G.R. No. 179121 , 179128, 179129 November 09, 2015
MARGARITA M. BENEDICTO-MUÑOZ, PETITIONER, VS. MARIA ANGELES CACHO-OLIVARES, EDGARDO P. OLIVARES, PETER C. OLIVARES, CARMELA Q. OLIVARES, MICHAEL C. OLIVARES, ALEXANDRA B. OLIVARES, AND MELISSA C. OLIVARES, RESPONDENTS. [G.R. NO. 179128] ABACUS SECURITIES CORPORATION AND JOEL CHUA CHIU, PETITIONERS, VS. MARIA ANGELES CACHO-OLIVARES, PETER C. OLIVARES, CARMELA Q. OLIVARES, MICHAEL Q. OLIVARES, ALEXANDRA B. OLIVARES, [and] MELISSA C. OLIVARES, RESPONDENTS. [G.R. NO. 179129] SAPPHIRE SECURITIES, INC., PETITIONER, VS. MARIA ANGELES CACHO-OLIVARES, EDGARDO P. OLIVARES, PETER C. OLIVARES, CARMELA Q. OLIVARES, MICHAEL C. OLIVARES, ALEXANDRA B. OLIVARES, MELISSA C. OLIVARES, AND THE HON. COURT OF APPEALS, NINTH DIVISION, RESPONDENTS.

FACTS

Respondents filed a Complaint for Damages and Revocation of Registration and License of Broker, Dealer and Salesman with the Securities and Exchange Commission (SEC) against several defendants, including petitioners (stock brokerage firms Abacus Securities Corporation and Sapphire Securities, Inc., and individuals Margarita Benedicto-Muñoz and Joel Chua Chiu) and the Cuaycong brothers (Jose Maximo Cuaycong III and Mark Angelo Cuaycong). Respondents alleged fraudulent activities by Cuaycong, a securities salesman, resulting in investment losses, and sought joint and solidary liability for damages. The case was transferred to the Regional Trial Court (RTC) upon the effectivity of the Securities Regulation Code. Separately, the Cuaycong brothers filed a case for Consignation and Damages against respondents. The Cuaycong brothers and respondents entered into a Compromise Agreement, approved by the RTC of Pasig, wherein respondents agreed to drop the Cuaycong brothers as defendants in the damage case in consideration of payment. The RTC of Makati, where the damage case was pending, granted the motion to drop the Cuaycong brothers and directed respondents to file an amended complaint. Respondents filed an Amended and Supplemental Complaint against the remaining defendants (petitioners), deleting the prayer for actual damages and seeking only moral and exemplary damages and attorney’s fees. The trial court dismissed the Amended and Supplemental Complaint, ruling that the Cuaycong brothers were indispensable parties sued under a common cause of action, and the dismissal of the complaint against them extended to the other defendants, depriving the court of competency. The Court of Appeals reversed, holding the Compromise Agreement did not absolve the other defendants as the cause of action against them was separate and distinct. Petitioners sought review before the Supreme Court.

ISSUE

Whether the Court of Appeals erred in reversing the trial court’s dismissal of the Amended and Supplemental Complaint against the petitioners after the respondents dropped the Cuaycong brothers as defendants based on a compromise agreement.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals Decision. The Court held that the Cuaycong brothers were not indispensable parties to the action against the petitioners. An indispensable party is one without whom no final determination can be had of an action. The causes of action against the petitioners, based on alleged violations of the Securities Regulation Code (such as fraudulent transactions and sales by unlicensed personnel), are separate and distinct from the cause of action against the Cuaycong brothers for misappropriation of funds. The Amended and Supplemental Complaint alleged acts committed by petitioners that did not involve the Cuaycong brothers. Therefore, a final determination of petitioners’ liability can be made without the Cuaycong brothers’ presence. The principle of res judicata does not apply as there is no identity of parties and causes of action between the compromise-approved consignation case and the damage case against petitioners. Payment by one solidary debtor (the Cuaycong brothers) does not extinguish the liability of the other solidary debtors (petitioners) for the same damages, but the amount paid should be deducted from the total damages recoverable. However, since respondents in their Amended and Supplemental Complaint waived and abandoned their claim for actual/compensatory damages and sought only moral and exemplary damages and attorney’s fees, the payment by the Cuaycong brothers did not extinguish a claim that was no longer being pursued. The case was remanded to the trial court for further proceedings.