CAUSAPIENCIA CLEMENTE, ET AL., PLAINTIFFS-APPELLANTS, VS. H. E. HEACOCK CO., ET AL., DEFENDANTS-APPELLEES.

Appeal from the order of the Court of First Instance of Rizal dis­missing the complaint in Civil Case No.
Q-5894.  Originally filed in the Court of
Appeals, it was certified to this Court for the reason that the issue being
raised is purely legal.

Juan J. Clemente was the owner of Lots
216, 228 and 125 of the Tala Estate Subdivision, with
a total combined area of 91,918 square meters, covered by TCT Nos. 11772, 11773
(Rizal) and 10965 (Quezon
City), registered in his name.  To
guarantee payment of goods consigned to him Clemente
constituted on 29 July 1948
a real estate mortgage on these 3 parcels of land in favor of H. E. Heacock Company.

Clemente failed to comply with his
obligations; thus, the Court of First Instance of Rizal,
in the foreclosure suit brought by H. E. Heacock
Company (Civil Case No. 947), ordered him to pay to the plaintiff the sum of
P11,517.75, with legal interest thereon, plus at­torney’s fees, within 90 days
from notice, otherwise, decree of foreclosure of the mortgage shall issue.  As Clemente once more failed to make payment,
writ of execution was duly issued and the prop­erties were sold by the
Provincial Sheriff of Rizal at public auction on 23 May 1955 for P14,301.34 to the
highest bidder, the H. E. Heacock Company. 
This judicial sale was confirmed by order of the court of 17 September 1956.

It appears, however, that after the public sale but before its confirmation by the court, the
plaintiff company sold the same 3 parcels of land to Amparo
Belen de Guzman for P10,717.00.  Upon
hearing this, Clemente instituted Civil Case No. 4365 in the same court of first
instance, for annulment of this subsequent sale.

On motion of therein defendants, H. E. Heacock
Company and the De Guzman spouses, the complaint was dismissed, the court
holding that the confirmation-order issued in Civil Case No. 947 constituted res juduicata to
that later case.  Appealed to this Court,
the order of dismissal of Civil Case No. 4365 was upheld,^[1]
thus:

“x x
x it must be apparent that plaintiff may com­plain
about Heacock’s transfer only if the confirmation of
the auction sale is revoked.  This is so,
because after the approval of the auction sale, he had lost all interest in the
property, he had no right of redemption and had no business attacking the
transfer to the Guzmans, whether fictitious or void or illegal in any manner.

“In this action, therefore, he must be deemed mainly to be
seeking the revocation (or reconsideration) of such approval.  Yet, that is precisely the question admittedly
pending before the court in Civil Case No. 974 (foreclosure).

“Consequently, this action should be dismissed, in view of the
pendency of another litigation between the same
parties on identical issues.  It makes no difference that the Guzman
spouses were not impleaded in the foreclosure
proceeding:  they are successors in
interest of the plaintiff there, and they acquired the lands after the
commencement of such foreclosure.”

In the meantime, Clemente appealed from
the orders denying his motions for reconsideration
and for setting aside of the order of confirmation, first in the Court
of Appeals, and later to this Court.^[2]
In the decision of 25 October 1960, this Court affirmed the ruling of the Court
of Appeals sustaining the validity of the confirmation-order and disregarding Clemente’s allegations of lack of notice and hear­ing,
taking into consideration the finding of the Court of Appeals that -?

“The alleged collusion between the H. E. Heacock
Co. and Amparo Belen de Guzman was not shown.  Appellant contends that he has been deprived
of the op­portunity to prove it, but such contention is untenable, as the
record fails to reveal that he had even attempt­ed to offer evidence during the hearing held to deter­mine whether or not the
sale should be confirmed.”

On 7 July 1961,
Causapiencia Clemente, et
al., heirs of Juan J. Clemente who had since died,
filed the present complaint against the H.
E. Heacock Company and Jose J. de Guzman
(Spouses) in the Court of First Instance of Rizal, docketed
as Civil Case No. Q-5894, pray­ing for judgment —

“(a) On the First Cause of Action, declaring the foreclosure
sale of plaintiffs’ three (3) parcels of land described in paragraph 2 hereof
made by the Sheriff in favor of defendant H. E. Heacock
Co. on May 23, 1955, null and void and rescinded; that Transfer Certificate of
Title Nos. 33164 (Quezon City), 46923 and 46924 (Rizal) issued by the Register of Deeds of Quezon City and Rizal,
respectively, to de­fendant H. E. Heacock Co., be
declared null and void and ordered cancelled;

“(b) On the Second Cause of Action, declaring the Deed of
Absolute Sale executed by defendant H. E. Heacock Co.
in favor of defendant Amparo Belen de Guzman covering the above-mentioned
three (3) parcels of land null
and void and rescinded; that Transfer Certificates of Title Nos. 33298 (Quezon City), 47136 and 47137 (Rizal),
issued by the Register of Deeds of Quezon City and Rizal,
respectively, to defendant Amparo Belen de Guzman be
declared null and void and ordered cancelled;

“(c) Ordering the defendants to reconvey
to the plaintiffs the three (3) parcels of land heretofore described and now
covered by Transfer Certificates of Title Nos. 33298 (Quezon
City), 47136 and 47137 (Rizal) of the Office of the
Register of Deeds of Quezon City and the Province of Rizal, respectively;

“(d) On the Third Cause of Action, ordering the defendants to
pay plaintiffs, jointly and severally, the sum of not less than P2,500.00, as
and for at­torney’s fees and expenses of
litigation;

“(e) For costs of this suit.”

The action was based on the allegations that the purchase of the
lots by H. E. Heacock Company was null and void,
because at the time of the judicial sale, said defendant had no corporate
authority to acquire lands or any interest therein; that the consolidation of
the company’s title over the lots was irregular and illegal for failure to
observe the legal proceedings specified in sections 63 and 78 of Act 496; that
the sale was null and void, because the purchase price of P14,301.34 was
unconscionably low for the properties allegedly worth P200,000.00; and that the
purchase by Amparo
Belen de Guzman of the same prop­erties for P10,717.00 was without valuable consideration, in
view of the great disparity between the said purchase price and the market
value of the properties.

On defendants’ motions, however, the court dismissed the com­plaint
on the ground of res judicata.  Plaintiffs then interposed the present
appeal.

In questioning the correctness
of the application by the lower
court of the doctrine of res judicata to the present case, herein ap­pellants
claim that there is no identity of the subject matter and causes of action in
Civil Cases Nos. 947, 4365 and Q-5894, in that, while the subject matter in the
first were the indebtedness and mortgage, in the second, it was the premature
sale of the prop­erties to the De Guzman spouses; and, it was the extrinsic
fraud (allegedly consisting of the non-disclosure by the company of its
incapacity to purchase lands) which vitiated the foreclosure proceedings, in
the third case.  Furthermore, since the
test for deter­mining identity of causes of action is the materiality of the
same evidence to the present and former causes of action, and there was no
evidence received in both Civil Cases Nos. 947 and 4365, then, according to
appellants, there is no set of uniform evidence that would support the causes of
action in the three cases.

The contentions are devoid of merit.  It may be pointed out that Civil Case No. 947
was not only for collection of an indebtedness, but also for foreclosure of the
mortgage constituted on the 3 parcels of land. 
The matter or thing with respect
to which the controversy arose was not only the amount collectible
from the debtor-mortgagor, but also the subject of the mortgage-contract, which
were the 3 par­cels of land.  And, in the
present action filed by appellants, it is evident that the things subject of
the litigation are the same lots.

As to the cause of action, H. E. Heacock
Company, as plain­tiff in Civil Case No. 947, had to establish not only its
right to collect the indebtedness, and to ask for the foreclosure of the mort­gage,
but also to show its right, as purchaser, to acquire the properties at the
public auction.  In Civil Case No.
Q-5894, on the other hand, it was clear
from the allegations of the complaint,^[3]
as well as in its prayer, that the principal issue tendered by plaintiffs (and
the others depended upon it) was the annulment of the sale or award of the
properties to the appellee company.  These matters were already finally passed
upon in Civil Cases No. 947 and 4365 of the court of first instance,
specifically in the order confirming the judicial sale, and in the decisions of
this Court in G. R. Nos. L-15233 and L-12786.

It may be true that the matter of the competency of the appellee company to acquire lands was not formally ruled on
in those 2 pre­vious cases.  But, this is
so because appellants’ predecessor never contested the corporate capacity of
said purchaser, which question properly should have been raised in Civil Case
No. 947, being germane to the approval of the sale.  Therein defendants’ failure to do so,
therefore, constituted waiver of that defense. 
Thus, when the judicial sale of
the properties was confirmed, the court in effect recognized the
existence of all the elements for the valid­ity of the contract of sale, viz., the subject, consent (and capacity
of the parties), and consideration. 
After such confirmation of the
sale, the mortgagor (and his successors, herein appellants) lost the
right to redeem the foreclosed properties and to question the subsequent conveyance thereof to the De Guzman
spouses.^[4]
Clearly, the rulings in those 2 previous cases are res
judicata to the present action.  It is well-settled that a change in the re­medy
sought or in the form of action is no bar to res judicata (v. Moran, Rules of Court, 1963 ed., vol. 2, pp. 329, 330; Francisco
vs. Blas, 93 Phil. 4).

The fatal flaw in
appellants’ position lies in their inability (or unwillingness) to discern that
the foreclosure proceedings (Civ. Case No.
947) in reality resolved two different issues: (1) the existence of the
mortgage indebtedness and the debtor’s default, matters that were resolved by
the decree of foreclosure of the mortgage; and (2) the validity of the sale of
the mortgaged properties to the purchaser mortgagee, H. E. Heacock
Company, which was decided by
the trial court’s order confirming the sale, and was finally upheld by the
superior courts. The validity of the sale to H. E. Heacock necessarily involved the capacity of the latter to acquire the land subject of the
foreclosure sale.  Hence, the
confirmation order concluded all future controversies about the sale to H. E. Heacock that appellants are seeking to relitigate
and revive in the present suit.  Of
course, once the sale to H. E. Heacock is (as it was
in fact) adjudged valid, appellants lose all standing to question Heacock’s subsequent transfers to the spouses De
Guzman.

With the foregoing conclusion, there is no necessity for us to
pass upon the issue of the timeliness or untimeliness
of the motion to dismiss of the defendants De Guzman also raised by appellants.

WHEREFORE, the order appealed from is hereby affirmed,
with costs against the appellants.

SO ORDERED.

Concepcion, C.J., Dizon,
Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez,
and Castro, JJ., concur.

^[1]
Clemente vs. H. E. Heacock
Company, et al., G. R. No. L-12786, October 29, 1959.

^[2]
Clemente vs. Court of Appeals, et al., G. R. No. L-15233, October
25, 1960.

^[3]
“5. That defendant H. E. Heacock Company’s purchase
of praintiffs‘ properties in the foreclosure sale is null and void, as said defendant
possessed neither power nor authority under its own charter to acquire, by purchase
or otherwise lands and interest in land at the time of said purchase;

 “6. That the consolidation of the
defendant Company’s title over plaintiffs’ above-mentioned properties is
unlawful, illegal, irregular, and therefore, null and void, said defendant
having failed to observe or
follow the proper legal proceedings in consolidation of titles as enjoined
by Sections 63 and 78 of Act 496 which require that a proper petition for the
entry of a new certificate of title must be filed in court so that any
objection that may be interposed relative to the validity of the proceedings
leading to the transfer of the land subject thereof may be determined and
threshed out.  x x x.

 “7. That the purchase price of P14,301.34
paid by defendant Heacock in the auction sale of
plaintiffs’ properties is highly unconscionable, immoral, and contrary to law
and public policy, for purchase price was too far below the minimum market price of said properties.  The fair market value of the three (3)
parcels of land, which contained a total area of 91,918 square meters, more or
less, is conservatively assessed
at P200,000.00;” (Complaint, p. 11, Record on Appeal.)

^[4]
Clemente vs. H. E. Heacock
Co., et al., G. R. No. L-12786, October 29, 1959.