FACTS:

The fishpond in question was initially leased by the usufructuaries to Luis Keh for a period of five years. However, private respondent Luis Crisostomo entered into an agreement with petitioner Charlie Lee to take over the fishpond. Private respondent made payments to petitioners Keh and Lee as specified in the agreement. Private respondent incurred expenses for repairs and improvements on the fishpond. Petitioners Tansinsin and Juan Perez, accompanied by armed men, later presented a letter to private respondent stating that the lease contract with Luis Keh was still in effect and demanded that he vacate the fishpond. Private respondent filed a case against the petitioners. The trial court ruled in favor of private respondent, directing Juan Perez to allow him to occupy and operate the fishpond and ordering the petitioners to pay damages. The Court of Appeals affirmed the decision of the trial court. Petitioners filed a petition for review on certiorari.

The second set of facts reveals that petitioner Luis Keh surrendered possession of the fishpond to the usufructuaries and presented a letter to that effect. Private respondent filed an action for injunction and damages. The court granted a restraining order but later lifted it, depriving private respondent of possession of the fishpond. A partial compromise agreement was submitted, allowing private respondent to personally harvest milkfish and deposit the proceeds in a specified bank. The complaint was later amended to include another petitioner as a defendant. Petitioners Keh and Lee did not appear or testify. Petitioners Perez and Tansinsin claimed they negotiated for the lease and substituted petitioner Luis Keh as lessee. The lower court found that the defendants conspired to defraud private respondent based on his testimony and a notarized receipt of one of the usufructuaries. The Court of Appeals affirmed the lower court's decision, declaring the intervenor-appellant as a co-usufructuary of the fishpond. The defendants argued that the principle of res judicata should apply, but the Court of Appeals held that it was not applicable in this case.

ISSUES:

1. Whether the principle of res judicata applies in this case.

2. Whether the Decision of the Court of Appeals was prematurely promulgated.

3. Whether the private respondent was a sublessee of the fishpond.

4. Whether the previous decision in CA-G.R. No. 10415 is a sufficient basis for the application of res judicata on the issue of possession in this case.

5. Whether there is identity of parties in Civil Case No. 8295-M and Civil Case No. 5610-M.

6. Whether there is identity of relief sought in the two cases.

7. Whether the intervention of the private respondent in Civil Case No. 5610-M was proper.

8. Whether the principle of "toppel in pais" applies in this case.

9. Whether the private respondent should be restored to the possession of the fishpond.

10. Whether the petitioner is liable for the improvements made by the private respondent in the fishpond.

11. Whether the petitioner is liable for moral and exemplary damages and attorney's fees.

RULING:

1. The principle of res judicata does not apply in this case. The Court of Appeals held that the previous case involving a writ of injunction did not resolve the issue of possession of the fishpond. Furthermore, findings of fact of the trial court cannot be reviewed in a certiorari proceeding.

2. The promulgation of the Decision of the Court of Appeals was not premature as it involved an intervention proceeding that was completely separable from the main appeal.

3. The Court of Appeals ruled that the private respondent cannot be considered a possessor in bad faith. The private respondent took possession of the fishpond when the appellants assigned their leasehold right to him, and appellant Perez knew of this transfer of possession. There was evidence to support that the private respondent was not a mere stranger to the contract of lease. Therefore, the private respondent was a valid sublessee of the fishpond.

4. No, the previous decision in CA-G.R. No. 10415 is not a sufficient basis for the application of res judicata on the issue of possession in this case. For res judicata to apply, the following requisites must concur: (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits, and (d) there must be between the first and second actions identity of parties, subject matter and causes of action. In this case, the Decision in CA-G.R. No. 10415 resolved only an interlocutory matter and did not determine the issue of possession on the merits. Therefore, the principle of res judicata cannot be applied in this case.

5. There is no identity of parties in Civil Case No. 8295-M and Civil Case No. 5610-M, as the private respondent was allowed to intervene in the latter case without becoming a formal plaintiff or defendant.

6. There is no identity of relief sought in the two cases, as Civil Case No. 8295-M seeks an accounting of the proceeds of the fishpond while Civil Case No. 5610-M is for injunction to prevent the petitioner from retaking the fishpond.

7. The intervention of the private respondent in Civil Case No. 5610-M was proper, as the trial court acted with prudence and exercised its discretion wisely.

8. The principle of "toppel in pais" applies in this case.

9. The private respondent should not be restored to the possession of the fishpond as it would violate existing contractual obligations and would result in injustice and inequity.

10. The petitioner is liable for the value of the improvements made by the private respondent in the fishpond.

11. The petitioner is liable for moral and exemplary damages and attorney's fees.

PRINCIPLES:

• The principle of res judicata does not apply when the previous case did not resolve the same issue.

• Findings of fact of the trial court cannot be reviewed in a certiorari proceeding.

• The promulgation of a decision is not premature if it involves a completely separable intervention proceeding.

• In order to be considered a possessor in bad faith, there must be evidence to show that the possessor had knowledge of defects in their right to possess.

• A sublessee can be validly recognized if there is evidence of the assignment or transfer of the leasehold right to them.

• Res judicata requires a final judgment on the merits of the case and identity of parties, subject matter, and causes of action.

• An interlocutory matter is not sufficient basis for the application of res judicata.

• Intervention pro interesse suo is a mode of intervention in equity where a stranger asserts a property right in the subject matter of the litigation without becoming a formal party to the case.

• Lis pendens as a ground for a motion to dismiss requires identity of parties in the two cases.

• Intervention pro interesse suo can proceed independently of the main action.

• Litigant's failure to furnish opponent with a copy of appeal does not warrant dismissal of the appeal; court can order the litigant to furnish opponent with a copy.

• Usufruct is extinguished by the death of the usufructuary, unless a contrary intention clearly appears.

• Questions of fact are not proper subjects of appeal by certiorari; this mode of appeal is confined to questions of law.

• Factual findings of the Court of Appeals are conclusive on the parties.

• Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence, warrants another to believe in the existence of a particular state of facts.

• Toppel in pais arises when one intentionally or through culpable negligence induces another to believe certain facts and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts.

• The court may not supplant the right of parties to enter into contracts.

• When an obligation consists of not doing and the obligor does what has been forbidden him, it shall be undone at his expense.

• Article 21 of the Civil Code states that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs, or public policy shall compensate the latter for the damage.

• Article 2229 of the Civil Code allows exemplary damages to be awarded in certain cases.

• Attorney's fees may be awarded when litigation was necessary to protect one's interest.