Gonzales v. Tuason
REITERATIONFacts
The Antecedents: Plaintiffs-appellants, Roman Gonzales, et al., filed a complaint against J. M. Tuason & Co., Inc., et al., seeking to compel the execution of a deed of sale over a parcel of land in Quezon City, which they claimed entitlement to, and to declare ineffective a writ of execution issued in Civil Case No. Q-4559. Procedural History: J. M. Tuason & Co., Inc. raised the defense of res judicata, asserting that the issues of ownership and possession were already settled in Civil Case No. Q-4559. Gregorio Araneta, Inc. moved to dismiss for lack of cause of action. The trial court dismissed the complaint against Gregorio Araneta, Inc. for lack of sufficient cause of action. Subsequently, after hearing, the trial court dismissed the complaint against J. M. Tuason & Co., Inc. on January 31, 1962, finding the cause of action barred by a prior judgment. The Petition: Plaintiffs-appellants interposed the present appeal, specifically challenging the dismissal of their complaint against J. M. Tuason & Co., Inc. on the ground of res judicata.
Issue(s)
Whether the appellants' cause of action is barred by the judgment rendered in Civil Case No. Q-4559. Whether the appellants waived their alleged preferential right under the compromise agreement by failing to set it up as a compulsory counterclaim in Civil Case No. Q-4559.
Ruling
The order appealed from is affirmed. The complaint is dismissed.
Ratio Decidendi
On the issue of whether the appellants' cause of action is barred by the judgment rendered in Civil Case No. Q-4559: The Supreme Court found no merit in the appeal. The Court noted that the appellants sought to enforce a preferential right under a compromise agreement, claiming they were buyers in good faith and that J. M. Tuason & Co., Inc. should recognize this right and execute a deed of sale. This alleged preferential right, which the appellants sought to enforce in the present case, was deemed to be in the nature of a compulsory counterclaim. The Court held that such a right should have been raised in the prior Civil Case No. Q-4559. Having failed to set up this right as a counterclaim, the appellants are considered to have waived it. Consequently, their claim is now barred by the principle of res judicata. On the issue of whether the appellants waived their alleged preferential right by failing to set it up as a compulsory counterclaim: The Court reiterated the principle that a compulsory counterclaim, which is necessarily connected with the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties, must be set up in the same action. Failure to do so results in a waiver of that claim. The Court cited its own ruling in J. M. Tuason & Co., Inc. v. Sanvictores, which is on all fours with the present case, stating that the failure to set up such rights as a compulsory counterclaim resulted in a waiver thereof and barred them after the judgment in the possessory action became final. Therefore, the appellants' inaction and failure to assert their preferential right as a counterclaim in the prior case led to its waiver and subsequent bar by res judicata.
Main Doctrine
A cause of action that should have been set up as a compulsory counterclaim in a prior case is deemed waived and barred by the principle of res judicata.