G.R. No. 225299 - Bank of Commerce vs. Dhn Construction and Development Corporation

DHN Construction and Development Corporation (DHN) filed a Complaint before the RTC-Makati against Bank of Commerce (BOC), docketed as Civil Case No. 12-167.
DHN sought the declaration of nullity of two promissory notes signed by its President, claiming the notes were simulated/fictitious and gave rise to an alleged loan obligation of ₱130,312,227.33.
DHN was an accredited contractor of Fil-Estate Properties, Inc. (Fil-Estate), involved in projects including the Eight Sto. Domingo Place Residential Tower B in Quezon City.

In 2007, DHN was requested by Fil-Estate and BOC to have a ₱115,000,000.00 loan to Fil-Estate booked under DHN’s name to avoid certain BSP regulations. DHN declined, leading to tight payments from Fil-Estate on other projects.
DHN was assured that Fil-Estate would settle outstanding obligations once DHN’s President, Dionisio P. Reyno, signed loan documents. Subsequently, Reyno signed two blank promissory notes.
In 2008, external auditors from SGV & Co. requested confirmation of the loan and submission of documents for renewal, but DHN informed BOC that it never received loan proceeds.

Fil-Estate wrote a letter dated 19 February 2009 confirming that the loan obtained by DHN from BOC was secured by collateral units and payments were for Fil-Estate’s account.
BOC representatives explained the need to "regularize" the loan due to BSP examiners’ observations and requested DHN’s affidavit confirming the loan plus signing another promissory note. DHN refused.
On 11 May 2009, BOC declared the loan due and demandable, prompting DHN to file complaints including one for unsafe banking practices before BSP.

BOC filed a Motion to Dismiss in the RTC-Makati case claiming that DHN’s complaint is barred by prior judgment and fails to state a cause of action.
BOC referenced a prior complaint for Annulment of Contract filed by DHN before RTC-Quezon City (Civil Case No. Q-09-66170), dismissed on 29 December 2011.
The dismissal in the Quezon City case was asserted by BOC as a decision on the merits that precluded DHN from impugning the loan's validity.
DHN opposed, arguing the prior dismissal was not a judgment on the merits, no trial was conducted, and the causes of action differed (annulment vs. nullity). DHN denied receiving the loan proceeds and asserted no estoppel applies.

On 30 July 2012, the RTC granted BOC’s Motion to Dismiss based on res judicata, holding that the 29 December 2011 dismissal by RTC-Quezon City was a final judgment on the merits barring the current complaint.
The RTC ruled that parties and issues were identical, and allowing the case would lead to conflicting judgments.
DHN’s motion for reconsideration was denied on 30 January 2013. DHN appealed to the Court of Appeals (CA).

On 19 December 2014, the CA set aside the RTC orders, holding that the principle of res judicata did not apply.
The CA reasoned the RTC-Quezon City’s dismissal was based on failure to state a cause of action under Rule 16, Section 1(g), which does not bar refiling under Rule 16, Section 5.
The CA instructed the case be remanded to the RTC for appropriate action.

BOC filed a Petition for Review on Certiorari before the Supreme Court, challenging the CA’s decision and resolution.
The Supreme Court required DHN to file a comment, which it did.

Whether the Court of Appeals erred in setting aside the dismissal orders of the RTC-Makati and ordering remand of the case.
Whether the principle of res judicata bars the Complaint filed by DHN against BOC before the RTC-Makati.