G.R. No. 237826 , June 28, 2021
RAFAEL A. MANALO, FREIDA Z. RIVERA-YAP, AND GRACE M. OLIVA, IN THEIR CAPACITY AS THE DULY ELECTED ASSIGNEES OF THE ASSETS OF SPOUSES ROSARIO AND SATURNINO BALADJAY AND THEIR COMPANIES, PETITIONERS, VS. HERARC REALTY CORPORATION, ARLENE M. BEDAYO, ANGELO C. GUERRERO, EVANGELINE L. LOPEZ, REAL P. MADRID, BJORN PAOLO M. BEDAYO, STELLA M. SALORSANO, DARWIN FERNANDEZ, AND ANTONIO O. MENDOZA, IN HIS CAPACITY AS DEPUTY SHERIFF OF THE REGIONAL TRIAL COURT OF MAKATI CITY (BRANCH 56), AND THE REGISTER OF DEEDS OF THE PROVINCE OF BATANGAS, RESPONDENTS.

FACTS

The case involves the Rosegold Resort, consisting of 13 parcels of land in Calatagan, Batangas, formerly registered to RAB Realty Corporation. Two collection cases (Civil Case Nos. 03-002 and 03-122) were filed by respondents Bedayo, et al. against Spouses Saturnino and Rosario Baladjay and their conduit corporations before the RTC of Makati City (Branch 56). The RTC Makati granted the complaints and ordered the spouses to pay a sum of money. Upon finality, a writ of execution was issued, and the Rosegold Resort was set for execution sale. Subsequently, creditors of the Spouses Baladjay filed a petition for involuntary insolvency (Spec. Proc. No. 03-026) before the RTC of Muntinlupa City (Branch 207). The RTC Muntinlupa issued a Stay Order to enjoin the execution sale. Despite this, the RTC Makati proceeded with the execution sale on August 11, 2004, where Herarc Realty Corporation was declared the highest bidder. The RTC Muntinlupa later declared the spouses insolvent. After the redemption period, the RTC Makati issued a Writ of Possession in favor of Herarc Realty. Petitioners, as assignees of the insolvents’ assets, filed a motion in the RTC Muntinlupa to declare the auction sale null, leading the RTC Muntinlupa to issue a Break-Open Order directing Herarc Realty to vacate and turn over possession to petitioners. Herarc Realty and petitioners filed separate petitions before the Court of Appeals. In a Decision dated October 26, 2006, the CA annulled the RTC Muntinlupa’s Break-Open Order, discharged the Rosegold Resort from the insolvency proceedings, and ordered petitioners to surrender possession to Herarc Realty. This CA Decision was affirmed by the Supreme Court in G.R. Nos. 178112 and 178118, and the Resolution became final on February 19, 2009. The RTC Muntinlupa subsequently issued an Order discharging the Rosegold Resort from the insolvency proceedings. Meanwhile, petitioners filed a Complaint for annulment of certificates of title (Civil Case No. 4855) before the RTC of Batangas (Branch IX), seeking to cancel the titles issued to Herarc Realty, alleging the execution sale was void due to the Stay Order, that Herarc Realty was a buyer in bad faith, and that the sale was at a grossly inadequate price. Herarc Realty moved for the dismissal of the Batangas Complaint on the ground of res judicata. The RTC Batangas denied the motion. The RTC Batangas later issued Orders dated November 4, 2013, and May 2, 2014, dismissing the Batangas Complaint on the ground of res judicata, finding the issues raised had already been conclusively settled by the final judgment in G.R. Nos. 178112 and 178118. The Court of Appeals affirmed the RTC Batangas Orders. Hence, this petition.

ISSUE

Whether the Court of Appeals erred in affirming the dismissal of the Batangas Complaint (Civil Case No. 4855) on the ground of res judicata.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition and affirmed the assailed CA Decision and Resolution. The doctrine of res judicata bars the Batangas Complaint. For res judicata to apply, the following must be present: (1) the former judgment must be final; (2) it must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) it must be a judgment on the merits; and (4) there must be identity of parties, subject matter, and causes of action between the first and second actions. All these elements are present. The judgment in G.R. Nos. 178112 and 178118, which affirmed the CA Decision annulling the RTC Muntinlupa’s Break-Open Order and removing the Rosegold Resort from the insolvency proceedings, is final and executory. It was rendered by the Supreme Court with jurisdiction. It constitutes a judgment on the merits as it determined the rights of the parties regarding the validity of the execution sale and Herarc Realty’s ownership. There is identity of parties as petitioners and Herarc Realty were parties in the prior case. There is identity of subject matter, which is the Rosegold Resort. There is identity of causes of action because the Batangas Complaint seeks the annulment of Herarc Realty’s titles based on the alleged nullity of the execution sale—the very issues already resolved in the prior final judgment, which upheld the validity of the sale and Herarc Realty’s rights. The Batangas Complaint is a mere re-litigation of issues already settled with finality. The principle of conclusiveness of judgment also applies, whereby facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties. Therefore, the Batangas Complaint was correctly dismissed.