G.R. No. L-1776 - Cea vs. Court of Appeals

The spouses Gregorio Natividad and Benedicta Villanueva were the joint owners of a tract of land known as "Hacienda Cabasay" situated in the municipality of Tigaon, Camarines Sur.
In their respective wills, both spouses devised their half interest in the hacienda to their grandson, Alfredo Natividad.

Upon the death of Gregorio Natividad, his estate was placed under judicial administration in special proceedings in the Court of First Instance of Camarines Sur.
A notice of the proceedings was duly recorded in 1928, informing the public that the properties, including Hacienda Cabasay, were under judicial custody.
Despite this judicial notice, Alfredo Natividad executed a deed on December 31, 1923, selling the hacienda to Gerardo Cea; the deed was subsequently recorded on January 3, 1929.
The judicial administrator initiated an annulment suit against the sale, which eventually resulted in a settlement whereby Alfredo Natividad ceded half of the hacienda to the heirs of Gregorio Natividad.

On September 3, 1931, Gerardo Cea sold the entire hacienda to Paz M. Cea.
Paz M. Cea, on June 1, 1936, sold one-half of the property to Sebastian Moll.
Both Paz M. Cea and Sebastian Moll later filed separate applications for the registration of their respective half interests in the property.
Although the Court of First Instance initially granted the registration applications, the heirs contested the half interest that came from Gregorio Natividad.

The Court of Appeals modified the initial grant by approving the registration only for the half interest inherited from Benedicta Villanueva.
The registration application concerning the half interest from Gregorio Natividad was denied on the ground that Alfredo Natividad, who executed the sale, did not have a registrable title since the property was under judicial custody (custodia legis).
No appeal was taken from this decision of the Court of Appeals at that time.

On March 19, 1941, during the ongoing administration of Gregorio Natividad’s estate, two sons and seven grandchildren petitioned the court to be declared his heirs and to have one-half of Hacienda Cabasay (specifically, the half bequeathed to Alfredo Natividad) adjudicated to them.
Paz M. Cea and Sebastian Moll opposed the petition, insisting on their claim over the disputed half.
The Court of First Instance of Camarines Sur, in its order on March 23, 1941, granted the petition of the heirs and denied the oppositors' claim by relying on the earlier appellate decision that the sale by Alfredo Natividad was null and void.
The decision was affirmed on appeal by the Court of Appeals.

Paz M. Cea and Sebastian Moll subsequently appealed to the Supreme Court.
Their appeal challenged whether the earlier decision of the Court of Appeals in the registration cases constituted res judicata that precluded further litigation on the contested half interest from Gregorio Natividad.
They argued that their right to assert title over the disputed half should not be barred by the previous ruling.

Whether the decision of the Court of Appeals in the registration cases, which declared the sale by Alfredo Natividad void as a conveyance of property in custody (custodia legis), should operate as res judicata in the present controversy over the disputed half interest in Hacienda Cabasay.

Whether the act of sale by Alfredo Natividad, even if void as a conveyance, also nullifies his interest as a legatee pending the final adjudication of the estate of Gregorio Natividad.