G.R. No. 133113 ; August 30, 2001
EDGAR H. ARREZA, petitioner, vs. MONTANO M. DIAZ, JR., respondent.

FACTS

Bliss Development Corporation owned a housing unit in Quezon City. A conflict of ownership arose between petitioner Edgar H. Arreza and respondent Montano M. Diaz, Jr., prompting Bliss to file a complaint for interpleader (Civil Case No. 94-2086) before the Regional Trial Court (RTC) of Makati, Branch 146. In a decision dated March 27, 1996, the trial court resolved the interpleader in favor of Arreza, granting cognizance of the transfer of rights to him and dismissing the case against Diaz. This decision became final and was executed, with Bliss executing a Contract to Sell to Arreza, and Diaz delivering the property to him. Subsequently, Diaz filed a new complaint (Civil Case No. 96-1372) before the RTC of Makati, Branch 59, against Bliss and Arreza, seeking reimbursement for the cost of acquisition and improvements on the property amounting to P1,706,915.58. Arreza filed a Motion to Dismiss on grounds of res adjudicata and lack of cause of action, which was denied by the trial court. The Court of Appeals dismissed Arreza’s petition for certiorari, ruling that the interpleader decision only resolved who had the better right over the property and did not adjudicate the claims for reimbursement, which were not raised in the prior case. Arreza’s motion for reconsideration was denied, leading to this petition.

ISSUE

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

RULING

Yes, the claims are barred by res adjudicata. The Supreme Court granted the petition, reversing the Court of Appeals and ordering the dismissal of Civil Case No. 96-1372 as against Arreza. The elements of res adjudicata are present: (1) the judgment in the prior interpleader case (Civil Case No. 94-2086) is final, having been affirmed by the Supreme Court in G.R. No. 128726; (2) the RTC of Makati, Branch 146, had jurisdiction over the parties and subject matter—Diaz invoked this jurisdiction by filing an answer seeking affirmative relief as a buyer in good faith and is thus estopped from challenging it; (3) it was a judgment on the merits; and (4) there is identity of parties, subject matter, and cause of action between the two cases. The cause of action for reimbursement now asserted by Diaz was actually a compulsory counterclaim that arose out of the same transaction or occurrence in the prior interpleader case. By failing to plead it in his answer in the prior case, it is now barred. The Court held that the interpleader court was tasked to determine the respective rights and obligations of the parties, and Diaz’s claim for reimbursement, being a compulsory counterclaim, should have been raised therein. Therefore, the final judgment in the prior case bars the present complaint on the ground of res adjudicata.