G.R. No. 157605 - Spouses Rasdas vs. Estenor

A parcel of land measuring 703 square meters, located in Ilagan, Isabela, became the subject of conflicting claims.
The dispute centers on the ownership and possession of the property, involving petitioners and respondent.

On October 29, 1992, respondent, acting as plaintiff, filed a Complaint for Recovery of Ownership and Possession with Damages against petitioners before the Regional Trial Court (RTC) of Ilagan, Branch 16.
In the complaint, respondent asserted his ownership of the land while claiming that petitioners were in possession.
On November 6, 1995, the RTC rendered a decision in favor of petitioners.

Respondent appealed the RTC decision, and the Court of Appeals (CA) reversed the earlier ruling on September 25, 1997.
The CA declared respondent as the owner of the property, ordering petitioners to vacate the premises.
The CA’s decision also mandated petitioners to jointly and severally pay compensation, attorney’s fees, and litigation expenses.
After a petition for certiorari was dismissed, the CA decision became final and executory.

A Writ of Execution and a Writ of Demolition were issued against petitioners, compelling them to demolish their houses, structures, and improvements on the property.
Petitioners then filed a second complaint on July 6, 1999 (Civil Case No. 1090) before the same RTC Branch 16, seeking just compensation and a preliminary injunction with a temporary restraining order.
Although petitioners conceded the final and executory nature of the CA decision regarding ownership, they contended that they were entitled to reimbursements for the houses they constructed as builders in good faith.

Respondent filed a Motion to Dismiss on the ground that the new complaint was barred by res judicata, given the conclusive judgment from Civil Case No. 673.
Initially, on August 4, 1999, the RTC denied the Motion to Dismiss, allowing pre-trial proceedings to commence.
Before the trial proper, respondent moved for a preliminary hearing on the affirmative defenses (lack of jurisdiction and res judicata).
In an order dated February 16, 2000, the RTC reversed its earlier denial and ruled that it was “constrained to apply the principle of res judicata,” thus dismissing the complaint.
The Court of Appeals subsequently affirmed the RTC’s finding of res judicata, which is now under review by the Supreme Court.

Petitioners argued that since the Motion to Dismiss for res judicata had already been denied, the subsequent preliminary hearing on the same ground was procedurally null and void.
They maintained that there was no complete identity of causes of action between the first complaint (ownership dispute) and the second complaint (claim for just compensation under Article 448 of the Civil Code).
Petitioners further contended that the rule of res judicata should be disregarded if its strict application would lead to grave injustice.
Respondent countered that the issues relating to bad faith and possession had been conclusively determined in the earlier case, thereby barring the new claim.

Whether the second complaint (Civil Case No. 1090) is barred by res judicata due to the prior adjudication in Civil Case No. 673.

Did the final judgment in the first case conclusively settle the issue of petitioners’ status as builders in bad faith?
Is there sufficient identity of issues between the disputes concerning ownership and the claim for just compensation?

Whether the procedural error of conducting a preliminary hearing on the affirmative defense of res judicata—after the Motion to Dismiss was already denied—can be excused or should be corrected.

Should a preliminary hearing have been allowed if a motion to dismiss on the same ground was already filed and decided?
What is the implication of the deviation from the prescribed procedure under Section 6, Rule 16 of the 1997 Rules of Civil Procedure?

Whether the application of the doctrine of res judicata, specifically the "conclusiveness of judgment," is proper in barring petitioners’ subsequent claim for just compensation.