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SUPREME COURT REPORTS ANNOTATED VOLUME 481 4/2/17, 3:40 PM

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G.R. No. 155698. January 31, 2006.

PHILIPPINE NATIONAL OIL COMPANY, petitioner, vs.


NATIONAL COLLEGE OF BUSINESS AND ARTS,
respondent.

Judgments; Res Judicata; Requisites.Res judicata applies if


the following requisites concur: (1) the former judgment or order
must be final; (2) the judgment or order must be on the merits; (3) it
must have been rendered by a court having jurisdiction over the
subject matter and parties; and (4) there must be as between the
first and second actions, identity of parties, of subject matter, and of
causes of action.
Same; Same; Judgments on the Merits; Writs of Possession;
Words and Phrases; There is a judgment on the merits when there is
an unequivocal determination of the rights and obligations of the
parties with respect to the causes of action and subject matter of the
case; An order issuing a writ of possession is an order where the
sheriff is commanded to place a person in possession of a real or

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* THIRD DIVISION.

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personal property, and to a purchaser in an auction sale, be it

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foreclosure or execution, a writ of possession is merely a ministerial


function where the court neither exercises its official discretion nor
judgment; Being a ministerial function and summary in nature, an
order issuing a writ of possession is not a judgment on the merits,
but simply an incident in the transfer of title.In the present case,
the presence of the second requisite that the judgment must be on
the merits is the only one disputed. There is a judgment on the
merits when there is an unequivocal determination of the rights
and obligations of the parties with respect to the causes of action
and the subject matter of the case. Note, however, that the root
cause of G.R. Nos. 112282 and 107909 concerned a motion for
issuance of a writ of possession. An order issuing a writ of
possession is an order where the sheriff is commanded to place a
person in possession of a real or personal property. To a purchaser
in an auction sale, be it foreclosure or execution, a writ of
possession is merely a ministerial function. In it the Court neither
exercises its official discretion nor judgment. Being a ministerial
function and summary in nature, it is not a judgment on the merits,
but simply an incident in the transfer of title. Hence, under such
circumstances, a separate case for annulment of the sale cannot be
barred by res judicata.
Appeals; The question involving the truth or falsehood of an
alleged fact is not a matter for the Supreme Court to resolve.The
question is whether the signature of Enrique Monserrat in the
Special Power of Attorney a forgery. This question involves the
truth or falsehood of an alleged fact, which is a matter not for this
Court to resolve. As well recognized, this Court accords great
weight and respect to findings of fact of trial courts, especially when
affirmed by the CA. Since in CA-G.R. SP No. 28453, now G.R. No.
107909, the appellate court concluded that the Special Power of
Attorney was a falsified and forged instrument, the sale of
Enriques one-half undivided interest in the properties to NCBA is
null and void. Accordingly, since the property still belongs to
Enrique, it is alleged that it can be levied on execution to satisfy his
obligation.
Evidence; Presumption of Regularity; Sales; Considering that
the execution sale was confirmed and the certificate of sale was
issued by the trial court, then the adverse party failed to overcome
the presumption of regularity.Petrophil has in its favor the
presumption of regularity of public transactions. Petrophil, as the
highest bidder

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in the execution sale, has the right to own and possess the one-half
undivided interest of Felipe in the properties after the lapse of the
period of redemption. NCBA now assails Petrophils rights over the
properties alleging that the latter did not pay for its bid.
Considering, however, that the sale was confirmed and a certificate
of sale was issued by the trial court, it appears that NCBA failed to
overcome this presumption of regularity.

PETITION for review on certiorari of a decision of the


Court of Appeals.

The facts are stated in the opinion of the Court.

The Solicitor General for petitioner.


Cruz-Feliciano Law Office for respondent.

QUISUMBING, J.:

Before us1
is an appeal by certiorari seeking to annul the
Decision dated June 21, 2002 of the Court of Appeals in
CA-G.R. CV No. 53466, affirming in toto the Decision of the
Regional Trial Court of Manila, Branch 30, in Civil Case
No. 83-16617 which, among others, declared the
respondent as the owner in fee simple of the contested
property.
This case is related to the decisions of this Court in G.R.
Nos. 112282 and 107909.

G.R. No. 112282

In G.R. No. 112282, Felipe and Enrique Monserrat were


owners of seven parcels
2
of land at V. Mapa St., Manila (V.
Mapa properties). On September 12, 1969, Felipe and
Enrique mortgaged the V. Mapa properties to the

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Development

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1 Rollo, pp. 65-77. Penned by Associate Justice Romeo A. Brawner,


with Associate Justices Jose L. Sabio, Jr., and Mario L. Guaria III
concurring.
2 The lands were covered by Transfer Certificate of Title Nos. 83621,
83622, 83623, 83624, 83625, 83626 and 83627.

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Bank of the Philippines (DBP) as part of the security for


the loan incurred by their companies, Manila Yellow
Taxicab Co., Inc. (MYTC) and Monserrat Enterprises Co.
(MEC). The3
Deed of Mortgage was registered on September
25, 1969.
On April 30, 1972, Enrique, Felipe and Rosario Vda. de
Monserrat jointly and severally executed two promissory
notes to cover the obligation of MYTC to Filoil Marketing
Corporation (Filoil). For failure to pay the notes, Filoil filed
before the Court of First Instance (CFI) of Manila, a
complaint for collection of sum of money, docketed as Civil
Case No. 89462, against MYTC, Felipe and Rosario. 4
On
May 22, 1974, the CFI decided in favor of Filoil.
Filoil moved for the execution of the judgment pending
appeal. Filoils motion was granted and upon posting of the
required bond, the sheriff levied on certain properties of the
defendants, including the V. Mapa properties.
DBP filed a third-party claim stating that the V. Mapa
properties were mortgaged to them and thus could not be
subjected to attachment or levy pursuant to
Commonwealth Act No. 459 (An Act Creating the
Agricultural and Industrial Bank) and Republic Act No. 85
(An Act Creating the Rehabilitation Finance Corporation).
However, upon motion of Filoil, the CFI quashed the claim.
DBPs subsequent motion for reconsideration was also
denied as the CFI found no provision in Rep. Act No. 85, or

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in other laws that transferred the powers and duties of the


Rehabilitation Finance Corporation (RFC) to DBP,
expressly stating that property mortgaged to or subject to a
lien in favor of RFC or DBP shall not be subjected
5
to levy or
attachment. DBP did not assail this order.
In the meantime, Felipe and Rosario filed their appeal.
On May 12, 1977, the Court of Appeals affirmed in toto the
CFI

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3 Rollo, p. 66.
4 Id., at pp. 87-88.
5 Id., at pp. 89-91.

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Manila decision. 6The decision became final and executory


on May 30, 1977.
On April 29, 1985, the one-half undivided interest of
Felipe in the V. Mapa properties which was levied on by
Filoil was sold to Petrophil Corporation (Petrophil) in a
public auction. Upon the expiration of the period of
redemption, a new Transfer Certificate of Title (TCT) and
writ of possession were granted despite opposition of the
National College of Business and Arts (NCBA), claiming
that it was the new owner of the properties.
On appeal by NCBA, the Court of Appeals ruled that the
Deed of Final Sale to Petrophil takes precedence 7and
priority over the Deed of Absolute Sale to NCBA. It
however, limited the sale to Petrophil only to the one-half
undivided interest of Felipe. The Supreme Court denied
NCBAs petition in G.R. No. 112282
8
and entry of judgment
was made on March 28, 1994.

G.R. No. 107909

The pertinent facts in G.R. No. 107909 are as follows:

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On May 21, 1984, Petrophil, the successor-in-interest of


Filoil, filed a collection suit against Enrique docketed as
Civil Case No. 7285 at the Regional Trial Court of Makati
(RTC Makati). The action was based on the unpaid balance
of promissory notes jointly and severally executed by
Enrique, Felipe and Rosario Vda. de Monserrat to Filoil,
Petrophils predecessor-in-interest. The trial court rendered
a decision in favor of Petrophil. By virtue of a writ of
execution, Petrophil levied on the one-half undivided 9
interest of Enrique in the V. Mapa properties. On
February 28, 1985, the levy in execution was inscribed in
the TCTs.

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6 Id., at p. 91.
7 Id., at p. 99.
8 Id., at p. 104.
9 Id., at p. 109.

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Enriques interest was auctioned and sold to Petrophil as


the highest bidder. After the lapse of the period of
redemption, the RTC Makati issued a writ of possession on
February 29, 1988. Petron Corporation (Petron), as
successor-in-interest of Petrophil acquired actual
possession of the V. Mapa properties on April 22, 1992.
NCBA filed a third-party claim and filed a motion to
quash the writ of possession. The motion was denied.
On appeal by NCBA, the appellate court declared that
the issue of ownership over the one-half undivided interest
of Felipe in the property had been ruled with finality10
in
CA-G.R. CV No. 31349 (now SC G.R. No. 112282). The
Court of Appeals also voided the sale by Felipe of the one-
half undivided interest of Enrique to NCBA. The Court of
Appeals observed that the Special Power of Attorney upon
which Felipe based his alleged authority to sell Enriques

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11
share was a falsified 12and forged document. Thus, the
petition was dismissed. NCBA appealed before this Court.
We denied said appeal, in G.R. No. 107909, on December
16, 1992 and the motion for reconsideration was also
denied on May 5, 1993. The denial became final on June 17,
1993.

G.R. No. 155698

The pertinent facts of the instant case, G.R. No. 155698,


are as follows:
To settle its obligation with DBP, MYTC executed, on
June 18, 1981, a Deed of Cession of Real Properties in
Payment of Debt (Dacion en Pago) which covered four
parcels of land
13
located at Arlegui, Quiapo, Manila (Arlegui
Properties). The deed was registered only on August 12,
1982.

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10 Id., at p. 110.
11 Id., at p. 111.
12 Id., at p. 113.
13 Id., at pp. 66-67.

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Meantime, on May 21, 1982, Felipe and Enrique Monserrat


sold the V. Mapa properties to National College of Business
and Arts (NCBA) despite partial levy by Filoil. Enrique,
who was then in Australia, was allegedly represented by
Felipe in14the transaction by virtue of a Special Power of
Attorney. The Deed of Absolute Sale provided that the
Monserrats shall deliver the property, with all its
improvements, free from any lien or encumbrance. The
period for the discharge of the liens expired without the
Monserrats fulfilling their undertaking. Thus, on February
3, 1983, NCBA caused the annotation of an adverse claim

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on the TCT of the V. Mapa properties. On March 29, 1983,


it filed an action for specific performance or rescission and
damages docketed as Civil Case No. 83-16617, against the
Monserrats with the Regional Trial Court of Manila (RTC
Manila).
Felipe admitted the sale to NCBA. Enrique, on the other
hand, denied that he authorized Felipe to sell his share,
claiming that his signature in the Special Power of
Attorney was a forgery.
NCBA was initially unaware of the dacion en pago
agreement between DBP and the Monserrats. Upon
learning about it, NCBA made several demands on DBP to
release the mortgage. Since DBP did not, NCBA amended
its complaint and impleaded DBP. NCBA prayed that the
mortgage be extinguished through the dacion en pago
agreement so that the properties may be released.
Petron intervened claiming a right over the V. Mapa
properties as the successor-in-interest of Petrophil, the
buyer in the execution sales. NCBA countered that Filoils
levy in execution, to which Petron based its right, is void ab
initio as the properties were then mortgaged to DBP and
therefore exempt from execution. It also argued that Petron
was a buyer in bad faith and not for value, because it did
not pay for its bid. As to Enriques interest in the
properties, NCBA maintained that

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14 Id., at p. 67.

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Enrique was no longer the owner at the time of the levy in


execution since it has already been sold to NCBA.
DBP, for its part, asserted that the mortgage was not
extinguished by the dacion en pago because the Monserrats
committed fraud and did not fulfill certain conditions
stipulated in the mortgages. It also asserted that the levies

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in execution were inoperative as the properties were


exempt from execution having been mortgaged to it.
On October 2, 1995, summons and copy of the Second
Amended Complaint were served on Philippine National
Oil Company (PNOC) as successor-in-interest of Petron.
PNOC filed a motion to dismiss on the ground of res
judicata. NCBA opposed and argued that the
pronouncement of the Court of Appeals in CA-G.R. CV No.
31349 was obiter dictum as the trial courts decision in
Civil Case No. 89462 made no mention of ownership over
the subject property.
Instead of allowing the trial court to rule on PNOCs
motion to dismiss, NCBA moved to drop PNOC as a
defendant, which the trial court did. On March 11, 1996,
the trial court rendered judgment as follows:

WHEREFORE, judgment is rendered in favor of plaintiff NCBA


and against defendants and intervenor, as follows:

1. Declaring plaintiff NCBA the owner in fee simple of the


properties in question, now covered by TCT Nos. 199394 to
199400 of the Registry of Deeds of Manila in the name of
intervenor Petrophil Corporation (now PETRON);
2. Declaring fully extinguished the mortgage of the property in
question in favor of defendant Development Bank of the
Philippines (DBP);
3. Ordering the Register of Deeds of Manila to cancel Transfer
Certificates of Title Nos. 199394 to 199400 of said Registry
and/or all transfer certificates of title derived or issued
subsequent thereto and to issue, in lieu thereof, new
transfer certificates of title in the name of plaintiff NCBA
free from the mortgage in favor of defendant Development
Bank of the Philippines [DBP];

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4. Declaring the owners duplicate copies of Transfer


Certificates of Title No. 199394 to 199400 of the Registry of

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Deeds of Manila and all certificates of title issued


subsequent thereto null and void;
5. Ordering defendants Felipe [M]onserrat, Enrique
Monserrat and Development Bank of the Philippines and
intervenor and third-party plaintiff Petrophil (now known
as PETRON) jointly and severally to pay to plaintiff NCBA
the amounts of P100,000.00 as exemplary damages and
P150,000.00 as attorneys fees, in addition to the costs of
suit.
6. Dismissing the defendants counterclaims and cross-claims,
and the intervention and third party complaint of Petrophil
(now PETRON).
15
SO ORDERED.

PNOC, as intervenor-appellant, Petron, DBP, and Enrique


elevated the matter to the Court of Appeals. On June 21,
2002, the Court of Appeals declared that res judicata did
not apply since a judgment issuing
16
a writ of possession is
not a judgment on the merits. It upheld the validity of
sale of Enriques one-half undivided interest in the
properties to NCBA since the petitioners therein failed to
overcome the presumption17 of regularity of the notarized
Special Power of Attorney. The appellate court also ruled
that the Monserrats obligation to 18 DBP was fully
extinguished by the dacion en pago. The dispositive
portion of the decision reads:

WHEREFORE, the decision of the Regional Trial Court of Manila,


Branch 30, in Civil Case No. 83-16617 is hereby AFFIRMED in toto.
19
SO ORDERED.

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15 Records (Vol. IV), pp. 1737-1738.


16 Rollo, pp. 72-73.
17 Id., at pp. 71-72.
18 Id., at p. 74.
19 Id., at p. 76.

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Philippine National Oil Company vs. National College of


Business and Arts

PNOC now comes before us in this petition for review


asserting that the Court of Appeals erred in:

. . . ruling that the principles of res judicata and/or conclusiveness of


judgment are inapplicable to uphold PETROPHIL (NOW PETRON)
CORPORATIONs title to the subject V. Mapa Properties.

II

. . . holding that the levy [i]n execution on the V. Mapa properties


is void ab initio.

III

. . . not holding that even if the levy is void, NCBA acted in bad
faith, as it had actual or constructive notice of the mortgage priorly
constituted on the subject properties.

IV

. . . ruling that its holding in CA-G.R. SP No. 28453 that the


signature of Enrique Monserrat, Jr. in the Special Power of
Attorney [is] a forgery was a mere obiter dictum not binding in Civil
Case No. 83-16617.

. . . finding that there was no sufficient evidence proving that the


signature of Enrique Monserrat, Jr. in the Special Power of
Attorney was a forgery.

VI

. . . not holding that the trial court was bereft of authority and
jurisdiction to order the cancellation of TCT Nos. 199394 to 199400
of the Registry of Deeds of Manila, in the name of Petrophil (now
20
PETRON) Corporation.

Here, this Court is asked to determine the rightful


ownership of the V. Mapa properties. Prejudicial to
determining the rightful owner are the following questions:

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(1) Was the Special Power of Attorney a forgery? (2) Can


the properties mort-

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20 Id., at pp. 36-37.

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gaged to DBP be subject to levy in execution? To begin


with, however, we must resolve the threshold issue, does
res judicata apply in this case?
Res judicata applies if the following requisites concur:
(1) the former judgment or order must be final; (2) the
judgment or order must be on the merits; (3) it must have
been rendered by a court having jurisdiction over the
subject matter and parties; and (4) there must be as
between the first and second actions, identity
21
of parties, of
subject matter, and of causes of action.
In the present case, the presence of the second requisite
that the judgment must be on the merits is the only one
disputed.
There is a judgment on the merits when there is an
unequivocal determination of the rights and obligations of
the parties with respect to22 the causes of action and the
subject matter of the case. Note, however, that the root
cause of G.R. Nos. 112282 and 107909 concerned a motion
for issuance of a writ of possession.
An order issuing a writ of possession is an order where
the sheriff is commanded to place a person in possession of
a real or personal property. To a purchaser in an auction
sale, be it foreclosure or execution,
23
a writ of possession is
merely a ministerial function. In it the Court neither
exercises its official discretion nor judgment. Being a
ministerial function and summary in nature, it is not a
judgment on the merits, but simply an incident in the
transfer of title. Hence, under such

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21 Oropeza Marketing Corporation v. Allied Banking Corporation, G.R.


No. 129788, 3 December 2002, 393 SCRA 278, 287.
22 Sta. Lucia Realty and Development, Inc. v. Cabrigas, G.R. No.
134895, 19 June 2001, 358 SCRA 715, 733.
23 A.G. Development Corporation v. Court of Appeals, G.R. No. 111662,
23 October 1997, 281 SCRA 155, 159.

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circumstances, a separate case 24 for annulment of the sale


cannot be barred by res judicata.
Now, the question is whether the signature of Enrique
Monserrat in the Special Power of Attorney a forgery. This
question involves the truth or falsehood of an alleged fact,
which is a matter not for this Court to resolve. As well
recognized, this Court accords great weight and respect to
findings25of fact of trial courts, especially when affirmed by
the CA. Since in CA-G.R. SP No. 28453, now G.R. No.
107909, the appellate court concluded that the Special
Power of Attorney was a falsified and forged instrument,
the sale of Enriques one-half undivided interest in the
properties to NCBA is null and void. Accordingly, since the
property still belongs to Enrique, it is alleged that it can be
levied on execution to satisfy his obligation.
Could the properties mortgaged to DBP be levied on
execution?
Although our ruling in G.R. Nos. 112282 and 107909
does not amount to res judicata, recall that DBP already
filed a third-party claim during the levy in execution in the
collection case docketed as Civil Case No. 89462. This was
a proceeding different from the hearing on the issuance of
the writ of possession earlier discussed wherein the trial
court had already ruled that properties mortgaged to DBP
were not exempt from levy or attachment. The said ruling
had already attained finality because of DBPs failure to
appeal the quashal of its claim, barring this present case by

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reason of prior judgment. Under these circumstances, we


are constrained to uphold the validity of the levy in
execution of the one-half undivided interest of Felipe in the
V. Mapa properties.

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24 Ong v. Court of Appeals, G.R. No. 121494, 8 June 2000, 333 SCRA
189, 199.
25 Jimenez v. Commission on Ecumenical Mission and Relations of the
United Presbyterian Church in the USA, G.R. No. 140472, 10 June 2002,
383 SCRA 326, 334.

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Moreover, Petrophil has in its 26favor the presumption of


regularity of public transactions. Petrophil, as the highest
bidder in the execution sale, has the right to own and
possess the one-half undivided interest of Felipe in the
properties after the lapse of the period of redemption.
NCBA now assails Petrophils rights over the properties
alleging that the latter did not pay for its bid. Considering,
however, that the sale was confirmed and a certificate of
sale was issued by the trial court, it appears that NCBA
failed to overcome this presumption of regularity.
In sum, we find that the one-half interest of Felipe and
the one-half-interest of Enrique in the V. Mapa properties
properly belong to Petrophil. As the legal owner of the
properties, Petrophil has not prejudiced NCBA by virtue of
its possession over the properties. Hence, it is not liable to
pay exemplary damages and attorneys fees to NCBA.
WHEREFORE, the petition is GRANTED. The Decision
dated June 21, 2002 of the Court of Appeals in CA-G.R. CV
No. 53466 and the Decision dated March 11, 1996 of the
Regional Trial Court of Manila, Branch 30 in Civil Case No.
83-16617 are hereby MODIFIED. Petrophil Corporation
(now Petron Corporation) is DECLARED owner in fee
simple of the seven parcels of land in V. Mapa St., Manila,

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now covered by Transfer Certificates of Title Nos. 199394 to


199400 of the Registry of Deeds of Manila. The order
requiring Petron to pay exemplary damages, attorneys fees
and costs to National College of Business and Arts is
REVOKED.
No pronouncement as to costs.
SO ORDERED.

Carpio, Carpio-Morales and Tinga, JJ., concur.

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26 See Equatorial Realty Development, Inc. v. Mayfair Theater, Inc.,


G.R. No. 136221, 25 June 2001, 359 SCRA 491, 493.

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Metropolitan Bank and Trust Company vs. Barrientos

Petition granted, judgment modified. Petron Corporation


declared owner in fee simple of parcels of land in V. Mapa
St., Manila covered by TCT Nos. 199394 to 199400 of
Registry of Deeds of Manila.

Notes.Dismissal of petition by minute resolution is


judgment on the merits. (Sy vs. Tuvera, 152 SCRA 103
[1987])
Dismissal of action on ground of lack of interest or
failure to prosecute has the effect of judgment on the
merits and constitutes res judicata. (Ilasco, Jr. vs. Court of
Appeals, 228 SCRA 413 [1993])
A judgment on the merits is one rendered after
argument and investigation and when there is
determination as to which party is right. (Diwa vs. Donato,
234 SCRA 608 [1994])

o0o

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SUPREME COURT REPORTS ANNOTATED VOLUME 481 4/2/17, 3:40 PM

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