Albert Nabus v. The Honorable Court of Appeals and Mariano Lim
REITERATIONFacts
1. The Antecedents: Albert Nabus sold a parcel of land to Mariano Lim on June 23, 1965, for P258,000.00, with a portion of the payment amortized. Title was transferred to Lim under TCT No. 2814, and the property was later subdivided. Nabus alleged that Lim still had an unpaid balance of P75,000.00 as of June 22, 1970. Nabus attempted to repurchase the property under Section 119 of the Public Land Law, offering to pay P183,000.00 (the total price minus the alleged unpaid balance), but Lim refused. 2. Procedural History: Nabus initially filed a complaint for reconveyance and damages (Civil Case No. 2159(24)) on June 22, 1970. After Lim's motion to dismiss was denied, the trial court ordered Nabus to deposit the repurchase price of P183,000.00. When Nabus failed to make the deposit, the trial court dismissed the case with prejudice on March 13, 1981, finding Nabus lacked interest. Nabus's motion for reconsideration was denied, and no appeal was taken. Subsequently, Nabus filed a new complaint (Civil Case No. 4293) on March 15, 1982, seeking annulment of the dismissal order, later amended to include causes of action for rescission and damages. Lim moved to dismiss this second complaint, arguing res judicata and prescription. The trial court dismissed Civil Case No. 4293 on both grounds. The Court of Appeals affirmed the dismissal based on res judicata. 3. The Petition: This petition for certiorari seeks to reverse the Court of Appeals' decision. Nabus argues that the complaint for rescission and damages is not barred by res judicata because the causes of action in the reconveyance case and the rescission case are distinct. He contends that the dismissal of the first case was not on the merits and that the issue of unpaid installments was not actually litigated. Nabus also questions whether the action for rescission has prescribed and argues it would be inequitable to deny him his day in court given the admitted unpaid balance. The Supreme Court, however, found that while res judicata did not apply due to the distinct causes of action, the action for rescission had prescribed.
Issue(s)
Whether the complaint for rescission and damages is barred by the principle of res judicata. Whether the action for rescission has prescribed. Whether it is equitable to deny petitioner his day in court.
Ruling
The petition is DENIED. The Court of Appeals correctly ruled that the action for rescission has prescribed, although it erred in applying the principle of res judicata to the cause of action for rescission. The dismissal of the first case was an adjudication on the merits, but the causes of action in the two cases were distinct.
Ratio Decidendi
On the issue of res judicata: The Court held that the dismissal of Civil Case No. 2159(24) with prejudice constitutes an adjudication on the merits, satisfying one of the requisites for res judicata. However, the Court found no identity of causes of action between the first case (reconveyance under the Public Land Act) and the second case (rescission under the Civil Code). The evidence required for each action is different: reconveyance under Section 119 of the Public Land Act requires proof of the land being granted under free patent, sale within five years, and filing within five years of the deed, while rescission under Article 1191 of the Civil Code requires proof of unpaid installments. Therefore, res judicata does not apply to bar the action for rescission. The Court also clarified that the unpaid balance was not directly litigated but merely assumed for determining the redemption price, thus not meeting the criteria for conclusiveness of judgment. On the issue of prescription: The Court found that the action for rescission had prescribed. The cause of action for rescission accrues upon breach of the contract. Petitioner Nabus alleged that the last three installments were due on July 1, 1968, July 1, 1969, and July 1, 1970. Even considering the last installment, the breach occurred by July 1, 1970. Under Article 1144 of the Civil Code, actions based on written contracts prescribe after ten years. Thus, Nabus should have filed his action for rescission before July 2, 1980. Since the amended complaint in Civil Case No. 4293 was filed on May 3, 1985, the action had clearly prescribed. On the issue of equity: While the Court acknowledged the private respondent's admitted non-payment of P75,000.00, it found that the petitioner's failure to file the action for rescission within the prescriptive period, despite having the opportunity and the legal basis to do so, precluded him from seeking equitable relief. The Court emphasized that the law on prescription is a matter of public policy and must be upheld.
Main Doctrine
The dismissal of a complaint with prejudice, even if based on a failure to comply with a court order, is considered an adjudication on the merits and can constitute res judicata. However, res judicata does not apply if the causes of action in the two cases are distinct and require different evidence, even if they arise from the same transaction. An action for rescission based on non-payment of installments under the Civil Code is distinct from an action for reconveyance under the Public Land Act.