ANTONIO NAVARRO, PETITIONER, VS. METROPOLITAN BANK & TRUST COMPANY, RESPONDENT,

Navarro versus Metropolitan Bank and Trust Company

The Case

This is the story of Clarita Navarro, who sued to recover her conjugal share in three parcels of land in Alabang, and of Metropolitan Bank and Trust Company, which had taken those same lands as security for a loan and bought them at the foreclosure sale. Clarita first sued to annul the mortgage and the foreclosure sale; that complaint was dismissed on the ground of laches, and the dismissal became final. She then filed a second complaint over the same properties, this time asking that the titles be declared void and that her share be reconveyed. The bank moved to dismiss, and the question that reaches us is whether that second suit may proceed. The case matters because it is the Supreme Court's cleanest statement that a dismissal grounded on laches bars the refiling of the same claim, and that a final judgment, right or wrong, must be allowed to stand.

Procedural History

Clarita filed her first complaint, an action for declaration of nullity of the real estate mortgage and the foreclosure sale, before the Regional Trial Court of Muntinlupa City, Branch 256. The bank moved to dismiss on the ground of laches. The trial court denied the motion, so the bank went up to the Court of Appeals on certiorari. The Court of Appeals granted the petition and ordered the complaint dismissed on the ground of laches, noting that eleven years had passed since the titles were issued before Clarita sought to annul the mortgage. That decision became final, no motion for reconsideration having been filed and no appeal taken.

Clarita then filed a second complaint before the same branch, this time for declaration of nullity of the titles and for reconveyance and damages. The bank again moved to dismiss, invoking the prior judgment. The trial court denied the motion, reasoning that a dismissal on laches and failure to implead an indispensable party could never be a dismissal on the merits. The bank sought reconsideration, which was denied, and then elevated the matter to the Court of Appeals by petition for certiorari and prohibition. The Court of Appeals reversed the trial court and ordered the second complaint dismissed. Antonio and Clarita Navarro then came to the Supreme Court by petitions for review on certiorari under Rule 45.

Facts

Antonio Navarro and Clarita Navarro were married in December 1968. During their union they acquired three parcels of land in Alabang, Muntinlupa City, and built their home on them. The titles to these lands, however, were registered in the name of Antonio Navarro, married to Belen B. Navarro. In 1998 the bank caused the judicial foreclosure of a real estate mortgage that Antonio had constituted over the properties as security for a loan. In December of that year the properties were sold at public auction, and the bank, as the lone bidder, was issued a certificate of sale.

Clarita then brought her first action, alleging that the properties belonged to the conjugal partnership, that Antonio with the connivance of Belen had registered them without her knowledge, and that the mortgage to the bank was likewise made without her knowledge. She faulted the bank for failing to consider that the properties belonged to the conjugal partnership. That complaint was dismissed on the ground of laches, and the dismissal became final.

In April 2002 Clarita filed her second complaint, essentially repeating the same allegations, but now also praying for the declaration of nullity of the titles and for the reconveyance of at least her one-half conjugal share. Meanwhile, Antonio and Clarita executed a compromise agreement in which Clarita waived her claims against Antonio, and Antonio stipulated that he had not availed of any mortgage loan from the bank and that the bank manager had manipulated his account. The trial court approved the compromise, leaving the case to proceed against the bank.

Issues

• Whether or not the dismissal of the first complaint on the ground of laches bars the filing of the second complaint for the same claim.
• Whether or not the Court may still rule on the applicability of laches given that the decision dismissing the first complaint had already become final.
• Whether or not the second complaint, being founded on the same claim and requiring the same evidence, is barred by the prior dismissal.

Applicable Provisions

Section 1 of Rule 16 of the Rules of Court, on the grounds for a motion to dismiss, provides in its relevant paragraph:

(h) That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or otherwise extinguished.

The Court reads this language broadly enough to embrace the defense of bar by laches.

Section 5 of Rule 16 of the Rules of Court, on the effect of dismissal, provides:

Section 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss based on paragraphs (f), (h) and (i) of Section 1 hereof shall bar the refiling of the same action or claim.

This is the provision that makes the dismissal of Clarita's first complaint a bar to her second.

Ruling

On the first issue, the Court held that the first complaint was dismissed not for failure to implead Belen as an indispensable party, but squarely on the ground of laches, that is, Clarita's unjustifiable neglect to timely prosecute her claim. Laches, the Court explained, is the neglect or omission to assert a right, taken with lapse of time and other circumstances causing prejudice to an adverse party, which operates as a bar in equity. As a ground for dismissal, it falls within paragraph (h) of Section 1 of Rule 16, and under Section 5 of the same Rule such a dismissal bars the refiling of the same action or claim.

On the second issue, the Court acknowledged that an action to declare the nullity of contracts is not barred by the statute of limitations. But it held that the question of laches had already been settled in the earlier case, whose decision had become final. Once a judgment becomes final, it is no longer subject to change, revision, amendment, or reversal, except for the correction of clerical errors, the making of entries that cause no prejudice, or where the judgment itself is void. The Court would not disturb that final ruling.

On the third issue, the Court compared the two complaints and found that, apart from the nature of the actions, the allegations and the reliefs prayed for were the same, and both would call for the same or similar evidence. The second complaint was therefore barred by the dismissal of the first, and the dismissal operated as res judicata. The Court also declined to rule on the factual claim of fraud by the bank manager, since a Rule 45 petition raises only questions of law.

Doctrine

A dismissal of a complaint on the ground of laches is a dismissal under paragraph (h) of Section 1 of Rule 16, and under Section 5 of Rule 16 it bars the refiling of the same action or claim. Such a dismissal operates as one with prejudice and constitutes res judicata. Once a judgment becomes final, it is immutable and may not be changed, revised, amended, or reversed, except for the correction of clerical errors, the making of entries that cause no prejudice to any party, or where the judgment itself is void. The winning party has a correlative right to enjoy the finality of the resolution of the case, and any attempt to thwart this rule must be struck down. A subsequent action founded on the same claim, even if differently styled, is barred where it rests on the same material facts and would require the same evidence.

Disposition

The petitions were denied, and the decision of the Court of Appeals ordering the dismissal of the second complaint was affirmed. The bank prevailed.

Remember This

Memorize this line: a dismissal on the ground of laches bars the refiling of the same claim, because laches falls under paragraph (h) of Section 1 of Rule 16, and Section 5 of Rule 16 makes such a dismissal with prejudice. Examiners use this case to test the immutability of final judgments and the bar of res judicata against a second suit dressed up in a new title but resting on the same claim.