Philippine National Bank vs. Romeo B. Daradar

A provisional dismissal of a civil action is not sanctioned by the Rules of Civil Procedure; being void or, at best, interlocutory, it does not divest the trial court of jurisdiction, and a later dismissal for failure to prosecute under Rule 17, Section 3 that becomes final operates as an adjudication on the merits and bars a subsequent complaint under res judicata.

Philippine National Bank (PNB) owned two parcels of land and improvements therein, which became the subject of a Deed of Promise to Sell in favor of Romeo B. Daradar. The governing backdrop is Rule 17, Section 3 of the Rules of Court, which treats dismissal for a plaintiff’s failure to prosecute as an adjudication on the merits unless otherwise declared, and the rule that provisional dismissal is a criminal-procedure concept. The dispute also implicated the finality-of-judgment and res judicata principles.

Philippine National Bank (PNB) and Romeo B. Daradar entered into a Deed of Promise to Sell covering two parcels of land and improvements therein that were owned by PNB. Due to Daradar’s failure to pay the yearly amortizations and interest due under the Deed, PNB rescinded the Deed through a Notarial Notice of Rescission dated November 27, 1989.

Daradar then filed an action for Annulment of Rescission, Accounting and Damages against PNB in the Regional Trial Court of Iloilo City, docketed as Civil Case No. 21375 and raffled to Branch 24. Due to Daradar’s failure to appear at the scheduled hearing, the RTC, in its April 5, 1995 Order, provisionally dismissed Civil Case No. 21375 without prejudice. No motion for reconsideration was filed against that Order.

After the lapse of four years, the RTC motu proprio issued its June 17, 1999 Order finally dismissing Civil Case No. 21375 on the ground of Daradar’s failure to prosecute under Section 3, Rule 17 of the Rules of Court, in view of his failure to reinstate or revive the case despite the lapse of more than four years from the first dismissal.

On October 18, 1999, Daradar filed another complaint for declaration of nullity of notarial rescission of the Deed with the RTC. The case was docketed as Civil Case No. 25981 and raffled to Branch 22. Summons was properly served upon PNB, which thereafter moved to dismiss the complaint on the ground that the Second Order dismissing Civil Case No. 21375 for failure to prosecute was an adjudication on the merits, thereby barring the subsequent filing of Civil Case No. 25981 on the ground of res judicata.

The RTC granted the motion to dismiss, finding that the previous dismissal of Civil Case No. 21375 involved the same parties, the same cause of action, and the same subject matter and had the effect of adjudication upon the merits pursuant to Section 3, Rule 17, without prejudice to PNB’s counterclaim in the same action.

• Interlocutory First Order: PNB contended that the Court of Appeals erred in reinstating the complaint in Civil Case No. 25981 because the First Order provisionally dismissing Civil Case No. 21375 without prejudice was merely interlocutory and not a final order that terminated the proceedings.
• Final and Immutable Second Order: PNB asserted that the Second Order finally dismissing the case for Daradar’s failure to prosecute superseded the First Order and had the effect of an adjudication on the merits, which barred Daradar from reviving the case.
• Res Judicata: PNB argued that the trial court erred in declaring the Second Order null and void since the same had already become final and immutable, and prayed for reinstatement of the January 27, 2000 Order granting the motion to dismiss on the ground of res judicata.

• Dismissal Without Prejudice: Daradar maintained that the First Order did not bar the filing of Civil Case No. 25981 because the First Order was a dismissal without prejudice.
• Void Second Order: Daradar argued that the Second Order was null and void for want of jurisdiction.

• Validity and Effect of the First Order: Whether the First Order provisionally dismissing Civil Case No. 21375 without prejudice was void for lack of legal basis and/or merely interlocutory, and thus did not divest the trial court of jurisdiction.
• Finality and Effect of the Second Order: Whether the Second Order dismissing Civil Case No. 21375 for failure to prosecute attained finality and operated as an adjudication on the merits.
• Res Judicata: Whether the dismissal of Civil Case No. 21375 barred the filing of Civil Case No. 25981 under res judicata.

• Validity and Effect of the First Order: Yes. The First Order was void for lack of legal basis and, at best, interlocutory; it did not divest the trial court of jurisdiction. The Rules of Civil Procedure do not provide for provisional dismissal of civil cases.
• Finality and Effect of the Second Order: Yes. The Second Order attained finality and operated as an adjudication on the merits. Daradar did not move for reconsideration or appeal, and a dismissal under Rule 17, Section 3 is with prejudice unless otherwise declared.
• Res Judicata: Yes. Res judicata barred Civil Case No. 25981. All requisites concurred: a final judgment, a court of competent jurisdiction, a judgment on the merits, and identity of parties, subject matter, and causes of action.

• Validity and Effect of the First Order: The concept of provisional dismissal in Philippine jurisdiction contemplates the temporary dismissal of a criminal action that may be revived within the period set by the Rules of Court upon compliance with certain requisites. There is nothing in the Rules of Civil Procedure, as amended, that provides for a provisional dismissal of a civil case. A judgment must be definitive; the decision itself must purport to decide finally the rights of the parties upon the issue submitted by specifically denying or granting the remedy sought. In Cu Unjieng E. Hijos vs. Mabalacat Sugar Company, the Court held that when a definitive judgment cannot be rendered because the judgment is subject to a contingency, the judgment contains no disposition at all and is null and void. The First Order failed to meet this standard of definitiveness and was therefore void and without legal effect for lack of basis. A void judgment or order has no legal and binding effect for any purpose; in contemplation of law, it is non-existent and may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take steps to vacate or avoid a void judgment or final order; it may simply be ignored. All acts performed pursuant to it and all claims emanating from it have no legal effect, and a void order can never attain finality. Being void, the issuance of the First Order never became final nor operated to divest the trial court of jurisdiction over the complaint. Even assuming arguendo that provisional dismissals of civil cases such as the First Order could be sanctioned, the First Order was interlocutory because it did not completely dispose of the case and did not decide with finality the rights and obligations of the parties. An interlocutory order is always under the control of the court until the final decision of the suit and may be modified or rescinded upon sufficient grounds shown at any time before final judgment. The trial court accordingly acted within its jurisdiction in issuing its Second Order and in motu proprio dismissing the case for Daradar’s failure to prosecute under Rule 17, Section 3.
• Finality and Effect of the Second Order: Dismissal of an action due to a plaintiff’s failure to prosecute is governed by Rule 17, Section 3 of the Rules of Court, which provides that the dismissal shall have the effect of an adjudication upon the merits unless otherwise declared by the court. The courts can no longer delve into the legality of the Second Order absent any indication that the same is void. Once a judgment becomes final, it is no longer subject to change, revision, amendment, or reversal, except only for correction of clerical errors, the making of nunc pro tunc entries which cause no prejudice to any party, or where the judgment itself is void. Public policy and sound practice demand that judgments of courts should become final at some definite time fixed by law. Daradar did not move for reconsideration of the Second Order nor appeal the same, thus allowing it to become final and executory; on this score, the Second Order is already beyond the power of the courts to amend or revoke. In any event, the question of whether a case should be dismissed for failure to prosecute is mainly addressed to the sound discretion of the trial court. The true test for the exercise of such power is whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing to proceed with reasonable promptitude, and there must be unwillingness on the part of the plaintiff to prosecute. As to what constitutes an unreasonable length of time, this depends on the circumstances of each particular case, and the sound discretion of the court will not be disturbed absent patent abuse. In Ko vs. Philippine National Bank, the Court affirmed dismissal for failure to prosecute and held that the span of three years from the filing of the complaint to the order of dismissal showed that the petitioners had no interest in seeing their case terminated at the earliest possible time, or that the case was unmeritorious from inception. In Roasters Philippines, Inc. vs. Gaviola, the Court found that the actions exhibited by respondents demonstrated their lack of interest in prosecuting the case after considering that almost two years had lapsed from finality of the CA Decision but respondents did not file any pleading to revive the case, respondents only acted at the behest of petitioner, and respondents and counsel failed to attend the scheduled pre-trial, mediation, and hearing for the initial presentation of their evidence-in-chief. Here, Daradar’s actions clearly demonstrated his lack of interest and due diligence to prosecute the case: he failed to act on the First Order and allowed the trial court to issue its Second Order four years later; he failed to assail the Second Order; and another four years lapsed before he filed another complaint based on the same cause of action. No compelling reason existed to disturb the trial court’s dismissal of Daradar’s complaint under Rule 17, Section 3.
• Res Judicata: Under the principle of res judicata, a final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies, and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. For a claim of res judicata to prosper, the following requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases, identity of parties, subject matter, and causes of action. All elements were present. The Second Order was a final judgment which had already attained finality and was rendered by a court of competent jurisdiction. It was likewise undisputed that there was an identity of parties, subject matter, and causes of action between Civil Case Nos. 21375 and 25981. The third element was present because the Second Order dismissing Civil Case No. 21375 operated as a judgment on the merits; it did not state that the dismissal of the complaint was without prejudice. A dismissal based on any of the grounds in Section 3, Rule 17 operates as an adjudication on the merits, and unless otherwise qualified by the court, a dismissal under said rule is considered with prejudice, which bars the refiling of the case. Daradar was therefore barred from reviving his action by filing a new complaint in Civil Case No. 25981, and the trial court correctly granted PNB’s motion to dismiss on the ground of res judicata.

• Provisional Dismissal in Civil Cases — The concept of provisional dismissal in Philippine jurisdiction contemplates the temporary dismissal of a criminal action that may be revived within the period set by the Rules of Court upon compliance with certain requisites. There is nothing in the Rules of Civil Procedure, as amended, that provides for a provisional dismissal of a civil case. Applied to the case, the First Order provisionally dismissing Civil Case No. 21375 was void and without legal effect for lack of basis.
• Void Judgment — A void judgment or order has no legal and binding effect for any purpose; in contemplation of law, it is non-existent and may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take steps to vacate or avoid a void judgment or final order; it may simply be ignored. All acts performed pursuant to it and all claims emanating from it have no legal effect, and a void order can never attain finality. Applied to the case, the First Order never became final nor operated to divest the trial court of jurisdiction.
• Interlocutory Order — An order is considered interlocutory when it does not completely dispose of the case because it leaves something to be done by the trial court with respect to the merits, and it refers to something between the commencement and end of the suit which decides some point or matter but is not the final decision on the whole controversy. An interlocutory order is always under the control of the court until the final decision of the suit and may be modified or rescinded upon sufficient grounds shown at any time before final judgment. Applied to the case, even assuming provisional dismissals of civil cases could be sanctioned, the First Order was interlocutory and could not have operated to divest the trial court of jurisdiction.
• Dismissal for Failure to Prosecute under Rule 17, Section 3 — If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with the Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court’s own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. The question of whether a case should be dismissed for failure to prosecute is mainly addressed to the sound discretion of the trial court, and the true test is whether the plaintiff is culpable for want of due diligence in failing to proceed with reasonable promptitude, with unwillingness on the part of the plaintiff to prosecute. Applied to the case, the Second Order validly dismissed Civil Case No. 21375 for failure to prosecute and operated as an adjudication on the merits.
• Finality of Judgment — Once a judgment becomes final, it is no longer subject to change, revision, amendment, or reversal, except only for correction of clerical errors, the making of nunc pro tunc entries which cause no prejudice to any party, or where the judgment itself is void. Public policy and sound practice demand that judgments of courts should become final at some definite time fixed by law. Applied to the case, the Second Order became final and executory because Daradar did not move for reconsideration or appeal, and it was already beyond the power of the courts to amend or revoke.
• Res Judicata — A final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies, and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. The requisites are: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases, identity of parties, subject matter, and causes of action. Applied to the case, all requisites were present, and Daradar was barred from reviving his action through Civil Case No. 25981.

• "There is nothing in the Rules of Civil Procedure, as amended, which provides for a provisional dismissal of a civil case." — This states the core rule invalidating the First Order, which the Court treated as void for lack of legal basis.
• "A void judgment or order has no legal and binding effect for any purpose. In contemplation of law, it is non-existent and may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take any steps to vacate or avoid a void judgment or final order; it may simply be ignored. All acts performed pursuant to it and all claims emanating from it have no legal effect. In this sense, a void order can never attain finality." — This defines the effects of a void judgment and explains why the First Order never became final nor divested the trial court of jurisdiction.
• "This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court." — This is the controlling language of Rule 17, Section 3, which made the Second Order a judgment on the merits and supplied the third requisite of res judicata.
• "For a claim of res judicata to prosper, the following requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases, identity of parties, subject matter, and causes of action." — This is the Court’s canonical formulation of the res judicata requisites applied to bar Civil Case No. 25981.

• Cu Unjieng E. Hijos vs. Mabalacat Sugar Company, 70 Phil. 380, 383-384 (1940) — Cited for the rule that when a definitive judgment cannot be rendered because the judgment is subject to a contingency, the judgment contains no disposition at all and is null and void; also cited for treating a provisional order as an interlocutory order subject to vacation or amendment before final judgment.
• Heirs of Kishinchand Hiranand Dialdas vs. Court of Appeals, 412 Phil. 491, 501 (2001) — Cited for the requirement that a judgment must be definitive and that the decision itself must purport to decide finally the rights of the parties upon the issue submitted by specifically denying or granting the remedy sought.
• Land Bank of the Philippines vs. Spouses Orilla, 703 Phil. 565, 574-575 (2013) — Cited for the effects of a void judgment: it has no legal and binding effect, is non-existent, may be resisted in any action or proceeding, need not be vacated, and can never attain finality.
• Hanlon y Santos vs. Samontina y Ceballos, G.R. No. 237236, April 18, 2018 — Cited for the definition of an interlocutory order as one that does not completely dispose of the case and leaves something to be done by the trial court with respect to the merits.
• Commissioner of Internal Revenue vs. Omya Chemical Merchants, Inc., G.R. No. 237079, November 7, 2018, citing Matute vs. Court of Appeals, 136 Phil. 157, 203-204 (1969) — Cited for the rule that an interlocutory order is always under the control of the court until the final decision of the suit and may be modified or rescinded upon sufficient grounds shown at any time before final judgment.
• Navarro vs. Metropolitan Bank & Trust Company, 612 Phil. 462, 471 (2009) — Cited for the finality-of-judgment principle that once a judgment becomes final, it is no longer subject to change, revision, amendment, or reversal, except for clerical errors, nunc pro tunc entries causing no prejudice, or where the judgment itself is void.
• Ko vs. Philippine National Bank, 515 Phil. 276, 282-283 (2006) — Cited as precedent affirming dismissal for failure to prosecute, where the span of three years from filing of the complaint to the order of dismissal showed that the petitioners had no interest in seeing their case terminated at the earliest possible time, or that the case was unmeritorious from inception.
• Roasters Philippines, Inc. vs. Gaviola, 768 Phil. 309, 318-320 (2015) — Cited for the factors demonstrating lack of interest in prosecuting the case: almost two years lapsed from finality of the CA Decision without any pleading to revive the case, respondents acted only at the behest of petitioner, and respondents and counsel failed to attend the scheduled pre-trial, mediation, and hearing for the initial presentation of their evidence-in-chief.
• Allied Banking Corp. vs. Spouses Madriaga, 797 Phil. 182, 191 (2016) — Cited for the rule that the question of whether a case should be dismissed for failure to prosecute is mainly addressed to the sound discretion of the trial court, and the true test is whether the plaintiff is culpable for want of due diligence in failing to proceed with reasonable promptitude.
• Land Bank of the Philippines vs. Del Moral, Inc., G.R. No. 187307, October 14, 2020 — Cited for the requisites of res judicata: final judgment or order, jurisdiction over the subject matter and the parties, judgment or order on the merits, and identity of parties, subject matter, and causes of action.
• Martinez vs. Buen, 808 Phil. 424, 435 (2017) — Cited for the rule that a dismissal based on any of the grounds in Section 3, Rule 17 operates as an adjudication on the merits, and unless otherwise qualified by the court, a dismissal under said rule is considered with prejudice, which bars the refiling of the case.

• Section 3, Rule 17, Rules of Court — Provides for dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with the Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court’s own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. Applied to the case, the Second Order dismissing Civil Case No. 21375 for failure to prosecute operated as an adjudication on the merits and barred the refiling of the case.
• Section 8, Rule 117, Rules of Court — Cited by the Court to explain that the concept of provisional dismissal in Philippine jurisdiction contemplates the temporary dismissal of a criminal action that may be revived within the period set by the Rules of Court upon compliance with certain requisites. Applied to the case, it underscored that the Rules of Civil Procedure do not provide for a provisional dismissal of a civil case.
• Sections 10 and 14, A.M. No. 12-11-2-SC (Guidelines for Decongesting Holding Jails by Enforcing the Rights of the Accused to Bail and Speedy Trial) — Cited together with Section 8, Rule 117, to reinforce that provisional dismissal is a criminal-procedure concept. Applied to the case, it supported the conclusion that the First Order provisionally dismissing a civil case had no legal basis.

Leonen (Chairperson), Inting, Delos Santos, and Lopez, J.Y., JJ., concur.