De Leon v. Dela Llana
REITERATIONFacts
The Antecedents: Respondent Gilbert dela Llana (Gilbert) filed an unlawful detainer complaint against petitioner Robert de Leon (Robert) and Gil de Leon (Gil) based on an undated contract of lease for a portion of Gilbert's property. The lease term was five years, intended for a lottery outlet, and stipulated that any case arising from it should be filed in Davao City. Gilbert alleged non-payment of rentals and refusal to vacate. Procedural History: The Municipal Circuit Trial Court (MCTC) of Nabunturan-Mawab dismissed the first complaint, finding the lease contract relatively simulated and thus non-binding, and also on the ground of improper venue due to the stipulation. This decision attained finality. Subsequently, Gilbert and his wife Analyn filed a second unlawful detainer complaint before the Municipal Trial Court in Cities (MTCC) of Davao City, alleging the same grounds. Petitioners raised the defense of res judicata. The MTCC ruled in favor of respondents, finding the contract not simulated and occupancy by tolerance. The Regional Trial Court (RTC) reversed, dismissing the second complaint due to improper venue, holding that venue for unlawful detainer cases is fixed by the Rules of Civil Procedure and cannot be stipulated upon. The Court of Appeals (CA) reinstated the MTCC ruling, holding that venue in unlawful detainer cases may be stipulated upon. The Petition: Petitioners seek review of the CA decision, arguing that the second ejectment complaint was barred by res judicata due to the final and executory judgment in the first case.
Issue(s)
Whether the second unlawful detainer complaint was barred by res judicata (bar by prior judgment). Whether the MCTC-Nabunturan-Mawab's decision in the first ejectment case was a judgment on the merits. Whether the undated lease contract was absolutely or relatively simulated. Whether the venue stipulation in the lease contract was valid for an unlawful detainer case.
Ruling
The petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The ejectment complaint of respondents-spouses Gilbert and Analyn dela Llana in Civil Case No. 19,590-B-06 before the MTCC of Davao City is DISMISSED without prejudice to the filing of another ejectment complaint grounded on a different cause of action.
Ratio Decidendi
On the issue of res judicata (bar by prior judgment): The Court ruled that res judicata, in the concept of bar by prior judgment, applies in this case. There is an identity of parties (Gilbert and Robert, with their respective spouses), subject matter (the leased portion of Gilbert's property), and cause of action (ejectment due to alleged breach of the undated lease contract for non-payment of rent) between the first case (Civil Case No. 821) and the second case (Civil Case No. 19,590-B-06). The MCTC-Nabunturan-Mawab's January 24, 2006 Decision in the first case dismissed the complaint based on the finding that the lease contract was simulated and thus non-binding, which directly negated the cause of action raised. This decision attained finality on March 20, 2006, thereby barring the subsequent filing of the second ejectment complaint on the same grounds. On whether the MCTC-Nabunturan-Mawab's decision was a judgment on the merits: The Court held that the MCTC-Nabunturan-Mawab's January 24, 2006 Decision was a judgment on the merits because it resolved the substantive issue of Gilbert's right to recover possession arising from Robert's alleged breach of the lease contract. The Court defined a judgment on the merits as one that amounts to a declaration of the law to the respective rights and duties of the parties, based upon the ultimate fact or state of facts disclosed by the pleadings and evidence, and upon which the right of recovery depends. The MCTC's pronouncement that the contract was simulated and non-binding was a determination of the substantive issue, not merely a technical or dilatory objection. The Court clarified that the MCTC's subsequent mention of improper venue was qualified by 'granting arguendo,' indicating it was a secondary consideration after the substantive issue was addressed. On the characterization of the simulated contract: The Court clarified that the MCTC-Nabunturan-Mawab's finding that the undated lease contract was simulated, leading to its non-binding effect, should properly be considered an absolutely simulated contract, not a relatively simulated one. An absolutely simulated contract is void because the parties do not intend to be bound by it at all, meaning the apparent contract has no substance. The MCTC's reasoning, particularly its observation that Gilbert made no effort to collect rent for six years and only filed the case later, and that the contract was a mere formality for PCSO requirements, indicated a lack of intent to be bound. While this was a mere error in terminology, it did not affect the outcome of the case, as the finality of the MCTC's decision on the simulated nature of the contract was the basis for res judicata. On the venue stipulation: The Court noted that with the undated lease contract being definitively settled as absolutely simulated and therefore void, there could be no invocation of the exclusive venue stipulation by either party. Consequently, the general rule on the filing of real actions, which mandates that such actions be filed in the court where the property is situated, prevailed. This supported the MCTC-Nabunturan-Mawab's initial dismissal on the ground of improper venue, although the Supreme Court ultimately dismissed the second complaint based on res judicata.
Main Doctrine
Res judicata, in the concept of bar by prior judgment, applies when there is identity of parties, subject matter, and causes of action between the first case where the judgment was rendered and the second case sought to be barred. A judgment on the merits, which unequivocally determines the rights and obligations of the parties with respect to the cause of action and subject matter, bars subsequent litigation on the same issues.