G.R. No. 104846. November 23, 1995.
RODRIGO GABUYA, represented by his attorney-in-fact LUCIA PONCE, petitioner, vs. ANTONIO LAYUG and HON. FEDERICO NOEL, REGIONAL TRIAL COURT, ILIGAN CITY, BRANCH 2, respondents.

FACTS

The dispute originated from a 1978 contract of sale over twelve lots between petitioner Rodrigo Gabuya and private respondent Antonio Layug. Layug failed to pay the final installment. Gabuya sued for annulment of contract and damages. The Court of Appeals, in a decision affirmed with modification by the Supreme Court in G.R. No. 75364 (promulgated November 23, 1988), ordered the rescission of the sale, with cancellation to be effective upon Gabuya’s payment of the “cash surrender value” of Layug’s payments. This judgment became final and executory on March 8, 1989, and a writ of execution was issued.
While execution was pending, Layug filed a new complaint (Civil Case No. II-1408) for specific performance against Gabuya before the Regional Trial Court, seeking reimbursement for the value of improvements he introduced on the lots. Respondent Judge Federico Noel issued orders on October 16, 1991, and March 11, 1992, restraining the deputy sheriff from dispossessing Layug of the property. Gabuya filed this petition for certiorari and prohibition, alleging grave abuse of discretion.

ISSUE

Whether the respondent judge committed grave abuse of discretion in taking cognizance of Civil Case No. II-1408 and in issuing restraining orders that interfered with the execution of a final and executory judgment of the Supreme Court.

RULING

Yes. The Supreme Court granted the petition. The final judgment in G.R. No. 75364, involving the same parties and the same subject matter, constitutes res judicata and is an absolute bar to the subsequent complaint (Civil Case No. II-1408). The principle of res judicata dictates that a final judgment on the merits binds the parties not only as to every matter offered and received to sustain or defeat their claims but also as to any other admissible matter which might have been offered for that purpose. Layug’s claim for reimbursement for the value of his improvements is necessarily connected with the main action for rescission and recovery of the land. This claim should have been raised as a compulsory counterclaim in the original suit for annulment filed by Gabuya. His failure to do so precludes its re-litigation in a separate action.
By entertaining the new complaint and issuing restraining orders that impeded the execution of the final Supreme Court judgment, respondent judge acted with grave abuse of discretion amounting to lack of jurisdiction. The orders and the proceedings in Civil Case No. II-1408 were annulled and set aside. The trial court was directed to proceed immediately with the implementation of the writ of execution to satisfy the long-final judgment.