CivPro Digests Rule 6

8/10/2019 CivPro Digests Rule 6

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Civil Procedure Case Digests | Atty. Tranquil Salvador | 2014

Dela Cruz Garcia Gervacio Gervasio Guballa Hourani Lapuz Lecaroz Ledesma Leuterio Leveriza Lim Lua Molaer Miranda Pacamarra Rivera Rovero Rubinos Rubio San

Juan Santos, D Santos, R So Chan Sorongon Tamondong Torcuator Velena Ybiernas Yogue Zerrudo

Execution. To support its motion, petitioner argued that therecords of the case were still with the Court of Appeals andtherefore, issuance of the writ of execution was prematuresince the 150-day period for petitioner to pay the judgmentobligation had not yet lapsed and petitioner had not yet

defaulted in the payment thereof since no demand for itspayment was made by the private respondent.

The lower court denied petitioner's urgent motion to quashopining that the judgment had become final and executoryand consequently, execution thereof was a matter of rightand the issuance of the corresponding writ of executionbecame its ministerial duty.

Challenging the said order granting execution, petitioner filedonce more with the Court of Appeals another petition forcertiorari and prohibition with preliminary injunction.

Meanwhile, the scheduled auction sale of subject pieces ofproperties proceeded and the private respondent was

declared the highest bidder. On the question regarding the 150-day period of redemption,

CA ruled that such period expired on September 11, 1994since the period should be computed from the date petitionerwas notified of the Entry of Judgment.

Petitioner moved for reconsideration, claiming that the periodshould be reckoned not from the entry of judgment but fromthe receipt of the trial court of the records of the case fromCA, nevertheless, petitioner claims that he cannot be held indefault since no prior demand was given.

Again, CA denied petitioners reconsideration on similargrounds promulgated by it with regard to the question of

when the 150-day period should be reckoned, adding, thatpetitioner merely had an equity of redemption, not a right ofredemption since this was a judicial foreclosure.Nevertheless, petitioner failed to invoke such equitableredemption on its appeal; thus, this can no longer beconsidered.

Because of such promulgation, petitioner now opposesprivate respondents motion for Issuance of Writ ofPossession with a counter motion to compel privaterespondent to accept redemption. It must be noted, that thisis the first time petitioner ever asserted his right of equitable

redemption under Section 78 of RA 337 (General BankingAct).

ISSUES:1. Whether or not the petitioner has the one-year right of

redemption of subject properties under Section 78 ofRepublic Act No. 337 otherwise known as the GeneralBanking Act.

HELD & RATIO:

1. NO, petition is devoid of merit.

The equity of redemption is, to be sure, different fromand should not be confused with the right of redemption.

The right of redemption in relation to a mortgage understood in the sense of a prerogative to re-acquiremortgaged property after registration of the foreclosuresale exists only in the case of the extrajudicial

foreclosure of the mortgage. No such right is recognizedin a judicial foreclosure except only where themortgagee is the Philippine National Bank or a bank orbanking institution.

Where a mortgage is foreclosed extrajudicially, Act 3135grants to the mortgagor the right of redemption withinone (1) year from the registration of the sheriff'scertificate of foreclosure sale.

In a judicial foreclosure, the foreclosure sale, 'whenconfirmed by an order of the court. . . shall operate todivest the rights of all the parties to the action and tovest their rights in the purchaser.' There then exists only

what is known as the equity of redemption. This is simplythe right of the defendant mortgagor to extinguish themortgage and retain ownership of the property by payingthe secured debt within the 90-day period after the

judgment becomes final, in accordance with Rule 68, oreven after the foreclosure sale but prior to itsconfirmation

Section 2, Rule 68 provides:


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'. . If upon the trial . . the court shall find the factsset forth in the complaint to be true, it shall ascertainthe amount due to the plaintiff upon the mortgagedebt or obligation, including interest and costs, andshall render judgment for the sum so found due and

order the same to be paid into court within a periodof not less than ninety (90) days from the date of theservice of such order, and that in default of suchpayment the property be sold to realize themortgage debt and costs.'

Petitioner failed to seasonably invoke its purported rightunder Section 78 of R.A. No. 337

Petitioner theorizes that it invoked its "right" in "timelyfashion", that is, after confirmation by the court of theforeclosure sale, and within one (1) year from the date ofregistration of the certificate of sale. Indeed, the facts

show that it was only on May 2, 1995 when, inopposition to the Motion for Issuance of Writ ofPossession, did petitioner file a Motion to CompelPrivate Respondent to Accept Redemption, invoking forthe very first time its alleged right to redeem subjectproperties under to Section 78 of R.A. No. 337.

In light of the aforestated facts, it was too late in the dayfor petitioner to invoke a right to redeem under Section78 of R.A. No. 337. Petitioner failed to assert a right toredeem in several crucial stages of the proceedings (i.e.Motion for Clarification, Motion to Set Aside Order, etc.).

Indeed, at the earliest opportunity, when it submitted its

answer to the complaint for judicial foreclosure,petitioner should have alleged that it was entitled to thebeneficial provisions of Section 78 of R.A. No. 337 butagain, it did not make any allegation in its answerregarding any right thereunder. It bears stressing thatthe applicability of Section 78 of R.A. No. 337 hinges onthe factual question of whether or not privaterespondent's predecessor in interest was a creditinstitution. Thus, the claim that petitioner is entitled to thebeneficial provisions of Section 78 of R.A. No. 337 since private respondent's predecessor-in-interest is a

credit institution is in the nature of a compulsorycounterclaim which should have been averred inpetitioner's answer to the compliant for judicialforeclosure.

Counterclaim:

A counterclaim is, most broadly, a cause ofaction existing in favor of the defendant against theplaintiff. More narrowly, it is a claim which. ifestablished, will defeat or in some way qualify a

judgment or relief to which plaintiff is otherwiseentitled It is sometimes defined as any cause ofaction arising in contract available against any actionalso arising in contract and existing at the time of thecommencement of such an action.

The rules of counterclaim are designed toenable the disposition of a whole controversy ofinterested parties' conflicting claims, at one time andin one action, provided all parties' be brought beforethe court and the matter decided without prejudicingthe rights of any party.

The very purpose of a counterclaim would have beenserved had petitioner alleged in its answer its purportedright under Section 78 of R.A. No. 337

The failure of petitioner to seasonably assert its allegedright under Section 78 of R.A. No. 337 precludes it from

so doing at this late stage case. Estoppel may besuccessfully invoked if the party fails to raise thequestion in the early stages of the proceedings.14 Thus,"a party to a case who failed to invoked his claim in themain case, while having the opportunity to do so, will beprecluded, subsequently, from invoking his claim, even ifit were true, after the decision has become final,otherwise the judgment may be reduced to a mockeryand the administration of justice may be placed indisrepute.


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All things viewed in proper perspective, it is decisivelyclear that the trial court erred in still allowing petitioner tointroduce evidence that private respondent'spredecessor-in-interest was a credit institution, and tothereafter rule that the petitioner was entitled to avail of

the provisions of Section 78 of R.A. No. 337. In effect,the trial court permitted the petitioner to accomplish whatthe latter failed to do before the Court of Appeals, that is,to invoke its alleged right under Section 78 of R.A. No.337 although the Court of Appeals in CA-G.R. no. 35086already found that 'the question of whether theSyndicated Management Council Group, Inc. is a bankor credit institution was never brought before (the Courtof Appeals) squarely.

FINAL VERDICT: Petition is denied. The CA and RTC decisions areaffirmed.

2. FINANCIAL BUILDING CORPORATION v. FORBES PARKASSOCIATION, INC.

G.R. No. 133119 August 17, 2000Compulsory Counterclaim

CASE:Financial Bldg Corp. (the contractor) was engaged by Union

of Soviet Socialist Republic (USSR) to construct a multi-level officeapartment in a residential lot it owns in Forbes Park Village in Makati.The village has a Deed of Restrictions which allows only theconstruction of a single-family residential building in each lot withinthe village. Due to the USSRs representation that it would bebuilding a residence for its Trade Representative, Forbes Parkauthorized its construction and work began shortly thereafter.However, Forbes Park found out that the building plan is for theconstruction of an apartment building - in violation of the deed ofrestrictions - hence it prohibited the construction work that was

ongoing at that time.

1st

Case (Injunction Case)Financial Bldg. filed in the RTC ofMakati a complaint for injunction and damages against Forbes Park.The latter, in turn, filed a Motion to Dismiss on the ground thatFinancial Building had no cause of action because it was not the realparty-in-interest. This case was dismissed by CA and SC andobtained finality.

2nd

Case (Damages Case)Forbes Park filed a complaint fordamages against Financial Bldg. with the RTC of Makati arising fromviolation of the regulations. RTC ruled in favor of Forbes Park,affirmed by CA, hence this petition.

Financial Bldg contends that the Damages Case should bedismissed because Forbes Parks claims should be deemed waivedfor its failure to interpose the same as a compulsory counterclaim inthe Injunction Case.

First major point: The instant case is barred due to ForbesParks failure to set it up as a compulsory counterclaim in theinjunction case. This is a case of a COMPULSORY counterclaim,having satisfied the 4 tests to be classified as compulsory (see ratio).

A compulsory counterclaim cannot be the subject of a separate


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action but it should instead be asserted in the same suit involving thesame transaction or occurrence, which gave rise to it.

Second major point: Since Forbes Park filed a motion todismiss in the injunction case, its existing compulsorycounterclaim at that time is now barred. The filing of a motion to

dismiss and the setting up of a compulsory counterclaim areincompatible remedies. In the event that a defending party has aground for dismissal and a compulsory counterclaim at the sametime, he must choose only one remedy. If he decides to file a motionto dismiss, he will lose his compulsory counterclaim. But if he opts toset up his compulsory counterclaim, he may still plead his ground fordismissal as an affirmative defense in his answer. The latter option isobviously more favorable to the defendant although such fact waslost on Forbes Park. Thus, it has no one to blame but itself for theconsequent loss of its counterclaim as a result of such choice.Forbes Park filed a motion to dismiss and thus exercised bad

judgment in its choice of remedies. Thus, it has no one to blame but

itself for the consequent loss of its counterclaim as a result of suchchoice.

FACTS:

USSR was the owner of a 4,223 square meter residential lotlocated at No. 10, Narra Place, Forbes Park Village in MakatiCity.

USSR engaged the services of Financial Building for theconstruction of a multi-level office and staff apartmentbuilding at the said lot, which would be used by the Trade

Representative of the USSR. Due to the USSRsrepresentation that it would be building a residence for itsTrade Representative, Forbes Park authorized itsconstruction and work began shortly thereafter.

Forbes Park reminded the USSR of existingregulations authorizing only the construction of a single-family residential building in each lot within the village. USSRgave its assurance that it has been complying with allregulations of Forbes Park.

Despite this, Financial Building submitted to the Makati CityGovernment a second building plan for the construction of amulti-level apartment building, which was different from thefirst plan for the construction of a residential buildingsubmitted to Forbes Park.

Forbes Park discovered the second plan and subsequentocular inspection of the USSRs subject lot confirmed theviolation of the deed of restrictions.

o Forbes Park suspended all permits of entry for thepersonnel and materials of Financial Building in thesaid construction site.

Injunction Case (Financial Bldg vs. Forbes Park) -Financial Building filed in the RTC of Makati, a Complaint forInjunction and Damages with a prayer for PreliminaryInjunction against Forbes Park.

o The latter, in turn, filed a Motion to Dismiss on theground that Financial Building had no cause of

action because it was not the real party-in-interest.o Trial court issued a writ of preliminary injunction.

Court of Appeals nullified it and dismissed thecomplaint. SC affirmed CA.

Damages Case (Forbes Park vs. Financial Bldg) - AfterFinancial Buildings casewas terminated with finality, ForbesPark sought to vindicate its rights by filing with the RTC ofMakati a Complaint for Damages, against Financial Building,arising from the violation of its rules and regulations.

o RTC ruled in favor of Forbes Park. CA affirmed RTC,hence this petition.

Financial Building contends that the Damages Case

should be dismissed because Forbes Parks claims shouldbe deemed waived for its failure to interpose the same as acompulsory counterclaim in the Injunction Case.

ISSUES:1. Whether or not Forbes Parks claims against Financial

Building are deemed waived for its failure to interposethe same as a compulsory counterclaim in theInjunction Case.


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HELD & RATIO: YES

First major point: The instant case is barred due to Forbes Parks

failure to set it up as a compulsory counterclaim in the injunction

case. A compulsory counterclaim is one which arises out of or is

necessarily connected with the transaction or occurrencethat is the subject matter of the opposing partys claim.If it iswithin the jurisdiction of the court and it does not require forits adjudication the presence of third parties over whom thecourt cannot acquire jurisdiction, such compulsorycounterclaim is barred if it is not set up in the actionfiled by the opposing party.

A compulsory counterclaim cannot be the subject of aseparate action but it should instead be asserted in thesame suit involving the same transaction or occurrence,

which gave rise to it. Four tests to determine whether a counterclaim is

compulsory or not:1. Are the issues of fact or law raised by the claim and the

counterclaim largely the same?2. Would res judicatabar a subsequent suit on defendants

claim absent the compulsory counterclaim rule?3. Will substantially the same evidence support or refute

plaintiffs claim as well as the defendants counterclaim?4. Is there any logical relation between the claim and the

counterclaim?

Affirmative answers to the above queries indicate theexistence of a compulsory counterclaim.

Tests applied to this case:1. The prior injunction case and the instant case arose from

the same occurrence the construction work done byFinancial Building on the USSRs lot in Forbes ParkVillage. The issues of fact and law in both cases areidentical.o The factual issue is whether the structures erected

by Financial Building violate Forbes Parks rules and

regulations, whereas the legal issue is whetherFinancial Building, as an independent contractorworking for the USSR, could be enjoined fromcontinuing with the construction and be held liablefor damages if it is found to have violated Forbes

Parks rules.3. Financial Building seized the initiative by filing the priorinjunction case, which was anchored on the contentionthat Forbes Parks prohibition on the construction work inthe subject premises was improper. The instant case onthe other hand was initiated by Forbes Park to compelFinancial Building to remove the same structures it haserected in the same premises involved in the prior caseand to claim damages for undertaking the saidconstruction. Thus, the logical relation between the twocases is patent and it is obvious that substantially thesame evidence is involved in the said cases.

4. The two cases involve the same parties. The aggregateamount of the claims in the instant case is within the

jurisdiction of the RTC, had it been set up as acounterclaim in the injunction case. Therefore, ForbesParks claims in the instant case should have been filed asa counterclaim in the injunction case.

Second major point: Since Forbes Park filed a motion to dismiss inthe injunction case, its existing compulsory counterclaim at that timeis now barred.

A counterclaim presupposes the existence of a claim againstthe party filing the counterclaim.

o Hence, where there is no claim against thecounterclaimant, the counterclaim is improper and itmust dismissed, more so where the complaint isdismissed at the instance of the counterclaimant.

o In other words, if the dismissal of the main actionresults in the dismissal of the counterclaim alreadyfiled, it stands to reason that the filing of a motion todismiss the complaint is an implied waiver of thecompulsory counterclaim because the grant of themotion ultimately results in the dismissal of thecounterclaim.


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The filing of a motion to dismiss and the setting up of acompulsory counterclaim are incompatible remedies.

o In the event that a defending party has a ground fordismissal and a compulsory counterclaim at thesame time, he must choose only one remedy.

o

If he decides to file a motion to dismiss, he will losehis compulsory counterclaim.o But if he opts to set up his compulsory counterclaim,

he may still plead his ground for dismissal as anaffirmative defense in his answer.The latter option isobviously more favorable to the defendant althoughsuch fact was lost on Forbes Park.

The ground for dismissal invoked by Forbes Park in theinjunction case was lack of cause of action. There was noneed to plead such ground in a motion to dismiss or in theanswer since the same was not deemed waived if it was notpleaded. Nonetheless, Forbes Park still filed a motion to

dismiss and thus exercised bad judgment in its choice ofremedies. Thus, it has no one to blame but itself for theconsequent loss of its counterclaim as a result of suchchoice.

FINAL VERDICT: Instant petition is hereby GRANTED. CA is herebyREVERSED and SET ASIDE.

3. ARENAS v. CACompulsory Counterclaims

CASE:

Respondent entered into a verbal contract of lease with

petitioner. Respondent wanted to terminate the lease contract butpetitioner refused to vacate the premises.In Civil Case No. 658, respondent filed with MTC a complaint

for unlawful detainer and damages against petitioner. Petitioner filedhis answer to the complaint and counterclaim for moral,exemplary damages and attorneys fees.

In Civil Case No. 16890, petitioner filed with RTC an actionfor damages, certiorari and/or restraining order against respondenton the ground that Art 19, 20, 21 of the Civil Code were violated dueto unlawful acts by respondents.

Trial court ruled in favor of petitioners. CA reversed thedecision and ruled that since petitioners interposed a counterclaimfor moral and exemplary damages in Civil Case No. 658, they werebarred from instituting Civil Case No. 16890.

Petitioners argue that the acts complained of in Civil CaseNo. 16890 aroseafter the filing of the complaint and the answer inCivil Case No. 658. Thus, damages arising from such acts could notbe raised therein as compulsory counterclaims.

SC ruled that the causes of action complained of in the RTCwere not compulsory counterclaims that must be pleaded in CivilCase No. 658 of MTC. First, In Civil Case No. 16890, the damagesprayed for arose not from contract but from quasi-delict. Theyconstitute separate and distinct causes of action. Second, the factthat the rule on summary procedure governs ejectment casesemphasizes the point that an action for damages incapable ofpecuniary estimation cannot be pleaded as counterclaims therein.Third, the acts complained of were committed after the complaintand the answer were filed.

FACTS:

In 1970, respondent Rojas entered into a verbal contract oflease with petitioner Arenas. Respondent Rojas wanted todemolish the building and terminate the lease contract with


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petitioner Arenas but petitioner refused to vacate thepremises.

In Civil Case No. 658, respondent filed with MTC a complaintfor unlawful detainer and damages against petitioner.Petitioner filed his answer to the complaint and counterclaim

for moral, exemplary damages and attorneys fees. MTC ordered the petitioner to vacate premises and pay

expenses.

In Civil Case No. 16890, before petitioners received a copyof decision in Civil Case No. 658, they filed with RTC anaction for damages, certiorari and/or restraining orderagainst respondents on the grounds that respondents filed acomplaint for ejectment against petitioners notwithstandingthe existence of contract between them, respondents causedthe removal of the signboard of the clinic, dumping of graveland sand infront of stall, and cutting off electric connection tothe clinic.

RTC issued a TRO enjoining MTC Pangasinan from hearingCivil Case No. 658. Respondents moved to dismiss thecase, invoking the rule against multiplicity of suits but trialcourt denied the motion to dismiss. Respondents filed theiranswer to the complaint with counterclaim their motion todismiss with an alternative motion to suspend theproceedings for the reason that the pending appeal raises aprejudicial question.

Trial court ruled in favor of petitioners. CA reversed thedecision and ruled that since petitioners interposed acounterclaim for moral and exemplary damages in Civil CaseNo. 658, they were barred from instituting Civil Case No.

16890. Petitioners argue that the acts complained of in Civil Case

No. 16890 aroseafter the filing of the complaint and theanswer in Civil Case No. 658. Thus, damages arising fromsuch acts could not be raised therein as compulsorycounterclaims.

ISSUE:1. Whether the causes of action complained of in the RTC

were in the nature of compulsory counterclaims thatmust be pleaded in Civil Case No. 658 of MTC

HELD & RATIO:1. NO. The causes of action pleaded in Civil Case No. 16890 aredifferent from those in Civil Case No. 658, and that such causescould not have been raised as compulsory counterclaims therein.

Rule 11 of the 1997 Rules of Civil Procedure provides:

"Sec. 8. Existing counterclaim or cross-claim- A compulsorycounterclaim or a cross-claim that a defending party has atthe time he files his answer shall be contained therein."

A counterclaim is compulsory where: (1) it arises out of, oris necessary connected with, the transaction or occurrencethat is the subject matter of the opposing partys claim;(2) it

does not require the presence of third parties of whom thecourt cannot acquire jurisdiction; and (3) the trial court has

jurisdiction to entertain the claim.

The following are the tests by which the compulsory natureof a counterclaim can be determined: (1) Are the issues offact and law raised by the claim and counterclaim largelythe same? (2) Would res judicatabar a subsequent suit ondefendants claim absent the compulsory counterclaim rule?(3) Will substantially the same evidence support or refuteplaintiffs claim as well as defendants counterclaim? (4) Isthere any logical relation between the claim andcounterclaim?

First. In Civil Case No. 16890, the damages prayed forarose not from contract but from quasi-delict.

They

constitute separate and distinct causes of action. The causeof action in Civil Case No. 658 involves a complaint forunlawful detainer and damages thus the issue is the right tophysical possession while the cause of action in Civil CaseNo. 16890 involves acts complained which were notfounded on the contract of lease but could constituteviolations of Art. 19, 20, 21 of Civil Code.

Second. In de Leon v. Court of Appeals, the Court held that"[W]here the issues of the case extend beyond those


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Dela Cruz Garcia Gervacio Gervasio Guballa Hourani Lapuz Lecaroz Ledesma Leuterio Leveriza Lim Lua Molaer Miranda Pacamarra Rivera Rovero Rubinos Rubio SanJuan Santos, D Santos, R So Chan Sorongon Tamondong Torcuator Velena Ybiernas Yogue Zerrudo

commonly involved in unlawful detainer suits, the case isconverted from a mere detainer suit to one incapable ofpecuniary estimation thereby placing it under the exclusive

jurisdiction of the regional trial courts." Verily, since themunicipal trial court could not have taken cognizance of the

claims in Civil Case No. 16890, then such claims could notbe considered as compulsory counterclaims in Civil CaseNo. 658.

The fact that the rule on summary procedure governsejectment cases emphasizes the point that an action fordamages incapable of pecuniary estimation cannot bepleaded as counterclaims therein.

Third. The acts complained of were committed after the

complaint and the answer were filed.

FINAL VERDICT: Petition granted, remanding the case to the courtof origin to determine whether the acts committed by respondents

constitute quasi-delict.

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