Macahilig vs. Heirs of Magalit

An interlocutory order cannot give rise to res judicata; only a final and unappealable judgment on the merits rendered by a court of competent jurisdiction can effectively bar another action that has identical parties, subject matter, and cause of action as the prior one. Corollarily, a party who has voluntarily and unqualifiedly participated in all stages of a case before a trial court is estopped from later challenging that court's jurisdiction, and jurisdiction over the res may be acquired through the mere institution of legal proceedings, without actual physical custody of the property.

Pepito Magalit and Bernardo Macahilig each sought fishpond permits from the then Philippine Fisheries Commission, now the Bureau of Fisheries and Aquatic Resources, over overlapping portions of an eleven-hectare area in Batan, Aklan. Their competing claims were resolved through the administrative process governing fishpond applications, including the Committee on Fishpond Claims and Conflict, whose findings on possession and occupation determined which applicant held the better right. The dispute's significance lies in the execution of that administrative determination, which the Macahilig spouses resisted even after it had been elevated to the Office of the President and thereafter to the appellate court. The present controversy is a collateral attack on the execution of that long-final disposition.

On February 5, 1965, Pepito Magalit, husband of Dr. Grace M. Magalit, filed Fishpond Application No. 24400 with the then Philippine Fisheries Commission, now the Bureau of Fisheries and Aquatic Resources, covering eleven hectares of land in the Municipality of Batan, Province of Aklan. Bernardo Macahilig, husband of petitioner Melina P. Macahilig, filed his own Fishpond Application No. 29972 on April 13, 1972 for five of those eleven hectares. On February 28, 1972, BFAR rejected Macahilig's application for his failure to submit all the requirements.

Macahilig protested Magalit's application on November 8, 1976, contending that for a period of twenty years he had been in actual possession of the five-hectare area included in Magalit's application. On August 22, 1979, the BFAR director ordered the Committee on Fishpond Claims and Conflict to hear and determine the parties' rights over the disputed area. The Committee concluded that Macahilig was merely Magalit's laborer and caretaker. On June 6, 1980, BFAR Director Felix R. Gonzales dismissed Macahilig's protest for lack of merit, ordered that Fp. A. No. 29972 remain rejected, and gave due course to Magalit's Fp. A. No. 24400 for 10.0 hectares only, subject to the condition that existing improvements be forfeited in favor of the Government, with Magalit retaining the option to purchase them after reappraisal.

Macahilig elevated the disposition to the Office of the President, where Presidential Assistant for Legal Affairs Manuel M. Lazaro, by authority of the President, denied reconsideration and declared the denial final. Macahilig then filed a Petition for Review with Prayer for the Issuance of a Writ of Injunction and/or Restraining Order, originally with the Supreme Court, which referred it to the Intermediate Appellate Court as AC-GR SP No. 03448. On March 26, 1985, the appellate court denied the petition for lack of legal and factual basis and ordered Macahilig or anyone acting in his behalf to vacate the subject property and turn it over to the heirs of Pepito Magalit, noting that the challenged decision had become final and executory on May 2, 1984.

Magalit thereafter instituted Civil Case No. 3517 in the Regional Trial Court of Kalibo, Aklan for the issuance of a Writ of Execution. On October 30, 1985, Judge Jaime D. Discaya issued the writ, which Deputy Provincial Sheriff Eriberto Taytayon Jr. implemented on November 29, 1985. According to Dr. Magalit, the writ was not satisfied because the Macahilig spouses refused to give up the fishpond in question; Bernardo Macahilig did not acknowledge receipt of the writ and allegedly stated that he had nothing to turn over. On August 6, 1990, the Magalit heirs, represented by Dr. Magalit, filed a Motion for Correction of the Implementation of the Decision of the Court of Appeals, praying that the trial court order the Macahilig spouses to turn over possession of Lot 4417, with an area of 2.0805 hectares.

On September 17, 1992, Judge Maria Carillo-Zaldivar issued an Order finding that the two hectares of land sought to be executed through an alias writ lay outside the ten hectares awarded by the Fisheries office, and that the court had no jurisdiction over the claim; the motion for reconsideration dated September 9, 1992 was denied. On October 9, 1992, Dr. Magalit filed a Petition for Contempt Against Melina Macahilig, alleging that on November 29, 1985 Bernardo Macahilig had refused to turn over Lot 4417 to her. The trial court appointed a commissioner to determine whether Lot 4417 was included in the parcels of land awarded to the deceased Magalit. Sheriff Nelson R. dela Cruz, the appointed commissioner, submitted a Report dated May 13, 1993 stating that Dr. Magalit was in actual possession of Lot-A with an area of 99,114 square meters, or 9.9 hectares, a fully developed fishpond; that 2.3 hectares had to be excluded because the portion was needed for forest purposes, leaving only 7.6 hectares; and that BFAR had to include Lot 4417 and Lot 5216 in order that the area of 10.0 hectares in the BFAR Order would be satisfied.

On June 18, 1993, the trial court adopted the Commissioner's Report and ruled in favor of Dr. Magalit, ordering the issuance of a writ of execution for the delivery of Lot 4417, directing petitioner to desist from occupying Lot 5216 — covered by Original Certificate of Title No. P-19359 in the name of Julie Cawaling — until that title had been passed upon by a competent court, and warning that failure to deliver Lot 4417 would result in a declaration of contempt. Petitioner's motion for reconsideration was denied on July 14, 1993 by Judge Niovady M. Marin, who held that she had no valid reason to possess the disputed lot because her husband's application therefor had been rejected. The Court of Appeals found no grave abuse of discretion, observing that the records showed the rejection of Macahilig's fishpond application and petitioner's failure to present any other evidence of a right of possession, while Dr. Magalit's claim rested on the final decision in the Fishpond Case and on the Commissioner's Report, to which petitioner had raised no objection.

• Compliance with the IAC Decision: Petitioner insisted that the Decision in AC-GR SP No. 03448 had already been complied with because the fishponds adjudicated to respondents had been surrendered to them, citing the receipt dated November 27, 1985 signed by Robinson de la Vega, Dr. Magalit's administrator, and the Decision in Civil Case No. 3436 for annulment of mortgage.
• Lack of Jurisdiction: Petitioner contended that the trial court had no jurisdiction over the res of Lot 4417 when it issued its September 17, 1992 Order, and that the Orders dated June 18 and July 14, 1993 were void for lack of jurisdiction.
• Res Judicata: Invoking Section 49 of Rule 39 of the Rules of Court, petitioner argued that the September 17, 1992 Order had become final and executory because Dr. Magalit did not appeal it, and therefore barred any rehearing of questions on the ownership of Lot 4417.
• Scope of the Assailed Orders: Petitioner maintained that the Orders dated June 18 and July 14, 1993 did not include Lot 4417, and that there was no judgment in favor of Dr. Magalit covering that lot.
• Plain Error: Petitioner alleged that her failure to object on time to the Commissioner's Report was a "plain error" that could be corrected by the Court of Appeals.

• Non-Satisfaction of the Writ: Dr. Magalit maintained that the Writ of Execution dated November 29, 1985 was not satisfied because the defendant-spouses opposed the official turnover of the fishpond and refused to surrender possession of the disputed area, Bernardo Macahilig having disclaimed having anything to turn over.
• Superior Right under the Final Fishpond Decision: Respondents' claim rested on the Decision in the Fishpond Case, which upheld Dr. Magalit's right, as surviving spouse of the applicant, to possess the ten hectares awarded to her husband, including Lot 4417.

• Propriety of the Writ of Execution: Whether the issuance of the Writ of Execution in Civil Case No. 3517 was proper.
• Jurisdiction over the Res: Whether the trial court acquired jurisdiction over Lot 4417.
• Res Judicata: Whether the September 17, 1992 Order constituted res adjudicata barring the June 18 and July 14, 1993 Orders of the trial court.

• Propriety of the Writ of Execution: Yes. The Magalit heirs held a right superior to that of petitioner's husband, whose fishpond application had been rejected by the BFAR, the Office of the President, and the Intermediate Appellate Court, and the final judgment in the Fishpond Case remained unsatisfied.
• Jurisdiction over the Res: Yes. The trial court acquired jurisdiction over Lot 4417 upon the institution of the petition for a writ of execution, which gave it potential custody over the property, and petitioner was estopped from challenging that jurisdiction after her unqualified participation in the proceedings.
• Res Judicata: No. The September 17, 1992 Order was interlocutory and could not operate as res adjudicata; only a final judgment on the merits bars a subsequent action.

• Propriety of the Writ of Execution: A judgment is a final ruling by a court of competent jurisdiction regarding the rights of the parties or other matters submitted to it in an action or a proceeding. The Magalit heirs possessed a right superior to that of petitioner's husband, whose application was rejected by BFAR, Presidential Assistant Lazaro, and the Intermediate Appellate Court; as the prevailing party, respondents were entitled to execution of the Decision in the Fishpond Case. Petitioner's claim of compliance rested on the receipt dated November 27, 1985 signed by de la Vega, acknowledging a 99,114-square-meter parcel, and on the November 4, 1988 Decision in the Annulment Case. These did not establish satisfaction of the judgment: Dr. Magalit's Motion for Correction averred that per the officer's return the Writ of Execution dated November 29, 1985 was not satisfied because the defendant-spouses opposed the official turnover, and her Petition for Contempt stated that petitioner and her husband refused to turn over possession of the disputed fishpond despite service of the writ, Bernardo Macahilig having refused to acknowledge receipt on the claim that he had nothing to turn over. The Commissioner's Report dated May 13, 1993 confirmed this failure. The Annulment Case was entirely different from the Fishpond Case: the lots mortgaged by petitioner to the Aklan Development Bank, which formed part of the ten-hectare property awarded to Dr. Magalit's husband, were separate and distinct from Lot 4417, and possession of Lot 4417 was not at issue in the Annulment Case. Contrary to petitioner's claim, the Decision in the Annulment Case did not state that this lot was actually turned over to respondents.
• Jurisdiction over the Res: The September 17, 1992 Order could not be given much weight. The September 9, 1992 Motion for Reconsideration addressed by that Order was neither attached to nor alleged in the Petition, leaving the Court unable to consider the nature of the claim denied or to speculate on why the trial court ruled that it had no jurisdiction, and unable even to determine which Order the unidentified movant sought to be reconsidered. More importantly, petitioner challenged the trial court's jurisdiction too late, having clearly submitted to its authority by her unqualified participation in Civil Case No. 3517; participation in all stages of a case before a trial court effectively estops a party from challenging its jurisdiction, and one cannot belatedly repudiate a decision after voluntarily submitting to jurisdiction merely to secure affirmative relief or after failing to obtain such relief. Jurisdiction over the res is acquired either by the seizure of the property under legal process, whereby it is brought into the actual custody of the law, or as a result of the institution of legal proceedings in which the power of the court is recognized and made effective; in the latter case, the property, though at all times within the potential power of the court, need not be in its actual custody. The trial court acquired jurisdiction over the disputed lot by virtue of the institution of the Petition for a Writ of Execution filed by respondents' predecessors in interest. Without taking actual physical control of the property, it had an impliedly recognized potential jurisdiction or potential custody over the res, which it exercised when it issued the Writ of Execution directing the surrender of Lot 4417 to Dr. Magalit.
• Res Judicata: "Final," in the phrase judgments or final orders in Section 49 of Rule 39, bears two accepted interpretations: an order that one can no longer appeal because the period to do so has expired or because it has been affirmed by the highest possible tribunal involved, and an order that leaves nothing else to be done, as distinguished from one that is interlocutory. The phrase refers to a final determination as opposed to a judgment or order that settles only some incidental, subsidiary, or collateral matter arising in an action, such as an order postponing a trial, denying a motion to dismiss, or allowing intervention. Orders that give rise to res judicata and conclusiveness of judgment apply only to those falling under the second category. For res judicata to apply, four elements must concur: (1) a final judgment or order; (2) jurisdiction of the rendering court over the subject matter and the parties; (3) a judgment on the merits; and (4) identity of parties, subject matter, and cause of action between the two cases. A judgment or order on the merits is one rendered after a determination of which party is upheld, as distinguished from an order rendered upon some preliminary, formal, or merely technical point. The interlocutory nature of the September 17, 1992 Order was evident from the fact that the trial court proceeded to hear and determine the inclusion of Lot 4417 in the Fishpond Case and, without objection from petitioner, commissioned Sheriff de la Cruz to hear and submit a report on the issue; had the Order been a final judgment, petitioner should have objected to any further proceedings. Petitioner's failure to object to the Commissioner's Report could not be dismissed as a mere matter of assigning errors on appeal; it was a failure to assert her right over the lot in dispute, an inaction constituting estoppel, since one who has performed affirmative acts upon which another acted in good faith cannot thereafter repudiate those acts to the prejudice of the latter. The apparent conflict between the trial court's Orders could not be construed in petitioner's favor, her Petition presenting no sufficient basis to reverse the Court of Appeals, the rule of thumb being to uphold the validity of all such orders.

• Res judicata — A claim is barred by prior judgment only where four elements concur: (1) there is a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment is one on the merits; and (4) there is, between the two cases, identity of parties, subject matter, and cause of action. The Court applied the test to the September 17, 1992 Order and found the first and third elements wanting, the Order being interlocutory and having settled only an incidental matter.
• Interlocutory orders and res judicata — Strictly speaking, res judicata does not apply to decisions or orders adjudicating interlocutory motions. An order overruling a motion to dismiss, for example, does not bar a subsequent action because it is interlocutory and subject to amendment until final judgment. The Court held that the September 17, 1992 Order fell within this class, as shown by the trial court's subsequent proceedings on the inclusion of Lot 4417.
• The two senses of "final" under Section 49, Rule 39 — "Final" may mean an order no longer appealable because the period to appeal has expired or because it has been affirmed by the highest possible tribunal, or an order that leaves nothing else to be done, as distinguished from an interlocutory one. Only orders falling under the second category give rise to res judicata and conclusiveness of judgment.
• Judgment or order on the merits — A judgment or order on the merits is one rendered after a determination of which party is upheld, as distinguished from an order rendered upon some preliminary, formal, or merely technical point. A dismissal for failure of the plaintiff to comply with a notice of case status signed by an officer-in-charge does not have the effect of an adjudication on the merits.
• Jurisdiction over the res — Jurisdiction over the res is acquired either (a) by the seizure of the property under legal process, whereby it is brought into the actual custody of the law, or (b) as a result of the institution of legal proceedings in which the power of the court is recognized and made effective. Under the second mode, the property, though at all times within the potential power of the court, need not be in its actual custody. The Court applied the second mode, holding that the filing of the petition for a writ of execution gave the trial court an impliedly recognized potential jurisdiction or potential custody over Lot 4417.
• Estoppel by participation — Participation in all stages of a case before a trial court effectively estops a party from challenging its jurisdiction. A party cannot belatedly reject or repudiate a decision after voluntarily submitting to jurisdiction, whether to secure affirmative relief against an opponent or after failing to obtain such relief. If, by deed or conduct, a party has induced another to act in a particular manner, estoppel bars the former from adopting an inconsistent position, attitude, or course of conduct that causes loss or injury to the latter.

• "An interlocutory order cannot give rise to res judicata. Only a final and unappealable judgment on the merits rendered by a court of competent jurisdiction can effectively bar another action that has identical parties, subject matter and cause of action as the prior one." — The ponencia's opening statement of the controlling rule, framing the entire disposition and supplying the canonical formulation of the Court's holding on the preclusive effect of interlocutory orders.
• "For res judicata to apply, the following elements must concur: (1) there is a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment is one on the merits; and (4) there is, between the two cases, identity of parties, subject matter and cause of action." — The Court's enumeration of the concurring requisites of res judicata, applied to defeat petitioner's claim that the September 17, 1992 Order barred the subsequent orders.
• "Jurisdiction over the res is acquired either (a) by the seizure of the property under legal process, whereby it is brought into actual custody of the law; or (b) as a result of the institution of legal proceedings, in which the power of the court is recognized and made effective." — The Court's statement of the two modes of acquiring jurisdiction over the res, the second of which sustained the trial court's authority over Lot 4417 despite the absence of actual physical custody.
• "Participation in all stages of a case before a trial court effectively estops a party from challenging its jurisdiction." — The ratio for rejecting petitioner's jurisdictional challenge, resting on her unqualified participation in Civil Case No. 3517 and her belated repudiation of the trial court's authority after an unfavorable ruling.

• Gotamco vs. Chan Seng, 46 Phil. 542 (1924) — Cited for the definition of a judgment as a final ruling by a court of competent jurisdiction regarding the rights of the parties or other matters submitted to it in an action or a proceeding.
• Banco Español-Filipino vs. Palanca, 37 Phil. 921 (1918) — Cited as the source of the rule on the two modes of acquiring jurisdiction over the res, which the Court applied to uphold the trial court's authority over Lot 4417.
• PNOC Shipping & Transport Corporation vs. Court of Appeals, 297 SCRA 402 (1998) — Cited, together with Nieva vs. Manila Banking Corporation, Philippine National Bank vs. Intermediate Appellate Court, and Tan Boon Bee and Co., Inc. vs. Jarencio, for the rule that participation in all stages of a case estops a party from challenging the trial court's jurisdiction.
• Mondejar vs. Javellana, 295 SCRA 699 (1998) — Cited, with Province of Bulacan vs. Court of Appeals, for the principle that a party cannot belatedly reject or repudiate a decision after voluntarily submitting to jurisdiction.
• Cruz vs. Court of Appeals, 293 SCRA 239 (1998) — Cited for the doctrine of estoppel by conduct and for the elements of res judicata.
• Linzag vs. Court of Appeals, 291 SCRA 304 (1998) — Cited, with Casil vs. Court of Appeals and De Kneckt vs. Court of Appeals, for the enumeration of the requisites of res judicata.
• Manila Electric Company vs. Artiaga, 50 Phil. 144 (1927) — Cited for the rule that an order overruling a motion to dismiss does not give rise to res adjudicata because it is interlocutory and subject to amendment until final judgment.
• Santos vs. Intermediate Appellate Court, 145 SCRA 238 (1986) — Cited for the definition of a judgment or order on the merits as one rendered after a determination of which party is upheld.
• Koh vs. Intermediate Appellate Court, 144 SCRA 259 (1986) — Cited for the rule that a dismissal for failure of the plaintiff to comply with a notice of case status signed by an officer-in-charge does not have the effect of an adjudication on the merits.
• Pureza vs. Court of Appeals, 290 SCRA 110 (1998) — Cited for the rule that one who has performed affirmative acts upon which another acted in good faith cannot thereafter repudiate those acts to the prejudice of the latter.
• Lu vs. Valeriano, 111 SCRA 87 (1982), and Corliss vs. Manila Railroad Company, 27 SCRA 674 (1969) — Cited for the rule of thumb that in cases involving apparently conflicting orders, the validity of all such orders is upheld.

• Section 49, Rule 39, Rules of Court — Invoked by petitioner as the basis for her claim that the September 17, 1992 Order barred the later orders. The Court construed the phrase "judgments or final orders" in the provision as embracing only orders that leave nothing else to be done, as distinguished from interlocutory orders settling incidental, subsidiary, or collateral matters, and held that only the former give rise to res judicata and conclusiveness of judgment.
• Rule 45, Rules of Court — The procedural vehicle for the Petition for Review filed with the Supreme Court assailing the Court of Appeals Decision dated October 15, 1999 and Resolution dated December 28, 1999 in CA-GR SP No. 31809.

Melo (Chairman), Vitug, and Gonzaga-Reyes, JJ.