G.R. No. L-22184; October 20, 1966
JOSE C. DE JESUS, PEDRO ALCANTARA, ET AL., plaintiffs and appellants, vs. J.M. TUASON & CO., ET AL., defendants and appellees.

FACTS

The antecedent facts are undisputed. Telesforo Deudor claimed ownership of 50 quiñones of land via an informacion possessoria, which was inherited by his descendants (the Deudors). In 1914, J.M. Tuason & Co. (the Tuasons) obtained Original Certificate of Title No. 735 covering the same land. The Deudors sued to annul the title, resulting in a compromise agreement dated March 16, 1953, wherein the Deudors renounced their rights in favor of the Tuasons for P1,201,063. The Tuasons paid P100,000 and took possession of 20 quiñones. Due to non-payment of the balance, the Deudors sought rescission. The Supreme Court ruled that the Tuasons’ obligation to pay ceased when the Deudors failed to deliver the remaining 30 quiñones, effectively rescinding the agreement to that extent.
Meanwhile, the Tuasons filed ejectment suits against occupants (including the plaintiffs) who claimed to have purchased lots from the Deudors. These occupants alleged that under the compromise agreement, the Tuasons assumed the Deudors’ obligations to acknowledge their rights to purchase. The Tuasons contended that new sales agreements were required.
The plaintiffs filed an amended complaint on December 5, 1962, alleging they purchased lots from the Deudors and had fully or partially paid; that in Deudor vs. Tuason, the court ruled purchasers from the Deudors were entitled to continue their purchases and not be ejected pending final determination of their rights; that they were similarly situated and sought to enforce their rights to buy the lots under the compromise agreement; and that they needed a preliminary injunction to stop threatened demolitions from the ejectment suits. They prayed for a declaration of their right to buy, an injunction, and attorney’s fees.
The Tuasons answered, asserting affirmative defenses: (1) cause of action barred by prior judgment; (2) no cause of action; (3) lack of jurisdiction to enjoin execution of other court decisions; and (4) misjoinder of parties. They later moved to dismiss based on these defenses. The Court of First Instance dismissed the action, ruling that the compromise agreement—the basis of the plaintiffs’ claim—had already been rescinded by the Supreme Court.

ISSUE

Whether the plaintiffs’ separate action to enforce their alleged preferential rights under the rescinded compromise agreement is proper, or whether such rights should have been asserted as compulsory counterclaims in the pending or concluded ejectment suits filed by the Tuasons.

RULING

The Supreme Court affirmed the dismissal. The plaintiffs’ cause of action depended on the compromise agreement, which had been rescinded. More critically, the plaintiffs’ asserted preferential right to purchase the lots is necessarily connected to the subject matter of the Tuasons’ ejectment suits against them. This right is in the nature of a compulsory counterclaim under Section 6 of Rule 10 (now Section 4, Rule 9) of the Rules of Court, which bars a counterclaim not set up if it arises from the same transaction or occurrence as the opposing party’s claim and does not require third parties beyond the court’s jurisdiction. The plaintiffs admitted in their complaint that ejectment suits threatened their eviction. As such, their claims should have been raised as compulsory counterclaims in those possessory actions to avoid multiplicity of suits, not in a subsequent independent action. The Court cited precedents (Tuason vs. Sanvictores and Gonzales vs. Tuason) where similar claims by Deudor vendees were required to be set up in the ejectment cases. Therefore, the decision appealed from was affirmed, with costs against appellants.