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OROPEZA MARKETING CORPORATION v. ALLIED BANKING CORPORATION

FACTS:

The case involves a loan agreement between respondent Allied Banking Corporation (Allied Bank) and petitioners Oropeza Marketing Corporation (OMC) and the spouses Rogaciano and Imelda Oropeza. Allied Bank extended a loan of P780,000 to the petitioners, secured by a promissory note and a continuing guaranty/comprehensive surety agreement. The loan was payable at a monthly amortization of P20,000 with a penalty for non-payment. The petitioners allegedly defaulted on their obligation, leading Allied Bank to file a collection suit with a application for a writ of preliminary attachment.

While the application for attachment was pending, Allied Bank found out that the Oropeza spouses had executed a deed of sale with assumption of mortgage in favor of Solid Gold Commercial Corporation, covering the properties that were mortgaged to Allied Bank. This prompted Allied Bank to file a complaint for annulment of the deed of sale and a separate criminal complaint for fraudulent insolvency against the Oropeza spouses.

In the meantime, the court hearing the collection suit granted Allied Bank's application for attachment and ordered the amount of the attachment bond. However, Allied Bank failed to submit the attachment bond and requested for the service of the summons to be held in abeyance. As a result, the case was archived. The court later revived the case but suspended the proceedings due to the pendency of the criminal case.

Despite the pending criminal and annulment cases, the lower court dismissed Allied Bank's collection suit on the ground of litis pendencia, stating that there was an identity of parties and cause of action between the cases. Dissatisfied with the dismissal, Allied Bank appealed to the Court of Appeals, which reversed the lower court's decision and ordered the reinstatement of the collection suit. Thus, this petition for review is filed before the Supreme Court.

The case involves two civil cases: Civil Case No. 19634-89 and Civil Case No. 19325-88. The Court of Appeals decided on May 2, 2000, that the Deed of Sale With Assumption of Mortgage in Civil Case No. 19634-89 was valid, and the action to rescind it had already prescribed. The appellate court also declared that the promissory note relied upon by Allied Bank was spurious. Allied Bank filed a motion for reconsideration, but it was denied.

This decision in Civil Case No. 19634-89 must be considered by the court in deciding the validity of the ruling in Civil Case No. 19325-88, which directed the trial court to proceed with the hearing. The issue at hand is whether the decision in Civil Case No. 19634-89 constitutes res judicata in Civil Case No. 19325-88. Petitioners argue that the causes of action in both cases were based on the same promissory note, which was declared void by the Court of Appeals, thus Allied Bank is barred from further prosecuting Civil Case No. 19325-88. Respondent, on the other hand, contends that there is no identity of rights asserted and parties involved in the two cases.

ISSUES:

  1. Whether res judicata applies to the two civil cases, Civil Case No. 19325-88 and Civil Case No. 19634-89.

  2. Whether there is identity of parties, subject matter, and causes of action in the two civil cases.

  3. Whether the inclusion of a new party in a subsequent case alters the application of res judicata.

  4. Whether there is identity of parties in the two cases.

  5. Whether there is identity of causes of action in the two cases.

  6. Whether the debt of the Oropezas has been settled in a previous case.

  7. Whether the cause of action in Civil Case No. 19325-88 is extinguished.

RULING:

  1. The principle of res judicata applies to the two civil cases.

  2. There is identity of parties in the two civil cases.

  3. The inclusion of a new party in a subsequent case does not alter the application of res judicata. The rule is that a party may not evade the application of res judicata by simply including additional parties in subsequent litigation or by excluding certain parties in the later case.

  4. There is identity of parties in the two cases. In both cases, the plaintiff is the administrator or administratrix of the Estate of the deceased Jose Aguilar. It does not matter that there are additional parties in the subsequent case. The defense of res judicata would still be decisive.

  5. There is no identity of causes of action in the two cases. The causes of action differ as the alleged violations of the plaintiff's legal rights by the defendants are based on different facts and acts or omissions. The evidence needed to support the causes of action in the two cases is not exactly the same.

  6. The Supreme Court granted the petition and set aside the decision of the Court of Appeals. The findings of the Regional Trial Court in a previous case, as affirmed by the appellate court, shall be conclusive upon the parties in Civil Case No. 19325-88. The order of the Regional Trial Court dismissing the complaint in Civil Case No. 19325-88 is reinstated, with the modification that the case is deemed concluded on the ground of res judicata.

PRINCIPLES:

  • Res judicata lays the rule that an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. (Bar by prior judgment and conclusiveness of judgment)

  • Identity of parties, subject matter, and causes of action are requisites for the application of res judicata in its "bar by prior judgment" aspect. If only identity of parties is present, but not identical causes of action, res judicata applies as "conclusiveness of judgment."

  • The application of res judicata is not altered by the inclusion of new parties in subsequent cases.

  • Identity of parties is not defeated by the inclusion of additional parties in subsequent cases.

  • The defense of res judicata would still be decisive even if defendants sued with others in a previous case are sued alone in the subsequent case.

  • There is no identity of causes of action if the alleged violations of legal rights by the defendants are based on different facts and acts or omissions.

  • Res judicata - The principle that once a matter or fact has been judicially tried and established by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, is conclusive upon the parties and those in privity with them in law or estate.