93. TAN vs.

VALDEHUEZA (1975)

Facts: Lucia Tan filed a complaint against respondent siblings. The complaint contained two
cause of action: first, for declaration of ownership and recovery of possession of a parcel of
land and second, for consolidation of ownership of two portions of another land. The lot in the
first cause of action was previously owned by respondents. It was sold in a public auction
where petitioner was the highest bidder. Then, Tan filed a petition for injunction to prevent
respondents from entering the lot but was dismissed for failure to prosecute.
With respect to the second cause of action, respondents executed two Pacto de Retro Deeds of
Sale (one registered and one unregistered) in favor of petitioner, but the respondents did not
vacate the premises and continued paying the taxes thereon.

Respondent’s defense: Res judicata on the first cause of action.

The second was a simple loan. Unsecured loan, not registered, therefore not
valid.

Held: Res Judicata does not apply where the first case of action for injunction against entry into
and gathering of fruits from the land while the second case seeks to remove any doubt or cloud
of the plaintiff ownership with prayer for declaration of ownership and recovery of possession,
since the causes of action are not identical. As the injunction cases involved only possession
and the fruits thereof, and the other case involves ownership, the judgment in the first could
not and did not encompass the judgment in the second case. Moreover, the New Civil Code
provides that suitors in action to quiet title "need not be in possession of said
property."

Where the supposed vendor a retro remained in possession of the land and paid the realty tax
thereon, the contract which purports to be a pacto de retro transaction is presumed to be
equitable mortgage under Art. 1602 of the New Civil Code, whether registered or not, where no
third parties are involved. Article 2125 of the New Civil Code: "If the instrument is not recorded
the mortgage is nevertheless binding between the parties.”

Lucia Tan is the absolute owner of the property described in the first cause of action.
Respondents ordered to pay the value of the land (1,500) in the second cause of action or the
mortgage may be foreclosed.