FLORITA A. GARCIA AND ANGELO A. GARCIA, PLAINTIFFS-APPELLANTS, VS. PILAR ALARCON[] ; THE SHERIFF OF THE RTC OF SAN JOSE, OCCIDENTAL MINDORO; AND THE REGISTER OF DEEDS OF OCCIDEN…
MACALINO, J:
The Case
In this appeal under Rule 41 of the Rules of Court, Plaintiffs-Appellants Florita A. Garcia and Angelo A. Garcia (“Plaintiffs-Appellants”) assail the Orders dated July 25, 2012[1] (“First Assailed Order”) and August 29, 2012[2] (“Second Assailed Order”) of the Regional Trial Court (“RTC”) of San Jose, Occidental Mindoro, Branch 45, in Civil Case No. R-1698. The dispositive portions of the Assailed Orders provide:
First Assailed Order
“WHEREFORE, premises considered, this Court hereby GRANTS the affirmative defense of Res Judicata and the Manifestation dated May 28, 2012 and hereby DISMISSES this instant case on the legal ground of Res Judicata.
No pronouncement as to costs.
SO ORDERED.”[3]
Second Assailed Order
“WHEREFORE, this Court hereby DENIES the Motion for Reconsideration for want of merit.
SO ORDERED.”[4]
The Facts
Plaintiff-Appellant Florita A. Garcia (“Florita”) was the former registered owner of a 601-square meter parcel of land (“the subject lot”) situated in Magsaysay St., Poblacion, San Jose, Occidental Mindoro, for which she was issued Original Certificate of Title (“OCT”) No. S-360 of the Registry of Deeds of Occidental Mindoro.[5] Sometime in 1985, Florita took out a loan from a certain Iluminada Biglete (“Iluminada”). To secure the payment of the said loan, Florita transferred the subject lot in favor of Iluminada’s husband, Pio Biglete (“Pio”). Hence, OCT No. S-360 was canceled and Transfer Certificate of Title (“TCT”) No. T-4660[6] covering the subject lot was issued in the name of Pio.
However, to ensure that the property will revert to Florita after the settlement of her loan obligation to Iluminada, a Deed of Absolute Sale[7] dated January 3, 1985 was executed to make it appear that Plaintiff-Appellant Angelo A. Garcia (“Angelo”) purchased the subject lot from Pio.
Despite Florita’s settlement of her loan obligation to Iluminada, title over the subject lot remained in Pio’s name.
In 1996, Florita obtained another loan from Danilo Padiernos (“Danilo”) in the amount of PhP106,208.70 with an interest of 5% compounded monthly. Upon her failure to pay the said loan, Danilo instituted a suit for sum of money with damages, docketed as Civil Case Nos. R-1012-1015[8], against Florita and Danilo’s other debtors before the RTC of Pinamalayan, Oriental Mindoro, Branch 42. In the course of the proceedings, Defendant-Appellee Pilar Alarcon (“Pilar”) substituted Danilo by virtue of a Deed of Assignment[9] of the latter’s personal account receivables in favor of the former.
On January 6, 2000, Florita executed an Affidavit of Adverse Claim[10] asserting ownership over the subject lot and discrediting the Deed of Absolute Sale dated January 3, 1985 in favor of Angelo for having been forged only to mislead her creditors.
In a Joint Decision[11] dated September 5, 2001, the RTC of Pinalamalayan, Oriental Mindoro, Branch 42, favored Pilar and disposed the case against Florita as follows:
“ACCORDINGLY, judgment is hereby rendered:
1) In civil case No. R-1012, ordering defendant Florita Aguirre Garcia to pay Pilar Alarcon whom Danilo Padiernos had assigned his receivable accounts from said defendant in the amount of P106,208.70 with 5% interest compounded monthly from December 15, 1996 until fully paid, and the amount of P20,000.00 Attorney’s fees;
x x x
5) In all the above-entitled cases, the defendants are ordered to pay costs of the suit.
SO ORDERED.”[12]
The above decision eventually became final and executory.
To facilitate the levy of the subject lot in satisfaction of the judgment award in Civil Case No. R-1012, the RTC of Pinamalayan, Oriental Mindoro, Branch 42, issued an Order[13] dated July 18, 2002 directing the Register of Deeds of Occidental Mindoro to cancel TCT No. T-4660 in the name of Pio and issue a new one in the name of Florita. Incidentally, the Land Registration Authority (“LRA”) issued on September 11, 2002 a Resolution in Consulta No. 3477 declaring that Florita is the true owner of the subject lot.[14] Consequently, TCT No. T-18079[15] was issued to Florita by the Register of Deeds of Occidental Mindoro on May 26, 2003.
On June 24, 2003, the subject lot was sold at an execution sale wherein Pilar emerged as the highest bidder for PhP1,500,000.00.[16] Upon Florita’s failure to redeem the subject lot within the one-year period provided by law, the Sheriff of the RTC of San Jose, Occidental Mindoro, Branch 45 issued a Deed of Final Conveyance[17] of the subject lot to Pilar.
Plaintiffs-Appellants then filed a complaint for “Declaration of Nullity of Levy and Sale at Public Auction with Prayer for a Writ of Preliminary Injunction/Restraining Order and Damages” against Defendants-Appellees Pilar Alarcon, the Sheriff of the RTC of San Jose, Occidental Mindoro and the Register of Deeds of Occidental Mindoro (“Defendants-Appellees”), docketed as Civil Case No. R-1416 and assigned to Branch 45 of the RTC of San Jose, Occidental Mindoro.[18]
Civil Case No. R-1416 was however dismissed for lack of merit on August 8, 2005, which dismissal became final and executory on November 29, 2005 as shown in an Entry of Judgment dated November 30, 2005.[19]
On February 3, 2012, Plaintiffs-Appellants filed before the RTC of San Jose, Occidental Mindoro a Complaint[20] for “Equitable Redemption, Cancellation of Memorandum of Encumbrance on TCT No. T-18079, Nullification of Certificate of Sale and Damages with Prayer for Issuance of TRO/and or Preliminary Injunction.” The Complaint, which impleaded Defendants-Appellees, was docketed as Civil Case No. R-1698 and raffled to Branch 45 of the RTC of San Jose, Occidental Mindoro.
In their Complaint, Plaintiffs-Appellants insisted that Florita’s loan obligation to Danilo is only PhP59,000.00. Allegedly however in January 2000, Pilar, who is also Angelo’s godmother, employed insidious machination to convince Florita, who was already old and had poor eyesight, to sign the Affidavit of Adverse Claim and an acknowledgment[21] of her total obligation in the amount of PhP106,208.70 with an interest of 5% compounded monthly. Hence, among others, Plaintiffs-Appellants prayed that they be allowed to redeem the subject lot at a reasonable price, and not at the bid amount of PhP1,500,000.00 which is unconscionable.
Pilar countered in her Answer with Counterclaim[22] that she did not employ any insidious machination to induce Florita to sign the acknowledgement and the Affidavit of Adverse Claim; and that her bid amount of PhP1,500,000.00 was reasonable. She likewise raised as an affirmative defense Plaintiffs-Appellants’ prior filing of Civil Case No. R-1416 before the same RTC.
After the parties’ filing of their respective pre-trial briefs, Pilar filed a Manifestation[23] praying that Civil Case No. R-1698 be dismissed by reason of res judicata. Since the parties, subject matter and cause of action in Civil Case Nos. R-1416 and R-1698 are identical, Pilar contended that the latter case is already barred by the final and executory judgment in Civil Case No. R-1416.
Plaintiffs-Appellants opposed[24] the Manifestation by arguing that although the parties and the subject matter are the same in Civil Case Nos. R-1416 and R-1698, the latter case involves a different cause of action – the equitable reduction of the redemption price of the subject lot.
In the First Assailed Order dated July 25, 2012, the RTC dismissed Civil Case No. R-1698, reasoning as follows:
“This Court finds similarity not only of the parties, the subject matter or the causes of action involved in the former case and that of the instant case but also in the relief/s prayed for. It does not matter if the amount of their previous and original obligation was so minimal at that time. As stated above, the instruction and rule on auction sale is to obtain the highest bid. The herein plaintiffs do not only claim for equitable reduction of the redemption price, but notably, they likewise pursue the nullification of the Certificate of Sale, an action which is inconsistent with the former prayer, considering that the latter is the basis of the repurchase. It is also immaterial that this instant case is captioned for Equitable Reduction of Redemption Price among other reliefs that it be considered a different cause of action for clearly, the evidence used in the former case is the same evidence that will be utilized in this instant case. Even granting for the sake of argument that there is variance of causes of action, the principle remains relevant and applicable to the extent that the particular facts or issues are to be relitigated between the same parties on a different claim or cause of action. Under the Rule of Res Judicata, conclusiveness of judgment undoubtedly bars the relitigation of the issues proffered by herein plaintiffs.x x x”[25] (Boldfacing supplied)
When Plaintiffs-Appellants sought reconsideration[26] of the First Assailed Order, the RTC issued the Second Assailed Order dated August 29, 2012 denying their motion for reconsideration.
Aggrieved, Plaintiffs-Appellants filed their Notice of Appeal[27], which was given due course by the RTC through an Order[28] dated September 5, 2012.
The Issues
In their Brief[29] before this Court, Plaintiffs-Appellants present the following issues for Our consideration:
“A. WHETHER OR NOT THE HONORABLE COURT A QUO GRAVELY ERRED IN DISMISSING THIS CASE ON GROUND OF RES JUDICATA DESPITE A CLEAR EVIDENCE THAT THE PROCEEDING IN THE EXECUTION SALE ON JUNE 24, 2003 WAS NULL AND VOID BECAUSE THE AMOUNT FOR THE REDEMPTION OF THE AUCTIONED PROPERTY IS OVER BLOATED, INEQUITIOUS (SIC) AND UNCONSCIONABLE.
B. WHETHER OR NOT THE COURT A QUO GRAVELY ERRED IN DISMISSING THIS CASE ON GROUND OF RES ADJUDICATA (SIC) WHEN THE EXECUTION SALE IS NULL AND VOID, SINCE A NULL AND VOID PROCEEDING CREATES NO OBLIGATION (AND) CONFERS NO RIGHT. THEREFORE, THERE WILL BE NO BASIS TO COVER THIS CASE WITHIN THE AMBIT OF RES JUDICATA.”[30]
Citing Castro v. Tan[31], Plaintiffs-Appellants posit that since the interest of 5% compounded monthly is unreasonable and the bid amount of PhP1,500,000.00 is far greater than Florita’s original loan obligation to Danilo or Pilar, they were deprived of the opportunity to redeem the subject lot. Thus, the entire auction sale is null and void and the principle of res judicata cannot be applied. They also add that substantial justice and equity dictate that Florita’s right of redemption of the subject lot at a reasonable price be granted to her.
On the other hand, Pilar argues in her Brief[32] that the Joint Decision in Civil Case No. R-1012 already adjudged Florita to pay her PhP106,208.70 with 5% interest compounded monthly from December 15, 1996 until fully paid. Also, the Decision in Civil Case No. R-1416 had dismissed Plaintiffs-Appellants’ Complaint for “Declaration of Nullity of Levy and Sale at Public Auction with Prayer for a Writ of Preliminary Injunction/Restraining Order and Damages” for lack of merit. Plaintiffs-Appellants’ failure to appeal the said judgments rendered the same final and executory. Therefore, it can no longer be altered under the principle of res judicata.
Thus, the main issue for this Court’s resolution is whether the principle of res judicata applies to the instant case.
The Ruling of this Court
This Court rules in the affirmative.
Sec. 47 (b) and (c), Rule 39 of the Rules of Court provides for the two (2) concepts of res judicata: bar by prior judgment and conclusiveness of judgment, respectively. The provisions state:
“Section 47. Effect of judgments or final orders. — The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:
x x x
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest, by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.”
The first general rule above stated, and which corresponds to the afore-quoted paragraph (b) of Section 47, Rule 39 of the Rules of Court, is referred to as “bar by former judgment”; while the second general rule, which is embodied in paragraph (c) of the same section and rule, is known as “conclusiveness of judgment.”[33]
Res judicata under the first concept or as a bar against the prosecution of a second action exists when there is identity of parties, subject matter and cause of action in the first and second actions. The judgment in the first action is final as to the claim or demand in controversy, including the parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose and of all matters that could have been adjudged in that case. In contrast, res judicata under the second concept or estoppel by judgment exists when there is identity of parties and subject matter but the causes of action are completely distinct. The first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved herein.[34]
The case at bench satisfies the four essential requisites of res judicata under the first concept (bar by prior judgment), viz: (1) finality of the former judgment; (2) the court which rendered it had jurisdiction over the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be, between the first and second actions, identity of parties, subject matter and causes of action.[35]
Plaintiffs-Appellants do not dispute that the judgment of dismissal in Civil Case No. R-1416 had long become final and executory. They do not question the jurisdiction of the the RTC of San Jose, Occidental Mindoro, Branch 45 over the subject matter and the parties, and that the dismissal of the case was on the merits. They also concede that in Civil Case Nos. R-1416 and R-1698, there is identity of the parties and the subject matter, but contend that there is no identity of causes of action.
Jurisprudence teaches that identity of causes of action does not mean absolute identity; otherwise, a party could easily escape the operation of res judicata by changing the form of the action or the relief sought. The test to determine whether the causes of action are identical is to ascertain whether the same evidence will sustain both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would sustain both, the two actions are considered the same, and a judgment in the first case is a bar to the subsequent action. Among the several tests resorted to in ascertaining whether two suits relate to a single or common cause of action are: (1) whether the same evidence would support and sustain both the first and second causes of action; and (2) whether the defenses in one case may be used to substantiate the complaint in the other. Also fundamental is the test of determining whether the cause of action in the second case existed at the time of the filing of the first complaint.[36]
It must be remembered that Civil Case No. R-1416 was filed by Plaintiffs-Appellants for “Declaration of Nullity of Levy and Sale at Public Auction with Prayer for a Writ of Preliminary Injunction/Restraining Order and Damages”. Although Civil Case No. R-1698 was captioned as “Equitable Redemption, Cancellation of Memorandum of Encumbrance on TCT No. T-18079, Nullification of Certificate of Sale and Damages with Prayer for Issuance of TRO/and or Preliminary Injunction”, it again challenged the nullity of the levy and auction sale by presenting a different argument – that the bid amount deprived them of the opportunity to redeem the subject lot – an issue which could have been raised while Civil Case No. R-1416 was pending. Since Plaintiffs-Appellants’ cause of action in Civil Case No. R-1698 already existed at the time of the filing of Civil Case No. R-1416, Civil Case No. R-1698 is evidently barred by the judgment in Civil Case No. R-1416 dismissing the case for lack of merit.
The instant case likewise satisfies the requisites of res judicata under the second concept (conclusiveness of judgment), which are the same as in the first concept except that identity of cause of action is not required but merely identity of issue.[37]
The Joint Decision in Civil Case No. R-1012 had long settled the loan obligation of Florita to Pilar, that is, PhP106,208.70 plus 5% interest compounded monthly from December 15, 1996 until fully paid. Thus, Plaintiffs-Appellants can no longer insist in Civil Case No. R-1698 that Florita’s original loan amount was only PhP59,000.00, nor question the imposition of an interest of 5% compounded monthly by arguing that the same was unconscionable and was only due to Pilar’s employment of insidious machination on Florita. Clearly, the issue as to the amount owed by Florita to Pilar can no longer be raised in Civil Case No. R-1698 because the same is barred by the Joint Decision in Civil Case No. R-1012.
The doctrine of immutability of final judgments, grounded on the fundamental principle of public policy and sound practice, is well settled. Indeed, once a decision has attained finality, it becomes immutable and unalterable and may no longer be modified in any respect, whether the modification is to be made by the court that rendered it or by the highest court of the land. The doctrine holds true even if the modification is meant to correct erroneous conclusions of fact and law. The judgment of courts and the award of quasi-judicial agencies must, on some definite date fixed by law, become final even at the risk of occasional errors.[38]
Thus, even if the Supreme Court held in Castro v. Tan that a 5% monthly interest compounded monthly is unconscionable and should equitably be reduced and the debtor-mortgagor should be given the opportunity to repay the real amount of his indebtedness, the same ruling can no longer be applied in this case for the September 5, 2001 Joint Decision of the RTC of Pinalamalayan, Oriental Mindoro, Branch 42 had long attained finality.
The doctrine of immutability of a final judgment may be relaxed only to serve the ends of substantial justice in order to consider certain circumstances like: (a) matters of life, liberty, honor or property; (b) the existence of special or compelling circumstances; (c) the merits of the case; (d) the cause not being entirely attributable to the fault or negligence of the party favored by the suspension of the doctrine; (e) the lack of any showing that the review sought is merely frivolous and dilatory; or (f) the other party will not be unjustly prejudiced by the suspension.[39]
Because of Plaintiffs-Appellants’ unexplained failure to appeal the September 5, 2001 Joint Decision of the RTC of Pinalamalayan, Oriental Mindoro, Branch 42, this Court cannot relax the doctrine of immutability of a final judgment in their favor.
WHEREFORE, premises considered, the instant appeal is hereby DENIED. The Orders dated July 25, 2012 and August 29, 2012 of the Regional Trial Court of San Jose, Occidental Mindoro, Branch 45, in Civil Case No. R-1698, are hereby AFFIRMED.
SO ORDERED.
Villon (Chairperson) and Corales, JJ., concur.
[*] Also referred to as “Pilar Alarcon-Paja” in subsequent pleadings.
[1] Original Records, pp. 58-62.
[2] Id., pp. 69-70.
[3] Id., p. 62.
[4] Id., p. 70.
[5] See the Affidavit of Adverse Claim dated January 6, 2000 (Id., pp. 11-12).
[6] Original Records, pp. 9-10.
[7] Id., p. 8
[8] Re-docketed as Civil Case Nos. R-1558-2000 to 1561-2000.
[9] Rollo, pp. 56-57.
[10] Supra, at note 5.
[11] Rollo, pp. 59-61.
[12] Id., p. 61.
[13] Original Records, p. 13.
[14] Id., pp. 10 & 44.
[15] Id., p. 14.
[16] As evidenced by a Certificate of Sale (Id., pp. 15-16).
[17] Rollo, p. 62.
[18] Original Records, p. 53.
[19] Ibid; Id., p. 45.
[20] Id., pp. 1-7.
[21] Rollo, p. 58.
[22] Original Records, pp. 21-26.
[23] Id., pp. 41-51.
[24] Id., pp. 52-55.
[25] Id., pp. 60-61.
[26] Id., pp. 63-67.
[27] Id., pp. 73-74.
[28] Id., p. 75.
[29] Rollo, pp. 15-25.
[30] Id., pp.. 19-20.
[31] G.R. No. 168940, November 24, 2009.
[32] Rollo, pp. 39-49.
[33] Alamayri v. Pabale, G.R. No. 151243, April 30, 2008.
[34] Selga v. Brar, G.R. No. 175151, September 21, 2011.
[35] Ibid.
[36] Yap v. Court of Appeals, G.R. No. 186730, June 30, 2012.
[37] Noceda v. Arbizo-Directo, G.R. No. 178495, July 26, 2010.
[38] Natividad v. Mariano, G.R. No. 179643, June 3, 2013.
[39] Abrigo v. Flores, G.R. No. 160786, June 17, 2013.