Alamayri vs. Pabale

The doctrine of conclusiveness of judgment does not apply when there is no identity of parties and issues between a guardianship proceeding and a subsequent action for annulment of contract; a judicial declaration of incompetency in 1986 does not conclusively establish incapacity in 1984, and strangers to the guardianship proceeding are not bound by its findings.

On January 3, 1984, Nelly S. Nave executed a handwritten "Kasunduan Sa Pagbibilihan" (Contract to Sell) with Sesinando M. Fernando over a parcel of land in Calamba, Laguna. Nave subsequently repudiated the agreement and refused the down payment. On February 20, 1984, Nave executed a Deed of Absolute Sale over the same property in favor of the Pabale siblings. Fernando filed a complaint for specific performance, while Nave claimed mental incapacity and fraud. In 1986, Nave's husband filed a petition for guardianship, resulting in a 1988 RTC decision declaring Nave an incompetent since 1980. Nave died in 1992, and her surviving spouse, Atty. Vedasto Gesmundo, transferred his claimed rights to petitioner Lolita R. Alamayri.

• The 1984 Transactions: On January 3, 1984, Nave and Fernando executed a Contract to Sell over Nave's property. Nave repudiated the agreement and refused the down payment. On February 20, 1984, Nave sold the same property to the Pabale siblings via a Deed of Absolute Sale.
• The Specific Performance Suit: Fernando sued Nave for specific performance. The Pabale siblings intervened. Nave moved to dismiss, alleging lack of capacity, fraud, and that she had already sold the property to the Pabale siblings. She later filed an amended answer claiming undue influence, fraud, and mental deficiency.
• The Guardianship Proceeding: In 1986, Atty. Gesmundo, Nave's husband, filed a petition for guardianship (SP. PROC. No. 146-86-C). On June 22, 1988, the RTC declared Nave an incompetent whose condition had become severe since 1980, appointing Atty. Paner as guardian. The decision became final and executory.
• Substitution and Transfer: Nave died on December 9, 1992. Gesmundo adjudicated her estate to himself. In 1997, Gesmundo sought to substitute for Nave in the civil case, but Alamayri also filed a motion for substitution, alleging Gesmundo sold the property to her. Gesmundo manifested that the transfer was a donation, which he had revoked.
• The RTC Ruling: On December 2, 1997, the RTC declared both the Contract to Sell and the Deed of Absolute Sale null and void due to Nave's incapacity, recognized Alamayri as the owner, and ordered the Pabale siblings to reconvey the property.
• The CA Reversal: The Court of Appeals reversed the RTC, upholding the validity of the 1984 Deed of Absolute Sale. It found that the guardianship proceeding did not bind the Pabale siblings and that Nave's incapacity in 1986 did not retroactively invalidate the 1984 sale.

• Conclusiveness of Judgment: Alamayri argued that the final and executory 1988 RTC decision in the guardianship proceeding, which declared Nave incompetent since 1980, bars relitigation of Nave's incapacity in the civil case under the doctrine of res judicata, specifically conclusiveness of judgment.
• Identity of Parties: Alamayri maintained that the Pabale siblings were bound by the guardianship decision because their father, Jose Pabale, participated in the guardianship hearings, as evidenced by the RTC's orders noting his presence.
• Reception of Evidence: Alamayri contended that the Court of Appeals erred in denying her Motion to Schedule Hearing to Mark Exhibits in Evidence, which sought to prove that Jose Pabale was the father of the Pabale siblings.

• No Identity of Parties: Respondents countered that they were not parties to the guardianship proceeding and cannot be bound by its outcome, emphasizing that notice to their father was not notice to them.
• No Identity of Issues: Respondents argued that the issue in the guardianship case was Nave's incompetency in 1986, whereas the issue in the annulment case was her capacity in 1984.
• Presumption of Capacity: Respondents asserted that Nave is presumed to have capacity to enter into the 1984 contract, as she was only declared incompetent in 1988.

• Conclusiveness of Judgment (Identity of Parties): Whether the Pabale siblings are bound by the finding of incompetency in the guardianship proceeding despite not being formal parties, given the alleged participation of their father.
• Conclusiveness of Judgment (Identity of Issues): Whether a finding of incompetency in 1986 (declared in 1988) retroacts to invalidate a contract executed in 1984.
• Procedural Law (Reception of Evidence): Whether the Court of Appeals erred in denying the motion to submit additional evidence regarding Jose Pabale's filiation to the respondents.

• Conclusiveness of Judgment (Identity of Parties): The Pabale siblings are not bound by the guardianship decision. Conclusiveness of judgment requires identity of issues and parties. A guardianship proceeding is a special proceeding without the usual parties; notice to relatives is required, but notice to creditors is not. The Pabale siblings were strangers to the proceeding. The mere presence of Jose Pabale in the hearings did not bind his children, as it was never established that he had authority to represent them, nor was he a party to the Deed of Sale.
• Conclusiveness of Judgment (Identity of Issues): There is no identity of issues. The guardianship case determined Nave's incompetency in 1986, while the civil case required a determination of her capacity in 1984. A finding of incompetency in 1986 does not automatically establish incapacity in 1984. Capacity to act is presumed until contrary is proved, and the burden of proving incapacity rests upon the person alleging it. The medical reports in the guardianship case only proved Nave's condition in 1986 and 1987, not in 1980 or 1984.
• Procedural Law (Reception of Evidence): The Court of Appeals correctly denied the motion. Alamayri sought to submit the evidence after the case had already been submitted for judgment and a decision promulgated, without justifying the delay. Moreover, even if admitted, the evidence would not bind the Pabale siblings, as notice to their father is not notice to them absent proof of representation.

• Res Judicata (Conclusiveness of Judgment) — Bars the relitigation in a second case of a fact or question already settled in a previous case. It requires identity of issues and parties, but not identity of causes of action. Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies.
• Presumption of Capacity to Act — Capacity to act attaches to a person who has not previously been declared incapable, and such capacity is presumed to continue so long as the contrary is not proved. The burden of proving incapacity to enter into contractual relations rests upon the person who alleges it.

• "Conclusiveness of judgment bars the re-litigation in a second case of a fact or question already settled in a previous case. The second case, however, may still proceed provided that it will no longer touch on the same fact or question adjudged in the first case. Conclusiveness of judgment requires only the identity of issues and parties, but not of causes of action."
• "Capacity to act is supposed to attach to a person who has not previously been declared incapable, and such capacity is presumed to continue so long as the contrary be not proved; that is, that at the moment of his acting he was incapable, crazy, insane, or out of his mind."
• "A finding that she was incompetent in 1986 does not automatically mean that she was so in 1984."

• Oropeza Marketing Corporation v. Allied Banking Corporation (441 Phil. 551, 2002) — Followed. Differentiated between "bar by prior judgment" (requires identity of parties, subject matter, and causes of action) and "conclusiveness of judgment" (requires identity of parties and issues, but not causes of action).
• Carillo v. Jaojoco (46 Phil. 957, 1924) — Followed. Held that a seller's declaration of mental incapacity nine days after executing a contract of sale does not prove incapacity at the time of execution. Applied to emphasize the significance of the two-year gap between the 1984 sale and the 1986 incompetency finding.
• Calalang v. Register of Deeds (G.R. No. 76265, March 11, 1994) — Followed. Discussed the doctrine of conclusiveness of judgment, requiring identity of issues for a former judgment to be conclusive as to a particular matter in a future action.
• Catalan v. Basa (G.R. No. 159567, July 31, 2007) — Followed. Established that the burden of proving incapacity to enter into contractual relations rests upon the person who alleges it.

• Rule 39, Section 47(b) and (c), Rules of Court — Governs the effect of judgments or final orders. Paragraph (b) establishes "bar by former judgment," while paragraph (c) lays down "conclusiveness of judgment." Applied to determine whether the guardianship decision barred relitigation of Nave's incapacity.
• Rule 92, Section 1, Rules of Court — Defines an "incompetent" as a person who, by reason of age, disease, weak mind, and other similar causes, cannot without outside aid take care of themselves and manage their property, becoming an easy prey for deceit and exploitation. Cited to clarify the nature of the guardianship proceeding involving Nave.
• Rule 93, Sections 1-5, 8, Rules of Court — Governs the appointment of guardians, including who may petition, the contents of the petition, notice requirements, and opposition. Applied to demonstrate that a guardianship proceeding is a special proceeding without usual parties, and that notice to creditors is not required, explaining why the Pabale siblings were not bound.

Reynato S. Puno (Chief Justice), Consuelo Ynares-Santiago, Antonio Eduardo B. Nachura, Ruben T. Reyes