Republic of the Philippines (Civil Aeronautics Administration) vs. Ramon Yu, et al.

A final and executory judgment that has settled the validity of a sale bars a subsequent reversion action based on that same sale under the doctrine of conclusiveness of judgment, even if the later action asserts a different cause of action; the party whose sale was nullified lacks legal personality to sue.

Lot No. 939 in Lahug, Cebu City was the subject of expropriation proceedings involving Francisca Valdehueza, et al. and the Republic. In Valdehueza vs. Republic (1966), the Supreme Court affirmed the judgment of expropriation and ruled that the former owners were not entitled to recover possession but only to demand fair market value. In Yu vs. Republic (1986), the Court of Appeals annulled the subsequent sale of the lot by Francisca Valdehueza, et al. to Ramon Yu, Teofista Villamala, Lourdes Yu, and Yu Se Peng, and declared the land owned by the Republic; no appeal was taken, so the judgment became final and executory. These prior final judgments form the backdrop to respondents’ later complaint for reversion.

Lot No. 939 in Lahug, Cebu City was expropriated by the Republic. In Valdehueza vs. Republic (1966), the Supreme Court affirmed the judgment of expropriation and ruled that Francisca Valdehueza, et al. were not entitled to recover possession of the lot but only to demand its fair market value. The dispositive portion of that decision affirmed the judgment appealed from without costs.

In Yu vs. Republic (1986), the Court of Appeals annulled the subsequent sale of the lot by Francisca Valdehueza, et al. to respondents Ramon Yu, Teofista Villamala, Lourdes Yu, and Yu Se Peng, and held that the latter were not purchasers in good faith. The Court of Appeals dismissed the complaint and declared that the land in question was owned by the Republic of the Philippines. The parties did not appeal, and the judgment became final and executory.

On October 1, 1992, respondents filed a complaint for reversion of the expropriated property. Petitioner Republic denied respondents’ right to reacquire title and ownership over the lot.

• Res Judicata: Petitioner asserted that the trial court properly dismissed the complaint on the ground of res judicata.
• No Right to Assert Ownership: Petitioner maintained that respondents were bereft of any right to assert ownership as the sale in their favor was invalidated in Yu vs. Republic.
• Absolute and Unconditional Expropriation: Petitioner asserted that the expropriation of Lot No. 939 was absolute and unconditional, so no reversion could be legally claimed despite the subsequent sale or reversion of the other nearby lots.
• Lack of Cause of Action and Forum-Shopping: Petitioner denied respondents’ right to reacquire title and ownership on the grounds of res judicata, lack of cause of action, and forum-shopping.

• New Cause of Action: Respondents countered that the action is not barred by res judicata because the abandonment by the government of the public purpose constitutes a new cause of action.
• Need for Full Trial: Respondents contended that the determination of their right to reacquire or repossess the lot necessitates a full blown trial.

• Res Judicata: Whether the action is barred by res judicata.
• Reversion: Whether respondents are entitled to reversion of the expropriated property.
• New Cause of Action: Whether the abandonment of Lahug Airport and the return of other expropriated properties gave respondents a new cause of action.
• Right to Assert Ownership: Whether, assuming a new cause of action, respondents have a right to assert ownership over the expropriated property.

• Res Judicata: Yes. The action was barred; conclusiveness of judgment applied because the validity of the sale had been settled by final and executory judgment, and the same issue could not be relitigated.
• Reversion: No. Respondents were not entitled to reversion; the sale on which they based their right was nullified, leaving them no right over the property.
• New Cause of Action: Mooted. The issue of abandonment and return of other properties was mooted and made academic by the finding of res judicata.
• Right to Assert Ownership: No. Respondents lacked legal personality to sue, as they were not real parties-in-interest; lack of legal personality is a ground for dismissal related to failure to state a cause of action.

• Res Judicata: The Court applied the four elements of res judicata: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be identity of parties, subject matter, and causes of action. It found the first three present and only identity of causes of action at issue. The Court distinguished bar by prior judgment under Rule 39, Section 47(b), which requires identity of parties, subject matter, and causes of action, from conclusiveness of judgment under Rule 39, Section 47(c), which requires only identity of parties and subject matter. Under conclusiveness of judgment, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even if the latter suit involves a different claim or cause of action; identity of issues, not causes of action, is required. The Court found conclusiveness of judgment present because respondents again sought to enforce a right based on a sale that had been nullified by a final and executory judgment. The validity of the sale had long been settled and could not be raised again even in a different proceeding involving the same parties. Thus, the trial court properly dismissed the complaint on res judicata.
• Reversion: Because the sale on which respondents based their right to reversion had been nullified, they had no right over the property and no legal personality to bring the action for reversion. Lack of legal personality to sue means they were not real parties-in-interest, a ground for dismissal related to the ground that the complaint evidently states no cause of action. Accordingly, they were not entitled to reversion.
• New Cause of Action: The Court held that the second issue—whether abandonment of Lahug Airport and return of other expropriated properties gave respondents a new cause of action—was mooted and made academic by the determination of res judicata.
• Right to Assert Ownership: Assuming a new cause of action, respondents still had no right to assert ownership because the sale in their favor was invalidated in Yu vs. Republic and the land was owned by the Republic. Their claim was based on a nullified sale, leaving them without legal personality to sue.

• Res Judicata — A final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. The elements are: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be identity of parties, subject matter, and causes of action. In this case, the first three elements were present, and the Court resolved the fourth through the doctrine of conclusiveness of judgment.
• Conclusiveness of Judgment — Under Rule 39, Section 47(c) of the Rules of Civil Procedure, where there is identity of parties and subject matter in the first and second cases but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. Facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even if the latter suit may involve a different claim or cause of action; identity of issues, not causes of action, is required. The Court applied this doctrine because respondents again sought to enforce a right based on a sale that had been nullified by a final and executory judgment.
• Bar by Prior Judgment — Under Rule 39, Section 47(b) of the Rules of Civil Procedure, there is bar by prior judgment when, as between the first case where the judgment was rendered and the second case sought to be barred, there is identity of parties, subject matter, and causes of action. The Court distinguished this from conclusiveness of judgment because the present case involved identity of parties and subject matter but no identity of causes of action.
• Lack of Legal Personality / Real Party-in-Interest — A party whose sale over the property has been nullified by final judgment has no right over the property and is not a real party-in-interest. Lack of legal personality to sue is a ground for dismissal related to the ground that the complaint evidently states no cause of action. The Court applied this to respondents because the sale on which they based their reversion claim had long been nullified.

• "The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action." — States the four elements of res judicata, which the Court used to frame its analysis before finding that only identity of causes of action was at issue.
• "There is "bar by prior judgment" when, as between the first case where the judgment was rendered, and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. But where there is identity of parties and subject matter in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is "conclusiveness of judgment."" — Defines and distinguishes the two concepts of res judicata, which supplied the controlling framework for dismissing the reversion complaint.
• "Under the doctrine of conclusiveness of judgment, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even if the latter suit may involve a different claim or cause of action." — States the ratio decidendi: the prior final judgment on the validity of the sale barred relitigation even though respondents asserted a different cause of action.
• "Considering that the sale on which respondents based their right to reversion has long been nullified, they have not an iota of right over the property and thus, have no legal personality to bring forth the action for reversion of expropriated property." — Applies the ruling to the facts, holding that respondents lacked legal personality to sue because their claimed right rested on a nullified sale.

• Valdehueza vs. Republic, No. L-21032, 19 May 1966, 17 SCRA 107 — Prior controlling judgment affirming the expropriation of Lot No. 939; the Court treated it as part of the final adjudication that foreclosed the former owners’ right to possession.
• Yu vs. Republic, CA-G.R. CV No. 01223, 30 October 1986 — Court of Appeals decision annulling the sale to respondents and declaring the land owned by the Republic; its finality supplied the basis for conclusiveness of judgment.
• Manila Electric Company vs. Philippine Consumers Foundation, Inc., G.R. No. 101783, 23 January 2002, 374 SCRA 262 — Cited for the definition of res judicata as a matter adjudged and conclusive of the parties’ rights.
• Oropeza Marketing Corporation vs. Allied Banking Corporation, G.R. No. 129788, 3 December 2002, 393 SCRA 278 — Cited for the rule that a final judgment on the merits by a competent court is conclusive on the parties and their privies.
• Republic vs. Court of Appeals, G.R. No. 103412, 3 February 2000, 324 SCRA 560 — Cited for the four elements of res judicata.
• Sta. Lucia Realty and Development, Inc. vs. Cabrigas, G.R. No. 134895, 19 June 2001, 358 SCRA 715 — Cited for the distinction between bar by prior judgment and conclusiveness of judgment.
• Padillo vs. Court of Appeals, G.R. No. 119707, 29 November 2001, 371 SCRA 27 — Cited for the rule that conclusiveness of judgment bars relitigation of facts and issues actually and directly resolved.
• Tan vs. Court of Appeals, G.R. No. 142401, 20 August 2001, 363 SCRA 444 — Cited for the principle that identity of issues, not causes of action, is required under conclusiveness of judgment.
• Bank of America NT&SA vs. Court of Appeals, G.R. No. 120135, 31 March 2003, 400 SCRA 156 — Cited for lack of legal personality as a ground for dismissal related to failure to state a cause of action.

• Rule 39, Section 47(b), Rules of Civil Procedure — Defines “bar by prior judgment.” The Court cited it to distinguish the concept requiring identity of parties, subject matter, and causes of action, which was not the basis of dismissal because identity of causes of action was absent.
• Rule 39, Section 47(c), Rules of Civil Procedure — Defines “conclusiveness of judgment.” The Court applied it because, although the causes of action differed, the prior final judgment had actually and directly resolved the validity of the sale on which respondents’ reversion claim rested.

Antonio T. Carpio, Conchita Carpio Morales, and Dante O. Tinga.