G.R. No. 157717 ; April 13, 2011
Heirs of MAXIMINO DERLA, namely: ZELDA, JUNA, GERALDINE, AIDA, ALMA, all surnamed DERLA; and SABINA Vda. de DERLA, all represented by their Attorney-in-Fact, ZELDA DERLA, Petitioners, vs. Heirs of CATALINA DERLA Vda. de HIPOLITO, MAE D. HIPOLITO, ROGER ZAGALES, FRANCISCO DERLA, SR., JOVITO DERLA, exaltacion pond, and VINA U. CASAWAY, in her capacity as the REGISTER OF DEEDS OF TAGUM, DAVAO DEL NORTE, Respondents.

FACTS

The petitioners are the heirs of Maximino Derla. The respondents, except the Register of Deeds, are the registered owners of a 23.9-hectare fishpond area in Panabo, Davao, by virtue of sales patents. The 20.5 hectares of this area were originally maintained by Derla under a fishpond permit issued in 1950. On May 8, 1950, Derla executed a Special Power of Attorney in favor of Ricardo Hipolito (Catalina’s husband) and a “Contract” acknowledging Hipolito’s ownership of one-half of the fishpond area, stating the permit was in Derla’s name only for convenience. On October 8, 1953, Derla executed a “Transfer of Rights in Fishpond Permit” transferring all his rights to Hipolito for ₱10,000.00, with Hipolito executing an affidavit/promissory note agreeing to buy Derla’s one-half share. In 1954, Hipolito filed a fishpond application over the area, which was approved in 1956. In 1960, Derla filed his own application over an adjoining 7.5-hectare area. Hipolito charged Derla with Qualified Theft for harvesting fish, but Derla was acquitted after relying on the “Transfer of Rights” document to claim co-ownership. In 1967, the Secretary of Agriculture and Natural Resources (SANR) ruled that Derla’s applied-for area was included in Hipolito’s permit. Derla filed a complaint for “Declaration of Nullity of Transfer of Right in a Fishpond Permit” against Hipolito in 1967, which was dismissed by the Court of First Instance (CFI) in 1969 on grounds of prescription and estoppel. The Court of Appeals affirmed this dismissal in 1973, and the Supreme Court denied Derla’s petition in 1974, which became final and executory. Meanwhile, Hipolito filed a sales application for the fishpond area. Initially, the Office of the President gave it due course in 1972, but in 1974, upon a marginal note by President Marcos, it revoked its ruling and ordered the area transferred to the Municipality of Panabo. Hipolito’s heirs and others later acquired sales patents and titles to the area. In 1991, the Office of the President, in a separate administrative case, upheld the validity of the sales patents issued to the respondents. The petitioners filed a complaint for Annulment of Title and/or Reconveyance with Damages in 1997. The Regional Trial Court (RTC) dismissed the complaint, and the Court of Appeals affirmed the dismissal.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s dismissal of the petitioners’ complaint for Annulment of Title and/or Reconveyance.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ Decision. The Court held that the petitioners’ action was barred by res judicata. The core issue of ownership over the fishpond area, based on the validity of the 1953 “Transfer of Rights,” had already been conclusively litigated and settled in the prior case, Civil Case No. 5826, which was dismissed by the CFI and whose dismissal was affirmed with finality by the Supreme Court in 1974. The elements of res judicata were present: (1) the prior judgment was final; (2) the court that rendered it had jurisdiction; (3) it was a judgment on the merits; and (4) there was identity of parties, subject matter, and causes of action between the prior and present cases. The Court found identity of causes of action because both the prior action for annulment of the transfer and the present action for annulment of title/reconveyance ultimately sought to establish Derla’s ownership over the fishpond, with the latter being a collateral attack on the titles derived from the same transfer already adjudicated. The principle of conclusiveness of judgment also applied, as the final ruling on the validity of the transfer barred re-litigation of that issue. The Court further noted that the respondents’ titles, originating from a sales patent, were indefeasible one year after issuance, and could not be collaterally attacked. The petitioners’ claim that the land was inalienable was also rejected, as the Office of the President had already ruled on the area’s alienable status in the administrative case, and such factual finding was binding.