Zulueta v. Wong
REITERATIONFacts
The Antecedents: Ana Ballesteros was the registered owner of Lot No. 87. Upon her death, her heirs, including Jose Wong and Anita Ballesteros, executed an Extrajudicial Partition and Deed of Sale. A portion of the land, 925 square meters, was sold to Lazaro M. Zulueta for P5,000.00. This portion was later designated as Lot No. 87-B and a new title was issued in Lazaro Zulueta's name. Anita Ballesteros, who was survived by her husband Nenito Ballesteros and their children, the Diazs, died in 1984. Procedural History: On March 20, 1995, the heirs of Ana Ballesteros (Jose Wong, Domingo Wong, Vicente Wong, Nenito Ballesteros, and the Diaz children) filed a Complaint for Declaration of Nullity of Sale with Damages against the Spouses Zulueta before the RTC of Iloilo City, Branch 26 (Civil Case No. 22276). They alleged the sale was fictitious and without consideration. The RTC dismissed this complaint for failure to state a cause of action, and the dismissal became final due to the plaintiffs' failure to file a timely appeal. Subsequently, on December 20, 1995, the same plaintiffs filed a second Complaint with substantially the same allegations and prayers before the RTC of Iloilo City, Branch 23 (Civil Case No. 22733), with a slight modification in the allegation regarding consideration. The RTC dismissed this second complaint on the grounds of res judicata, forum shopping, and lack of cause of action. The Court of Appeals reversed the RTC's dismissal, directing the trial court to proceed with the case on the merits. The Spouses Zulueta then filed a petition for review on certiorari with the Supreme Court. The Petition: The petitioners, Spouses Lazaro M. Zulueta and Perla Sucayan-Zulueta, seek review of the Court of Appeals' decision, arguing that the respondents' second complaint (Civil Case No. 22733) was barred by res judicata due to the final and executory dismissal of their first complaint (Civil Case No. 22733) by the RTC on the ground that it failed to state a cause of action. They contend that the issue of consideration was already passed upon in the first case. The petitioners assert that the dismissal of the first complaint, even if erroneous, constituted an adjudication on the merits and is binding on the respondents. They also argue that the respondents' allegations do not sufficiently establish the deed as fictitious or simulated and that the parties' conduct indicates compliance with the deed's terms. The petition further highlights that the deed is a public document, requiring clear and convincing evidence to contradict its contents.
Issue(s)
Whether the second complaint filed by the respondents was barred by res judicata due to the final and executory dismissal of their first complaint on the ground of failure to state a cause of action. Whether the Court of Appeals erred in reversing the Regional Trial Court's dismissal of the second complaint.
Ruling
The petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The assailed Order of the Regional Trial Court of Iloilo City, Branch 23 in Civil Case No. 22733 is AFFIRMED.
Ratio Decidendi
On the issue of res judicata and the dismissal of the second complaint: The Supreme Court held that the respondents' action was barred by the October 6, 1995 Order of the RTC dismissing their first complaint. This dismissal was an adjudication on the merits, as it was based on the legal rights of the parties as disclosed by the pleadings, specifically the respondents' admission of consideration in the deed of sale. The Court clarified that a dismissal on the ground of failure to state a cause of action, whether correct or erroneous, constitutes an adjudication on the merits and bars a subsequent action if the second complaint is virtually a copy of the first. The respondents' admission in their first complaint that there was a consideration, though unpaid, meant they had no cause of action for the declaration of nullity of the deed of sale. The subsequent modification in the second complaint to emphasize the lack of consideration was an attempt to circumvent the final and executory order of dismissal. The Court reiterated that the operation of res judicata is not affected by a right of appeal that was not taken or perfected. On the Court of Appeals' reversal: The Supreme Court found that the CA erred in reversing the RTC's dismissal. While the CA correctly noted that a complaint should not be dismissed if it appears that the plaintiff is entitled to relief under any state of facts provable, this principle does not apply when a prior dismissal on the merits has already become final and executory. The CA's reliance on the allegations of absence of consideration as an evidentiary matter requiring trial was misplaced because the issue of the existence of consideration had already been passed upon and resolved in the first case, leading to its dismissal on the merits. The Court emphasized that the respondents' failure to appeal the first dismissal order rendered it final and binding, preventing them from relitigating the same cause of action.
Main Doctrine
A dismissal of a complaint on the ground that it does not state a cause of action, whether right or wrong, is a bar to another action where the second complaint is virtually a copy of the complaint in the first action, provided the dismissal order has become final and executory.