GR. No.

156185 September 12, 2011

CATALINA B. CHU, et.al., Petitioners,
vs.
SPOUSES FERNANDO C. CUNANAN and TRINIDAD N. CUNANAN, BENELDA
ESTATE DEVELOPMENT CORPORATION, and SPOUSES AMADO E. CARLOS and
GLORIA A. CARLOS, Respondents.

(Rule 2, Sec. 4)

FACTS:

Spouses Manuel and Catalina Chu (Chus) executed a deed of sale with assumption of
mortgage involving five parcels of land owned by them, in favor of Trinidad Cunanan
(Cunanan). They stipulated therein that the lots would remain with the Chus and would be
transferred only upon complete payment of the total consideration.

The Chus executed a Special Power of Attorney authorizing the Cunanan to borrow form
any bank institutions and mortgage the lots for security and deliver proceeds to the Chus to pay
the balance. Cunanan was able to transfer the title of the five lots in her name without the
knowledge of the Chus and borrow money with the lots without paying the balance to the Chus.
She even transferred the lots to the Carloses.

The Chus then commenced a case to recover the unpaid balance from the Cunanan. They
amended the complaint and added several defendants. The parties later on entered in a
compromise agreement whereby the Cunanas would transfer their 50% share in all parcels of
land in all their parcels of land in Pampanga for and in consideration of the full settlement of
their case.

Later, the petitioners brought another Civil Case against the Carloses and Benelda Estate
seeking the cancellation of the TCT of the two lots in the name of Benelda Estate and the
issuance of new TCT’s in their favor. They also implead the Cunanans as additional defendants.

The Cunanans moved to dismiss the amended complaint based on two grounds, namely:
(a) bar by prior judgment, and (b) the claim or demand had been paid, waived, and abandoned.

Benelda Estate likewise moved to dismiss the amended complaint, citing as grounds: (a)
forum shopping; (b) bar by prior judgment, and (c) failure to state a cause of action.

On their part, the Carloses raised affirmative defenses in their answer, namely: (a) the
failure to state a cause of action; (b) res judicata or bar by prior judgment; and (c) bar by statute
of limitations.

The RTC denied the motions to dismiss holding that the amended complaint stated a
cause of action against all the defendants; that the action was not barred by res judicata because
there was no identity of parties and subject matter between Civil Case No.12251 and Civil Case
No. G-1936; and that the Cunanans did not establish that the petitioners had waived and
abandoned their claim or that their claim had been paid by virtue of the compromise agreement,
pointing out that the compromise agreement involved only the three parcels of land registered in
the name of Cool Town Realty.

The CA then granted the petition for certiorari. It ruled that 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 the five parcels of land; that the
filing of Civil Case No.12251 contravened the rule against splitting of a cause of action, and
rendered Civil Case No.12251 subject of a motion to dismiss based on bar by res judicata.

Hence, this petition.

ISSUE:

Whether or not the dismissal is proper and the petitioner is guilty of splitting their single
cause of action.

HELD:

The court ruled in the positive. In the construction or interpretation of a compromise

agreement, the intention of the parties is to be ascertained from the agreement itself, and effect
should be given to that intention. The intent of the parties to settle all their claims against each
other is expressed in the phrase any and all their respective claims against each other as alleged
in the pleadings they respectively filed in connection with this case, which was broad enough to
cover whatever claims the petitioners might assert based on the deed of sale with assumption of
mortgage.

However, to limit the compromise agreement only to the three lots mentioned therein
would contravene the avowed objective which is to enforce or to rescind the entire deed of sale
with assumption of mortgage.

Apparently, the petitioners were guilty of splitting their single cause of action to enforce
or rescind the deed of sale with assumption of mortgage. Splitting a single cause of action is the
act of dividing a single or indivisible cause of action into several parts or claims and instituting
two or more actions upon them. A single cause of action or entire claim or demand cannot be
split up or divided in order to be made the subject of two or more different actions.

Section 4, Rule 2 of the Rules of Court expressly prohibits splitting of a single cause of
action, viz:
 Section 4. Splitting a single cause of action; effect of. If two or more suits are instituted
on the basis of the same cause of action, the filing of one or a judgment upon the merits in any
one is available as a ground for the dismissal of the others. (4a)

The petitioners were not at liberty to split their demand to enforce or rescind the deed of
sale with assumption of mortgage and to prosecute piecemeal or present only a portion of the
grounds upon which a special relief was sought under the deed of sale with assumption of
mortgage, and then to leave the rest to be presented in another suit; otherwise, there would be no
end to litigation. Their splitting violated the policy against multiplicity of suits, whose primary
objective was to avoid unduly burdening the dockets of the courts.

In fine, the rights and obligations of the parties vis--vis the five lots were all defined and
governed by the deed of sale with assumption of mortgage, the only contract between them. That
contract was single and indivisible, as far as they were concerned. Consequently, the Chus could
not properly proceed against the respondents in Civil Case No. 12251 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. The Chus could not be permitted to split up a single cause
of action and make that single cause of action the basis of several suits.