OROPEZA MARKETING CORP.

v ALLIED BANK
EFFECT OF JUDGMENT | G.R. No. 129788 | Quisumbing, J.

DOCTRINE: If as between the two cases, only identity of parties can be shown, but not identical causes of action,
then res judicata as "conclusiveness of judgment" applies, such that judgment in one case is conclusive only as to
those matters actually and directly controverted and determined, and not as to matters merely involved therein.

FACTS OF THE CASE:

Nature Petition for review

Parties Oropeza Marketing Corporation, Rogaciano Oropeza, and Imelda Oropeza, petitioners
Allied Banking Corporation, respondent
 Oct. 12, 1982: Allied Bank extended a loan of P780K to Oropeza Marketing Corporation (OMC) and the Sps.
Oropeza
 The loan was payable at a monthly amortization of P20K
 To secure this obligation, the petitioners executed:
o A promissory note in favor of Allied Bank
o A Continuing Guaranty/Comprehensive Surety Agreement, where the Sps. Oropeza bound
themselves jointly and severally with OMC to pay said obligation without need of demand in the
aggregate amount of P840K
o A Real Estate Mortgage over their properties
 Due to financial constraints, petitioners allegedly defaulted and reneged on their obligation
RTC of  Allied Bank filed a collection suit with an application for a Writ of Preliminary Attachment (WPA)
Davao  While this case was pending, Allied Bank discovered that the Sps. Oropeza had executed an
Br. 15 Absolute Deed of Sale with Assumption of Mortgage in favor of Solid Gold Commercial Corp.
[Attachment]  The sale covered most of the Sps’ real properties, including those mortgaged to Allied Bank

RTC of  Allied Bank filed a complaint for the Annulment of the Absolute Deed of Sale in favor of Solid Gold
Davao, Br. 9
[Annulment]

RTC of  Allied Bank instituted a separate criminal complaint for fraudulent insolvency under Art. 314 of the
Davao, Br. 10 RPC against Sps. Oropeza
[Crim Case]

RTC of  Feb. 13, 1989: RTC granted Allied Bank’s application for attachment and fixed the amount of the
Davao attachment bond at P2.3M
Br. 15  Allied Bank, however, failed to submit an attachment bond
[Attachment]  Allied Bank moved that the service of summons upon petitioner be held in abeyance
 June 7, 1989: RTC ordered that the case be archived
 Aug. 29, 1989: RTC ordered the revival of the case, but held in abeyance Allied Bank’s motion to
reduce the amount of the bond
 Oct. 13, 1989: Allied Bank moved for the suspension of the proceedings of the Attachment Case,
citing the pendency of the Criminal Case in Br. 10
 RTC granted the motion and again ordered the Attachment Case archived
 Allied Bank then moved for reconsideration, resulting in the reopening of the Attachment Case
with respect to OMC alone

RTC of  Oct. 26, 1992: RTC dismissed the complaint for Annulment of the Deed of Sale, it held that:
Davao, Br. 9  The Deed of Sale with Assumption of Mortgage is valid, and not tainted with fraud
[Annulment]  Petitioners’ accounts have been satisfied by their deposit and receivables from General
Banking Corp.
 The Promissory Note executed by petitioners in favor of Allied Bank is void
 Allied Bank appealed to the CA

RTC of  Aug. 13, 1993: Upon Allied Bank’s motion, the RTC declared petitioners in default for failure to file
Davao an answer
Br. 15  Feb. 21, 1994: RTC dismissed Allied Bank’s complaint on the ground of litis pendentia
[Attachment]  While it is true that the decision of RTC, Br. 9 in the Annulment Case is pending appeal, it is
equally true that there is identity of parties and identity of cause of action
 This is obvious from the pleadings and the documents attached as annexes in this case
 The relief being sought; that is for the defendant to pay the plaintiff, is the same in both cases
 Allied Bank elevated the case to the CA
CA  March 13, 1997: CA ruled in favor of Allied Bank
[Attachment]  Reversed and set aside the RTC Decision because of the absence of identity of right
asserted and relief prayed for between the Attachment Case and the Annulment Case
 Ordered reinstated the Attachment Case in RTC Davao, Br. 15
 Remanded the case to the court of origin for further proceedings

SC  Petitioners filed a petition for review in the SC

 Argued that the Attachment Case should be dismissed on the ground of litis pendentia

CA  May 2, 2000: CA affirmed the RTC’s dismissal of the Annulment Case, it held that:
[Annulment]  The Deed of Sale with Assumption of Mortgage was valid
 Allied Bank’s action to rescind the Deed of Sale had already prescribed
 The promissory note relied upon by Allied Bank was spurious
o It failed to adduce evidence to disprove the claim of the Oropeza spouses that they had
paid their loans to Allied Bank and that said promissory note had no consideration
 Feb. 16, 2001: CA denied Allied Bank’s MR

SC  In light of the CA’s Decision in the appeal of the Annulment Case, petitioners contend that said
Decision would constitute res judicata in the Attachment Case
 They stress that inasmuch as the causes of action in the Attachment Case and the
Annulment Case were both predicated on the same and identical promissory note, which was
declared by the CA to be void and to have no force or effect, respondent Allied Bank is now
procedurally barred from further prosecuting the Attachment Case
 In response, Allied Bank submits that since there is no litis pendencia involved regarding the two
cases, a decision in one cannot serve as res judicata in the other
a) Allied Bank avers that the CA found in the appeal of the Attachment Case that there is no
identity of rights asserted in the two civil cases, as there is, disparity in the rights asserted and
reliefs prayed for in the respective cases
 The Annulment Case is for annulment of deed of sale with assumption of mortgage
 While the Attachment Case is for collection of a sum of money
b) Allied Bank further argues that there is no identity of parties in both cases
 The defendants in the Attachment Case are OMC and the spouses Oropeza
 While in the Annulment Case, the defendants are Solid Gold Commercial Corporation and the
Oropeza spouses
ISSUES with HOLDING:
1) W/N there is identity of parties, subject matter, and causes of action between the two civil cases, such
that the decision of the CA in the appeal of the Annulment Case would constitute res judicata insofar as
the Attachment Case is concerned – YES
 Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled
by judgment”
 It lays the rule that an existing final judgment or decree 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, if such final judgment or decree is rendered:
o On the merits
o Without fraud or collusion
o By a court of competent jurisdiction, upon any matter within its jurisdiction
 The principle of res judicata has two aspects, namely:
a) "bar by prior judgment" as enunciated in Rule 39, Section 49 (b) of the 1997 Rules of Civil Procedure;
 There is "bar by prior judgment" when, as between the first case where the judgment was rendered and
the second case that is sought to be barred, there is:
i. Identity of parties
ii. Identity of subject matter, and
iii. Identity of causes of action
 When there is identity in all these aspects, the judgment in the first case constitutes an absolute bar to the
second action
o Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits
concludes the litigation between the parties, as well as their privies, and constitutes a bar to a
new action or suit involving the same cause of action before the same or any other tribunal
b) "conclusiveness of judgment" which is contained in Rule 39, Section 47 (c)
 Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the parties and their privies whether or not the
claim, demand, purpose, or subject matter of the two actions is the same
  Where there is identity of parties in the first and second cases, but no identity of causes of action, the first
judgment is conclusive only as to those matters actually and directly controverted and determined, and
not as to matters merely involved therein
o This is the concept of res judicata known as "conclusiveness of judgment"
 The two aspects of res judicata are applied as follows:
 Should identity of parties, subject matter, and causes of action be shown in the two cases  then res
judicata in its aspect as a "bar by prior judgment" would apply
 If as between the two cases, only identity of parties can be shown, but not identical causes of action  then
res judicata as "conclusiveness of judgment" applies
 GENERAL RULE: The elements of res judicata are:
(1) The judgment sought to bar the new action must be final;
(2) The decision must have been rendered by a court having jurisdiction over the subject matter and the
parties;
(3) The disposition of the case must be a judgment on the merits; and
(4) There must be as between the first and second action, identity of (a) parties, (b) subject matter, and (c)
causes of action
 APPLICATION: The existence here of the first three requisites is not disputed. With respect to the fourth element,
however, the parties disagree. The SC held that as between the Attachment Case and the Annulment Case, there
is identity of parties BUT there is no identity of causes of action.
(a) Identity of parties
 Allied Bank was the plaintiff in both the Attachment Case and the Annulment Case, while the
Oropeza spouses were among the defendants in both cases. Moreover, Allied Bank was the
appellant in the appeal of the Annulment Case, where the Oropezas were included as appellees.
o Allied Bank’s argument: Since OMC was not impleaded in the Annulment Case, the finality
of the judgment in the appeal of the Annulment Case before the CA will not bind OMC.
Neither the trial court nor the appellate court in the Annulment Case acquired jurisdiction
over OMC.
 However, the rule on identity of parties does not require absolute, but only substantial identity of
parties
o Republic v Planas: “The operation of the final judgment or order in a previous case is not
altered by the fact that somebody who was not a party in the first action has been
impleaded in the second case. Otherwise, litigants can always renew any litigation by the
mere expediency of including new parties”
 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 in the later case certain parties in the previous suit
 Therefore, as between the Attachment Case and the Annulment Case, there is identity of parties
o The fact that OMC was not a party in the Annulment Case and the appeal of the Annulment
Case before the CA, does not nullify the effect of the judgments issued in these cases on
the other case, the Attachment Case
(b) Identity of subject matter
 With respect to identity of subject matter, this is included in identity of causes of action
o When there is identity of the cause or causes of action, there is necessarily identity of
subject matter
o But the converse is not true, for different causes of action may exist regarding the same
subject matter  in which case, the conclusiveness of judgment shall be only with regard to
the questions directly and actually put in issue and decided in the first case.
(c) Identity of causes of action
 A cause of action is an act or omission of one party in violation of the legal right of the other that
causes the latter injury
o It is determined not by the prayer of the complaint, but by the facts alleged
 The Attachment Case was for the collection of the P780K loan, secured by a Promissory Note,
which respondent Allied Bank insists remained unpaid by the petitioners
o In other words, it is the alleged failure of petitioners to liquidate their obligation to respondent
bank, which caused Allied Bank's cause of action in the Attachment Case to accrue
 The situation is different in the Annulment Case, where respondent bank asserts its right as a
mortgagee to the subject property by virtue of the real estate mortgage executed by petitioner
spouses in its favor
o Allied Bank averred that the Oropeza spouses executed a real estate mortgage over their
properties to secure their loan.
o It further alleged that the Oropezas then sold said properties to Solid Gold Commercial
Corporation, with intent to defraud respondent bank.
o Hence, respondent was forced to file suit to annul the deed of sale over the mortgaged
properties.
 It is apparent that alleged violations of respondent's legal rights by petitioners differ, as the acts or
omissions complained of the two civil cases, basing on the recitation of their facts which are
different
  The test to determine the identity of causes of action is to consider whether the same evidence
would sustain both causes of action
o In the Attachment Case, Allied Bank will have to present evidence showing:
 (a) the existence of the loan and
 (b) petitioners' failure to comply with their bounden duty to pay such loan in
accordance with terms of the Promissory Note
o However, in the Annulment Case, Allied Bank's evidence must establish and prove its
allegations to the effect that:
 (a) petitioners secured a loan from it;
 (b) said loan was secured by a Promissory Note and a mortgage over properties
owned by the Oropezas;
 (c) petitioners failed to pay their debt; and
 (d) petitioners sold the mortgaged properties with intent to defraud respondent bank
 The SC finds that the evidence to support Allied Bank's cause of action in the Attachment Case is
INCLUDED in and forms part of the evidence needed by respondent bank to support its cause of
action in the Annulment Case. The converse, however, not true.
o The evidence needed in the Annulment Case does not necessarily form part of the evidence
needed by respondent in the Attachment Case
o Accordingly, the SC finds that the evidence to sustain the respective causes of action in the
two cases is not exactly the same
o Perforce, the SC must rule that there is no identity between the causes of action in the
Attachment Case and the Annulment Case
 CONCLUSION: There being substantial identity of parties but no identity of causes of action, the applicable
aspect of res judicata in the instant case is "conclusiveness of judgment."
 Thus, there is conclusiveness of judgment only as to the matters actually determined by the
trial court in the Annulment Case, as affirmed by the CA
o These include the findings that:
 (1) the promissory note relied upon by respondent bank is spurious; and
 (2) that the loan obligation of the Oropeza spouses has been settled and paid.
 Therefore, it having been determined with finality by the CA in the appeal of the Annulment Case
that the debt of the Oropezas has been settled, Allied Bank’s cause of action in the Attachment
Case must be deemed extinguished

DISPOSITIVE PORTION
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals, dated March 13, 1997 in CA-G.R. CV
No. 47775 as well as its resolution of June 13, 1997 denying herein petitioners' motion for reconsideration are hereby
SET ASIDE. The findings of the Regional Trial Court of Davao City, Branch 9 in Civil Case No. 19634-89, as affirmed
by the appellate court in CA-G.R. CV No. 41986, shall be conclusive upon the parties in Civil Case No. 19325-88. The
order of the Regional Trial Court of Davao City, Branch 15, dismissing respondent Allied Banking Corporation's
complaint in Civil Case No. 19325-88 is hereby REINSTATED with the MODIFICATION that the case is not dismissed
but is deemed concluded on the ground of res judicata, i.e., as "conclusiveness of judgment." Costs against
respondent.
SO ORDERED.