G.R. No. 185757 - Spouses De Guzman, Jr. vs. Court of Appeals

On July 28, 1994, respondent Amparo Medina wrote a letter to the Office of the Sheriff of the RTC of Quezon City requesting the extrajudicial foreclosure of a mortgage on a property owned by petitioner spouses Fernando and Irma Torres.
The property in question was covered by Transfer Certificate of Title No. RT-61056 (354973) and secured by a Deed of Mortgage dated December 20, 1993.
On May 27, 1997, the Office of the Ex-Officio Sheriff issued a Notice of Sheriff’s Sale and, on June 30, 1997, conducted a public auction where Medina was adjudged the highest bidder.
A Certificate of Sale was subsequently issued to Medina, evidencing her acquisition of the property through the mortgage foreclosure procedure.

On September 21, 1999, the Spouses Torres filed a complaint before the RTC of Quezon City (Civil Case No. Q-99-38781), seeking the declaration of nullity of the extrajudicial foreclosure of the mortgage.
In their complaint, the petitioners raised four distinct causes of action:

The absence of a specified period or term in the December 20, 1993 Deed of Mortgage, arguing that performance was not yet due.
The contention that the June 28, 1994 Statement of Account did not constitute the loan as contemplated by law, and hence, could not justify extrajudicial foreclosure.
The assertion that the credit transaction was either void or unenforceable due to a breach of Section 6(a) of Republic Act No. 3765 (The Truth in Lending Act).
The claim that foreclosing the mortgage would result in double recovery—particularly since Medina had also pursued a separate case for violation of B.P. Blg. 22, a remedy that would lead to unjust enrichment.

On July 20, 2000, Medina filed a Motion to Dismiss based on the doctrines of res judicata and forum shopping.
Medina argued that the Spouses Torres had previously filed a similar complaint involving the same property, Civil Case No. Q-94-18962, which had already been dismissed by the RTC on March 7, 1997, and later affirmed by the Court of Appeals.
The RTC, on December 27, 2001, granted Medina’s motion to dismiss the complaint on the ground of res judicata and forum shopping.
The Spouses Torres appealed this dismissal, but the CA affirmed the lower court’s ruling and additionally denied their subsequent Motion for Reconsideration (Resolution dated January 18, 2005).

The Spouses Torres filed a Petition for Review on certiorari with the Supreme Court seeking to set aside both the CA’s decision and the earlier RTC rulings.
In their assignment of errors, the petitioners contended:

That the cause of action in the later complaint arose much later than in the case of Civil Case No. Q-94-18962, and thus, res judicata should not apply.
That even if res judicata existed, its application would sacrifice justice for a mere technicality.
That the extrajudicial foreclosure of the mortgage by Medina violated the equitable principle of unjust enrichment and resulted in double recovery, especially given the pending B.P. Blg. 22 cases.
That Medina’s election of remedy by filing a violation case under B.P. Blg. 22 precluded her from also pursuing foreclosure.

Whether the doctrine of res judicata applies, given that the prior litigation in Civil Case No. Q-94-18962 addressed and upheld the validity of the real estate mortgage and thus should bar the current complaint in Civil Case No. Q-99-38781.
Whether the causes of action raised in the later complaint are distinguishable from those in the earlier case, particularly regarding the timing and the supporting evidence.
Whether the extrajudicial foreclosure, as instituted by Medina, contravenes the equitable principle of unjust enrichment and results in double recovery, especially in light of pending criminal proceedings for violation of B.P. Blg. 22.
Whether Medina’s alleged election of remedy by pursuing a B.P. Blg. 22 case precludes her from executing the extrajudicial foreclosure of the mortgage.
Whether the application of res judicata in this situation would unjustly bar the Spouses Torres from questioning the validity of the mortgage, despite their claims of a later-arising cause of action.