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369 Phil. 582


[ G.R. No. 130381, July 14, 1999 ]




In this petition for certiorari, petitioner seeks the reversal of the decision of the Court of Appeals dated April 30, 1997 and its resolution dated August 25, 1997 affirming the dismissal by the trial court of petitioner's complaint for Reconveyance with Damages.

In G.R. No. 77691 entitled Paterno R. Canlas vs. Hon. Court of Appeals and Francisco Herrera which was promulgated on August 8, 1988, it was established that the late Francisco Herrera was the registered owner of eight (8) parcels of land located in Quezon City which he mortgaged in favor of L and R Corporation. The lots were later foreclosed by the financing company and Herrera, being unable to pay his loans and redeem his property, entered into an agreement with his lawyer, herein respondent Atty. Canlas. Under the Deed of Sale and Transfer of Rights of Redemption and/or to Redeem, Atty. Canlas was given the right to redeem the lots of his client. Having exercised the right of redemption over the lots in question, Atty. Canlas was able to register the properties in his name.

In 1983 Herrera filed in the Regional Trial Court of Quezon City an action for reconveyance and reformation of the contract, alleging that respondent Canlas fraudulently deprived him of his properties by falsifying the agreement they signed. During the pendency of the case, Canlas sold the properties to herein respondent spouses Maningding and spouses Perlas who were able to transfer the titles to their respective names. Only the lot covered by TCT No. 330674 remained in Canlas' name. The RTC ruled in favor of respondent Canlas and the dismissal of the complaint became final.

Undaunted, Herrera then filed for Annulment of Judgment with the Court of Appeals in answer to which Canlas filed a motion to dismiss on the ground of res judicata and other procedural issues. The Court of Appeals denied the motion to dismiss so Canlas went to this Court for relief. The Court agreed with Canlas as regards the procedural aspect of the case but rendered a decision against him on the merits. It invalidated the transfer of the properties to respondent Canlas on the ground that the transaction was one where the lawyer took undue advantage of his client. The Court, however, did not order the reconveyance of the subject lots, on the ground that since the properties have been conveyed to third persons who were presumed to be innocent purchasers for value, Canlas was instead held liable to Herrera, by way of actual damages, for such loss of properties. Canlas was thus ordered to pay petitioner P1,000,000.00, the sum which Canlas earned from the properties he sold. Herrera, on the other hand, was held liable to Canlas for the amount of P654,000.00 representing the redemption price for the lots. The difference of P324,000.00 thus served as the actual amount Herrera obtained on execution.

In 1990, Herrera filed another case for reconveyance with damages in the RTC against herein respondent spouses Canlas, spouses Maningding, and spouses Perlas alleging that the respondents acquired the subject properties in bad faith. The trial court dismissed the complaint saying that Herrera, having accepted as final the decision of this Court awarding him actual damages instead of reconveyance and other damages, no longer had a cause of action against Canlas and his successors in interest. The Court of Appeals affirmed the decision of the RTC explaining that the Supreme Court, in writing finis to the controversy, presumed that the third persons who bought the lots from Canlas were innocent purchasers for value and it is for this reason that the High Court awarded Herrera actual damages instead of ordering reconveyance.

Hence, the heirs of Herrera filed the present petition. They now contend that the trial court and the Court of Appeals both erred in dismissing the case on the ground of res judicata because, (1) the parcel of land covered by TCT No. 330674 which is still in respondent Canlas' name is not covered by the aforesaid Supreme Court decision, and (2) there is no identity of parties in the present case and the previous one since the buyers, spouses Maningding and spouses Perlas, were not impleaded in the first case for reconveyance.

Respondent spouses Canlas and spouses Perlas filed their respective Comments but the spouses Maningding have not to date filed their Comment as their address is unknown and they could not be served a copy of the petition. Spouses Canlas averred that the petition for review was filed out of time and that the issues raised by the petitioner were already decided upon in G.R. No. 77691. For their part, spouses Perlas likewise interposed the defense of res judicata, claiming that although they were not actual parties in the previous case, they were nevertheless bound by the decision of the Court as successors in interest of Canlas with respect to the lots under litigation. Respondents Perlas further maintained that since Herrera received the value of the properties sold by Canlas, he cannot now ask for reconveyance for this smacks of bad faith and greed. Moreover, respondents Perlas added, if petitioner had felt aggrieved by the Court's finding that the third persons who bought the lots were innocent purchasers for value, he should have questioned such pronouncement instead of proceeding to execute upon his judgment claim.

As to the first issue regarding the lack of identity in the subject matter of the case, it should be noted that the award of P1,000,000.00 ordered by the Court in G.R. No. 77691 refers only to the value of the properties sold by respondent Canlas to third persons. To reproduce the holding of the Court:
"At any rate, the transfer, so we hold, is not subject to the injunction of Article 1491 of the Civil Code. But like all voidable contracts, it is open to annulment on the ground of mistake, fraud, or undue influence, which is in turn subject to the rights of innocent purchasers for value.

For this reason, we invalidate the transfer in question specifically for undue influence as earlier detailed. While the respondent Herrera has not specifically prayed for invalidation, this is the clear tenor of his petition for annulment in the Appellate Court. It appearing, however, that the properties have been conveyed to third persons whom we presume to be innocent purchasers for value, the petitioner, Atty. Paterno Canlas, must be held liable, by way of actual damages, for such a loss of properties." (underscoring supplied).[1]
From the foregoing, it is clear that the decision in G.R. No. 77691 relates to those lots which can no longer be ordered reconveyed to Herrera, the same having been already transferred to persons whom the the Court considered to be innocent purchasers for value, namely, herein respondent spouses Maningding and spouses Perlas. However, with respect to the parcel of land covered by TCT No. 330674 which is still in the name of the Canlas spouses and which fact was not denied by the latter, res judicata cannot be invoked as to bar the recovery of the said lot as it was not adjudicated upon in the previously decided case.

With respect to the question regarding the identity of parties, worth reiterating is the Court's ruling in Sempio vs. Court of Appeals, et. al., where it was held that complete identity of parties is not required for res judicata to lie. Thus,
"The foregoing argument is, however, premised on the wrong notion that identity of parties is calibrated by their strict sameness or a total lack of differentiation among them.

Well settled is the rule that only substantial, and not absolute, identity of parties is required for lis pendens, or in any case, res judicata, to lie. There is substantial identity of parties when there is community of interest between a party in the first case and a party in the second case albeit the latter was not impleaded in the first case."[2]
In the case at bar, the buyers of the lots were virtually made parties to the decided case (G.R. 77691), because, first, the Court in effect confirmed their rights over the properties when it expressly presumed them to be innocent purchasers for value. Second, the buyers are deemed successors in interest of respondent Canlas and as such, they shared a community of interest with the latter as regards the outcome of the case.

Furthermore, this Court has had occasion to rule that "[i]f the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties, and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself."[3] Thus, the premise relied upon by the Court that the buyers of the properties were innocent purchasers for value is as conclusive as the award of actual damages granted to Herrera.

In another case, this Court likewise held that when material facts which were in issue in a former action and were admitted or judicially determined therein, such facts become res judicata and may not again be litigated in a subsequent action between the same parties or their privies.[4] These principles squarely apply to the case at bar.

Finally, to allow reconveyance of the lots to Herrera would be tantamount to unjust enrichment at the expense of herein respondents. Herrera, by obtaining execution for the judgment in G.R. No. 77691, already satisfied his claim over the lots which are now in the name of the spouses Maningding and spouses Perlas. He can no longer recover the said lots as he had already been paid the value thereof.

IN VIEW OF THE ABOVE PREMISES, the instant petition is PARTIALLY GRANTED. Thus, petitioners may recover the lot covered by TCT No. 330674 which was still in the name of the Canlas spouses at the time of the finality of the judgment in G.R. No.77601 in appropriate proceedings, without prejudice, of course, to the rights of innocent purchasers for value. Petitioners are, however, barred by the principle of res judicata from recovering the lots now owned by the spouses Maningding and spouses Perlas and for which petitioners had been paid actual damages by respondents Canlas. No costs.


Vitug, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

[1] Rollo, p. 170.

[2] G.R. No. 124326, July 22, 1998.

[3] Concepcion vs. Agana, 268 SCRA 307 (1997).

[4] Carlet vs. Court of Appeals, 275 SCRA 97 (1997).

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