Jesus v. Tuason
REITERATIONFacts
The Antecedents: Telesforo Deudor claimed ownership of 50 quiñones of land based on an informacion possessoria, which was inherited by his heirs, the Deudors. The Deudors subsequently disposed of portions of the land. In 1914, J.M. Tuason & Co. (Tuasons) obtained Original Certificate of Title No. 735 for the land. The Deudors sued to annul the title, resulting in a compromise agreement on March 16, 1953. The Deudors renounced their rights in exchange for P1,201,063. Upon payment of P100,000, the Tuasons took possession of 20 quiñones. The Deudors sued to rescind the agreement due to non-payment of the balance of P1,101,063. This Court ruled that the Tuasons' obligation to pay ceased when the Deudors failed to deliver the remaining 30 quiñones, and the agreement was rescinded to that extent. Procedural History: In the interim, the Tuasons filed ejectment suits against occupants of the land who claimed to have purchased lots from the Deudors and asserted rights under the compromise agreement. The plaintiffs, Jose de Jesus, et al., who purchased lots from the Deudors and had partially or fully paid, filed an amended complaint on December 5, 1962. They alleged that prior court orders (CFI of Rizal, upheld by the Court of Appeals) entitled purchasers from the Deudors to continue their purchase and not be ejected until their rights were determined. They sought a declaration of their right to buy their lots, a preliminary injunction against demolition, and damages. The Tuasons moved to dismiss, citing affirmative defenses including bar by prior judgment and lack of cause of action. The Court of First Instance dismissed the action on June 10, 1963, finding that the compromise agreement, the basis of the plaintiffs' claim, had been rescinded by the Supreme Court. The Petition: The plaintiffs appealed the dismissal to the Supreme Court, arguing their right to be heard on their claim of ownership based on the compromise agreement and subsequent court orders.
Issue(s)
Whether the plaintiffs' claim, based on the rescinded compromise agreement, can be asserted in a separate action. Whether the plaintiffs' asserted rights constitute a compulsory counterclaim that should have been set up in the prior possessory actions filed by the Tuasons.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, dismissing the plaintiffs' action. The Court held that the asserted right of the plaintiffs, which depended on the compromise agreement, was in the nature of a compulsory counterclaim in the ejectment suits filed by the Tuasons. As such, it should have been set up in those possessory actions and was barred in a subsequent, separate action.
Ratio Decidendi
On the issue of whether the plaintiffs' claim can be asserted in a separate action: The Supreme Court held that the plaintiffs' cause of action was fundamentally based on the compromise agreement dated March 16, 1953. However, this agreement had been previously rescinded by this Court in Deudor vs. Tuason, L-13768, May 30, 1961, to the extent that the Deudors failed to deliver the remaining land. Consequently, the basis of the plaintiffs' claim was effectively nullified or at least significantly altered by the rescission. The Court found that the situation was analogous to previous cases involving the same parties and the same compromise agreement, where similar claims were dismissed for being improperly raised in separate proceedings. On the issue of whether the plaintiffs' asserted rights constitute a compulsory counterclaim: The Court ruled that the asserted right of the plaintiffs was necessarily connected with the subject-matter of the possessory actions (ejectment suits) filed by the Tuasons against them. The plaintiffs themselves alleged in their amended complaint that these ejectment suits threatened their eviction. Under Section 6 of Rule 10 of the Rules of Court (now Section 4 of Rule 9), a counterclaim that arises out of or is necessarily connected with the transaction or occurrence that is the subject-matter of the opposing party's claim, and does not require the presence of third parties over whom the court cannot acquire jurisdiction, is considered compulsory. Such compulsory counterclaims, if not set up in the original action, are barred in subsequent actions. The Court emphasized that to avoid multiplicity of suits, these rights should have been asserted in the possessory actions, provided those actions had not yet resulted in a final and executory judgment.
Main Doctrine
A right that is in the nature of a compulsory counterclaim, arising out of or necessarily connected with the subject-matter of the opposing party's claim in a possessory action, must be set up in said possessory action; otherwise, it is barred in a subsequent action.