G.R. No. 159508; August 29, 2012
JUAN B. BANEZ, JR., Petitioner, vs. HON. CRISANTO C. CONCEPCION, IN HIS CAPACITY AS THE PRESIDING JUDGE OF THE RTC-BULACAN, MALOLOS CITY, AND THE ESTATE OF THE LATE RODRIGO GOMEZ, REPRESENTED BY ITS ADMINISTRATRIX, TSUI YUK YING, Respondents.

FACTS

The case originated from a 1990 compromise agreement approved by the RTC of Valenzuela in Civil Case No. 3287-V-90 between Leodegario Ramos and Rodrigo Gomez. The agreement settled Ramos’s action for rescission of a sale over a 1,233 sq.m. parcel of land. Petitioner Atty. Juan B. Bañez, Jr., Ramos’s counsel, assisted in the agreement and issued a post-dated check for P110,000.00 to guarantee Ramos’s monetary obligations to Gomez. The check was for a loan principal of P80,000.00, interest of P20,000.00, and attorney’s fees of P10,000.00. Only P80,000.00 was paid; the check for the P30,000.00 balance was dishonored.
Gomez died in November 1990. In 1994, his Estate filed an action for specific performance against Ramos and Bañez in Caloocan City (Civil Case No. C-15750) to recover the P30,000.00. The Caloocan RTC dismissed the case in 1995, finding the obligation was Ramos’s alone and Bañez acted merely as a guarantor. This 1995 decision became final and executory. In 2002, the Estate filed a new complaint in Malolos, RTC (Civil Case No. 722-M-2002) against Ramos and Bañez for recovery of ownership and possession of the land, alleging the 1990 compromise agreement was rescinded due to the dishonored check. Bañez moved to dismiss, arguing the action was barred by prescription and res judicata.

ISSUE

Whether the Regional Trial Court committed grave abuse of discretion in denying the motion to dismiss and reinstating the action for recovery of ownership and possession.

RULING

Yes, the Supreme Court granted the petition, finding grave abuse of discretion. The Court ruled that the 2002 action was barred by prescription. The right of action accrued on April 23, 1991, upon the dishonor of the check, which triggered the rescissory clause (paragraph 6) of the 1990 compromise agreement. An action upon a written contract, such as the compromise agreement, prescribes in ten years under Article 1144 of the Civil Code. The Estate filed its complaint only in September 2002, more than eleven years after the cause of action arose, making it time-barred.
Furthermore, the principle of res judicata applied. The 1995 final decision in the Caloocan specific performance case constituted a bar to the 2002 recovery action. Both cases involved the same parties, the same subject matter (the 1990 compromise agreement and its consequences), and the same cause of action—the alleged breach arising from the dishonored check. The Caloocan court had already conclusively adjudicated the rights and obligations of the parties concerning that breach. Therefore, the Malolos RTC’s orders, which reversed an initial dismissal and compelled Bañez to answer, were issued without legal basis and with grave abuse of discretion. The Supreme Court made the temporary restraining order permanent and ordered the dismissal of Civil Case No. 722-M-2002.