University of the Philippines College of Law | Remedial Law Review

Topic in Poli Law Rule 2 – Cause of Action / Section 4 – Splitting a Single Cause of Action
/ Subtopic
Case Name CHU v. SPOUSES CUNANAN, BENELDA ESTATE DEVELOPMENT and SPOUSES CARLOS
Case No. & Date G.R. No. 1561285; September 12, 2011
Ponente Bersamin, J.

RELEVANT FACTS
Antecedent Facts
1. Spouses Chu executed a Deed of Sale with Assumption of Mortgage involving their five parcels of land in favor of
Cunanan for P5M. However, Cunanan still had an unpaid balance of P2.5M.
2. Cunanan transferred the title of the five lots to her name without the knowledge of Sps. Chu. Thereafte,r she used
the lots as security to borrow money without paying the balance of the purchase price to Sps. Chu.
3. Cunanan transferred 2 of the 5 lots to Sps. Carlos
4. Sps. Chu caused the annotation of an unpaid vendor’s lien on the 3 remaining lots
5. Cunanan assigned the 3 remaining lots to Cool Town Realty despite the annotation
RTC (First Civil Case)
6. Sps. Chu filed a civil case in the RTC against Sps. Cunanan to recover the unpaid balance
7. Sps. Chu amended the complaint to:
a. Seek the annulment of the Deed of Sale with Assumption of Mortgage and the TCTs issued pursuant to
such Deed, plus damages
b. Implead Cool Town Realty and the Office of the Registry of Deeds of Pampanga
8. Sps. Carlos sold the 2 lots to Benelda Estate Development Corp.
a. Accordingly, Sps. Chu again amended the complaint to implead Benelda Estate as additional defendant
9. Benelda Estate filed its Answer with a Motion to Dismiss (MTD), claiming that the amended complaint stated no
cause of action because it acted in good faith in buying the 2 lots from Sps. Carlos
10. RTC denied the MTD of Benelda Estate
CA
11. Benelda filed a petition for certiorari with the CA, questioning the RTC’s denial of its MTD
12. CA annulled the RTC’s denial for being tainted with grave abuse of discretion, and dismissed the civil case as
against Benelda Estate
SC
13. The SC upheld the dismissal of the case as against Benelda Estate
RTC (First Civil Case)
14. Sps. Chu, Sps. Cuananan, and Cool Town Realty entered into a Compromise Agreement, wherein:
a. Sps. Cuananan transferred to Sps. Chu their 50% share in the parcels of land registered in the name of
Cool Town Realty for the full settlement of their case
15. RTC approved the compromise agreement in a partial decision
RTC (Second Civil Case)
16. Sps. Chu and their children filed another suit against Sps. Carlos and Benelda Estate, seeking:
a. Cancellation of the TCTs of the 2 lots in the name of Benelda Estate
b. Issuance of new TCTs in their favor plus damages
17. Sps. Chu amended their complaint to implead Sps. Cuanan as additional defendants
18. The defendants moved to dismiss the complaint and raised affirmative defenses in their answer respectively
a. Sps. Cuananan moved to dismiss on the ff. grounds: (i) bar by prior judgment, and (ii) the claim or demand
had been paid, waived or abandoned
b. Benelda moved to dismiss on the ff. grounds: (i) forum shopping, (b) bar by prior judgment, and (c) failure
to state cause of action
c. Sps. Carlos raised the ff. affirmative defenses in their answer: (a) failure to state cause of action, (b) bar
by prior judgment, and (c) bar by statute of limitations
19. RTC denied both MTDs, holding that:
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a. The complaint stated a cause of action against all defendants
b. The action was not barred by res judicata because there was no identity of parties between the first and
second civil case
c. Sps. Cuanan did not establish that Sps. Chu waived and abandoned their claim or that their claim had been
paid by virtue of the compromise agreement since it involved only the 3 parcels of land registered in the
name of Cool Town Realty
20. RTC denied the MR of Sps. Cunanan
CA
21. Sps. Cuananan filed a petition for certiorari in the CA questioning the RTC’s denial of their MTD
22. CA granted the petition and nullified the challenged orders of the RTC. The CA held that:
a. The compromise agreement had ended the legal controversy between the parties with respect to the
cause of action arising from the Deed of Sale with Assumption of Mortgage covering all 5 lots
b. The first and second civil case involved the violation by Cunanan of the same legal right under the Deed
c. The filing of the second civil case contravened the rule against splitting of a cause of action, and barred
by res judicata
SC
23. Sps. Chu filed a petition for review on certiorari with the SC, arguing that the compromise agreement did not apply
or extend to Sps. Carlos and Benelda estate, hence, the second civil case was not barred by res judicata.

Issue Ratio
W/N the second YES, the second civil case was barred by res judicata.
civil case was
barred by res Scope of the Compromise Agreement
judicata although • A compromise agreement is a contract, whereby the parties avoid litigation or put an end
the compromise to one already commenced
agreement did o It encompasses the objects specifically stated therein, although it may include
not expressly other objects by necessary implication
include Benelda o It has the effect and authority of res judicata upon the parties
Estate as a party • In the case at bar, the compromise agreement between Sps. Chu and Sps. Cunanan indicate
and although it that they intended to settle ALL their claims against each other
did not make o Expressed in the phrase “any and all their respective claims against each other as
reference to the alleged in the pleadings they respectively led in connection with this case”
lots registered o This was broad enough to cover whatever claims Sps. Chu might assert based on
under its name the Deed of Sale with Assumption of Mortgage
§ The Deed of Sale with Assumption of Mortgage covered all 5 lots
• To limit the compromise agreement only to the 3 lots mentioned therein would contravene
the objective of the first civil case to enforce or rescind the ENTIRE Deed of Sale
o The first civil case did not demand separate amounts for each of the 5 lots
o The agreement did not state that the value transferred to Sps. Chu by Sps. Cunanan
corresponded only to that of the 3 lots

[TOPIC] Splitting a Single Cause of Action

• Splitting a single cause of action is the act of dividing a single or indivisible cause of action
into several claims and instituting two or more actions upon them
o Under Rule 2, Section 4: If two or more suits are instituted on the basis of the same
cause of action, the ling of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others.
• In the case at bar, Sps. Chu are guilty of splitting their single cause of action to enforce or
rescind the Deed of Sale with Assumption of Mortgage
o Sps. Chu were not at liberty to split their demand to enforce or rescind the Deed
and to prosecute piecemeal or present only a portion of the grounds upon which
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a special relief was sought under said Deed, and then to leave the rest to be
presented in another suit; otherwise, there would be no end to litigation.
o The Chus cannot proceed against the respondents in the second civil case because
there can only be one action where the contract is entire, and the breach total,
and the petitioners must therein recover all their claims and damages
o Their contravention of the policy against multiplicity of suits merited the dismissal
of the second civil case on the ground of bar by res judicata.

Res Judicata
• Under the doctrine of res judicata, a final judgment or decree on the merits rendered by a
court of competent jurisdiction is conclusive of the rights of the parties or their privies in
all later suits and on all points and matters determined in the previous suit
• Requisites in order that res judicata may bar the institution of a subsequent action:
o (a) the former judgment must be final;
o (b) it must have been rendered by a court having jurisdiction of the subject matter
and the parties;
o (c) it must be a judgment on the merits; and
o (d) there must be between the first and second actions:
§ (i) identity of parties, (ii) identity of the subject matter, and (iii) identity of
cause of action
• APPLICATION: All requisites of res judicata are attendant in the case at bar
o (a) The first civil case was already terminated by final judgment since a judgment
upon compromise is immediately final and unappealable
o (b) The RTC had jurisdiction over the cause of action in the first civil case since the
enforcement or rescission of the Deed was an action incapable of pecuniary
estimation
o (c) The judgment upon compromise is equivalent to a judgment on the merits since
it resolved all claims of the parties against each other
o (d) Between the first and second civil cases:
§ (i) There is identity of parties because both involved the Sps Chu and Sps
Cunanan, along with their respective privies
• Note: shared identity of interest, substantial identity of parties, or
even community of interest between the parties in the 1st and 2nd
case is sufficient
§ (ii)There is identity of subject matter since both actions dealt with the
properties in the Deed of Sale with Assumption of Mortgage
§ (iii) There is identity of causes of action because the first and second case
were rooted in the same cause of action – the failure of Cunanan to pay
in full the purchase price of the 5 lots subject of the Deed of Sale

Ruling / Dispositive Portion: WHEREFORE, we deny the petition for review on certiorari, and affirm the decision
promulgated in CA-G.R. SP No. 72558.

Notes / Remarks:
a. Sps. Chu and Cunanan also executed a Side Agreement wherein they clarified that: (i) Cunanan paid only P1M to Sps.
Chu, despite the fact that the latter acknowledged receiving P5M, (ii) The amount of P1.6M was to be paid directly to
Benito Co and to Security Bank, (iii) Cunanan would pay the balance of P2.5M within 3 months, and (iv) The ownership
of the five lots would remain with Sps. Chu as the vendors until full payment by Cunanan
b. Sps. Chu also executed a Special Power of Attorney, authorizing Cunanan to borrow P5M from any banking institution
and to mortgage the five lots as security, and then deliver the proceeds to Sps. Chu, net of the balance of the mortgage
obligation and downpayment.