G.R. No. 212277 February 11, 2015
ROBERT and NENITA DE LEON, Petitioners, vs. GILBERT and ANALYN DELA LLANA, Respondents.

FACTS

Respondent Gilbert dela Llana filed an unlawful detainer complaint (first ejectment complaint) against petitioner Robert de Leon and Gil de Leon before the MCTC of Nabunturan-Mawab, Compostela Valley, docketed as Civil Case No. 821. The complaint was based on an undated lease contract for a portion of a property registered in Gilbert’s name, alleging non-payment of rentals. The MCTC dismissed the complaint in a Decision dated January 24, 2006, ruling that the lease contract was a relatively simulated contract and thus non-binding. Alternatively, it held that dismissal was proper due to improper venue, as the contract stipulated that disputes be filed exclusively in the courts of Davao City. This decision became final and executory on March 20, 2006.
Notwithstanding the finality, respondents Gilbert and Analyn dela Llana filed a second complaint for unlawful detainer, damages, and attorney’s fees against petitioners Robert and Nenita de Leon before the MTCC of Davao City, docketed as Civil Case No. 19,590-B-06, based on the same undated lease contract and failure to pay rent. In their Answer, petitioners raised the defense of res judicata, arguing the second complaint was barred by the final judgment in the first ejectment case.
The MTCC-Davao City ruled in favor of respondents, ordering petitioners to vacate and pay rentals, without ruling on the res judicata issue. On appeal, the RTC reversed the MTCC, dismissing the second complaint on the ground of improper venue, stating that venue for unlawful detainer is specifically governed by the Rules of Court and cannot be stipulated. The CA reversed the RTC and reinstated the MTCC decision, ruling that venue in unlawful detainer cases may be validly stipulated by the parties.

ISSUE

Whether or not the principle of res judicata applies that is, whether or not the second ejectment complaint was barred by prior judgment, i.e., by the MCTC-Nabunturan-Mawab’s January 24, 2006 Decision in Civil Case No. 821.

RULING

Yes, the principle of res judicata, specifically “bar by prior judgment,” applies.
The Supreme Court ruled that the second ejectment complaint is barred by the final and executory judgment in the first ejectment case (Civil Case No. 821). The elements of “bar by prior judgment” are present: (a) identity of parties, (b) identity of subject matter, and (c) identity of causes of action.
a) Identity of Parties: The parties in both cases are the same or their privies. In the first case, the parties were Gilbert dela Llana (plaintiff) versus Robert de Leon and Gil de Leon (defendants). In the second case, the parties were Gilbert and Analyn dela Llana (plaintiffs) versus Robert and Nenita de Leon (defendants). The spouses are considered privies to the original parties.
b) Identity of Subject Matter: Both cases involve the same portion of the 541-square-meter property in Poblacion, Nabunturan, Compostela Valley.
c) Identity of Causes of Action: Both complaints are for unlawful detainer based on the same undated lease contract and the same alleged breach thereof (non-payment of rentals).
The MCTC’s January 24, 2006 Decision was a judgment on the merits. It resolved the substantive issue of Gilbert’s right to recover possession based on the lease contract, ultimately dismissing the complaint after finding the contract was simulated and non-binding. A judgment on the merits is one that determines the rights and liabilities of the parties based on the ultimate facts disclosed by the pleadings and evidence. The finality of this judgment precludes the re-litigation of the same cause of action.
The Court clarified that the MCTC’s alternative ruling on improper venue did not detract from its primary ruling on the simulation of the contract, which constituted an adjudication on the merits. Therefore, respondents were barred from re-filing essentially the same complaint. The CA erred in focusing solely on the issue of venue without addressing the res judicata effect of the prior final judgment. The Supreme Court reversed the CA’s Decision and Resolution and reinstated the RTC’s order dismissing the second ejectment complaint.