View full case

CATALINA B. CHU v. SPS. FERNANDO C. CUNANAN

FACTS:

This case involves a dispute over a deed of sale with assumption of mortgage between Spouses Manuel and Catalina Chu (Chus) and Trinidad N. Cunanan (Cunanan), involving five parcels of land in San Fernando City, Pampanga. According to the deed, Cunanan was to pay the Chus a total consideration of P5,161,090.00. However, Cunanan only paid P1,000,000.00 and still owed a balance of P2,561.90.00. Meanwhile, Cunanan was able to transfer the title of the lots to her name without the knowledge of the Chus, and later transferred two of the lots to Spouses Amado and Gloria Carlos (Carloses). The Chus filed a case to recover the unpaid balance and seek the annulment of the deed of sale and the titles issued based on it. A compromise agreement was later entered into between the Chus, the Cunanans, and Cool Town Realty, wherein the Cunanans transferred their share in the parcels of land to the Chus. Subsequently, the Chus filed another case seeking the cancellation of the TCTs of the lots in the name of Benelda Estate Development Corporation (Benelda Estate) and the issuance of new TCTs in their favor. The Cunanans and Benelda Estate filed motions to dismiss the case, arguing, among others, that it was barred by res judicata. The trial court denied the motions to dismiss, but the Court of Appeals (CA) granted a petition for certiorari and ordered the dismissal of the case. The petitioners appealed the decision.

ISSUES:

  1. Whether Civil Case No. 12251 was barred by res judicata despite the absence of explicit inclusion of Benelda Estate as a party in the compromise agreement and the lack of reference to the lots now registered in Benelda Estate's name.

  2. Whether there is identity of parties, subject matter, and cause of action between Civil Case No. G-1936 and Civil Case No. 12251.

RULING:

  1. The Court denied the petition for review.

  2. The Supreme Court ruled that there is identity of parties, subject matter, and cause of action between Civil Case No. G-1936 and Civil Case No. 12251. The requirement of identity of parties was fulfilled because the parties in both cases were the same or there was privity between them or they were successors-in-interest by title subsequent to the commencement of the action litigating for the same thing and under the same title and in the same capacity. The fact that the defendants in Civil Case No. 12251 were not parties in the compromise agreement was inconsequential because they were also the privies of the plaintiffs as transferees and successors-in-interest. Mere substantial identity of parties or even community of interests between parties in the prior and subsequent cases, even if the latter were not impleaded in the first case, was sufficient.

  3. As to the subject matter, both actions dealt with the properties involved in the deed of sale with assumption of mortgage. The causes of action were also identical as they were rooted in the failure to pay the purchase price of the lots subject to the deed of sale with assumption of mortgage.

PRINCIPLES:

  • A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. It is binding on the parties involved and has the effect and authority of res judicata upon them. In the construction or interpretation of a compromise agreement, the intention of the parties is determined from the agreement itself, and effect should be given to that intention.

  • The intention of the parties to settle all their claims against each other should be ascertained from the entirety of the compromise agreement. If the language used in the agreement is broad enough to cover claims that may arise based on the pleadings filed in connection with the case, then it can be considered that the parties intended to settle all their claims.

  • The prohibition against splitting a single cause of action is express in Section 4, Rule 2 of the Rules of Court. Splitting a single cause of action occurs when a single or indivisible cause of action is divided into several claims and separate actions are instituted for each. A single cause of action should not be divided to avoid burdening the courts with multiple suits.

  • The doctrine of res judicata, which means a matter adjudged or decided, is founded on the principle that it is in the interest of the public to bring an end to litigation between the same parties over a subject that has already been fully and fairly adjudicated. It is a rule found in various maxims of the common law and is based on public policy and the necessity for finality in legal decisions.

  • The doctrine of res judicata holds that a final judgment on the merits rendered by a court of competent jurisdiction is conclusive of the rights of the parties in all later suits and on all points and matters determined in the previous suit. It is based on the principle that parties should not be permitted to litigate the same issue more than once.

  • In order for res judicata to bar a subsequent action, the following requisites must concur: (a) the former judgment must be final; (b) it must have been rendered by a court having jurisdiction of the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be identity of parties, subject matter, and cause of action between the first and second actions.