Aromin vs. Floresca

A purchaser of unregistered land who is a successor-in-interest of a co-owner is bound by a prior partition judgment under the principle of conclusiveness of judgment, and cannot claim good faith where prior knowledge of the co-ownership existed.

Cad. Lot No. 4894, an unregistered property in Bauang, La Union, was originally co-owned by siblings Alberto, Josefa, and Paulo Floresca, having been acquired from their parents. Upon the deaths of Alberto and Josefa, Alberto's children—Victor, Juanito, and Lilia—succeeded his share, while Paulo eventually secured tax declarations solely in his own name. On different dates from 1990 to 1992, Paulo sold several portions of the lot to spouses Wilfredo and Swarnie Aromin through seven separate deeds of sale, none of which were registered. Prior to the last four sales, Victor, Juanito, and Lilia filed a partition case against Paulo, resulting in a compromise judgment that divided the property equally between the siblings and Paulo.

• The Co-ownership and Partition: Cad. Lot No. 4894 (105,991 sqm) was inherited by siblings Alberto, Josefa, and Paulo Floresca. After Alberto died in 1973, his share passed to his children, Victor, Juanito, and Lilia. Josefa died in 1988. Paulo fraudulently secured tax declarations solely in his name. In August 1991, the siblings filed a partition case (Civil Case No. 832-BG) and registered a notice of lis pendens. On February 10, 1993, the RTC approved a compromise agreement partitioning the riceland, sandy land, and swampland equally between the siblings and Paulo.
• The Sales to the Aromins: Between November 1990 and February 1992, Paulo executed seven deeds of sale over portions of the lot totaling 98,257 square meters in favor of the spouses Aromin. None of these deeds were registered, nor did the Aromins secure tax declarations in their name. Four of the seven deeds were executed in February 1992, after the filing of the partition case and the registration of the notice of lis pendens. On February 10, 1994, Paulo executed another deed of sale covering the entire lot as part of a compromise in the specific performance case.
• The Consolidated Cases: The spouses Aromin filed actions for specific performance and quieting of title, claiming they were buyers in good faith who relied on Paulo's representations of sole ownership and the tax declarations in his name. The siblings filed an action for annulment of sale, asserting their co-ownership and the finality of the partition judgment. The RTC ruled for the Aromins, disbelieving the siblings' claim of co-ownership and finding the Aromins to be buyers in good faith. The CA reversed, declaring the partition judgment binding and the Aromins buyers in bad faith.

• Res Judicata Inapplicable: Petitioners argued that the judgment based on the compromise agreement in Civil Case No. 832-BG does not bind them because they were not parties thereto, and the element of identity of parties is absent.
• Indispensable Parties: Petitioners maintained that as assignees of Paulo under Article 497 of the Civil Code, they were deemed co-owners and indispensable parties who should have been impleaded in the partition case; their non-inclusion allegedly prevents the judgment from attaining finality.
• Sole Ownership of Paulo: Petitioners contended that the CA erred in finding co-ownership, asserting that the RTC correctly found Paulo as the sole owner based on his testimony and the tenant deliveries of produce to him.
• Good Faith Purchase: Petitioners insisted they were buyers in good faith who relied on Paulo's representations and the tax declarations, and that the registered notice of lis pendens did not prejudice them because they acquired rights before its registration, citing Section 113 of PD 1529.
• Reimbursement: Petitioners averred that if compelled to return half the property, equity demands that Paulo's heirs reimburse them for the corresponding purchase price.

• Finality of Compromise Judgment: Respondents countered that the judgment based on the compromise agreement is immediately executory and has the effect of res judicata, and cannot be disturbed except by a motion to set aside on grounds of nullity.
• Bad Faith of Purchasers: Respondents argued that the Aromins were not buyers in good faith because they had knowledge of the prior co-ownership and the pending partition case, yet failed to make proper inquiries with the Register of Deeds or Assessor's Office.
• Limited Effect of Sale: Respondents maintained that even assuming the sale was valid, Paulo could only dispose of his pro indiviso share, and the sale could not affect the shares of the co-owners who did not consent.

• Conclusiveness of Judgment: Whether the petitioners, as purchasers of the property from a co-owner after the filing of a partition case, are bound by the judgment based on compromise agreement in the partition case despite not being parties thereto.
• Good Faith of Purchaser: Whether the petitioners can be considered buyers in good faith of the unregistered property.
• Effect of Sale by Co-owner: Whether the sale of the entire co-owned property by a co-owner without the consent of the others is valid.

• Conclusiveness of Judgment: The petitioners are bound by the judgment in the partition case under the principle of conclusiveness of judgment. Absolute identity of parties is not required for res judicata; substantial identity or privity of interest suffices. Privity exists when a person acquires an interest in the subject matter of a suit after it was filed. Because the petitioners acquired most of the property after the partition case was instituted, they are Paulo's successors-in-interest and share a community of interest with him. The issue of co-ownership was necessarily and actually litigated and settled in the partition case, conclusively binding Paulo's privies.
• Good Faith of Purchaser: Good faith was not established. The issue of good faith is irrelevant for unregistered land, as one who purchases unregistered land does so at his peril. Regardless, the petitioners acted in bad faith. Petitioner Wilfredo admitted knowing the property was previously co-owned but relied solely on Paulo's word that he was the sole owner, without verifying with the Register of Deeds or Assessor's Office. Such reliance despite knowledge of facts that should put a prudent person on inquiry constitutes gross negligence amounting to bad faith. Furthermore, the registered notice of lis pendens constituted constructive notice to all.
• Effect of Sale by Co-owner: The sale is valid only to the extent of Paulo's pro indiviso share. Under Article 493 of the Civil Code, a co-owner may alienate his undivided interest, but the alienation cannot affect the shares of the other co-owners who did not consent. Applying the principle quando res non valet ut ago, valeat quantum valere potest, the disposition affects only the portion allotted to Paulo in the partition—one-half of the riceland, sandy land, and swampland.

• Conclusiveness of Judgment — A fact or question judicially passed upon and determined by a court of competent jurisdiction in a former suit is conclusively settled as far as the parties to that action and persons in privity with them are concerned, and cannot be again litigated in any future action between such parties or their privies, even on a different cause of action, provided the issue is identical. Identity of causes of action is not required, merely identity of issues.
• Privity of Interest — Recognized when a person acquires an interest in the subject matter of a suit after it was filed or decided. Successors-in-interest, whether by assignment, inheritance, or law, are bound by res judicata alongside their predecessors to preserve the finality of judgments.
• Purchasers of Unregistered Land — One who purchases unregistered land does so at his peril; the doctrine of innocent purchaser for value is irrelevant where the subject of the sale is unregistered land.
• Alienation by a Co-owner (Article 493, Civil Code) — Each co-owner has full ownership of his part and may alienate it, but the effect of the alienation with respect to the co-owners is limited to the portion allotted to him upon termination of the co-ownership. A co-owner cannot alienate the shares of other co-owners (nemo dat qui non habet).

• "One who purchases an unregistered land does so at his peril."
• "The petitioners' reliance on Paulo's word alone that he was the sole owner of the subject property when they bought the same, despite their knowledge of facts that should have put them on guard, constitutes gross negligence amounting to bad faith."
• "Following the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so – quando res non valet ut ago, valeat quantum valere potest - the disposition affects only Paulo's share pro indiviso..."

• Cayana v. Court of Appeals, G.R. No. 125607, March 18, 2004 — Followed. Cited for the definition and application of the principle of conclusiveness of judgment, emphasizing that identity of issues, not causes of action, is required.
• Salud v. Court of Appeals, G.R. No. 100156, June 27, 1994 — Followed. Cited for the recognized categories of privity of interest, particularly the rule that successors-in-interest who acquire their interest after a suit is filed are bound by res judicata.
• Acabal v. Acabal, G.R. No. 148376, March 31, 2005 — Followed. Cited for the doctrine that a purchaser of unregistered land does so at his peril and the application of nemo dat qui non habet.
• Tomas Claudio Memorial College, Inc. v. Court of Appeals, 374 Phil. 859 (1999) — Followed. Cited for the rule that a sale by a co-owner of the entire property affects only his share.

• Section 47(b) and (c), Rule 39, Rules of Court — Defines the effect of judgments or final orders, specifically the concepts of bar by prior judgment and conclusiveness of judgment. Applied to bind the petitioners, as successors-in-interest, to the issue of co-ownership settled in the prior partition case.
• Article 493, Civil Code of the Philippines — Governs the right of a co-owner to alienate his share and limits the effect of such alienation to the portion that may be allotted to him in the division. Applied to restrict the sale to Paulo to his one-half share of the property.
• Article 2038, Civil Code of the Philippines — Provides grounds for nullity of a compromise agreement (mistake, fraud, violence, intimidation, undue influence). Cited to emphasize that a judicial compromise has the effect of res judicata and cannot be set aside except on these grounds.
• Section 14, Rule 13, Rules of Court — Governs notice of lis pendens. Applied to establish that the filing of the notice with the register of deeds constitutes constructive notice to all, and no requirement exists to furnish copies to persons other than the register of deeds.

Panganiban, C.J., Ynares-Santiago, Austria-Martinez, Chico-Nazario