Civil Procedure - 51 Chu vs Cunanan (2011) Doctrine: Facts:

Chu (vendor) entered into a deed of sale with assumption of mortgage with Cunanan (vendee) for 5 parcels of land in Pampanga. Price for the sale is P5.1M (TERMS: P1M down payment paid to Chu; P1.6M paid to bank to free it from mortgage; P2.5M to be paid within 3 mos) Cunanan didnt pay the balance to the Chus, but was able to transfer the title of the lots to her name without the knowledge of the latter. Cunanan then sold 2/5 lots to Carlos (and Carlos subsequently sold the 2 to Benelda Estate) and 3/5 to Cool Town Realty.

Procedure: Chu filed a complaint to recover balance (which was amended to a complaint for annulment of deed of sale) against Cunanan and Cool Town Realty. However, trial did not push through as they entered into a Compromise Agreement whereby Cunanan transferred to Chu 50% of their share in all parcels of land in Pampanga registered under the name of Cool Town Realty for full settlement of their case. A year after, Chu filed another complaint for cancellation of the TCT against Carlos, Benelda Estate and Cunanan again for the 2 other lots. All parties moved to dismiss the complaint on the ground of res judicata. RTC: denied motion to dismiss. MR was filed, but was also denied. Cunanans filed petition for certiorari in CA. CA reversed the RTC denial of the motion to dismiss. Chu filed petition for certiorari with SC. Issue/s: WON the action is barred by res judicata although compromise agreement did not expressly include Benelda Estate as party and although the compromise agreement made no reference to the lots now registered in Benilda Estates name? YES! Held/Ratio: (1) The compromise agreement intended to settle all claims of the parties covering all lots. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It has the effect and authority of res judicata upon the parties. The intention of the parties in a compromise agreement may be gleaned from the agreement itself. In this case, a perusal of the agreement reveals that the parties intended to settle all their claims against each other which covered all 5 lots. Furthermore, to limit the compromise agreement to 2 lots mentioned therein would contravene the avowed objective of the Civil Case which is to enforce the entire deed of sale

with assumption of mortgage entered into by Chu and Cunanan. In such a case, it would be a splitting of a single cause of action which merited the dismissal of the case. (2) Action is barred by res judicata. Res judicata means matter adjudged. Requisites of res judicata: a. former judgment must be final judgment was by virtue of compromise agreement b. rendered by a court of having jurisdiction of the subject matter and parties. RTC had jurisdiction for enforcement/rescission of deed of sale with assumption of mortgage which is not capable of pecuniary estimation. c. There must be identity between the 1st and 2nd actions in terms of: 1. Parties Identity of parties mean that the parties are the same or there is privity beween them. In both cases, Chu and Cunanan were the parties along with their respective privies. The fact that Carlos and Benelda Estate were not defendants in the 1st case is inconsequential as they were also the privies of Cunanan. Absolute identity is not a condition; shared identity is sufficient. 2. Subject matter Both dealt with the properties in the deed of sale with assumption of mortgage. 3. Cause of action Cause of action for both: failure of the Cunanan to pay the purchase price in full. Digested by: Cari Mangalindan (A2015)