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Prudential v Magdamit

This is a case of unlawful detainer filed by petitioner Prudential Bank

ground of respondents' failure to pay rentals and refusal to vacate the subject property

petitioner impleaded Amador A. Magdamit, Jr. (Magdamit, Jr.), as respondent.

Instead of filing an Answer, Magdamit, Jr. filed a Notice of Special Appearance with Motion to Dismiss.
Among others, Magdamit, Jr. argued that (1) petitioner was not duly authorized through a Board Resolution
to institute the complaint, (2) he was not the occupant of the subject property but instead, his parents, as
grantees or awardees of Juliana Diez Vda. De Gabriel, and (3) the MeTC did not acquire jurisdiction over his
person because the summons was served at his former address at 1164 Interior Julio Nakpil St., Paco,
Manila. On 30 April 2003, petitioner filed a Motion to Strike Out this pleading on the ground that it is
prohibited. Petitioner then filed an Amended Complaint, this time, impleading both Magdamit, Jr. and
Amador Magdamit, Sr.

MeTC granted petitioner's Motion to Strike Out Magdamit, Jr.'s Notice of Special Appearance with Motion to
Dismiss and ordered Magdamit, Jr. to file an Answer

Magdamit, Jr., filed his Answer with Counterclaim7 (In a Special Appearance Capacity). On the other hand,
Magdamit, Sr. filed his Answer8 on 13 November 2003. Magdamit, Sr. argued that the MeTC did not acquire
jurisdiction over his person because the summons was not properly served as the summons was received by
Madel Magalona, who is not authorized to receive summons being a mere housemaid of Magdamit, Sr.'s
daughter, Arleen Marie Cabug.

According to Magdamit, Sr., amendment cannot be allowed so as to confer jurisdiction upon a court that
never acquired it in the first place, and the ejectment case cannot be instituted against Magdamit, Jr.
because an action to recover possession cannot be maintained against one who is not in actual or legal
possession thereof.

RULING:

Compliantly, respondents filed their respective Answers. In the MeTC, at first, Magdamit, Jr. filed a Notice of
Special Appearance with Motion to Dismiss, where he seasonably raised the issue of lack of jurisdiction,
which the MeTC later ordered to be stricken out. In lieu thereof, Magdamit, Jr. filed an Answer with
Counterclaim (In a Special Appearance Capacity). Again, Magdamit, Jr. reiterated the lack of jurisdiction
over his person and the subject matter. On the other hand, Magdamit, Sr. filed an Answer with an allegation
by special defense that the original complaint should be dismissed outright because the MeTC did not
acquire jurisdiction over his person and the subject matter. In sum, both respondents filed their Answers via
special appearance.

The mandate under the Rules on Summary Proceedings that govern ejectment cases, is expeditious
administration of justice such that the filing of an Answer is mandatory. To give effect to the mandatory
character and speedy disposition of cases, the defendant is required to file an answer within ten (10) days
from service of summons, otherwise, the court, motu proprio, or upon motion of the plaintiff, shall render
judgment as may be warranted by the facts alleged in the complaint, limited to the relief prayed for by the
petitioner.32 Through this rule, the parties are precluded from resorting to dilatory maneuvers.

Prescinding from the foregoing, it is thus clear that:


chanroblesv irt uallawl ibra ry

(1) Special appearance operates as an exception to the general rule on voluntary appearance;
(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be explicitly
made, i.e., set forth in an unequivocal manner; and
(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances
where a pleading or motion seeking affirmative relief is filed and submitted to the court for
resolution.34 (Emphasis supplied and underscoring supplied)

No jurisdiction was acquired…


GO V CA

petition for review on certiorari before us seeks to set aside and reverse the
consolidated Decision of the Court of Appeals[1] (CA) promulgated on March 4, 1997, in
CA-GR SP No. 37306 and CA-GR SP No. 39403, which disallowed the suspension of
the ejectment proceedings…

Private respondent filed with the Municipal Trial Court in Cities


(MTCC) of Iloilo City (Branch 1) an ejectment case [docketed as Civil
Case No. 332(93)] against petitioners. Upon motion of petitioners, said
court issued an Order dated November 29, 1993 holding in abeyance
the preliminary conference in said case until after the case for specific
performance docketed as Civil Case No. 21142 likewise involving the
same parties shall have been finally decided by the RTC of Iloilo City
(Branch 37).
An appeal was taken by private respondent from the aforesaid Order
which was assigned to herein public respondent RTC of Iloilo City
(Branch 34).
Thereafter, petitioners filed with the respondent RTC a motion to dismiss the
appeal on the ground that the appealed order is interlocutory and therefore
not appealable. Said motion was denied by the respondent RTC (Branch 34)
per its Order dated January 27, 1995. motion for reconsideration which was
likewise denied

petitioners filed the present petition for certiorari, docketed as SP No. 37306,
raising the issue of whether or not the respondent RTC (Branch 34) acted
without or in excess of jurisdiction or with grave abuse of discretion in denying
petitioners motion to dismiss appeal.

respondent then filed with respondent RTC a Motion to Resume


Proceedings. On August 30, 1995, respondent RTC issued an Order granting
said motion and directed the remand of the records of the case to the MTCC
(Branch 1) of Iloilo City for further proceedings.

Petitioners then filed with this Court the present petition for review, docketed
as SP No. 39403, raising the issue of whether or not the same respondent
RTC acted without or in excess of jurisdiction or with grave abuse of discretion
in ordering the resumption of the proceedings in the MTCC of Iloilo
RULING:

In affirming the ruling of the Regional Trial Court (RTC) of Iloilo City, the Court of
Appeals noted that there was a procedural void in the summary proceedings before the
MTCC. The undisputed facts illustrate that existing procedural rules do not provide an
adequate remedy to herein private respondent.
It may be recalled that the MTCC, acting on petitioners motion, held in abeyance the
preliminary conference in the ejectment suit, until the termination of a pending case for
specific performance involving the same parties. In challenging the order of the MTCC,
herein private respondent appealed to the Regional Trial Court. Petitioners filed a motion
to dismiss, arguing that the assailed order was interlocutory and, therefore, not subject to
appeal.
Indisputably, the appealed order is interlocutory, for it does not dispose of the case
but leaves something else to be done by the trial court on the merits of the case.[5] It is
axiomatic that an interlocutory order cannot be challenged by an appeal. [6] Thus, it has
been held that the proper remedy in such cases is an ordinary appeal from an adverse
judgment on the merits, incorporating in said appeal the grounds for assailing the
interlocutory order. Allowing appeals from interlocutory orders would result in the sorry
spectacle of a case being subject of a counterproductive ping-pong to and from the
appellate court as often as a trial court is perceived to have made an error in any of its
interlocutory rulings. However, where the assailed interlocutory order is patently
erroneous and the remedy of appeal would not afford adequate and expeditious relief,
the Court may allow certiorari as a mode of redress.[7]
Clearly, private respondent cannot appeal the order, being interlocutory. But neither
can it file a petition for certiorari, because ejectment suits fall under the Revised Rules on
Summary Procedure, Section 19 (g) of which considers petitions for certiorari prohibited
pleadings:
SEC. 19. Prohibited pleadings and motions. -- The following
pleadings, motions, or petitions shall not be allowed in the cases
covered by this Rule:
(a) Motion to dismiss the complaint or to quash the complaint or
information except on the ground of lack of jurisdiction over the
subject matter, or failure to comply with the preceding section;
(b) Motion for a bill of particulars;
(c) Motion for new trial, or for reconsideration of a judgment, or
for reopening of trial;
(d) Petition for relief from judgment;
(e) Motion for extension of time to file pleadings, affidavits or
any other paper;
(f) Memoranda;
(g) Petition for certiorari, mandamus, or prohibition against any
interlocutory order issued by the court;
(h) Motion to declare the defendant in default;
(i) Dilatory motions for postponement;
(j) Reply;
(k) Third party complaints;
(l) Interventions.

Based on the foregoing, private respondent was literally caught between


Scylla and Charybdis in the procedural void observed by the Court of Appeals and the
RTC. Under these extraordinary circumstances, the Court is constrained to provide it with
a remedy consistent with the objective of speedy resolution of cases.
As correctly held by Respondent Court of Appeals, the purpose of the Rules on
Summary Procedure is to achieve an expeditious and inexpensive determination of cases
without regard to technical rules. (Section 36, Chapter III, BP Blg. 129) Pursuant to this
objective, the Rules prohibit petitions for certiorari, like a number of other pleadings, in
order to prevent unnecessary delays and to expedite the disposition of cases.In this case,
however, private respondent challenged the MTCC order delaying the ejectment suit,
precisely to avoid the mischief envisioned by the Rules.
Thus, this Court holds that in situations wherein a summary proceeding is suspended
indefinitely, a petition for certiorari alleging grave abuse of discretion may be
allowed. Because of the extraordinary circumstances in this case, a petition for certiorari,
in fact, gives spirit and life to the Rules on Summary Procedure. A contrary ruling would
unduly delay the disposition of the case and negate the rationale of the said Rules.
Private respondent herein filed an appeal to question the interlocutory order. This
recourse was upheld by the RTC and the CA in order to fill a procedural void. We affirm
the ruling of both the trial court and the Court of Appeals. We hold, however, that the
appeal should instead be treated as a petition for certiorari under Rule 65. An appeal
ordinarily entails a longer process which negates an expeditious resolution.
Petitioners posit that if such procedural void exists, no remedy is sanctioned by law,
and the courts thus have no power to provide one.Petitioners aver that the defect lies in
the law and can only be remedied by the legislature.
This argument is unacceptable. First, at issue in this case is not a law passed by the
legislature, but procedural rules promulgated by the Supreme Court. Section 5, Article
VIII of the Constitution, categorically allows the Court to lay down rules concerning,
among others, procedure in all courts. Second, courts are empowered, even obligated,
to suspend the operation of the rules, when a rule deserts its proper office as an aid to
justice and becomes its great hindrance and chief enemy such that rigid application
thereof frustrates rather than promotes substantial justice." [8]Thus, it has been held that
the power of this Court to suspend its own rules or to except a particular case from [their]
operations whenever the purposes of justice require it, cannot be questioned.[9]
RP v Sunvar

The main subject matter of the instant Petition is one of these four parcels of
land covered by TCT No. 458365, with an area of approximately 22,294 square
meters (hereinafter, the subject property). Eighty percent (80%) of the subject
property is owned by petitioner Republic, while the remaining twenty percent (20%)
belongs to petitioner NPC.[2] Petitioners are being represented in this case by the
Privatization Management Office (PMO), which is the agency tasked with the
administration and disposal of government assets.[3]Meanwhile, respondent Sunvar
Realty Development Corporation (Sunvar) occupied the subject property by virtue
of sublease agreements, which had in the meantime expired.

On 23 July 2009, petitioners filed the Complaint dated 26 May 2009 for
unlawful detainer with the Metropolitan Trial Court (MeTC) of Makati City.
Petitioners prayed that respondent Sunvar be ordered to vacate the subject property
and to pay damages for the illegal use and lost income owing to them

Respondent Sunvar moved to dismiss the Complaint and argued that the
allegations of petitioners in the Complaint did not constitute an action for unlawful
detainer, since no privity of contract existed between them.[31] In the alternative, it
also argued that petitioners cause of action was more properly an accion
publiciana, which fell within the jurisdiction of the RTC, and not the MeTC,
considering that the petitioners supposed dispossession of the subject property by
respondent had already lasted for more than one year.

MeTC denied the Motion to Dismiss and directed respondent Sunvar to file an
answer to petitioners Complaint.

RULING:

Proceeding now to determine that very question of law, the Court finds that it was
erroneous for the RTC to have taken cognizance of the Rule 65 Petition of
respondent Sunvar, since the Rules on Summary Procedure expressly prohibit this
relief for unfavorable interlocutory orders of the MeTC. Consequently, the assailed
RTC Decision is annulled.

When confronted with the MeTCs adverse denial of its Motion to Dismiss in the
ejectment case, the expeditious and proper remedy for respondent should have
been to proceed with the summary hearings and to file its answer. Indeed, its resort
to a certiorari Petition in the RTC over an interlocutory order in a summary
ejectment proceeding was not only prohibited. The certiorariPetition was already a
superfluity on account of respondents having already taken advantage of a speedy
and available remedy by filing an Answer with the MeTC.

Respondent Sunvar failed to substantiate its claim of extraordinary


circumstances that would constrain this Court to apply the exceptions obtaining
in Bayog and Go. The Court hesitates to liberally dispense the benefits of these two
judicial precedents to litigants in summary proceedings, lest these exceptions be
regularly abused and freely availed of to defeat the very goal of an expeditious and
inexpensive determination of an unlawful detainer suit. If the Court were to relax the
interpretation of the prohibition against the filing of certiorari petitions under the
Revised Rules on Summary Procedure, the RTCs may be inundated with similar
prayers from adversely affected parties questioning every order of the lower court
and completely dispensing with the goal of summary proceedings in forcible entry
or unlawful detainer suits.
Fairland v Po

In a complaint6 for unlawful detainer, docketed as Civil Case No. 19429, filed before the MeTC, Fairland
alleged that it was the owner of Condominium Unit No. 205 in Cedar Mansion II on Ma. Escriba Street, Pasig
City. The said unit was leased by Fairland to Po by verbal agreement, with a rental fee of P20,000.00 a
month, to be paid by Po at the beginning of each month. From March 2011, Po had continuously failed to
pay rent. For said reason, Fairland opted not to renew the lease agreement anymore.

On January 30, 2012, Fairland sent a formal letter7 to Po demanding that he pay the amount of
P220,000.00, representing the rental arrears, and that he vacate the leased premises within fifteen (15)
days from the receipt of the letter. Despite receipt of the demand letter and the lapse of the said 15-day
period to comply, Po neither tendered payment for the unpaid rent nor vacated the premises. Thus, on
December 12, 2012, Fairland was constrained to file the complaint for unlawful detainer before the MeTC. Po
had until January 7, 2013 to file his answer but he failed to do so. Hence, on February 6, 2013, Fairland filed
a motion to render judgment.8

On March 1, 2013, Po's counsel filed his Entry of Appearance with Motion for Leave of Court to file
Comment/Opposition to Motion to Render Judgment. In the attached Comment/Opposition, Po denied the
allegations against him and commented that there was no supporting document that would show that
Fairland owned the property; that there was no lease contract between them; that there were no documents
attached to the complaint which would show that previous demands had been made and received by him;
that the alleged unpaid rental was P220,000.00, but the amount of damages being prayed for was
P440,000.00; that the issue in the case was one of ownership; and that it was the RTC which had
jurisdiction over the case.

The MeTC treated the comment/opposition as Po's answer to the complaint. Considering, however, that the
case fell under the Rules of Summary Procedure, the same was deemed filed out of time. Hence, the motion
was denied.

RULING:

To recapitulate, as Po failed to file his answer on time, judgment shall be rendered based only on the
complaint of Fairland without the need to consider the weight of evidence. As discussed above, the
complaint of Fairland had a valid cause of action for unlawful detainer.
Victorina v Brew Master International

Respondent, Brewmaster International, Inc., is a marketing company engaged in


selling and distributing beer and other products of Asia Brewery, Inc. On November
9, 2005, it filed a Complaint for Sum of Money against Prescillo G. Lazaro
(Prescillo) and petitioner, Victorina (also known as Victoria) Alice Lazaro, with the
Metropolitan Trial Court (MeTC) of Makati City. The complaint alleged as follows:
6. During the period from February 2002 to May 2002, defendants
obtained on credit from plaintiff beer and other products in the total
amount of ONE HUNDRED THIRTY EIGHT THOUSAND FIVE
HUNDRED TWO PESOS AND NINETY TWO CENTAVOS (Php
138,502.92), evidenced by sales invoices photocopies of which are hereto
attached as Annexes A, A-1 to A-11,
7. Despite repeated demands, defendants have failed and refused, and up
to now, still fail and refuse to pay their aforesaid obligation to plaintiff in
the amount of ONE HUNDRED THIRTY EIGHT THOUSAND FIVE
HUNDRED TWO PESOS AND NINETY TWO CENTAVOS (Php
138,502.92) as evidenced by the demand letters dated 21 April 2003, 12
May 2003, 5 August 2003 and 17 August 2005, photocopies of which are
hereto attached as Annexes B, C, C-1, D, D-1, D-2, and E, E-1,
8. Under the terms of the sales invoices, defendants agreed that in case of
litigation, the venue shall only be at the proper courts of Makati Cityand
to pay 24% interest on all overdue accounts.

WHEREFORE, it is respectfully prayed that judgment be rendered in


favor of plaintiff and against the defendants, ordering the latter to pay the
sum of Php138,502.92 representing plaintiffs claim and the sum of
Php33,240.00 as interest.
Plaintiff prays for such other or further relief and remedies that are just and
equitable in the premises.
CA held that judgment should have been rendered as may be warranted by the
facts alleged in the complaint considering that both defendants failed to appear
during the preliminary conference. The appellate court said that by instead
referring to the sales invoices and bypassing [the] ultimate facts [alleged in the
complaint], the MeTC contravened the evident purposes of the [Revised] Rule on
Summary Procedure directing that the judgment be based on the allegations of the
complaint, which were, firstly, to avoid delay and, secondly, to consider the non-
appearance at the preliminary conference as an admission of the ultimate facts.
RULING: Petitioner is correct in saying that no relief can be awarded to respondent
if its complaint does not state a cause of action. Indeed, if the complaint does not
state a cause of action, then no relief can be granted to the plaintiff and it would
necessarily follow that the allegations in the complaint would not warrant a
judgment favorable to the plaintiff.
The basic requirement under the rules of procedure is that a complaint must
make a plain, concise, and direct statement of the ultimate facts on which the plaintiff
relies for his claim.[15] Ultimate facts mean the important and substantial facts which
either directly form the basis of the plaintiffs primary right and duty or directly make
up the wrongful acts or omissions of the defendant.[16] They referto the principal,
determinative, constitutive facts upon the existence of which the cause of action
rests. The term does not refer to details of probative matter or particulars of evidence
which establish the material elements.[17]
The test of sufficiency of the facts alleged in a complaint to constitute a cause
of action is whether, admitting the facts alleged, the court could render a valid
judgment upon the same in accordance with the prayer of the petition or
complaint.[18] To determine whether the complaint states a cause of action, all
documents attached thereto may, in fact, be considered, particularly when referred
to in the complaint.[19] We emphasize, however, that the inquiry is into the
sufficiency, not the veracity of the material allegations in the complaint. [20] Thus,
consideration of the annexed documents should only be taken in the context of
ascertaining the sufficiency of the allegations in the complaint.
Petitioner argues that the complaint fails to state a cause of action since
reference to the sales invoices attached to and cited in paragraph six of the Complaint
shows that it was not her who purchased and received the goods from respondent.

Contrary to petitioners stance, we find that the Complaint sufficiently states a


cause of action. The following allegations in the complaint adequately make up a
cause of action for collection of sum of money against petitioner: (1) that petitioner
and her husband obtained beer and other products worth a total of P138,502.92 on
credit from respondent; and (2) that they refused to pay the said amount despite
demand.
Mongao v Pryce

The instant petition originated from a complaint for rescission and damages filed on
February 14, 1995 by petitioners, Spouses Pesane Animas Mongao (hereafter referred
to as petitioner Mongao) and Benhur Mongao, against respondent Pryce Properties
Corporation before the Regional Trial Court (RTC) in General Santos City.[3]

The complaint alleged that petitioner Mongao and respondent corporation executed
a Memorandum of Agreement[4] on December 20, 1993, wherein the former agreed to
sell to the latter for the total price of Five Million Twenty-Eight Thousand Eight Hundred
Pesos (P5,028,800.00) a parcel of land in Polomolok, South Cotabato covered by
Transfer Certificate of Title (TCT) No. T-22186[5] registered in the name of petitioner
Mongao only. In accordance with the terms and conditions of the Memorandum of
Agreement, respondent corporation allegedly paid petitioners the sum of Five Hundred
Fifty Thousand Pesos (P550,000.00) as earnest money considered as part of the
purchase price. The complaint further alleged that after considerable delay, respondent
corporation offered to pay the balance of the purchase price by issuing a check payable
to petitioner Mongao and her mother, Nellie Animas, which the former rejected.
Allegedly, respondent corporation continuously refused to heed petitioners written and
oral demands to pay the balance solely to petitioner Mongao.

The complaint also denied that petitioner Mongao executed a Deed of


Absolute Sale dated November 15, 1994 in favor of respondent corporation, the
registration of which caused the cancellation of TCT No. T-22186 in the name
of petitioner Mongao and the issuance of TCT No. T-62944. In addition to
petitioners prayer for the rescission of the Memorandum of Agreement and
the Deed of Absolute Sale and the forfeiture of the earnest money paid by
respondent corporation, the complaint also asked for the award of moral and
exemplary damages and attorneys fees.

The main issue for this Courts resolution is the propriety of the trial courts
judgment on the pleadings on the ground that respondent corporations
allegation did not tender an issue.
Now, if an answer does in fact specifically deny the material averments of the complaint
in the manner indicated by said Section 10 of Rule 8, and/or asserts affirmative
defenses (allegations of new matter which, while admitting the material allegations of
the complaint expressly or impliedly, would nevertheless prevent or bar recovery by the
plaintiff) in accordance with Sections 4[17] and 5[18] of Rule 6, a judgment on the pleadings
would naturally not be proper.

Thus, there is joinder of issues when the answer makes a specific denial of the material
allegations in the complaint or asserts affirmative defenses which would bar recovery by
the plaintiff. Where there is proper joinder of issues, the trial court is barred from
rendering judgment based only on the pleadings filed by the parties and must conduct
proceedings for the reception of evidence. On the other hand, an answer fails to tender
an issue where the allegations admit the allegations in support of the plaintiffs cause of
action or fail to address them at all. In either case, there is no genuine issue and
judgment on the pleadings is proper.

The records reveal that respondent corporation did not file any formal complaint for
consignation but merely deposited the check with the Clerk of Court. A formal complaint
must be commenced with the trial court to provide the proper venue for the
determination if there is a valid tender of payment. Strictly speaking, without the
institution of an action for tender of payment and consignation, the trial court cannot rule
on whether or not respondent was justified in not effecting payment solely to petitioner
Mongao.
Bucayao v Fort Ilocandia

Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs


who introduced improvements on the foreshore area of Calayab Beach in 1978
when Fort Ilocandia Hotel started its construction in the area. Thereafter, other
entrepreneurs began setting up their own stalls in the foreshore area. They later
formed themselves into the DSierto Beach Resort Owners Association, Inc.
(DSierto).

In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred,
ceded, and conveyed to the Philippine Tourism Authority (PTA) pursuant to
Presidential Decree No. 1704. Fort Ilocandia Resort Hotel was erected on the
area. In 1992, petitioner and other DSierto members applied for a foreshore lease
with the Community Environment and Natural Resources Office (CENRO) and
was granted a provisional permit.

On 31 January 2002, Fort Ilocandia Property Holdings and Development


Corporation (respondent) filed a foreshore application over a 14-hectare area
abutting the Fort Ilocandia Property, including the 5-hectare portion applied for by
DSierto members. The foreshore applications became the subject matter of a
conflict case, docketed Department of Environment and Natural Resources
(DENR) Case No. 5473, between respondent and DSierto members. In an undated
Order,[3] DENR Regional Executive Director Victor J. Ancheta denied the
foreshore lease applications of the DSierto members, including petitioner, on the
ground that the subject area applied for fell either within the titled property or
within the foreshore areas applied for by respondent.

In a letter dated 18 September 2003,[5] respondent, through its Public Relations


Manager Arlene de Guzman, invited the DSierto members to a luncheon meeting
to discuss common details beneficial to all parties concerned. Atty. Liza Marcos
(Atty. Marcos), wife of Governor Bongbong Marcos, was present as she was asked
by Fort Ilocandia hotel officials to mediate over the conflict among the
parties. Atty. Marcos offered P300,000 as financial settlement per claimant in
consideration of the improvements introduced, on the condition that they would
vacate the area identified as respondents property. A DSierto member made a
counter-offer of P400,000, to which the other DSierto members agreed.

Petitioner then filed an action for declaration of nullity of contract before the
Regional Trial Court of Laoag, City, Branch 13 (trial court), docketed as Civil
Case Nos. 12891-13, against respondent. Petitioner alleged that his son had no
authority to represent him and that the deed was void and not binding upon him.

RTC
As regards respondents counterclaim, the trial court ruled that based on the
pleadings and admissions made, it was established that the property occupied by
petitioner was within the titled property of respondent.
CA
The Court of Appeals ruled that the counterclaims raised by respondent were
compulsory in nature, as they arose out of or were connected with the transaction
or occurrence constituting the subject matter of the opposing partys claim and did
not require for its adjudication the presence of third parties of whom the court
could not acquire jurisdiction. The Court of Appeals ruled that respondent was the
rightful owner of the subject property and as such, it had the right to recover its
possession from any other person to whom the owner has not transmitted the
property, including petitioner.
Calo v Ajax

Sometime on May 7, 1959, plaintiff-appellant Calo ordered from defendant-appellee Ajax


International, Inc., 1,200 ft. of John Shaw wire rope at P2.85 per foot. The transaction was
evidenced by Charge Order No. 37071, for P3,420.00.

According to plaintiff Calo, when the wire rope was delivered to Butuan City, the same was
found short of 300 ft. Plaintiff then wrote two letters to defendant asking for either completion of
delivery or account adjustment of the alleged undelivered 300 ft. of wire rope.

a complaint docketed as Civil Case No. IV-93062 was filed in the Municipal Court of Manila
by one Adolfo Benavides who claimed to have acquired the outstanding credit account of Calo from
defendant Ajax International, Inc. Charge Order No. 37071 was among those included in the
assigned account.

On January 23, 1962, plaintiff Calo, assisted by her husband, Marcos Calo, filed in the Court of First
Instance of Agusan a complaint against defendant asking (1) that the latter either effect complete
delivery of Charge Order No. 37071 or that she be relieved from paying P855.00 and (2) that the
latter indemnify her for P12,000 as attorney's fees, damages and expenses of litigation.

Instead of filing an answer, defendant moved for the dismissal of Civil Case 860 on the ground, inter
alia, that the subject thereof was involved and intimately related to that in Civil Case No. IV-93062 of
the Municipal Court of Manila.

The court a quo sustained the motion and dismissed the case.

However, plaintiff's claim is not a compulsory counterclaim in Civil Case No. IV-93062 for the simple
reason that the amount thereof exceeds the jurisdiction of the municipal court. The rule that a
compulsory counterclaim not set up is barred, when applied to the municipal court, presupposes that
the amount involved is within the said court's jurisdiction. Otherwise, as this Court had already noted
in Yu Lay v. Galmes 3 we would come to the absurd situation where a claim must be filed with the
municipal court which it is prohibited from taking cognizance of, being beyond its jurisdiction.

Besides, the reason underlying the rule, which is to settle all related controversies in one sitting
only, does not obtain. For, even if the counterclaim in excess of the amount cognizable by the
inferior court is set up, the defendant cannot obtain positive relief. The Rules allow this only for the
defendant to prevent plaintiff from recovering from him.4 This means that should the court find both
plaintiff's complaint and defendant's counterclaim (for an amount exceeding said court's jurisdiction)
meritorious, it will simply dismiss the complaint on the ground that defendant has a bigger credit.
Since defendant still has to institute a separate action for the remaining balance of his counterclaim,
the previous litigation did not really settle all related controversies.

Plaintiff Calo's claim of P12,000.00 not being a compulsory counterclaim in Civil Case No. VI-
93062, it need not be filed there. The pendency then of said civil case could not be pleaded in
abatement of Civil Case No. 860. Consequently, the lower court erred in dismissing plaintiff's
complaint.
CONJUANCO
FACTS: Petitioner Lualhati Aldaba Cojuangco is the widow of Don Juan Cojuangco, the registered
owner of the disputed parcel of residential land
Many years back (about sixty years, according to the municipal trial court) the parents of
private respondent Purificacion Villegas, with the acquiescence of Don Juan Cojuangco, constructed
a residential house and later a structure housing a bakery on the aforesaid lot. It was understood
that they could remain on the land with his blessings and without paying rentals on condition that
they would vacate the premises when needed by the owner.
After her parent's death, Villegas remained in the property, renovating the same and
spending P300,000.00 in the process. She also leased out a portion of the land to Siapno
Appliances at P600.00 a month without the knowledge and consent of Don Juan Cojuangco This
latter act apparently destroyed her congenial relations with the landowner because soon thereafter,
Don Juan Cojuangco, through his attorney in fact, demanded that she leave the property. Despite
his repeated written demands for her to surrender possession of the property, Villegas refused,
prompting Cojuangco to institute ejectment proceedings against her before the Municipal Trial Court
(MTC)

RULING:

Rule 9, Section 4 of the Revised Rules of Court on compulsory counterclaim provides the answer. It 1âwphi1

states:

A counterclaim or cross-claim not set up shall be barred if it arises out of or is necessarily


connected with, the transaction or occurrence that is the subject-matter of the opposing
party's or co-party's claim and does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction.

Villegas' claim to recover compensation for improvements made on the land is essentially in the
nature of a counterclaim since it is inter-woven with the fact of possession. Said claim for
compensation should have been presented as a counterclaim in the ejectment suit. It is deemed
barred if not raised on time and the party in error is precluded from setting it up in a subsequent
litigation. 9 The rule on compulsory counter-claim is designed to enable the disposition of the entire
conflict at one time and in one action. The philosophy of the rule is to discourage multiplicity of
suits. 10

According to Villegas, the reason why the counterclaim for indemnification was not made in the
original action was because it became a "ripe issue" only after the ejectment proceedings. Villegas
contended that the estoppel of judgment could only extend to those facts and conditions existing at
the time the judgment was rendered and not to those which supervened before the second suit.

The argument is untenable. In her pleadings, Villegas repeatedly stressed that the residential house
which her parents had constructed was already there on the questioned lot for as long as she could
remember, that she herself has lived there all her life and that in the honest belief that the land had
been "donated" to her parents by her "Aunt Tecla", she made various improvements and renovation
thereon. Obviously, such declarations on the part of Villegas completely negate her absurd claim
that the factual basis for her subsequent action arose after the ejectment suit became final. 1âwphi 1

Thus, Villegas should have set forth, simultaneously with the assertion that she was entitled to the
parcel of land by right of inheritance, the alternative claim that assuming she was not legally entitled
to the disputed lot, at least as a builder in good faith, she has the right to the value of the buildings
and improvements which she and her parents had introduced on the land. 11 And while it may be
argued that the defense of being a builder in good faith would have been inconsistent with her claim
of ownership, in the case of Castle Bros., Wolf and Sons v. Go-Juno 12 the Court held that a party
may set forth as many defenses and counterclaims as he may have, whatever be their nature.
These may even be inconsistent with each other because what is sufficient is that each is consistent
with itself.
Philtranco v CA

Felix Paras (Paras for brevity), who hails from Cainta, Rizal is engaged in the buy and sell of fish
products. Sometime on 08 February 1987, on his way home to Manila from Bicol Region, he
boarded a bus with Body No. 101 and Plate No. EVE 508, owned and operated by Inland
Trailways, Inc. (Inland for brevity) and driven by its driver Calvin Coner (Coner for brevity).

At approximately 3:50 oclock in the morning of 09 February 1987, while the said bus was
travelling along Maharlika Highway, Tiaong, Quezon, it was bumped at the rear by another bus
with Plate No. EVB 259, owned and operated by Philtranco Service Enterprises, Inc. (Philtranco
for brevity). As a result of the strong and violent impact, the Inland bus was pushed forward and
smashed into a cargo truck parked along the outer right portion of the highway and the shoulder
thereof. Consequently, the said accident bought considerable damage to the vehicles involved
and caused physical injuries to the passengers and crew of the two buses, including the death of
Coner who was the driver of the Inland Bus at the time of the incident.

Issue: Philtranco contends that Paras could not recover moral damages because his
suit was based on breach of contract of carriage, pursuant to which moral damages
could be recovered only if he had died, or if the common carrier had been guilty of
fraud or bad faith. It argues that Paras had suffered only physical injuries; that he
had not adduced evidence of fraud or bad faith on the part of the common carrier;
and that, consequently, Paras could not recover moral damages directly from it
(Philtranco), considering that it was only being subrogated for Inland.

Ruling:

Section 12, Rule 6 of the Revised Rules of Court, the rule then applicable, viz:

Section 12. Third-party complaint. A third-party complaint is a


claim that a defending party may, with leave of court, file against a person
not a party to the action, called the third-party defendant, for contribution,
indemnity, subrogation or any other relief, in respect of his opponents
claim.[12]

Under this Rule, a person not a party to an action may be impleaded by the
defendant either (a) on an allegation of liability to the latter; (b) on the ground of
direct liability to the plaintiff-; or, (c) both (a) and (b). The situation in (a) is covered
by the phrase for contribution, indemnity or subrogation; while (b) and (c) are
subsumed under the catch all or any other relief, in respect of his opponents claim.

The case at bar is one in which the third party defendants are brought
into the action as directly liable to the plaintiffs upon the allegation that the
primary and immediate cause as shown by the police investigation of said
vehicular collision between (sic) the above-mentioned three vehicles was the
recklessness and negligence and lack of imprudence (sic) of the third-party
defendant Virgilio (should be Leonardo) Esguerra y Ledesma then driver of
the passenger bus. The effects are that plaintiff and third party are at issue as
to their rights respecting the claim and the third party is bound by the
adjudication as between him and plaintiff. It is not indispensable in the
premises that the defendant be first adjudged liable to plaintiff before the
third-party defendant may be held liable to the plaintiff, as precisely, the
theory of defendant is that it is the third party defendant, and not he, who
is directly liable to plaintiff. The situation contemplated by appellants would
properly pertain to situation (a) above wherein the third party defendant is
being sued for contribution, indemnity or subrogation, or simply stated, for a
defendant's remedy over.[19]

It is worth adding that allowing the recovery of damages by Paras based


on quasi-delict, despite his complaint being upon contractual breach, served the
judicial policy of avoiding multiplicity of suits and circuity of actions by disposing
of the entire subject matter in a single litigation.[20]
Dio v Subic Bay

Petitioner H.S. Equities, Ltd., (HSE) is a foreign corporation duly organized and existing under the
laws of the British Virgin Islands, with registered address at Akara Building, 24 De Castro Street,
Wickhams Cay I, Road Town, Tortola, British Virgin Islands. It entered into an isolated transaction
subject of the instant case. It is represented in this action by petitioner Virginia S. Dio (Dio).

Respondent Subic Bay Marine Exploratorium, Inc. (SBME) is a domestic corporation, duly organized
and existing under the Philippine laws and is represented in this action by its Chief Executive Officer,
respondent Timothy Desmond (Desmond).

In 2002, SBME decided to expand its business by operating a beach resort inside the property
administered by the Subic Bay Metropolitan Authority (SBMA). For the business venture to take off,
SBME needed to solicit investors who are willing to infuse funds for the construction and operation of
the beach resort project. HSE (formerly known as Westdale Assets Limited) thru its authorized
director, Dio, agreed to invest the amount of US$2,500,000.00 with SBME by purchasing 750,000
common shares with a par value of ₱100 per share from the increase in its authorized capital stock.
The agreement was reduced into writing wherein HSE, in order to protect its interest in the company,
was afforded minority protection rights such as the right to appoint a member of the board of
directors and the right to veto certain board resolutions. After HSE initially paid US$200,000.00 for
its subscription, it refused to further lay out money for the expansion project of the SBME due to the
alleged mismanagement in the handling of corporate funds.

Consequently, SBME initiated an intra-corporate dispute before the RTC of Balanga City, Bataan
against petitioners HSE and Dio.4 Before petitioners could file their answer to the complaint,
respondents impleaded its Corporate Secretary, Atty. Winston Ginez, as additional defendant. In
their Amended Complaint5 docketed as Civil Case No. 7572, SBME essentially alleged that HSE
unjustly refused to pay the balance of its unpaid subscription effectively jeopardizing the company’s
expansion project. Apart from their refusal to honor their obligation under the subscription contract, it
was further alleged by SBME that Dio tried to dissuade local investors and financial institutions from
putting in capital to SBME by imputing defamatory acts against Desmond. To protect the interest of
the corporation and its stockholders, SBME sought that petitioners be enjoined from committing acts
inimical to the interest of the company.

To refute the claims of respondents, petitioners maintained in their Answer with Compulsory
Counterclaim6 that it would be highly preposterous for them to dissuade investors and banks from
putting in money to SBME considering that HSE and Dio are stakeholders of the company with
substantial investments therein. In turn, petitioners countered that their reputation and good name in
the business community were tarnished as a result of the filing of the instant complaint, and thus
prayed that they be indemnified in the amount of US$2,000,000.00 as moral damages. Constrained
to litigate to protect their rights, petitioners asked that they be indemnified in the amount
of₱1,000,000.00 in litigation expenses. Petitioners likewise sought to recover their investment of
US$1,500,000.00 since they were purportedly inveigled by Desmond into putting in money to SBME
under the pretext that they will be accorded with minority protection rights. It was alleged that after
the filing of the instant complaint, Desmond, in collusion with other Board of Directors of SBME,
managed to unjustly deny HSE and Dio their rights under the Subscription Agreement. To curb
similar socially abhorrent actions, petitioners prayed that SBME and its Board of Directors, namely,
Desmond, John Corcoran, Gaile Laule and Gregorio Magdaraog, be jointly and severally held liable
to pay exemplary damages in the amount of US$2,000,000.00.
RULING:

Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main
action of the case, as when it dismisses the same, then the compulsory counterclaim being ancillary
to the principal controversy, must likewise be similarly dismissed since no jurisdiction remains for the
grant of any relief under the counterclaim.28

As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the
complaint does not ipso jure result in the dismissal of the counterclaim, and the latter may remain for
independent adjudication of the court, provided that such counterclaim, states a sufficient cause of
action and does not labor under any infirmity that may warrant its outright dismissal. Stated
differently, the jurisdiction of the court over the counterclaim that appears to be valid on its face,
including the grant of any relief thereunder, is not abated by the dismissal of the main action. The
court’s authority to proceed with the disposition of the counterclaim independent of the main action is
premised on the fact that the counterclaim, on its own, raises a novel question which may be aptly
adjudicated by the court based on its own merits and evidentiary support.

WHEREFORE, premises considered, the petition is GRANTED. The assailed R TC Orders dated 3
April 2009 and 26 August 2009 are hereby REVERSED and SET ASIDE. The case is REMANDED
to the Regional Trial Court of Balanga City, Bataan for further proceedings, on the matter of
petitioners Virginia S. Dio and H.S. Equities, Ltd. 's counterclaims. No pronouncement as to costs.