GR 148980; (September 2007) (Digest)
G.R. No. 148980 ; September 21, 2007
PCI LEASING & FINANCE, INC., Petitioner, vs. SPOUSES GEORGE M. DAI and DIVINA DAI, Respondents.
FACTS
Respondents obtained a loan from petitioner, secured by a chattel mortgage over a vessel. Upon default, petitioner filed a complaint for replevin and damages (Civil Case No. CEB-16691), praying for the seizure of the vessel or, if manual delivery could not be effected, a money judgment for the unpaid sum plus attorney’s fees and liquidated damages. Respondents answered, claiming possession of the vessel had already been surrendered. Petitioner subsequently foreclosed the chattel mortgage and purchased the vessel at auction.
The trial court, in its final and executory decision, dismissed both parties’ claims for damages and attorney’s fees. It found no bad faith on respondents’ part and ruled petitioner was not entitled to its claims as it had already obtained possession of the vessel’s certificate and had foreclosed the mortgage. Over a year later, petitioner filed a second complaint (Civil Case No. CEB-22585) for a deficiency judgment, seeking to recover the balance of the loan after applying the foreclosure proceeds.
ISSUE
Whether the second action for a deficiency judgment is barred by res judicata.
RULING
Yes, the second action is barred by res judicata. For res judicata to apply, there must be: (1) a final former judgment; (2) a court with jurisdiction; (3) a judgment on the merits; and (4) identity of parties, subject matter, and causes of action. All elements are present. The first case resulted in a final judgment on the merits. The parties are identical.
Crucially, there is identity of causes of action. The cause of action in both suits springs from the same loan agreement and promissory note secured by the chattel mortgage. In the first replevin suit, petitioner sought alternative reliefs: either possession of the collateral or a money judgment for the entire obligation, plus damages. By praying for a money judgment in the alternative, petitioner effectively invoked the court’s power to grant a deficiency judgment should the foreclosure proceeds be insufficient. The trial court’s dismissal of all claims in the first case, which became final, constituted an adjudication on the entire controversy, precluding a subsequent piecemeal action to recover the alleged deficiency. Petitioner cannot split its single cause of action.