SPOUSES CESAR DE RAMOS, AND CECILIA DE RAMOS, PETITIONERS, VS. HONORABLE COURT OF APPEALS AND SPOUSES FLAVIO DEMAMAY AND ESTELITA DEMAMAY, RESPONDENTS.

We are called once again to determine whether a case is barred by
res judicata.

Private respondents mortgaged their 230 square meter residential
lot located in Modern Village, Paciano Rizal, Calamba, Laguna and covered by
Transfer Certificate of Title No. T-35475 in the Register of Deeds of the
Province of Laguna, to the Luzon Development Bank (hereinafter, the Bank) as
security for a loan of P10,000.00 which is evidenced by a promissory note. The said note provides that if there is a
default in the payment of any of the installments as they become due, the
entire unpaid balance, together with the accrued interest, shall automatically
become due and payable without need of prior notice.

There being default in the payment of the installments on due
dates despite several written demands, the Bank applied for the extrajudicial
foreclosure of the mortgage. In a
public auction on 30 July 1981, the Provincial Sheriff of Laguna sold the
mortgaged property to the Bank, the lone bidder therein, for P23,808.29, the amount
of its bid. The certificate of sale was
duly recorded in the Office of the Register of Deeds on 24 August 1981. The private respondents failed to redeem the
property within the one-year redemption period. So, on 13 September 1982, the Bank filed with the Office of the
Register of Deeds an affidavit of consolidation of ownership. Consequently, said office cancelled TCT No.
35475 and issued TCT No. T-89122 in the name of the Bank.

On 26 July 1983, the Bank filed a petition for the issuance of a
writ of possession with the Regional Trial Court (RTC) of Calamba, Laguna which
was docketed as SLRC Case No. III-83-C.^[1]
The case was assigned to Branch 37 of the said court. Subsequently, Estelita Demamay filed a verified opposition to the
petition alleging that the court has no jurisdiction over the petition because
she was not notified of both the foreclosure proceedings and the auction sale,
and that the issues involved are highly controversial and litigious in
nature. She further claims that the
foreclosure was premature because her obligation was to mature only on 29 July
1982.^[2]
The court conducted a hearing on the petition and received the evidence of the
parties. In its Order dated 24 June
1985, the trial court granted the petition, ordered the issuance of a writ of
possession and directed the Provincial Sheriff or any of his deputies to place
the Bank in possession of the property;^[3]
the writ of possession was issued on 1 July 1985.^[4]

During the pendency of the petition for a writ of possession, or
specifically on 3 September 1983, the Bank sold to the herein petitioners the
property in question under a Deed of Conditional Sale for P35,000.00 payable in
installments, of which P15,000.00 shall be paid as down payment while the
balance would be payable within six (6) months.^[5]
The said balance having been paid, the Bank executed in the petitioners’ favor
a Deed of Absolute Sale on 9 November 1983^[6]
which was registered in the Office of the Register of Deeds on 13 November
1983. Transfer Certificate of Title No.
T-89122 was then cancelled and Transfer Certificate of Title No. T-119912 was
issued in the name of the petitioners.

The Demamays neither moved for a reconsideration of nor appealed
from the aforesaid 24 June 1985 Order. Instead, on 5 July 1985, Estelita Demamay filed a complaint “To Set
Aside the Sale of Mortgaged Property and Subsequent Transactions Pertinent
Thereto And Cancel Writ of Possession Issued Thereon” which was docketed
as Civil Case No. 894-85-C. This was
assigned to Branch 36 of the same RTC.^[7]
In said complaint, she reiterated the grounds raised in her opposition to the
petition for the issuance of a writ of possession and further alleged that the
writ of possession has no more leg to stand on because the Bank had already
sold the property to the petitioners herein. Her prayer in the petition reads:

“WHEREFORE, premises considered, it is respectfully prayed
that the sale of the mortgaged property in question to the defendant and the
consolidation thereof in its favor be set aside and the writ of possession
issued thereon by the said Court cancelled (sic).

Likewise, the writ of possession be set aside for the property in
question was no longer titled in the name of the defendant but to (sic) Cecilia
de Ramos, married to Cesar de Ramos, to whom the defendant fraudulently sold it
without the knowledge and consent of the petitioner.

It is also respectfully prayed the (sic) plaintiff be allowed to
pay her mortgage obligation to the defendant.

Petitioner further prays for other reliefs and remedies the
Honorable Court may deem just and proper under the premises.”^[8]

In its Answer and/or Opposition to Petition filed on 13 September
1985,^[9]
the Bank interposed, as one of its special and affirmative defenses, the
barring by res judicata of Estelita Demamay’s filing of the complaint
considering that the issues involved therein were already raised before Branch
37 of the same court in the aforementioned petition for a writ of possession
(SLRC No. 111-83-C); a counterclaim for actual and exemplary damages,
attorney’s fees and litigation expenses was also set up. The lower court considered the defense of res
judicata as a ground for a motion to dismiss and in its Order of 7 November
1985, required Demamay to put in writing her Reply thereto, after which the
motion would be deemed submitted for resolution. On 3 January 1986, Branch 36 of the RTC handed down an Order
dismissing Civil Case No. 894-85-C, the pertinent parts thereof, as well as the
dispositive portion of which read:

“The aforementioned grounds are the same grounds ventilated
and tried on the merits before Branch XXXVII of this Court. Although the petition for writ of possession
filed with this Court and assigned to Branch XXXVII is summary in nature, plaintiff
Damamay (sic) have (sic) filed a verified opposition thereto in the same
petition and the court without objections on the part of the parties proceeded
to hear the petition on the merits of the case. The Court received the evidence of both parties on the basis of
which the questioned Order dated June 24, 1985 granting the petition for writ
of possession was issued. Herein
petitioner Damamay (sic) did not take any further action by way of appeal or certiorari
to the appellate court. The present
petition of petitioner Damamay (sic) clearly seeks the annulment of the final
order of Branch XXXVII of this Court in RTC SLRC No. 111-83-C.

Under the provisions of BP 129 otherwise known as the Judicial
Reorganization Act of 1980, more specifically Sec. 9(2) thereof, Intermediate
(sic) Appellate Court has exclusive jurisdiction over acts for annulment of
judgments or final orders of the Regional Trial Courts.

IN VIEW THEREOF, the Motion To Dismiss is hereby GRANTED. The complaint is hereby DISMISSED on the
ground of lack of jurisdiction of this Court to annul the final order of Branch
XXXVII of the Regional Trial Court of Calamba, Laguna.”^[10]

Again, Estelita Demamay neither moved to reconsider the above
order nor appealed therefrom. It thus
became firm and final.

Then, seven (7) months later, or more specifically, on 8 August
1986, Estelita Demamay, now joined by her husband Flavio, filed a complaint for
Annulment of Sales and Reconveyance of Real Property with Damages against the
bank and herein petitioners with the RTC of Calamba, Laguna; the complaint was
docketed as Civil Case No. 1031-86-C^[11]
and was raffled off to Branch 34 of the said court. In its Answer with Counterclaim and Opposition to the Issuance of
Preliminary Injunction,^[12]
the Bank interposed Special and Affirmative Defenses, among which are (a) res
judicata, the issues involved having already been raised and resolved by
Branches 37 and 36 of the court, and (b) Branch 34 of the RTC has no
jurisdiction to annul the final orders of the two (2) aforementioned branches
of the court in SLRC No. 111-83-C and Civil Case No. 849-85-C, respectively.

The court (Branch 34) treated the special and Affirmative
Defenses “as Motion to Dismiss under Section 5, Rule 16 of the Rules of
Court” and in the Order of
1 April 1987, dismissed Civil Case No. 1031-86-C on the ground of res
judicata in view of
the final orders of 24 June 1985 in SLRC No. 111-83-C, and 3 January 1986 in
Civil Case No. 894-85-C.^[13]
It ruled:

“In this case, plaintiff Demamay again seeks the annulment of
the auction sale in favor of the defendant and prays that the property be reconveyed to her.

x x x

Notably, this issue is the very same issues (sic) presented in the
aforesaid cases. Indeed, it is settled
and adjudicated by the Order dated June 24, 1985, issued by Judge Odilon
Bautista in RTC Civil Case No. 111-83-C.

x x x

Clearly the principle of res judicata applies
in this case. There being clearly
identical parties and identity of rights asserted in all three (3) cases — the
focal issue in this case having been fully adjudicated in the aforecited cases
— this case must be dismissed.”^[14]

The Demamays appealed from the said Order to the respondent Court
of Appeals which docketed the case as C.A.-G.R. CV No. 14411. On 21 September 1988, the respondent Court
promulgated a decision^[15]
setting aside the Order of 1 April 1987 in Civil Case No. 1031-86-C (Branch 34
of the RTC) on the ground that res judicata cannot be invoked to bar
said case for (a) it was not proper for the Demamays “to present their
objections in the proceeding for the issuance of a writ of possession because
the issuance thereof is a purely ministerial duty on the part of the
court;” thus, “[w]hat is proper for plaintiffs to do is to file the
present action so that they may be able to ventilate their grounds for the
annulment of the foreclosure sale;” and (b) Civil Case No. 894-85-C cannot
likewise bar Civil Case No. 1031-86-C because there was no adjudication on the
merits in the former, the dismissal being for lack of jurisdiction.

A motion to reconsider said decision having been denied,
petitioners filed this present petition.

Private respondents filed their Comment in compliance with the
Resolution of 12 April 1989.

There is merit in the petition. This Court hereby gives due course to it, considers the Comment as the
Answer of the respondents and decides it on the merits.

The trial court was correct in dismissing Civil Case No.
1031-86-C on the ground that it is barred by res judicata because of the
final orders dated 24 June 1985 in SLRC No. 111-83-C, and 3 January 1986 in
Civil Case No. 894-85-C.

The principle of res judicata is enshrined in paragraph
(b), Section 49, Rule 39 of the Rules of Court which reads:

“SEC. 49. Effect
of Judgments. — The effect of a judgment or final order rendered by a
court or judge of the Philippines, having jurisdiction to pronounce the
judgment or order, may be as follows:

x x x

(b) In other cases
the judgment or 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.”

The doctrine 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 over a subject once fully and fairly
adjudicated.^[16]
It is “a rule pervading every well-regulated system of jurisprudence, and
is put upon two grounds embodied in various maxims of the common law; the one,
public policy and necessity, which
makes it to the interest of the state that there should be an end to litigation
— republicae ut sit litium; the other, the hardship on the individual
that he should be vexed twice for the same cause -? nemo debet bis
vexari et eadem causa.” A
contrary doctrine would subject the public peace and quiet to the will
and neglect of individuals and prefer the gratification of the litigious
disposition on the part of suitors to the preservation of the public tranquility and happiness.^[17]

The essential requisites of res judicata are (1) there
must be a final judgment or order; (2) the court rendering it must have
jurisdiction over the subject matter and over the parties; (3) it must be a
judgment or order on the merits; and (4) there must be between the two cases
identity of parties, identity of subject matter, and identity of action.^[18]

The parties do not dispute the fact that Branches 37 and 36 of
the Regional Trial Court of Calamba, Laguna had jurisdiction over SLRC No.
111-83-C and Civil Case No. 894-85-C, respectively; that their Orders which
were pleaded as a bar to Civil Case No. 1031-86-C are firm and final; and that
the principal parties, causes of action and issues involved in the latter are
identical to those in the first two (2) cases. The only issue to be determined is whether or not the said Orders are
adjudications on the merits of the causes of action and the issues involved.

Respondent Court does not place any importance on (a) the Order
of 24 June 1985 in SLRC No. 111-83-C on the ground that said order merely
disposed of the petition for a writ of possession; the respondent Court further
declares that it was not proper for the private respondents to raise in the
said case issues concerning the validity of the foreclosure sale, as this must
be done in a proper action, and (b) on the 3 January 1986 Order in Civil Case
No. 894-85-C because it is a dismissal on the ground of lack of jurisdiction.

Both propositions do not stand on solid ground.

While it may be true, as held in De los Angeles vs. Court of Appeals,^[19]
relied upon by the respondent Court, that under Section 8 of Act 3135, it is
the ministerial duty of the court to issue a writ of possession in favor of the
purchaser in a foreclosure sale of a mortgaged piece of property and the only
remedy of the mortgagor is to question the validity of the sale in the manner provided for by law, namely, by
a petition to set aside the sale and to cancel the writ of possession which
should be disposed of in accordance with the summary procedure prescribed in
Section 112 of the Land Registration Act, provided that the petition is filed
not later than thirty days after the purchaser was given possession, the fact
remains that in SLRC No. 111-83-C, a full-blown hearing was conducted by the
court with Estelita Demamay presenting her evidence. In its Order of 24 June 1985, the trial court found and held
that:

“The claim of Teresita (sic) Demamay that her obligation was
to mature on July 29, 1982, as shown by the Disclosure Statement of Loan/Credit
Transaction (Exhibits “2-A” and “2-C”) and consequently,
the extra-judicial foreclosure was premature, cannot be sustained by the
Court. Such Disclosure Statement on
Loan/Credit Transaction, cannot be considered as sufficient evidence to render
ineffective the terms and conditions of the Promissory Note (Exhibit
“B”), wherein it was provided that in case of default in any of the
scheduled installments, the unpaid balance becomes due and payable without
necessity of any prior notice.

The irregularities alleged and testified to by oppositor (sic) in
the conduct of the extrajudicial foreclosure of the property in question were
negated by the fact that the Notice of Sheriff’s Sale as well as the auction
sale were conducted in accordance with law. Likewise, the fact that the redemption period expired without the
oppositor redeeming the property militated against the stand taken by the
oppositor. The case cited by the
oppositor (Calimlim, et. vs. Hon. Pedro A. Ramirez, et. al., 118 SCRA 399),
cannot be used in this case for the simple reason that the facts therein were
(sic) different to (sic) those in the instant petition.”^[20]

After having submitted to the jurisdiction of the court in SLRC
No. 111-83-C, testifying therein and offering documentary evidence to resist
the petition for a writ of possession and to obtain affirmative relief such as
the nullification of the foreclosure proceedings and all incidents thereto
including, necessarily, the sale at the public auction, Demamay cannot now be
heard to challenge the jurisdiction of the said court and to suggest, in order
to escape from the effects of the finality of the Order, that all that had
transpired in the said case was an exercise in futility. A party cannot invoke the jurisdiction of
the court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction. Put differently, it is
not proper for a party who has affirmed and invoked the jurisdiction of a court
in a particular matter to secure an affirmative relief, to afterwards deny that
same jurisdiction to escape penalty.^[21]
That order was, undoubtedly, an adjudication on the merits of Demamay’s claim
and cause of action.

Even if We were to disregard the foregoing exposition, the fact
remains that the same causes of action and issues were raised again and revived
by Estelita Demamay herself in Civil Case No. 894-85-C. Respondent Court, however, opined that the
dismissal of said case cannot bar Civil Case No. 1031-86-C because the
dismissal was grounded on the lack of jurisdiction. Respondent Court must have been misled by the dispositive portion
of said order. Both the basis of the
issuance of the order and the body thereof unmistakably show that the dismissal
is based on res judicata. In its
Order of 7 November 1985,^[22]
the trial court, applying Section 5, Rule 16 of the Rules of Court which
provides:

“SEC. 5. Pleading
grounds as affirmative defenses. – Any of the grounds for dismissal
provided for in this rule, except improper venue, may be pleaded as an
affirmative defense, and a preliminary hearing may be had thereon as if a
motion to dismiss had been filed.”

required Estelita Demamay “to put in
writing his (sic) reply to the motion to dismiss contained in defendants’
Answer on the ground of res judicata,” after
which the motion would be deemed submitted for resolution. Furthermore, the 3 January 1986 Order
narrates in no uncertain terms what SLRC No. 111-83-C is all about, ruled that
the grounds raised therein by Estelita are the same as those
raised by her in Civil Case No. 894-85-C and declared that the court in the
former case heard the petition on the merits “without objections on the
part of the parties” who presented their evidence on the basis of which
the court entered its 24 June 1985 Order.

If the court in Civil Case No. 894-85-C finally decreed the
dismissal of the case for lack of jurisdiction, it was because the Order of 24
June 1985 in SLRC No. 111-83-C was already final; the court could not,
therefore, annul it. The authority to
annul the same is vested in the then Intermediate Appellate Court (now Court of
Appeals) pursuant to Section 9(2) of B.P. No. 129. The message the court wanted to convey was that the Order of 24
June 1985 constituted a prior final judgment which barred Civil Case No.
894-85-C.

The 3 January 1986 Order in Civil Case No. 894-85-C was, by
itself, an adjudication on the merits of the Demamay spouses’ claim because it
declared them no longer entitled to the right upon which their claims are
based. A judgment is deemed to be
rendered 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
objectives or contentions.^[23]

WHEREFORE, the instant petition is GRANTED. The decision of 21 September 1988 of the
respondent Court of Appeals in C.A.-G.R. CV No. 14411 is hereby SET ASIDE and the
Order of 1 April 1987 of Branch 34 of the Regional Trial Court of Calamba,
Laguna in Civil Case No. 1031-86-C is hereby REINSTATED.

Costs against private respondents.

SO ORDERED.

Gutierrez, Jr., (Chairman), Bidin,
and Romero, JJ., concur.

Feliciano, J., on official
leave.

^[1]
Annex “F” of Petition; Rollo, 41-43.

^[2]
Id., 45-46.

^[3]
Annex “G” of Petition; Rollo, 44-47.

^[4]
Annex “H”, Id.; Id., 48.

^[5]
Annex “R”, Id.;   Id.,
75-77.

^[6]
Annex “S”, Id.; Id., 79-80.

^[7]
Annex “J”, Id.; Id., 50-56.

^[8]
Rollo, 56.

^[9]
Annex “K” of Petition; Id., 58-61.

^[10]
Rollo, 67-68.

^[11]
Annex “W” of Petition; Rollo, 90-97.

^[12]
Annex “X”, Id.; Id., 108-115.

^[13]
Annex “Y”, Id.; Id., 118-122.

^[14]
Rollo, 121-122.

^[15]
Annex “Z” of Petition; Id., 123-127.

^[16]
Filipinas Investment and Finance Corp. vs. Intermediate Appellate Court,
179 SCRA 728 [1989]; Escarte, Jr. vs. Office of the President, 192 SCRA
1 [1990], both citing Fernandez vs. Sebido, 70 Phil. 151 [1940].

^[17]
Yusingco vs. Ong, 42 SCRA 589, 601-602 [1971].

^[18]
Yusingco vs. Ong, supra.; Santos vs. Gabriel,
45 SCRA 288 [1972]; Viray vs. Mariñas, 49 SCRA 44 [1973]; Philippine
Commercial and Industrial Bank vs. Pfleider, 65 SCRA 13 [1975];
Maglalang vs. Court of Appeals, 175 SCRA 808 [1989]; Maningo vs.
Intermediate Appellate Court, 183 SCRA 691 [1990]; Valencia vs. RTC of
Quezon City, 184 SCRA 80 [1990].

^[19]
60 SCRA 116 [1974].

^[20]
Rollo, 46.

^[21]
Tijam vs. Sibonghanoy, 23 SCRA 29 [1968]; Calderon vs. Public
Service Commission, 38 SCRA 624 [1971]; People vs.
Munar, 53 SCRA 278 [1973].

^[22]
Annex “L” of Petition; Rollo, 65.

^[23]
Escarte, Jr. vs. Office of the President, supra.,
citing FRANCISCO, Rules of Court, vol. II, 841-842.