G.R. No. 193516. March 24, 2014.
VILMA MACEDONIO, Petitioner, vs. CATALINA RAMO, YOLANDA S. MARQUEZ, SPOUSES ROEL and OPHELIA PEDRO, SPOUSES JOEFFRY and ELIZA BALANAG, and BPI FAMILY SAVINGS BANK, INC., Respondents.

FACTS

Petitioner Vilma Macedonio and respondent Catalina Ramo entered into an agreement for the purchase of a portion of Ramo’s unregistered lot. Petitioner paid P850,000.00 as earnest money. A “Deed of Sale with Mortgage to Secure Payment of Price” was executed. Ramo assured petitioner the property was free from liens, but the tax declaration indicated it was subject to a levy and a mortgage. Ramo failed to clear the mortgage as promised.
Petitioner filed Civil Case No. 5703-R for rescission of contract and damages against Ramo. The parties attempted to settle. The trial court (Branch 3, Baguio RTC) dismissed the case for failure to prosecute on November 11, 2005. Petitioner filed a motion for reconsideration. The court issued subsequent orders, including an October 23, 2006 Order stating “This case is considered terminated.”
Meanwhile, Ramo obtained a Sales Patent and an Original Certificate of Title (OCT P-3535) over the property on October 16, 2006. In June 2007, Ramo subdivided the property and transferred portions to respondents Spouses Pedro, Yolanda Marquez, and Spouses Balanag via Acknowledgment Trusts and a deed of sale. No portion was transferred to petitioner.
In 2008 and 2009, there were motions and orders regarding a possible settlement, with Ramo admitting receipt of the P850,000.00 but offering to return only P255,000.00. On February 2, 2010, an Entry of Judgment was issued, certifying that the October 23, 2006 Order became final and executory on November 17, 2006.
On December 2, 2009, petitioner filed a Protest with the DENR seeking to nullify Ramo’s sales patent and titles.
On April 21, 2010, petitioner filed Civil Case No. 7150-R (Branch 6, Baguio RTC) against all respondents for specific performance, annulment of documents and titles, and damages. Ramo moved to dismiss, citing forum-shopping due to the prior terminated case (Civil Case No. 5703-R) and the pending DENR Protest.
The trial court dismissed Civil Case No. 7150-R with prejudice in its July 20, 2010 Order due to: (a) violation of the certification against forum-shopping rule (failure to inform the court of Civil Case No. 5703-R and the DENR Protest); (b) forum-shopping; and (c) litis pendentia. The court held the cases involved the same cause of action (Ramo’s wrongful conduct in the cancelled sale), constituting splitting a cause of action, and the DENR Protest sought identical relief (annulment of titles). Petitioner’s motion for reconsideration was denied.

ISSUE

Whether the Regional Trial Court erred in dismissing Civil Case No. 7150-R with prejudice due to alleged forum-shopping and litis pendentia.

RULING

Yes, the Regional Trial Court erred. The dismissal with prejudice was improper.
The Supreme Court held that the outright dismissal with prejudice was too severe a penalty. The rules on forum-shopping and the certification requirement should not be applied rigidly. Courts must consider the facts and merits of the case, principles of justice, and fair play.
Regarding Civil Case No. 5703-R: It was dismissed for failure to prosecute, not on the merits. The October 23, 2006 Order stating the case was “terminated” was a reaffirmation of the earlier dismissal for failure to prosecute. A dismissal for failure to prosecute is an adjudication on the merits only if the court so specifies. Here, the dismissal order did not state it was with prejudice. Therefore, it was without prejudice and did not constitute res judicata. The causes of action in the two civil cases were not identical. Civil Case No. 5703-R was for rescission based on Ramo’s failure to clear the liens. Civil Case No. 7150-R was for specific performance and annulment of titles based on new facts occurring after the first case was filed—specifically, Ramo obtaining title and transferring portions to other respondents, thereby allegedly acting in bad faith and violating petitioner’s rights. These new facts gave rise to a different cause of action.
Regarding the DENR Protest: It was an administrative proceeding, not a judicial one. An administrative case and a judicial case do not constitute litis pendentia, as they do not involve the same parties and are not pending before courts of concurrent jurisdiction. The DENR Protest sought nullification of the sales patent and titles on administrative grounds, while the civil case sought judicial relief based on violations of civil law. They are not the same.
While petitioner technically violated the certification against forum-shopping rule by not disclosing the status of the prior case and the DENR Protest, the violation was not willful and deliberate. The circumstances showed a bona fide belief that the first case was terminated and the DENR action was separate. The appropriate penalty for such non-willful violation is dismissal without prejudice, not with prejudice.
The Supreme Court reversed the July 20, 2010 Order of the Regional Trial Court and remanded Civil Case No. 7150-R for further proceedings.