Heirs of Sta. Rita vs. Heirs of Manalo

A dismissal for failure to prosecute has the effect of an adjudication upon the merits, unless otherwise declared by the court, and bars a subsequent action involving identical parties, subject matter, and cause of action under res judicata. Applied to the 2006 dismissal for nearly one year of inaction, all four elements of bar by prior judgment were satisfied, while nondisclosure of the earlier filed identical case violated the certification against forum shopping.

The contending parties were two groups of heirs asserting rights over two parcels of land originally claimed by Eladia Manalo, one comprising 3,475 square meters and the other 4,192 square meters. According to the heirs of Eladia Manalo, after her death her compulsory heirs, including her husband Eleuterio Cruz, filed free patent applications that resulted in free patents and original certificates of title issued in the names of the Heirs of Eladia Manalo and Eleuterio Cruz, with Eleuterio taking custody of the titles as husband of the deceased.

Thereafter, allegedly without the knowledge of the other heirs and through the fraudulent and malicious machinations of Ben Sta. Rita, Eleuterio mortgaged and sold the parcels to Ben Sta. Rita. The transfer caused cancellation of the original certificates and issuance of Transfer Certificates of Title numbered 18206 and 18670 in Ben Sta. Rita's name. On March 14, 2006, the heirs of Eladia Manalo sued the heirs of Ben Sta. Rita and the Register of Deeds of Taguig City before the Regional Trial Court of Pasig City to annul the deeds and certificates and to reinstate their titles.

After Branch 153 declared the heirs of Ben Sta. Rita in default on June 20, 2007 and directed ex-parte presentation of evidence, motions filed by defendant Alfred R. Sta. Rita were denied on August 29, 2007 and February 13, 2008. Because nothing was thereafter heard from the plaintiffs for almost one year, Branch 153 dismissed the 2006 Complaint for failure to prosecute on January 26, 2009, an order that later attained finality. In 2010, the heirs of Eladia Manalo filed another complaint for annulment of the same deeds and Transfer Certificates of Title numbered 18206 and 18670 against the same heirs and the Register of Deeds, adding Westmont Bank, now United Overseas Bank Phils., as defendant. In the meantime, on May 5, 2011, Transfer Certificate of Title number 18670 was cancelled and reissued to United Overseas Bank Phils., whose property was later purchased by Rodel Barcelona Properties, Inc., which intervened asserting innocent purchaser for value.

Branch 266 found the 2006 and 2010 Complaints involved identical parties, subject matter, and causes of action, and that the 2009 dismissal was a judgment on the merits barring the second suit, compounded by failure to disclose the 2006 case in the certification against forum shopping.

• Res Judicata / Bar by Prior Judgment: Petitioner argued that all elements of res judicata were present because the 2006 and 2010 Complaints had identical parties, subject matter, and causes of action, the January 26, 2009 Order dismissing for failure to prosecute was a judgment on the merits under Rule 17, Section 3 of the 1997 Rules of Civil Procedure, it was rendered by a court with jurisdiction, and it had become final, thus barring the 2010 Complaint with prejudice.
• Error in Remand: Petitioner maintained that the Court of Appeals erred in remanding the case to Branch 266 for further proceedings instead of affirming its dismissal.

• Dismissal on Mere Technicality: Respondent heirs of Eladia Manalo argued that the January 26, 2009 Order was not an adjudication on the merits but was based on mere technicality, and because it did not state it was with prejudice, it did not bar the 2010 Complaint under res judicata.
• No Forum Shopping: Respondent heirs of Eladia Manalo maintained that they did not violate the rule on forum shopping because res judicata was inapplicable and the 2006 Complaint was no longer pending when the 2010 Complaint was filed.
• Prior Judgment and Disclosure — Intervenor: Respondent-intervenor Rodel Barcelona Properties, Inc. countered that the dismissal for failure to prosecute was an adjudication on the merits barring the 2010 Complaint, and that failure to disclose the 2006 case violated Rule 7, Section 5, whose phrase has been filed requires disclosure even of decided cases involving the same issues.
• Innocent Purchaser for Value — Intervenor: Respondent-intervenor argued that the heirs of Eladia Manalo had no cause of action against it because it was an innocent purchaser for value of the property previously titled to United Overseas Bank Phils.

• Res Judicata: Whether res judicata barred the filing of the 2010 Complaint.
• Forum Shopping / Certification: Whether respondents heirs of Eladia Manalo violated Rule 7, Section 5 of the 1997 Rules of Civil Procedure when they failed to disclose their filing of the 2006 Complaint.

• Res Judicata: Yes. The 2010 Complaint was barred because the final 2009 dismissal for failure to prosecute was a judgment on the merits with identity of parties, subject matter, and causes of action.
• Forum Shopping / Certification: Yes. Nondisclosure of the previously commenced identical action violated Rule 7, Section 5, constituting forum shopping of the decided-case type warranting dismissal.

• Res Judicata: Bar by prior judgment requires a final judgment, rendered by a court with jurisdiction over subject matter and parties, constituting a judgment on the merits, with identity of parties, subject matter, and causes of action. The first, second, and fourth elements were undisputed: the 2009 Order had attained finality, Branch 153 had jurisdiction over annulment of titles and over the parties by filing, summons, and voluntary appearance, and both suits sought annulment of the same deeds and TCTs numbered 18206 and 18670 between substantially the same heirs, the addition of the bank not defeating substantial identity. The contested third element was satisfied by Rule 17, Section 3, which expressly provides dismissal for failure to prosecute shall have the effect of adjudication upon the merits unless otherwise declared, and the 2009 Order contained no contrary declaration despite its lack of detailed rights determination.
• Forum Shopping / Certification: Rule 7, Section 5 required certification that plaintiff has not theretofore commenced any action involving the same issues, yet the certification to the 2010 Complaint stated no other such action had been commenced although the identical 2006 action had been filed before the same court. Theretofore commenced encompasses pending, dismissed, and finally decided cases involving the same issues, not only pending cases, consistent with preventing contradictory decisions and trifling with orderly administration of justice. The conduct fell under the second type of forum shopping identified in City of Taguig vs. City of Makati — filing multiple cases on the same cause and prayer after final resolution of the first — which coincides with res judicata and required dismissal.

• Res judicata; bar by prior judgment — Res judicata literally means a matter adjudged or settled by judgment, understood in two senses: bar by prior judgment precluding a second action upon the same claim, demand, or cause of action, and conclusiveness of judgment precluding relitigation of issues actually resolved in a former suit involving a different cause of action. Its rationale is to avoid unnecessary multiplicity of suits and to ensure an end to litigation. Applied here, bar by prior judgment barred the 2010 annulment suit because the 2009 dismissal satisfied all requisites.
• Elements of res judicata — Applicability rests on four elements: first, the judgment sought to bar the new action must be final; second, rendered by a court having jurisdiction over subject matter and parties; third, disposition must be a judgment on the merits; and fourth, identity of parties, subject matter, and causes of action between first and second actions. All four were found present, with substantial rather than absolute identity of parties deemed sufficient.
• Dismissal due to fault of plaintiff; Rule 17, Section 3 — If for no justifiable cause plaintiff fails to appear for presentation of evidence in chief, to prosecute for an unreasonable length of time, or to comply with rules or court order, the complaint may be dismissed on motion or motu proprio, without prejudice to defendant's counterclaim. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. The 2009 dismissal after almost one year of inaction, without a declaration otherwise, was thus on the merits by operation of law.
• Forum shopping; certification against forum shopping — Forum shopping is committed by (1) filing multiple cases on same cause and prayer while prior case is unresolved, ground being litis pendentia; (2) filing multiple cases on same cause and prayer after prior case was finally resolved, ground being res judicata; and (3) filing multiple cases on same cause but with different prayers, splitting causes of action. Rule 7, Section 5 requires disclosure of any theretofore commenced action involving same issues, including dismissed or decided cases. Nondisclosure of the 2006 suit constituted the second type and violated the rule.

• "A dismissal for failure to prosecute is a judgment on the merits that bars the filing of a subsequent complaint with similar parties, subject matter, and cause of action as that earlier dismissed." — States the controlling ratio on the effect of dismissal for failure to prosecute and its res judicata consequence.
• "This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court." — Quotes the decisive proviso of Rule 17, Section 3 applied to deem the 2009 Order a judgment on the merits.
• "Since then, or for almost one (1) year, nothing has been heard from [the heirs of Eladia Manalo] showing a seeming lack of interest to pursue this case." — Recites the factual basis for the 2009 finding of failure to prosecute for an unreasonable length of time.
• "WHEREFORE, premises considered, this Complaint is Dismissed for failure to prosecute." — Reproduces the dispositive order whose legal effect as prior judgment barred the second suit.

• Club Filipino, Inc. vs. Bautista, 150 Phil. 599, 617-618 (2015) — Followed as authority for the literal meaning of res judicata, its two senses of bar by prior judgment and conclusiveness of judgment, and its four elements.
• Heirs of Gabule vs. Jumuad, 887 Phil. 575, 592 (2020) — Followed for the rule that res judicata does not require absolute identity of parties, only that parties remain substantially the same despite the added bank defendant.
• City of Taguig vs. City of Makati, 787 Phil. 367, 386-387 (2016) — Followed for enumerating the three ways of committing forum shopping, with the present refiling classified under the second type based on a finally resolved prior case.
• Heirs of Mampo vs. Morada, 888 Phil. 583, 593, 605-606 (2020) — Followed to define the grave evil of forum shopping as rendition of contradictory decisions by competent tribunals and to support strict dismissal for trifling with orderly administration of justice.

• Section 3, Rule 17, 1997 Rules of Civil Procedure — Provides dismissal for failure to appear, to prosecute for unreasonable length of time, or to comply with rules or orders, with effect of adjudication on merits unless otherwise declared; applied to convert the 2009 failure-to-prosecute dismissal into a judgment on the merits barring the 2010 suit.
• Section 5, Rule 7, 1997 Rules of Civil Procedure — Requires sworn certification that no action involving same issues was theretofore commenced, status of any pending action, and reporting of later-learned similar actions, with dismissal, contempt, and sanctions for false certification or willful forum shopping; applied to find violation for certifying no prior action despite the 2006 suit.
• Section 12, Rule 15, A.M. No. 19-10-20-SC — Retains bar by prior judgment as one of limited grounds for motions to dismiss under the 2019 Amendments; cited to underscore public policy against multiplicity of suits.
• Section 3, Rule 17, A.M. No. 19-10-20-SC (2019 Amendments) — Retains Rule 17, Section 3 with gender-appropriate pronouns; cited to show continuity of the adjudication-on-the-merits rule.
• Section 19(2), Batas Pambansa Blg. 129 — Confers Regional Trial Court jurisdiction over the annulment action; cited to establish the second element of res judicata.

Lazaro-Javier, Lopez, Dimaampao, and Villanueva, JJ., concur.