G.R. No. 137694 ; January 17, 2005
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. LA CAMPANA DEVELOPMENT CORPORATION, et al., respondents.

FACTS

La Campana Development Corporation filed a Complaint for Annulment of Consolidation of Titles against the Development Bank of the Philippines (DBP) before the Regional Trial Court (RTC). La Campana alleged that DBP had consolidated ownership over several mortgaged properties despite the cancellation of the annotation of the certificate of sale on the titles. It contended that this cancellation meant its right of redemption had not expired, making DBP’s consolidation premature and void. DBP moved to dismiss the complaint, arguing that the issue was already settled with finality by the Court of Appeals in a prior case (CA-G.R. CV No. 34856), which upheld the validity of the foreclosure sale. DBP invoked res judicata and forum shopping.
The RTC initially dismissed La Campana’s complaint on the ground of res judicata. However, upon La Campana’s motion for reconsideration, the RTC reinstated the complaint. It found that the prior Court of Appeals decision did not explicitly authorize the consolidation of titles or order the cancellation of La Campana’s certificates of title. The RTC held that the present action raised a distinct issue—the propriety of the consolidation based on the annotation of the certificate of sale—which was not squarely ruled upon in the prior case. DBP’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s orders reinstating La Campana’s complaint, despite DBP’s claim that the action is barred by res judicata.

RULING

The Supreme Court denied DBP’s petition and affirmed the Court of Appeals. The principle of res judicata requires concurrence of four elements: (1) the former judgment must be final; (2) it must have been rendered by a court having 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. The Court found the fourth element lacking. The cause of action in the prior case was for the collection of a sum of money and the foreclosure of mortgage, which resulted in a ruling on the validity of the foreclosure sale. The cause of action in the present case is for the annulment of the consolidation of titles, premised on the specific allegation that the cancelled annotation of the certificate of sale was never re-annotated, thereby affecting the reckoning of the redemption period and DBP’s right to consolidate. These are distinct causes of action. The prior judgment did not adjudicate the issue of whether DBP properly consolidated the titles following the technical requirements of annotation. Therefore, res judicata does not apply, and the RTC correctly reinstated the complaint for trial on the merits.