Samson vs. Spouses Gabor

A complaint denominated as one for "Recovery of Property or its Value" is a real action when the alternative claim for value is dependent on a prior determination of ownership, and must be filed in the court where the property is situated; moreover, a prior final judgment resolving co-ownership in an action for partition bars a subsequent action for recovery of property under the doctrine of res judicata where the same evidence would sustain both actions.

Respondent spouses Jose and Guillermina Gabor are the registered owners of a 61,085-square-meter parcel of land in Tanay, Rizal, covered by TCT No. M-25565. Petitioner Emiliano S. Samson rendered legal services for the spouses and received a 20,631-square-meter undivided portion of the property as attorney's fees by way of a Deed of Assignment executed on November 14, 1985. The parties' dispute over this portion has spawned multiple rounds of litigation spanning decades, beginning with an action for legal redemption filed by the spouses after petitioner transferred the same portion to a third party, and continuing through a partition case that reached finality before the Supreme Court.

Respondent spouses Jose and Guillermina Gabor are the registered owners of a 61,085-square-meter parcel of land in Barrio Mapunso, Tanay, Rizal, covered by TCT No. M-25565. On November 14, 1985, the spouses executed a Deed of Assignment transferring a 20,631-square-meter undivided portion of the property to petitioner Emiliano S. Samson as attorney's fees for legal services rendered. On October 22, 1987, petitioner executed a Deed of Assignment transferring the same undivided portion to Ma. Remedios P. Ramos. Upon learning of the sale, the spouses filed an action for legal redemption with the RTC of Tanay, Rizal. Immediately thereafter, petitioner and Ramos executed an Agreement of Rescission revoking the transfer.

The RTC dismissed the legal redemption suit on July 25, 1989, but the CA reversed in CA-G.R. CV No. 25530 and upheld the spouses' right of legal redemption. No further appeals were pursued, and the decision became final and executory. During the pendency of that appeal, petitioner filed a separate action for Partition of Real Property and Damages against the spouses before the RTC of Morong, Rizal. That court dismissed the partition complaint on the ground that the finality of CA-G.R. CV No. 25530 effectively barred the action, since petitioner, having assigned his undivided share to Ramos, had ceased to be a co-owner, and the spouses, by exercising their right of legal redemption, owned the entire area covered by TCT No. M-25565. The CA affirmed in CA-G.R. CV No. 38373, holding that the Agreement of Rescission executed pendente lite did not divest the spouses of their vested right of legal redemption. Petitioner's petition for review on certiorari before the Supreme Court was dismissed in a minute resolution dated June 8, 1994 for failure to submit an affidavit of service, and his motion for reconsideration was denied with finality on July 25, 1994.

On April 4, 2006, petitioner filed a Complaint for Recovery of Property or its Value before the RTC of Pasig City against the spouses, Tanay Rural Bank, Inc., and the Register of Deeds of Morong, Rizal. He claimed that he had been paying his one-third share of realty taxes on the subject portion for the years 2002 to 2004, but in 2005 his payment was rejected by the Municipal Treasurer of Tanay, Rizal, at which time he discovered that the spouses had mortgaged the entire property to respondent Bank in November 2002. The RTC of Pasig City dismissed the complaint on August 18, 2006 on the grounds of improper venue, res judicata, and failure to state a cause of action. Petitioner appealed to the CA, which dismissed the appeal on May 9, 2008 for raising only questions of law. Petitioner then filed the instant petition for review on certiorari before the Supreme Court.

• CA Jurisdiction over Appeal: Petitioner argued that the Court of Appeals had jurisdiction over his appeal from the RTC of Pasig City's order of dismissal.
• Proper Venue: Petitioner maintained that since his complaint was both real and personal, as evidenced by its caption "For Recovery of Property or its Value," it was properly filed with the RTC of Pasig City, where he or any respondent resides.
• Cause of Action: Petitioner insisted that his complaint stated a cause of action, invoking Articles 19, 20, and 21 of the Civil Code.
• No Res Judicata: Petitioner contended that his current action was not barred by res judicata because the prior partition case was dismissed on a mere technicality (failure to submit an affidavit of service) rather than on the merits, and because the causes of action differed — partition in the prior case versus recovery of property in the instant case.

• CA Jurisdiction: Whether the Court of Appeals correctly dismissed petitioner's appeal for raising only questions of law.
• Venue: Whether the complaint for Recovery of Property or its Value was properly filed in the RTC of Pasig City or should have been filed in the RTC of Morong, Rizal where the property is situated.
• Cause of Action: Whether the complaint states a cause of action against respondent Tanay Rural Bank, Inc.
• Res Judicata: Whether the complaint is barred by res judicata on account of the prior final judgment in the partition case.

• CA Jurisdiction: Yes. The CA correctly dismissed the appeal pursuant to Section 2, Rule 50 of the 1997 Rules of Civil Procedure, as the dismissal of the complaint on grounds of improper venue, lack of cause of action, and res judicata involved only questions of law.
• Venue: No. The complaint was improperly filed in the RTC of Pasig City. The action was real in nature because the alternative claim for the value of the property was dependent on a determination of ownership, and real actions must be commenced where the property is situated.
• Cause of Action: No. The complaint failed to state a cause of action against respondent Bank, as it contained no specific allegation of any overt act or omission by the Bank in violation of petitioner's rights.
• Res Judicata: Yes. The instant suit is barred by res judicata under the first concept (bar by prior judgment), all four requisites being present — a final judgment on the merits by a court of competent jurisdiction, with identity of parties, subject matter, and causes of action between the prior partition case and the instant recovery case.

• CA Jurisdiction: The distinction between questions of law and questions of fact is well settled: a question of law arises when the doubt concerns what the law provides on a given set of circumstances, without requiring evaluation of the probative value of evidence; a question of fact exists when the inquiry requires re-evaluation of the credibility of witnesses or the existence and relevance of surrounding circumstances. Petitioner's appeal from the RTC's order of dismissal challenged the application of Rule 16 of the Revised Rules of Civil Procedure on grounds of improper venue, lack of cause of action, and res judicata. These grounds do not require a review of the facts but merely the application of law to the allegations in the complaint, the motions to dismiss, and the order of dismissal. Since the appeal raised only questions of law, the CA committed no error in dismissing it under Section 2, Rule 50.

• Venue: The nature of an action is determined by the allegations in the complaint itself, not by its title or heading, and the venue is determined by the primary objective of the filing. Under Sections 1 and 2 of Rule 4 of the 1997 Rules of Civil Procedure, real actions — those affecting title to or possession of real property or an interest therein — must be commenced and tried where the property is situated. Although petitioner's complaint was captioned "For Recovery of Property or its Value," all his claims were anchored on his alleged ownership over the one-third portion of the subject property. His alternative claim for the value of the property was necessarily dependent on a prior determination of ownership, which is an action affecting title to or possession of real property. The action was therefore real and should have been filed in the RTC of Morong, Rizal.

• Cause of Action: A cause of action is the act or omission by which a party violates the right of another, and its essential elements are: (1) a right in favor of the plaintiff; (2) an obligation on the part of the defendant to respect that right; and (3) an act or omission by the defendant in violation of that right. The test is whether, admitting the truth of the facts alleged, the court can render a valid judgment in accordance with the prayer. A perusal of the complaint showed that aside from the bare allegation that the spouses had mortgaged the property to respondent Bank, there was no other allegation of any act or omission by the Bank violating petitioner's rights. The complaint did not allege that the Bank had knowledge or could have known, with the exercise of due diligence, that the spouses had acted illegally. The mere invocation of Articles 19, 20, and 21 of the Civil Code, without specifying any overt act by the Bank, was insufficient to establish a cause of action. This contrasted with Nacua-Jao vs. China Banking Corporation, where the complaint specifically alleged that the bank accepted the property as security for a loan despite the title being void due to a forged deed of sale.

• Res Judicata: The doctrine of res judicata requires: (1) a final judgment; (2) rendered by a court having jurisdiction over the subject matter and the parties; (3) a judgment on the merits; and (4) identity of parties, subject matter, and causes of action between the first and second actions. All four requisites were satisfied. The prior partition case was decided on the merits by the RTC of Morong, Rizal, which had jurisdiction over the subject matter and parties, after consideration of the evidence and stipulations submitted; the CA affirmed in CA-G.R. CV No. 38373; and the Supreme Court dismissed petitioner's petition and motion for reconsideration with finality. Although the initial Supreme Court dismissal was for failure to submit an affidavit of service, the subsequent denial of the motion for reconsideration on the merits — for lack of compelling reason to warrant reconsideration — confirmed the finality of the dismissal. As to identity of parties, the fact that the Bank and the Register of Deeds were impleaded only in the subsequent case was immaterial, since absolute identity of parties is not required; substantial identity suffices. As to identity of causes of action, the test is whether the same evidence necessary to sustain the second action would have authorized recovery in the first. Petitioner relied on the same Deed of Assignment and the same Agreement of Rescission in both cases, and all his claims in both actions were anchored on his alleged co-ownership. The ultimate question in both cases was whether petitioner was a co-owner of the subject property — an issue already resolved against him with finality. An action for partition necessarily requires a prior determination of co-ownership, as the court cannot order division without first settling the issue of ownership. Changing the title of the action from "Partition" to "Recovery of Property or its Value" did not avoid res judicata where the same evidence would sustain both actions.

• Nature of Action Determined by Allegations, Not Title — The nature of an action is determined by the allegations in the complaint itself, rather than by its title or heading. The venue of a case is determined by the primary objective for filing the case. Applied to hold that a complaint captioned "Recovery of Property or its Value" was a real action because the alternative claim for value was dependent on a determination of ownership.

• Elements of Cause of Action — A cause of action consists of three elements: (1) a right in favor of the plaintiff; (2) an obligation on the part of the named defendant to respect or not violate such right; and (3) an act or omission by the defendant in violation of the plaintiff's right or constituting a breach of the defendant's obligation. A cause of action arises only upon the occurrence of the last element. The test for sufficiency is whether, admitting the truth of the facts alleged, the court can render a valid judgment in accordance with the prayer.

• Res Judicata — Bar by Prior Judgment (First Concept) — Res judicata as a bar by prior judgment under Rule 39, Section 47(b) exists when there is identity of parties, subject matter, and causes of action in the first and second actions. The requisites are: (1) the judgment must be final; (2) rendered by a court having jurisdiction over the subject matter and the parties; (3) a judgment on the merits; and (4) identity of parties, subject matter, and causes of action. The judgment is conclusive as to every matter offered and received to sustain or defeat the claim, as well as any matter which might have been offered for that purpose.

• Res Judicata — Conclusiveness of Judgment (Second Concept) — Res judicata as conclusiveness of judgment under Rule 39, Section 47(c) exists when there is identity of parties and subject matter but the causes of action are completely distinct. The first judgment is conclusive only as to matters actually and directly controverted and determined, not as to matters merely involved.

• Identity of Causes of Action — Same Evidence Test — The test for determining whether causes of action are identical is whether the same evidence necessary to sustain the second action would have been sufficient to authorize recovery in the first, even if the forms or nature of the two actions differ. If the same facts or evidence would sustain both, the judgment in the former bars the latter.

• Immutability of Final Judgments — A judgment which has acquired finality becomes immutable and unalterable and may no longer be modified in any respect except to correct clerical errors or mistakes, all issues between the parties being deemed resolved and laid to rest. Exceptions are allowed only under the most extraordinary circumstances.

• "In this jurisdiction, we adhere to the principle that the nature of an action is determined by the allegations in the Complaint itself, rather than by its title or heading. It is also a settled rule that what determines the venue of a case is the primary objective for the filing of the case." — This passage articulates the controlling rule on venue and the determination of the nature of an action, which the Court applied to classify petitioner's complaint as a real action despite its alternative caption.

• "While the two cases are captioned differently, petitioner cannot claim that there is no res judicata by simply changing the title of the action from 'Complaint for Partition of Real Property and Damages' to a 'Complaint for Recovery of Property or its Value.' — This statement captures the Court's rejection of the attempt to evade res judicata by relabeling the action, applying the same-evidence test to find identity of causes of action.

• "The issue of ownership or co-ownership, to be more precise, must first be resolved in order to effect a partition of properties. This should be done in the action for partition itself." — This quotation from Reyes-De Leon vs. Del Rosario, adopted by the Court, establishes that ownership is a necessary antecedent issue in partition actions, reinforcing the conclusion that the prior partition judgment conclusively settled co-ownership.

• Latorre vs. Latorre, G.R. No. 183926, March 29, 2010, 617 SCRA 88 — Followed for the rule that the nature of an action is determined by the allegations in the complaint, not its title, and that venue is determined by the primary objective of the filing.

• Spouses Zepeda vs. China Banking Corporation, 535 Phil. 133 (2006) — Followed for the definition and essential elements of a cause of action and the test for sufficiency of allegations.

• Nacua-Jao vs. China Banking Corporation, 535 Phil. 784 (2006) — Distinguished. The complaint in that case contained specific allegations of the bank's knowledge of the fraudulent transfer and acceptance of void title as security, contrasted with the bare allegations in petitioner's complaint.

• Selga vs. Brar, G.R. No. 175151, September 21, 2011, 658 SCRA 108 — Followed for the definition and two concepts of res judicata — bar by prior judgment and conclusiveness of judgment.

• Philippine National Bank vs. Gateway Property Holdings, Inc., G.R. No. 181485, February 15, 2012, 666 SCRA 251 — Followed for the same-evidence test in determining identity of causes of action for res judicata purposes.

• Reyes-De Leon vs. Del Rosario, 479 Phil. 98 (2004) — Followed for the rule that the issue of ownership or co-ownership must first be resolved before partition may be effected, establishing that a partition judgment necessarily adjudicates ownership.

• First Bancorp, Inc. vs. Court of Appeals, 525 Phil. 309 (2006) — Followed for the distinction between questions of law and questions of fact.

• Section 2, Rule 50, 1997 Rules of Civil Procedure — Mandates dismissal of an appeal to the Court of Appeals that raises only questions of law. Applied to uphold the CA's dismissal of petitioner's appeal, as the grounds for the RTC's dismissal (improper venue, lack of cause of action, res judicata) involved only questions of law.

• Sections 1 and 2, Rule 4, 1997 Rules of Civil Procedure — Provide that real actions affecting title to or possession of real property or an interest therein shall be commenced and tried where the property is situated, while personal actions shall be commenced where the plaintiff or defendant resides. Applied to hold that petitioner's complaint was a real action improperly filed in Pasig City.

• Section 2, Rule 2, Rules of Court — Defines a cause of action as the act or omission by which a party violates the right of another. Applied to test the sufficiency of the allegations against respondent Bank, which were found wanting.

• Rule 16, Revised Rules of Civil Procedure — Governs motions to dismiss. The RTC's dismissal was based on grounds available under this rule: improper venue, res judicata, and failure to state a cause of action.

• Section 47(b) and (c), Rule 39, Rules of Court — Defines the two concepts of res judicata: bar by prior judgment (identity of parties, subject matter, and causes of action) and conclusiveness of judgment (identity of parties and subject matter but distinct causes of action). Applied to hold that the first concept barred the instant suit.

• Articles 19, 20, and 21, Civil Code — Invoked by petitioner in his complaint but found insufficient to establish a cause of action against respondent Bank, as no specific overt act or omission by the Bank was alleged.

Velasco, Jr. (Chairperson), Villarama, Jr., Reyes, and Leonen, JJ., concurred.