SANTIAGO ESCARTE, JR., ERNESTO VILLANUEVA, FELIXBERTO VILLANUEVA, AND LOURDES VILLANUEVA, PETITIONERS, VS. OFFICE OF THE PRESIDENT OF THE PHILIPPINES AND TEODORO MEDINA, RESPOND…

This is a petition for review on certiorari (treated as a
petition for certiorari) seeking the reversal of the decision of public
respondent Office of the President of the
Philippines dated May 12, 1980, in O.P. Case No. 1442 entitled, “Teodoro Medina, Protestant
vs. Santiago Escarte, et al., Protestees”
and its resolution dated October 23, 1981, denying the motion for
reconsideration.

The antecedent facts are
as follows:

The subject lot (Lot 3, Block 2) and an adjoining lot (Lot 1-A) in Sande
Estate, Tondo, Manila, form a single parcel of land owned by the
Philippine Realty Company.  Constructed
thereon was a 6-door accessoria owned pro-indiviso
by Lucio Javellonar and Jerusalem Gingco.  On October 31, 1940, these lots, together with other lots
comprising the Sande Estate, were expropriated by the
government pursuant to the provisions of Commonwealth Act No. 539 for re-sale
at reasonable prices to their bona fide tenants, occupants, or
private individuals.*

On the same date, Gingco sold to Santiago
Escarte, Sr. his undivided one-half interest, rights
and participation over the accessoria.  Sometime in April, 1953, Escarte, Sr. and Javellonar
divided the accessoria between themselves.  The 3-door portion of the accessoria constructed on Lot
1-A was adjudicated in favor of Javellonar and the rest to Escarte,
Sr.

In November, 1954, Escarte, Sr. filed
an application to purchase the subject lot with the Bureau of Lands.  On January
3, 1955, the Bureau of Lands executed a contract to sell in favor
of Escarte, Sr. 
Later, the jurisdiction over the disposition and acquisition of landed
estate was transferred to the Land Tenure Administration (LTA).  A proposed deed of sale dated July 10, 1962 was prepared by the
LTA.  It was signed by Escarte, Sr., but not by the LTA Administrator who,
instead, cancelled it.  On April 3, 1963, Escarte,
Sr. died without a deed of sale over the subject lot having been executed anew
by the LTA Administrator.

Sometime in 1965, one unit of the 3-door accessoria
on the subject lot was leased to private respondent Teodoro
Medina.  Meanwhile, on August 23, 1965, the heirs of Escarte, Sr. executed an extra-judicial partition of his estate. 
A supplemental partition on June 8, 1966 included the subject lot and its
improvements, which were adjudicated solely in favor of petitioner Santiago Escarte, Jr., represented by his judicial guardian, Remedios Escarte Pantaleon.

In November, 1967, the Land Authority, which took over the
functions of the LTA, executed final Deed of Sale No. 4918 in favor of Escarte, Jr.  On November 10, 1967, a new title (TCT No. 90685) was
accordingly issued in favor of Escarte, Jr. by the
Register of Deeds of Manila.

Sometime in December, 1970, Pantaleon,
in her capacity as judicial
guardian of Escarte, Jr., filed a petition for authority to sell the
subject lot before the Juvenile and Domestic Relations Court of Manila, where
the guardianship proceeding was pending. 
The petition was granted by the court. 
On January 29, 1971,
Pantaleon requested the consent of the Land Authority
to the proposed sale of the subject
lot.  On February 1, 1971, the Land Authority’s permit to transfer the
subject lot in favor of the children of Francisco Villanueva, namely,
petitioners Ernesto, Felixberto and Lourdes, was issued.

On February
18, 1971, Escarte, Jr., through Pantaleon,
sold the subject lot to the Villanuevas.  On March 2, 1971, a new title (TCT No. 103617) was issued by
the Register of Deeds.

On April
26, 1971, Medina filed a protest which was originally
instituted before the Land Authority. 
Upon the transfer of the functions of the Land Authority to the
Department of Agrarian Reform, Medina filed an amended protest, seeking the
cancellation of the contract of sale over the subject lot executed by the Land
Authority in favor of Escarte, Jr., as well as the
deed of sale over the same lot in favor of the Villanuevas
and prayed for the sale of the lot to himself. 
Thereafter, the records of the case were transferred to the National
Housing Authority (NHA) pursuant to the provisions of Presidential Decree No.
757.  On December 14, 1978, the NHA resolved to dismiss the protest,
rationalizing, inter alia, as follows (p. 58, Rollo):

“We find the contention of the protestant that he had a
preferential right to purchase the property to be untenable.  By his own admission and as found out by the
Court of First Instance of Manila in its decision in Civil Case No. 83215, and
also by the Court of First Instance of Rizal, Quezon City Branch, in its decision in Civil Case No.
Q-15952, the protestant was merely a lessee of a unit or one door of the accessoria.  Therefore,
he could not be considered as a bona fide tenant or occupant of
the lot as contemplated in Commonwealth Act No. 539.”

Medina appealed to
the Office of the President.  On May 12, 1980, the said Office
rendered its decision, the dispositive portion of
which, reads (p. 40, Rollo):

“WHEREFORE, this Office hereby (a) sets aside the resolution
of the National Housing Authority, dated December 14, 1978; (b) cancels the
deed of sale over Lot 3, Block 2, Sande Estate, Tondo, Manila,
executed by the Land Tenure Administration in favor of Santiago Escarte, Jr., as well as the authority granted by the Land
Authority for the sale of said lot to Ernesto, Lourdes and Felixberto,
all surnamed Villanueva; (c) orders the institution of appropriate court
proceedings for the cancellation of the transfer certificates of title thereon
in the names of Santiago Escarte, Jr. and Ernesto,
Lourdes and Felixberto, all surnamed Villanueva; and
(d) awards said lot to Teodoro D. Medina.

“SO ORDERED.”

On October 23, 1981, the motion for reconsideration filed by
petitioners was denied for lack of merit. 
Hence, the present petition.

The main issue is who is entitled to the subject lot.  There are several grounds alleged by
petitioners in support of this petition, but one will suffice to dispose
thereof, that is, the principle of res judicata.

Petitioners submit that Medina’s
status relative to the subject lot had since been settled by final court pronouncements, namely, Civil
Case No. 83215 of the Court of First Instance of Manila and Civil Case No.
Q-15952 of the Court of First Instance of Rizal,
which held that he is not a bona fide tenant
or occupant thereof.  Therefore, he is
now barred from being considered as such and not legally entitled to challenge
petitioners’ titles much less be entitled to the award, on the basis of res judicata (pp. 20-24, Brief for Petitioners; p. 242, Rollo).

On the other hand, Medina contends that Civil Case No. 83215 has no applicability:  1) as subsequent proceedings thereafter took
place investigating the illegal issuance of title to petitioners; 2) the issue
of illegal issuance of title was not raised therein; 3) there was no trial on
the merits because the case was decided on a motion to dismiss; 4) there was no
formal presentation or reception of evidence; and 5) an order, not a decision,
was issued by the trial court (pp. 68- 69, Reply Brief for Private Respondent;
p. 248, Rollo).

Agreeing with Medina,
the respondent Office said (p. 38, Rollo):

“On the claim of res judicata by the protestees,
this Office finds this untenable.  Even
if there were court decisions, which there was none, raising the point squarely
x x x.”

We sustain petitioners.  It
was grave abuse of discretion on the part of respondent Office when it ruled in
favor of Medina, in complete
disregard of the principle of res judicata. 
Under this principle, an existing final judgment or decree rendered upon
the merits, by a court of competent jurisdiction, upon a matter within its
jurisdiction, is conclusive of the rights of the parties and those in privity with them, in all other actions or suits in the
same or any other tribunal not only on the points and matters in issue in the
first suit, but as to any other issues which might have been raised therein for
the purpose of the claim.

In Civil Case No. 83215 (pp. 85-89, Rollo),
Medina and a certain Pio Hipolito filed a complaint
against Remedios Pantaleon,
et al. assailing the right to the title to the subject property and claiming a
better right thereto.  On August 31, 1971, the trial court
dismissed the complaint.  According to it
(pp. 88-89, Rollo):

“x x x:

“1. When
plaintiff Medina leased one of the
doors of the accessoria from INCOMPETENT ESCARTE through his guardian, defendant Remedios Pantaleon, he recognized
that the ownership of the leased premises pertained to the lessor.  In Zobel vs.
Mercado, 108 Phil. 240, 242-3, the following was said:

‘Moreover, since defendant entered into a contract of lease with
plaintiff over the portion of land in question and said contract was found by
the trial court to be valid and binding, it is clear that defendant is now
prevented from denying the title of appellee over
said portion pursuant to the provisions of Section 68 (b), Rule 123, of the
Rules of Court.  As this Court well observed:

‘The defendants by attorning to him and
becoming his tenants are estopped from
disputing his title and his right to
such possession upon the termination of
the lease.  The defendants’
failure to pay the rent gave the plaintiff the right to terminate the lease and
oust them from their possession and before the defendants can dispute his title
and right to possession, they must first surrender to him the possession of the
land.  (Alderete
v. Amandoron, 46 Phil. 488, 491) (italics supplied).’

“Neither should the lessee in this case be allowed to assail
the title of the VILLANUEVA CHILDREN which was derived from INCOMPETENT
ESCARTE.

“2.  Plaintiff Medina who became the lessee of one
of the doors of the accessoria in 1965, cannot be
deemed a bona fide tenant, or a bona fide occupant,
within the meaning of Section 15 of LTA Order No. 5, which reads:

‘Section 15. – Definition of Bona-Fide Tenant;
Bona-Fide Occupant – For the purpose of these rules and
regulations, and more specifically of the succeeding section, a bona fide
tenant in a land acquired by the government is one who occupies or actually
possesses a certain area thereof by virtue of an express or implied contract of
tenancy had with the former owner of the land from whom it was acquired by the
government and continuous (sic) to be a tenant of the said area at the time he
files his application to purchase the same or a portion thereof.  A bona fide occupant in a land
acquired by the government is one who, not being a registered tenant, occupies
in good faith a certain area thereof at the time for the acquisition of said
land by the government, or one
who has been in continuous occupation of said area for at least two (2) years
immediately prior to the said acquisition by the government and had cultivated
the same during said period of time and/or had introduced improvements thereon
for which he had paid taxes to the government; and continues to be an occupant of
the said area at the time he files his application to purchase the same or a
portion thereof.’

“In the first place, he is only a lessee of a door in an accessoria belonging to the bona fide
tenant.  In the second place, even if he
were not a lessee, he was not a tenant or an occupant of the PROPERTY at the
time the PROPERTY was acquired by the Government.

“As a lessee, plaintiff Medina has the obligation to return
the demised premises after the expiration of the lease.  If plaintiff Medina had complied with the
demand to vacate made on him by the VILLANUEVA CHILDREN, he would instantly
lose all semblance of ‘occupancy’.  The
Court cannot concede that he has any right at all to be the original grantee of
the Government, in respect of the PROPERTY, nor to have a right to have the
present title transferred to him under the theory of trust.”

Medina questioned the dismissal of the
complaint before this Court by way of a petition for review on certiorari,
which was denied for lack of merit on September 17, 1971 (p. 91, Rollo).  An
entry of judgment was made on October 19, 1971 (p. 92, Rollo).  Certainly, this ruling constitutes an
absolute bar to the present case:  a) it
was final; b) it was a judgment on the merits; c) it was rendered by a court
having jurisdiction over the subject matter and the parties; and d) there is,
between the first and the present actions, identity of parties, subject matter
and cause of action.

While We agree with Medina that in Civil Case No. 83215, there
was no trial on the merits because the case was decided on a motion to dismiss,
there was no formal presentation or reception of evidence and an order, not a
decision, was issued by the trial court, still, the ruling was a judgment on
the merits.  As a technical legal term,
“merits” has been defined in law dictionaries as matter of substance
in law, as distinguished from matter of form, and as the real or substantial
grounds of action or defense, in contradistinction to some technical or
collateral matter raised in the
course of the suit.  A judgment is upon
the merits when it amounts to a declaration of the law as to the respective
rights and duties of the parties, based upon the ultimate fact or state of
facts disclosed by the pleadings and evidence, and upon which the right of
recovery depends, irrespective of formal, technical or dilatory objections or
contentions (Vicente J. Francisco, Revised Rules of Court, Volume II, pp.
841-842).

The principle of res judicata is an old axiom of the law, dictated by
wisdom and sanctified by age, and is founded on the broad principle that it is
to the interest of the public that there should be an end to litigation by the
same parties and their privies over a subject once fully and fairly
adjudicated.  Indeed, the very object of
instituting courts of justice is that litigation should be decided, and decided
finally, for human life is not
long enough to allow of matters once disposed of being brought under discussion
again (Fernandez v. Sebido, et al., 70 Phil. 151).

The order in Civil Case No. Q-15952 (pp. 93-95, Rollo) which likewise held that Medina was not a bona
fide tenant or occupant of the subject lot cannot be said to constitute res judicata to the
present case because there is no identity of parties.  The complaint therein was filed by Medina against
the Land Authority Governor.

ACCORDINGLY, the petition is hereby GRANTED.  The decision of the Office of the President
dated May 12, 1980 and its resolution dated October 23, 1981 are SET ASIDE.  The
resolution of the National Housing Authority dated December 14, 1978 is
REINSTATED.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Grino-Aquino, JJ., concur.

*
Section 1 of said Act provides: 
“The President of the Philippines
is authorized to acquire private lands o????? any interest therein, through
purchase or expropriation, and to subdivide the same into home lots or small
farms for resale at reasonable prices and under such conditions as he may fix
to their bona fide tenants or occupants or to private individuals who will work
the lands themselves and who are qualified to acquire and own lands in the Philippines.”