G.R. No. 74740 - People vs. Sanchez

On September 30, 1986, Spouses Manuel and Catalina Chu (Chus) sold five parcels of land in Saguin, San Fernando City, Pampanga, to Trinidad N. Cunanan (Cunanan) under a deed of sale with assumption of mortgage.
The total consideration was P5,161,090.00, but through a side agreement, the Chus acknowledged that Cunanan actually paid only P1,000,000.00 directly to them. The balance included payments to a third party and mortgage holders (Benito Co and Security Bank and Trust Company), and Cunanan was to pay the remaining balance within three months, subject to interest.
Ownership was to remain with the Chus until full payment was completed.
A special power of attorney was executed authorizing Cunanan to borrow and mortgage the five lots as security and deliver proceeds to the Chus, net of outstanding amounts.

Cunanan transferred titles of the five lots to her name without the Chus's knowledge and borrowed money using the lots as security without full payment of the purchase price.
She subsequently sold two lots to Spouses Amado and Gloria Carlos on July 29, 1987.
The Chus annotated an unpaid vendor’s lien on three lots on March 18, 1988, but Cunanan assigned three remaining lots to Cool Town Realty on May 25, 1989 despite the annotation.

In February 1988, the Chus filed Civil Case No. G-1936 against the Cunanans to recover the unpaid balance.
In 1993, the Chus amended the complaint seeking annulment of the deed of sale and TCTs and damages, also impleading Cool Town Realty and the Registry of Deeds.
Further amendments added Benelda Estate Development Corporation (Benelda Estate), a subsequent buyer of the two lots from the Carloses, as defendant.
Benelda Estate moved to dismiss, claiming good faith purchase and lack of cause of action; the RTC denied the motion but this was reversed by the Court of Appeals (CA), which dismissed the action against Benelda Estate due to grave abuse of discretion.
On March 1, 2001, the Supreme Court upheld the dismissal of Civil Case No. G-1936 against Benelda Estate in Chu, Sr. v. Benelda Estate Development Corporation (G.R. No. 142313).

On December 2, 1999, the Chus, Cunanans, and Cool Town Realty entered into a compromise agreement, transferring the Cunanans’ 50% share in all parcels registered under Cool Town Realty to the Chus for settlement.
The RTC approved the compromise agreement.
On April 30, 2001, petitioners (Catalina Chu and her children) filed Civil Case No. 12251 against the Carloses and Benelda Estate for cancellation of TCTs issued to Benelda Estate over two lots, and prayed for new TCTs plus damages.
On February 4, 2002, the petitioners amended the complaint to include the Cunanans as additional defendants.

The Cunanans moved to dismiss on grounds of bar by prior judgment and waiver/abandonment of claims due to the compromise agreement.
Benelda Estate moved to dismiss on grounds of forum shopping, res judicata, and failure to state cause of action.
The Carloses raised affirmative defenses including failure to state cause of action, res judicata, and statute of limitations bar.
The RTC denied all motions to dismiss, holding that there was no res judicata because of no identity of parties and subject matter; that the claim was not waived or abandoned; that the complaint stated a cause of action.
The Cunanans’ motion for reconsideration was denied.
The Cunanans filed a petition for certiorari before the CA to assail the RTC's denial of the motions to dismiss.
The CA granted the petition and dismissed Civil Case No. 12251 for being barred by res judicata based on the compromise agreement which settled all claims arising from the deed of sale with assumption of mortgage.

The compromise agreement did not expressly include Benelda Estate as a party, and
The compromise agreement made no reference to the lots registered in Benelda Estate’s name.