Civil Procedure
(3rd study guide questions) Whether or not the venue was properly laid.
1.
a) What is real action?
Real actions are actions involving title to, ownership,
possession, or any interest in real property.
(If the real property is merely incidental to the issue, such
as if the action is to recover damages to real property, the
same is a personal action.)
b) What is a personal action?
Personal action, one which is not founded upon the privity
of real rights or real property.
(An action for specific performance is a personal action.)
2. Is cancellation of real estate mortgage a
real action or personal action? (Hernandez vs.
Rural Bank of Lucena, G.R. No. L-29791, Jan. 10,
1978)
In sum, the cancellation of the real estate mortgage,
subject of the instant petition, is a real action,
considering that a real estate mortgage is a real right
and a real property by itself.
An action for cancellation of real estate
mortgage is necessarily an action affecting the title to
the property.
(GO vs. UCPB G.R. No. 156187 November 11, 2004)
HERNANDEZ VS RURAL BANK OF LUCENA, INC.
G.R. No. L-29791 1978 Jan 10 (81 SCRA 75)
FACTS:
Spouses Hernandez obtained from the Rural Bank of
Lucena, Inc. a loan of P6,000, payable in a year. The
loan was secured by a mortgage on their two lots
situated in Cubao, Quezon City.
About three months after that loan was obtained, the
Lucena bank became a distressed bank. It then
received directives from the Central Bank which it
construed as a directive to suspend operations.
Before the expiration of the one year term of the loan,
Hernandez offered to pay the loan by means of a check
which was drawn against the bank by a depositor, the
San Pablo Colleges, and which was payable to
Hernandez. The payment was never consummated.
Despite several attempts, Hernandez’s check was
refused, Lucena bank being no longer in a position to
honor withdrawals.
In the meantime, the Monetary Board had decided to
liquidate the Lucena bank. A petition was filed with CFI
of Manila for assistance and supervision in the
liquidation of the Lucena bank.
Hernandez made a judicial deposit of the check with
the CFI of Lipa City. He then filed with the same court
an action to compel the Rural Bank and Central Bank
as liquidator to accept the check and to execute the
cancellation of the real estate mortgage.
ISSUE:
HELD:
An action to foreclose a real estate mortgage is a real
action, but an action to compel the mortgagee to
accept payment of the mortgage debt and to release
the mortgage is a personal action.
Section 2(a), Rule 4 of the Rules of Court provides that
"actions affecting title to, or for recovery of possession,
or for partition or condemnation of, or foreclosure of
mortgage on, real property, shall be commenced and
tried in the province where the property or any part
thereof lies"
The rule mentions an action for foreclosure of a real
estate mortgage but does not mention an action for the
cancellation of a real mortgage. In the instant case, the
action is primarily to compel the mortgagee to accept
payment of the mortgage debt and to release the
mortgage.
Hence, the venue of plaintiffs' personal action is the
place 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
(Sec. 2[b], Rule 4). The term "resides" in section 2[b]
of Rule 4 refers to the place of actual residence or the
place of abode and not necessarily to the legal
residence or domicile
San Juan, Batangas might be the place where the
plaintiffs have their domicile or legal residence but
there is no question that Chicago St., Cubao, Quezon
City is their place of abode or the place where they
actually reside. So, the action in this case, which is a
personal action to compel the defendants to honor the
check in question and to cancel the mortgage, should
have been filed in Quezon City if the plaintiffs intended
to use their residence as the basis for their choice of
venue.
GO vs. UCPB G.R. No. 156187 November 11,
2004 Real v. Personal Action, Real Estate
Mortgage
FACTS:
Petitioner Jimmy Go and Alberto T. Looyuko applied for
an Omnibus Line accommodation with respondent
UCPB in the amount of 900 Million Pesos. The
transaction was secured by Real Estate Mortgages over
parcels of land located in Mandaluyong.
The approved Omnibus Line accommodation was
subsequently cancelled by respondent UCPB. Hence,
petitioner demanded the return of the 2 TCTs covered
by the Real Estate Mortgages earlier executed.
UCPB refused to return the TCTs and thereafter filed
an extrajudicial foreclosure of real estate mortgage for
nonpayment of the obligation secured by said
mortgage. A public auction sale of the mortgaged
property was then set.
Hence, petitioner filed a complaint for Cancellation of
Real Estate Mortgage and damages, with prayer for
temporary restraining order and/or writ of preliminary
injunction, against respondent with RTC Pasig City.

Respondent bank, instead of filing an answer, filed a
motion to dismiss alleging, among others, that the
complaint was filed in the wrong venue.
The trial court granted petitioner’s application for a writ
of preliminary injunction and denied respondent bank’s
motion to dismiss as well as its motion for
reconsideration.
Respondent bank questioned said orders before the CA
via a petition for certiorari.
The CA set aside the subject Orders issued by the trial
court and directed the trial court to dismiss the case on
the ground of improper venue.
Petitioner in this case contends that a case for
cancellation of mortgage is a personal action and since
he resides at Pasig City, venue was properly laid
therein.
ISSUE:
Whether or not petitioner’s complaint for cancellation
of real estate mortgage is a personal or real action for
the purpose of determining venue.
RULING:
In a real action, the plaintiff seeks the recovery of real
property, or as provided for in Section 1, Rule 4, a real
action is an action affecting title to or possession of
real property, or interest therein. These include
partition or condemnation of, or foreclosure of
mortgage on real property. The venue for real actions
is the same for regional trial courts and municipal trial
courts — the court which has territorial jurisdiction
over the area where the real property or any part
thereof lies.
Personal action is one brought for the recovery of
personal property, for the enforcement of some
contract or recovery of damages for its breach, or for
the recovery of damages for the commission of an
injury to the person or property. The venue for
personal actions is likewise the same for the regional
and municipal trial courts — the court of the place
where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal
defendants resides, at the election of the plaintiff, as
indicated in Section 2 of Rule 4.
It is quite clear then that the controlling factor in
determining venue for cases of the above nature is the
primary objective for which said cases are filed.
In Carandang v. CA, we held that an action for
nullification of the mortgage documents and
foreclosure of the mortgaged property is a real action
that affects the title to the property. Thus, venue of
the real action is before the court having jurisdiction
over the territory in which the property lies.
In a relatively recent case, Asset Privatization Trust v.
CA, it was succinctly stated that the prayer for the
nullification of the mortgage is a prayer affecting real
property, hence, is a real action.
In sum, the cancellation of the real estate mortgage,
subject of the instant petition, is a real action,
considering that a real estate mortgage is a real right
and a real property by itself. An action for cancellation
of real estate mortgage is necessarily an action
affecting the title to the property. It is, therefore, a real
action which should be commenced and tried in
Mandaluyong City, the place where the subject
property lies.
3. If the buyer of a lot in installment files a
case to compel the seller to accept payment
already due, is the case a real action or personal
action? Explain.
4.
a) What is action in personam?;
A proceeding to enforce personal rights and obligations
brought against the person and is based on the
jurisdiction of the person, although it may involve his right
to, or the exercise of ownership of, specific property, or
seek to compel him to control or dispose of it in
accordance with the mandate of the court.
The purpose of a proceeding in personam is to impose,
through the judgment of a court, some responsibility or
liability directly upon the person of the defendant
[Domagas v. Jensen, G.R. No. 158407 (2005)]
b) What is action in rem?
Actions against the thing itself. They are binding upon the
whole world. "Against the thing" means that resolution of
the case affects interests of others whether direct or
indirect. It also assumes that the interests — in the form
of rights or duties — attach to the thing which is the
subject matter of litigation [De Pedro v. Romasan
Development Corp., G.R. No. 194751
(2014)]
5. Can a personal action at the same time be
an action in rem? Explain by example.
6. Can a real action be an action in personam?
Explain by example.
7. What is the venue for a real action?
Rule 4, Section 1. Venue of real actions. — Actions
affecting title to or possession of real property, or interest
therein, shall be commenced and tried in the proper court
which has jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced
and tried in the municipal trial court of the municipality or
city wherein the real property involved, or a portion
thereof, is situated. (1[a], 2[a]a)
8. What is the venue for personal actions?
Rule 4, Section 2. Venue of personal actions. — All
other actions may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, or where
the defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he may
be found, at the election of the plaintiff. (2[b]a)
9. What is the venue of actions against non-
residents?
Rule 4, Section 3. Venue of actions against
nonresidents. — If any of the defendants does not reside
and is not found in the Philippines, and the action affects
the personal status of the plaintiff, or any property of said
defendant located in the Philippines, the action may be
commenced and tried in the court of the place where the
plaintiff resides, or where the property or any portion
thereof is situated or found. (2[c]a)
10. Under what circumstances that the rules of
venue under the Rules of Court is/are not
applicable?
Rule 4, Section 4. When Rule not applicable. — This
Rule shall not apply.
(a) In those cases where a specific rule or law provides
otherwise; or
(b) Where the parties have validly agreed in writing
before the filing of the action on the exclusive venue
thereof. (3a, 5a)
11. What is the venue of an action for revival of
judgment? (Infante vs. Aran Builders, Inc. G.R. No.
156596, Aug. 24, 2007)
The allegations in the complaint for revival of judgment
determine whether it is a real action or a personal action.
x x x If the action for revival of judgment affects title to
or possession of real property, or interest therein, then it
is a real action that must be filed with the court of the
place where the real property is located. (Adelaida
Infante v Aran Builders, GR 156596, August 24,
2007)
INFANTE V. ARAN BUILDERS
FACTS:
Aran Builders filed before the RTC of Muntinlupa City
an action for revival of judgment against Infante.
The judgment sought to be revived was rendered by
the Makati RTC which is an action for specific
performance and damages.
Infante filed a motion to dismiss the action for revival
of judgment on the grounds that Muntinlupa RTC has
no jurisdiction over the persons of the parties and that
venue was improperly laid. Aran Builders opposed the
Motion.
Muntinlupa RTC denied the motion to dismiss due to
the following reasons:
1. When the decision was rendered by the Makati RTC,
there was still no RTC in Muntinlupa
2. The case at bar is a revival of a judgment which
declared the plaintiff as the owner of a parcel of land
located in Muntinlupa City. It is this judgment which is
sought to be enforced thru this action which
necessarily involves the interest, possession, title, and
ownership of the parcel of land located in Muntinlupa
city and adjudged to Infante. Hence, the complaint
should be filed in Muntinlupa City where the property
is located, as there are now Regional Trial Courts in
said city.
MR denied by Muntinlupa RTC.
CA ruled in favor of Aran Builders. CA held that since
the judgment sought to be revived was rendered in an
action involving title to or possession of real property,
or interest therein, the action for revival of judgment
is then an action in rem which should be filed with the
Regional Trial Court of the place where the real
property is located. MR denied.
ISSUE:
Where is the proper venue of the present action for
revival of judgment?
RULING: Muntinlupa RTC
Section 6, Rule 39 of the 1997 Rules of Civil Procedure
provides that after the lapse of five (5) years from
entry of judgment and before it is barred by the
statute of limitations, a final and executory judgment
or order may be enforced by action. The Rule does not
specify in which court the action for revival of
judgment should be filed.
The proper venue depends on the determination of
whether the present action for revival of judgment is
a real action or a personal action. If the action for
revival of judgment affects title to or possession of real
property, or interest therein, then it is a real action
that must be filed with the court of the place where
the real property is located. If such action does not fall
under the category of real actions, it is then a personal
action that may be filed with the court of the place
where the plaintiff or defendant resides.
The allegations in the complaint for revival of
judgment determine whether it is a real action or a
personal action. The complaint for revival of judgment
alleges that a final and executory judgment has
ordered Infanta to execute a deed of sale over a parcel
of land in Ayala Alabang Subdivision in favor of Aran
Builders; pay all pertinent taxes in connection with
said sale; register the deed of sale with the Registry of
Deeds and deliver to Ayala Corporation the certificate
of title issued in the name of Aran Builders.
The previous judgment has conclusively declared Aran
Builders’ right to have the title over the disputed
property conveyed to it. It is undeniable that Aran
Builders has an established interest over the lot in
question; and to protect such right or interest, Aran
Builders brought suit to revive the previous judgment.
The sole reason for the present action to revive is the
enforcement of Aran Buidlers’ adjudged rights over a
piece of realty. Verily, the action falls under the
category of a real action, for it affects Aran Builders’
interest over real property. The present case for
revival of judgment being a real action, the complaint
should indeed be filed with the Regional Trial Court of
the place where the realty is located.
 Section 18 of BP129 provides that a branch of the officer whose office is in the City of Manila at the time
Regional Trial Court shall exercise its authority only of the commission of the offense, the action shall be
over a particular territory defined by the Supreme filed in the Court of First Instance of the City of Manila,
Court. Originally, Muntinlupa City was under the or of the city or province where the libelous article is
printed and first published, and in case such public
territorial jurisdiction of the Makati Courts. However,
officer does not hold office in the City of Manila, the
the Judiciary Reorganization Act of 1981 took effect action shall be filed in the Court of First Instance of the
and said law provided for the creation of a branch of province or city where he held office at the time of the
the Regional Trial Court in Muntinlupa. Thus, it is now commission of the offense or where the libelous article
the Regional Trial Court in Muntinlupa City which has is printed and first published and in case one of the
territorial jurisdiction or authority to validly issue offended parties is a private individual, the action shall
orders and processes concerning real property within be filed in the Court of First Instance of the province or
Muntinlupa City. city where he actually resides at the time of the
commission of the offense or where the libelous matter
12. Give the instances where a specific rule or is printed and first published: Provided, further, That
law provides a specific venue for the action. (read the civil action shall be filed in the same court where
Sec. 5 of A.M. No. 01-2-04-SC, March 13, 2001 the criminal action is filed and vice versa: Provided,
(Interim Rules of Procedure Governing Intra- furthermore, That the court where the criminal action
Corporate Controversies under R.A. 8799); Rule or civil action for damages is first filed, shall acquire
66, Sec. 7 of the Rules of Court; and Art. 360 of the jurisdiction to the exclusion of other courts: And,
Revised Penal Code) provided, finally, That this amendment shall not apply
to cases of written defamations, the civil and/or
A.M. No. 01-2-04-SC. March 13, 2001 criminal actions which have been filed in court at the
Re: PROPOSED INTERIM RULES OF PROCEDURE time of the effectivity of this law.
GOVERNING INTRA-CORPORATE CONTROVERSIES
UNDER R. A. NO. 8799 Preliminary investigation of criminal action for written
defamations as provided for in the chapter shall be
conducted by the provincial or city fiscal of the province
SEC. 5. Venue. – All actions covered by these Rules
or city, or by the municipal court of the city or capital
shall be commenced and tried in the Regional Trial
of the province where such action may be instituted in
Court which has jurisdiction over the principal office of
accordance with the provisions of this article.
the corporation, partnership, or association concerned.
Where the principal office of the corporation,
No criminal action for defamation which consists in the
partnership or association is registered in the Securities
imputation of a crime which cannot be prosecuted de
and Exchange Commission as Metro Manila, the action
oficio shall be brought except at the instance of and
must be filed in the city or municipality where the head
upon complaint expressly filed by the offended party.
office is located.
(As amended by R.A. 1289, approved June 15, 1955,
R.A. 4363, approved June 19, 1965).
Rule 66, Sec. 7 of the Rules of Court;
13. What are the exceptions to the rule on
Section 7. Venue. — An action under the preceding
uniformity of procedures in the MTC and RTC?
six sections can be brought only in the Supreme Court,
the Court of Appeals, or in the Regional Trial Court
Rule 5, Section 1. Uniform procedure. — The procedure
exercising jurisdiction over the territorial area where
in the Municipal Trial Courts shall be the same as in the
the respondent or any of the respondents resides, but
Regional Trial Courts, except (a) where a particular
when the Solicitor General commences the action, it
provision expressly or impliedly applies only to either of
may be brought in a Regional Trial Court in the City of
said courts, or (b) in civil cases governed by the Rule on
Manila, in the Court of Appeals, or in the Supreme
Summary Procedure. (n)
Court. (8a)
14. What is a pleading? Is motion a pleading?
Art. 360 of the Revised Penal Code
Rule 6, Section 1. Pleadings defined. — Pleadings are
Art. 360. Persons responsible. — Any person who shall
the written statements of the respective claims and
publish, exhibit, or cause the publication or exhibition
defenses of the parties submitted to the court for
of any defamation in writing or by similar means, shall
appropriate judgment. (1a)
be responsible for the same.
Rule 16, Section 1. Motion defined. — A motion is an
The author or editor of a book or pamphlet, or the
application for relief other than by a pleading. (1a)
editor or business manager of a daily newspaper,
magazine or serial publication, shall be responsible for
Both Prays for a relief [Sec. 1, Rule 15]
the defamations contained therein to the same extent
as if he were the author thereof.
Motion, contains allegations of facts [Sec. 3, Rule 15]
whereas Pleadings, Contains allegations of the ultimate
The criminal and civil action for damages in cases of
facts [Sec. 1, Rule 8].
written defamations as provided for in this chapter,
shall be filed simultaneously or separately with the
Motion is generally in writing (with some exceptions)
court of first instance of the province or city where the
[Sec. 2, Rule 15], whereas, Pleadings Always in writing
libelous article is printed and first published or where
[Sec. 1, Rule 6].
any of the offended parties actually resides at the time
of the commission of the offense: Provided, however,
15.
That where one of the offended parties is a public
a) What is a complaint?; Said certifications are not Should be accompanied
required by a certification against
Rule 6, Section 3. Complaint. — The complaint is the forum shopping and,
pleading alleging the plaintiff's cause or causes of action. whenever required by
The names and residences of the plaintiff and defendant law, also a certificate to
must be stated in the complaint. (3a) file action issued by the
Lupong Tagapamayapa
b) What is an answer?; Failure to answer a Must be answered by the
compulsory counterclaim party against whom it is
Rule 6, Section 4. Answer. — An answer is a pleading is not a cause for a default interposed, otherwise he
in which a defending party sets forth his defenses. (4a) declaration. may be declared in default
as to the counterclaim.
c) What is a counterclaim?
SAMPLE:
Rule 6, Section 6. Counterclaim. — A counterclaim is If Mr. P for instance, sues Mr. D for a sum of money and
any claim which a defending party may have against an Mr. D interposes a claim for damages arising out of a
opposing party. (6a) tortuous act previously committed by Mr. P against him,
the counterclaim is permissive because the same has no
16. What is a third party complaint? connection with the claim of Mr. P. This counterclaim may
be the subject of a separate suit at the option of Mr. D.
Rule 6, Section 11. Third, (fourth, etc.)—party Now, suppose the suit filed by Mr. P against Mr. D is one
complaint. — A third (fourth, etc.) — party complaint is a for sum of money. This time Mr. D files a counterclaim for
claim that a defending party may, with leave of court, file damages allegedly caused by the unjustified institution of
against a person not a party to the action, called the third the suit. the counterclaim for damages is compulsory
(fourth, etc.) — party defendant for contribution, because of its obvious connection with the plaintiff's
indemnity, subrogation or any other relief, in respect of cause of action. This counterclaim must be set up or shall
his opponent's claim. (12a) be barred.

17. Distinguish compulsory from permissive Cruz-Agana v Santiago-Lagman

counterclaim. (Read: Cruz-Agana vs. Santiago-
Lagman, GR No. 139018, April 11, 2005; Ballecer
vs. Bernardo, GR No. L-21766, Sept. 30, 1996;
Gegare vs. CA, GR No. 132264, Oct. 8, 1998;
Lascano vs. Universal Steel , GR No. 146019, June
8, 2004)
A compulsory counterclaim has the following
elements:
a. It arises put, or is necessarily connected with the
transaction or occurrence which is the subject matter of
the opposing party's claim;
b. It does not require for its adjudication the presence of
third parties of whom the court cannot acquire
jurisdiction; and
c. The Court has jurisdiction to entertain the claim both
as to the amount and the nature thereof.
A permissive counterclaim does not arise out of the same
transaction or is not connected with the plaintiff's cause
of action. It does not arise out of, nor is necessarily
connected with the subject matter of the opposing party's
claim. It is called permissive because it can be the subject
of a separate action. If it is not set-up, it is not barred.
[GR NO. 139018] | [11 April 2005] | [Carpio, J.]
Petitioner: Estherlita Cruz-Agana
Respondents: Hon. Judge Aurora Santiago-Lagman
and B. Serrano Enterprises, Inc.
CASE SUMMARY
Petitioner Estherlita Cruz-Agana filed a complaint for
annulment of title with prayer for preliminary
mandatory injunction, claiming that as the sole heir of
one Teodorico Cruz, she is the sole owner of a lot which
was fraudulently sold to Eugenio Lopez and was later
transferred to respondent B. Serrano Enterprises.
When respondent filed an answer with compulsory
counterclaim, petitioner moved for its dismissal for lack
of a certificate of non-forum shopping. TC denied the
motion, saying that since the respondent’s
counterclaim is compulsory, it is thus excluded from the
coverage of Sec 5, Rule 7. In her motion for
reconsideration, petitioner invoked the mandatory
nature of a certificate of non-forum shopping under SC
Admin Circular No. 04-94. TC then reversed its order
and dismissed the counterclaim. However, respondent
seasonably filed a motion for reconsideration, arguing
that the SC ruling in Santo Tomas University Hospital v
Surla already held that the Admin Circular does not
apply to compulsory counterclaims. TC again reversed
itself. Petition for certiorari filed with the SC.

Compulsory Permissive FACTS

Counterclaim
A compulsory
counterclaim, which a
party has at the time the
answer is filed, shall be
contained in the answer
[Sec. 8, Rule 11] because
a compulsory
counterclaim not set up
shall be barred [Sec. 2,
Rule 9]
Not an initiatory pleading
Counterclaim
Not subject to the rule on
compulsory
counterclaims. Hence, it
may be set up as an
independent action and
will not be barred if not
contained in an answer to
the complaint.
Initiatory pleading
 Petitioner filed a Complaint for annulment of
title with prayer for preliminary mandatory
injunction
 Petitioner claims that as the sole
heir of Teodorico Cruz, she is the
sole owner of a lot covered by
Transfer Certificate of Title No. T-
3907
 Said lot was fraudulently sold to
Eugenio Lopez, Jr who later
transferred the lot to respondent
B. Serrano Enterprises.
  Respondent filed an Answer with compulsory
counterclaim.
 Petitioner moved to dismiss the
counterclaim for lack of a
certificate of non-forum shopping.
 TC denied motion to dismiss.
Respondent’s counterclaim is
compulsory and is therefore
excluded from the coverage of Sec
5, Rule 7.
 Petitioner moved for reconsideration of the
trial court’s Order, invoking the mandatory
nature of a certificate of non-forum shopping
under SC Admin Circular No. 04-94.
 TC then reversed its order and
dismissed the counterclaim for
lack of a certificate of non-forum
shopping.
 Respondent appealed, arguing that the Admin
Circular does not apply to compulsory
counterclaims, per the ruling in Sto. Tomas
University Hospital v Surla.
 TC again reversed its order,
holding that compulsory
counterclaims do not require a
certificate of forum shopping, as
held by the Court in Santo Tomas.
PROCEDURE SUMMARY
Action (Petition for Decision (RTC:
review, appeal of CA petition denied)
decision etc.)
Complaint for annulment RTC Branch 77 Malolos:
of title with prayer for
prelim mandatory
injunction
Respondent filed an
answer with compulsory
counterclaim
Petitioner: motion to RTC: denied
dismiss counterclaim for
lack of a certificate of
non-forum shopping
Petitioner: motion for RTC: granted,
reconsideration counterclaim dismissed
Respondent: motion for RTC: granted, dismissal
reconsideration of counterclaim
reversed.
Petition for certiorari to SC: denied.
reverse RTC order
ISSUE and Ratio
1. WON the trial court committed grave
abuse of discretion in refusing to dismiss
respondent’s counterclaim NO
a. In Santo Tomas University Hospital v
Surla, the Court already clarified that
the Admin Circular No. 04-94 is
intended primarily to cover an
initiatory pleading or an incipient
application of a party asserting a claim
for relief. The distinction between a
compulsory and a permissive
counterclaim is vital in the application
of the circular.
b. The circular has not been
contemplated to include a kind of
claim which, by its very nature as
being auxiliary to the proceedings in
the suit, can only be appropriately
pleaded in the answer and not remain
outstanding for independent
resolution where the main case is
pending. Sec 5, Rule 8 on the violation
of the anti-forum shopping rule as a
cause for dismissal is predicated on
the applicability of the need for a
certification against forum shopping. It
does not include a claim which cannot
be independently set up.
c. Court in Ponciano v Judge Parentela,
Jr reiterated this ruling. Admin Circular
No. 04-94 applies to initiatory and
similar pleadings. A compulsory
counterclaim set up in the answer is
not an “initiatory” or similar pleading.
The initiatory pleading is the plaintiff’s
complaint. A respondent has no choice
but to raise a compulsory counterclaim
the moment the plaintiff files the
complaint. It is a reaction or response,
mandatory upon pain of waiver, to an
initiatory pleading which is the
complaint.
2. WON the Court’s rulings in Santo Tomas
and Ponciano are contrary to the
mandate of Admin Circular No. 04-94 and
other procedural laws NO because the
Court has the power to promulgate rules
as expressly bestowed by the
Constitution
a. Procedural matters are within the sole
jurisdiction of the Court to prescribe.
Administrative Circular No. 04-94 is an
issuance of the Court and not an
enactment of the Legislature. This
Court has the exclusive jurisdiction to
interpret, amend or revise the rules it
promulgates, as long as the rules do
not diminish, increase, or modify
substantive rights. This is precisely
the purpose of Santo Tomas as far
as Administrative Circular No. 04-94 is
concerned.
b. The basis for the ruling in Santo
Tomas and Ponciano is the distinction
between a permissive counterclaim
and a compulsory counterclaim. If it is
a permissive counterclaim, the lack of
a certificate of non-forum shopping is
fatal. If it is a compulsory
counterclaim, the lack of a certificate
of non-forum shopping is immaterial.
c. A compulsory counterclaim is any
claim for money or other relief, which
a defending party may have against an
opposing party, which at the time of
suit arises out of, or is necessarily
connected with, the same transaction
or occurrence that is the subject
matter of plaintiff's complaint. It is
compulsory in the sense that it is
within the jurisdiction of the court,
does not require for its adjudication
the presence of third parties over
whom the court cannot acquire
jurisdiction, and will be barred in the
future if not set up in the answer to
the complaint in the same case. Any
other counterclaim is permissive.
 d. The counterclaim set up by
respondent arises from the filing of
plaintiff’s complaint. The counterclaim
is so intertwined with the main case
that it is incapable of proceeding
independently. The counterclaim will
require a relitigation of the same
evidence if it is allowed to proceed in
a separate action.
DECISION.
 Petition denied. RTC order recalling the
order which dismissed the compulsory
counterclaim is affirmed.
APPENDIX
DIGESTER’S NOTES / TABLES/ ILLUSTRATIONS
Respondent's counterclaim as set up in its answer
states:
3. That because of the unwarranted, baseless, and
unjustified acts of the plaintiff, herein defendant has
suffered and continue to suffer actual damages in the
sum of at least P400,000,000.00 which the law, equity,
and justice require that to be paid by the plaintiff and
further to reimburse the attorney's fees
of P2,000,000.00;
Ballecer v. Bernardo GR No. L-21766 September 30,
1966
Concepcion, C.J:
Facts: Petitioner spouses Jose S. Agawin and
Felicisima Ballecer instituted a Civil Case against
respondent Jose Bernardo before the Court of First
Instance of Manila, to recover damages allegedly
caused by him in consequence of the destruction and
demolition of a portion of a wall of the petitioners,
along the common boundary line of their lot and that
of Bernardo, at Felix Huertas Street, Manila, as well as
to recover possession of a portion of petitioners’
aforementioned lot, with an area of 0.80 square
meters, which was allegedly encroached upon by the
wall subsequently erected by Bernardo in place of the
one he had destroyed.
Bernardo filed his answer denying petitioners’
averments, and alleging, in turn, that the demolition
and destruction made by him had taken place within
the boundary of his own property. By way of
counterclaim, Bernardo set up two (2) causes of action,
namely: (1) that petitioners were the parties who had
encroached upon and occupied a portion of Bernardo’s
property, with an area of about 3.70 square meters,
without his consent and against his will, and (2) that
petitioners’ complaint is premature, uncalled for,
capricious and without any justifiable cause, for which
reason Bernardo prayed that they be sentenced to
vacate his aforementioned portion of land allegedly
encroached upon them and to turn it over to him, and
to pay damages aggregating P48,000.00.
On the last day of the reglementary period to
answer counterclaim, or on June 6, 1960,
petitioners filed an ex parte urgent motion for
extension of time therefor, but on June 11, the
motion was denied and ordered stricken off the
record. Then, on June 13, the court declared
petitioners in default as to the counterclaim and
ordered Bernardo to present his evidence
thereon before the Deputy Clerk of Court on
June 15, at 9:00 a.m., which Bernardo did. On
June 20, the court rendered a decision in favor
of Jose Bernardo.
Issue: Whether or not the lower court has gravely
abused its discretion in declaring the petitioners in
default and in rendering judgment against them on
Bernardo’s counterclaim after an ex parte hearing.
Held: Yes, the lower court gravely abused its
discretion.
Ratio: To begin with, a motion for extension of time
to file an answer to the counterclaim had been filed
within the reglementary period and plausible reasons
were given in support thereof; counsel for petitioners
had been unable to contact them owing to a typhoon
that had just hit Manila, and the flood and inclement
weather that had followed. The main reason for the
lower court’s adverse action thereon would seem to be
petitioners’ failure to set it for hearing as provided in
the Rules of Court. But, there are motions that may
be heard and granted ex parte, and petitioners’
aforementioned motion belongs to such class.
What is more, Bernardo’s counterclaim was
predicated upon allegations of fact which are
inconsistent with and, hence, controverted by, the
allegations in petitioners’ complaint. In this connection,
it should be noted that Bernardo had, according to the
complaint, encroached upon petitioners’ property,
whereas, Bernardo maintained the exact opposite in his
counterclaim — not only that petitioners’ allegation was
not true, but, also, that they were the ones encroaching
upon the property of Bernardo. Certainly, this
contention, of Bernardo cannot be decided without
passing upon the truth of the allegations in the
complaint, which petitioners are entitled to prove,
whether they had answered Bernardo’s counterclaim or
not. In other words, the issues raised in the
counterclaim were inseparable from those
posed in the complaint, and so it was not
absolutely necessary for the petitioners to file
an answer to the counterclaim.
18. Is a compulsory counterclaim not yet
existing at the time of the filing an answer barred
if not set up in the answer? (Intramuros
Administration vs. Contacto, et. al., G.R. No.
152576, May 5, 2003)
19.
a) May the defendant interpose a compulsory
counterclaim against plaintiff’s lawyer for the latter’s
alleged filing of an unfounded suit? (Chavez vs.
Sandiganbayan, GR No. 91391, Jan. 24, 1991);
REMEDIAL LAW; ACTIONS; FILING OF ORDINARY CIVIL
ACTION FOR DAMAGES AGAINST A LAWYER, PROPER
FOR ALLEGED HARASSMENT FALLING UNDER ARTICLE
32 OF THE CIVIL CODE; IT DOES NOT CONSTITUTE A
COMPULSORY COUNTERCLAIM. — The charges pressed
by respondent Enrile for damages under Article 32 of the
Civil Code arising from the filing of an alleged harassment
suit with malice and evident bad faith do not constitute a
compulsory counterclaim. To vindicate his rights, Senator
Enrile has to file a separate and distinct civil action for
damages against the Solicitor General. To allow a
counterclaim against a lawyer who files a complaint for
his clients, who is merely their representative in court and
not a plaintiff or complainant in the case would lead to
mischievous consequences. A lawyer owes his client
entire devotion to his genuine interest, warm zeal in the
maintenance and defense of his rights and the exertion of
his utmost learning and ability. (See Agpalo, Legal Ethics
[1980] p. 147 citing Javier v. Cornejo, 63 Phil. 293 [1936];
In re Tionko, 43 Phil. 191 [1922]; In re: Atty. C. T. Oliva,
103 Phil. 312 [1958]; Lualhati v. Albert, 57 Phil. 86
[1932]; Toguib v. Tomol, Jr., G.R. Adm. Case No. 554,
Jan. 3, 1969; People v. Macellones, 49 SCRA 529 [1973];
Tan Kui v. Court of Appeals, 54 SCRA 199 [1973] A lawyer
cannot properly attend to his duties towards his client if,
in the same case, he is kept busy defending himself.
7. ID.; ID.; ID.; ID.; CASE AT BAR. — As counsel of the
Republic, the Solicitor General has to appear in
controversial and politically charged cases. It is not
unusual for high officials of the Government to unwittingly
use shortcuts in the zealous desire to expedite executive
programs or reforms. The Solicitor General cannot look at
these cases with indifferent neutrality. His perception of
national interest and obedience to instructions from
above may compel him to take a stance which to a
respondent may appear too personal and biased. It is
likewise unreasonable to require Government Prosecutors
to defend themselves against counterclaims in the very
same cases they are prosecuting. As earlier stated, we do
not suggest that a lawyer enjoys a special immunity from
damage suits. However, when he acts in the name of a
client, he should not be sued on a counterclaim in the
very same case he has filed only as counsel and not as a
party. Any claim for alleged damages or other causes of
action should be filed in an entirely separate and distinct
civil action.
CHAVEZ VS. SANDIGANBAYAN G.R. No. 91391
January 24, 1991
FACTS:
On July 31, 1987, the Republic of the Philippines,
through the Presidential Commission on Good
Government (PCGG) with the assistance of Solicitor
General Francisco Chavez filed with the respondent
Sandiganbayan a complaint against Eduardo
Cojuangco, Jr. and Juan Ponce Enrile for reconveyance,
reversion and accounting, restitution and damages.
After the denial of his motion to dismiss, respondent
Enrile filed his answer with compulsory counterclaim
and cross-claim with damages.
Respondent Enrile then requested leave from the
Sandiganbayan to implead the petitioner and the PCGG
officials as party defendants for lodging this alleged
"harassment suit" against him. The motion was granted
in a resolution dated June 8, 1989
In the case, the counterclaim was filed against the
lawyer, not against the party plaintiff itself.
Thereafter, all the PCGG officials filed their answer to
the counterclaims invoking their immunity from suits as
provided in Section 4 of Executive Order No. 1. The
petitioner comes to the Court assailing the resolutions
as rendered with grave abuse of discretion amounting
to lack of jurisdiction.
ISSUE:
Whether or not the petitioner is immune from being
impleaded as additional party defendant in the
counterclaim filed by respondent Enrile.
RULING:
Yes, it is not suggested that a lawyer enjoys a special
immunity from damage suits. However, when he acts
in the name of a client, he should not be sued on a
counterclaim in the very same case he has filed only as
counsel and not as a party. Any claim for alleged
damages or other causes of action should be filed in an
entirely separate and distinct civil action. Under the
circumstances of the case, it was ruled that the charges
pressed by respondent Enrile for damages under Article
32 of the Civil Code arising from the filing of an alleged
harassment suit with malice and evident bad faith do
not constitute a compulsory counterclaim. To vindicate
his rights, Senator Enrile has to file a separate and
distinct civil action for damages against the Solicitor
General. To allow a counterclaim against a lawyer who
files a complaint for his clients, who is merely their
representative in court and not a plaintiff or
complainant in the case would lead to mischievous
consequences.
b) may counterclaim be set up in a criminal case?
20. May a counterclaim implead persons not
parties to the original complaint? (Lafarge Cement
Philippines, Inc. vs. Luzon Continental Land Corp.,
et. al., GR No. 155173, Nov. 23, 2004)
However, while a compulsory counterclaim may implead
persons not parties to the original complaint, the general
rule - - a defendant in a compulsory counterclaim need
not file any responsive pleading, as it is deemed to have
adopted the allegations in the complaint as its answer - -
does not apply. The filing of a responsive pleading is
deemed a voluntary submission to the jurisdiction of the
court; a new party impleaded by the plaintiff in a
compulsory counterclaim cannot be considered to have
automatically and unknowingly submitted to the
jurisdiction of the court. A contrary ruling would result in
mischievous consequences whereby a party may be
indiscriminately impleaded as a defendant in a
compulsory counterclaim; and judgment rendered against
it without its knowledge, much less participation in the
proceedings, in blatant disregard of rudimentary due
process requirements.
The correct procedure in instances such as this is for the
trial court, per Section 12 of Rule 6 of the Rules of Court,
to "order [such impleaded parties] to be brought in as
defendants, if jurisdiction over them can be obtained," by
directing that summons be served on them. In this
manner, they can be properly appraised of and answer
the charges against them. Only upon service of summons
can the trial court obtain jurisdiction over them.
Lafarge Cement Phil v. Continental Cement
G.R. No. 155173, 23 November 2004
FACTS:
In the Letter of Intent (LOI) executed by both parties,
Petitioner Lafarge Cement Philippines, Inc. on behalf of
its affiliates and other qualified entities agreed to
purchase the cement business of Respondent
Continental Cement Corporation. Both parties entered
into a Sale and Purchase Agreement knowing that
respondent has a case pending with the Supreme
Court. In anticipation of future liability, the parties
allegedly agreed to retain from the purchase price a
certain amount to be deposited in an account for
payment to the complainant who sued respondent
herein. Upon the finality of the decision of the said case
wherein liability was imposed to the respondent,
petitioner allegedly refused to apply the sum for
payment despite repeated instructions of the
Respondent. Respondent filed a Complaint with
Application for Preliminary Attachment against
petitioners.
Petitioners filed their Answer and Compulsory
Counterclaims denying all the allegations and alleged
that respondent`s majority stockholder (Lim) which is
also the company president and the corporate
secretary (Mariano), influences respondent to file the
baseless complaint and procured the Writ of
Attachment in bad faith. Hence, petitioners prayed that
both the president and corporate secretary be held
jointly and solidarily liable with respondent. RTC
dismissed petitioner`s counterclaims.
ISSUE:
May defendants in civil cases implead in their
counterclaims persons who were not parties to the
original complaint?
RULING:
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 a 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
principle 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.
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 6 which 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 foregoing procedural rules are founded on
practicality and convenience. They are meant to
discourage duplicity and multiplicity of suits. This
objective is negated by insisting — as the court a quo
has done — that the compulsory counterclaim for
damages be dismissed, only to have it possibly re-filed
in a separate proceeding. Respondents Lim and
Mariano are real parties in interest to the compulsory
counterclaim; it is imperative that they be joined
therein. Moreover, in joining Lim and Mariano in the
compulsory counterclaim, petitioners are being
consistent with the solidary nature of the liability
alleged therein.
WHEREFORE, the Petition is GRANTED and the assailed
Orders REVERSED. The court of origin is hereby
ORDERED to take cognizance of the counterclaims
pleaded in petitioners Answer with Compulsory
Counterclaims and to cause the service of summons on
Respondents Gregory T. Lim and Anthony A. Mariano.
21. What is a cross-claim?
Rule 6, Section 8. Cross-claim. — A cross-claim is any
claim by one party against a co-party arising out of the
transaction or occurrence that is the subject matter either
of the original action or of a counterclaim therein. Such
cross-claim may include a claim that the party against
whom it is asserted is or may be liable to the cross-
claimant for all or part of a claim asserted in the action
against the cross-claimant. (7)
22. Can the defendant in an unlawful detainer
case set up counterclaim for reimbursement of
useful expenses against the plaintiff in the same
case? (Cabangis vs. CA, et. al. GR No. 83722., Aug.
9, 1991)
REMEDIAL LAW; CIVIL PROCEDURE; USEFUL EXPENSES
CONSIDERED A COMPULSORY COUNTERCLAIM;
FAILURE TO SET IT UP IN AN EJECTMENT CASE BARRED
FROM BEING RAISED IN A SUBSEQUENT LITIGATION. —
Well-established is the doctrine that the counterclaim for
reimbursement of the useful expenses is in the nature of
a compulsory counterclaim and the failure to set it up in
the ejectment suit bars the right to raise it in a subsequent
litigation.
23. What are the criteria that may be used in
determining whether a counterclaim is
compulsory or permissive? (Alday vs. FGU
Insurance Corp., GR No. 138822, Jan. 23, 2001 and
Quintanilla vs. CA, GR No. 101747, Sept. 24, 1997)
Adopted in Quintanilla v. CA14 and reiterated in Alday v.
FGU Insurance Corporation,15 the "compelling test of
compulsoriness" characterizes a counterclaim as
compulsory if there should exist a "logical relationship"
between the main claim and the counterclaim. There
exists such a relationship when conducting separate trials
of the respective claims of the parties would entail
substantial duplication of time and effort by the parties
and the court; when the multiple claims involve the same
factual and legal issues; or when the claims are offshoots
of the same basic controversy between the parties.
Determining whether a counterclaim is
compulsory or permissive
A positive answer on all four the following tests would
indicate that the counterclaim is compulsory
1. Are the issues of fact and law raised by the claim and
counterclaim largely the same?
2. Would res judicata bar a subsequent suit on
defendant’s claims, absent the compulsory counterclaim
rule?
3. Will substantially the same evidence support or refute
plaintiff’s claim as well as the counterclaim?
4. Is there any logical relation between the claim and
counterclaim? [GSIS v. Heirs of Caballero, G.R. No.
158090 (2010)]
There is a logical relationship where conducting separate
trials of the respective claims would entail substantial
duplication of effort and time and involves many of the
same factual and legal issues [Meliton v. CA, G.R. No.
101883 (1992)]
24. a) What is a reply? ;
Rule 6, Section 10. Reply. — A reply is a pleading, the
office or function of which is to deny, or allege facts in
denial or avoidance of new matters alleged by way of
defense in the answer and thereby join or make issue as
to such new matters. If a party does not file such reply,
all the new matters alleged in the answer are deemed
controverted.
If the plaintiff wishes to interpose any claims arising out
of the new matters so alleged, such claims shall be set
forth in an amended or supplemental complaint. (11)
b) is the filing of a reply mandatory?
General rule: If a party does not file such reply, all the
new matters alleged in the answer are deemed
controverted [Sec. 10, Rule 6]
Exception: When a reply is necessary
1. To set up affirmative defenses on the counterclaim
[Rosario v. Martinez, G.R. No. L- 4473 (1952)]
2. Where the answer alleges the defense of usury in which
case a reply under oath should be made; otherwise, the
allegation of usurious interest shall be deemed admitted
[Rule 8, Sec. 8; Sun Bros. v. Caluntad, G.R. No. L-21440
(1966)]
3. Where the defense in the answer is based on an
actionable document, a reply under oath must be made;
otherwise, the genuineness and due execution of the
document shall be deemed admitted [Sec. 11, Rule 8;
Toribio v. Bidin, G.R. No. L-57821 (1985)]
25. May plaintiff add to or change his causes of
action in a reply? (Magnolia Corporation, et. al. vs.
NLRC, et. al., GR No. 116813, Nov. 24, 1995)
REMEDIAL LAW; CIVIL PROCEDURE; REPLY; PURPOSE.
— The purpose of a reply is to deny or allege facts in
denial of new matters alleged by way of defense in the
answer. It is not the office or function of a reply to set up
or introduce a new cause of action or to amend or amplify
the complaint.
26. What are the affirmative defenses that may
be set up by a defendant?
AFFIRMATIVE DEFENSES
It is an allegation of a new matter which, while
hypothetically admitting the material allegations in the
pleading of the claimant, would nevertheless prevent or
bar recovery by him.
Kinds of affirmative defenses (PERSSIDOFF)
1. Payment;
2. Estoppel;
3. Release;
4. Statute of limitations;
5. Statute of frauds;
6. Illegality;
7. Discharge in bankruptcy;
8. Any other matter by way of confession and avoidance;
9. Fraud; and
10. Former recovery (Sec. 5(b), Rule 6; Pesane
Animas Mongao v. Pryce Properties Corpo, G.R.
No. 156474. August 16, 2005)
27.
a) What is a verification?
The declaration under oath or upon penalty of perjury
that a statement or pleading is true, located at the end of
a document.
b) How is a pleading verified?;
Rule 7, Section 4. Verification. — Except when
otherwise specifically required by law or rule, pleadings
need not be under oath, verified or accompanied by
affidavit .(5a)
A pleading is verified by an affidavit that the affiant has
read the pleading and that the allegations therein are true
and correct of his knowledge and belief.
A pleading required to be verified which contains a
verification based on "information and belief", or upon
"knowledge, information and belief", or lacks a proper
verification, shall be treated as an unsigned pleading. (6a)
c) May counsel sign the verification?
Rule 7, Section 3. Signature and address. — Every
pleading must be signed by the party or counsel
representing him, stating in either case his address
which should not be a post office box.
The signature of counsel constitutes a certificate by him
that he has read the pleading; that to the best of his
knowledge, information, and belief there is good ground
to support it; and that it is not interposed for delay.
An unsigned pleading produces no legal effect. However,
the court may, in its discretion, allow such deficiency to
be remedied if it shall appear that the same was due to
mere inadvertence and not intended for delay. Counsel
who deliberately files an unsigned pleading, or signs a
pleading in violation of this Rule, or alleges scandalous or
indecent matter therein, or fails promptly report to the
court a change of his address, shall be subject to
appropriate disciplinary action. (5a)
28. What is certification of non-forum
shopping?
It is a mandatory requirement in filing a complaint and
other initiatory pleadings asserting a claim or relief (Sec.
5, Rule 7).
NOTE: This rule also applies to special civil actions since
a special civil action is governed by the rules for ordinary
civil actions, subject to the specific rules prescribed for
special civil action (Riano, 2014, citing Wacnang v.
COMELEC, G.R. No. 178024, October 17, 2008).
The certification against forum shopping is only required
in a complaint or other initiatory pleading (Sec. 5, Rule 7;
Arquiza v. Court of Appeals, G.R. No. 160479, June 8,
2005). A petition for the issuance of the writ of execution
is not an initiatory pleading, it does not require a
certification against forum shopping (2014 Bar).
29. What are the effects/consequences of failure to
comply with the rule on verification and certification of
non-forum shopping?
30. a) Distinguish ultimate facts from
evidentiary facts.

Ultimate facts are essential facts constituting the
plaintiff’s cause of action. A fact is essential if it cannot be
stricken out without leaving the statement of the cause of
action insufficient [Remitere v. Montinola, G.R. No. L
19751 (1966)]
Non-ultimate facts
A fact is essential if it cannot be stricken out without
leaving the statement of the cause of action or defense
insufficient [Toribio v. Bidin, G.R. No. 57821 (1985)].
Hence, conclusions, inferences, presumptions, and details
of probative matters should not be alleged [1 Regalado
173, 2010 Ed.]
"Evidentiary facts" are those which are necessary to
prove the ultimate fact or which furnish evidence of the
existence of some other facts. They are not proper as
allegations in the pleadings as they may only result in
confusing the statement of the cause of action or the
defense. They are not necessary therefor, and their
exposition is actually premature as such facts must be
found and drawn from testimonial and other evidence [1
Regalado 173-174, 2010 Ed.]
Facts alleged in the complaint are judicial admissions that
bind the plaintiff and may be the basis to dismiss the
complaint [Luzon Development Bank v. Conquilla, G.R.
No. 163338 (2005)]
31.
a) What is an actionable document?;
It is a written instrument or document which is the basis
of an action or a defense (e.g. a promissory note in an
action for collection of a sum of money).
b) How may a party plead an actionable
document?;
Pleading an actionable document
Whenever an action or defense is based upon a written
instrument or document:
1. The substance of such instrument or document shall
be set forth in the pleading; and
2. The original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a part
of the pleading, or said copy may with like effect be set
forth in the pleading (Sec. 7, Rule 8).
NOTE: A variance in the substance of the document set
forth in the pleading and the document annexed thereto
does not warrant the dismissal of the action (Convets, Inc.
v. National Development Co., G.R. No. L- 10232, February
28, 1958). However, the contents of the document
annexed are controlling.
c) How may a party contest the genuineness and due
execution of an actionable document? Permanent
Savings vs. Velarde (2004)
Permanent Savings and Loan Bank v. Velarde,
439 SCRA 1 (2004)
FACTS:
In a complaint for sum of money filed before the RTC,
petitioner Permanent Savings and Loan Bank sought to
recover from respondent Mariano Velarde, the sum of
P1,000,000.00 plus accrued interests and penalties,
based on a loan obtained by respondent from petitioner
bank as evidence by promissory notes. Petitioner bank
sent a letter of demand to respondent on July 27, 1988,
demanding full payment of the loan. Despite receipt of
said demand letter, respondent failed to settle his
account.
Velarde contends that he caused the preparation of the
complaint and that all the allegations thereat are true
and correct; that the promissory note sued upon,
assuming that it exists and bears the genuine signature
of herein defendant, the same does not bind him and
that it did not truly express the real intention of the
parties as stated in the defenses
The Bank claims, that there is no need to prove the
loan and its supporting papers as Velarde has already
admitted these. Velarde had in fact denied these in his
responsive pleading.
ISSUE:
Whether or not the defendant has really executed the
Promissory Note considering the doubt as to the
genuineness of the signature and as well as the non-
receipt of the said amount
RULING:
No. The mere presentation of supposed documents
regarding the loan, but absent the testimony of a
competent witness to the transaction and the
documentary evidence, coupled with the denial of
liability by the defendant does not suffice to meet the
requisite preponderance of evidence in civil cases.
The documents, standing alone, unsupported by
independent evidence of their existence, have no legal
basis to stand on. They are not competent evidence.
Such failure leaves this Court without ample basis to
sustain the plaintiff’s cause of action and other reliefs
prayed for. The loan document being challenged.
Plaintiff did not exert additional effort to strengthen its
case by the required preponderance of evidence. On
this score, the suit must be dismissed.
The bank should have presented at least a single
witness qualified to testify on the existence and
execution of the documents it relied upon to prove the
disputed loan obligations of Velarde. This falls short of
the requirement that (B)efore any private writing
may be received in evidence, its due execution
and authenticity must be proved either: (a) By
anyone who saw the writing executed; (b) By
evidence of the genuineness of the handwriting
of the maker; or (c) By a subscribing witness.
(Rule 132, Sec. 21, Rules of Court)
32. What is the effect of a party’s failure to
specifically deny an actionable document?
Effect of an invalid and ineffective denial of
actionable documents attached to the complaint
When an action or defense is founded upon an actionable
document, the genuineness and due execution of the
same instrument shall be deemed admitted unless it is
specifically denied under oath (Sec. 8, Rule 8).

The failure to deny the genuineness and due execution of
said document amounts to a judicial admission (PNB v.
Refrigeration Industries, Inc., GR No. 156178, January
20, 2006).
NOTE: But the failure to deny the genuineness and due
execution of an actionable document does not preclude a
party from arguing against the document by evidence of
fraud, mistake, compromise, payment, statute of
limitations, estoppel and want of consideration. He is
however, precluded from arguing that the document is a
forgery because the genuineness of document is impliedly
admitted (Acabal v. Acabal, G.R. 148376, March 31, 2005;
PNB v. Refrigeration Industries, Inc, supra).
33. Is there a need to formally offer an
actionable document? (Philippine American
General Insurance vs. Sweet lines , GR No. 87434,
Aug. 5, 1992)
Actionable documents must be properly pleaded either as
causes of action or defenses, and the genuineness of
which are deemed admitted unless specifically denied
under oath by the adverse party. Failure to specifically
deny the existence of actionable documents amounts to
an admission. Judicial admissions are conclusive, no
evidence being required to prove the same.
PHILIPPINE AMERICAN GENERAL INSURANCE
CO. AND TAGUM V. SWEET LINES
DOCTRINES:
• Issues may accordingly be taken cognizance of by the
court even if not inceptively raised as a defense so long
as its existence is plainly apparent on the face of
relevant pleadings.
• Actionable documents must be properly pleaded
either as causes of action or defenses, and the
genuineness of which are deemed admitted unless
specifically denied under oath by the adverse party.
• Failure to specifically deny the existence of actionable
documents amounts to an admission. Judicial
admissions are conclusive, no evidence being required
to prove the same.
• Before an action can properly be commenced all the
essential elements of the cause of action must be in
existence.
• The right of action does not arise until the
performance of all conditions precedent to the action
and may be taken away by the running of the statute
of limitations, through estoppel, or by other
circumstances which do not affect the cause of action.
• Performance or fulfilment of all conditions precedent
upon which a right of action depends must be
sufficiently alleged, considering that the burden of
proof to show that a party has a right of action is upon
the person initiating the suit.
SUMMARY:
Petitioner Tagum Plastics (TAGUM), from Davao,
imported polyethylene [basic plastic material] from F.
E. Zuellig in America. Co-petitioner Philippine American
General Insurance (PHILAMGEN) is its insurer. The
shipment has to first arrive in Manila before it can be
interisland shipped to Davao. Respondent Sweet Lines
was hired to ferry said shipment to Davao. Upon arrival
at Davao, it was found that some of the imported
plastics were undelivered or damaged. Petitioners filed
suit on the basis of the bills of lading. Unfortunately,
said bills of lading contain prescriptive periods of sixty
(60) days to file for claims of loss/damages. It also
required notice to respondent carrier before judicial
claims may be had. The bills of lading, however,
were not formally presented as evidence during
trial.
The RTC ruled in favor of importer-petitioner, but the
CA reversed on the basis of prescription. The SC upheld
the CA, saying that even though the bills of lading were
not formally presented as evidence, the same were
sufficiently referred to in the pleadings of both parties.
Hence, it was deemed judicially admitted and no
evidence was required to prove its existence.
Whether or not the CA correctly ruled on the
basis of prescription even without formal
evidence of its existence.
1. YES, because such was sufficiently raised in the
pleadings. Ruling on Prescription EVEN without formal
evidence of its existence.
• The litigation obviously revolves on such bills of lading
which are practically the documents or contracts sued
upon, hence, they are inevitably involved and their
provisions cannot be disregarded in the determination
of the relative rights of the parties thereto.
• Respondent court correctly passed upon the matter
of prescription, since that defense was so considered
and controverted by the parties.
• Since petitioners are suing on the basis of contractual
obligations indicated in the bills of lading, such bills can
be categorized as actionable documents which under
the Rules of Court must be properly pleaded either as
causes of action or defenses, and the genuineness and
due execution of which are deemed admitted unless
specifically denied under oath by the adverse party.
• Failure to specifically deny the existence of the
instruments in question amounts to an admission.
• Judicial admissions, verbal or written, made by the
parties in the pleadings or in the course of the trial or
other proceedings in the same case are conclusive, no
evidence being required to prove the same, and cannot
be contradicted unless shown to have been made
through palpable mistake or that no such admission
was made.
• In the case at bar, prescription as an affirmative
defense was seasonably raised by respondent Sweet
Lines in its answer, except that the bills of lading
embodying the same were not formally offered in
evidence.
• Petitioner specifically replied to such defense in
respondent’s answer, but it failed to controvert the
existence of the bills of lading. It is thus in the nature
of a negative pregnant. Consequently, they impliedly
admitted the same when they merely assailed the
validity of subject stipulations. Petitioners MUST
SPECIFICALLY DENY THE EXISTENCE OR
PRESENTATION OF EVIDENCE. This is petitioners’
reply to respondent’s answer:
o “In connection with Pars. 14 and 15 of defendant
Sweet Lines, Inc.'s Answer, plaintiffs state that such
agreements are what the Supreme Court considers as
contracts of adhesion and, consequently, the
provisions therein which are contrary to law and public
policy cannot be availed of by answering defendant as
valid defenses.”
• Petitioners failed to touch on the matter of the non-
presentation of the bills of lading. Hence it is too late
in the day to now allow the litigation to be overturned
on that score, for to do so would mean an over-
 indulgence in technicalities. Petitioners' feigned
ignorance of the provisions of the bills of lading does
not deserve serious attention.

34.

a) What is a general denial? ;

A statement in an answer to a lawsuit or claim by a

defendant in a lawsuit, in which the defendant denies
everything alleged in the complaint without
specifically denying any allegation.

b) what is a specific denial?;

Rule 8, Section 10. Specific denial. — A defendant must

specify each material allegation of fact the truth of which
he does not admit and, whenever practicable, shall set
forth the substance of the matters upon which he relies
to support his denial. Where a defendant desires to deny
only a part of an averment, he shall specify so much of it
as is true and material and shall deny only the remainder.
Where a defendant is without knowledge or information
sufficient to form a belief as to the truth of a material
averment made to the complaint, he shall so state, and
this shall have the effect of a denial. (10a)

35. Under what circumstances that specific

denial be under oath?

Specific denials that must be made under oath

1. A denial of an actionable document (Sec. 8, Rule

8); and

Rule 8, Section 8. How to contest such documents. —

When an action or defense is founded upon a written
instrument, copied in or attached to the corresponding
pleading as provided in the preceding section, the
genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath
specifically denies them, and sets forth what he claims to
be the facts, but the requirement of an oath does not
apply when the adverse party does not appear to be a
party to the instrument or when compliance with an order
for an inspection of the original instrument is refused. (8a)

2. A denial of allegation of usury in a complaint to

recover usurious interest (Sec. 11, Rule 8).

If the complaint makes an allegation of usury to recover

usurious interest, the defendant must not only specially
deny the same but must likewise do so under oath. Failure
to make the proper denial under oath would involve an
implied admission of the allegation of usury
(Riano, 2016).