G.R. No. 100789 . July 20, 1999.
AUGUSTO A. CAMARA AND FELICIANA CAMARA, petitioners, vs. HON. COURT OF APPEALS AND CELINA R. HERNAEZ, respondents.

FACTS

On July 21, 1964, Jose C. Zulueta and his wife executed a “Contract of Absolute Sale” in favor of petitioners Augusto and Feliciana Camara over a Makati lot. After the sale, petitioners discovered two mortgages annotated on the title: one in favor of China Banking Corporation and another in favor of Ramon B. Lacson. On October 31, 1967, petitioners filed an action for specific performance and damages (Civil Case No. 58780) against Zulueta to demand the removal of these encumbrances. During this case, the first mortgage was settled, leaving only the Lacson mortgage. On November 18, 1963, Lacson had assigned his mortgage to private respondent Celina R. Hernaez. The specific performance case was decided in favor of petitioners, ordering Zulueta to cancel the mortgages or, alternatively, to return the purchase price and pay attorney’s fees. Petitioners later opted for the alternative relief and filed a money claim in Zulueta’s intestate estate, collecting P10,000 in partial execution. Meanwhile, on April 1, 1969, Zulueta executed a “Supplemental and Amendment to the Mortgage” in favor of Hernaez, which reproduced and confirmed the assigned Lacson mortgage over his properties, including the Makati lot. On March 14, 1974, Hernaez filed an action for judicial foreclosure (Civil Case No. 19093) against Zulueta’s heirs. On October 25, 1976, a decision was rendered in favor of Hernaez, the properties were sold at public auction, and a Certificate of Sale was issued to Hernaez on July 21, 1980. The sale was judicially confirmed on August 18, 1980. Petitioners filed motions to intervene in the foreclosure case, which were denied, and they did not appeal. On September 22, 1982, petitioners filed an action for quieting of title (Civil Case No. 979) against Hernaez. The Regional Trial Court dismissed the complaint, a decision affirmed by the Court of Appeals.

ISSUE

Whether the petitioners’ action for quieting of title was properly dismissed on the grounds of (a) lack of cause of action and (b) res judicata.

RULING

Yes, the action for quieting of title was properly dismissed. The principle of res judicata, specifically in its concept of “conclusiveness of judgment,” applies. There is identity of parties and subject matter between the prior action for judicial foreclosure and the present action for quieting of title, though not identity of causes of action. The parties are substantially identical because Hernaez, as assignee and mortgagee, is a successor in interest to Zulueta’s rights and obligations. The judgment in the judicial foreclosure case, which had become final and executory and was already satisfied, is conclusive as to the validity of the mortgage on the subject property. Allowing the quieting of title action would effectively be an appeal from that final judgment. The Court affirmed the dismissal of the petition and the decision of the Court of Appeals.