In the early morning of 3 May 1970 -- at exactly 0350 hours, on the approaches to the port of Manila near Caballo Island, a collision took place between the M/V "Don Carlos," an inter-island vessel owned and operated by private respondent Carlos A. Go Thong and Company ("Go Thong"), and the M/S "Yotai Maru," a merchant vessel of Japanese registry.  The "Don Carlos" was then sailing south bound leaving the port of Manila for Cebu, while the "Yotai Maru" was approaching the port of Manila, coming in from Kobe, Japan.  The bow of the "Don Carlos" rammed the portside (left side) of the "Yotai Maru" inflicting a three (3) cm. gaping hole on her portside near Hatch No. 3, through which seawater rushed in and flooded that hatch and her bottom tanks, damaging all the cargo stowed therein.

The consignees of the damaged cargo got paid by their insurance companies.  The insurance companies in turn, having been subrogated to the interests of the consignees of the damaged cargo, commenced actions against private respondent Go Thong for damages sustained by the various shipments in the then Court of First Instance of Manila.

Two (2) cases were filed in the Court of First Instance of Manila.  The first case, Civil Case No. 82567, was commenced on 13 March 1971 by petitioner Smith Bell and Company (Philippines), Inc. and Sumitomo Marine and Fire Insurance Company Ltd., against private respondent Go Thong, in Branch 3, which was presided over by Judge Bernardo P. Fernandez.  The second case, Civil Case No. 82556, was filed on 15 March 1971 by petitioners Smith Bell and Company (Philippines), Inc. and Tokyo Marine and Fire Insurance Company, Inc. against private respondent Go Thong in Branch 4, which was presided over by then Judge, later Associate Justice of this Court, Serafin R. Cuevas.

Civil Cases Nos. 82567 (Judge Fernandez) and 82556 (Judge Cuevas) were tried under the same issues and evidence, relating to the collision between the "Don Carlos" and the "Yotai Maru", 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, the Manila Court of First Instance 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.  Judge Fernandez awarded the insurance companies P19,889.79 with legal interest plus P3,000.00 as attorney's fees; while Judge Cuevas awarded the plaintiff insurance companies on two (2) claims US$68,640.00 or its equivalent in Philippine currency plus attorney's fees of P30,000.00, and P19,163.02 plus P5,000.00 as attorney's fees, respectively.

The decision of Judge Fernandez in Civil Case No. 82567 was appealed by respondent Go Thong to the Court of Appeals, and the appeal was there docketed as C.A.-G.R. No. 61320-R.  The decision of Judge Cuevas in Civil Case No. 82556 was also appealed by Go Thong to the Court of Appeals, the appeal being docketed as C.A.-G.R. No. 61206-R.  Substantially identical assignments of errors were made by Go Thong in the two (2) appealed cases before the Court of Appeals.

In C.A.-G.R. No. 61320-R, the Court of Appeals through Reyes, L.B., J., rendered a Decision on 8 August 1978 affirming the Decision of Judge Fernandez.  Private respondent Go Thong moved for reconsideration, without success.  Go Thong then went to the Supreme Court on Petition for Review, the Petition being docketed as G.R. No. L-48839 ("Carlos A. Go Thong and Company v. Smith Bell and Company [Philippines], Inc., et al.").  In its Resolution dated 6 December 1978, this Court, having considered "the allegations, issues and arguments adduced in the Petition for Review on Certiorari, of the Decision of the Court of Appeals as well as respondent's comment", denied the Petition for lack of merit.  Go Thong filed a Motion for Reconsideration; the Motion was denied by this Court on 24 January 1979.

In the other (Cuevas) case, C.A.-G.R. No. 61206-R, the Court of Appeals, on 26 November 1980 (or almost two ^[2] years after the Decision of Reyes, L.B., J., in C.A.-G.R. No. 61320-R, had been affirmed by the Supreme Court on Petition for Review) through Sison, P.V., J., reversed the Cuevas Decision and held the officers of the "Yotai Maru" at fault in the collision with the "Don Carlos," and dismissed the insurance companies' complaint.  Herein petitioners asked for reconsideration, to no avail.

The insurance companies are now before us on Petition for Review on Certiorari, assailing the Decision of Sison, P.V., J., in C.A.-G.R. No. 61206-R.  Petitioners' principal contentions are:

a. that the Sison Decision had disregarded the rule of res judicata;

b. that Sison P.V., J., was in serious and reversible error in accepting Go Thong's defense that the question of fault on the part of the "Yotai Maru" had been settled by the compromise agreement between the owner of the "Yotai Maru" and Go Thong as owner of the "Don Carlos;" and

c. that Sison, P.V., J., was in serious and reversible error in holding that the "Yotai Maru" had been negligent and at fault in the collision with the "Don Carlos."

I

The first contention of petitioners is that Sison, P.V., J. in rendering his questioned Decision, failed to apply the rule of res judicata.  Petitioners maintain that the Resolution of the Supreme Court dated 6 December 1978 in G.R. No. 48839 which dismissed Go Thong's Petition for Review of the Decision of Reyes, L.B., J., in C.A.-G.R. No. 61320-R, had effectively settled the question of liability on the part of the "Don Carlos." Under the doctrine of res judicata, petitioners contend, Sison, P.V., J. should have followed the Reyes, L.B., J.  Decision since the latter had been affirmed by the Supreme Court and had become final and executory long before the Sison Decision was rendered.

Private respondent Go Thong, upon the other hand, argues that the Supreme Court, in rendering its minute Resolution in G.R. No. L-48839, had merely dismissed Go Thong's Petition for Review of the Reyes, L.B., J.  Decision for lack of merit but had not affirmed in toto that Decision.  Private respondent, in other words, purports to distinguish between denial of a Petition for Review for lack of merit and affirmance of the Court of Appeals' Decision.  Thus, Go Thong concludes, this Court did not hold that the "Don Carlos" had been negligent in the collision.

Private respondent's argument must be rejected.  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.^[1] 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.^[2] It has been stressed by the Court that the grant of due course to a Petition for Review is "not a matter of right, but of sound judicial discretion; and so there is no need to fully explain the Court's denial.  For one thing, the facts and law are already mentioned in the Court of Appeals' opinion."^[3] 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.^[4]

Private respondent Go Thong argues also that the rule of res judicata cannot be invoked in the instant case whether in respect of the Decision of Reyes, L.B., J. or in respect of the Resolution of the Supreme court in G.R. No. L-48839, for the reason that there was no identity of parties and no identity of cause of action between C.A.-G.R. No. 61206-R and C.A.-G.R. No. 61320-R.

The parties in C.A.-G.R. No. 61320-R where the decision of Judge Fernandez was affirmed, involved Smith Bell and Company (Philippines), Inc., and Sumitomo Marine and Fire Insurance Co., Ltd. while the petitioners in the instant case (plaintiffs below) are Smith Bell and Co. (Philippines), Inc. and Tokyo Marine and Fire Insurance Co., Ltd.  In other words, there was a common petitioner in the two (2) cases, although the co-petitioner in one was an insurance company different from the insurance company co-petitioner in the other case.  It should be noted, moreover, that the co-petitioner in both cases was an insurance company and that both petitioners in the two (2) cases represented the same interest, i.e., the cargo owners' interest as against the hull interest or the interest of the shipowner.  More importantly, both cases had been brought against the same defendant, private respondent Go Thong, the owner of the vessel "Don Carlos".  In sum, C.A.-G.R. No. 61320-R and C.A.-G.R. No. 61206-R exhibited substantial identity of parties.

It is conceded by petitioners 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." The judgments in both cases were final judgments on the merits rendered by the two (2) divisions of the Court of Appeals and by the Supreme Court, the jurisdiction of which has not been questioned.

Under the circumstances, we believe that 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.^[5]

In Tingson v. Court of Appeals,^[6] 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."^[7] (Citations omitted) (Emphases supplied)

In Lopez v. Reyes,^[8] the Court elaborated further the distinction between bar by former judgment which bars the prosecution of a second action upon the same claim, demand or cause of action, and conclusiveness of judgment which bars the relitigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action:

"The doctrine of res judicata has two aspects.  The first is the effect of a judgment as a bar to the prosecution of a second action upon the same claim, demand or cause of action.  The second aspect is that it precludes the relitigation of a particular fact or issues in another action between the same parties on a different claim or cause of action.

The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in former action are commonly applied to all matters essentially connected with the subject matter of the litigation.  Thus, it extends to questions 'necessarily involved in an issue, and necessarily adjudicated, or necessarily implied in the final judgment, although no specific finding may have been made in reference thereto, and although such matters were directly referred to in the pleadings and were not actually or formally presented.  Under this rule, if the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties, and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself.  Reasons for the rule are that a judgment is an adjudication on all the matters which are essential to support it, and that every proposition assumed or decided by the court leading up to the final conclusion and upon which such conclusion is based is as effectually passed upon as the ultimate question which is finally solved.'"^[9] (Citations omitted)  (Emphases supplied)

In the case at bar, the issue of which vessel ("Don Carlos" or "Yotai Maru") 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.  The Court of Appeals fell into clear and reversible error when it disregarded the Decision of this Court affirming the Reyes Decision.^[10]

Private respondent Go Thong also argues 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.  This argument is wanting in both factual basis and legal substance.  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."^[11] 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.^[12] 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.^[13] It is of the very nature of an offer of compromise that it is made tentatively, hypothetically and in contemplation of mutual concessions.^[14] 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.

The collision between the "Yotai Maru" and the "Don Carlos" spawned not only sets of litigations but also administrative proceedings before the Board of Marine Inquiry ("BMI").  The collision was the subject matter of an investigation by the BMI in BMI Case No. 228.  On 12 July 1971, the BMI, through Commodore Leovegildo L. Gantioki, found both vessels to have been negligent in the collision.

Both parties moved for reconsideration of the BMI's decision.  The Motions for Reconsideration were resolved by the Philippine Coast Guard ("PCG") nine (9) years later, in an order dated 19 May 1980 issued by PCG Commandant, Commodore Simeon M. Alejandro.  The dispositive portion of the PCG decision read as follows:

"Premises considered, the Decision dated July 12, 1971 is hereby reconsidered and amended absolving the officers of 'YOTAI MARU' from responsibility for the collision.  This Headquarters finds no reason to modify the penalties imposed upon the officers of 'Don Carlos'. (Annex 'C', Reply, September 5, 1981)."^[15]

Go Thong filed a second Motion for Reconsideration; this was denied by the PCG in an order dated September 1980.

Go Thong sought to appeal to the then Ministry of National Defense from the orders of the PCG by filing with the PCG on 6 January 1981 a motion for a 30-day extension from 7 January 1981 within which to submit its record on appeal.  On 4 February 1981, Go Thong filed a second urgent motion for another extension of thirty (30) days from 7 February 1981.  On 12 March 1981, Go Thong filed a motion for a final extension of time and filed its record on appeal on 17 March 1981.  The PCG noted that Go Thong's record on appeal was filed late, that is, seven (7) days after the last extension granted by the PCG had expired.  Nevertheless, on 1 July 1981 (after the Petition for Review on Certiorari in the case at bar had been filed with this Court), the Ministry of Defense rendered a decision reversing and setting aside the 19 May 1980 decision of the PCG.

The owners of the "Yotai Maru" then filed with the Office of the President a Motion for Reconsideration of the Defense Ministry's decision.  The Office of the President rendered a decision dated 17 April 1986 denying the Motion for Reconsideration.  The decision of the Office of the President correctly recognized that Go Thong had failed to appeal in a seasonable manner:

"MV 'DON CARLOS' filed her Notice of Appeal on January 5, 1981.  However, the records also show beyond peradventure of doubt that the PCG Commandant's decision of May 19, 1980, had already become final and executory when MV 'DON CARLOS' filed her Record on Appeal on March 17, 1981, and when the motion for third extension was filed after the expiry date.

Under Paragraphs (c), (d), (e) and (f), Chapter XVI, of the Philippine Merchant Marine Rules and Regulations, decisions of the PCG Commandant shall be final unless, within thirty (30) days after receipt of a copy thereof, an appeal to the Minister of National Defense is filed and perfected by the filing of a notice of appeal and a record on appeal.  Such administrative regulation has the force and effect of law, and the failure of MV 'DON CARLOS' to comply therewith rendered the PCG Commandant's decision on May 19, 1980, as final and executory.  (Antique Sawmills, Inc. vs. Zayco, 17 SCRA 316; Deslata vs. Executive Secretary, 19 SCRA 487; Macailing vs. Andrada, 31 SCRA 126.)  (Annex 'A', Go Thong's Manifestation and Motion for Early Resolution, November 24, 1986)."^[16] (Emphases supplied)

Nonetheless, acting under the misapprehension that certain "supervening" events had taken place, the Office of the President held that the Minister of National Defense could validly modify or alter the PCG Commandant's decision:

"However, the records likewise show that, on November 26, 1980, the Court of Appeals rendered a decision in CA-G.R. No. 61206-R (Smith Bell & Co., Inc., et. al. vs. Carlos A. Go Thong & Co.) holding that the proximate cause of the collision between MV 'DON CARLOS' AND MS 'YOTAI MARU' was the negligence, failure and error of judgment of the officers of MS 'YOTAI MARU'.  Earlier, or on February 27, 1976, the Court of First Instance of Cebu rendered a decision in Civil Case No. R-11973 (Carlos A. Go Thong vs. San-yo Marine Co.) holding that MS 'YOTAI MARU' was solely responsible for the collision, which decision was upheld by the Court of Appeals.

The foregoing judicial pronouncements, rendered after the finality of the PCG Commandant's decision of May 19, 1980, were supervening causes or reasons that rendered the PCG Commandant's decision as no longer enforceable and entitled MV 'DON CARLOS' to request the Minister of National Defense to modify or alter the questioned decision to harmonize the same with justice and the facts.  (De la Costa vs. Cleofas, 67 Phil. 686; City of Bututan vs. Ortiz, 3 SCRA 659;  Candelario vs. Canizares, 4 SCRA 738; Abellana vs. Dosdos, 13 SCRA 244).  Under such precise circumstances, the Minister of National Defense may validly modify or alter the PCG Commandant's decision.  (Sec. 37, Act 4007; Secs. 79 (c) and 550, Revised Administrative Code; Province of Pangasinan vs. Secretary of Public Works and Communications, 30 SCRA 134; Estrella vs. Orendain, 37 SCRA 640)."^[17] (Emphases supplied)

The multiple misapprehensions under which the Office of the President labored, were the following:

It took account of the Decision of Sison, P.V., J. in C.A.-G.R. No. 61206-R, the very decision that is the subject of review in the Petition at bar and therefore not final.  At the same time, the Office of the President either ignored or was unaware of the Reyes, L.B., J. Decision in C.A.-G.R. No. 61320-R finding the "Don Carlos" solely liable for the collision, and of the fact that that Decision had been affirmed by the Supreme Court and had long ago become final and executory.  A third misapprehension of the Office of the President related to a decision in a Cebu Court of First Instance litigation which had been settled by the compromise agreement between the Sanyo Marine Company and Go Thong.  The Office of the President mistakenly believed that the Cebu Court of First Instance had rendered a decision holding the "Yotai Maru" solely responsible for the collision, when in truth the Cebu court had rendered a judgment of dismissal on the basis of the compromise agreement.  The Cebu decision was not, of course, appealed to the Court of Appeals.

It thus appears that the decision of the Office of the President upholding the belated reversal by the Ministry of National Defense of the PCG's decision holding the "Don Carlos" solely liable for the collision, is so deeply flawed as not to warrant any further examination.  Upon the other hand, the basic decision of the PCG holding the "Don Carlos" solely negligent in the collision remains in effect.

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