G.R. No. 93640 - Tay Chun Suy vs. Court of Appeals

Bliss Development Corporation owned a housing unit located at Lot 27, Block 30, New Capitol Estates I, Barangay Matandang Balara, Quezon City.
A conflict of ownership arose between petitioner Edgar H. Arreza and respondent Montano M. Diaz, Jr., leading to litigated disputes.

Bliss Development Corporation filed a complaint for interpleader to resolve the conflicting claims over the property.
In a decision dated March 27, 1996, the Regional Trial Court of Makati, Branch 146, ruled in favor of petitioner Arreza by:

The decision became final and was executed, with Bliss Development Corporation executing a Contract to Sell the property to Arreza; respondent Diaz was required to deliver the property with all its improvements to petitioner Arreza.

Respondent Diaz filed a complaint against Bliss Development Corporation, Edgar H. Arreza, and Domingo Tapay seeking reimbursement of P1,706,915.58, representing his cost of acquisition and improvements on the property, with additional interest.
Petitioner Arreza moved to dismiss this complaint on two primary grounds:

The Regional Trial Court, in an Order dated February 4, 1997, denied Arreza’s motion to dismiss. A subsequent Motion for Reconsideration filed on March 20, 1997, was also denied.
On April 16, 1997, Arreza filed a petition for certiorari before the Court of Appeals, challenging the decisions on the grounds of:

The Court of Appeals dismissed the petition, holding that the prior interpleader judgment resolved only the issue of who had the better right over the property and did not encompass the matters of damages and reimbursement sought in the later case.

That the claim for reimbursement by respondent Diaz is barred by the final judgment in the prior interpleader case.
That the claim for reimbursement regarding improvements made to the property is similarly barred by res judicata.
That the prior CA petition, which affirmed that the earlier RTC decision settled all claims between the parties, constitutes a bar.
That the amended complaint in the present RTC case altogether fails to state a valid cause of action.

The crux of the controversy centers on whether respondent Diaz’s claims for reimbursement are barred by res judicata due to the identity of:

Parties involved.
Subject matter (the disputed property).
Cause of action (rights arising out of the interpleader proceeding and related reimbursement claims).

Whether respondent Diaz’s claims for reimbursement of acquisition costs and improvements against petitioner Arreza are barred by the doctrine of res judicata.
Whether the earlier final judgment in the interpleader case (Civil Case No. 94-2086) fully determined all claims and liabilities between the parties, including those relating to damages and reimbursement.
Whether respondent Diaz’s failure to crystallize his reimbursement claims as a compulsory counterclaim in the interpleader proceedings precludes raising them in the subsequent RTC action.
Whether there exists an identity of parties, subject matter, and cause of action between the prior interpleader case and the present complaint such that the prior judgment conclusively bars the current claims.