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ZALDARRIAGA vs COURT OF APPEALS G.R. No. 90215 March 29, 1996 FACTS: This is a case about the opposing claims over Hacienda Escolastica which belonged to the conjugal property of Pedro Zaldarriaga and Margarita Iforong who begot four sons during their marriage: Jesus, Jose, Manuel, and Julio. On May 17, 1919, Margarita died leaving one-half (1/2) or four-eighths (4/8) of the hacienda to her husband as his conjugal share, and one-eighths (1/8) share to each of her sons. Thereafter, Manuel and Julio died single and without issue. Their combined two-eighths (2/8) shares therefore passed by legal succession to their father, Pedro, who consequently became the owner of six-eighths (6/8) or three-fourths (3/4) share of the hacienda. In 1944, Jose died survived by his wife, Basilia and their seven children. Two years later, Jesus also died. He was survived by his wife Consuelo and their three children. Eventually, Pedro Zaldarriaga (the patriarch) also died but prior to his death, he executed a deed of definite sale conveying his (6/8) share in the hacienda to his grandchildren by Jesus. Basilia filed a petition thru Civil Case No. 2705 to invalidate the sale because it is prejudicial to their successional rights to the hacienda which entitled them to only (1/8) of the property since the seven-eighths (7/8) was already transferred to Jesus descendants. The Supreme Court on May 8, 1972 resolved the case denying Basilias contention without prejudice to whatever action not yet prescribed, that the children, if any, of the late Jose Zaldarriaga may have for the recovery of their share in the lands in question as part of estate of the now deceased Pedro Zaldarriaga (reservation clause). In 1973 Basilia and her children filed another case claiming three-eighths (3/8) or one-half () of Pedros six-eighths (6/8) share in the hacienda which was allegedly fictitiously conveyed to the children of Consuelo. They prayed that the deed of sale executed by Pedro be declared void ab initio. Plaintiffs also invoked the significance of the reservation clause of the Supreme Courts resolution in L -34557 which they believed defoliates the legal posture of the defendants. In their answer with counterclaim, the defendants alleged that the action was barred by res judicata (a matter already adjudicated/decided on May 8, 1972; thus, it cannot be raised again) and alleged prescription, lack of personality and no cause of action on the part of the plaintiffs.

ISSUE: Pedro allegedly conveyed through a deed of sale his 6/8 share in Hacienda Escolastica in favor of Jesus descendants in which the Supreme Court affirmed on May 8, 1972 along with a reservation clause. 1. Who owned Pedros 6/8 share of the hacienda upon his death? a. Pedro himself, in which case the property shall pass by intestacy to his descendants in accordance with the law on succession? or; b. The children of Jesus by virtue of the deed of sale in their favor?

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2. May the principle of res judicata (a matter already adjudicated that cannot be raised again) be applied vis-a-vis the reservation clause enunciated by the Court in its resolution in May 8, 1972? HELD: 1. The Supreme Court, in its May 8, 1972 resolution considered the use of the validity of the deed of sale as a matter which should be litigated in another action pertaining to the estate of Pedro. The action to nullify the deed of sale had not yet prescribed considering that the issue was raised in Civil Case No. 2705. The amendment of the complaint in Civil Case No. 2705 to include the nullity of the deed of sale amounted to filing of an action thereon which interrupted the running of the prescriptive period. 2. Considering the peculiar circumstances in the case, res judicata does not find application in the instant petition as it would not serve the interest of substantial justice. The principle of res judicata is a fundamental component of our judicial system, but it should be disregarded if its application would involve the sacrifice of justice to technicality. The usage of res judicata as a rule on conclusiveness of judgment refers to the situation where the judgment in the prior action operates as an estoppel only as to matters actually determined therein or which were necessarily included therein. Consequently, since other admissible and relevant matters which the parties in the second action could properly offer are not concluded by the said judgment, the same is not a bar to or ground for dismissal of the said action. The reservation clause in the resolution of May 8, 1972, waived the applicability of the principle of res judicata. A reservation for the filing of an other action in a decision which is usually preceded by the phrase without prejudice imports the contemplation of further proceedings. The reservation clause made by the Court in the exercise of its discretion was aimed at giving the private respondents another opportunity to ventilate their valid claims to Pedros estate. Thus, the deed of sale is set aside and the share of Pedro Zaldarriaga i.e., 6/8 will be part of his estate to be inherited proportionately or as the case may be by Jesus and Jose (represented by their descendants). The instant petition for review on certiorari is DENIED. The July 14, 1989 decision of the Court of Appeals in CA-GR CV No. 14450 and that of the lower court in Civil Case No. 117-V are AFFIRMED.