Sta. Rita v. Gueco
REITERATIONFacts
The Antecedents: Angeline M. Gueco (Gueco) purchased four parcels of land from B. Sta. Rita & Co., Inc. (B. Sta. Rita) for ₱1,000,000.00, evidenced by a Deed of Absolute Sale dated April 11, 2000. In October 2001, Gueco filed a petition for the surrender of the titles against B. Sta. Rita and its corporate secretary, Edgardo Kanapi. B. Sta. Rita and Edgardo claimed the sale was conditional for ₱25,000,000.00, Gueco only paid ₱1,565,000.00, and the deed was for securing a downpayment. They sought rescission and damages. Procedural History: While the surrender of titles case was pending, alleged heirs and shareholders of B. Sta. Rita (Sta. Ritas) filed a complaint for reformation and rescission of contract and quieting of title against Gueco, claiming the sale was conditional and Gueco failed to pay the balance. Gueco moved to dismiss, citing lack of legal personality for a derivative suit and lack of standing as a non-party to the deed. The motion was denied, leading Gueco to file a petition for certiorari with the Court of Appeals (CA). The Sta. Ritas moved to intervene in the surrender of titles case, which was granted. Later, Arlene Sta. Rita Kanapi (Arlene), wife of Edgardo and a stockholder/director, moved to intervene in the reformation case with a similar complaint. The surrender of titles and reformation cases were consolidated. The CA dismissed the reformation case due to the Sta. Ritas' lack of legal personality for a derivative suit, finding their rights did not antedate the sale and they failed to demand action from the Board. The CA's denial of reconsideration led to a petition before the Supreme Court (G.R. No. 165858), which was later denied for failure to prosecute, rendering the reformation case dismissed with finality. The Petition: The Regional Trial Court (RTC) Branch 63 rendered a Joint Decision rescinding the sale transaction and ordering the return of ₱1,000,000.00 to Gueco. Gueco appealed to the CA, arguing the RTC erred in rendering a joint decision, allowing intervention, and rescinding the sale. The CA reversed the RTC's Joint Decision, holding that the final dismissal of the reformation case left only the surrender of titles case. It ruled that rescission, being an issue in the dismissed reformation case, could not be resolved in favor of the Sta. Ritas, applying the principles of law of the case and res judicata. Arlene moved for reconsideration, which was denied. Arlene, for herself and on behalf of B. Sta. Rita and Edgardo's heirs, filed a petition for review on certiorari, asserting the dismissal of the reformation case should not affect her intervention and that the CA erred in applying res judicata. She also argued the sale should be considered an equitable mortgage.
Issue(s)
Whether Arlene Sta. Rita Kanapi and the Heirs of Edgardo Kanapi have the legal personality to appeal the Court of Appeals' Decision. Whether Arlene Sta. Rita Kanapi has the authority to file the appeal on behalf of B. Sta. Rita & Co., Inc. Whether the Court of Appeals erred in applying the doctrine of res judicata in reversing the Regional Trial Court's Joint Decision. Whether the sale transaction between Gueco and B. Sta. Rita should be considered an equitable mortgage.
Ruling
The petition is denied. The Decision dated January 21, 2010 and the Resolution dated July 26, 2010 of the Court of Appeals in CA-G.R. CV No. 87000 are affirmed.
Ratio Decidendi
On the legal personality of Arlene Sta. Rita Kanapi and the Heirs of Edgardo Kanapi to appeal: The Court held that Arlene and the Heirs of Edgardo lacked the legal personality to appeal the CA Decision. Firstly, they were merely intervenors in the reformation case, which had been dismissed with finality by the Supreme Court. Their complaint-in-intervention was ancillary to the principal action and was effectively discharged upon the dismissal of the main complaint. Therefore, it could not be treated as an independent action. Secondly, they were not parties, either as defendants or intervenors, in the surrender of titles case, nor did they participate in its proceedings. As a general rule, no person can be adversely affected by a civil action in which they are not a party. Consequently, they could not interpose an appeal from the outcome of the surrender of titles case. On Arlene Sta. Rita Kanapi's authority to appeal on behalf of B. Sta. Rita & Co., Inc.: The Court found that Arlene could not file the appeal on behalf of B. Sta. Rita because there was no evidence on record showing she was properly authorized by the corporation to do so. The power of a corporation to sue and be sued is vested in its board of directors or authorized officers and agents, and Arlene did not possess such authority. The assertion that B. Sta. Rita had ceased business operations was unsubstantiated, and thus, the corporation was presumed to exist, requiring proper authorization for legal actions. On the application of res judicata: The Court affirmed the CA's application of res judicata. The CA correctly reasoned that the final dismissal of the reformation case, which involved issues of rescission and reformation of the sale, left only the surrender of titles case for resolution. The RTC's Joint Decision, which rescinded the sale, was an issue that was litigated and decided in the dismissed reformation case. Therefore, the RTC's resolution of this issue in the Joint Decision was reversible error, as it was barred by the principles of law of the case and res judicata, stemming from the final dismissal of the reformation case. On the equitable mortgage claim: The Court found it unnecessary to delve into the issue of whether the sale transaction should be considered an equitable mortgage. This was due to the procedural infirmity of the petition, specifically the lack of legal personality and authority of the petitioners to file the appeal. The Court's primary focus was on the procedural aspects that precluded it from reaching the substantive merits of the case.
Main Doctrine
Intervenors in a dismissed case cannot appeal the decision of the appellate court if their complaint-in-intervention was effectively discharged due to the dismissal of the principal action, and they were not parties to the original case.