ALFREDO MONTELIBANO AND ALEJANDRO MONTELIBANO, PETITIONERS, VS. THE HON. COURT OF APPEALS AND BACOLOD-MURCIA MILLING COMPANY, INC., RESPONDENTS.

The petitioners seek a review of the decision dated October 19, 1988 of the Court of
Appeals which reversed the decision in their favor of the Regional Trial Court
of Negros Occidental, Branch XLVII in Civil Case No.
8134 entitled, “Alfredo Montelibano and
Alejandro Montelibano vs. Bacolod-Murcia
Milling Co., Inc.”

In 1919, Alfredo and Alejandro Montelibano,
together with other planters, entered into contracts with Bacolod-Murcia
Milling Co., Inc., for the milling of sugar cane at a sharing ratio of 55% for
the planters and 45% for the miller.  The
contracts were to be in force for thirty (30) years starting with the 1920-21 crop.

In 1936, a proposal was made to amend the milling contracts by
increasing the planters’ share to 60% of the manufactured sugar and molasses
and giving them other concessions besides, but the term of the contracts was
extended to 45 years instead of 30.  On
August 30, 1936, the milling company’s Board of Directors adopted a resolution
granting further concessions to the planters over and above those contained in
the amended milling contract (Contrato de Molienda Enmendado), which reads:

“ACTA
NO. 11

“SESION DE LA JUNTA
DIRECTIVA
“AGOSTO 20, 1936

“Acuerdo No. 1. – Previa mocion debidamente
secundada, la Junta en consideracion
a una peticion de los plantadores hecha por un
comite nombrado por los mismos,
acuerda enmendar el contrato de molienda enmendado mediante las siguientes:

“xxx                           xxx                               xxx.

“9.a   Que si durante
la vigencia de este contrato de Molienda
Enmendado, las centrales azucareras, de Negros Occidental, cuya produccion anual de azucar centrifugado sea mas de una tercera
parte de la produccion
total de todas las centrales azucareras de Negros Occidental, concedieren a sus plantadores mejores condiciones que la estipuladas en el presente contrato, entonces esas mejores
condiciones se concederan y
por el presente se entenderan concedidas a los plantadores que hayan otorgado
este Contrato de Molienda Enmendado.” (Montelibano, et al. vs. Bacolod-Murcia
Milling Co., Inc., 5 SCRA 36, 38.)

The Montelibanos signed and executed
the printed Amended Milling Contract on September 10, 1936.  A copy of the resolution of August 20, 1936
signed by the Central’s General Manager was attached to the printed contract on
April 27, 1937, with the following notation:

“Las enmiendas arriba
transcritas forman parte del contrato
de molienda enmendado, otorgado por – y la Bacolod-Murcia Milling Co., Inc.” (Montelibano,
et al. vs. Bacolod-Murcia Milling Co., Inc., 5 SCRA
36, 38.)

In 1953, the Montelibanos sued the
milling company in Civil Case No. 2603 of the Court of First Instance of
Occidental Negros, alleging that the three other
centrals in the province were granting increased participation to their
planters; therefore, pursuant to paragraph 9 of the August 20, 1936 Resolution,
Bacolod?Murcia Milling Co., Inc. was obligated
to grant similar concessions to the Montelibanos.

The milling company opposed the claim, on the ground that the
resolution was null and void for lack of a valid consideration, and that it
was, in effect, a donation which was not within the power of the Board of
Directors to grant.  The trial court
dismissed the action, but on appeal to the Supreme Court in G.R. No. L-15092
(Alfredo Montelibano, et al. vs. Bacolod-Murcia
Milling Co., Inc., 5 SCRA 36), the Supreme Court, in a decision
dated May 18, 1962, reversed the lower court. 
It held that the August 20, 1936 resolution, passed in good faith by the
board of directors, was valid and binding and formed an integral part of the
amended milling contracts, the milling company having agreed to give
concessions to the planters, precisely to induce them to agree to an extension
of their contracts.  In that decision,
the Supreme Court ordered Bacolod-Murcia to pay the
planters the differential or increase in participation in the milled sugar,
pursuant to paragraph 9 of the Resolution dated August 20, 1936, over and in
addition to their 60% share under the printed Amended Milling Contract, or the
value thereof when due, starting with the 1951-52 crop year up to the 1955-56
crop year, with legal rate of interest on the value of such differentials.

The appellee, Bacolod-Murcia
Milling Co., Inc., filed two motions for reconsideration urging the Supreme
Court to set aside its decision and to refer the factual issues raised in its
original answer to appellant’s complaints to the court a quo or
the Court of Appeals for determination.

In  a Resolution dated September 29, 1962 (Montelibano
vs. Bacolod-Murcia Milling Co., Inc., 6 SCRA 89),
this Court denied the motions for reconsideration.  Since the Court of First Instance, in
dismissing the complaint, limited itself exclusively to the questions of law
posited by the company and disregarded its factual defenses, and the milling
company for its part, submitted the case for decision on the legal issue raised
by it, without adverting to its factual defenses until the case was decided
against it, this Court regarded it as having waived all such factual defenses,
its inaction being evidence of its intention to waive.

As a sequel
to G.R. No. L-15092, the Montelibanos on June
27, 1972, filed Civil Case No. 8134 in the Regional Trial Court of Bacolod to recover the differentials due them for the crop
years 1956-57 up to 1964-65 on the basis of concessions granted by the other
sugar centrals whose total production exceeded one-third of the total sugar
production in the province.  The Montelibanos claimed that their share should have been
increased as follows:

CROP YEAR                          PLAINTIFF’S
SHARE

1956-1957                                           64        %

1957-1958                                           64        %

1958-1959                                           63.83
  %

1959-1960                                           64.5     %

1960-1961                                           64.5     %

1961-1962                                           64.5     %

1962-1963                                           64.5     %

1963-1964                                           64.66
  %

1964-1965                                           64.66
  %

Bacolod-Murcia, answering the
complaint, alleged that the Montelibanos could not
invoke paragraph 9 of the resolution of August 20, 1936 because they had not
complied with the mandatory conditions of paragraph 11 thereof, i.e., the
registration of contracts with the Register of Deeds and compliance with the
“secret agreement” between R. Nolan for the milling company and Montelibano for the planters.

On December 16, 1983, the trial court rendered judgment for the
plaintiffs-appellees. 
It held itself bound by the Supreme Court’s decision in the earlier case
(G.R. No. L-15092) between the parties and, accordingly, ordered the
defendant-appellant to pay the plaintiffs-appellees,
jointly and severally, the differential or increase of participation in the
milled sugar and molasses in accordance with paragraph 9 of the resolution,
over and in addition to the 60% share stipulated in the printed Amended Milling
Contract, or the value thereof when due, as follows:

with interest at
the legal rate on the value of the said differentials from the time the same
were due until fully paid, and the sum of P10,000 as attorney’s fees, plus costs (p. 36, Rollo).

On January 4, 1984, the milling company appealed the lower court’s
decision to the Court of Appeals in CA-G.R. CV No. 08391, contending that the
matter of petitioner’s entitlement to the differential is res
judicata.

In a decision dated October 19, 1988, the Court of Appeals
reversed the lower court’s judgment and dismissed the complaint against the
milling company.  It held that the
milling company was not barred from proving the defenses raised
in its answer to the original complaint since the only matter that was decided
in G.R. No. L-15092 was a legal one, i.e., whether the resolution of August 20,
1936 was an integral part of the amended milling contracts.  The question of whether sugar planters, like
the plaintiffs-appellees, were entitled to the
increased benefit under paragraph 9 solely upon proof that other millers (the
sugar centrals of La Carlota, Hawaiian Philippines, San Carlos and Binalbagan), whose total production exceeded one-third of
the total production of sugar in Occidental Negros,
had given increased benefits, or whether they must, in addition, show compliance
with the conditions in paragraph 11, was not adjudicated in that case.  It held that the Supreme Court decision
reserved to the Montelibanos the right to sue not for
“additional increases” per se, but only for such additional increases
as they may be entitled to for
the crop years subsequent to those herein
adjudged” (p. 11, Decision).

On November 10, 1988, the petitioners filed a motion for
reconsideration of the appellate court’s decision, but it was denied.

The petition is impressed with merit.

It is a well-settled principle of remedial law that matters
already determined and decided are res judicata and are no longer subject to review by any
court.  The underlying philosophy of the
doctrine of res judicata
is that parties should not be permitted to litigate the same issue more than
once and when a right or fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains unreversed,
it should be conclusive upon the parties and those in privity
with them in law or estate (Vencilao vs. Vano, 182 SCRA 491; Alvarez vs. IAC and Yanes,
185 SCRA 8; Miranda vs. CA, 141 SCRA 302).

The essential requisites for the application of the bar by
judgment are:  (1) the former judgment
must be final; (2) it must have been rendered by a court having jurisdiction of
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:  (a) identity of parties; (b) identity of
subject matter; and (c) identity of cause of action (Cruz vs. Mossesgeld, 24 SCRA 1006; Maglalang
vs. CA, 175 SCRA 808; Asuncion vs. Pineda, 175 SCRA 719).

All the elements of res judicata being present, the judgment is, with
respect to all matters directly adjudged or which 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 (Rule 39, Section 49(b),
Rules of Court).  The
decision in G.R. No. L-15092 (Montelibano vs. Bacolod-Murcia Milling Co., Inc., 5 SCRA 36) is therefore
binding not only as to matters actually litigated and determined therein, but
also as to matters necessarily
involved or coming within the legitimate purview of the original action, both
in respect to matters of claim and of defense (Mapa
vs. Guanzon, 77 SCRA 398).

A defendant should not be permitted to split his defenses and
present them piecemeal in successive actions growing out of the same
transaction, for there must be an end to litigation.  Hence, where a party has an opportunity to
present his defense and neglects to do so, the law requires that he take the
consequences.  Having submitted the case
on the legal issue or defense without adverting to the factual defenses until
the case was decided, despite ample opportunity to do so, the party (in this
case Bacolod-Murcia) must be regarded as having waived all such factual
defenses.  Its inaction is evidence of
its intention to so waive (Montelibano vs. Bacolod-Murcia, 6 SCRA 89). 
The policy of this Court has always been to discourage piecemeal
appeals.

WHEREFORE, the assailed decision of the Court of Appeals
is hereby reversed and set aside and that of the trial court is affirmed in
toto.  Costs against the private respondent.

SO ORDERED.

Narvasa, (Chairman), Cruz, and Medialdea, JJ., concur.

Gancayco, J., on leave.