University of the Philippines College of Law

Topic Objection to Pleadings – Res Judicata and Statute of Limitations

Case No. [G.R. No. 133113. August 30, 2001
Case Name Arrezza v Diaz
Ponente Justice Quisumbing
Digester Jake Jacinto

SUMMARY
Arreza and Diaz had conflict over the ownership of a certain housing unit. RTC ruled in favor of Arreza.
Later, Diaz filed a reimbursement claim arguing that he already furnished some expenses for the
improvements in the housing units. Arreza filed MTD on the ground of res adjudicata. Diaz contends that
res adjudicate doesn’t lie against him as (1) the RTC had no jurisdiction over the subject matter and (2)
the subject matter in his action was reimbursement, a matter entirely different from the subject matter in
the first case which is the determination of rights over the unit. SC held that (1) Diaz prayed for relief in
the RTC and therefore, invoked its jurisdiction and (2) Diaz should have raised such reimbursement claim
in the first case as it was a compulsory counterclaim. Therefore, MTD on the ground of prior judgment
lies against Diaz.
RELEVANT FACTS
 Bliss Development Corporation (Bliss) owned a housing unit located at Lot 27, Block 30, New
Capitol Estates I, Barangay Matandang Balara, and Quezon City. They filed a complaint for
interpleader against petitioner Arrezza and respondent Diaz in Civil Case No. 94-2086, the case
having arisen from a dispute regarding the transfer of rights between petitioner and respondent.

 On March 27, 1996 the trial court held the interpleader to be in favor petitioner Arrezza and granted
Bliss cognizance of the May 6, 1991 transfer of rights by Spouses Melgazo to Arrezza.

 The decision became final and was duly executed with Bliss executing a Contract to Sell the
aforementioned property to petitioner Arrezza.

 Private Respondent Diaz then filed a case with the RTC. He sought to hold Bliss and Arrezza liable
to reimburse him f P1, 706,915.58 representing the cost of his acquisition and improvements on
the subject property with interest at 8% per annum.

 Arrezza then filed a Motion to Dismiss on the grounds of res adjudicata of the Court’s resolution
in the interpleader case as well a lack of cause of action. The Court denied the motion for lack of
merit.

 On April 16, 1977 Arrezza filed a Petition for Certiorari with the CA alleging that the Orders
dated February 4 and March 20, 1997, were issued against clear provisions of pertinent laws, the
Rules of Court, and established jurisprudence such that respondent court acted without or in excess
of jurisdiction, or grave abuse of discretion amounting to lack or excess of jurisdiction. The CA
then denied the petition for lack of merit.

ISSUE/S
 W/N Diaz’s claim was barred by res adjudicata?
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RATIO DECIDENDI

Issue Ratio
W/N Diaz’s claims for YES
reimbursement were barred
by res adjudicata? 1. The Court noted that the previous case’s judgement had become
final. When the RTC had rendered the decision it had acquired
jurisdiction over the parties and over the subject matter.

2. The Court held that by asserting his right as a buyer for value and in
good faith, Diaz was estopped from challenging the jurisdiction of
the Court for he had asked from affirmative relief.

3. The Court also rejected Diaz’s claim that there was no identity of
causes of action in the case at bar and the interpleader case. He also
contested that it was incumbent upon respondents to put in issue
demands for reimbursement.

4. The Court held that an interpleader is filed in order to determine the

rights and obligations of the parties and adjudicate their respective
claims. Such rights, obligations and claims could only be
adjudicated if put forward by the aggrieved party in assertion of his
rights. That party should have been Diaz. The Court thus noted Diaz
should have filed these issues against Arrezza in the interpleader.

5. The Court also noted Diaz could not file another case against
Arrezza on the basis of an inconsistent alternative defense he had
inherited the parcel of land from his late grandfather.

6. The Court held that Diaz had failed to set up such defense and that
because his original defense had been resolved in the interpleader
case there was res adjudicata.

7. The SC thus found that, Diaz’s counterclaim for the reimbursement

of the value of the improvements was in the nature of a compulsory
counterclaim. Thus, the failure by the private respondents to set it up
bars their right to raise it in a subsequent litigation.

8. In cases involving res adjudicata, the parties and the causes of action
are identical or substantially the same in the prior as well as the
subsequent action. The judgment in the first action is conclusive as
to every matter offered and received therein and as to any other
matter admissible therein and which might have been offered for
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that purpose, hence said judgment is an absolute bar to a subsequent

action for the same cause.

9. The bar extends to questions necessarily involved in an issue, and

necessarily adjudicated, or necessarily implied in the final judgment,
although no specific finding may have been made in reference
thereto, and although such matters were directly referred to in the
pleadings and were not actually or formally presented.

10. Said prior judgment is conclusive in a subsequent suit between the

same parties on the same subject matter, and on the same cause of
action, not only as to matters which were decided in the first action,
but also as to every other matter which the parties could have
properly set up in the prior suit

RULING

WHEREFORE, this petition is hereby DISMISSED with costs against the petitioner.

SEPARATE OPINIONS

NOTES
Elements of Res Adjudicata
1. That the former judgment must be final;
2. The court which rendered judgment had jurisdiction over the parties and the subject matter;
3. It must be a judgment on the merits; and
4. There must be between the first and second causes of action identity of parties, subject matter,
and cause of action