Facts:

The case involves petitioners Rosario Neri Edwards and T. E. Edwards against respondents Jose Arce and Fe Catalina Arce, with the decision rendered on March 26, 1956, by the Supreme Court of the Philippines. The dispute centers around a parcel of land known as the "Divisoria Lot," which consists of two portions: one measuring 137 square meters, owned exclusively by Rosario Neri Edwards, and another measuring 43 square meters, co-owned by her and her husband, T. E. Edwards. In 1931, the couple entrusted the administration of the lot to the respondents, who were obligated to render an accounting and return possession upon demand. However, the respondents failed to provide any accounting since October 1946 and instead leased the property to a third party for a monthly rental of P160 starting in April 1947.

In response, the petitioners filed a case in the Court of First Instance of Misamis Oriental seeking to recover possession of the lot and demand an accounting of ...

Facts:

Ownership and Administration of the "Divisoria Lot"

• Rosario Neri Edwards was the exclusive owner of a portion of land with an area of 137 square meters and, jointly with her husband T. H. Edwards, owned another portion of the same land with an area of 43 square meters. These two portions formed a lot known as the "Divisoria Lot."
• In 1931, the lot was delivered to Jose Arce and Fe Catalina Arce (respondents) for administration. They were obligated to render an accounting and surrender possession to the petitioners (Rosario Neri Edwards and T. H. Edwards) upon demand.

Failure to Render Accounting and Lease of the Property

• Respondents failed to render any accounting since October 1946. Instead, they leased the lot to a Chinaman named Leeson Javier for a monthly rental of P160 starting April 1947.
• Petitioners filed an action in the Court of First Instance of Misamis Oriental to recover possession of the lot and to demand an accounting and liquidation of respondents' administration.

Respondents' Claim of Ownership

• Respondents admitted that the lot was delivered to them for administration in 1931 but claimed that they purchased a portion of the lot (137 square meters) from petitioners in 1946 for P4,000. They argued that they were the owners of this portion, as declared in a prior case (Civil Case No. 123) between the same parties.
• Respondents sought to compel petitioners to execute a deed of conveyance for the 137-square-meter portion and claimed damages for petitioners' failure to execute the deed.

Prior Litigation (Civil Case No. 123)

• In Civil Case No. 123, respondents had sought specific performance to compel petitioners to execute a deed of sale for the entire "Divisoria Lot." The court ruled that respondents were entitled to demand fulfillment of the contract only for the 137-square-meter portion, excluding the 43-square-meter portion and improvements. However, the court absolved petitioners from the complaint because respondents sought conveyance of the entire lot, including improvements owned by a third party.
• Respondents did not appeal this decision, which became final and executory.

Issue:

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Ruling:

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Ratio:

1. Res Judicata: A final judgment on the merits, rendered by a court with jurisdiction, is conclusive in a subsequent case between the same parties involving the same subject matter and issues. The principle of res judicata applies even if the prior decision was erroneous.
2. Dispositive Part of the Decision: Only the dispositive part of a decision is controlling for res judicata purposes. Findings in the body of the decision, while informative, do not have binding legal effect.
3. Failure to Appeal: Respondents' failure to appeal the decision in Civil Case No. 123 or file a motion for reconsideration precludes them from seeking relief in a subsequent action. Public policy favors the finality of judgments to end controversies.
4. Rentals and Accounting: Respondents are obligated to return possession of the lot to petitioners and to account for and pay rentals corresponding to the 137-square-meter portion from October 1946 until delivery. They must also account for rentals corresponding to the 43-square-meter portion.