G.R. No. 119707 ; November 29, 2001
VERONICA PADILLO, petitioner, vs. COURT OF APPEALS, and TOMAS AVERIA, JR., respondents.

FACTS

Petitioner Veronica Padillo filed a petition for declaratory relief and damages (Civil Case No. 9114) against respondent Tomas Averia, Jr., alleging she was the absolute owner of a parcel of land in Lucena City covered by TCT No. T-9863, which she purchased from Marina de Vera-Quicho and Margarita de Vera. She claimed Averia unlawfully refused to turn over the property and had instituted a previous suit for rescission (Civil Case No. 1690-G) merely to harass her. Padillo sought injunctive relief and damages. Averia moved to dismiss the petition, invoking the defense of res judicata based on a prior final decision in Civil Case No. 1620-G, a specific performance case he filed against de Vera-Quicho. In that case, the court ordered de Vera-Quicho to execute documents over the property in favor of Averia and enjoined the Register of Deeds from entering any transaction except in Averia’s favor.
The property was the subject of multiple prior actions. These included M.C. No. 374-82, filed by Padillo to compel registration of her deed of sale, and Civil Case No. 1690-G, Averia’s action for rescission against Padillo, which was dismissed for improper venue. The Supreme Court, in G.R. No. 65129 , later ordered a new trial in M.C. No. 374-82, which ultimately resulted in a 1988 decision declaring Padillo the exclusive owner and ordering registration in her favor. However, this 1988 decision was still pending appeal at the Court of Appeals when the trial court in Civil Case No. 9114 ruled in Padillo’s favor.

ISSUE

Whether the Court of Appeals correctly reversed the trial court’s decision in Civil Case No. 9114 on the ground of res judicata.

RULING

No, the Court of Appeals erred in applying res judicata. The Supreme Court held that for res judicata to bar a subsequent action, the following must concur: (1) a final former judgment; (2) rendered by a court with jurisdiction; (3) a judgment on the merits; and (4) identity of parties, subject matter, and causes of action between the first and second actions. The pivotal element lacking here was the finality of the judgment invoked. The decision in Civil Case No. 1620-G, while final as to the parties therein (Averia and de Vera-Quicho), did not constitute a final judgment on the merits with respect to Padillo. Padillo was not a party to that case; she was a stranger to it. A judgment cannot bind a person who was not a party to the proceedings. Furthermore, the 1988 decision in M.C. No. 374-82, which favored Padillo, was still under appeal and thus not final and executory. Therefore, there was no prior final judgment on the same claim between the same parties that could operate as res judicata to bar Padillo’s action for declaratory relief against Averia. The case was remanded for further proceedings.