Universal Robina Sugar Milling v. Heirs of Teves
REITERATIONFacts
The Antecedents: Andres Abanto owned two parcels of land in Campuyo, Manjuyod, Negros Oriental: a registered lot of 55,463 sq.m. under TCT No. H-37 and an unregistered lot of 193,789 sq.m.; he died intestate on February 16, 1973, leaving his widow Victorina C. Vda. de Abanto and adopted daughter Gumersinda A. Abanto-Maldo as sole heirs. On October 19, 1974, the heirs executed a notarized 'Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale,' adjudicating the properties to themselves under Rule 74, Sec. 1 of the Rules of Court and selling the unregistered lot to United Planters Sugar Milling Company, Inc. (UPSUMCO) and the registered lot under TCT No. H-37 to Angel M. Teves for a total consideration of P115,000.00, though the sale was not registered with the Registry of Deeds. Out of respect for his uncle Ignacio Montenegro, UPSUMCO's founder and president, Teves verbally allowed UPSUMCO free use of the TCT H-37 lot for pier and loading facilities, conditioned on UPSUMCO paying real property taxes and its occupation co-terminous with corporate existence; UPSUMCO built a guesthouse and pier thereon. Subsequently, UPSUMCO's properties were foreclosed by Philippine National Bank (PNB), transferred to Asset Privatization Trust (APT), and sold to petitioner Universal Robina Sugar Milling Corporation (URSUMCO), which took possession including Teves' lot; Teves demanded turnover or rentals, asserting no mortgage or inclusion in foreclosures, but URSUMCO refused, claiming acquisition from UPSUMCO via a 'Deed of Transfer and Waiver of Rights and Possession' dated November 26, 1987, which described the lot as UPSUMCO's titled property 'placed in the name of Angel Teves' bounding its lease applications. Procedural History: On June 18, 1992, Teves filed a complaint for recovery of possession with damages against URSUMCO before RTC Dumaguete City, Branch 43 (Civil Case No. 10235); Teves died on September 4, 1992, substituted by heirs. On April 6, 1994, RTC ruled for Teves: declared him owner entitled to possession subject to Art. 448 NCC options, URSUMCO owner of improvements as good faith builder, awarded attorney's fees of P15,000.00, dismissed other claims. URSUMCO appealed to CA; on September 30, 1996, CA affirmed, holding the transaction a perfected sale binding on parties despite non-registration and no fatal barangay conciliation defect against a corporation; MR denied February 10, 1997. The Petition: URSUMCO petitioned for review on certiorari, arguing: (1) no cause of action as the document was a mere promise to sell void for uncertain consideration (P115,000.00 not apportioned) and unregistered, thus non-binding on third parties; (2) as innocent purchaser for value from UPSUMCO (paying taxes), it has personality to assail the sale's validity; (3) complaint dismissible for lack of barangay conciliation. Respondents countered with ownership via valid sale, URSUMCO's notice via Teves' demands and title in Abanto/Teves' name, and corporate exemption from conciliation.
Issue(s)
Whether respondents established a cause of action, i.e., if the 'Extrajudicial Settlement and Simultaneous Sale' was a valid contract of sale transferring ownership despite non-registration and alleged uncertain price. Whether petitioner, as alleged innocent purchaser, has legal capacity to question the sale's validity. Whether the complaint should be dismissed for lack of barangay conciliation.
Ruling
The petition is DENIED. The assailed Decision of the Court of Appeals dated September 30, 1996 in CA-G.R. CV No. 46352 is AFFIRMED. Respondents declared owners of the lot under TCT No. H-37 entitled to possession subject to Art. 448 NCC; petitioner as good faith builder of guesthouse and pier with indemnity options; no additional damages beyond P15,000.00 attorney's fees.
Ratio Decidendi
On Issue 1 (Cause of Action and Validity of Sale): The Court ruled the document a perfected contract of sale under Art. 1458 NCC, not a mere promise to sell, as it explicitly adjudicated and simultaneously sold specific parcels—the unregistered to UPSUMCO and registered TCT H-37 lot to Teves—for P115,000.00 total price certain as a package, transferring ownership upon execution, payment, and delivery, per Dawson v. Register of Deeds (295 SCRA 733, citing Salazar v. CA, 258 SCRA 317). Non-registration does not vitiate validity between parties, as sales are consensual; Art. 1358 requires public instrument only for enforceability against third parties or convenience, per Fule v. CA (286 SCRA 698) and Cenido v. Apacionado (318 SCRA 688). Teves' subsequent acts—allowing UPSUMCO use conditionally, demanding from URSUMCO with documents (extrajudicial settlement, TCT copy)—confirmed ownership transfer, negating retention of title. Had it been a contract to sell, Abanto heirs would retain ownership, precluding UPSUMCO's transfer to URSUMCO. Thus, respondents have clear cause for recovery of possession. On Issue 2 (Petitioner's Capacity as Innocent Purchaser): URSUMCO fails both prongs: no proof the lot was included in PNB foreclosure, APT sale, or 'Deed of Transfer' list (only guesthouse, pier, 25-ha lease, foreshore app.); vague boundary reference to 'titled property of Andres Abanto bought by UPSUMCO but placed in Teves' name' insufficient, per RTC/CA findings. Constructive notice from title in Abanto (not UPSUMCO), Teves' demands with proofs, and tax payments not establishing good faith; innocent purchaser requires valuable consideration without prior adverse claim notice, per Lucena v. CA (313 SCRA 47), Sandoval v. CA (260 SCRA 283), and DBP v. CA (331 SCRA 267)—a buyer cannot ignore red flags like mismatched title. Not privy to original sale, URSUMCO lacks personality to assail it. On Issue 3 (Barangay Conciliation): Dismissal unwarranted as corporations cannot be parties to conciliation under Katarungang Pambarangay Rules, Rule VI, Sec. 1 (RA 7160); RTC/CA acquired jurisdiction over subject/person upon filing.
Main Doctrine
A contract of sale is perfected by mere consent, transferring ownership upon delivery of the thing sold, as distinguished from a contract to sell where title is reserved until full payment; thus, a notarized 'Extrajudicial Settlement of the Estate and Simultaneous Sale' explicitly conveying specific parcels for a certain price constitutes a valid sale binding on parties despite non-registration. Non-registration of such consensual contracts does not invalidate them between contracting parties, serving only evidentiary and third-party notice purposes under Article 1358 of the Civil Code. An innocent purchaser for value must prove both acquisition for consideration without notice of adverse claims and actual inclusion of the property in the transfer documents; mere possession or tax payments by a predecessor does not suffice if title remains in another name, imputing constructive notice. In actions for recovery of possession, successors to a valid purchaser step into the shoes of the original vendee, entitled to enforce ownership against non-innocent claimants not privy to the sale. Corporations are exempt from barangay conciliation prerequisites, preserving court jurisdiction over complaints against juridical entities.