TERESITA S. LEE, PETITIONER, VS. LUI MAN CHONG, RESPONDENT.

Teresita Lee versus Lui Man Chong

The Case

This is a petition for review on certiorari brought by Teresita Lee against Lui Man Chong, asking the Supreme Court to reverse the dismissal of her action for recovery of ownership over properties left by the late Conrado Romero. Lee claims to have been Romero's common-law wife and business partner, and to have co-owned the properties in equal portions with him. Chong, claiming to be Romero's nephew, had earlier adjudicated the entire estate to himself through an affidavit of self-adjudication. The case matters because it is the Court's cleanest recent illustration of res judicata in its aspect of bar by prior judgment, and of how a final dismissal on the merits, even one issued on a motion to dismiss, closes the door on every later attempt to relitigate the same claim.

Procedural History

Lee first filed a petition for letters of administration of Romero's estate before a branch of the Regional Trial Court of Baguio City. That petition was dismissed, and the dismissal was eventually affirmed by the Supreme Court.

Lee then filed, together with Linda Ng-Perido, a complaint for declaration of nullity of the affidavit of self-adjudication against Chong, raffled to another branch of the same trial court. That court dismissed the case for lack of cause of action and lack of legal personality, holding that Lee, having no matrimonial bond with Romero, was not an heir under the Civil Code, and that she failed to establish cohabitation. That dismissal was affirmed by the Supreme Court and became final in January 2009.

Lee then filed the present action for annulment of title with damages, later amended to recovery of ownership, before a third branch of the trial court. That court initially denied Chong's motion to dismiss, but on reconsideration granted it on the ground of res judicata. Lee appealed. The Court of Appeals affirmed, and denied her motion for reconsideration. Hence her petition for review on certiorari before the Supreme Court.

Facts

Conrado Romero died intestate in January 2006, leaving four parcels of land in Baguio City and four thousand six hundred shares in Pines Commercial Corporation. In February 2006, Lui Man Chong, claiming to be Romero's nephew, executed an affidavit of self-adjudication, adjudicating the entire estate to himself as sole and exclusive heir. The titles over the properties were transferred to his name.

In April 2006, Teresita Lee, claiming to be Romero's common-law wife, sought letters of administration of the estate. That petition was dismissed and the dismissal became final. In August 2006, Lee and Linda Ng-Perido filed a complaint to annul Chong's affidavit of self-adjudication, asserting that Lee owned half of Romero's estate as his common-law spouse and co-owner. That case was dismissed in April 2008 for lack of cause of action and legal personality, and the dismissal became final in January 2009.

In September 2008, Lee filed the present action for recovery of ownership, again alleging that she and Romero were common-law spouses and business partners who acquired the properties during their cohabitation using funds from their businesses, and that Chong erroneously included her one-half share. She prayed for cancellation of the titles in Chong's name and for new titles recognizing her as owner of one-half of each parcel and of fifty percent of the shares. Chong moved to dismiss on grounds of lack of jurisdiction, lack of cause of action, and res judicata, invoking the final judgments in the earlier administration and annulment cases.

Issues

• Whether or not the Court of Appeals erred in holding that res judicata, in the concept of bar by prior judgment, barred the present action for recovery of ownership.
• Whether or not the dismissal of the earlier annulment case, issued on a motion to dismiss, was a judgment on the merits for purposes of res judicata.
• Whether or not there was identity of parties, subject matter, and causes of action between the earlier annulment case and the present recovery case.

Applicable Provisions

Section 47, Rule 39 of the Rules of Court provides:

Section 47. Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.

This provision supplies the two concepts of res judicata, bar by prior judgment and conclusiveness of judgment, and the Court applies the first concept here.

Section 2, Rule 2 of the Rules of Court defines a cause of action as:

the act or omission by which a party violates a right of another.

The Court uses this definition to test whether the causes of action in the two cases are identical.

Ruling

On the first issue, the Court held that there was no reversible error. Res judicata means a matter adjudged, a thing judicially acted upon or decided, a thing or matter settled by judgment. A final judgment rendered on the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of the rights of the parties in all other actions in the same or any other tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. The Court listed the elements: the judgment sought to bar the new action must be final; it must have been rendered by a court having jurisdiction over the subject matter and the parties; the disposition must be a judgment on the merits; and there must be identity of parties, subject matter, and causes of action. Where all three identities appear, res judicata operates as bar by prior judgment; where only identity of parties appears, it operates as conclusiveness of judgment.

On the second issue, the Court held that the dismissal of the annulment case, although issued on a motion to dismiss, was a judgment on the merits. The trial court there had unequivocally determined the rights and obligations of the parties, declaring that Lee had no legal personality and no cause of action to seek nullification of the affidavit or to recover the portion she claimed.

On the third issue, the Court found all three identities present. The parties were the same, Lee against Chong. The subject matter was the same, the very properties already adjudicated in Chong's name. The causes of action were the same, the recovery of ownership of one-half of the properties anchored on her claim of co-ownership. Applying the absence of inconsistency test, the Court held that granting the relief prayed for would be inconsistent with the prior judgment. Lee practically sought the same relief in both cases, to be declared co-owner and to divest Chong of at least one-half of the properties.

Doctrine

A Bar candidate should retain these rules. First, res judicata as bar by prior judgment requires four elements: a final judgment; rendered by a court with jurisdiction over the subject matter and the parties; a disposition on the merits; and identity of parties, subject matter, and causes of action. Second, a dismissal on a motion to dismiss may still be a judgment on the merits where the court actually determines the rights and obligations of the parties, as when it holds that the plaintiff has no legal personality and no cause of action. Third, identity of causes of action exists where the same evidence would support both actions and the relief sought in the second would be inconsistent with the judgment in the first, the absence of inconsistency test. Fourth, res judicata under Section 47, Rule 39 of the Rules of Court is conclusive not only as to the matter directly adjudged but also as to any other matter that could have been raised in relation thereto.

Disposition

The petition was denied, and the decision of the Court of Appeals affirming the dismissal of Lee's recovery case on the ground of res judicata was upheld.

Remember This

Memorize this line: a dismissal on a motion to dismiss that actually determines the rights and obligations of the parties is a judgment on the merits, and it bars a later action involving the same parties, subject matter, and causes of action. Examiners use this case to test the elements of res judicata, the distinction between bar by prior judgment and conclusiveness of judgment, and the absence of inconsistency test for identity of causes of action.