Smith Bell and Company v. CA
G.R. No. 56294. May 20, 1991


Facts:

M/V "Don Carlos," an inter-island vessel owned and operated by Go Thong and Company ("Go Thong"), and the M/S "Yotai Maru," a merchant vessel of Japanese registry collided. After the insurance companies paid the consignees of the damaged cargo, they commenced action against Go Thong in the Court of First Instance of Manila. The first case, filed by Smith Bell and Company and Sumitomo Marine and Fire Insurance Company, was raffled to Judge Fernandez of Branch 3. The second case, filed by Smith Bell and Company and Tokyo Marine and Fire Insurance Company, was raffled to Judge Cuevas of Branch 4. 

The two cases were tried under the same issues and evidence relating to the collision, the parties in both cases having agreed that the evidence on the collision presented in one case would be simply adopted in the other. In both cases, it was held that the officers and crew of the "Don Carlos" had been negligent that such negligence was the proximate cause of the collision and accordingly held respondent Go Thong liable for damages to the plaintiff insurance companies. 

Go Thong appealed both decisions to the Court of Appeals. The decision of Judge Fernandez in the first case was affirmed by the the CA, through Justice Reyes. Go Thong went to the Supreme Court on Petition for Review, but the petition was denied for lack of merit. 

Two years after the decision of Justice Reyes had been affirmed, the CA, through Justice Sison, reversed the decision of Judge Cuevas in the second case. The CA dismissed the insurance companies' complaint, holding that the officers of the "Yotai Maru" was at fault in the collision.

The insurance companies filed a Petition for Review on Certiorari before the Supreme Court, contending that Justice Sison failed to apply the rule of res judicata. They argued that Justice Sison should have followed the Reyes Decision since the latter had been affirmed by the Supreme Court and had become final and executory before the Sison Decision was rendered. 

Go Thong, upon the other hand, argued that the Supreme Court, in rendering its minute Resolution in the first case, had merely dismissed Go Thong's Petition for Review for lack of merit but had not affirmed in toto the Reyes Decision. Go Thong concluded that the Court did not hold that the "Don Carlos" had been negligent in the collision. It likewise argued that the rule of res judicata cannot be invoked for the reason that there was no identity of parties and no identity of cause of action between. Go Thong further argued that a compromise agreement entered into between Sanyo Shipping Company as owner of the "Yotai Maru" and Go Thong as owner of the "Don Carlos," under which the former paid P268,000.00 to the latter, effectively settled that the "Yotai Maru" had been at fault.

The insurance companies conceded that the subject matters of the two (2) suits were not identical, in the sense that the cargo which had been damaged in the one case and for which indemnity was sought, was not the very same cargo which had been damaged in the other case indemnity for which was also sought. The cause of action was, however, the same in the two (2) cases, i.e., the same right of the cargo owners to the safety and integrity of their cargo had been violated by the same casualty, the ramming of the "Yotai Maru" by the "Don Carlos.


Issue:

1. Was Go Thong correct?

2. Whether the Sison Decision disregarded the rule of res judicata.

3. Whether the compromise agreement was an admission of liability by the owners of Yotai Maru.


Held:

1. Yes. 

"That this Court denied Go Thong's Petition for Review in a minute Resolution did not in any way diminish the legal significance of the denial so decreed by this Court. The Supreme Court is not compelled to adopt a definite and stringent rule on how its judgment shall be framed. It has long been settled that this Court has discretion to decide whether a "minute resolution" should be used in lieu of a full-blown decision in any particular case and that a minute Resolution of dismissal of a Petition for Review on certiorari constitutes an adjudication on the merits of the controversy or subject matter of the Petition. A minute Resolution denying a Petition for Review of a Decision of the Court of Appeals can only mean that the Supreme Court agrees with or adopts the findings and conclusions of the Court of Appeals, in other words, that the Decision sought to be reviewed and set aside is correct."


2. Yes. 

"Under the circumstances, the absence of identity of subject matter, there being substantial identity of parties and identity of cause of action, will not preclude the application of res judicata.

In Tingson v. Court of Appeals, the Court distinguished one from the other the two (2) concepts embraced in the principle of res judicata, i.e., "bar by former judgment" and "conclusiveness of judgment:"

There is no question that where as between the first case Where the judgment is rendered and the second case where such judgment is invoked, there is identity of parties, subject-matter and cause of action, the judgment on the merits in the first case constitutes an absolute bar to the subsequent action not only as to every matter which was offered and received to sustain or defeat the claim or demand, but also as to any other admissible matter which might have been offered for that purpose and to all matters that could have been adjudged in that case. This is designated as "bar by former judgment."

But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or judgment was rendered. In fine, the previous judgment is conclusive in the second case, only as those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the rule on 'conclusiveness of judgment' embodied in subdivision (c) of Section 49 of Rule 39 of the Revised Rules of' Court."

In the case at bar, the issue of which vessel had been negligent, or so negligent as to have proximately caused the collision between them, was an issue that was actually, directly and expressly raised, controverted and litigated in C.A.-G.R. No. 61320-R. Reyes, L.B., J., resolved that issue in his Decision and held the "Don Carlos" to have been negligent rather than the "Yotai Maru" and, as already noted, that Decision was affirmed by this Court in G.R. No. L-48839 in a Resolution dated 6 December 1978. The Reyes Decision thus became final and executory approximately two (2) years before the Sison Decision, which is assailed in the case at bar, was promulgated. Applying the rule of conclusiveness of judgment, the question of which vessel had been negligent in the collision between the two (2) vessels, had long been settled by this Court and could no longer be relitigated in C.A.-G.R. No. 61206-R. Private respondent Go Thong was certainly bound by the ruling or judgment of Reyes, L.B., J. and that of this Court. 


3. "True it is that by virtue of the compromise agreement, the owner of the "Yotai Maru" paid a sum of money to the owner of the "Don Carlos." Nowhere, however, in the compromise agreement did the owner of the "Yotai Maru " admit or concede that the "Yotai Maru" had been at fault in the collision. The familiar rule is that "an offer of compromise is not an admission that anything is due, and is not admissible in evidence against the person making the offer." A compromise is an agreement between two (2) or more persons who, in order to forestall or put an end to a law suit, adjust their differences by mutual consent, an adjustment which everyone of them prefers to the hope of gaining more, balanced by the danger of losing more. An offer to compromise does not, in legal contemplation, involve an admission on the part of a defendant that he is legally liable, nor on the part of a plaintiff that his claim or demand is groundless or even doubtful, since the compromise is arrived at precisely with a view to avoiding further controversy and saving the expenses of litigation. It is of the very nature of an offer of compromise that it is made tentatively, hypothetically and in contemplation of mutual concessions. The above rule on compromises is anchored on public policy of the most insistent and basic kind; that the incidence of litigation should be reduced and its duration shortened to the maximum extent feasible."