G.R. No. 142439 ; December 6, 2006
FILINVEST LAND, INC., petitioner, vs. HON. COURT OF APPEALS and ROMEO, ANTONIO, JOSEFINA, RICARDO (JR.), all surnamed ALVAREZ and VENANCIA R. Vda. de ALVAREZ, for herself as guardian ad litem for her minor children, RAMON, VERONICA, and FLORDELIZA, all surnamed ALVAREZ, and as necessary and indispensable party plaintiffs JAIME, VICTORIA, and MANUEL, all surnamed ALVAREZ, and ROSARIO PARAM Vda. de ALVAREZ, respondents.

FACTS

The Department of Agrarian Reform (DAR) awarded Ricardo Alvarez the right to purchase a parcel of land within the Laguna Resettlement Project, culminating in a Deed of Sale in 1977. This deed contained a ten-year prohibition on transfer to non-qualified beneficiaries, pursuant to agrarian laws. However, on June 11, 1978, Presidential Decree No. 1474 was enacted, converting the estate for non-agricultural use and expressly allowing awardees to sell or transfer their lots. After a Transfer Certificate of Title was issued in his name in May 1979, Ricardo Alvarez, with his wife Rosario, sold the land to Mercedes Oliver in June 1979. Oliver later sold the property to Filinvest Land, Inc. in 1989.
The heirs of Ricardo Alvarez initially filed a case for reconveyance before the Regional Trial Court (RTC) in 1982, alleging the sale was void and executed through deceit. This case was dismissed in 1989 for failure to prosecute after the plaintiffs and their counsel repeatedly failed to appear for hearings. The dismissal order became final. Subsequently, in 1990, the heirs filed a new complaint before the Provincial Agrarian Reform Adjudicator (PARAD) seeking annulment of the sales.

ISSUE

The primary issue is whether the doctrine of res judicata bars the subsequent PARAD case filed by the Alvarez heirs.

RULING

Yes, the principle of res judicata applies. The Supreme Court affirmed the Court of Appeals’ decision, which had annulled the DARAB’s ruling and reinstated the PARAD’s dismissal on the ground of res judicata. For res judicata to apply, four elements must concur: (1) the former judgment must be final; (2) it must have been rendered by a court with jurisdiction; (3) it must be a judgment on the merits; and (4) there must be identity of parties, subject matter, and causes of action between the first and second actions.
All these elements are present. The RTC’s 1989 Order of dismissal for failure to prosecute is a final judgment on the merits, as such a dismissal constitutes an adjudication on the merits under the rules of court. The RTC had jurisdiction over the subject matter—an action for reconveyance and annulment of title. The parties in both the RTC and PARAD cases are substantially identical, involving the Alvarez heirs as plaintiffs and the successors-in-interest (Oliver and Filinvest) as defendants. Finally, the causes of action are the same: both complaints sought to annul the 1979 sale to Oliver based on allegations of its invalidity and vitiated consent. Since the RTC case was conclusively adjudicated, the heirs are barred from re-litigating the same claim before the PARAD.