MARIA VELASCO AND MARIA ABORDE, PLAINTIFFS AND APPELLANTS, VS. CARLOS VELASCO, DEFENDANT AND APPELLEE.

Velasco versus Velasco

The Case

This is a civil action for declaration of ownership, recovery of possession, and annulment of judgment, brought by Maria Velasco and Maria Aborde against Carlos Velasco over three parcels of land that once belonged to the estate of Exequiel Velasco. The plaintiffs ask the Court to declare them owners in common of Parcels One and Two, to declare Maria Aborde the exclusive owner of Parcel Three, to eject Carlos Velasco from the land, and to nullify certain documents as false and forged, as well as to annul a final judgment of the Court of Appeals that had already gone against Maria Aborde. The case matters because it is the classic illustration of res judicata — the rule that a matter once litigated and finally decided may not be litigated again — and of the distinction between extrinsic fraud, which can annul a judgment, and intrinsic fraud, which cannot.

Procedural History

Parcel Three had earlier been the subject of a separate action for recovery of ownership brought by Maria Aborde and her husband Pascual Bihag against Carlos Velasco. Maria Aborde lost that case in the Court of First Instance of Camarines Sur because Carlos Velasco presented certain documents, and the Court of Appeals affirmed that decision, which then became final and executory.

In the present case, Carlos Velasco moved to dismiss the complaint on the ground that the plaintiffs' causes of action were barred by a prior judgment and had long prescribed. The trial court initially denied the motion, holding that there was no identity of parties and subject matter and that prescription was not sufficiently alleged. On reconsideration, however, the trial court sustained the dismissal of the complaint as to Maria Aborde and as far as Parcel Three was concerned. The plaintiffs appealed, but the Court of Appeals certified the question to the Supreme Court because the issue raised was purely legal in nature.

Facts

Exequiel Velasco died intestate in 1917, leaving three parcels of land that were placed under administration. He was the grandfather of the plaintiffs Maria Velasco and Maria Aborde, who were first-degree cousins. In 1929, Carlos Velasco, a natural son of Exequiel's brother, Fr. Mariano Velasco, took possession of Parcels One and Two and claimed ownership of them.

Parcel Three became the subject of a prior litigation between Maria Aborde and her husband, on one side, and Carlos Velasco, on the other. Maria Aborde lost that case because Carlos Velasco presented certain documents, and the decision was affirmed by the Court of Appeals and became final.

In the present complaint, the plaintiffs sought to recover the parcels and, crucially, to have those same documents declared null and void as false and forged, and to annul the final judgment of the Court of Appeals on the ground that it had been obtained through fraudulent means. The trial court dismissed the complaint as to Maria Aborde and Parcel Three, and the matter reached the Supreme Court on a purely legal question.

Issues

• Whether or not the prior judgment in the earlier case is a bar, under the principle of res judicata, to the present action as far as Parcel Three is concerned.
• Whether or not the fact that Maria Velasco was an additional plaintiff in the present case, and was not a party in the former case, removes the case from the operation of res judicata.
• Whether or not the final judgment of the Court of Appeals may be annulled on the ground of fraud in the presentation of the questioned documents.

Applicable Provisions

The decision does not quote a specific statutory provision but rests on the settled doctrine of res judicata as stated in the cases it cites. The Court adopts this formulation:

Briefly stated, this doctrine is that an existing final judgment or decree rendered upon the merits, and without fraud or collusion, by a court of competent jurisdiction, upon a matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions, or suits in the same or any other judicial tribunal of concurrent jurisdiction, on the points and matters in issue in the first suit.

This rule is the very foundation of the dismissal, because it makes the earlier judgment conclusive against Maria Aborde and her privies as to Parcel Three.

The Court also relies on the rule that a judgment is conclusive not only as to matters actually determined but as to every matter that might have been litigated:

An adjudication is finally conclusive not only as to the matter actually determined, but as to every other matter which the parties might have litigated and have had decided incident to or essentially connected with the subject matter of litigation, and every matter coming within the legitimate purview of the original action, both with respect to matter of claim and of defense.

This forecloses the plaintiffs' attempt to relitigate the genuineness of the documents, since that question was necessarily connected with the earlier action.

Ruling

On the first issue, the Court held that the prior judgment is a bar under res judicata as far as Parcel Three is concerned. The subject matter is the same parcel of land, the cause of action in the earlier case was for declaration of ownership and recovery of possession, and the present complaint merely seeks to avoid the very exhibits presented in that case on the ground of forgery. The same evidence would support both causes of action, and the probability that the documents were forged is irrelevant.

On the second issue, the Court held that the joinder of Maria Velasco as an additional plaintiff does not remove the case from the operation of res judicata. The Court quoted with approval the rule that although in the second action there are joined parties who were not joined in the first action, there is still res judicata if the party against whom the judgment is offered in evidence was a party in the first action. Otherwise, the Court warned, no matter how often a case be decided, the parties might renew the litigation by simply joining new parties. Maria Velasco and Maria Aborde were first-degree cousins with a community of interest, and one plaintiff is a privy to her co-plaintiff.

On the third issue, the Court held that the final judgment can no longer be annulled. As a general rule, extrinsic or collateral fraud would warrant a court to set aside a judgment based on fraud. But here the alleged fraud does not refer to jurisdiction; it refers to the admission by the trial court of supposedly false or forged documents, which is intrinsic in character and therefore not a ground for annulment.

Doctrine

A Bar candidate should retain these rules. First, res judicata bars a subsequent action when there is a final judgment on the merits by a court of competent jurisdiction, and it binds the parties and their privies as to every matter actually determined and every matter that might have been litigated incident to the subject matter. Second, the subsequent joinder of a new party who was not a party to the first action does not defeat res judicata, so long as the party against whom the judgment is offered was a party to the first action. Third, only extrinsic or collateral fraud — fraud going to jurisdiction or preventing a party from presenting his case — can annul a judgment; intrinsic fraud, such as the presentation of forged documents during the trial, is not a ground for annulment, because the remedy against it is to raise it in the very case where it is presented.

Disposition

The Supreme Court affirmed the order dismissing the complaint of Maria Aborde with respect to Parcel Three, with costs against the appellants.

Remember This

The single line worth memorizing is that intrinsic fraud, such as the presentation of forged documents at trial, cannot annul a final judgment, while only extrinsic or collateral fraud can. Examiners like to use this case to test res judicata despite the joinder of a new party, and the intrinsic-versus-extrinsic fraud distinction in actions to annul judgments.