Serrano vs. Cabrera

A dismissal of an action upon the plaintiff's motion, consented to by the defendant and grounded on the defendant's full payment and satisfaction of the plaintiff's claims, is a compromise that has the same authority as res judicata between the parties; it bars a subsequent action to recover alleged excess payments, and solutio indebiti does not apply because the payment was made pursuant to the compromise.

Gaudencio Serrano was the lessee of a 24-hectare parcel of land in La Paz, Tarlac. Donata Cabrera was the lessor, having inherited the land from her deceased father Eusebio Cabrera, the original lessor; Teodato Makabulos was her husband. The lease was for six agricultural years beginning May 1, 1941, at a yearly rental of 290 cavans of palay. The dispute implicated the old Civil Code provisions on compromise and solutio indebiti, as well as Section 1, Rule 30, on dismissals without prejudice.

Gaudencio Serrano was the lessee of a parcel of land containing an area of 24 hectares, more or less, situated in La Paz, Tarlac. Donata Cabrera was the lessor, having inherited the land from her deceased father Eusebio Cabrera, the original lessor; Teodato Makabulos was her husband. The lease was for six agricultural years beginning May 1, 1941, at a yearly rental of 290 cavans of palay.

On December 13, 1946, Cabrera brought civil case No. 141 before the Court of First Instance of Tarlac to recover rentals due and unpaid for agricultural years 1943-44, 1944-45, 1945-46, and 1946-47. On December 18, 1946, the complaint was dismissed without costs upon a motion filed by Cabrera through counsel Tomas Besa. The motion, entitled MOCION DE SOBRESEIMIENTO, stated that because Serrano had paid and satisfied completely Cabrera's claims as alleged in the complaint, she no longer had a cause of action against him and therefore asked that the case be dismissed under Rule 30, Section 1. The motion was conformed to by Cabrera and Serrano.

Serrano thereafter filed civil case No. 213 before the same court against Cabrera and Makabulos. He alleged that what he had paid to Cabrera was in excess of what was due her for unpaid rentals and sought to annul the proceedings in civil case No. 141 and recover the alleged excess payments. The excess amounts allegedly paid and sought to be recovered included P1,286.40 for an agricultural year and P193 for court fees in connection with the attachment issued in the first case. He also prayed that the promissory note for P1,000 which he had executed and delivered to Cabrera be cancelled or returned to him, and that Cabrera and Makabulos be ordered to pay him P20,000 for damages suffered as a result of the filing of the action against him and the attachment of his property.

Defendants moved for dismissal of the complaint on the grounds of res judicata and failure to state a cause of action. The trial court dismissed the complaint on the ground of res judicata. The plaintiff appealed.

• Rule 30, Section 1: Petitioner contended that the dismissal of the complaint in the first action, upon the ground that the defendant had paid and satisfied fully all the plaintiff's claims and before the filing of an answer, was without prejudice under Section 1, Rule 30.
• Solutio Indebiti: Petitioner claimed that a thing received by one who has no right to it and which has been delivered due to error must be returned under Article 1895 of the Civil Code.

• Res Judicata: Defendants moved for dismissal of the complaint on the ground of res judicata.
• Failure to State a Cause of Action: Defendants also moved for dismissal on the ground of failure to state a cause of action.

• Rule 30, Section 1: Whether the dismissal of the first action, upon motion of the plaintiff before the filing of an answer and with the defendant's conformity, was a dismissal without prejudice under Section 1, Rule 30.
• Solutio Indebiti: Whether Article 1895 of the Civil Code required the lessor to return alleged excess rentals paid by the lessee.
• Res Judicata/Compromise: Whether the dismissal of the first action, grounded on full payment and satisfaction of the lessor's claims, constituted a compromise with the authority of res judicata and barred the second action.

• Rule 30, Section 1: No. The dismissal was not the unilateral dismissal contemplated by Section 1, Rule 30; it was made upon motion of the plaintiff, consented to by the defendant, and grounded on full payment and satisfaction, so it operated as a compromise.
• Solutio Indebiti: No. Article 1895 was inapplicable because what was received by the plaintiff and delivered by the defendant was the result of a compromise.
• Res Judicata/Compromise: Yes. Under Articles 1809 and 1816 of the old Civil Code, the compromise had the same authority as res judicata and barred the second action; the dismissal was affirmed.

• Rule 30, Section 1: Section 1, Rule 30 permits a plaintiff to dismiss an action without prejudice before the defendant files an answer. The provision cannot be invoked here because the dismissal in civil case No. 141 was not a mere unilateral dismissal by the plaintiff. It was made upon Cabrera's motion, but Serrano conformed to it, and the ground was that Serrano had paid and satisfied all of Cabrera's claims as prayed for in her complaint. The dismissal therefore rested on the parties' agreement that the claim had been fully settled. The Court also noted that a dismissal under the rule would not preclude the plaintiff from bringing another action on the same subject matter, and would not bar an action by the defendant which he could have brought as a counterclaim or cross-claim; but those consequences did not govern because the first dismissal was a compromise.

• Solutio Indebiti: Article 1895 of the old Civil Code (Article 2154, new Civil Code) governs solutio indebiti: a thing received by one who has no right to it and delivered due to error must be returned. The provision was not applicable because the payment made by Serrano and received by Cabrera was not made through error; it was the result of a compromise. The compromise was the source of the settlement. Hence, Serrano could not later characterize the payment as an erroneous excess and demand restitution.

• Res Judicata/Compromise: Article 1809 of the old Civil Code (Article 2028, new Civil Code) defines compromise as a contract whereby parties in interest, by giving, promising, or retaining something, avoid the provocation of a suit or terminate one already instituted. Article 1816 (Article 2037, new Civil Code) provides that a compromise has, with respect to the parties, the same authority as res adjudicata. The motion to dismiss in civil case No. 141, signed by Cabrera and conformed to by Serrano, recited that Serrano had fully paid and satisfied Cabrera's claims and asked for dismissal. That was a compromise terminating the first action. Because the compromise had the authority of res judicata, the trial court correctly dismissed civil case No. 213 on the ground of res judicata. The order appealed from was affirmed, with costs against appellant.

• Compromise — Under Article 1809 of the old Civil Code (Article 2028, new Civil Code), a compromise is a contract whereby parties in interest, by giving, promising, or retaining something, avoid the provocation of a suit or terminate one already instituted. The dismissal of civil case No. 141 upon Cabrera's motion, conformed to by Serrano and grounded on full payment of Cabrera's claims, was held to be a compromise.
• Res Judicata Effect of Compromise — Article 1816 of the old Civil Code (Article 2037, new Civil Code) provides that a compromise has, with respect to the parties, the same authority as res adjudicata. The compromise in the first case barred Serrano's subsequent action to annul the proceedings and recover alleged excess rentals.
• Solutio Indebiti — Article 1895 of the old Civil Code (Article 2154, new Civil Code) requires the return of a thing received without right and delivered by error. The Court held it inapplicable because the payment was made pursuant to a compromise, not by error.
• Dismissal Without Prejudice under Rule 30, Section 1 — A plaintiff may dismiss an action without prejudice before the defendant files an answer. The rule cannot be invoked where the dismissal is upon motion of the plaintiff, consented to by the defendant, and grounded on full satisfaction of the claim, because such dismissal is a compromise with res judicata effect.

• "Section 1, Rule 30, cannot be invoked in this case, because a dismissal of the action without order of the Court, which is without prejudice, is one by the plaintiff before the filing of an answer by the defendant." — The Court rejects appellant's reliance on Rule 30, Section 1, holding that the first dismissal was not the kind of dismissal without prejudice contemplated by the rule.
• "Neither are the provisions of article 1895 of the Civil Code on solutio indebiti applicable to the case, because what was received by the plaintiff and delivered by the defendant was the result of that a compromise." — The Court disposes of the restitution claim, ruling that the alleged excess payment was not an erroneous payment but part of a compromise.
• "Article 1809 of the Civil Code provides parties in interest, by giving, promising, or retaining something avoids the provocation of a suit or terminates one which has already been instituted." — The Court invokes the old Civil Code definition of compromise to characterize the dismissal of the first action.
• "Article 1816 of the Civil Code provides that 'A compromise shall have with respect to the parties, the same authority as res adjudicata; ...'" — The Court gives the compromise res judicata effect, which is the basis for affirming the dismissal of the second complaint.

• Section 1, Rule 30 — Provides for dismissal by plaintiff before answer, without prejudice. The Court held it cannot be invoked because the dismissal was upon motion of the plaintiff, consented to by the defendant, and grounded on full payment, thus a compromise.
• Article 1895, old Civil Code (Article 2154, new Civil Code) — Requires return of a thing received without right and delivered by error. Held inapplicable because the payment was the result of a compromise.
• Article 1809, old Civil Code (Article 2028, new Civil Code) — Defines compromise as a contract whereby parties in interest, by giving, promising, or retaining something, avoid the provocation of a suit or terminate one already instituted. Applied to the dismissal of the first action.
• Article 1816, old Civil Code (Article 2037, new Civil Code) — Provides that a compromise has, with respect to the parties, the same authority as res adjudicata. Applied to bar the second action.

Chief Justice Paras; Justices Pablo, Bengzon, Tuason, Montemayor, Reyes, Jugo, Bautista Angelo, and Labrador.