal Reasoning Model

Facts:

Issues:

Ruling:

Ratio:

Doctrine:

Case Digest (G.R. No. 128574)
Core Legal Reasoning Model

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Case Digest (G.R. No. 128574)
Expanded Legal Reasoning Model