DIGEST:NORIZA JEAN DAGA/INTERPLEADER: EDGAR H. ARREZA, petitioner, vs. MONTANO M. DIAZ, JR., respondent.

SECOND DIVISION

G.R. No. 133113, August 30, 2001

EDGAR H. ARREZA, petitioner
vs.
MONTANO M. DIAZ, JR., respondent 

Facts:

            Bliss Development Corporation is the owner of a housing unit located in Quezon City. In the course of a case involving a conflict of ownership between petitioner Edgar H. Arreza and respondent Montano M. Diaz, Jr. before the Regional Trial Court of Makati, (Civil Case No. 94-2086), Bliss Development Corporation filed a complaint for interpleader.  The RTC resolved in favor of defendant Edgar H. Arreza.  The decision became final and was duly executed with Bliss executing a Contract to Sell the aforementioned property to petitioner Arreza. Respondent Diaz was constrained to deliver the property with all its improvements to petitioner.

            Thereafter respondent Diaz filed a complaint against Bliss Development Corporation, Edgar H. Arreza, and Domingo Tapay in the Regional Trial Court of Makati (Civil Case No. 96-1372). He sought to hold Bliss Development Corporation and petitioner Arreza liable for reimbursement to him representing the cost of his acquisition and improvements on the subject property with interest at 8% per annum. 

Petitioner Arreza filed a Motion to Dismiss the case, citing as grounds res adjudicata or conclusiveness of the judgment in the interpleader case as well as lack of cause of action.  In an Order, the motion was denied for lack of merit and Motion for Reconsideration filed by Arreza was likewise denied, hence, this petition.

 

Issue:

            Whether respondent Diaz's claims for reimbursement against petitioner Arreza are barred by res adjudicata.

 

Ruling:

The elements of res adjudicata are: (a) that the former judgment must be final; (b) the court which rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment on the merits; and (d) there must be between the first and second causes of action identity of the parties, subject matter, and cause of action.  In cases involving res adjudicata, the parties and the causes of action are identical or substantially the same in the prior as well as the subsequent action. The judgment in the first action is conclusive as to every matter offered and received therein and as to any other matter admissible therein and which might have been offered for that purpose, hence said judgment is an absolute bar to a subsequent action for the same cause. The bar 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." Said prior judgment is conclusive in a subsequent suit between the same parties on the same subject matter, and on the same cause of action, not only as to matters which were decided in the first action, but also as to every other matter which the parties could have properly set up in the prior suit.

            As stated by the CA, the court in a complaint for interpleader shall determine the rights and obligations of the parties and adjudicate their respective claims. Such rights, obligations, and claims could only be adjudicated if put forward by the aggrieved party in assertion of his rights. That party in this case referred to respondent Diaz. The second paragraph of Section 5 of Rule 62 of the 1997 Rules of Civil Procedure provides that the parties in an interpleader action may file counterclaims, cross-claims, third party complaints and responsive pleadings thereto, "as provided by these Rules." The second paragraph was added to Section 5 to expressly authorize the additional pleadings and claims enumerated therein, in the interest of a complete adjudication of the controversy and its incidents. Pursuant to said Rules, respondent (Diaz) should have filed his claims against petitioner Arreza in the interpleader action. Having asserted his rights as a buyer in good faith in his answer, and praying relief therefor, respondent Diaz should have crystallized his demand into specific claims for reimbursement by petitioner Arreza. This he failed to do.

            In the present case, the SC find there is an identity of causes of action between Civil Case No. 94-2086 and Civil Case No. 96-1372. Respondent Diaz's cause of action in the prior case, now the crux of his present complaint against petitioner, was in the nature of an unpleaded compulsory counterclaim, which is now barred. There being a former final judgment on the merits in the prior case, rendered in Civil Case No. 94-2086 by the RTC of Makati, which acquired jurisdiction over the same parties, the same subject property, and the same cause of action, the present complaint of respondent herein (Diaz) against petitioner Arreza before the RTC of Makati, should be dismissed on the ground of res adjudicata.