Lee vs. Lui Man Chong

A subsequent action for recovery of ownership is barred by prior judgment when it involves the same parties, subject matter, and causes of action as a previously dismissed action for annulment of self-adjudication, both anchored on the claimant's alleged status as common-law spouse and co-owner of the decedent's estate.

Conrado P. Romero died intestate on January 17, 2006, leaving parcels of land and shares of stock. Respondent Lui Man Chong, claiming to be Romero's nephew, executed an Affidavit of Self-Adjudication over the estate. Petitioner Teresita S. Lee, claiming to be Romero's common-law wife and business partner, sought to recover a portion of the properties, asserting co-ownership based on their cohabitation.

On January 17, 2006, Conrado P. Romero died intestate, leaving four parcels of land in Baguio City and 4,600 shares of Pines Commercial Corporation. On February 23, 2006, respondent Lui Man Chong, asserting he was Romero's nephew and sole heir, executed an Affidavit of Self-Adjudication, transferring the titles to the properties to his name.

Petitioner Teresita S. Lee, claiming to be Romero's common-law wife and business partner, filed a Petition for Letters of Administration before the RTC of Baguio City, Branch 5, which was dismissed on August 24, 2006. On August 24, 2006, Lee filed a complaint for Declaration of Nullity of Affidavit of Self-Adjudication against Chong before RTC Branch 61. She claimed co-ownership over half of Romero's estate, asserting they acquired the properties during cohabitation using funds from their joint businesses. On April 29, 2008, RTC Branch 61 dismissed the case for lack of cause of action and legal personality, finding that Lee, having no matrimonial bond with Romero, did not qualify as an heir and failed to establish cohabitation. This dismissal was affirmed by the Supreme Court and became final on January 12, 2009.

On September 4, 2008, Lee filed another complaint for Annulment of Title with Damages, later amended to Recovery of Ownership, against Chong before RTC Branch 60. She reiterated her claims of being Romero's common-law wife and business partner and sought the cancellation of Chong's titles and the issuance of new ones declaring her owner of a 1/2 portion of the properties. Chong moved to dismiss on grounds of lack of jurisdiction, lack of cause of action, and res judicata, citing the final judgment in the Annulment Case. The RTC Branch 60 initially denied the motion on February 28, 2011, but upon reconsideration, granted it on August 8, 2011, ruling that determining her entitlement to the properties would inevitably tackle the validity of the Affidavit of Self-Adjudication, an issue already settled with finality. The Court of Appeals affirmed this ruling on May 24, 2013, holding that the doctrine of res judicata, specifically bar by prior judgment, applied because both cases involved the same parties and were anchored on Lee's claim of co-ownership over the same properties. Lee's motion for reconsideration was denied, prompting the present petition.

• Res Judicata: Petitioner argued that the Court of Appeals seriously erred in declaring that res judicata had set in to bar the Recovery Case by prior judgment in the Annulment Case.
• Sacrifice of Justice: Petitioner contended that assuming res judicata had indeed set in, its application would involve the sacrifice of justice to technicality.

• Res Judicata: Respondent maintained that the final and executory judgment in the Special Proceedings Case and the Annulment Case barred the Recovery Case, as the causes of action in both were anchored on her claim that she was Romero's common-law spouse.
• Validity of Affidavit Settled: Respondent argued that the final dismissal of the Annulment Case, which sought to declare the nullity of his affidavit of self-adjudication, had effectively settled the issue of its validity, including the consequences of its execution such as the ownership of the subject properties.

• Res Judicata: Whether the Court of Appeals erred in affirming the ruling of the RTC that res judicata bars the Recovery Case.

• Res Judicata: No. The Court found no reversible error in the appellate court's ruling, holding that all the requisites of res judicata under the concept of bar by prior judgment were satisfied.

• Res Judicata: The Court found that all elements of res judicata as "bar by prior judgment" were present: (1) the prior Annulment Case was dismissed and attained finality on January 12, 2009; (2) RTC Branch 61 had jurisdiction over the parties and rendered a judgment on the merits; (3) there was identity of parties, as both cases were instituted by Lee against Chong; (4) there was identity of subject matter, as both involved her claim over the exact same properties; and (5) there was identity of causes of action, as both cases sought the recovery of ownership of 1/2 of the subject properties anchored on her claim of co-ownership. The Court applied the "absence of inconsistency test," noting that Lee practically sought the same relief in both cases—to be declared co-owner and to divest Chong of his ownership over at least one half of the properties. Thus, the prior judgment constituted a bar to the subsequent action.

• Res Judicata — An existing final judgment rendered on the merits by a court of competent jurisdiction is conclusive of the rights of the parties in all other actions on the points and matters in issue in the first suit. It has two concepts: bar by prior judgment (identity of parties, subject matter, and causes of action) and conclusiveness of judgment (only identity of parties). The Court applied the first concept, finding that the Annulment Case and the Recovery Case shared identical parties, subject matter, and causes of action, thereby barring the latter.
• Absence of Inconsistency Test — A test for determining identity of causes of action where it is assessed whether the judgment sought will be inconsistent with the prior judgment. If no inconsistency is shown, the prior judgment shall not constitute a bar. The Court found that the relief sought in the Recovery Case would be inconsistent with the prior dismissal in the Annulment Case, confirming the identity of causes of action.

• "The Court finds that the subject case satisfies all the requisites of res judicata under the first concept of bar by prior judgment." — This passage states the Court's conclusion that the subsequent recovery case is barred by the prior annulment case.
• "The causes of action in both the Annulment Case and the Recovery Case were the recovery of ownership of 1/2 of the subject properties by Lee from Chong anchored on her claim that she was a co-owner of the said properties." — This defines the identity of causes of action that triggered the application of bar by prior judgment.

• Selga vs. Brar, G.R. No. 175151, September 21, 2011 — Cited for the definition of res judicata.
• Social Security Commission vs. Rizal Poultry and Livestock Association, Inc., G.R. No. 167050, June 1, 2011 — Cited for the elements of res judicata and its two concepts: bar by prior judgment and conclusiveness of judgment.
• Spouses Torres vs. Medina, 629 Phil. 101 (2010) — Cited for the "absence of inconsistency test" in determining identity of causes of action.

• Section 47, Rule 39 of the Rules of Court — Defines the effect of judgments or final orders, embodying the two concepts of res judicata. The Court applied paragraph (b) regarding bar by prior judgment, as there was identity of parties, subject matter, and causes of action.
• Section 2, Rule 2 of the Rules of Court — Defines a cause of action as the act or omission by which a party violates a right of another. Used to determine the identity of causes of action between the two cases.
• Article 887 and 1003 of the Civil Code — Cited by the RTC Br. 61 in the Annulment Case to determine that Lee, as a common-law wife without a matrimonial bond, did not qualify as an heir of Romero.

Antonio T. Carpio (Chairperson), Arturo D. Brion, Mariano C. del Castillo, and Francis H. Jardaleza (Designated Acting Member in lieu of Associate Justice Marvic M.V.F. Leonen).