ALFREDO PUA, PLAINTIFF AND APPELLANT, VS. EULOGIO LAPITAN, DEFENDANT AND APPELLEE.

This is an appeal from an order of the Court of First Instance of
Laguna dismissing the complaint filed by plaintiff against defendant
for damages in Civil Case No. B-132. The dismissal is predicated on the
ground that the complaint is barred by a prior judgment between the
same parties.

The facts which gave rise to the present case are: On December 15,
1953, Eulogio Lapitan, now defendant filed an action against Alfredo
Pua, now plaintiff, before the Court of First Instance of Laguna for
specific performance and for damages. In the complaint, it was alleged
that Pua, taking advantage of the ignorance and confidence of Lapitan,
and by the use of fraud, deceit and misrepresentation, caused Lapitan
and his wife to sign a document which purported to be a lease agreement
when their true understanding was that they would enter into a
partnership contract whereby they would share alike the profits that
may be derived therefrom, and that because of said fraud, deceit and
misrepresentation, Lapitan and his family “suffered mental anguish,
wounded their feelings, besmirched their reputation in the community,
and consequently the plaintiff suffered moral damages in the amount of
P5,000.00” (Case No. 9739).

Pua answered the complaint denying the imputation of fraud, deceit
and misrepresentation contained therein and, as a counterclaim, alleged
that “as a result of the unjustified and, unwarranted filing of the
complaint by the plaintiff, the defendant who has never been involved
on any court litigation and who was quietly and lawfully pursuing a
legal and decent business activity, and who has lived up to the terms
of the lease agreement, suffered mental torture and anguish, his
reputation having been adversely affected, thereby suffering in the
form of moral damages to the tune of P10,000.00.” He also prayed for
attorney’s fees in the amount of P1,000.00.

After trial, the court rendered judgment in favor of Lapitan
declaring that the contract entered into between the parties was one of
partnership and, therefore, it ordered defendant to make a liquidation
of the income derived from the business within 30 days from the date
the judgment becomes final and to pay P500.00 as attorneys’ fees. But
on appeal to the Court of Appeals, the appellate court reversed the
judgment and dismissed the complaint with costs against Lapitan. The
court, however, did not make any mention of the counterclaim of Pua.

It is as a result of the decision of the Court of Appeals justifying
the claim of Alfredo Pua to the effect that the contract entered into
between him and Eulogio Lapitan is one of lease and not of partnership
which implies that the imputations of fraud, deceit and
misrepresentation hurled against him by Lapitan were not true, that Pua
commenced the present action before the same court of first instance
for actual and moral damages and attorneys’ fees in the total sum of
P49,500.00.

The main basis of the complaint is that “by reason of defendant’s
malicious imputations and false accusations, that plaintiff exercised
fraud, misrepresentation and deceit in obtaining defendant and his wife
to sign a lease agreement in Civil Case No. 9739, plaintiff being then
a successful businessman or merchant suffered embarrassment, loss of
prestige towards his patrons and the public thereby regarding his
business; standing; goodwill; trust, confidence and commercial credit.”
Against this complaint defendant filed a motion to dismiss on the
ground that its cause of action is barred by a prior judgment, to which
plaintiff filed a written opposition, and after proper hearing, the
court found the motion well taken, and dismissed the complaint. Hence
this appeal. There is no merit in the appeal. It should be noted that
when appellee filed before the same court an action for specific
performance and damages against appellant (Civil Case No. 979), wherein
the former imputed to the latter certain acts of fraud, deceit and
misrepresentation in connection with the execution of an alleged
contract entered into between them, the latter, not only set up
specific defenses, but a counterclaim wherein he claimed the sum of
P10,000.00 as moral damages and P1,000.00 as attorneys’ fees, the basis
of his counterclaim being that because of the imputation of fraud,
deceit and misrepresentation made against him by appellee, he suffered
mental torture and anguish, while his reputation has been adversely
affected, for which reason he asked that he be awarded moral damages in
the amount above stated. The trial court in that case rendered judgment
against appellant, whereupon he appealed to the Court of Appeals, who
reversed the judgment appealed from. The Court of Appeals, however, did
not mention anything about the counterclaim of appellant for it merely
dismissed the case. It can therefore be said that appellant won in that
case in the sense that he succeeded in having the case of appellee
thrown out of court though not to the extent of obtaining a judgment on
his counterclaim. Why he failed in his counterclaim the record does not
show, but it cannot be denied that such counterclaim was then in issue
and could have been passed upon by the court had he pressed action
thereon. Apparently, he waived his right to such counterclaim, or the
court found no evidence to support it, and for that reason the same was
passed up sub silentio by the court. If such counterclaim,
which in substance is the basis of the present action of appellant, was
already in issue in the former case, it is logical that the decision
rendered therein has now the effect of a prior judgment in the present
under the principle of res judicata. Such being the case, we cannot but hold that the trial court acted correctly in dismissing the complaint on that ground.

In Bingham vs. Kearney, 136 Cal, 175, cited in Palanca vs. Quiros, 10 Phil., 360, the Court said:

“It is a rule, long recognized in this country, that
a judgment between the same parties is conclusive, not only as to the
subject-matter in controversy in the action upon which it is based but
also in all other actions involving the same question, and upon all
matters involved in the issues which might have been litigated and
decided in the case, the presumption being that all such issues were
met and decided. It is the policy of the law to put an end to
litigation, and to aid the vigilant and not those who sleep upon their
rights. It is not the policy of the law to allow a new and different
suit between the same parties, concerning the same subject-matter, that
has already been litigated; neither will the law allow the parties to
trifle with the courts by piecemeal litigation.”

On the strength of the above ruling, it is clear that “an
adjudication is finally conclusive not only as to the matter actually
determined, but as to every other matter which the parties might have
litigated and have had decided incident to or essentially connected
with the subject-matter of litigation, and every matter coming within
the legitimate purview of the original action, both with respect to
matter of claim and of defense” (2 Freeman on Judgments, Section 574).^[1] The purpose of this ruling is to avoid multiplicity of actions.

Wherefore, the order appealed from is affirmed, with costs against appellant.

Paras, C. J., Bengzon, Padilla, Montemayor, Labrador, Concepcion, Reyes, J. B. L., Endencia, Barrera, and Gutierrez David, JJ., concur.

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^[1] Miranda vs. Tiangco, et al., 66 Phil., 526; 61 Off. Gaz., (3) 1866; NAMARCO vs. Judge Macadaeg, 98 Phil., 185; 52. Off. Gaz., 182.