Heirs of Dionisio-Galian v. Dionisio

FIRST DIVISION

[G.R. No. 247856. June 16, 2021.]

HEIRS OF THE LATE LOURDES DIONISIO-GALIAN, HEREIN REPRESENTED BY HILDA D. GALIAN, HEIRS OF ERLINDA DIONISIO-SEGUNDO, HEREIN REPRESENTED BY GUILLERMO J. SEGUNDO, LETICIA DIONISIO-WAKAT, REGINA DIONISIO-WAKAT AND WILLY N. DIONISIO, petitioners,vs. LARRY DIONISIO AND REMEDIOS DIONISIO, GRACE G. WAYAGWAG-ECHANES, SPOUSES DEMETRIA AND GERALD TAKIO, AND THE MUNICIPAL ASSESSOR OF TUBA, BENGUET, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedJune 16, 2021which reads as follows:

"G.R. No. 247856 (Heirs of the Late Lourdes Dionisio-Galian, herein represented by Hilda D. Galian, Heirs of Erlinda Dionisio-Segundo, herein represented by Guillermo J. Segundo, Leticia Dionisio-Wakat, Regina Dionisio-Wakat and Willy N. Dionisio v. Larry Dionisio and Remedios Dionisio, Grace G. Wayagwag-Echanes, Spouses Demetria and Gerald Takio, and the Municipal Assessor of Tuba, Benguet). — This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the Decision 2 dated May 31, 2019 of the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch 62, which dismissed petitioners' appeal for lack of merit. The Decision affirmed in toto the Order 3 dated July 2, 2018 of the Municipal Circuit Trial Court (MCTC) of Tuba-Sablan, Benguet dismissing petitioners' complaint for being barred by prior judgment.

Facts of the Case

This case stemmed from a complaint for reconveyance, cancellation of tax declaration and damages 4 filed by petitioners against respondents before the MCTC of Tuba-Sablan, Benguet, docketed as Civil Case No. 380.

The subject matter of the case is a parcel of land and a family home covering an area of 10,255 square meters, situated at Sitio Caucalan, Barangay Taloy Sur, Tuba, Benguet, and covered by Tax Declaration/Assessment of Real Property No. 99-012-00796 5 in the name of Maria Narciso who died on September 30, 2008. 6

Lourdes, Erlinda, Leticia, Regina and Willy (the predecessors of petitioners) and respondent Lardy are the children of the late Maria Narciso and Ceferino Dionisio. It was Lardy and his family who resided in the family home while petitioners settled elsewhere. 7

Petitioners alleged that on August 3, 1998, the lot was mortgaged to Tubao Credit Cooperative, Inc. as collateral for the loan of P20,000.00. The loan was fully paid on September 14, 2006. Unknown to petitioners, respondents Spouses Lardy and Remedios Dionisio (Spouses Dionisio), together with Spouses Gerald and Demeteria Takio (Spouses Takio) who pretended to be co-owners of the subject lot, executed a Promissory Note with Real Estate Mortgage 8 dated September 13, 2006 in favor of respondent Grace Wayagwag-Echanes (Echanes) using the subject lot as collateral for the loan of P200,000.00 payable on or before December 14, 2006 with 10% monthly interest. Petitioners averred that in said document, it was stated that Lardy was the spouse of Maria Narciso. They claimed that Echanes had personal knowledge that Lardy is the son of Maria. Petitioners also pointed out that Remedios Dionisio falsified the signature of Maria considering that the latter does not know how to read and write. 9

For failure of Spouses Dionisio and Takio to pay the obligation, Echanes caused the foreclosure of the mortgage. 10 An auction sale was conducted on May 25, 2010 with Echanes as the highest bidder. The Sheriff's Certificate of Sale 11 was recorded in the Register of Deeds (RD) on June 9, 2010. The tax declaration was transferred in the name of Echanes. 12 Due to the foregoing acts of respondents, petitioners filed the instant complaint for reconveyance. 13

Petitioners claim that upon the death of Maria on September 30, 2008, the subject lot was inherited by the surviving six children owning 1/6 undivided interest on the parcel of land. Petitioners pleaded to Lardy to segregate his 1/6 share which he mortgaged to Echanes to the exclusion of their shares but to no avail as Echanes caused the transfer of the entire property in her name. The illegal acts of respondents in conspiring and deliberately appropriating the subject lot prejudiced petitioners of their rightful shares of the property. 14

Spouses Dionisio filed an Answer with Cross-Claim 15 and alleged that Spouses Takio, Echanes and a certain Atty. Matthew Kollin persuaded them to pay the loan with Tubao Credit Cooperative, Inc. for the discharge of the earlier mortgage. After the discharge of the mortgage, a subsequent Promissory Note with Real Estate Mortgage dated September 13, 2006 was executed. Spouses Dionisio claimed that Spouses Takio knew that the document was spurious since Lardy was made to appear as the spouse of Maria when in fact, he is the son of Maria. They convinced Remedios to sign as Maria. Being spurious, the Promissory Note with Real Estate Mortgage could not be the basis of a valid foreclosure proceedings as a forged deed is a nullity and conveys no title. Spouses Dionisio alleged that they did not receive any consideration for the loan, except the release of the mortgage with the Tubao Credit Cooperative. By way of cross-claim, Spouses Dionisio sought reimbursement from Spouses Takio for whatever amount they may be answerable or ordered to pay under the present action, Spouses Dionisio not having benefitted from the loan transaction. 16

In their Answer, 17 Spouses Takio averred that they were merely witnesses to the document and that they had no knowledge that Lardy is not the sole owner of the subject property. They also claimed that although they shared in the proceeds of the loan, they have paid their share in the amount of P135,000.00. 18

Echanes filed her Answer with Affirmative Defenses and Compulsory Counterclaim. 19 She moved to dismiss the complaint by way of the affirmative defense of res judicata. 20 She claimed that the earlier case filed by petitioners (i.e., Civil Case No. 11-CV-2738) for annulment of mortgage, annulment of foreclosure sale 21 before RTC, Branch 8, involving the same parties, subject matter, and cause of action as in this case, had been dismissed in the Order dated March 26, 2013 for failure to prosecute and thus, constitutes as an adjudication on the merits of the case. Petitioners filed a Notice of Appeal but the RTC denied the same for having been filed out of time. Petitioners filed a petition for certiorari to the Court of Appeals (CA) but it was dismissed in the Resolution dated September 18, 2014 of the CA for failure of petitioners to fully pay the required docket and other legal fees. This Resolution became final and executory on October 20, 2014. 22

Petitioners filed a petition for relief under Rule 38 of the Rules of Court asking for relief from the judgment of the RTC dismissing the complaint. The petition was denied for having been filed out of time as stated in the Order dated February 23, 2015. Petitioners elevated the same to the CA by way of a petition for certiorari but it was dismissed in the Resolution dated July 14, 2015 of the CA due to infirmities. The case was further elevated to this Court which denied the petition. The Resolution dated June 15, 2016 of the Court became final and executory. 23

The other cases earlier filed are as follows: (1) Civil Case No. 14-118 for Issuance of Writ of Possession under Act 3135 filed by Echanes against Spouse Dionisio, which was granted; the writ has been fully implemented (the possession of the property having been turned over to Echanes); and the case is considered closed and terminated; (2) Civil Case No. 15-CV-3106 for Indirect Contempt filed by Echanes against Spouses Dionisio resulting from the latter's act of re-taking possession of the property; Spouses Dionisio were found guilty of indirect contempt and directed to pay a fine of P30,000.00. 24

Ruling of the Municipal Circuit Trial Court

In the Order 25 dated July 2, 2018, the MCTC dismissed the complaint filed by petitioners and the cross-claim filed by Spouses Dionisio against their co-defendants Spouses Takio and Echanes for being barred by prior judgment. 26

The MCTC ruled that all the requisites of res judicata are present: (1) the Order of the RTC dismissing Civil Case No. 11-CV-2738 had attained finality; (2) the dismissal order for failure to prosecute had the effect of adjudication on the merits of the case as provided under Section 3, Rule 17 of the Rules of Court; (3) said dismissal order was rendered by the RTC having jurisdiction over the subject matter and parties; and (4) there is identity of parties, subject matter, and cause of action between the first and second actions. 27 The MCTC opined that while the present case is one for reconveyance, cancellation of tax declaration and damages and Civil Case No. 11-CV-2738 is for annulment of mortgage and annulment of foreclosure sale, both cases ultimately call for a determination of the validity of said mortgage and foreclosure sale; such determination is required before it can rule on the case for reconveyance and cancellation of the tax declaration of Echanes over the subject lot. Finally, the MCTC noted that petitioners lost their right to prosecute Civil Case No. 11-CV-2738 when they failed to obey a court order and failed to prosecute said case, thereby foreclosing their right to litigate this case. 28

Petitioners appealed to the RTC.

Ruling of the Regional Trial Court

On May 31, 2019, the RTC of La Trinidad, Benguet, Branch 62, issued a Decision 29 dismissing the appeal for lack of merit. It ruled that all the requisites of res judicata are present. The dismissal of Civil Case No. 11-CV-2738 (annulment of mortgage and annulment of foreclosure sale) for failure to prosecute is an adjudication on the merits. Since the action was for annulment of mortgage and foreclosure sale; hence, it is incapable of pecuniary estimation, the RTC had jurisdiction to try the case. And further proceeding to assail the dismissal of the civil case for annulment of mortgage and foreclosure sale initiated by petitioners all the way up to the Supreme Court which were decided against petitioners, and to overturn the judgment of the Highest Court would be against the principle of hierarchy of court. 30

Hence, this petition for review on certiorari under Rule 45 filed by petitioners.

Issues

The issues are: (1) whether this petition for review on certiorari under Rule 45 filed directly to this Court from the RTC is proper and warranted under the circumstances; and (2) whether the second complaint for reconveyance, cancellation of tax declaration and damages was properly dismissed on the ground of res judicata.

Petitioners' Arguments

Petitioners aver that the application of the principle of res judicata may be set aside in the interest of substantial justice. That their case deserves a second hard look because the dismissal of the first case was based on procedural infirmities, due to the fault of their previous counsel. The property at stake is petitioners' inheritance lot registered in the name of their late mother Maria Narciso with an area of 10,255 square meters. The mortgage (Promissory Note with Real Estate Mortgage) executed by respondent Lardy, is patently null and void as the mortgagors are not the absolute owners of the property mortgaged. Further, the 10% monthly interest imposed on the loan obligation is unconscionable. Thus, the Promissory Note with Real Estate Mortgage cannot be the source of any right by respondent Echanes. At most, Lardy can only convey his 1/6 share but not the whole property. 31

Petitioners beg this Court to exercise its discretionary power to set aside the application of res judicata to dismiss the second case which must be decided on the merits since they will lose their inheritance because of the fraudulent acts perpetrated against them. 32

Spouses Dionisio's Comment

Spouses Dionisio ask that the petition be granted. They assert that this case should be heard on the merits and should not be dismissed on technical infirmities. Spouses Dionisio admit that the Promissory Note with Real Estate Mortgage is a forged document since the registered owner, Maria Narciso, did not participate in the execution thereof and Lardy signed as the husband of Maria. They merely agreed to the request of Spouses Takio to use the property as collateral to the loan extended by Echanes, who introduced herself as a law graduate. Echanes knew that the document is spurious since Lardy was made to appear as the spouse of Maria. Echanes also knew that it was Remedios who signed as Maria in the deed. Further, Spouses Dionisio aver that Spouses Takio were able to pay to Echanes the amount of P185,000.00 out of the original loan of P200,000.00 leaving a balance of P15,000.00. Echanes bid in the amount of P650,000.00 at the foreclosure sale, was fully applied to the loan with 10% monthly interest. 33

However, Spouses Dionisio, disagree to petitioners' contention that Lardy's 1/6 share maybe conveyed to Echanes since the document is void from the beginning and therefore no right may pass to Echanes. 34

Echanes' Comment

To Echanes, the principle of res judicata should be strictly applied since petitioners were given enough opportunity to assert their claim of alleged simulated contract and unconscionable interest in all courts, and the dismissal of the first case had attained finality. Petitioners' second case for reconveyance, cancellation of tax declaration and damages involve the same cause of action, subject matter, parties, evidence to be presented, and reliefs sought, and the principle of res judicata cannot be set aside only because the second case was different in its form. And if the court will hear the case again, it will be in violation of the Supreme Court ruling in G.R. No. 221517. Further, while petitioners claim that the dismissal was not on the merits but on technicalities, Echanes pointed out that the dismissal of the case was petitioners' fault because of their failure to comply with the court order and for failure to prosecute and it is not required that a full hearing and trial of the case be conducted as the parties had the full legal opportunity to be heard on their respective claims and contentions. 35

The bare invocation of "the interest of substantial justice" is not a magic wand that will automatically merit suspension of procedural rules, which ought to be followed and its rigid application can be allowed only to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure. Petitioners' case does not fall with any of the circumstances that may justify the relaxation of the rules in their favor. 36

Ruling of the Court

We grant the petition.

Foremost, this Court notes that from the Decision of the RTC, petitioners immediately filed this petition before this Court. Considering that what is being principally raised is the application of the principle of res judicata, which is a question of law, 37 direct resort to this Court via a petition for review on certiorari under Rule 45 of the Rules of Court is proper and warranted under the circumstances.

The second case for reconveyance, cancellation of tax declaration and damages is dismissible being barred by res judicata. The dismissal of the first case for failure to prosecute has the effect of an adjudication on the merits pursuant to Section 3, Rule 17 of the Rules of Court. 38 While the first case was for the annulment of the mortgage and foreclosure sale, the facts alleged and reliefs sought show that reconveyance is the end goal. 39 The first case for annulment of mortgage may result in the recovery of ownership and possession of the subject lot, 40 similar to the relief sought in the second case for reconveyance.

However, this Court agrees with petitioners that res judicata should be disregarded in the broader interest of substantial justice considering the peculiar circumstances of the case.

As held in the case of Aledro-Ruña v. Lead Export and Agro-Development Corp., 41

x x x However, res judicata is to be disregarded if its rigid application would involve the sacrifice of justice to technicality, particularly in this case where there was actually no determination of the substantive issues in the first case. There was no legal declaration of the parties' rights and liabilities.

xxx xxx xxx

The broader interest of justice as well as the circumstances of the case justifies the relaxation of the rule on res judicata. The Court is not precluded from re-examining its own ruling and rectifying errors of judgment if blind and stubborn adherence to res judicata would involve the sacrifice of justice to technicality. This is not the first time that the principle of res judicata has been set aside in favor of substantial justice, which is after all the avowed purpose of all law and jurisprudence. 42

In this case, there was no judgment on the merits on the first complaint. There was no determination of the substantive issues raised in the case. Among other issues, there was no determination of the validity or nullity of the Promissory Note with Real Estate Mortgage, which is the ultimate source of the right of Echanes in acquiring the subject lot. A determination of its validity or nullity is necessary considering the insistence of petitioners that it was a forged document. For even Spouses Dionisio, who were parties to its execution, had admitted that Maria Narciso, the registered owner of the subject lot, did not participate in the execution of the document; Maria's signature therein was forged by Remedios; and that Lardy was made to appear as Maria's spouse when in fact he was Maria's son. With these admissions, there is a need to determine the rights and liabilities of the parties based on the disclosed facts.

The MCTC of Tuba-Sablan, Benguet should reinstate Civil Case No. 380 for reconveyance, cancellation of tax declaration and damages. With the amendment of Batas Pambansa Blg. 129, it has expanded the jurisdiction of the first level courts to hear actions involving title to, or possession of, real property or any interest therein, where the assessed value is less than P20,000.00. 43 In this complaint for reconveyance, petitioners prayed that judgment be rendered ordering and confirming that the subject lot is owned in common by petitioners and Lardy Dionisio; that the mortgage executed by Spouses Dionisio is limited to 1/6 share of the lot; to order Echanes and the Municipal Assessor to reconvey the property back to the original owner, Maria Narciso; to cancel the tax declaration issued in favor of Echanes and issue a new tax declaration to include the name of petitioners as co-owners; and the award of damages. This case primarily seeks to ascertain who are the lawful owners of the subject property and a determination of the validity or nullity of the Promissory Note with Real Estate Mortgage on the ground of forgery is just incidental or secondary in the resolution thereof. 44 Considering that the assessed value of the subject property 45 does not exceed the jurisdictional threshold value of P20,000.00 fixed by law, the MCTC has jurisdiction over the case.

In sum, the broader interest of substantial justice as well as the circumstances of the case justifies the relaxation of the rule on res judicata. If a strict adherence to the application of the Rules would result in a grave miscarriage of justice, this Court will not hesitate to relax the same in favor of substantial justice, which is after all the avowed purpose of all law and jurisprudence. 46 Petitioners must be afforded the chance to prove their claims.

WHEREFORE, the instant petition is GRANTED. The Decision dated May 31, 2019 of the Regional Trial Court of La Trinidad, Benguet, Branch 62 is SET ASIDE. The Municipal Circuit Trial Court of Tuba-Sablan, Benguet is directed to REINSTATE Civil Case No. 380 for trial on the merits and to RESOLVE the same with dispatch.

The respondent Spouses Demetria and Gerald Takio's third and fourth motions for extension of time totaling twenty-five (25) days from September 26, 2020 within which to file a comment on the petition for review on certiorari, are GRANTED, counted from September 26, 2020. The said respondents' comment on the petition for review on certiorari, is NOTED. The said respondents' manifestation with motion, stating that prior to the receipt of the Resolution dated September 21, 2020, they filed twin motions for extension of time totaling twenty-five (25) days, is NOTED, and their prayer for the reconsideration of the Resolution dated September 21, 2020, and their comment on the petition for review on certiorari filed within the extended period be admitted, is GRANTED.

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 12-28.

2. Penned by Judge Danilo P. Camacho; id. at 34-47.

3. Records, pp. 202-215.

4.Id. at 1-7.

5.Id. at 15.

6.Id. at 2.

7.Id. at 2-3.

8.Id. at 16-18.

9.Rollo, pp. 37-39.

10.Id. at 35-36.

11. Records, pp. 37-39.

12.Id. at 31.

13.Rollo, p. 36.

14. Records, p. 5.

15.Id. at 64-69.

16.Id. at 65-67.

17.Id. at 88-90.

18.Id. at 88-89.

19.Id. at 119-136.

20.Id. at 136.

21.Id. at 139-149.

22.Id. at 123-124.

23.Id. at 183.

24.Id. at 204-205.

25. Penned by Acting Presiding Judge Modesto D. Bahul, Jr.; id. at 202-215.

26.Id. at 215.

27.Id. at 207-208.

28.Id. at 209.

29. Penned by Judge Danilo P. Camacho; rollo, pp. 34-47.

30.Id. at 43-35.

31.Id. at 23-27.

32.Id. at 27.

33.Id. at 66-65.

34.Id. at 67.

35.Id. at 87-88.

36.Id. at 88.

37. See Daswani v. Banco De Oro Universal Bank, 765 Phil. 88 (2015).

38.Martinez v. Buen, 808 Phil. 424, 435 (2017).

39.Uy v. Court of Appeals, 769 Phil. 705, 718 (2015).

40.Galang v. Peakhold Finance Corp., 824 Phil. 674 (2018).

41. G.R. No. 225896, July 23, 2018.

42.Id. Internal citations omitted.

43. Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

xxx xxx xxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) x x x.

44. See Heirs of Sebe v. Heirs of Sevilla, 618 Phil. 395 (2009).

45. Records, p. 15.

46.De Leon v. Balinag, 530 Phil. 299, 310 (2006).