Title
Allied Banking Corp. vs. Court of Appeals
Case
G.R. No. 108089
Decision Date
Jan 10, 1994
Allied Banking sued Dearfield and Filoteo Alano over promissory notes. First case dismissed for no cause of action; second case barred by res judicata. SC upheld dismissal, citing finality of judgments.
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Case Digest (G.R. No. 108089)

Facts:

  1. Initial Complaint (First Case):

    • Allied Banking Corporation (petitioner) filed a complaint against Dearfield, Incorporated, and several co-defendants, including Filoteo Alano (private respondent), in the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. 16837.
    • The complaint was based on promissory notes, letters of credit, and trust receipts executed by Dearfield.
    • Alano filed a motion to dismiss, arguing that the complaint failed to state a cause of action against him since he was not mentioned in the transactions and the required annexes (Continuing Guaranty/Comprehensive Surety documents) were not attached.
    • The trial court granted the motion to dismiss on 20 June 1988, finding no cause of action against Alano. The petitioner's motion for reconsideration was denied.
  2. Appeal and Dismissal:

    • The petitioner filed a notice of appeal and later a petition for certiorari with the Supreme Court (G.R. No. 86009), which was dismissed on 17 April 1989 for being filed late and lacking merit.
  3. Second Complaint (Second Case):

    • On 31 October 1990, the petitioner filed a new complaint against Alano and Feliciana Camara in the RTC of Manila, docketed as Civil Case No. 90-54998.
    • The complaint restated the causes of action from the First Case and included the previously missing annexes.
    • Alano moved to dismiss the Second Case, arguing res judicata and failure to state a cause of action.
    • The trial court dismissed the Second Case on 1 March 1991, and the Court of Appeals affirmed the dismissal on 25 November 1992.
  4. Petition to the Supreme Court:

    • The petitioner filed a petition for review on certiorari, arguing that the dismissal of the First Case was not on the merits and that there was no identity of causes of action between the two cases.

Issue:

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Ruling:

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Ratio:

  1. Res Judicata Requirements:

    • The doctrine of res judicata requires: (1) a final judgment, (2) rendered by a court with jurisdiction, (3) a judgment on the merits, and (4) identity of parties, subject matter, and causes of action.
    • All these elements were present in this case.
  2. Judgment on the Merits:

    • The dismissal of the First Case for failure to state a cause of action was a judgment on the merits. The trial court determined the rights and obligations of the parties based on the allegations in the complaint, which did not mention Alano’s liability.
  3. Identity of Causes of Action:

    • The causes of action in both cases were the same: enforcement of rights under promissory notes, letters of credit, and trust receipts. The inclusion of the missing annexes in the Second Case did not create a new cause of action.
  4. Public Policy:

    • The doctrine of res judicata ensures finality of judgments and prevents endless litigation. Allowing the petitioner to relitigate the same issues would undermine this principle.
  5. Hypothetical Admissions:

    • The petitioner’s argument that Alano hypothetically admitted the allegations in the Second Case by filing a motion to dismiss was rejected. The Court found no cause of action against Alano in either case.

Conclusion:

The Supreme Court upheld the dismissal of the Second Case, ruling that the doctrine of res judicata barred the petitioner from relitigating the same issues. The petition was denied for lack of merit.


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