G.R. No. 75005-06 - Rivera vs. Intermediate Appellate Court

The case originated from a first ejectment (unlawful detainer) complaint filed on March 7, 2005 by respondent Gilbert dela Llana against petitioner Robert de Leon and a certain Gil de Leon.
The complaint was based on an undated lease contract allegedly executed in 1999 for a 541 square‐meter property in Poblacion, Nabunturan, Compostela Valley Province, which Robert intended to use as a lottery outlet.
The lease contract provided for a five-year term and contained a stipulation that any disputes arising therefrom be filed exclusively in the courts of Davao City.

Gilbert claimed non-payment of rental arrears and refusal to vacate the property by Robert and Gil.
Petitioners contended that the undated lease contract was simulated and, therefore, non-binding.
On January 24, 2006, the MCTC-Nabunturan-Mawab dismissed the complaint, holding that the contract was relatively simulated because:

There was no effort on Gilbert’s part to collect rental payments for nearly six years prior to the filing of the complaint.
The contract served merely as a formality to comply with the requirements of the Philippine Charity Sweepstakes Office (PCSO) for the establishment of a lottery outlet.

The court also noted that even if the contract were not simulated, the dismissal would be proper on the ground of improper venue based on the stipulated exclusive venue in the contract; however, this point was later not sustained.

On November 13, 2006, respondents (now including Gilbert’s spouse, Analyn dela Llana) refiled a second ejectment complaint before the MTCC-Davao City alleging the same non-payment of rentals.
In the verification filed with the second complaint, respondents acknowledged the existence of the earlier ejectment complaint that had been dismissed due to improper venue.
Petitioners raised the defense of res judicata, arguing that the second complaint was barred by the prior final judgment rendered in the first case.
On July 26, 2007, the MTCC-Davao City ruled in favor of respondents, ordering:

Without directly addressing the res judicata issue, the MTCC-Davao City found that the undated lease contract was not simulated, and even if it were, Robert’s actions confirmed Gilbert’s administrative role over the property.
Petitioners then elevated the matter to the Regional Trial Court (RTC), where on June 11, 2009, the RTC reversed the MTCC-Davao City ruling on the basis of improper venue.
Respondents moved for reconsideration at the RTC, which was denied on March 1, 2010, prompting the elevation of the case to the Court of Appeals (CA).
The CA, in its July 31, 2013 decision, reversed the RTC’s ruling and reinstated the MTCC-Davao City decision, holding that in unlawful detainer cases, the venue stipulated by the parties is valid.
Petitioners subsequently filed a motion for reconsideration before the CA, which was denied on March 31, 2014.

Whether the principle of res judicata applies to bar the second ejectment complaint based on the earlier final judgment rendered in the first ejectment complaint.
Whether the identity of parties, subject matter, and cause of action between the first and second complaints is sufficient to invoke res judicata.
Whether the stipulation in the undated lease contract regarding exclusive venue is valid and enforceable in unlawful detainer cases.
Whether the characterization of the undated lease contract as simulated (absolutely or relatively) affects the finality of the first judgment and consequently the res judicata defense.