THIRD DIVISION
[G.R. No. 251169. September 29, 2021.]
HEIRS OF SABAS LIBO-ON, ET AL., petitioners, vs.HEIRS OF PILAR VILLAROSA, ET AL., respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated September 29, 2021, which reads as follows: DETACa
"G.R. No. 251169 (Heirs of Sabas Libo-on, et al. v. Heirs of Pilar Villarosa, et al.). — Before Us is a Petition for Review on Certiorari1 assailing the Decision 2 dated November 27, 2019 of the Court of Appeals (CA) in CA-G.R. CV No. 06268, which affirmed the Order 3 dated September 20, 2016 of the Regional Trial Court (RTC) of Bacolod City, Branch 50 in Civil Case No. 16-14714 dismissing the case of the Heirs of Sabas, Florentina, Julian, Ines and Pedro, all surnamed Libo-on, as represented by Ramon Libo-on (Ramon; collectively, petitioners) on the ground of res judicata.
Facts of the Case
Petitioners claimed that by virtue of a Decision 4 by the Court of First Instance of Negros Occidental dated November 12, 1915, the Lot 652 was awarded to petitioners. The then Land Registration Office General Office, now Land Registration Authority, issued Decree No. 207830 on March 12, 1926 registering Lot 652 in the name of petitioners. 5 Thereafter, an Original Certificate of Title (OCT) No. 21111657 was issued in the name of Sabas. 6
Petitioners alleged that they occupied the said lot in full and absolute ownership and they never alienated or disposed of the said property to anyone.
Somehow, on November 5, 1940, the title over the lot was reconstituted in the name of Pilar Villarosa (Pilar). Thus, Transfer Certificate of Title (TCT) No. R-T-646 (1812) was issued in the name of Pilar. 7
Sometime in 1957, Pilar sold the lot to Enrique Rojas (Enrique), Francisco Flores (Francisco), Francisco Rojas II (Rojas II), collectively referred to as Rojas, et al. Consequently, Rojas, et al., subdivided the lot to three sub-lots. Thereafter, the lot conveyed to Francisco was further subdivided into several sub-lots. Numerous TCTs were then issued in the name of different persons which had their origin from TCT No. R-T-646 (1812). 8
On May 11, 1994, petitioners through Silvestre Montilla, filed a case for Cancellation/Annulment of Deed of Sale and Certificates of Title with Issuance of Writ of Possession and Damages against Enrique, Alberto Flores, Gloria Vita, Antonio Nobleza, Leonor Panique, Heirs of Maximo Flores, as represented by Luis Flores, Heirs of Gilberto Flores, Juanito Flores, Pacifico Flores, Laura Flores, Heirs of Severino Flores, as represented by Lilia Flores and Nancy Fuerte, docketed as Civil Case No. 94-8413 (first case). 9
All the other defendants in that first case filed a Motion to Dismiss while Enrique filed an Answer with Affirmative Defense. 10
In an Order 11 dated September 19, 1994, the trial court dismissed the complaint filed by petitioners on the ground of: (1) lack of prior consultation before the proper lupon; (2) failure to state cause of action, and (3) prescription.
Petitioners appealed the said Order to the CA. In its Decision 12 dated January 30, 1997, the CA in CA-G.R. CV No. 47725 affirmed the Decision of the RTC. The CA found Rojas, et al., to be innocent purchasers for value. The CA held that the mere allegation that the titles of respondents came from Pilar is insufficient to prove that respondents participated or have any knowledge of the fraud. All the allegations of fraud are directed against Pilar. As such, the complaint failed to state a cause of action. Also, the CA held that the petitioners' claim has already prescribed. The original certificate of title issued in favor of petitioners was issued in 1927. The alleged fraud was committed sometime in 1940, while the sale to Rojas, et al., happened in 1957 or about 34 years prior to the filing of the complaint. The Decision of the CA became final on June 6, 1997. 13
On October 21, 2016, petitioners, now represented by Ramon filed another case for Nullity of Title, Confirmation of Title, Recovery of Possession and Damages against Rojas, et al., and the Heirs of Pilar docketed as Civil Case No. 16-14714 (second case). 14
Enrique filed a Motion to Dismiss the second case on the ground that the complaint was barred by prior judgment in Civil Case No. 94-8413, the first case. 15
Petitioners do not deny the filing of the first case. They, however, argued that the first case was filed by Silvestre Montilla in his own capacity. Although the case was captioned as being filed by the Heirs of Sabas, Florentina, Julian, Ines and Pedro, there is nothing in the complaint which showed that he was authorized by the heirs. Also, petitioners argued that the dismissal of the first case was not based on the merits but on mere technicality which prevented the court from delving into the merits of the case. Also, there is no identity of parties in both cases. 16
As to the issue of prescription, petitioners claimed that the title of petitioners over the lot is still existing and since the same is under the Torrens system, their title is indefeasible and incontrovertible. 17
In its Decision 18 dated September 30, 2016, the RTC dismissed the complaint filed by petitioners on the ground of res judicata.
The RTC found that the elements of res judicata are present in this case, 1) the CA decision dismissing the first case became final and executory on June 6, 1997; 2) the RTC which ordered the dismissal of the case has jurisdiction over the subject matter and parties; and 3) despite the case being dismissed via a motion to dismiss, the case was dismissed based on the merits.
The RTC in the second case found that the decision of the CA in the first case found Rojas, et al., as innocent purchasers for value. Thus, the petitioners are already barred from seeking recovery of the said lot from Rojas, et al.
The dismissal of the first case on the ground of prescription and laches has the effect of res judicata on the instant case as it already determines the rights of the parties. Be it noted that the petitioners are not in actual possession of the lot since they are also praying for recovery possession, thus they only have ten years from the date of registration of the deed of sale or the issuance of the certificate of title over the property to file the case.
TCT No. R-T-646 (1812) (reconstituted title) was issued on November 5, 1940 in favor of Pilar, thus petitioners had 10 years from such date to file a complaint against any person in possession of the property, otherwise prescription will set in.
To simply allege that all the derivative titles from TCT No. R-T-646 (1812) is spurious without alleging specific instances of fraud committed by the other persons is not accurate. Be it noted that the forged or fraudulent deed may be a source of a valid title in the hands of an innocent purchaser in good faith and for value.
As to the fact that Silvestre Montilla filed the case in his own capacity deserves no consideration. In the first case, the Heirs of Sabas, Florentina, Julian, Ines and Pedro were also impleaded as parties. Silvestre is the only child of Rufina Libo-on (Rufina) and Clemente Montilla. Rufina, on the other hand, is the daughter of Sabas.
In a Decision 19 dated November 27, 2019, the CA affirmed the RTC.
The CA found that there is identity of parties between the two cases, while the Heirs of Pilar was not included in the first case, there is substantial identity of parties between the two cases. Further, both complaints alleged that the source of the title of Rojas, et al., is the fraudulently issued title of Pilar. Thus, the privity of relations between Villarosa and Rojas, et al., was alleged in the body of the complaints.
As to the fact that in the first case, Silvestre filed the first case and the disownment of his authority to file, the fact remains that both Silvestre and Ramon are grandsons of Sabas. They have privity or a shared identity of interest which is enough for res judicata to be present. Further, they were both litigating for the benefit of the Heirs of Sabas, Florentina, Julian, Ines and Pedro.
The CA also held that the dismissal of the first case was based on merits. The CA extensively discussed that the complaint failed to state a cause of action because of the failure of the petitioners to state that Rojas, et al., acted in bad faith when they acquired the subject lot from Pilar, and that the claim of petitioners already prescribed.
Proceedings before this Court
Petitioners' Arguments
Petitioners argue that there is no res judicata in this case. First, there is no identity of parties. In the first case, it was filed by Silvestre Montilla, in his own capacity. He was not authorized by the petitioners to file the case. Thus, as for the petitioners, the first case is not deemed filed. Further, the Heirs of Pilar was not impleaded in the first case, while in this case, the Heirs of Pilar is already impleaded. Second, the dismissal of the first case was not based on the merits but on mere technicalities. The Order of the RTC did not declare the rights and liabilities of the parties. 20
Further, there is no prescription because the title of the petitioners is still existing. Petitioners never disposed of or alienated any part of the lot to any person, as such, their title remains to be indefeasible and incontrovertible. The tax declaration coupled with their physical possession of certain portions of the lot serve to reinforce that they never abandoned their title. 21
Petitioners claim that the reconstituted title in favor of Pilar is dubious. They claim that for reconstitution of title, a notice must first be published in the Official Gazette. Based on the reconstituted title, it was issued on October 31, 1946 pursuant to Republic Act (R.A.) No. 26. Since R.A. No. 26 only became effective on September 25, 1946, the publication of the notice of reconstitution should have been published anytime between September to October 1946. However, no notice of reconstitution was published during that time. As such, the court never acquired any jurisdiction over the case for the reconstitution of title. Therefore, TCT No. R-T-646 (1812) is void ab initio. 22
Respondents' Arguments
Respondents claim that the Petition filed by petitioners did not raise substantial new issues and arguments. Nevertheless, the present petition should be dismissed on the ground of res judicata. The decision of the CA in the first case (Civil Case No. 94-8413) has already attained finality. 23
Respondents claimed that they have been the registered owner and possessor of their respective properties. The title of the previous owner was clean at the time of the sale and/or succession. Thus, they are not required to go beyond what appears on the face of the title of their predecessors. Further, the petition lacks the material allegations pertaining to the particular participation of respondents to the alleged fraud and misrepresentation made by Pilar. The allegations of fraud all point to Pilar only and not to respondents. In all averments of fraud, the circumstances constituting fraud must be stated with particularity. 24
Issue
The issue in this case is whether the instant case should be dismissed on the ground of res judicata.
Ruling of the Court
After a careful perusal of the records of this case, We find that petitioners failed to show reversible error on the part of the CA in holding that the case should be dismissed on the ground of res judicata.
It is settled that under the doctrine of res judicata, a final judgment or order on the merits, rendered by a court having jurisdiction of the subject matter and the parties, is conclusive in a subsequent case between the same parties and their successors-in-interest by title subsequent to the commencement of the action. As such, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive on the rights of the parties or their privies in all later suits on all points and matters determined in the former suit. 25
For res judicata to apply, the concurrence of the following requisites must exist: (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, identity of parties, subject matter and cause of action.
It is undisputed that the CA decision in CA-G.R. CV No. 47725 dismissing the first case (Civil Case No. 94-8413) on the ground of failure to state cause of action and prescription has already attained finality on June 6, 1997. It is also undisputed that the RTC of Bacolod City, Branch 50 has jurisdiction over the subject matter of the case and over the parties. The controversy lies on the last two elements of res judicata. Petitioners alleged that the judgment of the RTC and the CA is not on the merits and that there is no identity of parties between the first and second case.
Absolute identity of parties is not required. Only substantial identity of parties is necessary to warrant the application of res judicata. The addition or elimination of some parties does not alter the situation. 26 There is substantial identity of parties when there exists a community of interest between a party in the first case and a party in the second case even if the latter was not impleaded in the first case. 27
There is substantial identity of parties in the first and second case. In both cases, the complaint was filed by the Heirs of Sabas. In the first and second case, the defendants are the same, except for the Heirs of Pilar which was only impleaded in the second case. The non-inclusion of the Heirs of Pilar do not preclude the application of res judicata. The privity of relations between Pilar and the other respondents was clearly established, hence there is community of interests between the parties.
Review of the records of the case would also show that the judgment in the first case by both the RTC and the CA were judgment on the merits.
A judgment may be considered as one rendered on the merits when it determines the rights and liabilities of the parties based on the disclosed facts, or when the judgment is rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal or merely technical point. It is not required that a trial or actual hearing or argument on the facts was conducted, for as long as the parties had the full legal opportunity to be heard on their respective claims and contentions. 28
In this case, the RTC and the CA finally determined the rights of the parties. The courts declared and found that respondents are buyers in good faith and for value and that the subject property had already been passed on to an innocent purchaser in good faith and for value, who has a right to rely on the face of the title. It is well settled that no valid TCT can issue from a void TCT, unless an innocent purchaser for value has intervened. 29 Here, respondents Rojas, et al., and the other subsequent buyers of the subject properties are innocent purchasers in good faith and value. They have no notice of any defect in the title of Pilar nor any knowledge that would raise a suspicion that the title of Pilar is void. Further, the courts found that the complaint failed to alleged with particularity the participation of respondents in the alleged fraud and misrepresentation committed by Pilar. All allegations of fraud must be stated with particularity. 30 Good faith is always presumed.
We also observed that the subject property was mortgaged by Pilar to Rehabilitation Finance Corporation (RFC) in 1948 and 1954. The lending institution would have investigated the property before it accepted the property as collateral. The fact that Pilar was able to mortgage the property twice to RFC would show that when the latter investigated the condition of the property, it found no flaw in the title of Pilar and relied on what appeared on the title. Thereafter, in 1957, Pilar mortgaged the property to Francisco Rojas before Pilar sold the said property to Rojas, et al. Clearly, respondents Rojas, et al., are innocent purchasers in good faith and for value as they relied on the face of the title of Pilar and had no knowledge of any circumstance that would raise any suspicion that Pilar's title was fraudulently acquired.
The RTC and the CA also found that prescription had already set in. In an action for reconveyance and cancellation of title, the same prescribes in 10 years from the time of the issuance of the title over the property. 31 As observed by the CA in the first case, to wit:
It should be noted that the decree of registration in the case at bar was issued sometime in 1915, while the original certificate of title was issued sometime in 1927. The alleged fraud was committed sometime in 1940 and the sale to herein defendants-appellees in 1957 or about thirty four (34) years prior to the filing of this complaint. Laches is very much evident in this case before us, or such neglect or omission to assert a right taken in conjunction with the lapse of time and other circumstances causing prejudice to an adverse party as will operate as a bar in equity. Plaintiffs-appellants must bear with the effect of their unreasonable delay. Herein plaintiffs-appellants inaction over such a long period of time opened the door wide open for the land to be sold to third-parties who relied on the title of Pilar Villarosa. During the entire seventeen (17) years that Pilar Villarosa held on to the alleged fraudulently reconstituted title, none of the plaintiffs-appellants nor their predecessors-in-interest ever tried to check on the title of their supposed property. x x x 32
Following the observation of the CA, clearly, the cause of action had already prescribed.
In view of the above circumstances, the present case should be dismissed on the ground of res judicata.
WHEREFORE, the instant petition is DENIED. The Decision dated November 27, 2019 of the Court of Appeals in CA-G.R. CV No. 06268 is hereby AFFIRMED. Accordingly, the complaint filed by petitioners Heirs of Sabas Libo-on, et al. docketed as Civil Case No. 16-14714 is DISMISSED on the ground of res judicata. aDSIHc
SO ORDERED." (Leonen, J., on official leave.)
By authority of the Court:
(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court
Footnotes
1.Rollo, pp. 3-26.
2. Penned by Associate Justice Alfredo D. Ampuan, with the concurrence of Associate Justices Edgardo L. Delos Santos (former Member of this Court) and Marilyn B. Lagura-Yap; id. at 37-52.
3. Penned by Judge Estefanio S. Libutan, Jr.; id. at 74-83.
4.Id. at 64-66.
5.Id. at 38-39.
6.Id. at 271.
7.Id. at 9, 283.
8.Id.
9.Id. at 268-274.
10.Id. at 210.
11.Id. at 210-214.
12. Penned by Associate Justice Fermin A. Martin, Jr., with the concurrence of Associate Justices Conchita Carpio-Morales and Omar U. Amin; id. at 282-291.
13.Id. at 292.
14. Records, pp. 1-16.
15.Rollo, p. 74.
16.Id. at 75.
17.Id.
18.Supra note 3.
19.Supra note 2.
20.Rollo, pp. 12-15.
21.Id. at 15-18.
22.Id. at 19-23.
23.Id. at 247-252, 256-260.
24.Id. at 260-263.
25.Heirs of Dimaampao v. Atty. Alug, 754 Phil. 236, 247 (2015).
26.Heirs of Gepuela v. Meñez-Andres, 778 Phil. 97, 115 (2016).
27.Taar v. Lawan, 820 Phil. 26, 50 (2017), citing Sendon v. Ruiz, 415 Phil. 376, 385 (2001).
28.Aledro-Ruña v. Lead Export and Agro-Dev't Corp., 836 Phil. 946, 960 (2018).
29.Billote v. Solis, 760 Phil. 712, 725 (2015).
30. Section 5, Rule 8 of the 1997 Rules of Civil Procedure.
31.Sps. Aboitiz v. Sps. Po, 810 Phil. 123, 147 (2017).
32.Rollo, p. 290.