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.

FACTS

Respondent Jaime Estenor filed a Complaint for Recovery of Ownership and Possession against petitioners over a parcel of land. The Regional Trial Court (RTC) initially ruled for petitioners, but the Court of Appeals reversed this decision, declared Estenor the owner, and ordered petitioners to vacate. This decision became final and executory. A writ of execution and demolition was subsequently issued.
Petitioners then filed a new complaint (Civil Case No. 1090) against Estenor before the same RTC branch. While conceding the finality of the prior ownership ruling, they claimed entitlement to just compensation for the houses they built on the land, asserting they were builders in good faith under Article 448 of the Civil Code. They argued that without reimbursement, they could not be ejected. Estenor moved to dismiss on the ground of res judicata.

ISSUE

Whether the complaint for just compensation is barred by res judicata.

RULING

Yes, the complaint is barred by res judicata, specifically “conclusiveness of judgment.” The Supreme Court clarified that while the procedural handling by the RTC—conducting a preliminary hearing on the affirmative defense after a motion to dismiss had already been denied—was irregular, this procedural lapse did not preclude the proper application of the substantive doctrine of res judicata.
The Court explained that res judicata has two concepts: “bar by prior judgment” and “conclusiveness of judgment.” The latter applies here. The first case (Civil Case No. 673) conclusively settled the issue of ownership in favor of Estenor. The present action for just compensation as builders in good faith is inherently incompatible with that final ruling. A claim under Article 448 for reimbursement as a builder in good faith presupposes that the builder is not the owner and is building on land owned in good faith by another. However, the final CA decision established that petitioners were not possessors in good faith; they were possessors unlawfully withholding the property from the declared owner. Their claim for compensation is therefore a direct collateral attack on the final judgment which ordered them to vacate without any condition for reimbursement. Allowing this new action would essentially re-litigate the very issues of possession and good faith already resolved with finality. Thus, the cause of action in the second case is barred by the conclusive findings of the first.