G.R. No. L-5202

YAP UNKI, plaintiff-appellee, vs. CHUA JAMCO, defendant-appellant.

December 16, 1909

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FACTS:
Plaintiff Yap Unki and defendant Chua Jamco dissolved their business partnership. Yap Unki sold his interest in the partnership to Chua Jamco for P1,728.94, payable in installments. Chua Jamco failed to pay, leading Yap Unki to file a complaint for collection.

Chua Jamco raised several defenses and counterclaims:
1. Failure to Deliver: Yap Unki allegedly failed to deliver the property sold and ensure its peaceable possession. (The Court found the property was delivered and Chua Jamco affirmed the contract by actively opposing a receiver in a prior action and regaining possession).
2. Damages from Receivership: Yap Unki had improperly instituted a previous action for partnership dissolution and secured the appointment of a receiver for the partnership property. Chua Jamco opposed this, secured the receiver’s discharge, and the dismissal of the dissolution complaint. Chua Jamco then sought damages for the deterioration of goods while under the receiver’s custody. The trial court excluded this evidence, holding the claim was res judicata because it had been or should have been adjudicated in the prior receivership action, and Chua Jamco accepted that judgment without appeal.
3. Damages from Unlawful Detention/False Accusation: Yap Unki allegedly caused Chua Jamco’s arrest and detention by a policeman for robbery without a warrant, which caused Chua Jamco to miss a boat to Manila’s Christmas/New Year’s market, resulting in lost sales and deterioration of goods. The trial court disallowed this counterclaim, citing Quiros vs. Tan-Guinlay, which held that a civil action for damages from acusación o denuncia falsa (false accusation or denunciation) could not be instituted unless the court which investigated the crime directed criminal proceedings against the accuser.

ISSUE:
1. Can a party, who has already enforced a contract by regaining property from a receiver, later resist payment under the same contract by claiming the other party failed to deliver or secure possession?
2. Is a counterclaim for damages arising from the appointment of a receiver barred by res judicata if it was or could have been raised in the prior action for receivership and the judgment was accepted without appeal?
3. Can a civil action for damages arising from an alleged false accusation and unlawful detention made to a policeman be maintained without a prior court directive for criminal proceedings, particularly when the lower court applied the rule for acusación o denuncia falsa?
4. Can unliquidated damages be set up as a counterclaim against a liquidated contractual debt under the Code of Civil Procedure, despite Civil Code provisions on compensation?

RULING:
1. No. The property was delivered (evidenced by the notarial instrument and defendant’s admissions). Furthermore, Chua Jamco elected to enforce the contract by successfully opposing the receiver and securing the return of the property. He cannot, therefore, now claim the right to rescind or resist payment under the very contract he chose to enforce (Article 1124 Civil Code).
2. Yes. The claim for damages resulting from the improper appointment of a receiver was correctly held by the trial court to be res judicata. The issue of damages from the receivership was or should have been litigated in the previous action where Chua Jamco sought such damages, and he accepted the judgment in that case without appealing.
3. Yes, it can. The trial court erred in applying Quiros vs. Tan-Guinlay. The Court, citing United States vs. Quiroga, clarified that the crime of acusación o denuncia falsa (Article 326 of the Penal Code) applies when the accusation is made before an “administrative or judicial officer.” A policeman is not considered such an officer in that context. Therefore, the procedural requirement of a prior court directive for criminal proceedings does not apply to an accusation made to a policeman. Chua Jamco is entitled to a hearing on his counterclaim for damages arising from the alleged unlawful detention.
4. Yes. While Civil Code Articles 1195 and 1196 on compensation (set-off by operation of law) require debts to be liquidated, due, and demandable, Section 95 of the Code of Civil Procedure is broader. It allows a defendant to set forth “as many defenses and counterclaims as he may have, whatever their nature.” This provision permits the defendant to raise a counterclaim for unliquidated damages against the plaintiff’s claim in the same action, promoting the final disposition of all claims between the parties.

The Court reversed the judgment and remanded the case to the trial court to allow Chua Jamco to submit evidence on his counterclaim for damages due to unlawful detention, and to modify the original judgment accordingly.