GR 160446; (September, 2012) (Digest)
G.R. No. 160446 , September 19, 2012
RIZAL COMMERCIAL BANKING CORPORATION, PETITIONER, VS. DOLORES HILARIO, TERESITA HILARIO, THELMA HILARIO OCHOA AND EDUARDO HILARIO, RESPONDENTS.
FACTS
The case originated from two related civil actions. First, in 1991, Edmund Perez and heirs (Edmund, et al.) filed a complaint (Civil Case No. Q-91-10079) against his wife Yolanda, her business associates, and RCBC. The complaint sought, among other reliefs, the annulment of mortgages over a Caloocan property (TCT No. 21563) owned by respondents Dolores Hilario and Teofilo Hilario. Edmund and Yolanda had mortgaged this property as attorneys-in-fact for the Hilarios to secure loans for their conjugal business, HPM, from RCBC. The complaint alleged conspiracy and that the mortgages should be cancelled as the original loans were paid. This case was eventually settled by a Compromise Agreement approved by the Quezon City RTC in 1995.
Subsequently, in 1995, the Hilario respondents themselves filed a separate complaint (Civil Case No. C-17332) against RCBC in the Caloocan RTC. They sought the cancellation of the same mortgages on their Caloocan property, alleging they never authorized the mortgages beyond the original, already-paid loans. RCBC moved to dismiss this second case on grounds of litis pendentia and forum shopping, arguing the first case involved the same parties and cause of action. The Caloocan RTC granted the dismissal. The Court of Appeals reversed, holding that the Hilarios were not formal parties in the first case and thus there was no identity of parties to support litis pendentia.
ISSUE
Whether the complaint filed by the Hilario respondents in Civil Case No. C-17332 should be dismissed.
RULING
Yes, the complaint must be dismissed, but on the ground of res judicata, not litis pendentia. The Supreme Court clarified that while the Hilarios were not named parties in the first case (Q-91-10079), they were in fact real parties-in-interest as the registered owners of the mortgaged property. Their interests were directly represented and bound by the actions of their attorneys-in-fact, Edmund and Yolanda Perez, who were parties to that case. The agency relationship was not extinguished by the death of Teofilo Hilario during the pendency of the first case, as the agent’s act of entering into the Compromise Agreement was beneficial to the principal.
The court-approved Compromise Agreement in the first case constituted a final judgment on the merits. It specifically resolved the issue of the validity and continued effectivity of the mortgages over the Hilario property, mandating Edmund, et al. to pay the outstanding obligations to RCBC, after which the mortgages would be cancelled. This agreement conclusively settled the very same issue raised by the Hilarios in their separate complaint. Therefore, the principle of res judicata bars the re-litigation of this settled issue. The Supreme Court reversed the Court of Appeals and reinstated the dismissal of Civil Case No. C-17332, albeit on the correct ground of res judicata.