G.R. No. 108089 January 10, 1994
ALLIED BANKING CORPORATION, petitioner, vs. HON. COURT OF APPEALS AND FILOTEO ALANO, respondents.

FACTS

Petitioner Allied Banking Corporation filed a complaint (the First Case) against Dearfield, Incorporated and several co-defendants, including private respondent Filoteo Alano, in the RTC of Makati, Branch 149, based on promissory notes, letters of credit, and trust receipts. Alano filed a motion to dismiss on the ground that the complaint failed to state a cause of action against him, as the allegations did not mention his participation or contractual relation in the transactions. The trial court granted the motion in its Order of June 20, 1988, finding no cause of action against Alano based on the complaint’s allegations. Petitioner’s motion for reconsideration was denied. Petitioner appealed to the Supreme Court (G.R. No. 86009), but the petition was dismissed on April 17, 1989, for being filed late and for lack of merit. On October 31, 1990, petitioner filed a new complaint (the Second Case) against Alano and another surety in the RTC of Manila, Branch 46, involving the same promissory notes, letters of credit, and trust receipts. Alano moved to dismiss on the grounds of res judicata and failure to state a cause of action. The trial court dismissed the case against Alano on March 1, 1991. The Court of Appeals affirmed the dismissal on November 25, 1992. Petitioner filed the instant petition, arguing that the first dismissal was not on the merits and that there is no identity of causes of action because the second complaint attached the “Continuing Guaranty/Comprehensive Surety” agreements not attached to the first.

ISSUE

Whether the Court of Appeals committed reversible error in affirming the dismissal of the Second Case on the ground of res judicata.

RULING

No. The petition is denied for lack of merit. All essential requisites of res judicata are present: (1) The Order of June 20, 1988, dismissing the First Case for failure to state a cause of action against Alano, is final, having been affirmed by the Supreme Court’s dismissal of G.R. No. 86009. (2) The RTC of Makati had jurisdiction over the subject matter and parties. (3) The dismissal was a judgment on the merits, as it was a declaration based on the ultimate facts disclosed by the pleadings regarding the rights of the parties. (4) There is identity of parties (petitioner and Alano), subject matter, and causes of action between the two cases—both seek enforcement of rights under the same promissory notes, letters of credit, and trust receipts. The trial court’s conclusion in the First Case was based on the allegations of the complaint, which neither mentioned Alano nor suggested his liability. The subsequent attachment of surety agreements in the Second Case does not alter the identity of the cause of action, as those documents are linked to the same transactions and could have been raised in the first suit. Res judicata bars not only relitigation of issues actually adjudicated but also those that could have been raised.