G.R. No. L-3606
IGNACIO ACASIO, Plaintiff-Appellant, vs. FELICISIMA ALBANO, Defendant-Appellee.
March 18, 1908 | Mapa, J.

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FACTS:
1. The disputed land originally belonged to Castora Sales, who sold it to Federico Martinez in September 1881.
2. In January 1884, Martinez exchanged the land with Andres Albano for another parcel.
3. On March 8, 1894, Albano sold the land to Ignacio Acasio (plaintiff) for 160 pesos, though Albano retained possession under a lease agreement.
4. In 1905, Felicisima Albano (defendant) obtained a default judgment against Andres Albano, declaring her the owner of the land.
5. Acasio, who was not a party to the 1905 case, sought recovery of the land from Felicisima, but the trial court ruled in her favor, citing the prior judgment.

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ISSUE:
Whether the 1905 default judgment against Andres Albano is binding on Ignacio Acasio, a third-party purchaser who was not involved in the prior litigation.

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RULING:
NO. The Supreme Court reversed the trial court’s decision, holding:
1. Res Judicata Inapplicable: The 1905 judgment only binds the parties involved (Felicisima and Andres Albano) and cannot prejudice Acasio, a non-party (under Section 306, Paragraph 2 of the Code of Civil Procedure).
2. Due Process Violation: Acasio cannot be deprived of ownership without being heard in court. His 1894 purchase predated the 1905 case, and the latter judgment did not nullify his valid title.
3. Remedy: Felicisima must restore the land to Acasio. The Court declined to award costs.

Disposition: Judgment reversed; land ordered returned to Acasio.
Concurring: Arellano, C.J., Torres, Johnson, Carson, Willard, and Tracey, JJ.

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Key Doctrine: A judgment by default against one party does not extinguish the rights of a third-party purchaser who was neither impleaded nor heard in the prior case. Res judicata applies only to parties and their privies.