G.R. No. 73707 March 12, 1990
VICTORIA C. GO and EPIFANIO GO, petitioners, vs. HONORABLE INTERMEDIATE APPELLATE COURT (FIRST CIVIL CASES DIVISION), SPOUSES EUGENIO DE VERA and ELENA HERMOSA, respondents.

FACTS

Private respondents, the spouses Eugenio de Vera and Elena Hermosa, were homestead patentees of a farmlot. On March 27, 1972, they sold the property to petitioner Victoria Go. Three years later, on August 5, 1975, the De Vera spouses filed an action to repurchase the homestead under Section 119 of the Public Land Act. The Gos moved to dismiss, contending the action was barred by res judicata. They alleged the De Veras had previously filed a similar case (Civil Case No. 1284) in May 1972, which was terminated by a compromise agreement approved by the court on June 3, 1972. In that agreement, the De Veras agreed to drop their complaint in exchange for P1,000.
The De Veras opposed the motion, denying they had ever instituted the prior case. They claimed their signatures on the verification and compromise agreement were forged or obtained through fraud, asserting they only met with Atty. Narciso Mirabueno—who was also Mrs. Go’s counsel—on the day of the sale to sign what they were told were mere formalities. The trial court proceeded to trial and eventually dismissed the 1975 repurchase complaint. The Intermediate Appellate Court reversed, ordering reconveyance. The Gos elevated the case to the Supreme Court.

ISSUE

Whether the action for repurchase filed in 1975 is barred by res judicata due to the prior 1972 compromise judgment.

RULING

The Supreme Court affirmed the Appellate Court’s decision, ruling that res judicata does not apply. The legal logic centers on the void nature of the 1972 compromise agreement, which destroys the very foundation for claiming res judicata. A compromise agreement is a contract requiring the consent of the parties. The Court found the De Veras’ consent was vitiated by fraud. Atty. Mirabueno, acting as counsel for the purchaser Mrs. Go, notarized the deed of sale and then purportedly represented the vendor De Veras in the prior case, creating a clear conflict of interest. The De Veras, with limited education, were made to sign documents under the false pretense they were formalities, when in fact these included the complaint and the compromise agreement. The Court found the lawyer-client relationship between Atty. Mirabueno and the De Veras was a sham, part of a scheme to deprive them of their homestead rights. Since there was no meeting of the minds, the compromise agreement was void. A void judgment cannot serve as a basis for res judicata. Consequently, the 1975 action for repurchase was not barred. The Court also referred Atty. Mirabueno’s conduct to the Integrated Bar of the Philippines for investigation.