Aromin v. Floresca
REITERATIONFacts
The Antecedents: Spouses Wilfredo and Swarnie Aromin (petitioners) filed an action for specific performance against Paulo Floresca, alleging that Paulo sold to them several portions of two parcels of unirrigated riceland. Victor, Juanito, and Lilia Floresca (respondents), siblings of Paulo, intervened, claiming co-ownership over the properties. They alleged that the properties were subject to a partition case (Civil Case No. 832-BG) where a compromise agreement was approved, partitioning the land between Paulo and the siblings. The Aromins filed another case for quieting of title, asserting their ownership based on the sales from Paulo and claiming the compromise agreement was not binding on them. The siblings filed a third case for annulment of sale, seeking to annul the sale between Paulo and the Aromins, alleging Paulo fraudulently secured tax declarations and that the compromise agreement in Civil Case No. 832-BG was binding. Paulo died during the proceedings and was substituted by his heirs. Procedural History: The Regional Trial Court (RTC) ruled in favor of the Aromins, declaring them buyers in good faith and owners of the entire property, and that the judgment in Civil Case No. 832-BG was not binding on them. On appeal, the Court of Appeals (CA) reversed the RTC decision, declaring the Aromins not buyers in good faith, limiting their ownership to Paulo's one-half share, and ordering them to restore the other half to the siblings. The CA also held Paulo liable for moral damages and attorney's fees. The CA denied the Aromins' motion for reconsideration. The Petition: The spouses Aromin filed a petition for review on certiorari, arguing that the judgment based on the compromise agreement in Civil Case No. 832-BG did not bind them as they were not parties to the case. They also argued that they should have been impleaded as indispensable parties and that their claim as buyers in good faith should be upheld, especially since they acquired ownership before the registration of the notice of lis pendens and the judgment.
Issue(s)
Whether the spouses Aromin are bound by the judgment based on the compromise agreement in Civil Case No. 832-BG. Whether the spouses Aromin are buyers in good faith. Whether the sale made by Paulo Floresca to the spouses Aromin is valid and to what extent.
Ruling
The petition is DENIED for lack of merit. The Decision dated June 6, 2003 and Resolution dated October 24, 2003 of the Court of Appeals in CA-G.R. CV No. 69651 are AFFIRMED in toto.
Ratio Decidendi
On the binding effect of the compromise agreement and res judicata: The Supreme Court affirmed the Court of Appeals' ruling that the spouses Aromin are bound by the judgment based on the compromise agreement in Civil Case No. 832-BG under the principle of res judicata. The Court explained that a judicial compromise has the effect of res judicata and is immediately executory. While the Aromins were not parties to Civil Case No. 832-BG, they are considered successors-in-interest or privies of Paulo Floresca, who was a party to the case. The Court cited case law recognizing privity when a person acquires an interest in the subject matter after the suit was filed or decided. Since the Aromins acquired most of their interest after the filing of the partition case and the annotation of the notice of lis pendens, they are bound by the judgment. The Court clarified that absolute identity of parties is not required for res judicata; substantial identity or a community of interest is sufficient, which the Aromins clearly had with Paulo. On the claim of being buyers in good faith: The Supreme Court held that the spouses Aromin's claim of being buyers in good faith is untenable and irrelevant. The Court reiterated the settled rule that the issue of good faith is relevant only for registered lands, not for unregistered lands. Since the subject property was unregistered, purchasers buy at their peril. Furthermore, the Court found that the Aromins were not buyers in good faith based on the testimony of Wilfredo Aromin himself. He admitted to having prior knowledge that the property was co-owned by Paulo, his brother Alberto, and sister Josefa. Despite this knowledge, he relied solely on Paulo's word that he had become the sole owner, without making further inquiries from the Register of Deeds or the Assessor's Office. This reliance on Paulo's assurance, despite facts that should have put them on guard, constituted gross negligence amounting to bad faith. On the validity and extent of the sale: The Court affirmed the appellate court's ruling that the sale made by Paulo Floresca to the spouses Aromin is valid only to the extent of Paulo's one-half share in the subject property. Citing Article 493 of the Civil Code, the Court explained that while a co-owner has the right to sell his undivided interest, he cannot alienate the shares of his co-owners without their consent. Therefore, Paulo could only dispose of his pro indiviso share, which was one-half of the property. The sale of the entire property to the Aromins, without the consent of the other co-owners (the siblings), only affected Paulo's share. The Court also denied the Aromins' plea for reimbursement from Paulo's heirs, stating that the Aromins purchased the property at their peril and should bear the consequences, especially since Paulo had already passed away and there was no showing that his heirs received any amount from the transaction.
Main Doctrine
A judgment based on a compromise agreement has the effect of res judicata and binds successors-in-interest, even if they were not parties to the original case, provided there is substantial identity of parties or privity of interest. The claim of being a buyer in good faith is irrelevant for unregistered lands.