NEVILLE Y. LAMIS ENTS. AND/OR NEVILLE Y. LAMIS, PETITIONERS, VS. HON. ALFREDO J. LAGAMON, AS JUDGE OF THE COURT OF FIRST INSTANCE OF DAVAO, BRANCH III, AND SANTIAGO MANINGO, RES…

This is an appeal by certiorari to annul the order of the
respondent judge, dated April 2, 1981,
which denied a motion to dismiss Civil Case No. 1395 of the Court of First
Instance of Davao at Tagum.

Santiago Maningo in a complaint dated November 3, 1981, sued Neville Y. Lamis Enterprises and Neville Lamis
for sums of money in the above-mentioned civil case under the following causes
of action:

“FIRST CAUSE OF ACTION

I

“That as First Cause of Action against the de­fendants, it is
hereby averred, that sometimes on January 26, 1979, the defendants obtained a
loan from the plaintiff in the sum of FIFTY FIVE THOUSAND (P55,000.00) PESOS
payable on or before February 28, 1979 at 14% interest per annum;

II

“That said loan, now overdue, is evidenced by a Promissory
Note signed by the defendant Neville Y. Lamis
Enterprises through its proprietor and General Manager Neville Y. Lamis, copy of which is hereto attached as Annex
“A” and form part of this complaint, the substance and/or content of
said note are hereby quoted as follows:

‘PROMISSORY
NOTE

January
26, 1979

‘For value received, on or before February 28, 1979, Neville Y. Lamis
Enterprises of Hi-way, Villa Consuelo Subdivision, General
Santos City,
promise to pay the sum of Fifty Five Thousand Pesos (P55,000.00)
Philippine Currency.

‘Interest of 14% per annum will be charged on delayed payment and
twenty five (25%) of the amount due as attorney’s fees and expenses of
collection in the event of judicial collection.

‘In case of litigation, jurisdiction shall be vested in the Court
of Davao City.

NEVILLE Y. LAMIS ENTS.

By:   (Sgd.) NEVILLE Y. LAMIS

Proprietor/General Manager’

III

“That the defendants have not paid said loan nor any part thereof, despite plaintiff’s demand for pay­ment;

IV

“That for having purposely failed to pay the said loan, the
defendants are now liable to plaintiff for the payment of interest and
attorney’s fees which, as per computation, it is already P11,550.00 for and as
interest and P20,625.00 for attorney’s fees;

“SECOND
CAUSE OF ACTION

I

“That as second cause of action against the defen­dant, it is
hereby averred, that sometimes on January 29, 1979, defendant Neville Y. Lamis Enterprises, re­presented by its proprietor and
General Manager Neville Y. Lamis, had, by way of
Chattel Mortgage acquired from the plaintiff a certain personal property worth
P200,000.00 on installment basis hereinafter described as follows:

‘One (1) unit:

‘Komatsu
Crawler Tractor D8CA-12 with Cummins Engine NH-220C10168N12521 Chassis No.
D8OA-9659 complete with Hydraulic angle Dozer with Towing Winch Carco No. 21568. UNIT IN GOOD OPERAT­ING CONDITION;’

II

“That the above-described properties had already been
delivered to the defendant, subject however to the terms and conditions as
provided for under the Chattel Mortgage contract, the pertinent portion of
which reads as follows:

‘For value received, I/we jointly and se­verally promise to pay to
the order of Santiago Maningo at its office, the
principal sum of Two Hundred Thousand, Philippine Currency with interest at the
rate stipulated hereinbelow, in installment basis as
follows:

P120,000.00 – February
16, 1979

P  80,000.00 – March 16, 1979′

Hereto attached as Annex “B” and
form part hereof is the xerox copy of the Chattel
Mortgage Contract cover­ing said properties;

III

“That until recently, and despite the lapse of the period
stated in the Chattel Mortgage contract consisting of two installments, no
single payment and/or installment having been made by the defendants to the
prejudice and great damage on the part of the plaintiff;

IV

“That for having purposely failed to pay a single payment
and/or installments on the amount due that defendants are now liable to the
penalty of P10.00 for every month or fraction thereof, that an installment
remains overdue, in which case, as per computation under the penalty clause, of
the Chattel Mortgage Contract, the penalty of P500.00 computed as of September
30, 1980, can now be charged and collected from the defendant;

V

“That for having purposely failed to pay a single installment
and/or payment thereof, the defendants are now liable to the plaintiff for
damages in the form of interest and attorney’s fees equivalent to 14% and 25%
respectively, in which case, as per computation under the Chattel Mortgage Contract,
the interest of P45,661.00 computed as of September
30, 1980 can now be charged and collected from the defendant plus another
amount of P50,000.00 for and as attorney’s fees;

“THIRD
CAUSE OF ACTION

“Plaintiff does hereby reproduces and incorporate
as part hereof, all the allegations stated under the first and second cause of
action in this complaint, and thus respectively aver:

I

“That as a legal consequence of the Promissory Note and the
Chattel Mortgage Contract the defendants had made and entered into with the
plaintiff as pro­misee and/or as mortgagee thereof,
there a certain right is created in favor of the plaintiff, the breach thereof,
either through the manipulation of legal ma­neuvers or through any other means
by the defend­ants purposely to evade payments of a certain obli­gations, which
incidentally, is exactly, what the defendants had done here, there entitles the
plain­tiff for damages under the provision of Article 19 of the New Civil Code,
which says:

‘Every person must, in the exercise of his rights, and in the
performance thereof, give everyone his due, and observe honesty and good
faith.’

II

“That on August 16, 1979, that is several months after the
defendants had failed to pay their obligation with the plaintiff, to the latter’s
surprise, the defend­ants after having received several demands from the
plaintiff, through counsel, in clear abuse of their rights under the provisions
of the Article above-mentioned and basically, for a certain purpose to evade
the fulfillment of their obligations with the plaintiff, had maliciously filed
a groundless suit in the Court of First Instance of Rizal,
Branch XXV thereof, for specific performance against the plain­tiff;

III

“That actually, said action for Specific per­formance was filed
in bad faith and basically to evade and/or delay the payments of their
obligation with the plaintiff.  It was
made for no other purpose except to defeat the rights of the plaintiff under
the law;

IV

“That with the filing of the defendant’s most ma­licious
complaint against the plaintiff, the latter had suffered mental anguish,
fright, anxieties and cer­tainly such wounded feeling, where the amount of
P200,000.00 had been asked and prayed for to com­pensate the plaintiff for his
moral damages;

V

“That with the filing of the defendant’s most ma­licious
complaint against the plaintiff, there an abuse of a right had been committed
by the defendants, in which case, as a corrective measure against them, the
amount of P30,000.00 should be imposed by way of example or correction for the
public good;

“x x x.”

The suit mentioned in
par. II of Maningo’s Third Cause of Action (supra)
was filed by Neville Lamis Ents.
against Santiago Maningo in
the Court of First Instance of Rizal (Civil Case No.
35199) by means of a complaint dated November 16, 1979, alleging the following causes of
action:

“FIRST
CAUSE OF ACTION

“1.  That plaintiff is a single proprietorship firm
duly established and existing under the laws of the Philippines with principal
office address at 8 Fairlane Street, Fairlane Subdivision, Marikina,
Metro Manila; and defendant is of legal age, Filipino, married, and with
residence address at 29 Palm Drive, Bajada, Da­vao City, where summons may be served;

“2.  That on January 27, 1979 defendant and plain­tiff
executed a memorandum of agreement whereby de­fendant shall specifically
advance unto plaintiff for the latter’s logging operations with ETCO TIMBER COR­PORATION at General Santos City which
corporation, the proprietor of plaintiff’s firm, NEVILLE Y. LAMIS
is now President likewise thereof, the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00) payable as follows:

‘a)  IMMEDIATE; UPON SIGNING OF THIS MEMO OF
AGREEMENT. . . .  P50,000.00;

and

‘b)  TO BE RELEASED ONE WEEK FROM DATE HEREOF. . .
. . . . . . .  P50,000.00

/Par. A-1, (a) & (b)/.’

copy of which
memorandum of agreement is herewith attached as Annex “A” hereof;

“3. That to the
aforesaid conditions defendant only complied and released the sum of P50,000
upon the signing of the agreement and failed to release the balance of P50,000
unto plaintiff within one week from date of the memorandum of agreement in
spite of the latter’s repeated calls and demands for the release of the same
(copy of one of which demands is herein at­tached as Annex “B”
hereof; and defendant refused and still refuses to release the said amount up
to the present to the prejudice of the plaintiff’s logging ope­ration and
productions;

“4. That the
performance of aforesaid obligation is now long overdue and defendant just
simply ignores the same;

“SECOND
CAUSE OF ACTION

“1.  Plaintiff reproduces herein the allegations in
paragraph 1 of the First Cause of Action;

“2.  That under the same memorandum of agree­ment
in paragraph A No. 2 (a) thereof defendant have covenanted himself unto plaintiff
to deliver one (1) unit of ‘D8
OA-12 Komatsu Bulldozer with winch in good operating condition, for a value of
P200,000.00;

“3.  That the bulldozer delivered however to the
defendant by the plaintiff was one outside of the spe­cifications covenanted by
the parties as it was later found out by plaintiff after defendant’s mechanic
have dismantled the same for repairs before operation, that the unit was not
D80A-12 but an outmoded model of Kumatsu Bulldozer
D8OA-8 which is much lower in power than the D80A-12 originally contracted
hence, defendant evieted his warranty under the said
memo agreement of ‘GOOD OPERATING CONDITION’ and ‘D80-A’ to the great prejudice
of plaintiff;

“4.  That the actual value of the tractor model
delivered by defendant to plaintiff is currently tagged at only between P120,000 to P150,000 at well estab­lished outlets thereof and
not to reach P200,000 or even P170,000 as valued by defendant.

“THIRD
CAUSE OF ACTION

“1.  That plaintiff reproduces the allegation of
paragraph 1 of the First Cause of Action to form an integral part hereof;

“2.  That under the same memorandum of agree­ment,
aforesaid defendant further failed to deliver unto plaintiff the ‘JH-65 Payloader with log-grapple, complete and in good operating
condition one week after date of said contract,’ in open defiance of para­graph
A No. 2 (b) hereof, the pertinent provision of which is herewith reproduced to
wit:

‘2. To be released by SANTIAGO MANINGO to
N. Y. LAMIS ENTS./ETCO
TIMBER CORP. operations x x x

‘b. JH-65 Payloader
with log-grapple complete and in good operating condition, after one (1) week
hereof x x x.’

“3.  That the performance of aforesaid obligation
by defendant has been long overdue and in spite of re­peated calls and demands
by plaintiff of its delivery defendant refused and still refuses to deliver the
same in violation of the covenant and to the great prejudice and damage of the
plaintiff;

“FOURTH
CAUSE OF ACTION

“1.  That plaintiff reproduces all the allegations
contained in paragraph 1 of the First Cause of Action to form likewise an
integral part hereof;

“2.  That by reason of the non-performance of de­fendant,
plaintiff suffered actual financial losses, aside from loss of business good
will in its failure to ship and comply with the terms of the agreement between
itself thru ETCO TIMBER CORP. and their Japanese
buyer, MITSUI & CO., LTD. of Tokyo, Japan under which plaintiff having been
assured of the compliance of defendant’s covenant accepted to supply logs to
MITSUI & CO., LTD. in the volume of about 2,000 cubic meters equivalent to
U.S. $200,000 or approxi­mately equivalent to P1,460,000 under Mitsui Foreign
Letter of Credit No. G/HK780014 as opened on 18th of November 1978 thru
SUMITOMO BANK, LTD. 8 Queen’s Road Central, Hongkong
and coursed thru Equitable Banking Corporation under their Reference No. O.B. – L.C. 78/893 as amended to expire on Feb­ruary 28, 1979 copy of which L/C
and extension are hereby attached as Annexes “C” and “C-1”
hereof of which defendant has the full knowledge thereof;

“FIFTH
CAUSE OF ACTION

“1.  That plaintiff reproduces all the allegations
contained in paragraph 1 of the First Cause of Action to form an integral part
hereof;

“2.  That by reason of the non-performance and
breach of defendant’s covenant plaintiff suffered fur­ther losses in the
repairs of the unit maliciously mis­represented to by defendant which amount is
no less than P6,000 for labor and parts, and further
suffered a great period of time loss as caused by the non-ope­rating condition
of the unit at the time of delivery thereof and several months thereafter;

“SIXTH
CAUSE OF ACTION

“1.  That plaintiff reproduces the allegation con­tained
in paragraph 1 of the First Cause of Action and made an integral part hereof;

“2.  That by reason further defendant’s non-per­formance
in the contract, plaintiff suffered moral da­mages by the evident loss of its
credit standing and commitments as well as mental anxiety and embarrass­ment to
its creditors and suppliers in the equivalent amount of not less than
P30,000.00;

“3.  That the acts of defendant merits an imposi­tion
of exemplary damages which the plaintiff asks this Honorable Court to be fixed
at P20,000.00;

“4.  That to enforce its rights the plaintiff has
availed of the legal consultations with special luminaries in Manila, to which
in representation thereof, it has spent no less than P3,000.00;

“SEVENTH
CAUSE OF ACTION

“1.  That plaintiff reproduces the allegation con­tained
in paragraph 1 of the First Cause of Action as integral part hereof;

“2.  That by reason of the saturated misrepresen­tations
made by defendant and with the hope in view that defendant may be able to
comply with his obli­gations, should proper commercial documentation in good
faith are executed, plaintiff herein unhesitating­ly heeded to the requirement
of defendant and exe­cuted a promissory note for P55,000.00 inclusive of P5,000
usurious interest thereon for a period of 30 days, issued on January 26, 1979
to become due on February 28, 1979, and delivered to defendant on Jan­uary 27,
1979 to cover the release of the first obliga­tion of cash advances of
defendant; which promissory note is merely a guarantee of the payment unto
defendant should he be able to comply with his contrac­tual obligations, copy
of the same is herewith attached as Annex “D” hereof;

“3.  That aside from the aforesaid promissory note
defendant still required plaintiff to further cover the said advance with post
dated checks of the plaintiff which the latter issued originally with its Metro
Bank Davao Account (Magsaysay
Branch);

“4.  That sometime in May 1979, defendant visited
plaintiff at their office in General Santos City renewing its promise to
deliver very soon the JH-65 Payloader and P50,000 balance of the memo agreement dated January 27, 1979,
provided plaintiff in consideration thereof shall renew its checks covering the
transaction to enable him to produce the cash needed, to which plaintiff was
again deceived by defendant in issuing the following checks in guarantee of the
P50,000 first advanced by him:

RCBC Main
Office Account No. 9366-2

1. Check No. 6923588 – P60,000 – July 31, 1979;

2. Check No. 6923589 – P10,000 – July 31, 1979.

All of which checks are now in the
possession of de­fendant;

“5.  That defendant had the fullest of knowledge that
the performance of payment of plaintiff’s afore­said checks
were all dependent upon his compliance of the original contract of January 27, 1979;

“6.  That the collection of payment made by de­fendant
unto plaintiff is obviously showing of his ‘loan shark’ mentality of charging a
total sum of P20,000 interest charges for a total period of just over four
months of maturity date on the P50,000 originally released by him pursuant to
the contract in open de­fiance of usury laws;

“EIGHT CAUSE OF ACTION

“1.  That plaintiff reproduces the allegation of
paragraph 1 of the First Cause of Action as part here­of;

“2.  That by reason further of the continued mis­representations
of defendant for his further compliance of their original contract subject
hereof, sometime in June 1979, defendant renewed his prior checks of guarantee
in good faith and issued the following checks amounting to a total of P170,000
in favor of defendant to wit:  a) RCBC Check No. 6923586 dated July 2, 1979 for P100,000 and
b) RCBC Check No. 6923587 dated July 9, 1979 for
P70,000; which checks are all in the possession of defendant;

“3.  That the issuance of checks were all premised
on the guarantee that defendant shall already comply very soon his promise to
deliver the P50,000 cash ad­vance balance subject of the contract and the JH-65
Payloader likewise covered by the same in order for
plaintiff to comply with its log commitments to its buyers including defendant
himself;

“4.  That defendant however continuously failed to
comply with his contractual obligations pursuant to the subject memorandum of
agreement for which reason the defendant has no right to enforce collection by
vir­tue of aforesaid checks against plaintiff as by the default of defendant
himself as well as misrepresentations and misdelivery
of the required units the obligation of plaintiff did not expire under the same
contract;

“FACTS COMMON TO ALL CAUSES OF ACTION ABOVE-MENTIONED

“1.  Plaintiff reproduces the allegation in
paragraph 1 of the complaint as integral part hereof;

“2.  That plaintiff is willing to perform its part
of the obligation contained in subject memorandum of agreement between
plaintiff and defendant dated Jan­uary 27, 1979 provided full compliance by
defendant of his preceding obligations as raised is properly en­forced by this
Honorable Court and provided further that the prices of logs stipulated therein
to be sold to defendant shall indispensably be adjusted to conform with the
present local current market price;

x x x.”

The memorandum of agreement in the Lamis
complaint reads as follows:

“MEMORANDUM OF AGREEMENT

“A. TO BE PERFORMED BY SANTIAGO
MANINGO:

“1. To be advanced by SANTIAGO MANINGO
to N. Y. LAMIS ENTS./ETCO TIMBER opera­tions:

a) Immediate, upon signing of this memo of
agreement . . . P 50,000.00

b) To be released one (1) week from date hereof. . . . . . . . .    50,000.00

T O T A L. . . .
. . . . . . . . . . . . . . P100,000.00

“2. To be released by SANTIAGO MANINGO
to N. Y. LAMIS ENTS./ETCO TIMBER opera­tions:

a)     
D80 A-12 Komatsu Bulldozer with winch,

good
operating condition, immediate,

Value. . . . . . . . . . . . . .  . . . . . P200,000.00

b)     
JH-65 Payloader with
long?grapple,

complete
and in good operating

condition,
after one (1) week hereof.

Value. . . . . . . . . . . . . . . . . .
. .P180,000.00

“B. TO BE PERFORMED BY NEVILLE Y. LAMIS
ENTS. (SCHEDULE OF RE-PAYMENTS)

“1. AFTER MITSUI PARTIAL EXPORT ON OR ABOUT FIRST
WEEK FEBRUARY, 1979 FOR 700 CU. M.:

a) Partial payment of cash advance. . . . . . . . . .  P 55,000.00

b) Down payment on D80A-12 tractor. . . . . . . .    120,000.00

T o t a l. . . .
. . . . . . . . . . . .   P175,000.00

“2. AFTER LOCAL LOG SHIPMENT WITH SARMIENTO
ON OR ABOUT LAST WEEK FEBRUARY, 1979 for 1,000 CU. M.:

a) Full payment of cash advance. . . . . . . . . . . .  P 55,000.00

b) Full payment of D80A-12 tractor. . . . . . . . . . .     80,000.00

T o t a l. . . .
. . . . . . . . . . . . . P135,000.00

“3. AFTER MITSUI FULL BALANCE REPORT SHIPMENT ON OR ABOUT END
OF MARCH, 1979 FOR 1,200 CU. M.:

Full payment of JH
65 pay­loader/grapple. . . . P180,000.00

WE AGREE:

(Sgd.)
SANTIAGO MANINGO

“ADDENDUM:  SHOULD THE EXPECTED EXPORT SHIPMENT/S WITH
MITSUI & CO., LTD. FAIL, SUBJECT LOGS OF N. Y. LAMIS
ENTS./ETCO TIMBER CORP.
SHALL BE PURCHASED BY L. S. SARMIENTO INDS. THRU SANTIAGO
MANINGO AT THE CURRENT PRICE OF P350.00/CU. M. FOR
EXPORTABLE, P270/CU. M. FOR LSQ GRADE &
P170.00/CU. M. FOR SAWMILL GRADE, ALL PRICES F. O. B. VESSEL.

NEVILLE Y. LAMIS ENTS.

By:

(Sgd.) NEVILLE Y. LAMIS

Proprietor/Gen. Manager

Davao City, Philippines,
January 27, 1979.”

By motion dated February
18, 1981, which the
defendant filed in Civil Case
No. 1395, the dismissal of the complaint was sought on the following grounds:

“(1)  THAT THE SUBJECT IS IN ‘LIS
PENDENS‘ AND/OR ‘MULTIPLICITY OF SUIT’ OF A PRIOR AND
EXISTING CIVIL CASE NO. 35199 ENTITLED ‘NEVILLE Y. LAMIS
ENTS. PLAINTIFF VERSUS SANTIAGO
MANINGO, DEFENDANT, BEFORE CFI PASIG, BRANCH XXV’ FILED ON NO­VEMBER 16, 1979.

“(2)  THAT VENUE IN THE HEREIN CASE IS RESPECTFULLY
SUBMITTED TO BE IMPROPERLY LAID.”

On the question of venue
it is alleged that the proper venue for Civil Case No. 1395 should be Davao City where the plaintiff resides and as
stipulated in the promissory note dated February 26, 1979 and in the chattel mortgage dated February
27, 1979.  However, the respondent judge found that Maningo has “not only legal residence but also
physical and actual residence in Busaon, Tagum, Davao” and We are not inclined to disturb
this finding.  Anent the claim that Davao City had been stipulated as the venue, suffice it to
say that a stipulation as to venue does not preclude the filing of suits in the
residence of plaintiff or defendant under Section 2(b), Rule 4, Rules of Court,
in the absence of qualifying or restrictive words in the agreement which would
indicate that the place named is the only venue agreed upon by the
parties.  The stipulation did not
deprive Maningo of his right to pursue remedy in the
court specifically mentioned in Section 2 (b) of Rule 4, Rules of Court.  Renuntiatio non praesumitur.  (Polytrade Corporation vs. Blanco, No. L-27033, Oct. 31, 1969, 30 SCRA 187. )

However, We believe that the first
ground invoked in the motion to dismiss is well-taken; the respondent judge
should have dismissed Civil Case No. 1395 on that ground.

Rule 16, Sec. 1 of the Rules of Court provides that a motion to
dismiss an action may be made, inter alia, on the ground that “there is another
action pending between the same parties for the same cause.”

It has been said that for this ground to be invoked “there
must be, between the action under consideration and the other action, (1)
identity of parties, or at least such as representing the same interest in both
actions; (2) identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (3) the identity on the two preceding
particulars should be such that any judgment which may be rendered on the other
action will, regard­less of which party is successful, amount to res adjudicata in
the action under consideration.” (1 Moran, Rules of Court, pp. 488-­489
[1970].)

The petitioner contends that in so far as the complaint in Civil
Case No. 1395 seeks to collect the P55,000 alleged
loan, it should be dismissed on the ground of litis
pendencia because there is another case on the
same cause pending between them in the Court of First Instance of Rizal.  And with
respect to the claim for P200,000, the same can not be
set up in the present action on the ground of multiplicity of suits since
Santiago Maningo’s claim under the deed of chattel
mortgage (over the tractor) partook of a compulsory counterclaim which not
having been set up in Civil Case No. 35199 was forever barred under Sec. 4,
Rule 9 of the Rules of Court.

The private respondent, on the other hand, states that although
the causes of action in Civil Case No. 1395 arose from the Memo­randum
Agreement sued upon in Civil Case No. 35199, the respective causes of action in
the two cases are distinct in nature.  He
claims that Civil Case No. 35199 is basically for the performance of certain
supposedly valid obligations whereas Civil Case No. 1395 is prin­cipally for
collection of over due accounts.  He also
argues that on the assumption that the petitioner succeeds in compelling the
private respondent to perform under the Memorandum Agreement, the private
respondent would not be barred from seeking judgment in a separate case for the
loan and the purchase price of the tractor. 
Finally, he maintains that the evidence to support the claims in the two
actions are not the same.

We find the position of the petitioner tenable.  The claim of the private respondent for
P55,000 admittedly arose from the same transaction i.e., the Memorandum of
Agreement sued upon in Civil Case No. 35199, notwithstanding that no mention of
the agreement is made in Civil Case No. 1395. Moreover, it appears that in the
answer with a counterclaim filed by the private res­pondent as the defendant in
Civil Case No. 35199, the same amount of P55,000 was
demanded of the plaintiff therein. 
Indubitably, in the resolution
of the issues of facts and law in Civil Case No. 35199, relative to the claimed
amount, the right of the private respondent thereto will have to be passed
upon.

Similarly, the private
respondent’s claim for the purchase price of the tractor is barred.  This claim should have been set up in Civil
Case No. 35199, of which, in one of the causes of action it was alleged that
there was a misdelivery of tractor for which reason
the plaintiff therein asks for the delivery of the tractor specified in the
Memorandum Agreement.

In Yu Lay v. Galmes (40 Phil. 651 [1920]), a counterclaim is compulsory
if (a) it matured before answer; (b) it arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing party’s claim; (c) it does not require for its adjudication the
presence of third persons of whom the court cannot acquire jurisdiction; and
(d) it is within the jurisdiction of the court. 
And in Carpena v. Manalo,
(L-13143, April 26, 1961, 1 SCRA 1060), it was held
that where the claim is necessarily connected with or arise
out of the transaction involved in the first case, the same claim is barred if
not set up as a counterclaim in the previous case.

It is clear that in the light of the jurisprudence cited, the
private respondent’s claim for the purchase price of the tractor is in the
nature of a compulsory counterclaim and to allow it in the present action will
violate the principle against multiplicity of suits.

WHEREFORE, the petition is granted; the order of the res­pondent
judge dated April 2, 1981 in
Civil Case No. 1395 is hereby set aside and another one entered ordering the
dismissal of said case.  No special
pronouncement as to costs.

SO ORDERED.

Barredo, (Chairman), Aquino, Concepcion, Jr., and De Castro, JJ., concur.