Arreza v Diaz

Facts:

 Bliss Development Corporation is the owner of a housing unit

 In the course of a case involving a conflict of ownership between Edgar H. Arreza and Montano M. Diaz, Jr.,
before the RTC, Bliss Development Corporation filed a complaint for interpleader.
 Court ruled interpleader is resolved in favor of defendant Edgar H. Arreza, and plaintiff Bliss Development is
granted cognizance of the May 6, 1991 transfer of rights by Emiliano and Leonila Melgazo thru Manuel
Melgazo, to said defendant Edgar Arreza. The case is dismissed as against defendant Montano M. Diaz, Jr.
 decision became final and was duly executed with Bliss executing a Contract to Sell the aforementioned
property to petitioner Arreza. Respondent Diaz was constrained to deliver the property with all its
improvements to petitioner
 Diaz filed a complaint against Bliss Development Corporation, Edgar H. Arreza, and Domingo RTC for
reimbursement to him of P1,706,915;58 representing the cost of his acquisition and improvements on the
subject property with interest at 8% per annum.
 Arreza filed a MTD for res adjudicata or conclusiveness of the judgment in the interpleader case as well as
lack of cause of actionDENIED, MR Denied
 Arreza filed a petition for certiorari before the CA for GADdismissed
o decision invoked by the petitioner as res adjudicata resolved only the issue of who between Edgar
H. Arreza and Montano Diaz has the better right over the property under litigation. It did not resolve
the rights and obligations of the parties. Theaction filed by Montano M. Diaz against Bliss
Development Corporation, et al. seeks principally the collection of damages in the form of the
payments Diaz made to the defendant and the value of the improvements he introduced on the
property — matters that were not adjudicated upon in the previous case for interpleader.

ISSUE + RULING
whether respondent Diaz's claims for reimbursement against petitioner Arreza are barred by res judicataY

- The elements of res adjudicata are: (a) that the former judgment must be final; (b) the court which rendered
judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment on the merits;
and (d) there must be between the first and second causes of action identity of the parties, subject matter,
and cause of action.8
- the prior case for interpleader was settled with finality
- When the RTC rendered judgment, it had priorly acquired jurisdiction over the parties and the subject
matter.
- Respondent, however, contends that the trial court did not acquire jurisdiction over the property
subject of the action, as the action was instituted in Makati City while the subject unit is situated in
Quezon City.
- However, by asserting his right as a buyer for value and in good faith of the subject property, and asking for
relief arising therefrom, respondent invoked the jurisdiction of the trial court. Having invoked the jurisdiction
of the RTC by filing his answer to secure affirmative relief against petitioner, respondent is now estopped
from challenging the jurisdiction of said court after it had decided the case against him. Surely we cannot
condone here the undesirable practice of a party submitting his case for decision and then accepting the
judgment only if favorable, but attacking it on grounds of jurisdiction when adverse.12
- Respondent : that there is no identity of causes of action between, the prior case, and the present case n,
as the former involved a complaint for interpleader while the latter now involves an action for a sum of
money and damages. He avers that a complaint for interpleader is nothing more than the determination of
rights over the subject matter involved. Diaz faults petitioner for not raising reimbursement and damages in
the prior case, with the result that the trial court did not resolve the rights and obligations of the parties.
There being no such resolution, no similar cause of action exists between the prior case and the present
case, according to respondent Diaz.
- Court: Respondent in effect argues that it was incumbent upon petitioner as a party in Civil Case No. 94-
2086 to put in issue respondent's demands for reimbursement. However, it was not petitioner's duty to do
the lawyering for respondent.
- the court in a complaint for interpleader shall 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 in this case
referred to respondent Diaz.
- The second paragraph of Section 5 of Rule 62 of the 1997 Rules of Civil Procedure provides that the parties
in an interpleader action may file counterclaims, cross-claims, third party complaints and responsive
pleadings thereto, "as provided by these Rules." The second paragraph was added to Section 5 to expressly
authorize the additional pleadings and claims enumerated therein, in the interest of a complete adjudication
of the controversy and its incidents.
- Therefore, respondent should have filed his claims against petitioner Arreza in the interpleader action.
- Having asserted his rights as a buyer in good faith in his answer, and praying relief therefor,
respondent Diaz should have crystallized his demand into specific claims for reimbursement by
petitioner Arreza. This he failed to do.
- Having failed to set up his claim for reimbursement, said claim of respondent Diaz being in the nature of a
compulsory counterclaim is now barred.

 There is identity of causes of action the 2 civil cases. Diaz's cause of action in the prior case, now the crux of
his present complaint against petitioner, was in the nature of an unpleaded compulsory counterclaim, which
is now barred. Therefore the latter civil case is barred by res judicata.