A dismissal of a case based on non-compliance with a "Notice of Case Status" issued by a court's officer-in-charge, which requires parties to manifest their intent regarding modes of discovery, is null and void and does not constitute res adjudicata, as such notice is not a lawful order of the court contemplated under Rule 17, Section 3 of the Rules of Court.

The dispute originated from an erroneous bank transaction where respondent First Interstate Bank of California, due to a computer mistake, issued a cashier's check for US-$8,500.00 to petitioner Maria Monserrat R. Kor, instead of the US-$500.00 actually remitted by her father.

• On September 30, 1981, petitioner's father remitted US-$500.00 through Metropolitan Bank & Trust Company, using respondent First Interstate Bank of California as the paying bank.
• Due to a computer error at respondent Bank's Los Angeles Office, the amount was overstated to US-$8,500.00.
• On October 8, 1981, respondent Bank issued and delivered Cashier Check No. 1217681 for US-$8,500.00 to petitioner, which she deposited and subsequently withdrew.
• Respondent Bank demanded the return of the overpayment of US-$7,434.90 (difference between $8,500 and the intended $500, plus potentially $1,000 from another transaction not fully detailed, totaling $8,000 overpayment mentioned later).
• Petitioner, in her Answer to the initial complaint (Civil Case No. 4272 filed June 15, 1983), admitted the overpayment allegations and stated she had offered to repay it in installments of $100.00 per month, which the bank rejected.
• On August 19, 1983, the Officer-in-Charge of RTC Branch 141 issued a "Notice of Case Status," requiring parties to manifest within 30 days if modes of discovery under Rules 24-29 were necessary or feasible, otherwise the case would be archived or dismissed.
• Neither party filed the required manifestation.
• On November 29, 1983, the presiding judge of Branch 141 dismissed the case for non-compliance with the August 19, 1983 notice.
• On July 4, 1984, respondent Bank, through new counsel, refiled the complaint (Civil Case No. 7765) in RTC Makati, assigned to Branch 143 presided by respondent Judge Madayag.
• Petitioner filed a motion to dismiss the second complaint on the ground of res adjudicata, arguing the dismissal of the first case barred the refiling.
• Respondent Judge Madayag denied the motion to dismiss and the subsequent motion for reconsideration.
• Petitioner elevated the matter via certiorari to the Intermediate Appellate Court (IAC), which dismissed the petition, finding the initial dismissal order void.
• Petitioner appealed the IAC decision to the Supreme Court.

• The dismissal of the first complaint (Civil Case No. 4272) by RTC Branch 141 constituted res adjudicata, barring the second complaint (Civil Case No. 7765).
• The dismissal of the first case was an adjudication on the merits under Rule 17, Section 3 (failure to prosecute/comply with court orders).
• Respondent Judge Madayag erred in stating a pre-trial order should have been issued, arguing the last pleading (answer to counterclaim) was filed much later than the "Notice of Case Status."
• The "Notice of Case Status" issued by the officer-in-charge was a valid court process, and failure to comply justified the dismissal.
• If the notice signed by the officer-in-charge was invalid, then other court processes signed by clerks (summons, pre-trial notices, writs of execution) could also be disregarded.
• The case of Arellano vs. Court of First Instance of Sorsogon supports the dismissal for failure to comply with discovery-related processes.

• (As upheld by Judge Madayag, IAC, and SC) The dismissal order in the first case (Civil Case No. 4272) was null and void for lack of legal basis.
• The "Notice of Case Status" was merely a notice, not an order of the court, and was issued by an officer-in-charge, not the judge.
• Failure to heed the warning in the notice did not constitute disobedience of a lawful court order under Rule 17, Section 3.
• The dismissal based on the void notice could not have the effect of an adjudication on the merits and thus did not constitute res adjudicata.
• The dismissal was too drastic and deprived the bank of its day in court, especially given petitioner's admission of the overpayment.
• The proper procedure after the last pleading was filed should have been the setting of a pre-trial conference under Rule 20, Section 1.
• The bank could not be deemed to have failed to prosecute for an unreasonable length of time as the dismissal occurred shortly after the answer was filed.

• Whether the dismissal of the first complaint (Civil Case No. 4272) by RTC Branch 141 constituted res adjudicata, barring the refiling of the same complaint (Civil Case No. 7765) in RTC Branch 143.
• Whether the "Notice of Case Status" issued by the Officer-in-Charge of RTC Branch 141 was a valid court order, the non-compliance with which could result in a dismissal having the effect of an adjudication on the merits under Rule 17, Section 3 of the Rules of Court.

• The Supreme Court affirmed the decision of the Intermediate Appellate Court.
• The Court held that the dismissal order of November 29, 1983, in Civil Case No. 4272 was null and void.
• The "Notice of Case Status" was not a lawful order of the court; it was merely a notice signed by the officer-in-charge (E.R. Belen), who is not the court or judge.
• Failure of the parties to comply with this notice did not constitute disobedience of a lawful court order, which is a ground for dismissal with prejudice under Rule 17, Section 3.
• The warning in the notice that the case "shall be archived or dismissed as the case may be" was ambiguous.
• Since the dismissal order was null and void, it did not have the force of a judgment and could not operate as an adjudication on the merits. Therefore, it did not constitute res adjudicata and did not bar the refiling of the complaint.
• The Court noted that recourse to discovery procedures (Rules 24-29) is not mandatory. If parties do not resort to discovery, the pre-trial conference should be set pursuant to Rule 20, Section 1.
• The Court clarified that petitioner's counterclaim for damages did not require an answer, making the counterclaim the last pleading. Thus, the clerk of court had the duty under Rule 20, Section 5 to place the case in the pre-trial calendar after the counterclaim was filed, which the trial court failed to do.
• The Court distinguished the Arellano case, noting the dismissal there was validly based on Rule 29, Section 5 for failure to serve answers to interrogatories, unlike the present case where the dismissal was based on a void notice.
• The Court rejected petitioner's argument regarding the validity of other clerk-issued notices, stating that rules specifically authorize clerks to issue summons (Rule 14, Sec 1), pre-trial notices (Rule 20, Sec 1 & 5), and trial notices (Rule 22, Sec 2), but no rule authorizes an officer-in-charge to issue the specific "Notice of Case Status" in question.

• Res Judicata: Definition: A legal principle meaning "a matter adjudged"; it prevents the relitigation of a claim, cause of action, or issue that has already been finally decided on its merits by a court of competent jurisdiction. Application: Petitioner invoked this doctrine, claiming the first dismissal barred the second suit. The Court held it inapplicable because the first dismissal was null and void and therefore not a judgment on the merits.
• Dismissal for Failure to Prosecute (Rule 17, Section 3): Definition: Allows dismissal of an action if the plaintiff fails to appear at trial, prosecute the action for an unreasonable length of time, or comply with the Rules of Court or any order of the court; such dismissal generally operates as an adjudication on the merits unless the court provides otherwise. Application: The Court ruled this inapplicable because the non-compliance was not with a lawful court order, and the time elapsed was not unreasonable.
• Rules on Discovery (Rules 24, 25, 26, 27, 28, 29): Definition: Procedural rules intended to enable parties to obtain knowledge of material facts from adversaries or third parties to facilitate settlement or expedite trial. Application: The "Notice of Case Status" related to these rules. The Court clarified that discovery is encouraged but not mandatory, and failure to manifest regarding discovery based on the defective notice could not justify a dismissal with prejudice.
• Mandatory Pre-trial Conference (Rule 20, Section 1): Definition: Requires the court to direct the clerk of court to calendar the case for pre-trial after the last pleading has been filed. Application: The Court stated this was the procedure Branch 141 should have followed after petitioner filed her answer (containing a counterclaim that needed no reply), instead of issuing the notice that led to the void dismissal.
• Clerk of Court's Duty to Calendar (Rule 20, Section 5): Definition: Mandates the clerk of court to include cases in the pre-trial calendar after the last pleading is filed and notify the parties. Application: The Court pointed out the clerk's duty to set the case for pre-trial after the counterclaim (last pleading) was filed.

• "Since the order of dismissal was null and void, it did not have the force of a judgment. It did not constitute a bar to the refiling of the bank's complaint. Respondent Judge did not err, or abuse his discretion, in denying petitioner's motion to dismiss Civil Case No. 7765." (Quoting the IAC decision)
• "The failure of the parties to heed the warning was not tantamount to disobedience of a lawful order of the court, for the 'officer-in-charge' was not the court or judge." (Quoting the IAC decision)
• "As the appellate court correctly held, the 'notice of case status' was not an order of the court. It was signed by Mr. E.R. Belen, officer-in-charge."
• "Consequently, the order of dismissal could not have the effect of an adjudication upon the merits."
• "However, recourse to discovery procedures is not mandatory. If the parties do not choose to resort to such procedures, the pre-trial conference should be set pursuant to the mandatory provisions of Section 1 of Rule 20."

• Itchon vs. Baligod (17 SCRA 268): Cited to establish the general rule that the answer to a counterclaim is ordinarily the last pleading before pre-trial is set.
• Pioneer Insurance & Surety Corp. vs. Hontanosas (78 SCRA 447): Cited alongside Itchon for the same principle regarding the last pleading.
• Navarro vs. Bello (102 Phil 1019): Cited to show that petitioner's counterclaim for damages resulting from the filing of the complaint did not require an answer from the respondent bank.
• Gojo vs. Goyola (35 SCRA 557): Cited alongside Navarro for the same principle that a counterclaim based on the complaint itself (like damages for malicious filing) is compulsory and needs no answer.
• Arellano vs. Court of First Instance of Sorsogon (65 SCRA 45): Cited by petitioner but distinguished by the Court; the dismissal in Arellano was upheld because it was properly based on Rule 29, Section 5 (failure to answer interrogatories), unlike the dismissal in the present case based on a void notice.

• Rules of Court, Rule 14, Section 1: Cited to show the clerk of court is authorized to issue summons upon the filing of the complaint.
• Rules of Court, Rule 17, Section 3: Invoked by petitioner as basis for dismissal with prejudice (failure to prosecute/comply with orders); found inapplicable by the Court because the non-compliance was not with a lawful court order.
• Rules of Court, Rule 20, Section 1: Cited regarding the mandatory nature of pre-trial after the last pleading and the court's duty to direct the clerk to calendar it.
• Rules of Court, Rule 20, Section 5: Cited regarding the clerk of court's duty to place the case in the pre-trial calendar and notify parties.
• Rules of Court, Rule 22, Section 2: Cited to show the clerk of court is authorized to issue the notice of the date of the trial.
• Rules of Court, Rules 24, 25, 26, 27, 28, 29: Referenced collectively as the rules on discovery, which the "Notice of Case Status" pertained to; the Court clarified their use is not mandatory.
• Rules of Court, Rule 29, Section 5: Mentioned in relation to the Arellano case, providing for dismissal or default judgment for failure to serve answers to interrogatories under Rule 25.