G.R. No. L-10718; April 30, 1958
M. M. DE LOS REYES, plaintiff-appellant, vs. CORONET, INC., defendant-appellee.

FACTS

The plaintiff-appellant, M. M. de los Reyes, filed a complaint in the Court of First Instance of Manila against the defendant-appellee, Coronet, Inc., for breach of contract and/or damages. The appellee moved to dismiss the complaint on the ground of res judicata, alleging that it was a mere reproduction of the appellant’s counterclaim in a prior case (Civil Case No. 40884, Coronet, Inc. vs. M. M. de los Reyes) in the Municipal Court of Manila, which counterclaim had already been dismissed. The Court of First Instance of Manila sustained this ground and dismissed the complaint, prompting the plaintiff’s appeal.

ISSUE

Whether the dismissal of the appellant’s counterclaim in the prior Municipal Court case constitutes res judicata, thereby barring the present complaint for breach of contract and/or damages filed in the Court of First Instance.

RULING

No. The order of dismissal from the Court of First Instance is reversed. The plea of res judicata is not sustainable. The records show that the Municipal Court of Manila dismissed the appellant’s counterclaim precisely because it was already the subject matter of the separate complaint (the present case) in the Court of First Instance, and not after a trial on the merits. Furthermore, a trial on the merits could not have taken place in the Municipal Court because the counterclaim, which sought actual damages of P20,000 and moral damages of P5,000, was beyond the jurisdictional limit of that court. Therefore, the dismissal did not constitute an adjudication on the merits necessary for res judicata to apply. The case is remanded to the Court of First Instance of Manila for further proceedings. Costs are imposed against the appellee.