G.R. No. 180203 - Philippine National Bank vs. Daradar

Philippine National Bank (PNB), petitioner, and Romeo B. Daradar (respondent) entered into a Deed of Promise to Sell covering two parcels of land and improvements owned by PNB.
Daradar failed to pay yearly amortizations and interest due under the Deed.

PNB rescinded the Deed through a Notarial Notice of Rescission dated November 27, 1989.
Daradar filed a complaint for Annulment of Rescission, Accounting, and Damages against PNB in the Regional Trial Court (RTC) Iloilo City, docketed as Civil Case No. 21375.
Case was raffled to Branch 24 of RTC.

On April 5, 1995, the RTC issued an Order provisionally dismissing the case without prejudice due to Daradar’s failure to appear at hearings (First Order).
Daradar did not file a motion for reconsideration against the First Order.
On June 17, 1999, the RTC issued a Second Order motu proprio finally dismissing Civil Case No. 21375 due to respondent’s failure to prosecute the case for an unreasonable length of time, pursuant to Section 3, Rule 17 of the Rules of Civil Procedure.

On October 18, 1999, Daradar filed a second complaint for nullity of notarial rescission of the Deed, docketed as Civil Case No. 25981 and raffled to Branch 22.
Summons was served to PNB, which moved to dismiss on the ground that the earlier dismissal of Civil Case No. 21375 barred the new action by res judicata.

On January 27, 2000, RTC granted PNB’s motion to dismiss Civil Case No. 25981 based on res judicata, finding that the dismissal of Civil Case No. 21375 was an adjudication on the merits.
Daradar’s motion for reconsideration was denied on March 14, 2000.
Daradar appealed the dismissal to the Court of Appeals (CA).

The CA, in its June 8, 2007 Decision, reversed the RTC dismissal and reinstated Civil Case No. 25981, directing further proceedings.
The CA reasoned that the First Order was a valid dismissal without prejudice and divested the RTC of jurisdiction, rendering the Second Order void.
PNB’s motion for reconsideration to the CA was denied on September 19, 2007.

PNB filed a Petition for Review on Certiorari before the Supreme Court to challenge the CA Decision and Resolution.
PNB argued that the First Order was interlocutory and not a final dismissal, and that the Second Order was a final judgment with adjudication on the merits that barred Daradar’s subsequent complaint under res judicata.
Daradar maintained that the First Order was a dismissal without prejudice and that the Second Order was null and void for lack of jurisdiction.

Whether the Court of Appeals erred in reinstating the complaint in Civil Case No. 25981, holding that the dismissal of Civil Case No. 21375 by the Second Order was void for lack of jurisdiction.

Whether the dismissal of Civil Case No. 21375 by the Second Order constituted a final judgment on the merits that barred the filing of a subsequent complaint under the doctrine of res judicata.