CivPro Digest - 3 February

CIVIL PROCEDURE DIGEST
VILLEGAS vs. CA Sec. 16, Rule 3
G.R. No. 82562; G.R. No. 82592 (April 11, 1997)
FACTS:
This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza against
then Manila Mayor Antonio J. Villegas, who allegedly publicly imputed to him acts constituting
violations of the Anti-Graft and Corrupt Practices Act. He did this on several occasions (a) a
speech before the Lions Club (b) public statements in Manila which was coupled with a radio-
TV interview; and (c) a public statement shortly prior to his appearance before the Senate
Committee on Public Works.
The Committee, however, observed that all the allegations in the complaint were based mainly
on the uncorroborated testimony of a certain Pedro U. Fernandez, whose credibility turned out to
be highly questionable. Villegas also failed to submit the original copies of his documentary
evidence. Thus, after thorough investigation, Raquiza was cleared of all charges by the
Committee.
An information for libel was filed by the Office of the City Fiscal of Manila with the then Court of
First Instance of Manila against Villegas. After losing in the 1971 elections, Villegas left for the
United States where he stayed until his death. Nevertheless, trial proceeded in absentia, by the
time of his death in 1984, the prosecution had already rested its case. Two months after notice
of his death, the court issued an order dismissing the criminal aspect of the case but reserving
the right to resolve its civil aspect.
Judge Obien rendered judgment dismissing the criminal aspect of the case but reserved the
right to resolve the civil aspect by ordering the estate of Villegas to pay plaintiff.
The heirs of Villegas (the Heirs), through their fathers counsel, Atty. Norberto Quisumbing,
appealed the decision on these three main ground:
Whether the trial court, three months after notice of the death of the accused and before his
counsel could file a memorandum in his behalf, could validly render judgment in the case?
Whether, in the absence of formal substitution of parties, the trial court could validly render
judgment against the heirs and estate of a deceased accused?
The Court of Appeals rendered a decision affirming the trial courts judgment.
ISSUE:
Did the death of the accused before final judgment extinguish his civil liability?
HELD: NO
Death of the accused pending appeal of his conviction extinguishes his criminal liability as well
as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, the
death of the accused prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore.
Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the
same may also be predicated on a source of obligation other than delict.
Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor
may be pursued but only by way of filing a separate civil action
The source of Villegas civil liability in the present case is the felonious act of libel he allegedly
committed. Yet, this act could also be deemed a quasi-delict within the purview of Article 33 in
relation to Article 1157 of the Civil Code.
The rule on substitution by heirs is not a matter of jurisdiction but a requirement of due process.
The rule on substitution was crafted to protect every partys right to due process. It was
designed to ensure that the deceased party would continue to be properly represented in the
suit through his heirs or the duly appointed legal representative of the estate.
VDA. DELA CRUZ vs. CA, G.R. No. L-41107 (February 28, 1979)
FACTS:
It appears that plaintiffs (herein petitioners) filed an action for ejectment and collection of unpaid
rentals against Felix Jose and 114 other tenants. Felix Jose, a tenant, refused to vacate the
landholding and to pay his obligation. In a join answer filed through their counsel, Atty. Fausto G.
Cabotaje, defendant Felix Jose and his 114 co-defendants denied the material averments of the
complaint, alleging payment of all the rentals of their respective landholdings. Thereafter, trial
was commenced. However, as found by the Court of Appeals, before termination thereof, Felix
Jose died. It appears that Joses demise, no substitution of defendant was effected. The trial
court rendered judgment against Felix Jose together with the other defendants holding him liable
to plaintiffs.
To satisfy the award of damages under, the decision of the Court of Agrarian Relations, the
conjugal properties of the deceased Felix Jose and his wife were sold at public auction. A
certificate of sale dated July 31, 1969 was later issued in favor of plaintiff Amanda L. Vda. De
dela Cruz as highest bidder.
The heirs of the deceased defendant, through their new counsel, Atty. Juan V. Landingin, filed a
motion to substitute the deceased and to set aside as null and void the decisions, orders, writ of
execution and sale at public auction made and entered against the latter.
TC allowed the substitution but denied to set aside the decision. The substituted defendants
then appealed to the Court of Appeals, raising mainly the question of the validity of the lower
courts decision on the ground that despite its awareness of the death of said defendant, no
substitution was ordered. CA found the appeal meritorious because they found that the
defendant Felix Jose died before the termination of the trial contrary to petitioners claim that
when said defendant died, the trial was already terminated and hence, there was no denial of
due process.
HELD:
SC held that no legal representative was ever summoned to appear in court; that no legal
representative appeared to be substituted; and that plaintiffs did not procure the appointment of
such legal representatives. As a result, the continuance of a proceeding during the pendency
of which a party thereto dies, without such having been validly substituted in accordance with
the rules, amounts to lack of jurisdiction.
The need therefore for substitution is based on the right of a party to due process. Summing up
then the previous ruling of this Court in the afore-cited cases, and noting that Rule 3, Sec. 17,
Revised Rules of Court uses the word shall, one infers that substitution is indeed a mandatory
requirement in actions surviving the deceased. It has been held that in statutes relating to
procedure . . . every act which is jurisdictional, or of the essence of the proceedings, or is
prescribed for the protection or benefit of the party affected, is mandatory.
In any case, substitution should be ordered even after judgment has been rendered since
proceedings may still be taken as was done in this caselike an execution; and legal
representative must appear to protect the interests of the deceased and in all such proceeding
HEIRS OF MAXIMO REGOSO vs. CA G.R. No. 91879 (July 6, 1992)
***No notice of death of party and the court has no knowledge, the proceeds are not set
aside)
FACTS:
The heirs of Maximo Regoso seek a review of the resolution. The case involves an action for
judicial partition of property with accounting and damages, which was filed by Belen Cruz-
Regoso against her husband, Maximo Regoso. The trial court rendered a decision, in favor of
the plaintiff and against the defendant.
Regoso died on January 17, 1985 after the case had been submitted for decision, but he was
not substituted as defendant by his heirs because, apparently, the trial court was not informed of
his death until the decision had been promulgated on November 14, 1988. Regosos counsel,
Attorney Adriano Javier, Sr., filed a notice of appeal which the trial court approved.
The plaintiff, Belen Cruz-Regoso, through counsel, moved to dismiss the appeal on the ground
that the deceased defendant ceased to have legal personality and that Attorney Javiers
authority to represent him was terminated or expired upon his demise, hence, the notice of
appeal filed by said counsel was invalid, a worthless piece of paper. The Court of Appeals
issued a resolution dismissing the appeal.
HELD:
Under the rules, it is the duty of the attorney for the deceased defendant to inform the court of
his clients death and to furnish the court with the names and residences of the executor,
administrator, or legal representative of the deceased.
The rules operate on the presumption that the attorney for the deceased party is in a better
position than the attorney for the adverse party to know about the death of his client and to
inform the court of the names and addresses of his legal representative or representatives.
In the case at bar, no such notice of death, nor a motion for substitution of the deceased
defendant, was ever made. Hence, the trial court could not be expected to know or take judicial
notice of the death of defendant, Maximo Regoso, without the proper manifestation from his
counse.
The supervening death of the defendant, Maximo Regoso, did not extinguish his wifes action for
partition of their conjugal assets, for it is an action that survives. The trial of the case on the
merits was already finished before the defendant died. Since it was not informed about that
event, the trial court may not be faulted for proceeding to render judgment without ordering the
substitution of the deceased defendant. Its judgment is valid and binding upon the defendants
legal representatives or successors-in- interest, insofar as his interest in the property subject of
the action is concerned.
Thus, a judgment in an ejectment case may be enforced not only against defendants therein but
also against the members of their family, their relatives, or privies who derived their right of
possession from the defendants
EVANGELISTA vs. SANTOS Sec. 2, Rule 4
86 Phil. 387, 393 (1950)
FACTS:
The complaint alleges that plaintiffs are minority stockholders of the Vitali Lumber Company,
Inc., a Philippine corporation organized for the exploitation of a lumber concession, that
defendant holds more than 50 per cent of the stocks of said corporation and also is and always
has been the president, manager, and treasurer thereof; and that defendant, in such triple
capacity, through fault, neglect, and abandonment allowed its lumber concession to lapse thus
causing the complete ruin of the corporation and total depreciation of its stocks.
The complaint does not give plaintiffs' residence, but, for purposes of venue, alleges that
defendant resides at 2112 Dewey Boulevard, corner Libertad Street, Pasay, province of Rizal.
Having been served with summons at that place, defendant filed a motion for the dismissal of
the complaint on the ground of improper venue and also on the ground that the complaint did
not state a cause of action in favor of plaintiffs.
In support of the objection to the venue, the motion, which is under oath, states that defendant is
a resident of Iloilo City and not of Pasay, and at the hearing of the motion defendant also
presented further affidavit to the effect that while he has a house in Pasay, where members of
his family who are studying in Manila live and where he himself is sojourning for the purpose of
attending to his interests in Manila, yet he has his permanent residence in the City of Iloilo
where he is registered as a voter for election purposes and has been paying his residence
certificate.
After hearing, the lower court rendered its order, granting the motion for dismissal upon the two
grounds alleged by defendant, and reconsideration of this order having been denied, plaintiffs
have appealed to this Court.
HELD:
It is important to remember that the laying of the venue of an action is not left to plaintiff's
caprice. The matter is regulated by the Rules of Court.
And in actions like the present, which is one in personam, the regulation applicable is that
contained in section 1 of Rule 5 : "Civil actions in Courts of First Instance may be commenced
and tried where the defendant or any of the defendant resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the plaintiff."
Section 1 of Rule 5 may seem, at first blush, to authorize the laying of the venue in the province
where the defendant "may be found." But this phrase has already been held to have a limited
application. It applies only to cases where defendant has no residence in the Philippine Islands.
The fact that defendant was sojourning in Pasay at the time he was served with summons does
not make him a resident of that place f or purposes of venue. Residence is "the permanent
home, the place to which, whenever absent for business or pleasure, one intends to return. The
term residence was interpreted to mean the permanent home, the place of which, whenever
absent for business or pleasure, one intends to return. In short residence was held to be
synonymous with domicile.
RAYMOND vs. CA
166 SCRA 50, 54 (1988)
FACTS:
A complaint for damages was filed with the Regional Trial Court of Iloilo by Santiago Bitera
against Carlos Bell Raymond and Agustin Alba. The latter moved to dismiss the action on the
ground of improper venue. They argued that although Biteras complaint gives his address as
240-C Jalandoni Street, Iloilo City, he is, and for many years has been actually residing at the
so-called UPSUMCO.
The Trial Court however denied their motion to dismiss. They then filed a special civil action of
certiorari and prohibition with the Court of Appeals. But, as above stated, they fared no better in
that court.
HELD:
According to Section 2, Rule 4 of the Rules of Court, personal actions, such as Biteras, may be
commenced and tried where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff. The term, where
a person resides, or residence, may be understood as synonymous with domicile: as
referring to a persons permanent home, the place to which, whenever absent for business or
pleasure, one intends to return,
The term may also be taken in another sense, and it is this which is germane to the
determination of venue, as meaning a persons actual residence, different and distinct from his
permanent one, or domicile, where he was born and reared. Thus this Court has held that venue
was improperly laid in a case where the complaint was filed in the Court of First Instance of
Ilocos Norte by the plaintiff who was born and reared in that province, but whose actual
residence at time of suit was admittedly at Quezon City.
In other words, resides should be viewed or understood in its popular sense, meaning the
personal, actual or physical habitation of a person, actual residence or place of abode. It
signifies physical presence in a place and actual stay thereat.
It therefore clearly appears that both the respondent Judge and the Court of Appeals, the former
in the first instance and the latter on review, committed reversible legal error, if not grave abuse
of discretion, in not dismissing Biteras action despite the fact that its venue had clearly been
improperly laid, and had been seasonably objected to on that ground by petitioners in a motion
to dismiss.
SALUDO vs. AMEX
G.R. No. 159507 (April 19, 2006)

FACTS:
Aniceto G. Saludo, Jr. filed a complaint for damages against the American
Express International, Inc. (AMEX)The complaint alleged, inter alia, that plaintiff (hereinpetitioner
Saludo) is a Filipino citizen, of legal age, and a member of the House of Representatives and a
resident of Ichon, Macrohon, Southern Leyte.
On the other hand, defendant (herein respondent AMEX, Inc.) is a corporation doing business
in the Philippines and engaged in providing credit and other credit facilities and allied services
with office address at 4th floor, ACE Building, Rada Street, Makati.
The other defendants (herein respondents Fish and Mascrinas) are officers of respondent
AMEX, and may be served with summons and other court processes at their office address.
The complaints cause of action stemmed from the alleged wrongful dishonor of petitioner
Saludos AMEX credit card and the supplementary card issued to his daughter. The first
dishonor happened when petitioner Saludos daughter used her supplementary credit card to
pay her purchases in the United States. The second dishonor occurred when petitioner Saludo
used his principal credit card to pay his account at the Hotel Okawa in Tokyo.
The dishonor of these AMEX credit cards were allegedly unjustified as they resulted from
respondents unilateral act of suspending petitioner Saludos account for his failure to pay its
balance.
In their answer, respondents specifically denied the allegations in the complaint. Further, they
raised the affirmative defenses of lack of cause of action and improper venue. On the latter,
respondents averred that the complaint should be dismissed on the ground that venue was
improperly laid because none of the parties was a resident of Leyte. They alleged that
respondents were not residents of Southern Leyte. Petitioner Saludo was not allegedly a
resident thereof as evidenced by the fact that his community tax certificate, which was
presented when he executed the complaints verification and certification of non-forum
shopping, respondents pointed out that petitioner Saludos complaint was prepared in Pasay
City and signed by a lawyer of the said city.
He asserted that any allegation refuting his residency in Southern Leyte was baseless and
unfounded considering that he was the congressman of the lone district thereof at the time of
the filing of his complaint.
The court a quo denied the affirmative defenses interposed by respondents. It found the
allegations of the complaint sufficient to constitute a cause of action against respondents. The
court a quo likewise denied respondents affirmative defense that venue was improperly laid
saying: [T]he fact alone that the plaintiff at the time he filed the complaint was and still is, the
incumbent Congressman is enough to dispell any and all doubts about his actual residence.
The appellate court rendered the assailed decision granting respondents petition for certiorari
as it found that venue was improperly laid. The appellate court explained that the action filed by
petitioner Saludo against respondents is governed by Section 2, Rule 4 of the Rules of Court.
The said rule on venue of personal actions basically provides that personal actions may be
commenced and tried where plaintiff or any of the principal plaintiffs resides, or where defendant
or any of the principal defendants resides, at the election of plaintiff.
Venue was improperly laid in the court a quo, according to the appellate court, because
not one of the parties was a resident of Southern Leyte. Specifically, it declared that petitioner
Saludo was not a resident thereof. The appellate court pronounced that, for purposes of venue,
the residence of a person is his personal, actual or physical habitation, or his actual residence or
place of abode, which may not necessarily be his legal residence or domicile provided he
resides therein with continuity and consistency.
ISSUE:
Whether the appellate court committed reversible error in holding that venue was improperly laid
in the court a quo in Civil Case No. R-3172 because not one of the parties, including petitioner
Saludo, as plaintiff therein, was a resident of Southern Leyte at the time of filing of the
complaint?
HELD:
Petitioner Saludos complaint for damages against respondents before the court a quo is a
personal action. As such, it is governed by Section 2, Rule 4 of the Rules of Courts which reads:
The choice of venue for personal actions cognizable by the RTC is given to plaintiff but not to
plaintiffs caprice because the matter is regulated by the Rules of Court. The rule on venue, like
other procedural rules, is designed to insure a just and orderly administration of justice, or the
impartial and evenhanded determination of every action and proceeding. The option of plaintiff
in personal actions cognizable by the RTC is either the place where defendant resides or may
be found, or the place where plaintiff resides. If plaintiff opts for the latter, he is limited to that
place.
Following this rule, petitioner Saludo, as plaintiff, had opted to file his complaint with the court a
quo which is in Maasin City, Southern Leyte.
The appellate court committed reversible error in finding that petitioner Saludo was not a
resident of Southern Leyte at the time of the filing of his complaint, and consequently holding
that venue was improperly laid in the court a quo.
There is no dispute that petitioner Saludo was the congressman or the representative of the lone
district of Southern Leyte at the time of filing of his complaint with the court a quo.
For purposes of venue, the less technical definition of residence is adopted. Thus, it is
understood to mean as the personal, actual or physical habitation of a person, actual residence
or place of abode. It signifies physical presence in a place and actual stay thereat. Residence,
not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a
given place, while domicile requires bodily presence in that place and also an intention to make
it ones domicile.
Since petitioner Saludo, as congressman or the lone representative of the district of Southern
Leyte, had his residence (or domicile) therein as the term is construed in relation to election
laws, necessarily, he is also deemed to have had his residence therein for purposes of venue for
filing personal actions.
In this popular sense, the term means merely residence, that is, personal residence, not legal
residence or domicile. Residence simply requires bodily presence as an inhabitant in a given
place, while domicile requires bodily presence in that place and also an intention to make it
ones domicile.
Since petitioner Saludo, as congressman or the lone representative of the district of Southern
Leyte, had his residence (or domicile) therein as the term is construed in relation to election
laws, necessarily, he is also deemed to have had his residence therein for purposes of venue for
filing personal actions. This is because residence is not domicile, but domicile is residence
coupled with the intention to remain for an unlimited time.
The fact then that petitioner Saludos community tax certificate was issued at Pasay City is of no
moment because granting arguendo that he could be considered a resident therein, the same
does not preclude his having a residence in Southern Leyte for purposes of venue. A man can
have but one domicile for one and the same purpose at any time, but he may have numerous
places of residence.
YOUNG AUTO SUPPLY vs. CA
223 SCRA 670 (1993)
FACTS:
Young Auto Supply Co. Inc. (YASCO) represented by Nemesio Garcia, its president, Nelson
Garcia and Vicente Sy, sold all of their shares of stock in Consolidated Marketing &
Development Corporation (CMDC) to Roxas. The purchase price was P8,000,000.00 payable as
follows: a downpayment of P4,000,000.00 and the balance of P4,000,000.00 in four postdated
checks of P1,000,000.00 each.
Roxas took full control of the four markets of CMDC. However, the vendors held on to the stock
certificates of CMDC as security pending full payment of the balance of the purchase price.
The first check of P4,000,000.00, representing the downpayment, was honored by the drawee
bank but the four other checks representing the balance of P4,000,000.00 were dishonored.
Subsequently, Nelson Garcia and Vicente Sy assigned all their rights and title to the proceeds of
the sale of the CMDC shares to Nemesio Garcia.
Petitioners filed a complaint against Roxas in the Regional Trial Court, Branch 11, Cebu City,
praying that Roxas be ordered to pay petitioners.
Roxas filed two motions for extension of time to submit his answer. But despite said motion, he
failed to do so causing petitioners to file a motion to have him declared in default. Roxas then
filed, through a new counsel, a third motion for extension of time to submit a responsive
pleading.
Roxas filed a motion to dismiss on the grounds that:
1. The complaint did not state a cause of action due to non-joinder of indispensable parties;
2. The claim or demand set forth in the complaint had been waived, abandoned or otherwise
extinguished; and
3. The venue was improperly laid
The Court of Appeals sustained the findings of the trial court with regard to the first two grounds
raised in the motion to dismiss but ordered the dismissal of the complaint on the ground of
improper venue
HELD:
In holding that the venue was improperly laid in Cebu City, the Court of Appeals relied on the
address of YASCO, as appearing in the Deed of Sale. This was the same address written on
YASCOs letters and several commercial documents in the possession of Roxas
In the case of Garcia, the Court of Appeals said that he gave Pasay City as his address in three
letters which he sent to Roxas brothers and sisters
In the Regional Trial Courts, all personal actions are commenced and tried in the province or city
where the defendant or any of the defendants resides or may be found, or where the plaintiff or
any of the plaintiffs resides, at the election of the plaintiff
There are two plaintiffs in the case at bench: a natural person and a domestic corporation. Both
plaintiffs aver in their complaint that they are residents of Cebu City
A corporation has no residence in the same sense in which this term is applied to a natural
person. But for practical purposes, a corporation is in a metaphysical sense a resident of the
place where its principal office is located as stated in the articles of incorporation
The Corporation Code precisely requires each corporation to specify in its articles of
incorporation the place where the principal office of the corporation is to be located which must
be within the Philippines (Sec. 14 [3]). The purpose of this requirement is to fix the residence of
a corporation in a definite place, instead of allowing it to be ambulatory.
The Court ruled that to allow an action to be instituted in any place where the corporation has
branch offices, would create confusion and work untold inconvenience to said entity. By the
same token, a corporation cannot be allowed to file personal actions in a place other than its
principal place of business unless such a place is also the residence of a co-plaintiff or a
defendant.
With the finding that the residence of YASCO for purposes of venue is in Cebu City, where its
principal place of business is located, it becomes unnecessary to decide whether Garcia is also
a resident of Cebu City and whether Roxas was in estoppel from questioning the choice of Cebu
City as the venue.
La farge cement v. CCC
Facts:
Petitioner Lafarge Cement Philippines (Lafarge) agreed to purchase the cement
business of Respondent Continental Cement Corporation (CCC). Both parties entered into a
sale of Purchase and Agreement and were well aware that Continental had a case pending with
the Supreme Court. The case was docketed as G.R. No. 119712 entitled Asset Privatization
Trust (APT) v. CA and CCC. The parties, under the said agreement, allegedly agreed to retain
from the purchase price a portion of the contract price to be deposited for payment to APT.
Petitioners allegedly refused to apply the sum to the payment to APT. Despite the
subsequent finality of the Decision in G.R. No. 119712 in favor of the latter and the repeated
instructions of Respondent Continental.
Continental filed a case against Lafarge stating that petitioner be directed to pay the
APT Retained Amount referred in Clause 2 of the SPA. Petitioners moved to dismiss the
complaint on the ground of forum shopping.
Petitioners alleged that CCC, through Lim and Mariano had filed the baseless
Complaint and procured the Writ of Attachment in bad faith. Relying on this Courts ruling in the
case of Sapugay v. CA. Petitoners prayed that both Lim and Mariano be held jointly and
solidarily liable with Respondent CCC
RTC dismissed petitioners counterclaim because it was not compulsory, the cited ruling
was not applicable and petitioners answer with counterclaims violated procedural rules on the
proper joinder of causes of action.
Issue + Ruling:
1. Whether Continental has no personality to move to dismiss petitioners

compulsory counterclaims on Respondents Lim and Marianos behalf. YES
Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil Procedure as any
claim which a defending party may have against an opposing party. They are generally allowed
in order to avoid multiplicity of suits and to facilitate the disposition of the whole controversy in a
single action, such that the defendants demand may be adjudged by a counterclaim rather than
by an independent suit. The only limitations to this principles are: (1) that the court should have
jurisdiction over the subject matter of the counterclaim and (2) that it could acquire jurisdiction
over third parties whose presence is essential for its adjudication.
A counterclaim is either permissive or compulsory. It is permissive if it does not arise out
of or is not necessarily connected with the subject matter of the opposing partys claim. A
permissive counterclaim is essentially an independent claim that may be file separately in
another case.
A counterclaim is compulsory when its object arises out of or is necessarily connected
with the transaction or occurrence constituting the subject matter of the opposing partys claim
and does not require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction.
The court used the compelling test of compulsoriness, which characterizes a
counterclaim as compulsory if there should exist a logical relationship between the main claim
and the counterclaim, and found out that the recovery of petitioners counterclaims is contingent
upon the case filed by respondents, thus conducting separate trials thereon will result in a
substantial duplication of the time and effort of the court and the parties. Since the counterclaim
for damages is compulsory, it must be set up in the same action.
2. Whether or not the ruling in Sapugay was not applicable. NO, it is applicable in the
case
The court disposed the issue as follows: A counterclaim is defined as any claim for
money or other relief which a defending party may have against an opposing party. However, the
general rule that a defendant cannot by a counterclaim bring into the action any claim against
persons other than the plaintiff admits of an exception under Section 14, Rule 6which provides
that 'when the presence of parties other than those to the original action is required for the
granting of complete relief in the determination of a counterclaim or cross-claim, the court shall
order them to be brought in as defendants, if jurisdiction over them can be obtained.' The
inclusion, therefore, of Cardenas in petitioners' counterclaim is sanctioned by the rules."
3. Whether or not the petitioners answer with counterclaims violated the procedural
rules on joinder of claims
In joining Lim and Mariano in the compulsory counterclaim, petitioners are being
consistent with the solidary nature of the liability alleged therein. The procedural rules are
founded on practicality and convenience. They are meant to discourage duplicity and multiplicity
of suits.
Quintanilla v. CA and RCBC

GR No. 101747. 24 September 1997.
FACTS:
Quintanilla executed a REMortage in favor of RCBC to secure a P45,000 credit line.
o Only P25,000 was availed of and this was secured by a promissory note with a
38% p.a. interest.
She then secured two P100,000 loans, both secured by PNs.
RCBC, upon a Letter of Credit, received $10,638.15 from Quintanillas buyer.
o This amount was credited to her account and was subsequently debited by
RCBC in the amount of P125,000 for her loans.
She made another shipment but this time, RCBC was refused payment by the foreign
buyers bank.
o Instead, RCBC was asked to reimburse them $20,721.70, which RCBC gave.
o RCBC then reverted the loans and debit entries on her account (supposedly paid
already) and demanded payment of the whole amount, including the REMs
P25,000.
After failure to comply, RCBC foreclosed for P25,000 AND P500,994.39 (subsequent
loans made), alleging that the latter amount was also secured under the REM.
Quintanilla asserted that the REM was only for the P45,000 and that she had already
paid her other unsecured loans.
o RCBC denied; RTC in favor of RCBC but only for P25,000.
o CA affirmed RTC but granted counterclaim of RCBC.
o Quintanilla moved for partial reconsideration on the basis that counterclaim,
which was permissive in nature, was not within RTCs jurisdiction yet because
docket fees were not yet paid CA denied but asked RCBC to pay fees.
ISSUES + RULING:
Is RCBCs counterclaim permissive or compulsory in nature? COMPULSORY.

Its nature relies on the REM provision which provides:
That for and in consideration of certain loans overdrafts and other

credit accommodations obtained from the mortgagee by the same
and those that hereafter be obtained, the principal of all of which is

hereby fixed at forty-five Thousand Pesos (P45,000.00), Philippine
Currency, as well as those that the mortgagee may extend to the
mortgagor including interest and expenses of any other obligation
owing to the mortgagee, whether direct or indirect, principal or
secondary, as appears in the accounts, books and records of the
mortgagee, the mortgagor does hereby transfer and convey by
way of mortgage unto the mortgagee x x x
An action to foreclose a mortgage is usually limited to the amount mentioned in the

mortgage, but where on the four corners of the mortgage contracts, as in this case, the
intent of the contracting parties is manifest that the mortgage property shall also answer
for future loans or advancements, then the same is not improper as it is valid and binding
between the parties.
o Intent to secure future loans is evident in the REM contract.
The compelling test of compulsoriness requires a logical relationship between the
claim and counterclaim, that is, where conducting separate trials of the respective claims
of the parties would entail a substantial duplication
of effort and time by the parties and the court.
o Since both claims are merely offshoots of the same basic controversy, therefore,
RCBCs counterclaim for such other advances cannot but be considered as
compulsory in nature.
o Moreover, RCBCs counterclaim does not require for its adjudication the presence
of third parties upon whom the court cannot acquire jurisdiction and the court has
jurisdiction to entertain the claim.
RCBCs counterclaim being compulsory in nature, there is no need to pay docket fees
therefor.
Even granting that it is permissive, Quintanilla is estopped from challenging RTCs
jurisdiction because it was only raised during appeal.
o While jurisdiction may be assailed at any stage, a partys active participation in
the proceedings before a court without jurisdiction will estop such party from
assailing such lack of it.
DISPOSITION: Affirmed.
Evangeline Alday v. FGU Insurance

GR No. 138822; 23 January 2001
Facts:
- FGU filed a complaint in RTC alleging Alday owed it P114,650 representing unliquidated cash
advances and unremitted premiums as insurance agent. FGU also prayed for exemplary
damages, attys fees, and costs of suit.
- Aldays counterclaim asserted that she be paid P104,893 representing commissions, bonuses,
and accumulated premium reserves. Alday also prayed for moral and exemplary damages,
attys fees, litigation expenses.
- FGU later filed a motion to strike out answer w/ compulsory counterclaim and to declare
defendant in default because Aldays answer was filed out of time. RTC denied the motion.
- Later FGU filed a motion to dismiss the counterclaim contending that no jurisdiction was
acquired due to non-payment of docket fees by Alday.
- Alday asked RTC to exempt her from docket fees since it is compulsory and FGU should be in
default for failing to answer the counterclaim.
- RTC granted FGUs motion to dismiss finding the counterclaim to be merely permissive and
failure to pay docket fees prevented court from acquiring jurisdiction.
- CA sustained RTC stating that FGUs cause of action is not for specific performance or
enforcement of the Special Agents Contract rather it is for the payment of the cash
accountabilities by Alday. CA said that it is an established rule that unenforceable contracts

cannot be sued upon or enforce unless ratified.
- To support the Compulsory Counterclaim Alday alleged that FGU has unjustifiably failed to remit
to her despite repeated demands in gross violation of their contract.
Issue:
Whether the counterclaim of Alday is compulsory in nature. No.
Ruling:
A compulsory counterclaim is one which arises out of the transaction constituting the subject
matter of the opposing partys claim and does not require for its adjudication the presence of 3 rd
parties of whom the court cannot acquire jurisdiction.
Test whether counterclaim is compulsory or permissive:

a) Are the issues of fact and law raised by the claim and counterclaim largely the same?
b) Would res judicata bar a subsequent suit on defendants claim absent the compulsory
counterclaim rule?
c) Will substantially the same evidence support or refute claim and counterclaim?
d) Is there any logical relation between claim and counterclaim?
Another test is the compelling test of compulsoriness wherein conducting a separate trial of
the claims would entail a substantial duplication of effort and time by the parties and court.
The evidence required to prove Aldays claims differs from that needed to establish FGUs
demands for the recovery of cash accountabilities. Alday admitted that FGUs cause of
action, unlike her own, was not based upon the Special Agents Contract. However, Aldays
claims for damages, allegedly suffered as a result of the filing by FGU of its complaint, are
compulsory. There is no need to pay docket fees for compulsory counterclaim but is needed
to acquired jurisdiction for the permissive counterclaim
Spouses Meliton v. CA and Ziga (1992)
FACTS:
Ziga, in her own behalf and as atty-in-fact of Alex Ziga and Ziga-Siy, filed a complaint
with RTC Naga City against pet Meliton for rescission of contract of lease over a parcel
of land
o Grounds:
Meliton;s failure, as lessee, to deposit the 1month rental and pay the
monthly rentals due
Her construction of a concrete wall and roof on the site of demolished
house on the leased premises without lessors consent
Unauthorized sublease to a third party

Meliton filed an answer denying the material averments thereof and setting up 3
counterclaims for recovery of the value of kitchenette, improvements introduced therein,
and of the furniture and fixtures purchased
TC dismissed the complaint
o Counterclaims were also dismissed for non-payment of docket fees
Meliton filed a complaint for recovery of the same amounts involved in their
counterclaims
Ziga filed a MTD complaint on the ground that the cause of action therein was barred by
prior judgment = denied
o MR = denied
Hence, petition for certiorari
CA granted the petition for certiorari
o That Zigas counterclaim was a compulsory counterclaim, it having arisen out of
or being necessarily connected with the transaction or occurrence of the subject
matter of the Melitons complaint
o That such dismissal barred the prosecution of their counterclaim
Hence, instant appeal by certiorari (prayed for annulment of CA decision)
ISSUES + RULING:
WON counterclaims are compulsory in nature. YES

Considering Section 4 of Rule 9 of the Rules of Court, a counterclaim is compulsory
if:
o it arises out of, or is necessarily connected with, the transaction or occurrence
which is the subject matter of the opposing party's claim;
o it does not require for its adjudication the presence of third parties of whom the
court cannot acquire jurisdiction; and
o the court has jurisdiction to entertain the claim.
The one compelling test of compulsoriness is the logical relationship between the
claim alleged in the complaint and that in the counterclaim
o Thus, a counterclaim is logically related to the opposing party's claim where, as
already stated, separate trials of each of their respective claims would involve a
substantial duplication of effort and time by the parties and the courts.
o Where multiple claims involve many of the same factual issues, or where they are
offshoots of the same basic controversy between the parties, fairness and
considerations of convenience and of economy require that the counterclaimant
be permitted to maintain his cause of action.
In the civil case file by Ziga, all the requisites of a compulsory counterclaim are present
o Private respondent's complaint was for rescission of the contract of lease due to
Lydia Meliton's breach of her obligations under the said contract. On the other
hand, petitioner's counterclaims were for damages for unlawful demolition of the
improvements she introduced pursuant to her leasehold occupancy of the
premises, as well as for the filing of that civil suit which is contended to be clearly
unfounded.
o Both claims arose from the same contract of lease
o The 2 actions are but the consequences of the reciprocal obligations imposed by
law upon and assumed by the parties under their lease contract
o They are offshoots of the same basic controversy between the parties, that is, the
right of either to the possession of the property.
WON Melitons are already barred from asserting the same claims in another action. NO; not
barred
Rule 9 Sec 4 providing that a counterclaim not set up shall be barred if it arises out of a
transaction connected is inapplicable
It cannot be said that their failed to duly interpose their causes of action as counterclaims
in the previous action.
o Petitioners' claims were duly set up as counterclaims in the prior case but the
same were dismissed by reason of non-payment of docket fees.
The ruling of respondent Court of Appeals to the effect that the failure of petitioners to
appeal or to move for reconsideration of the said order of dismissal bars them from
asserting their claims in another action cannot be upheld.
Where a compulsory counterclaim is made the subject of a separate suit, it may be
abated upon a plea of another action pendant or dismissed on the ground of res judicata
o But both defenses are unavailing to resps
o The present action cannot be dismissed on either ground
o Petitioners' claims were duly set up as counterclaims in the prior case but the
same were dismissed by reason of non-payment of docket fees.
o Moreover, in the same order of dismissal of the complaint, the counterclaims of
herein petitioners were dismissed by reason of the fact that the court a quo had
not acquired jurisdiction over the same for non-payment of the docket fees
No adjudication of the case on the merits
A reading of the order of dismissal will show that the TC, in dismissing the complaint of
Ziga, did not intend to prejudice the claims of pet by barring the subsequent judicial
enforcement thereof
o In dismissing private respondent's complaint, the trial court could not but have
reserved to petitioners, as a condition for such dismissal, the right to maintain a
separate action for damages.
o Petitioners' claims for damages in the three counterclaims interposed in said

case, although in the nature of compulsory counterclaims but in light of the
aforesaid reservation in the dismissal order, are consequently independent
causes of action which can be the subject of a separate action against private
respondent.
Even assuming arguendo that the bar under the rule on compulsory counterclaims may
be invoked, the peculiar circumstances of this case irresistibly and justifiedly warrant the
relaxation of such rule.
o The failure of petitioners to seek reconsideration of or to take an appeal from the
order of dismissal of the counterclaim should not prejudice their right to file their
claims in a separate action because they were thereby made to understand and
believe that their counterclaims were merely permissive and could be the subject
of a separate and independent action.
DISPOSITION: CA decision reversed and RTC decision reinstated

Altres et al. v. Empleo et al.

Doctrine:
. The Court issued guidelines on the distinction between non-compliance with the requirement
on or submission of defective verification, and non-compliance with the requirement on or
submission of defective certification against forum shopping:
1. As to verification, non-compliance therewith or a defect therein does not necessarily
render the pleading fatally defective. The court may order its submission or correction or
act on the pleading if the attending circumstances are such that strict compliance with
the Rule may be dispensed with in order that the ends of justice may be served thereby.
2. Verification is deemed substantially complied with when one who has ample knowledge
to swear to the truth of the allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in good faith or are true and
correct.
3. As to certification against forum shopping, non-compliance therewith or a defect therein,
unlike in verification, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of substantial compliance
or presence of special circumstances or compelling reasons.
4. The certification against forum shopping must be signed by all the plaintiffs or petitioners
in a case; otherwise, those who did not sign will be dropped as parties to the case.
Under reasonable or justifiable circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a common cause of action or defense,
the signature of only one of them in the certification against forum shopping substantially
complies with the Rule.
5. Finally, the certification against forum shopping must be executed by the party-pleader,
not by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is
unable to sign, he must execute a Special Power of Attorney designating his counsel of
record to sign on his behalf.
. The Court had repeatedly clarified the distinction between a question of law and a question of
fact. A question of law exists when the doubt or controversy concerns the correct application of
law or jurisprudence to a certain set of facts or when the issue does not call for an examination
of the probative value of the evidence presented, the truth or falsehood of facts being admitted.
A question of fact, on the other hand, exists when the doubt or difference arises as to the truth
or falsehood of facts or when the query invites calibration of the whole evidence considering
mainly the credibility of the witnesses, the existence and relevance of specific surrounding
circumstances, as well as their relation to each other and to the whole, and the probability of the
situation.
Facts:
. In 2003, Iligan City mayor Franklin Quijano sent notices of numerous vacant career positions in
the city government to the Civil Service Commission (CSC).
. Petitioners and other applicants submitted their applications for the different positions where
they felt qualified.
. Toward the end of his term, Mayor Quijano issued appointments to petitioners. The
Sangguniang Panlunsod issued Resolution 04-242 requesting a suspension of action on the
processing of appointments to all vacant positions in the plantilla of the city government until the
enactment of a new budget. It also issued Resolution 04-266 in view of its stated policy against
midnight appointments and also enjoined all officers of the said Office to put off the
transmission of all appointments to the CSC.
. Respondent city accountant Empleo did not thus issue a certification as to availability of funds
for the payment of salaries and wages of petitioners.
. The CSC Field Office for Lanao del Norte and Iligan City disapproved the appointments issued
to petitioners due to lack of certification of availability of funds. Mayor Quijano appealed but the
CSC Regional Office dismissed the appeal explaining that its function in approving
appointments is only ministerial.
. Petitioners filed a petition for mandamus with the RTC of Iligan against Empleo for the issue of
certification of availability of funds. The RTC denied the petition for mandamus stating that the
city accountant cannot be compelled to issue a certification as to availability of funds as this
ministerial function pertains to the city treasurer.
. Petitioner filed a motion for reconsideration but was denied.
. Respondents moved for the dismissal of the petition assailing that the verification and
certification against forum shopping attached to the petition as defective as it bears the
signature of only 11 out of the 59 petitioners and no competent evidence of identity was
presented by the signing petitioners.
Issue+Ruling:
Whether the petition should be dismissed due to irregularities with the verification and
certification of non-forum shopping.
. The Court ruled that they have allowed the relaxation of the requirements of verification and
certification so that the ends of justice may be better served.
. The Court held that the signing of the verification by only 11 out of the 59 petitioners already
sufficiently assures the Court that the allegations in the pleading are true and correct and the
pleadings are filed in good faith.
. On the requirement of a certification of non-forum shopping, the well-settled rule is that all the
petitioners must sign the certification of non-forum shopping. The rule, however, admits of an
exception and that is when the petitioners show reasonable cause for failure to personally sign
the certification. The petitioners must be able to convince the court that the outright dismissal of
the petition would defeat the administration of justice.
(see doctrine)
Hibberd v. Rohde and McMillian

No. 8418, 9 December 1915
FACTS
According to the testimony of the defendant Rohde, McMillian was in the retail liquor business
and secured a stock of merchandise valued at P1,200 from Brand & Hibberd and sold it.
Alleging that they delivered the merchandise to him on deposit only, Brand & Hibberd filed a
complaint of estafa against McMillian. In order to protect his client, Rodhe agreed to sign a
promissory note on the condition that Brand & Hibberd would withdraw the estafa complaint.
After the execution of the note, Brand & Hibberd moved in the justice court that the estafa
complaint be dismissed and this motion was granted by the presiding justice. In the order
dismissing the complaint, the justice stated that, from the evidence introduced at the hearing he
was convinced that there was no sufficient basis for a criminal action, but that the controversy
was of a civil character.
After defaulting on the payments, the petitioners filed a suit enforcing the promissory note. Only
Rohde appeared and answered but did not enter a denial on the genuineness and the execution
of the note. He only raised the special defense of illegality of consideration. The trial court ruled
in favor of Rohde, since the consideration of the promissory note was the compromise of a
public offense.
ISSUE + RULING
Whether Rohde was barred from questioning the legality of the note due to not having
verified specific denial of the genuiness and due execution of the note.
By the admission of the genuineness and due execution of an instrument, as the term is used in
section 103 of the Code of Civil Procedure, is meant that the party whose signature it bears
admits that he signed it or that it was signed by another for him with his authority; that at the
time it was signed it was in words and figures exactly as set out in the pleading of the party
relying upon it; that the document -was delivered; and that any formal requisites required by law,
such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived by him.
Hence, such defenses as that the signature is a forgery; or that it was unauthorized, as In the
case of an agent signing for his principal, or one signing: in behalf of a partnership, or of a
corporation; or that, in the case of the latter, that the corporation was not authorized under its
charter to sign the instrument; or that the party charged signed the instrument in some other
capacity than that alleged in the pleading setting it out; or that it was never delivered; are cut off
by the admission of its genuineness and due execution.
To interpret section 103 of the Code of Civil Procedure, according to the plaintiff as to prohibit
such a defense as illegality of consideration which is clearly a defense of new matter, would pro
tanto repeal the second paragraph of Sec. 94 which permits a defendant to answer by A
statement of any new matter constituting a defense or counterclaim.
Heirs of Amparo v. Santos

Facts:
Amparo Del Rosario (plaintiff) entered into a contract with Atty. Andres Santos
(defendant) and his wife Aurora whereby the latter sold to the former 20,000 sq. m. of land
which is to be segregated from one lot.
Said lot forms part of the several lots belonging to certain Teofilo Custodio, of which lots
Attorney Santos owns interest thereof. Parties agreed that spouses Andres shall thereafter
execute a Deed of Confirmation of Sale in favor of Del Rosario as soon as the title has been
released and the subdivision plan of said Lot 1 has been approved by the Land Registration
Commissioner.
Eventually, after the release of the title and the subdivision plan of said Lot 1 approved
by the Land Registration Commissioner, the spouses failed to execute the deed and Del Rosario
claims a malicious breach of a deed of sale.
Defendant thereafter filed a motion to dismiss setting up the defenses of lack of
jurisdiction of the court over the subject of the action lack of cause of action as well as the
defense of prescription alleging that the deed of sale was only an accommodation graciously
extended out of the close friendships between the defendants and the plaintiff thus it results to
an abandonment of the demand set forth in the complaint.
Issue + Held:
Whether or not the sale is valid as to the cause or object of the contract. YES
The SC held that the execution of the Deed of Sale is valid notwithstanding the lack of
any title to the lot by the defendants at the time of the execution of the Deed of Sale in favor of
plaintiffs as there can be a sale of an expected thing.
Defendants failed to substantiate the claim that the cause of action of plaintiff has been
extinguished. And while it is true that appellants submitted a receipt signed by plaintiff, the
aforesaid receipt is no proof that Erlinda Cortez subsequently paid her debt to appellee.
Defendants claim that their P2, 000.00 debt to Erlinda Cortez had been waived or
abandoned is not also supported by any affidavit, document or writing submitted to the court. As
to their allegation that the plaintiffs claim is barred by prescription, the ruling of the trial court that
only seven years and six months of the ten-year prescription period provided under Arts. 1144
and 155 in cases of actions for specific performance of the written contract of sale had elapsed
and that the action had not yet prescribed, is in accordance with law and, therefore, the court
affirms the same.
Basilia and Gustavus Bough v. Matilde Cantiveros and Presbitera Hanopol

GR No.13300. 29 September 1919.
FACTS:
Matilde Cantiveros and her husband Jose separated.
o Basilia Hanopol, a cousin married to Gustavus Bough, lived with her and they
were both treated as her children.
o Bough induced Matilde to sign a fictitious contract of sale (Exh A) of all her
property worth P30,000 for P10,000 to Basilia, saying that Jose might contest the
separation of conjugal property.
o The contract was in due form and notarized although there was no evidence of
payment.
Basilia and Gustavus signed a deed of donation (Exh. 1) of all the property back to be
effective in case of the death of themselves and their children before the death of
Matilde, who remained in possession of the property.
Plaintiff's declarations have not been corroborated, while defendant's story has been
corroborated by reliable witnesses.
ISSUES + RULING:
Did the trial court err in allowing the defendants to present evidence tending to impugn Exhibit
A, which was not specifically denied? NO.
The genuineness and due execution of a written instrument properly pleaded shall be
deemed admitted unless the plaintiff or defendant, as the case may be, shall specifically
deny the same under oath
o "Genuineness and due execution of the instrument" means that the instrument is
not spurious, counterfeit, or of different import on its face from the one executed.
o However, failure to deny genuineness and due execution of the document does
not estop the party from controverting it by evidence of fraud, mistake,
compromise, payment, statute of limitations, estoppel, and want of consideration.
Although the defendants did not deny the genuineness and due execution of the contract
of sale under oath, the defendants could still properly set up the defenses of fraud and
want of consideration.
Did Gustavus, under guise of exposing herself to a suit by her husband regarding her property,
induce Matilde to execute document Exh. A? YES.
While the law says "public instruments are evidence of the fact which gave rise to their
execution" and are to be considered as containing all the terms of the agreement, if the
validity of the agreement is the issue, parole evidence may be introduced to establish
illegality or fraud.
o Evidence to establish illegality or fraud is expressly permitted.
o Parole evidence was properly admitted to show the illegality of the contract of
sale.
Is Matilde estopped from denying the consideration set forth in Exh 1? NO.
An invalid instrument cannot be the basis of estoppel.
Is the contract illegal? YES.

The conveyance was wrongfully induced by the grantee through imposition or
overreaching, or by false representations made by one in a confidential relation.
DISPOSITION: Affirmed.
Permanent Savings and Loan Bank vs. Mariano Velarde

GR No. 140608; 23 September 2004
Topic: Rule 7 Parts of a Pleading

Facts:
- Permanent Savings filed a complaint for sum of money in RTC against Velarde for P1M based
on a loan obtained.
- In his answer, Velarde disclaims any liability on the instrument, the receipt of the said amount of
P1M shows that the amount was received by another person. The documents relative to the
loan do not express the true intention of the parties.
- RTC dismissed the complaint.
- CA found that Permanent failed to present any evidence to prove the existence of Velardes
alleged loan obligations considering that Velarde denied Permanents allegations in its
complaint.
Issue:
1) Whether Permanent had to first establish the due execution and authenticity of the loan
documents. No.
Ruling:
1) Velardes denials do not constitute an effective specific denial contemplated by law.

Velardes allegations amount to an implied admission of the due execution and genuineness
of the promissory note. The Loan Release Sheet bears Velardes signature as borrower.
Legarda Koh v. Ongsiaco (1917)

Doctrine:
The plaintiff, after hearing the answer for the defendant, did not in writing and on oath
deny the genuineness and proper insertion of the words at the will of both parties in the
contract. Nevertheless, the defendant, in allowing proof to be presented as to whether
the said words were inserted before or after the contract was signed by the parties and
certified to before a notary public, and was to whether they were inserted with the
knowledge of the plaintiff, consented that the questions should be submitted to the court
and waived his right to claim that the phrase was inserted with the knowledge and
consent of the plaintiff lessee.
Facts:
Enrique Legarda Koh filed a Complaint, dated December 15, 1914 in the CFI of Manila
against Ongsiaco, alleging that he had leased the apartments Nos. 511 and 513 on
Calle Santo Cristo in Binondo, owned by Ongsiaco.
This lease was for a term of 1 year counting from December 1, 1913, extendible for
another year.
Notwithstanding that Koh had informed the defendant prior to December 1, 1914 that he
desired to extend the lease until December 1, 1915, the defendant seized and took
possession of the apartments, the camarin, as well as the bodega.
For this reason, Legarda Koh failed to sublease the seized locations to those he had
contracted to do so.
He claimed to have suffered damages amounting to P3K. He prayed to the court to
render judgment against Ongsiaco and to order the same to pay the amount of damages
together with costs.
On December 17, 1917, counsel for Ongsiaco, in an answer, denied each and all the
allegations contained in the complaint, and interposed that the contract stated that the
lease was extendible at the will of both parties. He prayed that the defendant be
absolved from the complaint.
After trial and introduction of evidence, the court rendered judgment in favor of Koh, and
ordered Ongsiaco to pay P1020, which is the amount of profits Koh failed to collect, and
the costs of trial. Ongsiaco moved to reopen the case.
Motion was overruled, to which an exception was entered by the defendant upon
presentation of bill of exceptions, which was approved and transmitted to the Clerk of the
SC.
Issue + Ruling:
WON Legarda Koh was entitled to the agreed extension of the term of the lease and to continue
to lease the said properties under the said contract of lease at the expiration of the term of one
year. YES. CFI affirmed.
Record shows that about the 7th or 8th of December 1914, Koh went to Ongsiacos house
and urged him to execute a new contract for the lease for another year. Ongsiaco agreed
to do so and asked Koh to return the next day and to leave with him a copy of the
contract.
Koh did leave a copy, but it was not returned to him despite numerous visits to
Ongsiacos house but the latter was always avoiding him, so that before Koh had finished
his negotiations for the renewal of the contract, the caretaker of said properties notified
the sublessee of the said apartments that payments should be made to Ongsiaco
instead of Koh.
Since Koh has no copy of the contract as he had left it with Ongsiaco, the only proof of
the said contract is the copy furnished by the defendant. Koh admitted to the
genuineness of the said contract, with the inclusion of the phrase at the will of both
parties.
The caretaker admitted to adding this phrase after the execution of the contract,
however, stating that Koh knew of such inclusion.
Lessor violated the fourth paragraph of the contract by refusing to extend the lease, and,
not withstanding that the plaintiff in his pleadings did not deny under oath the authenticity
and due insertion of the phrase in controversy, yet Ongsiaco allowed the evidence to be
presented at trial with regard as to whether the said phrase was written in the contract
before or after the document has been signed by the contracting parties and ratified by
them before the notary and as to whether they were inserted with Kohs knowledge,
consented to the questions being submitted to the court and waived his right to claim
that the said phrase was written in the contract with the actual knowledge and consent of
the plaintiff.
Republic v. Sandiganbayan
Doctrine:
. A negative pregnant is a denial pregnant with the admission of the substantial facts in the
pleading responded to which are not squarely denied, in effect an admission of the averments it
was directed at. A negative pregnant is a form of negative expression which carries with it an
affirmation or at least an implication of some kind favorable to the adverse party.
. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where
a fact is alleged with qualifying or modifying language and the words of the allegation as so
qualified or modified are literally denied, it has been held that the qualifying circumstances alone
are denied while the fact itself is admitted.
. When matters regarding which respondents claim to have no knowledge or information
sufficient to form a belief are plainly and necessarily within their knowledge, their alleged
ignorance or lack of information will not be considered a specific denial.
. The form of denial based on ignorance or lack of information must be availed of with sincerity
and in good faith, and certainly not for the purpose of confusing the adverse party as to what
allegations of the petition are really being challenged, nor should it be made for the purpose of
delay.
Facts:
. The petitioner Republic, through the PCGG, filed a petition for forfeiture before the
Sandiganbayan. The petition sought to declare the aggregate amount of US$356M deposited in
escrow in the PNB, as ill-gotten wealth.
. The petition also sought the forfeiture of US$25 million and US$5 million in treasury notes
which exceeded the Marcos couples salaries, other lawful income as well as income from
legitimately acquired property.
. Before the case was set for pre-trial, the Marcos children and then PCGG Chairman
Magtanggol Gunigundo executed a General Agreement and the Supplemental Agreements for a
global settlement of the assets of the Marcos family. The General Agreement/Supplemental
Agreements sought to identify, collate, cause the inventory of and distribute all assets presumed
to be owned by the Marcos family under the conditions contained therein.
. The Sandiganbayan conducted hearings on the motion to approve the General Agreements.
. The petitioner filed a motion for summary judgment. The respondent Marcoses filed their
opposition.
. The Sandiganbayan denied petitioners motion for summary judgment and/or judgment on the
pleadings on the ground that the motion to approve the compromise agreement took
precedence over the motion for summary judgment.
The petitioner filed a petition for certiorari.
Issue + Ruling:
Whether the allegations in the petition on the existence of the Swiss bank accounts were
specifically denied by the respondents. NO.
. The Court determined that respondent Imelda Marcos never specifically denied the existence
of the Swiss funds. Her claim that the funds involved were lawfully acquired was an
acknowledgment on her part of the existence of said deposits. This only reinforced her earlier
admission of the allegation in paragraph 23 of the petition for forfeiture regarding the existence
of the US$356 million Swiss bank deposits.
. As held in Galofa vs. Nee Bon Sing, if a defendants denial is a negative pregnant, it is
equivalent to an admission.
. Respondents denial of the allegations in the petition for forfeiture for lack of knowledge or
information sufficient to form a belief as to the truth of the allegations since respondents were
not privy to the transactions was just a pretense. Mrs. Marcos privity to the transactions was in
fact evident from her signatures on some of the vital documents attached to the petition for
forfeiture which Mrs. Marcos failed to specifically deny as required by the rules.
(see doctrine)
Phil. Advertising Counselors, Inc. vs. Revilla

No. L-31869, 8 August 1973
FACTS
In a complaint filed on June 21, 1968 by petitioner against respondent Southern Industrial
Projects, Inc. with the Court of First Instance of Rizal, it alleged that from July 1, 1962 up to
November 1, 1963, respondent corporation engaged petitioner's services in promoting and
advertising the former's products; that as of July 20, 1965, said respondent had accumulated
unpaid accounts with petitioner in the total amount of P97,952.08.
Respondent admitted its indebtedness to petitioner in the sum of P97,952.08 and undertook to
pay the same in periodic amortizations, as per its letter of August 18, 1965. Respondent
corporation made partial payments, but eventually defaulted in spite of repeated demands from
the petitioner. Plaintiff filed a complaint against the respondent corporation. However,
respondent corporation prayed for the dismissal of the complaint on the grounds that the
defendant is without sufficient knowledge or information to form a belief as to the truth,
correctness or accuracy of the allegations set forth in the plaintiffs complaint.
Trial court rendered a decision in favor of the respondent on the grounds that said answer really
failed to tender any issue and that the claims alleged in the complaint are, therefore, deemed
admitted. Upon appeal to the CA, the CA dismissed the petition. Hence, this petition.
ISSUE + RULING
Whether private respondents answer failed to tender an issue.
The rule authorizing an answer to the effect that the defendant has no knowledge or information
sufficient to form a belief as to the truth of an averment and giving such answer the effect of a
denial does not apply where the fact as to which want of knowledge is asserted is so plainly and
necessarily within the defendant's knowledge that his averment of ignorance must be palpably
untrue. A mere allegation of ignorance of the facts alleged in the complaint is insufficient to raise
an issue for the defendant must aver positively or state how it is that he is ignorant of the facts
so alleged.
In the light of these doctrinal considerations, it is apparent, on the basis of the undisputed facts
appearing from the pleadings, that private respondent was indebted to petitioner in the sum of
P89,100.03, which debt was already overdue; petitioner was, therefore, entitled to a judgment
as a matter of law.
Considering that private respondent has not shown that it has a good and substantial defense
which it may prove before the court a quo, a re-hearing of the case by the trial court would be an
exercise in futility, for, then, the issue whether private respondent's answer failed to tender an
issue will again be laid before the court; and, as We have already said, it is quite clear that the
said issue must have to be resolved in the negative.
Golofa v. Sing
Facts:
Plaintiff Apolinio Galoda filed a complaint against the Defendant Nee Bon Sing for the
recovery of possession of and to quiet title over a certain parcel of land.
The complaint alleges that, Galofa was unable to take actual possession of the property
due to an unwarranted adverse claim of rights of ownership and possession by the defendant
and/or his tenant
The defendant alleged that he denies the material averments contained in the paragraph
4 of the complaint:
4. That plaintiff however, despite the foregoing, was unable to take actual possession of the
above-described property due to an unwarranted adverse claim of rights of ownership and
possession by the defendant and/or his tenant or encargado, Abion Pantilone, alleging sale by a
certain Fe Nicolas of said property to defendant, which if true, had no right whatsoever to legally
dispose the above described property not being the owner thereof, aside from the fact that the
defendant is not allowed under the law to own and possess real properties being an alien,
pursuant to the Constitution and/or the Krivenko case;
Defendant never asserted title over the ownership to the property described to anybody,
much less to the plaintiff by virtue of any deed of conveyance executed in favor of the defendant
by one Fe Nicholas or claimed any possessory right over the said property.
Upon motion by the plaintiff that the defendants answer failed to tender an issue, lower
courts declared the plaintiff to be the owner of the property free from any cloud arising from any
assertion of adverse claim or interest on the part of the defendant, ordering the defendant to
deliver the possession of the property and pay for attorneys fees.
Issue + Ruling: Whether or not the denial of the defendant amounts to a defense. NO
Where a fact is alleged with some qualifying or modifying language and the denial is
conjunctive, a negative pregnant exits and only the qualification or modification is denied, while
the fact itself is admitted.
The SC held that where the plaintiff's allegation of his inability to take actual possession
of the parcel of land due to "an unwarranted adverse claim of rights of ownership and
possession by the defendant" was followed by an allegation of how such claim was exercised,
and the defendant's denial is as to "the material averments contained in paragraph 4 of the
complaint", conjoined with his disclaimer of dominical or possessory rights in the manner
alleged in the complaint, such denial is a negative pregnant, which is equivalent to an
admission.
A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be

ascertained whether it is the fact or only the qualification that is intended to be denied.
For having prayed for a judgment on the pleadings, plaintiff is deemed to have admitted
the truth of the defendant's denial on the alleged damages and to have rested his motion for
judgment on those allegations taken together with such of his own as are admitted in the
pleadings.
Since the defendant neither denies nor admits the material allegations about the
services of plaintiffs counsel, judgment on the pleadings is proper.
He traversed these allegations in his answer by stating that he does not possess any
knowledge or information sufficient to form a belief as to the truth of the allegations contained in
the complaint and therefore, denies the same. The defendants specific denials served no
purpose at all.
As the defendant stated that he had no real right or interest whatsoever not having been
involved in any way with any transaction affecting the title or possession of the same. Therefore,
there was no issue to be tried and the courts denial of the motion was proper.
Sps. Aznar v. Hon. Bernad and Sps. Kintanar

GR No.L-81190. 9 May 1988.
FACTS:
Sps. Kintanar filed against Sps. Aznar an action for annulment f a Sheriffs Certificate of
Sale.
o Sps. Aznar filed an answer specifically denying the allegations.
7 days later, Sps. Aznar filed a Motion For Leave to Amend Answer Or To File
Supplemental Pleading alleging that:
1. Case had not been set for trial;
2. There was no reply to their answer;
3. Admitted evidences show that Aznars are assailing mortgage contract with
respect to P60,000 and the validity of a handwritten certificate they signed.
Although Redempta Kintanar said it was dictated by them, she did not say the
statements were correct; and
4. Court had observed that, plaintiffs are assailing the documents relied upon by
the defendants in the foreclosure as not being an expression of the true intent
and agreement of the parties.
Attached to the motion was a copy of the amended answer which contained an
additional paragraph alleging, for the first time, the affirmative defense of prescription.
o Trial court denied motion based on a strict construction of the rules which provide
that defenses or objections, except the failure to state a cause of action, if not
pleaded in a motion to dismiss or in an answer, are deemed waived
o MR denied.
ISSUES + RULING:
Was the affirmative defense of prescription validly pleaded through the amended answer? YES.
GR: Affirmative defenses of prescription, when not seasonably raised in an answer or
motion to dismiss, is deemed waived
o This case, however, does not fall under the cited rule. It cannot be said that the
petitioners failed to allege the defense of prescription in their answer.
o Precisely, the amended answer is being submitted to take the place of the
original one.
Court differentiated between a supplemental answer (which was the issue of Torreda v.
Boncaros, upon which court incorrectly relied on) and an amended answer.
o Supplemental Motion: Not a pleading; does not extinguish existence of original
pleading since it only adds something.
o Amended Answer: Takes place of original pleading.
Xpn: A party may amend his pleading once as a matter of course at any time before a
responsive pleading is served or, if the pleading is one to which no responsive pleading
is permitted and the action has not been placed upon the trial calendar.
Even assuming that the petitioners had indeed failed to raise the affirmative defense of
prescription in a motion to dismiss or in an appropriate pleading and an amendment
would no longer be feasible, still prescription, if apparent on the face of the complaint,
may be favorably considered.
o Contract was 8 years ago; prescription period for declaration of nullity on the
ground of fraud is 4 years. DISPOSITION: Granted.
PNB vs. Pacific Commission House
GR No. L-22675; 28 March 1969
Topic: Rule 9, Sec. 1 Defenses and Objections Not Pleaded

Facts:
- In a case in CFI Pacific was made to pay PNB. PNB later filed a complaint against Pacific for the
revival of the judgment and recovery of the sums adjudged.
- Pacific was declared in default after service of summons.
- Trial court in its decision stated that during the presentation of evidence PNB did not introduce
any evidence as to the date of entry of the judgment. The Court cannot presume that the date
of the entry is within 10yrs prior to the date the complaint was filed. The stamp on the first
page of the complaint showed that it was filed on May 31, 1963 although it was dated March 1,
1963. It is not true, that the action was filed less than 10yrs after entry of the original judgment
which was on February 3, 1953.
Issue:
2) Whether the court may consider the defense of prescription even if the defendant failed to
raise it. No.
Ruling:
2) Defenses and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. Except if there is failure to state a cause of action or lack of jurisdiction over
the subject matter. The first exception may be alleged in a later pleading or by motion for
judgment on the pleadings or at the trial on the merits. The second exception imposes upon
the court the duty to dismiss the action.
However, the fact that PNBs own allegations shows that the action had prescribed removes
the case from the rule regarding waiver of the defense by failure to plead the same.
Ferrer v. Ericta (1978)

Doctrine:
Defense of prescription not deemed waived for failure to allege the same in an answer or
in a motion to dismiss.
Facts: (PLEASE TAKE NOTE OF DATES)

Case is originally a damage suit filed against spouses Pfleider assigned in the sala of
Judge Ericta.
It was alleged that, ON DECEMBER 31, 1970, Pfleider spouses were the owners of a
Ford pick-up, and that their 16-yr old son, without proper authority, drove the vehicle and
caused got into an accident which caused injuries to Ferrer (she was paralyzed and was
confined for more than 2 years), who was a passenger at that time.
ON JANUARY 6, 1975, she filed a complaint and prayed that she be reimbursed for the
expenses she has incurred as well as other damages.
Trial ensued and CFI rendered judgment in favor of Ferrer.
Respondents filed a Motion for Reconsideration on the grounds of prescription. They
then filed a Supplemental Motion for Reconsideration alleging that their defense of
prescription has not been waived and may be raised even at such stage of the
proceedings because on the face of the complaint, their cause of action had already
prescribed.
Petitioners filed an Opposition to the supplemental motion averring that the defense of
prescription had been waived as such is available only at any time not later than the trial
and prior to the decision.
Judge Ericta issued an order absolving defendants from liability, accepting the defense
of prescription.
Issue + Ruling:
WON the defense of prescription has been deemed waived by private respondents failure to
allege the same in their answer. NO. CFI affirmed.
As early as Chua v. Dioso, et al., this Court sustained the dismissal of a counterclaim on
the ground of prescription, although such defense was not raised in the answer of the
plaintiff. Thus, this Court held that where the answer does not take issue with the
complaint as to dates involved in the defendants claim of prescription, his failure to
specifically plead prescription in the answer does not constitute a waiver of the defense
of prescription. It was explained that the defense of prescription, even if not raised in a
motion to dismiss or in the answer, is not deemed waived unless such defense raises
issues of fact not appearing upon the pleading.
In the case of PNB v Pacific Commission House, where the action sought to revive a
judgment rendered by the CFI on February 3, 1953, it was patent from the stamp
appearing on the first page of the complaint that the complaint was actually filed on May
31, 1953, this Court sustained the dismissal of the complaint on the ground of
prescription, although such defense was not raised in the answer, overruling the
appellants invocation of Section 2 Rule 9 of the Rules of Court that defenses and
objections not pleaded either in a motion to dismiss or in the answer and deemed
waived. We held therein that the fact that the plaintiffs own allegation in the complaint or
the evidence it presented shows clearly that the actionhad prescribed removes this case
from the rule regarding waiver of the defense by failure to plead the same.
PNB v. Perez
Doctrine:
. Under Section 6, Rule 39 of the Rules of Court a judgment which was rendered more than five
years after it had become final can only be revived before it is barred by the statute of
limitations, and an action for the enforcement of judgment can only be brought within 10 years
from the time the judgment becomes final. (Articles 1144 and 1152, Civil Code).
Facts:
. On 22 March, 1961, PNB filed a complaint for revival of judgment rendered on 29 Dec., 1949
against Amando M. Perez, Gregorio Pumuntoc and Virginia de Pumuntoc pursuant to Section 6,
Rule 39 of the Rules of Court.
. It was alleged that the judgment was rendered more than 5 years ago but since then less than
10 years had elapsed and that judgment be rendered reviving the one entered on 29 December,
1949 sentencing the defendants to pay jointly and severally the outstanding balance of
P7,699.49.
. The defendants failed to file their answer and were declared in default.
. The plaintiff submitted its evidence but the Court dismissed the complaint when the case was
submitted for decision because the cause of action had already prescribed under Art. 1144 and
1152 of the Civil Code.
. Plaintiff filed a motion for reconsideration but was denied.
Issue+Ruling:
Whether the plaintiffs complaint for revival of judgment will prosper. No.
The Court held that while plaintiffs complaint alleges that the previous judgment was rendered
more than five years but less than ten years since its rendition, the very evidence of the plaintiff,
however, shows that the present action was filed after the lapse of more than 10 years.
The decision became final on 2 February 1950. The instant case was filed with this Court on 22
March 22, 1961.
Zulueta, et al. v. Pan American World Airways, Inc.

No. L-28589, 8 January 1973
FACTS
Spouses Rafael Zulueta and Telly Albert Zulueta, with their daughter boarded a PANAM plane
from Honolulu to Manila, the first leg of which was Wake Island. While on stopover, Mr. Zulueta
found the need to relieve himself and after finding the terminals comfort rooms full, he walked
down the beach to do his business. Meanwhile, the flight was called and Mr. Zuluetas absence
was noticed. Heading towards the ram, plaintiff remarked, You people almost made me miss
your flight. You have a defective announcing system and I was not paged.
Instead of allowing plaintiff to board the plane, however, the airport manager stopped plaintiff
and asked him to surrender his baggages for inspection. Refusing to comply with the order,
plaintiff was not allowed to board the plane. His wife and daughter were able to proceed but
were instructed to leave their baggages behind.
Plaintiff instituted present petition for recovery of damages against respondents for breach of
contract which was granted by the trial court. Now, both parties in this case have moved for the
reconsideration of the decision of this Court promulgated on February 29, 1972. Plaintiffs
maintain that the decision appealed from should be affirmed in toto.
And the defendants, that the complaint be dismissed or that the amount of the award be
reduced. Subsequently, they filed a petition to annul proceedings and/or to order the dismissal of
plaintiffs-appellees complaint upon the ground that appellees complaint actually seeks the
recovery of only P5,502.85 as actual damages, because, for the purpose of determining the
jurisdiction of the lower court, the unspecified sums representing items of alleged damages, may
not be considered, and that the jurisdiction of courts of first instance when the complaint in the
present case was filed on Sept. 30, 1965 was limited to cases in which the demand, exclusive
of interest, or the value of the property in controversy amounts to more than ten thousand
pesos and the mere fact that the complaint also prays for unspecified moral damages and
attorneys fees, does not bring the action within the jurisdiction of the lower court.
ISSUE + RULING
Whether the CFI had jurisdiction over the case.
YES, although the original claim involves less than the jurisdictional amount, jurisdiction can be
sustained if the counterclaim (of the compulsory type) based upon the damages allegedly
suffered by the defendant in consequence of the filing of the complaint exceeds the
jurisdictional amount.
A claim for moral damages is one not susceptible of pecuniary estimation. Article 2217 of the
Civil Code of the Philippines explicitly provides that (t)hough incapable of pecuniary
computation, moral damages may be recovered if they are the proximate result of the
defendants wrongful act or omission. Hence, (n)o proof of pecuniary loss is necessary
pursuant to article 2216 of the same Code in order that moral x x x damages may be
adjudicated. And (t)the assessment of such damages x x x is left to the discretion of the
court said article adds according to the circumstances of each case.
Appellees complaint is, therefore, within the original jurisdiction of courts of first instance, which
includes all civil actions in which the subject of the litigation is not capable of pecuniary
estimation.
Also, in its answer to plaintiffs original and amended complaints, defendant had set up a
counterclaim in the aggregate sum of P12,000, which is, also, within the original jurisdiction of
said courts, thereby curing the alleged defect if any, in plaintiffs complaint
Lastly, the defendant is estopped from impugning said jurisdiction of the court, not only because
it failed to question the jurisdiction of the trial court either in that court or in the Supreme
Court, but because of the filing of the aforementioned motion for reconsideration and seeking
the reliefs therein prayed for.

CivPro Digest - 3 February

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CIVIL PROCEDURE DIGEST

VILLEGAS vs. CA Sec. 16, Rule 3

G.R. No. 82562; G.R. No. 82592 (April 11, 1997)

HEIRS OF MAXIMO REGOSO vs. CA G.R. No. 91879 (July 6, 1992)

EVANGELISTA vs. SANTOS Sec. 2, Rule 4

86 Phil. 387, 393 (1950)

166 SCRA 50, 54 (1988)

SALUDO vs. AMEX

G.R. No. 159507 (April 19, 2006)

YOUNG AUTO SUPPLY vs. CA

223 SCRA 670 (1993)

Roxas filed a motion to dismiss on the grounds that:

3. The venue was improperly laid

La farge cement v. CCC

1. Whether Continental has no personality to move to dismiss petitioners

Quintanilla v. CA and RCBC

Is RCBCs counterclaim permissive or compulsory in nature? COMPULSORY.

That for and in consideration of certain loans overdrafts and other

and those that hereafter be obtained, the principal of all of which is

An action to foreclose a mortgage is usually limited to the amount mentioned in the

Evangeline Alday v. FGU Insurance

accountabilities by Alday. CA said that it is an established rule that unenforceable contracts

Test whether counterclaim is compulsory or permissive:

Unauthorized sublease to a third party

WON counterclaims are compulsory in nature. YES

o Petitioners' claims for damages in the three counterclaims interposed in said

DISPOSITION: CA decision reversed and RTC decision reinstated

Altres et al. v. Empleo et al.

Hibberd v. Rohde and McMillian

Heirs of Amparo v. Santos

Basilia and Gustavus Bough v. Matilde Cantiveros and Presbitera Hanopol

Is the contract illegal? YES.

Permanent Savings and Loan Bank vs. Mariano Velarde

Topic: Rule 7 Parts of a Pleading

1) Velardes denials do not constitute an effective specific denial contemplated by law.

Legarda Koh v. Ongsiaco (1917)

Phil. Advertising Counselors, Inc. vs. Revilla

A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be

Sps. Aznar v. Hon. Bernad and Sps. Kintanar

GR No.L-81190. 9 May 1988.

Topic: Rule 9, Sec. 1 Defenses and Objections Not Pleaded

Ferrer v. Ericta (1978)

Facts: (PLEASE TAKE NOTE OF DATES)

Zulueta, et al. v. Pan American World Airways, Inc.

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