Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 128349 September 25, 1998

BACHRACH CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and PHILIPPINE PORTS
AUTHORITY, respondents.

VITUG, J.:

Bachrach Corporation ("Bachrach"), in its petition for review on certiorari, questions

the decision of the Court of Appeals in CA-G.R. SP No. 38763, promulgated on 12
November 1996, the dispositive part of which reading

WHEREFORE, the petition is granted. The assailed RTC orders art

hereby NULLIFIED and SET ASIDE and public respondent is ordered
to dismiss the subject action before him under Civil Case No. 95-
73399. No pronouncement as to costs. 1

on several counts; viz:

I. THE COURT OF APPEALS

GRAVELY ERRED IN NOT
DISMISSING CA-G.R. SP NO. 38673
DESPITE THE FACT THAT A
SIMILAR PETITION EARLIER FILED
BY PPA WAS DISMISSED FOR
BEING INSUFFICIENT NOT ONLY IN
FORM BUT ALSO IN SUBSTANCE
WHICH DISMISSAL CONSTITUTES
RES JUDICATA INSOFAR AS THE
ISSUES RAISED THEREIN ARE
CONCERNED.

II. THE COURT OF APPEALS

GRAVELY ERRED IN RULING THAT
THE DECISION IN THE UNLAWFUL
DETAINER CASE CONSTITUTES
RES JUDICATA WHICH BARS THE
SPECIFIC PERFORMANCE CASE.
 III. THE COURT CF APPEALS
GRAVELY ERRED IN RULING THAT
THE FILING OF THE SPECIFIC
PERFORMANCE CASE VIOLATES
THE RULE AGAINST FORUM
SHOPPING.

IV. THE COURT OF APPEALS

GRAVELY ERRED IN RULING THAT
THE WRIT OF PRELIMINARY
INJUNCTION ISSUED BY THE
TRIAL COURT CONSTITUTES
INTERFERENCE WITH ITS
JUDGMENT IN THE UNLAWFUL
DETAINER CASE.

V. THE COURT OF APPEALS

GRAVELY ERRED IN ORDERING
THE DISMISSAL OF CIVIL CASE NO.
95-73399 THEREBY RULING ON THE
MERITS OF THE CASE WHEN IN
FACT, THE ONLY ISSUES FOR ITS
RESOLUTION WERE THE
PROPRIETY OF THE WRIT OF
PRELIMINARY INJUNCTION
ISSUED BY THE TRIAL COURT AND
THE DENIAL OF PPA'S MOTION FOR
PRELIMINARY HEARING ON
AFFIRMATIVE DEFENSES.2

It would appear that petitioner corporation entered into two lease contracts with the
Philippine government covering two specified areas, Block 180 and Block 185,
located at the Manila Port Area, then under the control and management of the
Director of Lands, for a term of ninety-nine years each, the first lease to expire on 19
June 2017 and the other on 14 February 2018. During her tenure, President Corazon
Aquino issued Executive Order No. 321 transferring the management and
administration of the entire Port Area to herein respondent Philippine Ports Authority
("PPA"). Shortly alter its take-over, PPA issued a Memorandum increasing the rental
rates of Bachrach by 1,500%. Bachrach refused to pay the substantial increased rates
demanded by PPA.

On 23 March 1992, PPA initiated unlawful detainer proceedings, docketed Civil Case
No. 138838 of the Metropolitan Trial Court ("MeTC") of Manila, against Bachrach
for non-payment of rent. On 27 April 1993, MeTC rendered a decision ordering the
eviction of Bachrach from the leased premises. Bachrach appealed to the Regional
Trial Court ("RTC") of Manila which, on 21 September 1993, affirmed the decision of
the lower court in toto.3

Bachrach elevated the case to the Court of Appeals by way of a petition for review.
On 29 July 1994, the appellate court affirmed the decision of the RTC. A motion for
reconsideration was filed by Bachrach; however, the resolution of the motion was put
on hold pending submission of a compromise agreement.4 When tile parties failed to
submit the promised compromise agreement, the Court of Appeals, on 15 May 1995,
denied Bachrach's motion for reconsideration. The decision of the appellate court in
the ejectment suit became final and executory on 20 May 1995.5

Meanwhile on 25 March 1995, while the motion for reconsideration was yet pending
with the appellate court, Bachrach filed a complaint against PPA with the Manila
RTC, docketed Civil Case No. 95-73399 (hereinafter referred to also as the specific
performance case), for refusing to honor a compromise agreement said to have been
perfected between Bachrach and PPA during their 04 February 1994 conference that
superseded the ejectment case. In its complaint, Bachrach prayed for specific
performance.

On 08 June 1995, PPA filed a motion for a writ of execution/garnishment in the

ejectment case. The next day, 09 June 1995, Bachrach filed an application in the
specific performance case for the issuance of a temporary restraining order and/or a
writ of preliminary injunction to enjoin the MeTC from issuing the writ of
execution/garnishment. PPA countered by filling a motion for preliminary hearing on
its affirmative defenses along the same grounds mentioned in its motion to dismiss the
specific performance case, to wit: (a) the pendency of another action between the
same parties for the same cause; (b) the violation of the anti-forum-shopping rule; (c)
the complaint's lack of cause of action; and (d) the unenforceable character of the
compromise agreement invoked by Bachrach. On 13 July 1995, the trial court issued
an omnibus order, granting the application of Bachrach for a writ of preliminary
injunction, in this tenor

PREMISES CONSIDERED, this Court is of the opinion and so holds

(1) that plaintiff (Bachrach) is entitled to the injunctive relief prayed
for and upon the posting of a bond in the amount of P300,000.00, let a
writ of preliminary injunction be issued enjoining the defendant (PPA),
the Presiding Judge of the Metropolitan Trial Court of Manila, Branch
2 from issuing a writ of execution/garnishment in Civil Case No.
238838-CV entitled "Philippine Ports Authority vs. Bachrach
Corporation"; (2) lifting/setting aside the order dated June 5, 1995 and
(3) denying defendant's motion for a preliminary hearing on
affirmative defenses. 6

PPA moved for reconsideration of the above order but the trial court denied the
plea in its order of 29 August 1995.

On 25 September 1995, PPA filed a petition for certiorari and prohibition, with
application for the issuance of a temporary restraining order and/or writ of
preliminary injunction, docketed CA-G.R. SP No. 36508, before the Court of Appeals.
The petition was dismissed by resolution, dated 28 September 1995, of the appellate
court for being insufficient in form and substance, i.e., the failure of PPA to properly
attach a certified true copy each of the assailed order of 13 July 1995 and 29 August
1995 of the trial court. PPA received on 05 October 19957 a copy of the resolution,
dated 28 September 1995, of the appellate court. Undaunted, PPA filed a new petition
on 11 October 1995, now evidently in proper form, asseverating that since it had
received a copy of the assailed resolution of the trial court only on 07 September
1995, the refiling of the petition with the Court of Appeals within a period of less than
two months from the date of such receipt was well within the reasonable time
requirement under the Rules for a special civil action for certiorari. 8 In the
meantime, the resolution, dated 28 September 1995, of the Court of Appeals which
dismissed CA-G.R. No. 38508 became final on 21 October 1995.9

In its newly filed petition, docketed CA-G.R. SP No. 38673, PPA invoked the
following grounds for its allowance:

I. That respondent judge acted without, or in excess of jurisdiction, or

with grave abuse of discretion when it issued a writ of preliminary
injunction against the final and executory resolution of the Honorable
Court of Appeals Annex "I") inspite of the well-established rule that
courts are allowed to interfere with each other's judgment or decrees
by injunction, and worse, in this case, against the execution of the
judgment of a superior or collegiate court which had already became
final executory.

II. That respondent Judge acted without, or in excess of jurisdiction, or

with grave abuse of discretion when it also denied petitioner's motion
for a preliminary hearing on its affirmative defenses or in failing to
have the case below outrightly dismissed on the grounds stated in its
affirmative defenses, when respondent Judge pronounced there is no
identity as to the causes of action between the case decided by the
Court of Appeals (CA-G.R. SP No. 32630) and the case below (Civil
Case No. 95-73399) when clearly the causes or action in both cases
revolve on the same issue of possession of the subject leased premises.

III. That respondent Judge acted without, or in excess of jurisdiction,

or with grave abuse of discretion in refusing to take cognizance (of),
abide (by) and acknowledge the final judgment of the Court of Appeals
which, on said ground alone, is enough justification for the dismissal
of the case grounded on res judicata. Moreover private respondent is
guilty of forurn-shopping and the penalty therefor is the dismissal of
its case. 10

On 12 November 1996, the Court of Appeals rendered the assailed decision

nullifying and setting aside the orders of the RTC and ordering the latter to
dismiss the specific performance case.

The Court finds merit in the instant appeal interposed by petitioner.

Verily, the decisive issue raised by the parties before the Court in the instant petition is
whether or not the specific performance case (Civil Case No. 73399) should be held
barred by the unlawful detainer case on the ground of res judicata. There are four (4)
essential conditions which must concur in order that res judicata may effectively
apply, viz: (1) The judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject
matter and the parties; (3) the disposition of the case must be a judgment or order on
the merits, and (4) there must be between the first and second action identity of
parties, identity of subject matter, and identity of causes of action." 11 There is no
question about the fact that all the first three elements of res judicata are here extant;
it is the final condition requiring an identity of parties, of subject matter and of causes
of action, particularly the last two, i.e., subject matter and cause of action, that
presents a problem.

A cause of action, broadly defined, is an act or omission of one party in violation of

the legal right of the other. 12 The subject matter, on the other hand, is the item with
respect to which the controversy has arisen, or concerning which the wrong has been
done, and it is ordinarily the right, the thing, or the contract under dispute. 13 In a
breach of contract, the contract violated is the subject matter while the breach thereof
by the obligor is the cause of action. It would appear quite plain then that the RTC did
act aptly in taking cognizance of the specific performance case. In Civil Case No.
138838 of the MeTC, the unlawful detainer case, the subject matter is the contract of
lease between the parties while the breach thereof, arising from petitioner's non-
payment of rentals, constitutes the suit's cause of action. In Civil Case No. 73399 of
the RTC, the specific performance case, the subject matter is the compromise
agreement allegedly perfected between the same parties while the cause of action
emanates from the averred refusal of PPA to comply therewith. The ultimate test in
ascertaining the identity of causes of action is said to be to look into whether or not
the same evidence fully supports and establishes both the present cause of action and
the former cause of action. In the affirmative, the former judgment would be a bar; if
otherwise, then that prior judgment would not serve as such a bar to the second. 14
The evidence needed to establish the cause of action in the unlawful detainer case
would be the lease contract and the violation of that lease by Bachrach. In the specific
performance case, what would be consequential is evidence of the alleged
compromise agreement and its breach by PPA.

The next thing to ask, of course, would be the question of whether or not the issuance
by the trial court of the writ of preliminary injunction was an improper interference
with the judgment in the unlawful detainer suit. It could be argued that, instead of
filing a separate action for specific performance. Bachrach should just have presented
the alleged compromise agreement in the unlawful detainer case. Unfortunately, the
refusal of PPA to honor the agreement after its alleged perfection effectively
prevented Bachrach from seeking the coercive power of the court to enforce the
compromise in the unlawful detainer case. The situation virtually left Bachrach with
but the remedy of independently initiating the specific performance case in a court of
competent jurisdiction. In its challenged decision, the Court of Appeals, on its part,
has said that respondent PPA's prayer for the issuance of a writ of execution and
garnishment is but the necessary and legal consequence of its affirmance of the lower
court's decision in the unlawful in the unlawful detainer case which has by then
become final and executory. 15 The rule indeed is, and has almost invariably been,
that after a judgment has gained finality, it becomes the ministerial duty of the court to
order its execution. 16 No court, perforce, should interfere by injunction or otherwise
to restrain such execution. The rule, however, concededly admits of exceptions;
hence, when facts and circumstances later transpire that would render execution
inequitable or unjust, the interested party may ask a competent court to stay its
execution or prevent its enforcement. 17 So, also, a change in the situation of the
parties can warrant an injunctive relief. 18 Evidently, in issuing its orders of 13 July
1995 and 29 August 1995 assailed by PPA in the latter's petition or certiorari and
prohibition before the Court of Appeals, the trial court in the case at bar would want
to preserve status quo pending its disposition of the specific performance case and to
prevent the case from being mooted by an early implementation of the ejectment writ.
In holding differently and ascribing to the trial court grave abuse of discretion
amounting to lack or excess of jurisdiction, the appellate court, in our considered
view, has committed reversible error.

Having reached the above conclusions, other incidental issues raised by petitioner no
longer need to be passed upon.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is

reversed and set aside; Civil Case No. 73399 along with the assailed orders of the
Regional Trial Court, aforedated, are hereby reinstated. No costs.

SO ORDERED.

Davide, Jr., Bellosillo, Panganiban and Quisumbing, JJ., concur.

Footnotes

1 Rollo, p. 59.

2 Rollo, p. 14.

3 Rollo, p. 47.

4 Court of Appeals Decision, Rollo, pp. 47-48.

5 Ibid.

6 Rollo, p. 145.

7 Per entry of judgment issued by the Court of Appeals, Rollo, pp. 286-287.

8 Rollo, p. 288.

9 Rollo, p. 264.

10 Rollo, pp. 51-52.

11 Mendiola vs. Court of Appeals, 258 SCRA 492; Blue Bar Coconut Phils.,
Inc. vs. National Labor Relations Commission, 208 SCRA 371; Development
Bank of the Philippines vs. Pundogar, 218 SCRA 118, Guevara vs. Benito, 247
SCRA 570.

12 Development Bank of the Philippines vs. Pundogar, 218 SCRA 118;

Racoma vs. Fortich, 39 SCRA 520; Santos vs. IAC, 145 SCRA 238; Republic
Planters Bank vs. IAC, 131 SCRA 631.
13 Yusingco vs. Ong Hing Lian, 42 SCRA 590.

14 Mendiola vs. Court of Appeals, 258 SCRA 492; Development Bank of the
Phils. vs. Pundogar, 218 SCRA 118.

15 Rollo, pp. 53-54.

16 Sec. 1, Rule 39, Rules of Court; Nique vs. Zapatos, 219 SCRA 639;
Ortegas vs. Hidalgo, 198 SCRA 635; Esquivel vs. Alegre, 172 SCRA 315;
Rodriguez vs. Project 6 Market Service Cooperative, Inc., 247 SCRA 528.

17 Lee vs. De Guzman, Jr., 187 SCRA 276.

18 Luna vs. Court of Appeals, 137 SCRA 7; Heirs of Guminpin vs. Court of
Appeals, 120 SCRA 687.
 Republic of the Philippines
SUPREME COURT

SECOND DIVISION

G.R. No. 157605 December 13, 2005

SPS. ENRIQUETA RASDAS, and TOMAS RASDAS, SPS. ESPERANZA A.

VILLA, and ERNESTO VILLA, and LOLITA GALLEN, Petitioners,
vs.
JAIME ESTENOR, Respondent.

DECISION

Tinga, J.:

The main issue in this Petition for Review under Rule 45 is whether the complaint
below is barred by res judicata. We find that res judicata indeed obtains in this case,
albeit of a mode different from that utilized by the trial court and the Court of Appeals
in dismissing the complaint.

The antecedent facts, as culled from the assailed Decision1 of the Court of Appeals
Tenth Division, follow.

The dispute centers on a parcel of land with an area of 703 square meters, situated in
Ilagan, Isabela. On 29 October 1992, respondent as plaintiff filed a Complaint For
Recovery Of Ownership And Possession With Damages against petitioners as
defendants. The complaint was docketed as Civil Case No. 673 and tried by the
Regional Trial Court (RTC) of Ilagan, Isabela, Branch 16. In the same complaint,
respondent asserted that he was the owner of the subject property, which was then in
the possession of petitioners.

On 6 November 1995, the RTC decided Civil Case No. 673 in favor of petitioners.
Respondent appealed the RTC decision before the Court of Appeals, and his appeal
was docketed as CA-G.R. No. 52338.

On 25 September 1997, the Court of Appeals reversed the judgment of the RTC, and
declared respondent as the owner of the subject property. As a result, petitioners were
ordered to vacate the land. The dispositive portion of the appellate courts decision
reads:

WHEREFORE, the Decision of the trial court dated November 6, 1995 is

REVERSED and SET ASIDE, and a new one is rendered declaring the plaintiff as the
owner of the land in question; and ordering the defendants-appellees to vacate the
same and jointly and severally to pay the plaintiff reasonable compensation of
300.00 a month for the use and enjoyment of the land from June 1991 up to the time
the land is vacated; attorneys fees of 10,000.00 and litigation expenses of
5,000.00.

Costs against the defendants-appellees.

SO ORDERED.2

The decision became final and executory after a petition for certiorari assailing its
validity was dismissed by this Court.3 Thereafter, a Writ of Execution and Writ of
Demolition was issued against petitioners, who were ordered to demolish their houses,
structures, and improvements on the property.

Petitioners as plaintiffs then filed a Complaint dated 6 July 1999 against respondent
for just compensation and preliminary injunction with temporary restraining order.
The case was docketed as Civil Case No. 1090, and heard by the same RTC Branch
16 that ruled on the first complaint. Notwithstanding the earlier pronouncement of the
Court of Appeals, petitioners asserted therein that they were the lawful owners of the
subject property4 , although they ultimately conceded the efficacy of the appellate
courts final and executory decision. Still, they alleged that they were entitled to just
compensation relating to the value of the houses they had built on the property, owing
to their purported status as builders in good faith. They claimed that the Court of
Appeals decision did not declare them as builders in bad faith, and thus, they were
entitled to be reimbursed of the value of their houses before these could be
demolished.5 They posited that without such reimbursement, they could not be
ejected from their houses.

Respondent as defendant countered with a Motion to Dismiss, arguing that petitioners

complaint was barred by res judicata, owing to the final and executory judgment of
the Court of Appeals. The Motion to Dismiss was initially denied by the RTC in an
Order dated 4 August 19996 , and pre-trial ensued. However, before trial proper could
begin, respondent filed a motion for preliminary hearing on the affirmative defense of
lack of jurisdiction and res judicata.

This motion was resolved in an Order dated 16 February 2000, wherein the RTC
declared itself "constrained to apply the principle of res judicata," thus reversing its
earlier order. In doing so, the RTC concluded that the earlier decision of the Court of
Appeals had already effectively settled that petitioners were in fact builders in bad
faith. Citing Mendiola v. Court of Appeals,7 the RTC held that the causes of action
between the final judgment and the instant complaint of petitioners were identical, as
it would entail the same evidence that would support and establish the former and
present causes of action. Accordingly, the RTC ordered the dismissal of petitioners
complaint. The counsel for petitioners was likewise issued a warning for having
violated the prohibition on forum-shopping on account of the filing of the complaint
barred by res judicata.

The finding of res judicata was affirmed by the Court of Appeals in its assailed
Decision. It is this finding that is now subject to review by this Court. Petitioners
argue that since respondents Motion to Dismiss on the ground of res judicata had
already been denied, the consequent preliminary hearing on the special defenses
which precluded the dismissal of the complaint was null and void.8 Petitioners also
claim that there was no identity of causes of action in Civil Case No. 673, which
concerned the ownership of the land, and in Civil Case No. 1090, which pertained to
just compensation under Article 448 of the Civil Code. Even assuming that res
judicata obtains, petitioners claim that the said rule may be disregarded if its
application would result in grave injustice.
We observe at the onset that it does appear that the RTCs act of staging preliminary
hearing on the affirmative defense of lack of jurisdiction and res judicata is not in
regular order. Under Section 6, Rule 16 of the 1997 Rules of Civil Procedure, the
allowance for a preliminary hearing, while left in the discretion of the court, is
authorized only if no motion to dismiss has been filed but any of the grounds for a
motion to dismiss had been pleaded as an affirmative defense in the answer. In this
case, respondents had filed a motion to dismiss on the ground of res judicata, but the
same was denied. They thus filed an answer alleging res judicata as a special
affirmative defense, but later presented a Motion for Preliminary Hearing which was
granted, leading to the dismissal of the case.

The general rule must be reiterated that the preliminary hearing contemplated under
Section 6, Rule 16 applies only if no motion to dismiss has been filed. This is
expressly provided under the rule, which relevantly states "[i]f no motion to dismiss
has been filed, any of the grounds for dismissal provided for in [Rule 16] may be
pleaded as an affirmative defense in the answer and, in the discretion of the court, a
preliminary hearing may be had thereon as if a motion to dismiss had been filed." An
exception was carved out in California and Hawaiian Sugar Company v. Pioneer
Insurance,9 wherein the Court noted that while Section 6 disallowed a preliminary
hearing of affirmative defenses once a motion to dismiss has been filed, such hearing
could nonetheless be had if the trial court had not categorically resolved the motion to
dismiss.10 Such circumstance does

not obtain in this case, since the trial court had already categorically denied the
motion to dismiss prior to the filing of the answer and the motion for preliminary
hearing.

We observe in this case that the judge who had earlier denied the motion to dismiss,
Hon. Teodulo E. Mirasol, was different from the judge who later authorized the
preliminary hearing,11 Hon. Isaac R. de Alban, a circumstance that bears some light
on why the RTC eventually changed its mind on the motion to dismiss. Still, this fact
does not sanction the staging of a preliminary hearing on affirmative defenses after
the denial of the motion to dismiss. If a judge disagrees with his/her predecessors
previous ruling denying a motion to dismiss, the proper recourse is not to conduct a
preliminary hearing on affirmative defenses, but to utilize the contested ground as part
of the basis of the decision on the merits

On the part of the movant whose motion to dismiss had already been filed and denied,
the proper remedy is to file a motion for reconsideration of the denial of the motion. If
such motion for reconsideration is denied, the ground for the dismissal of the
complaint may still be litigated at the trial on the merits.

Clearly, the denial of a motion to dismiss does not preclude any future reliance on the
grounds relied thereupon. However, nothing in the rules expressly authorizes a
preliminary hearing of affirmative defenses once a motion to dismiss has been filed
and denied. Thus, the strict application of Section 6, Rule 16 in this case should cause
us to rule that the RTC erred in conducting the preliminary hearing.

However, there is an exceptional justification for us to overlook this procedural error

and nonetheless affirm the dismissal of the complaint. The complaint in question is so
evidently barred by res judicata, it would violate the primordial objective of
procedural law to secure a just, speedy and inexpensive disposition of every action
and proceeding12 should the Court allow this prohibited complaint from festering in
our judicial system. Indeed, the rule sanctioning the liberal construction of procedural
rules is tailor-made for a situation such as this, when a by-the-numbers application of
the rule would lead to absurdity, such as the continued litigation of an obviously
barred complaint.

Why is the subject complaint barred by res judicata? It is uncontroverted that in the
decision by the Court of Appeals in Civil Case No. 673, it was observed:

When the occupancy of the lot by Luis Aggabao which was transmitted to his son
Vivencio Aggabao, and later transmitted to the latters children . . . expired in April
1965, the late Vivencio Aggabao verbally begged and pleaded to plaintiff-appellant
that he be allowed to stay on the premises of the land in question as his children,
herein appellees, were still studying and it would be very hard fro them to transfer
residence at that time. The plaintiff, out of Christian fellowship and compassion,
allowed the appellees to stay temporarily on the land in question.

....

In this case, the possession of the land by the appellees derived from their father Luis
Aggabao from March 31, 1955 to March 31, 1965 was by virtue of a stipulation in the
deed of sale (exh. G), while their possession derived from their father, Vivencio
Aggabao, from March 31, 1965 to 1982 (the latter died in 1982) was only by
tolerance because of the pleading of Vivencio Aggabao to the plaintiff-appellant that
he be allowed to stay because of the children going to school. . . . 13

Evidently, the Court of Appeals had previously ruled in the first case that as early as
1965, the father of the petitioners (and their predecessor-in-interest) had already
known that he did not own the property, and that his stay therein was merely out of
tolerance. Such conclusion in fact bolstered the eventual conclusion that respondents
were the owners of the land and that petitioners should vacate the same.

This fact should be seen in conjunction with the findings of the RTC and the Court of
Appeals in this case that the structures for which petitioners sought to be compensated
were constructed in 1989 and 1990, or long after they had known they were not the
owners of the subject property.

These premises remaining as they are, it is clear that petitioners are not entitled to the
just compensation they seek through the present complaint. Under Article 448 of the
Civil Code, the builder in bad faith on the land of another loses what is built without
right to indemnity.14 Petitioners were in bad faith when they built the structures as
they had known that the subject property did not belong to them. Are these
conclusions though sufficient to justify dismissal on the ground of res judicata?

The doctrine of res judicata has two aspects.15 The first, known as "bar by prior
judgment," or "estoppel by verdict," is the effect of a judgment as a bar to the
prosecution of a second action upon the same claim, demand or cause of action. The
second, known as "conclusiveness of judgment" or otherwise known as the rule of
auter action pendant, ordains that issues actually and directly resolved in a former suit
cannot again be raised in any future case between the same parties involving a
different cause of action.16 It has the effect of preclusion of issues only.17

It appears that both the RTC and the Court of Appeals deemed that the first aspect of
res judicata, "bar by prior judgment," applied in this case.18 We hold that it is the
second kind of res judicata, "conclusiveness of judgment," that barred the instant
complaint. As previously explained by this Court:

[C]onclusiveness of judgment states that a fact or question which was in issue in a

former suit and there was judicially passed upon and determined by a court of
competent jurisdiction, is conclusively settled by the judgment therein as far as the
parties to that action and persons in privity with them are concerned and cannot be
again litigated in any future action between such parties or their privies, in the same
court or any other court of concurrent jurisdiction on either the same or different
cause of action, while the judgment remains unreversed by proper authority. It has
been held that in order that a judgment in one action can be conclusive as to a
particular matter in another action between the same parties or their privies, it is
essential that the issue be identical. If a particular point or question is in issue in the
second action, and the judgment will depend on the determination of that particular
point or question, a former judgment between the same parties or

their privies will be final and conclusive in the second if that same point or question
was in issue and adjudicated in the first suit. Identity of cause of action is not required
but merely identity of issues.19

Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which
judgment is rendered on the merits is conclusively settled by the judgment therein and
cannot again be litigated between the parties and their privies whether or not the
claim, demand, purpose, or subject matter of the two actions is the same.20

Indeed, in cases wherein the doctrine of "conclusiveness of judgment" is applicable,

there is, as in the two cases subject of this petition, identity of parties but not of causes
of action. The judgment is conclusive in the second case, only as to those matters
actually and directly controverted and determined, and not as to matters merely
involved therein.21 Herein, the fact that petitioners were in possession in bad faith as
early as 1965 was already determined in the first case. In order that they could
successfully litigate their second cause of action, petitioners will have to convince that
they were in possession in good faith at the time they built their structures, an
argument that deviates the previous determination made in the final judgment that
resolved the first case.

The reasons for establishing the principle of "conclusiveness of judgment" are

founded on sound public policy, and to grant this petition would have the effect of
unsettling this well-settled doctrine. It is allowable to reason back from a judgment to
the basis on which it stands, upon the obvious principle that where a conclusion is
indisputable, and could have been drawn only from certain premises, the premises are
equally indisputable with the conclusion.22 When a fact has been once determined in
the course of a judicial proceeding, and a final judgment has been rendered in
accordance therewith, it cannot be again litigated between the same parties without
virtually impeaching the correctness of the former decision, which, from motives of
public policy, the law does not permit to be done.23

Contrary to the holdings of both courts below, in the case of Mendiola v. Court of
Appeals24 which they relied upon, this Court observed that the causes of action in the
two cases involved were so glaringly similar that it had to affirm the dismissal of the
second case by virtue of the "bar of former judgment rule."

One final note. Petitioners, in their Reply before this Court, raise the argument that
assuming that they were builders in bad faith, respondents should likewise be
considered as being in bad faith, as the structures were built with their knowledge and
without their opposition. That being the case, Article 453 of the Civil Code would
apply to the effect both parties could thus be deemed as being in good faith.
Accordingly, petitioners would still be entitled to compensation on the structures they
built.

We are disinclined to accord merit to this argument. For one, it was raised for the first
time in the Reply before this Court. It was not even raised in the Complaint filed with
the RTC, hence it could not be said that petitioners cause of action is grounded on
Article 453. Issues not previously ventilated cannot be raised for the first time on
appeal25 , much less when first proposed in the reply to the comment on the petition
for review. Even assuming the issue is properly litigable, the Court can find no basis
to declare that respondents were in bad faith as a matter of fact. Certainly, nothing in
the first decision of the Court of Appeals conclusively establishes that claim, its
factual determination being limited to the finding that petitioners alonewere had been
in possession of the property in bad faith. We are not wont to ascribe points of fact in
the said decision which were not expressly established or affirmed.

WHEREFORE, the petition is DENIED. Costs against petitioners.

SO ORDERED.

DANTE O. TINGA
Associate Justice

WE CONCUR:

REYNATO S. PUNO

Associate Justice

Chairman

MA. ALICIA AUSTRIA-MARTINEZ, ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
 Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Associate Justice
Chairman, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

Footnotes

1 Dated 28 February 2002. Decision penned by Justice A.G. Tolentino,

concurred in by Justices C.M. Reyes and A.B. Reyes.

2 Rollo, p. 19.

3 Id. at 41.

4 Id. at 39.

5 Id. at 41.

6 Id. at 58-59. Order penned by Judge Teodulo E. Mirasol.

7 Cited as 258 SCRA 492.

8 Rollo, p. 15.

9 399 Phil. 795 (2000)

10 Id. at 803-804.
11 The judge who rendered the 4 August 1999 Order was Hon. Teodulo E.
Mirasol, while the judge who penned the orders dated 23 October 1999 and 16
February 2000 was Isaac R. de Alban.

12 See Section 6, Rule 1, 1997 Rules of Civil Procedure.

13 Supra note 2 at 114-115.

14 See Article 448, Civil Code. "The owner of the land on which anything has
been built, sown or planted in good faith, shall have the right to appropriate as
his own the works, sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the one who built or planted
to pay the price of the land, and the one who sowed, the proper rent. However,
the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms
of the lease and in case of disagreement, the court shall fix the terms thereof."

15 See NHA v. Baello, G.R. No. 143230, 30 August 2004, 437 SCRA 86.

16 Chua v. Victorio, G.R. No. 157568, 18 May 2004, 428 SCRA 447. See also
Section 47(c), Rule 39, 1997 Rules of Civil Procedure.

17 F. Regalado, Vol. 1, p. 472.

18 Both the RTC and the Court of Appeals cited the four requisites that
characterize "bar by prior judgment", namely: (a) the finality of the former
judgment; (b) such former judgment being rendered by a court that had
jurisdiction over the subject matter and the parties; (c) the former judgment
must be a judgment on the merits; and (d) there must be as between the first
and second causes of actions identity of parties, subject matter and cause of
action.

19 Calalang v. Register of Deeds of Quezon City, G.R. No. 76265, 11 March

1994, 231 SCRA 88, 100. See also Intestate Estate of the Late Don Mariano
San Pedro y Esteban v. Court of Appeals, 265 SCRA 733 (1996).

20 Dapar v. Biascan, G.R. No. 141880, 27 September 2004, 439 SCRA 179.

21 See Heirs of Pael v. Court of Appeals, G.R. Nos. 133547 & 133843, 11
November 2003, 415 SCRA 451.

22 Kidpalos vs. Baguio Gold Mining Co., 122 Phil. 249 (1965).

23 NHA v. Baello, supra note 15; citing Kidpalos v. Baguio Gold Mining Co,
122 Phil. 249 (1965), and Burlen v. Shannon, 99 Mass. 200, 96 (1868).

24 Supra note 7.
25 See e.g., R. P. Dinglasan Construction v. Atienza, G.R. No. 156104, 29 June
2004, 433 sCRA 263 citing Tinio v. Manzano, 307 SCRA 460 (1999); Manalili
v. Court of Appeals, 280 SCRA 372 (1989); Ruby International Corporation v.
Court of Appeals, 284 SCRA 445 (1998).