G.R. No. 160994 - Aromin vs. Floresca

The dispute involves the spouses Wilfredo and Swarnie Aromin (petitioners) and the Floresca family, namely Paulo Floresca along with his siblings Victor, Juanito, and Lilia (respondents).
Three civil cases were consolidated before the RTC of Bauang, La Union, Branch 67:

Civil Case No. 921-BG – an action for specific performance wherein the Aromins alleged that Paulo was the owner of certain parcels of unirrigated riceland (identified as Cad. Lot No. 4894) and sought the formal execution of deeds of sale.
Civil Case No. 938-BG – an action for quieting of title, where the Aromins claimed ownership and physical possession of the property purchased from Paulo.
Civil Case No. 965-BG – an action for annulment of sale filed by Victor, Juanito, and Lilia alleging that the property was co-owned by Paulo with his siblings, based on their inheritance from their parents, and that fraudulent practices had been used by Paulo in securing tax declarations in his name.

The subject property, described as Cad. Lot No. 4894, consists of unirrigated riceland (and portions of sandy and swampland) situated at Taberna, Bauang, La Union, originally covered by specific Tax Declarations.
Between 1990 and 1992, Paulo Floresca executed a series of seven unregistered deeds of sale transferring various portions of the property to the Aromins.
A receipt dated September 29, 1992, acknowledged a total payment of P1,462,000.00 by the Aromins, indicating the sale of approximately 98,257 square meters of the property.
Notably, subsequent deeds (including one executed on February 10, 1994) and other documents were later produced, raising questions as to the complete extent of Paulo’s authority over the property.

A separate action for partition (Civil Case No. 832-BG) was filed by Paulo’s siblings (Victor, Juanito, and Lilia), asserting that the property was a co-owned asset acquired upon the death of their parents.
In Civil Case No. 832-BG, the Regional Trial Court (RTC, Branch 33) rendered a judgment, based on a compromise agreement, partitioning the property into two equal shares: one-half for Paulo and one-half for his siblings.
Concurrently, a Notice of Lis Pendens was recorded on the property, thereby giving constructive notice to any subsequent purchaser.

The existence and content of the judgment based on compromise agreement in Civil Case No. 832-BG.
That the Aromins, as well as Paulo, were not served with the notice of lis pendens duly recorded on the subject property.
The seven unregistered deeds of sale executed between the Aromins and Paulo, with the later transactions occurring after the filing of the partition action.
That the Deed of Sale executed on February 10, 1994, was submitted as part of the compromise agreement forming the basis of the partition.

Concluding that Paulo was the sole owner of the subject property based on his testimony and corroborative tenant evidence.
Declaring the Aromins buyers in good faith and validating the sale executed on February 10, 1994.

The judgment based on compromise agreement in Civil Case No. 832-BG, which effectively partitioned the property between Paulo and his siblings, is binding and has res judicata effect.
The sale by Paulo affected only his one-half share in the property even if the deed purporting to transfer the whole property was executed, as a co-owner cannot dispose of the entire property without the consent of the other co-owners.
The Aromins were not purchasers in good faith due to their failure to inquire about the property’s co-ownership status despite the constructive notice provided by the notice of lis pendens.

They were not bound by the judgment based on the compromise agreement because they were not parties to Civil Case No. 832-BG and merely acquired their rights by assignment from Paulo.
The doctrine of res judicata should not apply to them since the element of identity of parties did not exist.
Since the property had been sold to them before the judgment in Civil Case No. 832-BG was registered, their rights should remain unaffected.
In the interest of equity, if required to return one-half of the property, Paulo’s heirs should reimburse them equivalent to their purchase price.

Whether a judgment based on a compromise agreement (partition) in Civil Case No. 832-BG, to which the Aromins were not a party, binds them as successors-in-interest under the doctrine of res judicata.
Whether the Aromins can legitimately claim to be buyers in good faith despite the existence of a recorded notice of lis pendens and the known co-ownership of the subject property.
Whether a sale executed by a co-owner (Paulo) purporting to alienate the entire property is valid, given that he could only dispose of his respective share under the rules of co-ownership.
Whether the Aromins’ reliance solely on Paulo’s assertion of sole ownership, without due inquiry into the property’s title and co-ownership status, constitutes negligence and bad faith in their purchase.