Manique v. Cayco
REITERATIONFacts
The Antecedents: Plaintiffs obtained a loan of P15,000.00 from defendants, securing it with a second mortgage on a Quezon City property. Plaintiffs had a prior first mortgage with the Rehabilitation Finance Corporation (RFC). On June 1, 1953, plaintiffs executed a deed of absolute sale of the property to defendants for P18,000.00 plus assumption of the first mortgage. Two days later, defendants gave plaintiffs an option to repurchase the property until June 22, 1954, for P39,000.00. On July 8, 1953, a similar sale with modified area was executed and registered. Procedural History: Due to plaintiffs' failure to redeem or vacate the property after the repurchase period lapsed, defendants filed an ejectment case. A compromise was reached, wherein plaintiffs recognized defendants' ownership but would remain in the premises for one year, paying P150.00 monthly rental, with a right to repurchase within one year from December 10, 1954, for P49,000.00. The Municipal Court rendered judgment based on this compromise. Plaintiffs failed to comply, and a writ of execution was issued on February 18, 1956. The Petition: Meanwhile, on December 9, 1955, plaintiffs filed the instant action seeking to repurchase the property for P49,000.00 within a court-fixed period. Defendants moved to dismiss, citing lack of cause of action and res judicata. The Court of First Instance ruled that the contract was a mortgage and ordered defendants to execute a deed of sale upon plaintiffs' payment of P37,874.00 within 90 days, or the property would be sold at public auction. Both parties appealed.
Issue(s)
Whether the judgment rendered by the Municipal Court based on a compromise agreement bars the present action under the principle of res judicata. Whether the Municipal Court had jurisdiction to pass upon the issue of ownership. Whether the judgment on compromise is a nullity for not containing findings of fact or law. Whether the compromise agreement was vitiated by duress.
Ruling
The Supreme Court reversed the decision of the Court of First Instance. It held that the judgment based on the compromise agreement was final and executory and barred the present action under the principle of res judicata. No costs.
Ratio Decidendi
On the issue of res judicata: The Court held in the affirmative. The elements of res judicata are present: identity of parties, identity of things, and identity of questions involved. The parties in both cases are the same, and the property and issues settled in the ejectment case are similar, if not the same. Article 2037 of the Civil Code states that a compromise has the effect and authority of res judicata, with execution only by judicial order. Since no motion to set aside the compromise on grounds of fraud, mistake, or duress was filed, the judgment became final and executory. This subsequent action would encourage duplicity of suits. On the issue of jurisdiction: The Court found the claim that the Municipal Court lacked jurisdiction to pass upon ownership untenable. The court merely approved the settlement reached by the parties and did not decide any issue of fact or law. Its role was to give sanction to the agreement, and this judgment became final for lack of appeal. On the nature of the judgment: The contention that the judgment is not a decision in contemplation of law because it lacks findings of fact or law was also dismissed. When a compromise agreement is approved and embodied in a decision, the court adopts the parties' statements of facts and law, merely impressing its approval. This practice is consistent with long-standing jurisprudence. On the issue of duress: The Court found the claim of duress unsubstantiated. The plaintiffs had consistently recognized themselves as lessees, executed deeds of sale with assumption of mortgage, and failed to exercise their option to redeem. It was deemed preposterous to claim coercion under these circumstances.
Main Doctrine
A judgment based on a compromise agreement, which has become final and executory, bars the prosecution of a subsequent case involving the same parties, subject matter, and issues, under the principle of res judicata, as a compromise has the effect and authority of res judicata.