Filinvest vs.

CA
Facts:
Ricardo Alvarez purchased a parcel of land of the Laguna Resettlement Project from DAR.
The Deed of Sale prohibited the transfer to any person who is not the vendee's relative
within the 3rd civil degree by consaguinity and affinity, and not a qualified beneficiary.
Before a certificate of title was issued on said land, PD No. 1474 declared the Laguna
Resettlement Project suitable for non-agricultural purposes and repealed the 10 year
prohibition on the transfer of agrarian lands in the Laguna Resettlement Project.
16 days after the title was issued, Alvarez and his wife sold the land to Mercedes Oliver,
who later sold the land to Filinvest. Both vendees were not relatives of the vendor nor
qualified beneficiaries.
Case #1: Heirs of Ricardo Alvarez filed with the RTC a case for reconveyance of said land
against Oliver, claiming that they had no knowledge of the sale and that the sale was void
for violating the prohibition on the transfer of said land. The case was dismissed for
failure to appear during hearing for the reception of their evidence, despite due notice
and after eight postponements. The order became final and executory.
Case #2: Heirs of Ricardo Alvarez filed a complaint against Oliver and Filinvest before
PARAD, seeking to annul the sale of the land to Oliver and the subsequent transfer to
Filinvest on grounds similar to the earlier complaint. Oliver filed a Motion to Dismiss on
the ground of res judicata and that PARAD had no jurisdiction over the subject matter of
the case. Filinvest also filed a similar motion and alleged that the restriction against
selling the land within ten years was superseded by PD No. 1474. PARAD dismissed the
complaint on the grounds of res judicata and ruled that the sale between the Spouses
Alvarez and Oliver was valid.
On appeal, DARAB reversed said decision and ordered the reversion of the land to the
government. It ruled that res judicata was not applicable to the case since there was no
adjudication on the merits before the RTC.
Filinvest elevated the case to the CA which dismissed its Petition for Certiorari for lack of
merit and affirmed the Decision of the DARAB.
Case was elevated to the SC
Issue:
Whether the CA acted with grave abuse of discretion and committed reversible error in
ruling that the doctrine of res judicata does not apply to bar the complaint in the DARAB
case.
Held:
Yes. All the requisites of res judicata are complied with.
The 4 requisites of res judicata must concur in order that a prior judgment may bar a
subsequent action:
former judgment must be final
must be a judgment on the merits
must have been rendered by a court having jurisdiction over the subject matter and
the person
and there must be, between the first and second actions, identity of parties, of subject
matter and of cause of action.
The 1st, 3rd, and 4th requisites have been complied with
1st: The order of the RTC dismissing the case was final since no motion for
reconsideration was filed
3rd: There was never any question rined on the jurisdiction of the RTC to hear and
decide the question of whether the sale between the Spouses Alvarez and Oliver was
valid.
4th: The allegations of the Heirs of Alvarez in their Amended Complaint filed with the
RTC are substantially identical to the Complaint filed before the PARAD. It involved the
same subject matter and raised the same causes of action. And although Filinvest only

became a party in the PARAD case, the fact that its predecessor-in-interest, Oliver, was
a party in the first case satisfies the requirement on the identity of parties.
The only contention between the parties was whether the 2 nd requirement, that the order
must have been based on the merits of the case, was met. Under Sec. 3, Rule 17 of the
ROCm a dismissal for failure to prosecute has the effect of an adjudication on the merits,
and operates as res judicata, particularly when the court did not direct that the dismissal
was without prejudice. The 2nd requirement was met.