Facts:

The case at hand involves a dispute over a property, specifically Lot 3, Block 2 in the Sande Estate, located in Tondo, Manila. The petitioners are Santiago Escarte, Jr., Ernesto Villanueva, Felixberto Villanueva, and Lourdes Villanueva, whereas the respondents are the Office of the President of the Philippines and Teodoro Medina. The background of the case traces back to October 31, 1940, when the subject lot was expropriated by the government under Commonwealth Act No. 539, which allowed for the resale of the land to bona fide tenants and occupants. On that same date, a portion of the property was sold by Jerusalem Gingco to Santiago Escarte, Sr., who subsequently shared ownership of the property with Lucio Javellonar.

In November 1954, after various transactions and estate settlements, Escarte, Sr. applied for a purchase of the subject lot, which was sold to his heir, Santiago Escarte, Jr., after Escarte, Sr.'s death. The Land Authority executed a final deed of sale in 1

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Facts:

Description of the Subject Property and Its Original Ownership

• The subject lot (Lot 3, Block 2) and an adjoining lot (Lot 1-A) in Sande Estate, Tondo, Manila, are part of a single parcel owned by the Philippine Realty Company.
• An accessoria structure was constructed on the property, owned pro-indiviso by Lucio Javellonar and Jerusalem Gingco.

Expropriation and Early Transactions

• On October 31, 1940, the lots, together with others in Sande Estate, were expropriated by the government under Commonwealth Act No. 539 to be re-sold at reasonable prices to bona fide tenants, occupants, or qualified private individuals.
• On the same date, Jerusalem Gingco sold his undivided one-half interest in the accessoria to Santiago Escarte, Sr.

Division of the Accessoria and Subsequent Administrative Actions

• In April 1953, the accessoria was divided between Escarte, Sr. and Javellonar, with the 3-door portion on Lot 1-A adjudicated to Javellonar while Escarte, Sr. obtained the remainder.
• Escarte, Sr. proceeded to secure his interest by filing an application to purchase the subject lot in November 1954, leading to the execution of a contract to sell by the Bureau of Lands on January 3, 1955.

Transition of Jurisdiction and Complications in Sale

• Jurisdiction over land disposition was later transferred to the Land Tenure Administration (LTA).
• A proposed deed of sale dated July 10, 1962 was prepared by the LTA; Escarte, Sr. signed it, but it was cancelled by the LTA Administrator.
• Escarte, Sr. died on April 3, 1963, leaving no fully executed deed of sale over the subject lot.

Lease, Partition, and Subsequent Sale

• In 1965, one unit of the 3-door accessoria was leased to Teodoro Medina, a private respondent.
• On August 23, 1965, Escarte, Sr.’s heirs executed an extra-judicial partition of his estate, and a supplemental partition on June 8, 1966 specifically included the subject lot and its improvements, which were adjudicated solely in favor of Santiago Escarte, Jr., represented by his judicial guardian, Remedios Escarte Pantaleon.
• In November 1967, the Land Authority (successor to the LTA) executed a final Deed of Sale No. 4918 in favor of Escarte, Jr., and a new title (TCT No. 90685) was issued on November 10, 1967.

Guardianship Proceedings and the Transfer to the Villanuevas

• In December 1970, Pantaleon, as judicial guardian of Escarte, Jr., filed a petition for authority to sell the subject lot pending before the Juvenile and Domestic Relations Court of Manila; the petition was granted.
• On January 29, 1971, Pantaleon requested consent from the Land Authority for the proposed sale, and on February 1, 1971, a permit was issued transferring the lot to the children of Francisco Villanueva (petitioners Ernesto, Felixberto, and Lourdes).
• Escarte, Jr., through his guardian, sold the subject lot to the Villanuevas on February 18, 1971, and a new title (TCT No. 103617) was issued on March 2, 1971.

Protest and Administrative Proceedings by Teodoro Medina

• On April 26, 1971, Medina filed a protest—initially before the Land Authority—challenging both the contract of sale executed in favor of Escarte, Jr. and the subsequent deed of sale to the Villanuevas, and he prayed for the lot to be awarded to himself.
• With the transfer of land functions to the Department of Agrarian Reform, Medina amended his protest. The case records were subsequently transferred to the National Housing Authority (NHA).

NHA’s Resolution and Subsequent Appeal to the Office of the President

• On December 14, 1978, the NHA dismissed Medina’s protest, reasoning that he was merely a lessee of a door in the accessoria and not a bona fide tenant or occupant as applicable under Commonwealth Act No. 539.
• Medina appealed this decision to the Office of the President, which, on May 12, 1980, issued a decision that:
• Set aside the NHA resolution;
• Canceled the deed of sale over the subject lot executed in favor of Escarte, Jr. and the authorization for sale to the Villanuevas;
• Ordered appropriate court proceedings for the cancellation of the transfer certificates; and
• Awarded the lot to Medina.
• On October 23, 1981, the motion for reconsideration filed by the petitioners was denied.

The Res Judicata Contention

• Petitioners contended that Medina’s status regarding the subject lot had been decisively settled by prior final court decisions in Civil Case No. 83215 (Court of First Instance of Manila) and Civil Case No. Q-15952 (Court of First Instance of Rizal, Quezon City Branch).
• These decisions held that Medina was not a bona fide tenant or occupant, thus barring him from challenging the petitioners’ titles under the principle of res judicata.
• Medina argued that the earlier cases were inapplicable because:
• Subsequent proceedings had addressed the illegal issuance of titles;
• The issue of illegal issuance was not raised in those cases;
• There was no trial on the merits as the complaint was dismissed on a motion to dismiss;
• There was no formal presentation or reception of evidence; and
• An order, rather than a full decision, had been issued.

Final Administration and Judgment

• While Medina asserted that there were defects in the proceedings in Civil Case No. 83215, the Court maintained that the judgment was on the merits and, despite technical objections, constituted a final determination.
• The principle of res judicata was emphasized to bar Medina from re-litigating issues already decided.
• Ultimately, the petition was granted, setting aside the Office of the President’s decision and reinstating the NHA’s December 14, 1978 resolution.

Issue:

• Whether the principle of res judicata applies to prevent Medina from challenging the titles already held by petitioners, given the prior final decisions in related cases (Civil Case Nos. 83215 and Q-15952).
• Whether Medina’s status as a lessee qualifies him as a bona fide tenant or occupant having a preferential right to acquire the property under Commonwealth Act No. 539 and subsequent regulations.
• Whether the absence of a trial on the merits — due to the cases being decided on motions to dismiss — undermines the application of res judicata vis-à-vis Medina’s protest.
• Whether the procedural and substantive issues raised by Medina are sufficiently distinct from those adjudicated in the previous cases to warrant a fresh determination of his rights.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)