rule 6 (outline, case digest & full text)

8/11/2019 Rule 6 (Outline, Case Digest & Full Text)

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Outline: Rule 6 - Kinds of Pleadings CIVIL PROCEDURE

mmeikimouse

Lesson for August 19, 2014

Tuesday

Judge Mike Asuncion

Kinds of Pleadings

1. Kinds of pleadings - Rule 6

a) Complaint - Sec. 3, Rule 6

b) Answer - Sec. 4, Rule 6

i. Negative defenses - Sec. 5(a), Rule 6

ii. Negative pregnant

- Republic v. Sandiganbayan, G.R. No. 152154, July 15, 2003

iii. Affirmative defenses - Sec. 5(b), Rule 6

c) Counterclaims - Sec. 6, Rule 6

i. Compulsory counterclaim - Sec. 7, Rule 6

- Financial Building Corp. v. Forbes Park Assoc. Inc., G.R. No. 133119, August 7, 2000

- Cruz-Agana v. Hon. Santiago-Lagman, G.R. No. 139018, April 11, 2005

ii. Permissive counterclaim -

- Alday v. FGU Insurance Corp., G.R. No. 138822, January 23, 2001

iii. Effect on the counterclaim when the complaint is dismissed

- International Container Terminal Services Inc. v. CA, G.R. No. 90530, October 7, 1992

d) Cross-claims - Sec. 8, Rule 6

- Ruiz v. CA, G.R. No. 101566, August 17, 1992

- Ruiz v. CA, G.R. No. 101566, March 26, 1993 - Resolution on Reconsideration

e) Third (fourth, etc.) party complaints - Sec. 11, Rule 6

f) Complaint-in-intervention - Sec. 3, Rule 19

- Clariza v. Rosales, G.R. No. L-15364, May 31, 1961

g) Reply - Sec. 10, Rule 6

2. Pleadings allowed in small claim cases and cases covered by the Rules on Summary Procedure

a) A.M. No. 08-8-7-SC - Secs. 5, 11, 14

b) 1991 Revised Rules of Summary Procedure - Secs. 3, 19


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Case Digest: Rule 6 - Kinds of Pleadings CIVIL PROCEDURE

mmeikimouse

Negative Pregnant

REPUBLIC vs SANDIGANBAYAN

G.R. No. 152154, July 15, 2003

Facts:

Republic (petitioner), through the Presidential

Commission on Good Government (PCGG), represented by the

Office of the Solicitor General (OSG), filed a petition for forfeiturebefore the Sandiganbayan pursuant to RA 1379. Declaration of

the aggregate amount of US$ 356M deposited in escrow in the

PNB, as ill-gotten wealth.

The funds were previously held by 5 account groups,

using various foreign foundations in certain Swiss banks.

In addition, the Republic sought the forfeiture of US$25

million and US$5 million in treasury notes which exceeded the

Marcos couple's salariesi ii iii iv, other lawful income as well as

income from legitimately acquired property. The treasury notes

are frozen at the Central Bank of the Philippines, now Bangko

Sentral ng Pilipinas, by virtue of the freeze order issued by the

PCGG.Before the case was set for pre-trial, a General

Agreement and the Supplemental Agreement dated December

28, 1993 were executed by the Marcos children and then PCGG

Chairman Magtanggol Gunigundo for a global settlement of the

assets of the Marcos family.

The General Agreement/Supplemental Agreements

sought to identify, collate, cause the inventory of and distribute

all assets presumed to be owned by the Marcos family under the

conditions contained therein. The General Agreement specified

in one of its premises or "whereas clauses" the fact that

petitioner "obtained a judgment from the Swiss Federal Tribunal

on December 21, 1990, that the Three Hundred Fifty-six Million

U.S. dollars (US$356 million) belongs in principle to the Republic

of the Philippines provided certain conditionalities are met x x

x."

Hearings were conducted by the Sandiganbayan on the

motion to approve the General/Supplemental Agreements.

In a resolution dated 31 January 2002, the

Sandiganbayan denied the Republic's motion for summary

judgment.

"The evidence offered for summary judgment of the

case did not prove that the money in the Swiss Banks belonged

to the Marcos spouses because no legal proof exists in the record

as to the ownership by the Marcoses of the funds in escrow from

the Swiss Banks. The basis for the forfeiture in favor of the

government cannot be deemed to have been established and our

judgment thereon, perforce, must also have been without basis."

The Republic filed the petition for certiorari.

Issue:

Whether or not the respondents failed to specifically

deny each and every allegation contained in the petition for

forfeiture in the manner required by the rules. Yes

Whether or not the kind of denial in respondents

answer qualifies as the specific denial called for by the rules. No

Held:

In their answer, respondents failed to specifically deny

each and every allegation contained in the petition for forfeiture

in the manner required by the rules. All they gave were stock

answers like they have no sufficient knowledge or they could

not recall because it happened a long time ago, and, as to Mrs.

Marcos, the funds were lawfully acquired, without stating the

basis of such assertions.

Section 10, Rule 8 of the 1997 Rules of Civil Procedure,

provides: A defendant must specify each material allegation of

fact the truth of which he does not admit and, wheneverpracticable, 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 the remainder. Where a

defendant is without knowledge or information sufficient to form

a belief as to the truth of a material averment made in the

complaint, he shall so state, and this shall have the effect of a

denial.[

The purpose of requiring respondents to make a specific

denial is to make them disclose facts which will disprove the

allegations of petitioner at the trial, together with the matters

they rely upon in support of such denial. Our jurisdiction adheresto this rule to avoid and prevent unnecessary expenses and

waste of time by compelling both parties to lay their cards on the

table, thus reducing the controversy to its true terms. As

explained inAlonso vs. Villamor,

A litigation is not a game of technicalities in which one,

more deeply schooled and skilled in the subtle art of movement

and position, entraps and destroys the other. It is rather a

contest in which each contending party fully and fairly lays

before the court the facts in issue and then, brushing aside as

wholly trivial and indecisive all imperfections of form and

technicalities of procedure, asks that justice be done upon the

merits. Lawsuits, unlike duels, are not to be won by a rapiers

thrust.

On the part of Mrs. Marcos, she claimed that the funds

were lawfully acquired. However, she failed to particularly state

the ultimate facts surrounding the lawful manner or mode of

acquisition of the subject funds. Simply put, she merely stated in

her answer with the other respondents that the funds were

lawfully acquired without detailing how exactly these funds

were supposedly acquired legally by them. Even in this case

before us, her assertion that the funds were lawfully acquired

remains bare and unaccompanied by any factual support which

can prove, by the presentation of evidence at a hearing, that

indeed the funds were acquired legitimately by the Marcos

family.

Respondents denials in their answer at the Sandiganbayan

were based on their alleged lack of knowledge or information

sufficient to form a belief as to the truth of the allegations of the

petition.

It is true that one of the modes of specific denial under the

rules is a denial through a statement that the defendant is

without knowledge or information sufficient to form a belief as

to the truth of the material averment in the complaint. The

question, however, is whether the kind of denial in respondents

answer qualifies as the specific denial called for by the rules. Wedo not think so. InMorales vs. Court of Appeals,

[30]this Court

ruled that if an allegation directly and specifically charges a party

with having done, performed or committed a particular act which
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the latter did not in fact do, perform or commit, a categorical and

express denial must be made.

Here, despite the serious and specific allegations against

them, the Marcoses responded by simply saying that they had no

knowledge or information sufficient to form a belief as to the

truth of such allegations. Such a general, self-serving claim of

ignorance of the facts alleged in the petition for forfeiture was

insufficient to raise an issue. Respondent Marcoses should havepositively stated how it was that they were supposedly ignorant

of the facts alleged.

To elucidate, the allegation of petitioner Republic in

paragraph 23 of the petition for forfeiture stated:

23. The following presentation very clearly and overwhelmingly

show in detail how both respondents clandestinely stashed away

the countrys wealth to Switzerland and hid the same under

layers upon layers of foundations and other corporate entities to

prevent its detection. Through their dummies/nominees, fronts

or agents who formed those foundations or corporate entities,

they opened and maintained numerous bank accounts. But due

to the difficulty if not the impossibility of detecting anddocumenting all those secret accounts as well as the enormity of

the deposits therein hidden, the following presentation is

confined to five identified accounts groups, with balances

amounting to about $356-M with a reservation for the filing of a

supplemental or separate forfeiture complaint should the need

arise.[32]

Respondents lame denial of the aforesaid allegation was:

22. Respondents specifically DENY paragraph 23 insofar as it

alleges that Respondents clandestinely stashed the countrys

wealth in Switzerland and hid the same under layers and layers

of foundations and corporate entities for being false, the truth

being that Respondents aforesaid properties were lawfully

acquired.[33]

Evidently, this particular denial had the earmark of what is

called in the law on pleadings as a negative pregnant, that is, a

denial pregnant with the admission of the substantial facts in the

pleading responded to which are not squarely denied. It was in

effect an admission of the averments it was directed at.[34]

Stated

otherwise, a negative pregnant is a form of negative expression

which carries with it an affirmation or at least an implication of

some kind favorable to the adverse party. It is a denial pregnant

with an admission of the substantial facts alleged in the pleading.

Where a fact is alleged with qualifying or modifying language and

the words of the allegation as so qualified or modified are

literally denied, has been held that the qualifying circumstances

alone are denied while the fact itself is admitted.[35]

In the instant case, the material allegations in paragraph 23

of the said petition were not specifically denied by respondents

in paragraph 22 of their answer. The denial contained in

paragraph 22 of the answer was focused on the averment in

paragraph 23 of the petition for forfeiture that Respondents

clandestinely stashed the countrys wealth in Switzerland and hid

the same under layers and layers of foundations and corporate

entities. Paragraph 22 of the respondents answer was thus a

denial pregnant with admissions of the following substantialfacts:

(1) the Swiss bank deposits existed and

(2) that the estimated sum thereof was US$356

million as of December, 1990.

Therefore, the allegations in the petition for forfeiture on

the existence of the Swiss bank deposits in the sum of about

US$356 million, not having been specifically denied by

respondents in their answer, were deemed admitted by them

pursuant to Section 11, Rule 8 of the 1997 Revised Rules on Civil

Procedure:

Material averment in the complaint, xxx shall be deemed

admitted when not specifically denied. xxxBy the same token, the following unsupported denials of

respondents in their answer were pregnant with admissions of

the substantial facts alleged in the Republics petition for

forfeiture:

23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28,

29 and 30 of the Petition for lack of knowledge or information

sufficient to form a belief as to the truth of the allegation since

respondents were not privy to the transactions regarding the

alleged Azio-Verso-Vibur Foundation accounts, except that, as to

respondent Imelda R. Marcos, she specifically remembers that

the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35,36, 37, 38, 39, 40, 41 of the Petition for lack of knowledge or

information sufficient to form a belief as to the truth of the

allegations since respondents were not privy to the transactions

and as to such transactions they were privy to, they cannot

remember with exactitude the same having occurred a long time

ago, except as to respondent Imelda R. Marcos, she specifically

remembers that the funds involved were lawfully acquired.

25. Respondents specifically DENY paragraphs 42, 43, 45, and 46

of the petition for lack of knowledge or information sufficient to

from a belief as to the truth of the allegations since respondents

were not privy to the transactions and as to such transaction

they were privy to, they cannot remember with exactitude, the

same having occurred a long time ago, except that as to

respondent Imelda R. Marcos, she specifically remembers that

the funds involved were lawfully acquired.

26. Respondents specifically DENY paragraphs 49, 50, 51 and 52

of the petition for lack of knowledge and information sufficient

to form a belief as to the truth of the allegations since

respondents were not privy to the transactions and as to such

transaction they were privy to they cannot remember with

exactitude the same having occurred a long time ago, except that

as to respondent Imelda R. Marcos, she specifically remembers

that the funds involved were lawfully acquired.

The matters referred to in paragraphs 23 to 26 of the

respondents answer pertained to the creation of five groups of

accounts as well as their respective ending balances and

attached documents alleged in paragraphs 24 to 52 of the

Republics petition for forfeiture.Respondent Imelda R. Marcos

never specifically denied the existence of the Swiss funds. Her

claim that the funds involved were lawfully acquired was an

acknowledgment on her part of the existence of said deposits.

This only reinforced her earlier admission of the allegation in

paragraph 23 of the petition for forfeiture regarding the

existence of the US$356 million Swiss bank deposits.

The allegations in paragraphs 47

[37]

and 48

[38]

of thepetition for forfeiture referring to the creation and amount of the

deposits of the Rosalys-Aguamina Foundation as well as the

averment in paragraph 52-a[39]

of the said petition with respect

to the sum of the Swiss bank deposits estimated to be US$356
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million were again not specifically denied by respondents in their

answer. The respondents did not at all respond to the issues

raised in these paragraphs and the existence, nature and amount

of the Swiss funds were therefore deemed admitted by them. As

held in Galofa vs. Nee Bon Sing,[40]

if a defendants denial is a

negative pregnant, it is equivalent to an admission.

Moreover, respondents denial of the allegations in the

petition for forfeiture for lack of knowledge or informationsufficient to form a belief as to the truth of the allegations since

respondents were not privy to the transactions was just a

pretense. Mrs. Marcos privity to the transactions was in fact

evident from her signatures on some of the vital

documents[41]

attached to the petition for forfeiture which

Mrs. Marcos failed to specifically deny as required by the rules.

Compulsory counterclaim - Sec. 7, Rule 6

FINANCIAL BUILDING CORP. vs. FORBES PARK ASSOC. INC.

G.R. No. 133119, August 7, 2000

Facts:

The then Union of Soviet Socialist Republic (hereafter,

USSR) was the owner of residential lot located at No. 10, Narra

Place, Forbes Park Village in Makati City. USSR engaged the

services of Financial Building for the construction of a multi-level

office and staff apartment building at the said lot, which would

be used by the Trade Representative of the USSR.[3]

Due to the

USSRs representation that it would be building a residence for

its Trade Representative, Forbes Park authorized its construction

and work began shortly thereafter.

Forbes Park reminded the USSR of existing

regulations[4]

authorizing only the construction of a single-family

residential building in each lot within the village. It also elicited a

reassurance from the USSR that such restriction has been

complied with.[5]

Promptly, the USSR gave its assurance that it

has been complying with all regulations of Forbes Park.[6]

Despite

this, Financial Building submitted to the Makati City Government

a second building plan for the construction of a multi-level

apartment building, which was different from the first plan for

the construction of a residential building submitted to Forbes

Park.

Forbes Park discovered the second plan and subsequent

ocular inspection of the USSRs subject lot confirmed the

violation of the deed of restrictions. Thus, it enjoined further

construction work. Forbes Park suspended all permits of entry

for the personnel and materials of Financial Building in the said

construction site. The parties attempted to meet to settle their

differences but it did not push through.

Instead, Financial Building filed in the Regional Trial Court

of Makati, Metro Manila, a Complaint[7]

for Injunction and

Damages with a prayer for Preliminary Injunction against ForbesPark. The latter, in turn, filed a Motion to Dismiss on the ground

that Financial Building had no cause of action because it was not

the real party-in-interest.

TC issued a writ of preliminary injunction against Forbes

Park but the Court of Appeals nullified it and dismissed the

complaint altogether.

After Financial Buildings case, G.R. No. 79319, was

terminated with finality, Forbes Park sought to vindicate its rights

by filing with the Regional Trial Court of Makati a Complaint[9]

for

Damages, against Financial Building, arising from the violation of

its rules and regulations. The damages claimed are in thefollowing amounts: (a) P3,000,000.00 as actual damages; (b)

P1,000,000.00 as moral damages; (c) P1,000,000.00 as exemplary

damages; and (d) P1,000,000.00 as attorneys fees. TC rendered

its Decision in favor of Forbes Park and against Financial Building.

The FB appealed to the CA, however it affirmed the decision of

the trial court. FB now appeal to the SC.

Issue:

Whether or not the alleged claims and causes of action

therein are barred by prior judgment and/or deemed waived for

its failure to interpose the same as compulsory counterclaim in

civil case.

Held:

Yes. The SC held that a counterclaim is one which arises

out of or is necessarily connected with the transaction or

occurrence that is the subject matter of matter of the opposing

party's claim. If it is within the jurisdiction of the court and it

does not require for its adjudication the presence of the third

parties over whom the court cannot acquire jurisdiction, such

compulsory counter claim is barred if it is not set up in the action

filed by the opposing party. As a result of controversy, FB seized

the initiative by filing prior injunction case, which was anchored

on the contention that Forbes Park's prohibition on the

construction in the subject premises was improper. The instant

case on the other hand, was initiated by Forbes park to compel

FB to remove the same structures it has erected in the same

premises involved in the prior case and it claims damages for

undertaking the said construction. Thus, it is logical relation

between the two cases is patent and it is obvious that

substantially the same evidence is involve in this case. The

compulsory counterclaim is now barred because Forbes Park

filed a motion to dismiss. A compulsory counterclaim is auxiliary

to the proceeding in the original suits and derives its jurisdiction

support therefrom. A counterclaim presupposes the existence of

a claim against the party filing counterclaim. Hence, where there

is no claim against the counterclaimant. The counterclaim is

improper and it must be dismissed, more so where the complaint

is dismissed at the instance of the counterclaimants. In other

words, if the dismissal of the main action result the dismissal of

counterclaim already filed, it stand to reason that the filing of a

motion to dismiss the complaint is an implied waiver of the

compulsory counterclaim because the grant of the motion

ultimately results in the dismissal of the counterclaim.
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Compulsory counterclaim - Sec. 7, Rule 6

CRUZ-AGANA vs. HON. SANTIAGO-LAGMAN

G.R. No. 139018, April 11, 2005

Facts:

Petitioner filed a Complaint for annulment of title with

prayer for preliminary mandatory injunction against

respondent. Petitioner claims that as the sole heir of oneTeodorico Cruz, she is the sole owner of a lot covered by

TCT. Petitioner further claims that the lot was fraudulently sold

to Eugenio Lopez, Jr. who later on transferred the lot to

respondent. The case was raffled to the RTC presided by Judge

Aurora Santiago-Lagman and docketed as Civil Case No. 210-M-

96.

Respondent seasonably filed its Answer with compulsory

counterclaim. Petitioner moved to dismiss respondents

counterclaim for lack of a certificate of non-forum shopping.

In an Order, the trial court denied petitioners motion to

dismiss respondents counterclaim. The trial court reasoned that

respondents counterclaim is compulsory and therefore excluded

from the coverage of Section 5, Rule 7 of the Rules of

Court. Petitioner moved that the trial court reconsider its Order

invoking the mandatory nature of a certificate of non-forum

shopping under Supreme Court Administrative Circular No. 04-

94. On the trial court reversed its Order and dismissed

respondents counterclaim for lack of a certificate of non-forum

shopping.

Respondent seasonably filed a motion for reconsideration

arguing that Administrative Circular No. 04-94 does not apply to

compulsory counterclaims following the ruling in Santo Tomas

University Hospital v. Surla.3 TC again reversed itself and

recalled its Order dismissing respondents counterclaim.

The trial court found that respondents counterclaim is

compulsory in nature. The trial court ruled that the filing of a

compulsory counterclaim does not require a certificate of non-

forum shopping. On the effect of Santo Tomason Administrative

Circular No. 04-94, the trial court explained: It is settled rule that

it is one of the inherent powers of the court to amend and

control its processes and orders so as to make them conformable

to law and justice. This power includes the right to reverse itself,

specially when in its honest opinion, it has committed an error or

mistake in judgment, and that to adhere to its decision will cause

injustice to a party litigant.

Issue:

Whether the trial court committed grave abuse

of discretion in refusing to dismiss respondents

counterclaim. No

Whether or not a compulsory counterclaim pleaded in an

Answer be dismissed on the ground of a failure to accompany it

with a certificate of non-forum shopping. No (A compulsory

counterclaim does not require a certificate of non-forum

shopping because a compulsory counterclaim is not an initiatory

pleading.)

Held:

No. The petition lacks merit.

Santo Tomasclarified the scope of Administrative Circular

No. 04-94 with respect to counterclaims. The Court pointed out

that this circular 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. The Court explained: It should not be too difficult, the

foregoing rationaleof the circular aptly taken, to sustain the view

that the circular in question has not, in fact, been contemplated

to include a kind of claim which, by its very nature as beingauxiliary to the proceedings in the suit and as deriving its

substantive and jurisdictional support therefrom, can only be

appropriately pleaded in the answer and not remain outstanding

for independent resolution except by the court where the main

case pends. Prescinding from the foregoing, theproviso in the

second paragraph of Section 5, Rule 8 of the 1997 Rules of Civil

Procedure, i.e., that the violation of the anti-forum shopping rule

shall not be curable by mere amendment xxx but shall be cause

for the dismissal of the case without prejudice, being predicated

on the applicability of the need for a certification against forum-

shopping, obviously does not include a claim which cannot be

independently set up.The Court reiterated this ruling in Ponciano v. Judge

Parentela, Jr. Administrative Circular No. 04-94 does not apply to

compulsory counterclaims. The circular 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 plaintiffs complaint. A respondent has no choice

but to raise a compulsory counterclaim the moment the plaintiff

files the complaint. Otherwise, respondent waives the

compulsory counterclaim.[5]

In short, the compulsory

counterclaim is a reaction or response, mandatory upon pain of

waiver, to an initiatory pleading which is the complaint.

Petitioners counsel fails or simply refuses to accept t he

distinction between a permissive counterclaim and a compulsory

counterclaim. This distinction was the basis for the ruling

in Santo Tomasand Ponciano. The sole issue for resolution in

the present case is whether respondents counterclaim is

compulsory or permissive. 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.

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 plaintiffs complaint.[8]

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.

Respondents 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 theplaintiff and further to reimburse the attorneys fees

of P2,000,000.00;[9]

It is clear that the counterclaim set up by respondent arises

from the filing of plaintiffs complaint. The counterclaim is so
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intertwined with the main case that it is incapable of proceeding

independently. The counterclaim will require a re-litigation of

the same evidence if the counterclaim is allowed to proceed in a

separate action. Even petitioner recognizes that respondents

counterclaim is compulsory.[10]

A compulsory counterclaim does

not require a certificate of non-forum shopping because a

compulsory counterclaim is not an initiatory pleading.

Permissive counterclaim

ALDAY vs FGU INSURANCE CORP.,

G.R. No. 138822, January 23, 2001

Facts:

FGU Insurance Corporation (FGU) filed a complaint

before RTC alleging that Alday owed it P114,650.76, representing

unliquidated cash advances, unremitted costs of premiums and

other charges incurred by Alday in the course of her work as an

insurance agent for respondent, and prayed for payment of

exemplary damages, attorneysfees, and cost of suit.

In her Answer, and by way of counterclaim, she

asserted her right for the payment of P104,893.45, representing

direct commissions, profit commissions and contingent bonuses

earned from July to December 1986, and for the accumulated

premium reserves amounting to P500,000.00. She also prayed

for attorneys fees, litigation expenses, moral damages and

exemplary damages for the allegedly unfounded action filed by

respondent.

Respondent filed a Motion to Strike Out Answer with

Compulsory Counterclaim And to Declare Defendant in Default

because petitioners answer was allegedly filed out of time.

However, the trial court denied the said motion as well as its

motion for reconsideration. A few weeks later, respondent filed a

motion to dismisspetitionerscounterclaim, contending that the

trial court never acquired jurisdiction over the same because of

non-payment of docket fees by petitioner. In response,

petitioner asked the trial court to declare her counterclaim as

exempt from payment of docket fees since it is compulsory and

that respondent be declared in default for having failed to

answer such counterclaim.

The trial court granted the motion to dismiss

petitionerscounterclaim, and consequently, denied petitioners

motion. The court found petitionerscounterclaim to be merely

permissive in nature and held that petitioners failure to pay

docket fees prevented the court from acquiring jurisdiction over

the same. The motion for reconsideration was likewise denied by

the trial court.

On appeal to CA, the CA sustained the trial court,

finding that petitionersadmissions, as contained in her answer,

show that her counterclaim is merely permissive. Her motion forreconsideration was also denied by CA, hence, the present

petition.

Issue:

Whether or not the counterclaim of petitioner is

compulsory or permissive in nature.

Held:

A compulsory counterclaim is one which, being

cognizable by the regular courts of justice, arises out of or is

connected with the transaction or occurrence constituting thesubject matter of the opposing party's claim and does not require

for its adjudication the presence of third parties of whom the

court cannot acquire jurisdiction.

In Valencia v. Court of Appeals, this Court capsulized the

criteria or tests that may be used in determining whether a

counterclaim is compulsory or permissive, summarized as

follows:

1.

Are the issues of fact and lawraised by the claim and

counterclaim largely the same?

2.

Would res judicatabar a subsequent suit ondefendant's claim absent the compulsory counterclaim

rule?

3. Will substantially the same evidence support or refute

plaintiff's claim as well s defendant's counterclaim?

4. Is there any logical relationbetween the claim and the

counterclaim?

Another test, applied in the more recent case of Quintanilla

v. Court of Appeals, is the "compelling test of compulsoriness"

which requires "a logical relationship between the claim and

counterclaim, that is, where conducting separate trials of the

respective claims of the parties would entail a substantial

duplication of effort and time by the parties and the court."

Tested against the abovementioned standards, petitioners

counterclaim for commissions, bonuses and accumulated

premium reserves is merely permissive.

The evidence required to prove petitioner's claims differs

from that needed to establish respondent's demands for the

recovery of cash accountabilities from petitioner, such as cash

advances and costs of premiums. The recovery of respondent's

claims is not contingent or dependent upon establishing

petitioner's counterclaim, such that conducting separate trials

will not result in the substantial duplication of the time and effort

of the court and the parties. One would search the records in

vain for a logical connection between the parties' claims.

This conclusion is further reinforced by petitioner's own

admissions since she declared in her answer that respondent's

cause of action, unlike her own, was not based upon the Special

Agent's Contract. However, petitioner's claims for damages,

allegedly suffered as a result of the filing by respondent of its

complaint, are compulsory.

There is no need for need for petitioner to pay docket fees

for her compulsory counterclaim.

On the other hand, in order forthe trial court to acquire jurisdiction over her permissive

counterclaim, petitioner is bound to pay the prescribed docket

fees.
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Petitioner asserts that the trial court should have declared

respondent in default for having failed to answer her

counterclaim. Insofar as the permissive counterclaim of

petitioner is concerned, there is obviously no need to file an

answer until petitioner has paid the prescribed docket fees for

only then shall the court acquire jurisdiction over such

claim. Meanwhile, the compulsory counterclaim of petitioner for

damages based on the filing by respondent of an allegedlyunfounded and malicious suit need not be answered since it is

inseparable from the claims of respondent. If respondent were to

answer the compulsory counterclaim of petitioner, it would

merely result in the former pleading the same facts raised in its

complaint.

WHEREFORE, the assailed Decision of the Court of Appeals

promulgated on 23 December 1998 and its 19 May 1999

Resolution are hereby MODIFIED. The compulsory counterclaim

of petitioner for damages filed in Civil Case No. 89-3816 is

ordered REINSTATED. Meanwhile, the Regional Trial Court of

Makati (Branch 134) is ordered to require petitioner to pay the

prescribed docket fees for her permissive counterclaim (directcommissions, profit commissions, contingent bonuses and

accumulated premium reserves), after ascertaining that the

applicable prescriptive period has not yet set in.

Effect on the counterclaim when the complaint is dismissed

INTERNATIONAL CONTAINER TERMINAL SERVICES INC. vs CA

G.R. No. 90530, October 7, 1992

Facts:

February 10, 1998 - Private respondent CF Sharp, Inc.

(Sharp) filed before the RTC a complaint for prohibition with

prayer for preliminary injunction against the Sec. of

Transportation and Communications, the Philippine Ports

Authority (PPA), E. Razon, Inc. and the herein petitioner, ICTSI.

March 7, 1988 - The trial court issued a writ of

preliminary injunction upon the posting of a bond by Sharp in the

sum of P10M issued by Integrated Bonding and Insurance Co.

(Integrated).

On the same day, the petitioner filed an answer with

compulsory counterclaim against Sharp for its unfounded and

frivolous action. It also claimed that as a consequence of the

complaint and the writ of preliminary injunction it had suffered

injuries which ifmonetized would amount to more than P100M.

March 17, 1988 - The writ of preliminary injunction was

nullified by SC holding that Sharp was not a proper party to stop

the negotiation and awarding of the contract for the

development, management and operation of the Container

Terminal at the Port of Manila; and that the petition was

premature because Sharp did not exhaust administrativeremedies available from it.

March 25, 1988PPA filed a motion to dismiss Sharps

complaint based on SC decision of March 17, 1988. ICTSI filed a

manifestation adopting said motion.

July 13, 1988 the trial court dismissed the complaint as

well as the counterclaim. ICTSI filed MR insofar as it dismissed its

counterclaim. However it was denied in an Order declaring in

part.

. . . indeed a compulsory counterclaim by the nature of its

nomenclature arises out of or is so intertwined with the

transaction or occurrence that is the subject matter of the

complaint so that by the dismissal of the latter, the samehas to be discarded, specially since the complaint was

dismissed without any trial.

On appeal, the CA upheld the lower court holding that

compulsory counterclaims for actual damages are not the claim

recoverable against the bond; and that the petitioners

manifestation did not contain any reservation.The counterclaim

for damages being compulsory in nature, for which no filing fee

has been paid, was correctly dismissed, hence, the present

petition.

Issue:

Whether or not a compulsory counterclaim standsupon the dismissal of the complaint

Held:

NO. It has been held that a counterclaim is compulsory

where: (1) it arises out of, or is necessarily connected with, the

transaction or occurrence that is the subject matter of the

opposing partysclaim; (2) it does not require for its adjudication

the presence of third parties of whom the court cannot acquire

jurisdiction; and (3) the court has jurisdiction to entertain the

claim.

Tested by these requirements, the petitioners

counterclaim was clearly compulsory. The petitioner itself so

denominated it. There is no doubt that the same evidence

needed to sustain it would also refute the cause of action alleged

in the private respondents complaint; in other words, the

counterclaim would succeed only if the complaint did not. It is

obvious from the very nature of the counterclaim that it could

not remain pending for independent adjudication, that is,

without adjudication by the court of the complaint itself on

which the counterclaim was based.

All questions which are material to the main action or

which are incidental thereto but depending thereon should be

presented and litigated at the same time with the main action, so

as to avoid the necessity of subsequent litigation and consequent

loss of time and money.

However, there is no glossing away the fact that it was

the petitioner itself that caused the dismissal of its counterclaim

when it not only did not object to, but actually moved for, the

dismissal of the complaint. The petitioner cannot undo that act. If

it wanted the counterclaim to subsist, it should have objected to

the dismissal of the complaint or at least reserved its right to

prosecute it, assuming this would still be possible. It did neither

of these. The petitioner now claims that there is no law requiring

that reservation, but there is no law presuming it either. The

petitioner cannot simply say now that it intended all the time topreserve its counterclaim when it knew that under Rule 17, Sec.

2 "if a counterclaim has been pleaded by a defendant prior to the

service upon him of a motion to dismiss, the action shall not be

dismissed against the defendants objection unless the


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counterclaim can remain pending for independent adjudication

by the Court."

The counterclaim was not permissive. A counterclaim is

permissive if it does not arise out of nor is it necessarily

connected with the subject matter of the opposing partysclaim.

It is not barred even if not set up in the action. The petitioners

counterclaim was within the jurisdiction of the trial court. Most

importantly, it had no independent existence, being merelyancillary to the main action. The petitioner knew all this and did

not object to the dismissal of the complaint. On the contrary, it

actually moved to dismiss that main action, and in so doing also

moved, in effect, for the dismissal of its counterclaim.

Had the counterclaim not been dismissed with the

dismissal of the complaint, the petitioner could have introduced

evidence to show that it was prejudiced by the filing of the

complaint and the obtention of the writ of preliminary injunction

by Sharp. But the petitioner itself aborted that effort when it

joined PPA in moving for the dismissal of Sharps complaint,

knowing that it was the basis of its own compulsory

counterclaim. For failing to object when it should have, to keep

its counterclaim alive, and instead moving to dismiss the

complaint from which the counterclaim derived its life, the

petitioner must now bear the consequences of its own

negligence.

WHEREFORE, the petition is DENIED, with costs against

the petitioner. It is so ordered.

Cross-claims - Sec. 8, Rule 6

RUIZ vs CA

G.R. No. 101566, August 17, 1992

Facts:

The Crisologo family donated an island to the Sent of

God Foundation on the condition inter alia that it would "be used

exclusively to provide a monastic life and experience according to

the Rule of St. Benedict and for such other religious and

charitable purposes as may be determined by the donee." This

was followed by a later donation of other lands, under the same

conditions. The subject properties were later transferred by the

Foundation to the S of G Foundation Inc., which introduced

improvements thereon that, it later demolished. Believing that

the conditions of the donations had been violated, the Crisologos

filed a complaint for revocation of the donations and the

recovery of the properties donated. Impleaded as defendants

were the Sent of God Foundation, the S of G Foundation, Inc.,

Raul G. Fores, Senen F. Valero, and Father Odon de Castro, the

last three as officers or the foundations. Also included were

Olegario Orbeta and his wife, Susana Rosario Orbeta, for their

role in facilitating the donations.In their answer, the first-named defendants resisted

the allegations in the complaint and denied that the conditions of

the donations had been violated. For their part, the Orbeta

spouses confessed judgment in their answer but also filed a

cross-claim for damages against the other defendants for

involving them in the litigation.

The other defendants filed a motion to dismiss, the

complaint on the ground that it did not state a cause of action

and that only the S of G Foundation was a real party-in-interest.

A copy of the motion was furnished the Orbeta spouses. The trial

court issued an order dismissing the complaint for lack of a cause

of action. The cross-claim was also dismissed because it "had nomore leg to stand on."

The plaintiffs filed a motion for reconsideration, which

was adopted by the Orbeta spouses in an urgent ex parte

manifestation. This motion was denied. The Crisologos then

challenged the order of dismissal before the Court of Appeal in a

petition for certiorariunder Rule 65 of the Rules of Court. It was

dismissed on the ground that the proper remedy was an ordinary

appeal.

The Orbeta spouses, who had not joined the Crisologos

filed their own petition for certiorari also with the Court of

Appeals. This petition prospered. The respondent court annulled

the dismissal of the complaint by the trial court and ordered itsreinstatement. Reconsideration of this decision was denied. The

petitioners then came to the Supreme Court.

Issue:

Whether the Orbeta spouses, as cross-claimants in the

original complaint, could still appeal its dismissal in their own

petition for review. No!

Held:

The most important reason is that the order of

dismissal issued by the trial court had already become final and

executory at the time it was sought to be reversed. The

reglementary period for appealing it had already lapsed when

the Crisologos filed their petition for certiorari under Rule 65.

This was correctly dismissed by the Court of Appeals on the

ground, as earlier stated, that the special civil action was not a

substitute for a lost appeal.

When the Orbetas filed their own petition on March 6,

1989, it was also after the order they were questioning had

already become unappealable. On this score alone, the present

petition must fail. Even as the petition of the plaintiffs

themselves had been earlier dismissed, similar treatment should

have been given to the petition of the Orbetas, who were

appealing only as cross-claimants.

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 counter-claim

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.

The cross-claim in this case stemmed from the alleged

unjust refusal of the donees to return the donated properties,

resulting in the Crisologos filing their complaint for revocation of

the donations. In their cross-claim, the Orbetas alleged that theywere dragged into the controversy because of the conduct of the

petitioners. Their contention was that they would not have been

sued at all were it not for the failure of the petitioners to comply

with the conditions of the donations.


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It is clear that the cross-claim arose from the complaint

of the Crisologos and was not separable from that main action. It

had no independent existence and was based entirely on that

complaint. The cross-claim was defensive in character because it

could prosper only if the plaintiffs succeeded. As the plaintiffs

failed to establish that the petitionersrefusal was not justified, it

necessarily followed that the private respondents own cross-

claim, which was based on the same allegation, also had to fail.The cross-claimants cannot claim more rights than the

plaintiffs themselves, on whose cause of action the cross-claim

depended. The dismissal of the complaint divested the cross-

claimants of whatever appealable interest they might have had

before and also made the cross-claim itself no longer viable.

A party has an appealable interest only when his

property may be diminished, his burdens increased or his rights

prejudiced by the order sought to be reviewed. In the case at

bar, the consequence of the dismissal of the complaint was the

cessation of the cross-claimants exposure to injury, which risk

would in fact have continued if the Crisologos appeal had

succeeded. It bears stressing that when the plaintiffs petitionwas dismissed by the Court of Appeals, the cross-claim lost its

basis, which was the dismissed complaint itself. Earlier, in fact,

the dismissal of the cross-claim had already become

unappealable when the order dismissing the complaint became

final and executory.

It would be highly irregular to allow the reinstatement

of the appeal lost by the plaintiffs through another appeal made

by the cross-claimants. Not only was the cross-claim defensive in

character and therefore deemed dismissed with the complaint

but, as pointed out by the petitioners, the cross-claimants and

the plaintiffs were supposed to be opposing parties and not in

collusion with each other.

Supreme Courts ruling is that the Orbetas, as cross-

claimants, had no personality to pursue a remedy which properly

belonged to the Crisologos who, through their fault or

negligence, failed to employ it. Accordingly, the petition filed by

the Orbetas should have been dismissed outright by the

respondent court on the ground that the cross-claimants were

not proper parties to appeal the dismissal of the complaint.

Cross-claims - Sec. 8, Rule 6

RUIZ vs CA

G.R. No. 101566, March 26, 1993

- Resolution on Reconsideration

Facts:

The private respondents, spouses Olegario Orbeta and

Susana Rosario S. Orbeta, have filed a motion for reconsideration

of the decision the Supreme Court which reversed the decision ofthe Court of Appeals granting the petition for certiorari in

"Spouses Olegario Orbeta and Susana Rosario S. Orbeta,

petitioners v. Hon. Florencio A. Ruiz, Jr., Et. Al." and upholding on

procedural grounds, the orders of the Regional Trial Court

dismissing the Crisologos complaint and the Orbetas answer

with cross claim, in civil case entitled "Carmeling P. Crisologo, Et

Al., v. Sent of God Foundation Inc., Et. Al."

This is a splinter case arising from the complaint filed

by Carmeling P. Crisologo and her children for revocation of two

(2) deeds of donation to the Sent of God Foundation, Inc., which

was represented in both transactions by Carmeling niece, Susana

Rosario Orbeta, and her husband, Olegario Orbeta, who weremembers of the Sent of God Foundation, Inc., otherwise known

as the Caryana Movement, a religious cult headed by a

Benedictine monk, Father Odon de Castro, as the groups

spiritual director. The donations were subjected to three (3)

conditions imposed by the honors.

Ten years later, the Sent of God Foundation, Inc.,

represented by its chairman of the board of trustees, Dr. Raul

Flores, with the consent of the donors, transferred the Puro-

Salomague Island (renamed St. Benedict Island by Fr. Odon de

Castro) to the S of G Foundation, Inc., represented by Senen P.

Valero, subject to the same conditions as the original donation.

Unfortunately, the Caryana Movement was deniedcanonical recognition and its spiritual director was himself

expelled from the Benedictine order and stripped of his priestly

functions by the Archbishop of Manila, Jaime Cardinal Sin.

One of the conditions of her donation to the

Movement was that the Island would be used "to provide a

monastic life and experience according to the rules of St.

Benedict" was violated. Mrs. Crisologo wrote letters to Dr. Fores

and Mrs. Crisologo, asking for the return of her island but

nothing happened. The Sent of God Foundation, Inc. and S of G

Foundation, Inc., abandoned Puro-Salomague Island. Their

agents destroyed and demolished almost all the improvements

thereon.

Mrs. Crisologo and her children filed a complaint with

the Regional Trial Court against the Sent of God Foundation, Inc.,

the S of G Foundation, Inc., Raul G. Fores, Senen P. Valero, Fr.

Odon de Castro and Spouses Olegario and Susana Rosario S.

Orbeta for the revocation of the donation and return of the

island to the doors.

In their answer, the defendants (except the Orbetas)

admitted the donations but denied that they had violated the

conditions thereof.

The Orbetas filed a separate Answer with Cross-claim,

making common cause with the plaintiffs. They alleged that Fr.

Odon de Castro instructed Mrs. Orbeta to look for an ideal place

in Ilocos Sur to house the monastery of the Caryana Movement,

so she thought of approaching her aunt, Mrs. Crisologo, who is a

devout Catholic and devotee of St. Benedict, and who is a

considered one of the biggest land owners in Ilocos Sur. Even if

had not met Fr. Odon, Dr. Fores, and Senen Valero, pillars of the

Sent of God Foundation, Inc., Mrs. Crisologo was persuaded by

Mrs. Orbeta to give her Puro-Salomague Island for the use of the

Caryana Movement. Upon inspection by Fr. Odon, the island was

found suitable for the purposes of the movement, but since the

Sent of God Foundation, Inc., did not have money to buy it, Mrs.

Orbeta persuaded her aunt to donate it to the Foundationsubject to certain conditions already mentioned in the complaint.

The Orbetas confirmed that the Foundation violated the

conditions of the donation when it was denied canonical

permission to teach the monastic life according to the rules of St.


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Benedict. The Orbetas joined the plaintiffs demand for the

reversion of the island to the donors.

The Orbetas asserted a cross claim against their co-

defendants for moral and exemplary damages and expenses of

litigation because the refusal of the Foundations to convey the

island to the Crisologos caused the Orbetas to be dragged into

this case, and has put them (Orbetas) "in a bad perspective".

They prayed that judgment be rendered for the plaintiffs andthat the Foundations and their co-defendants be ordered to pay

damages.

The Foundations, etc. filed motion to dismiss Orbetas

Crossclaim. The Foundations, etc. (except the Orbetas) filed a

"Motion to Dismiss and to Drop Defendants." Furthermore, the

original deeds of donation in favor of the Sent of God

Foundation, Inc., have already been cancelled by the execution of

a third deed of donation by the Sent of God Foundation, Inc. in

favor of the S and G Foundation, Inc., with the consent of the

plaintiffs.

Judge Florencio A. Ruiz, Jr. issued an order dismissing

the complaint and the Orbetascross claim (it had "no more legto stand on"). The plaintiffs filed a motion for reconsideration,

which was adopted by the Orbetas in an urgent ex parte

manifestation. This motion was denied. The Crisologos then

sought a review of the order of dismissal by the Court of Appeals

through a petition for certiorari under Rule 65 of the Rules of

Court. It was dismissed on the ground that the proper remedy

was an ordinary appeal.

The Orbetas who had not joined the Crisologos filed

their own petition for certiorari in the Court of Appeals. Their

petition prospered. The Court of Appeals annulled Judge Ruizsof

dismissal and reinstated the complaint. Reconsideration of this

decision was denied. The Foundations, etc. appealed to Supreme

Court which reversed the Court of Appeals.

The Orbetas filed a motion for reconsideration of the

Supreme Courts decision. The court denied it by resolution.

However, the Orbetas filed a timely Motion to Recall that

resolution. They invited the courtsattention to the fact that the

resolution denying their motion for reconsideration did not carry

the necessary votes of three (3) justices for only Justices Cruz and

Aquino voted on it as Justice Bellosillo took no part and Justice

Medialdea was on sick leave of absence, when the motion for

reconsideration was deliberate upon. Consequently, the Division

decided to refer the case to the Court En Banc which recalled the

resolution for lack of the necessary votes and constituted a

Special First Division to deliberate on the Orbetas motion for

reconsideration.

Held:

After a careful review and study of the records, the Court

finds merit in the motion for reconsideration. The Court of

Appeals did not commit a reversible error in setting aside the

orders of Judge Florencio A. Ruiz, Jr. granting the motion to

dismiss the complaint because:

xxx

(2) The Orbetas are proper parties-in-interest to seek a

review on certiorariof the trial courtsorder dismissing the

complaint.

The Orbetas had an interest in the subject matter of the

Crisologos suit for they were the conduit, through whom the

Crisologos effected the donation of their island to the Sent of

God Foundation, Inc. They were signatories of the deed of

donation of Puro-Salamague Island. Being instrumental in the

obtaining the donations from the Crisologos, they are de facto

plaintiffs with an actual interest in the enforcement of theconditions of the donation and in the recovery of the donated

property on accountant of the donees violations of the

conditions of the donation.

Being de facto plaintiffs, the Orbetas could file in the

Court of Appeals a separate petition for review on certiorari of

the trial courtsorder dismissing their demand for the reversion

of the island to the donors.

The finality of the trial courts order dismissing the

Crisologos complaint was not an obstacle to the plaintiffs and

the Orbetas recourse to the Court of Appeals by a petition for

certiorariunder Rule 65 of the Rules of Court for such a petition

may be filed "within a reasonable time," not within the time toappeal.

Even if appeal should have been the proper remedy

against an oppressive and arbitrary order or decision of a lower

court, the aggrieved party may avail of the special civil action of

certiorari when appeal would not be a speedy and adequate

remedy. In this case, appeal would have been neither speedy nor

adequate for the plaintiffs and the Orbetas had not been given a

chance to prove their causes of action, hence, there was no

evidence in the records upon which to anchor a judgment by the

Appellate Court in their favor.

The Appellate Court can legally entertain the special civil

action of certiorari considering the broader and primordial

interests of justice which compel an occasional departure from

the general rule that the extraordinary writ of certioraricannot

substitute for a lost appeal, the order having become final upon

the lapse of the reglementary period of appeal.

"Certiorariis one such remedy. Considered extraordinary,

it is made available only when there is no appeal, nor any plain,

speedy or adequate remedy in the ordinary course of the law

(Rule 65, Rules of Court, Section 1). The long line of decisions

denying the petition for certiorari, either before appeal was

availed of or specially in instances where the appeal period has

lapsed, for outnumbers the instances when certiorariwas given

due course. The few significant exceptions were: when public

welfare and the advancement of public policy dictate: or when

the broader interests of justice so require, when the writs issued

are null, or when the questioned order amounts to an oppressive

exercise of judicial authority."

The Supreme Court granted the motion for

reconsideration and affirmed the Court of Appeals decision.

Judge Florencio A. Ruiz, Jr.sorders were annulled and set aside.

Said civil case should proceed to trial on the merits with all

reasonable dispatch.


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mmeikimouse

Complaint-in-intervention - Sec. 3, Rule 19

CLARIZA vs ROSALES

G.R. No. L-15364, May 31, 1961

Facts:

Appeal from an order of the Court of First Instance,

dismissing a "complaint in intervention and/or amended

complaint" filed by Felipe J. Zamora in civil case of said court,entitled "Virginia Clareza, Et Al., plaintiffs, versus Benjamin A.

Rosales, Et Al., Defendants."

In said civil case, Virginia Clareza and her children claim

damages for the death of Juan Luno (Virginiashusband and the

father of her children), caused by the reckless negligence of the

defendant Rosales in colliding with the taxicab driven by the

deceased. The defendants filed their answer, claiming that the

incident was due to the negligence of the deceased himself, and

praying for the dismissal of the complaint. By way of

counterclaim they asked for payment of damages to them.

Plaintiffs filed their answer to the counterclaim.

Felipe J. Zamora filed an urgent motion for leave tointervene and/or be substituted for the plaintiffs attaching

thereto his complaint in intervention and/or amended complaint.

In his motion, he avers that he is the owner of the Golden

Taxicab that the deceased Juan Luno was driving at the time of

the collision; that he has paid P4,000.00 to the heirs of the

deceased as compensation under the WorkmensCompensation

Act, and is therefore subrogated to their rights against the

defendants. In his complaint, the intervenor prays for actual,

compensatory, exemplary and moral damages, including the

P4,000.00 which he paid to the heirs.

The lower court admitted the complaint in intervention

and required the defendants to answer it and the defendants

filed a motion to dismiss the complaint as well as the complaint

in intervention. Defendants allege that inasmuch as plaintiffs

have already recovered compensation from the intervenor, they

have no cause of action against the defendants, and,

consequently, no basis for the intervention.

The lower court dismissed both the complaint and the

complaint in intervention. A motion for reconsideration of the

order of dismissal having been denied, intervenor Zamora has

prosecuted the appeal to the Supreme Court.

Issue:

Whether or not the lower court is correct when it

dismissed the complaint in intervention filed by Zamora. No!

Held:

Fundamentally, intervention is never an independent

action, but is ancillary and supplemental to an existing litigation.

Strictly speaking, as the right of the original plaintiffs to sue the

defendants has ceased to exist by virtue of the payment of

compensation to them by the intervenor, in accordance with the

provisions of Sec. 6, Act 3812, as amended by Republic Act No.

772, the said action of original plaintiffs may no longer be

allowed to continue. The right of an intervenor should merely bein aid of the right of the original party, like the plaintiffs in this

case. As this right of the plaintiffs has ceased to exist, there is

nothing to aid or fight for. So the right of intervention has ceased

to exist.

However, the coming in of the intervenor may be

allowed under the provisions of Section 20 of Rule 3 of the Rules

of Court, which provides:

"In case of any transfer of interest, the action may be

continued by or against the original party, unless the court

upon motion directs the person to whom the interest is

transferred to be substituted in the action or joined with theoriginal party."

Under the provisions of Section 6 of the Workmens

Compensation Act, as amended, the employer who paid the

compensation to an employee "shall succeed the injured

employee to the right of recovery from such person what he

paid." Supreme Court held that the intervenor, the employer,

may well be substituted as party plaintiff. In the case at bar he

actually prayed the court to allow him to do so. Thereafter, he

presented the amendments to the original complaint, required

by the new circumstances surrounding the substituted partys

rights. Such a procedure subserves the policy of the Rulesavoiding multiplicity of suits. The right of the intervenor herein

being the same right of the original party injured by the

negligence of the defendant, which right has been transferred to

the intervenor, the latter should be allowed to be substituted for

the original plaintiff.


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Full Text Cases: Rule 6 - Kinds of Pleadings CIVIL PROCEDURE

mmeikimouse

[G.R. No. 152154. July 15, 2003.]

REPUBLIC OF THE PHILIPPINES, Petitioner, v. HONORABLESANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E.MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R.MARCOS, MARIA IMELDA [IMEE] MARCOS-MANOTOC,FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA)AND IMELDA ROMUALDEZ MARCOS, Respondents.

D E C I S I O N

CORONA,J.:

This is a petition for certiorariunder Rule 65 of the Rules of Court

seeking to (1) set aside the Resolution dated January 31, 2002

issued by the Special First Division of the Sandiganbayan in Civil

Case No. 0141 entitled Republic of the Philippines v. Ferdinand E.

Marcos, et. al., and (2) reinstate its earlier decision dated

September 19, 2000 which forfeited in favor of petitioner

Republic of the Philippines (Republic) the amount held in escrow

in the Philippine National Bank (PNB) in the aggregate amount ofUS$658,175,373.60 as of January 31, 2002.chanrob1es virtua1

1aw 1ibrary

BACKGROUND OF THE CASE

On December 17, 1991, petitioner Republic, through the

Presidential Commission on Good Government (PCGG),

represented by the Office of the Solicitor General (OSG), filed a

petition for forfeiture before the Sandiganbayan, docketed as

Civil Case No. 0141 entitled Republic of the Philippines v.

Ferdinand E. Marcos, represented by his Estate/Heirs and Imelda

R. Marcos, pursuant to RA 1379 1 in relation to Executive Order

Nos. 1, 2 2, 3 14 4 and 14-A. 5

In said case, petitioner sought the declaration of the aggregate

amount of US$356 million (now estimated to be more than

US$658 million inclusive of interest) deposited in escrow in the

PNB, as ill-gotten wealth. The funds were previously held by the

following five account groups, using various foreign foundations

in certain Swiss banks:chanrob1es virtual 1aw library

(1) Azio-Verso-Vibur Foundation accounts;

(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus-Avertina

Foundation accounts;

(3) Trinidad-Rayby-Palmy Foundation accounts;

(4) Rosalys-Aguamina Foundation accounts and

(5) Maler Foundation accounts.

In addition, the petition sought the forfeiture of US$25 million

and US$5 million in treasury notes which exceeded the Marcos

couples salaries, other lawful income as well as inco me from

legitimately acquired property. The treasury notes are frozen at

the Central Bank of the Philippines, now Bangko Sentral ng

Pilipinas, by virtue of the freeze order issued by the PCGG.

On October 18, 1993, respondents Imelda R. Marcos, MariaImelda M. Manotoc, Irene M. Araneta and Ferdinand R. Marcos,

Jr. filed their answer.

Before the case was set for pre-trial, a General Agreement and

the Supplemental Agreements 6 dated December 28, 1993 were

executed by the Marcos children and then PCGG Chairman

Magtanggol Gunigundo for a global settlement of the assets of

the Marcos family. Subsequently, respondent Marcos children

filed a motion dated December 7, 1995 for the approval of said

agreements and for the enforcement thereof.

The General Agreement/Supplemental Agreements sought to

identify, collate, cause the inventory of and distribute all assets

presumed to be owned by the Marcos family under theconditions contained therein. The aforementioned General

Agreement specified in one of its premises or "whereas clauses"

the fact that petitioner "obtained a judgment from the Swiss

Federal Tribunal on December 21, 1990, that the Three Hundred

Fifty-six Million U.S. dollars (US$356 million) belongs in principle

to the Republic of the Philippines provided certain

conditionalities are met. . . ." The said decision of the Swiss

Federal Supreme Court affirmed the decision of Zurich District

Attorney Peter Consandey, granting petitioners request for legal

assistance. 7 Consandey declared the various deposits in the

name of the enumerated foundations to be of illegal provenance

and ordered that they be frozen to await the final verdict in favor

of the parties entitled to restitution.

Hearings were conducted by the Sandiganbayan on the motion

to approve the General/Supplemental Agreements. Respondent

Ferdinand, Jr. was presented as witness for the purpose of

establishing the partial implementation of said agreements.

On October 18, 1996, petitioner filed a motion for summary

judgment and/or judgment on the pleadings. Respondent Mrs.

Marcos filed her opposition thereto which was later adopted by

respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.

In its resolution dated November 20, 1997, the Sandiganbayan

denied petitioners motion for summary judgment and/or

judgment on the pleadings on the ground that the motion toapprove the compromise agreement" (took) precedence over the

motion for summary judgment."cralaw virtua1aw library

Respondent Mrs. Marcos filed a manifestation on May 26, 1998

claiming she was not a party to the motion for approval of the

Compromise Agreement and that she owned 90% of the funds

with the remaining 10% belonging to the Marcos estate.

Meanwhile, on August 10, 1995, petitioner filed with the District

Attorney in Zurich, Switzerland, an additional request for the

immediate transfer of the deposits to an escrow account in the

PNB. The request was granted. On appeal by the Marcoses, the

Swiss Federal Supreme Court, in a decision dated December 10,

1997, upheld the ruling of the District Attorney of Zurich grantingthe request for the transfer of the funds. In 1998, the funds were

remitted to the Philippines in escrow. Subsequently, respondent

Marcos children moved that the funds be placed in custodia legis

because the deposit in escrow in the PNB was allegedly in danger

of dissipation by petitioner. The Sandiganbayan, in its resolution

dated September 8, 1998, granted the motion.

After the pre-trial and the issuance of the pre-trial order and

supplemental pre-trial order dated October 28, 1999 and January

21, 2000, respectively, the case was set for trial. After several

resettings, Petitioner, on March 10, 2000, filed another motion

for summary judgment pertaining to the forfeiture of the US$356

million, based on the following grounds:chanrob1es virtual 1awlibrary

I


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mmeikimouse

THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF

THE FUNDS SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE

ADMITTED BY RESPONDENTS IN THEIR PLEADINGS AND OTHER

SUBMISSIONS MADE IN THE COURSE OF THE PROCEEDING.

II

RESPONDENTS ADMISSION MADE DURING THE PRE-TRIAL THATTHEY DO NOT HAVE ANY INTEREST OR OWNERSHIP OVER THE

FUNDS SUBJECT OF THE ACTION FOR FORFEITURE TENDERS NO

GENUINE ISSUE OR CONTROVERSY AS TO ANY MATERIAL FACT IN

THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF

SUMMARY JUDGMENT. 8

Petitioner contended that, after the pre-trial conference, certain

facts were established, warranting a summary judgment on the

funds sought to be forfeited.chanrob1es virtua1 1aw 1ibrary

Respondent Mrs. Marcos filed her opposition to the petitioners

motion for summary judgment, which opposition was later

adopted by her co-respondents Mrs. Manotoc, Mrs. Araneta and

Ferdinand, Jr.

On March 24, 2000, a hearing on the motion for summary

judgment was conducted.

In a decision 9 dated September 19, 2000, the Sandiganbayan

granted petitioners motion for summary judgment:chanrob1es

virtual 1aw library

CONCLUSION

There is no issue of fact which calls for the presentation of

evidence.

The Motion for Summary Judgment is hereby granted.

The Swiss deposits which were transmitted to and now held in

escrow at the PNB are deemed unlawfully acquired as ill-gotten

wealth.

DISPOSITION

WHEREFORE, judgment is hereby rendered in favor of the

Republic of the Philippines and against the respondents,

declaring the Swiss deposits which were transferred to and now

deposited in escrow at the Philippine National Bank in the total

aggregate value equivalent to US$627,608,544.95 as of August

31, 2000 together with the increments thereof forfeited in favor

of the State. 10

Respondent Mrs. Marcos filed a motion for reconsideration

dated September 26, 2000. Likewise, Mrs. Manotoc and

Ferdinand, Jr. filed their own motion for reconsideration dated

October 5, 2000. Mrs. Araneta filed a manifestation dated

October 4, 2000 adopting the motion for reconsideration of Mrs.

Marcos, Mrs. Manotoc and Ferdinand, Jr.

Subsequently, petitioner filed its opposition thereto.

In a resolution 11 dated January 31, 2002, the Sandiganbayan

reversed its September 19, 2000 decision, thus denyingpetitioners motion for summary judgment:chanrob1es virtual

1aw library

CONCLUSION

In sum, the evidence offered for summary judgment of the case

did not prove that the money in the Swiss Banks belonged to the

Marcos spouses because no legal proof exists in the record as to

the ownership by the Marcoses of the funds in escrow from the

Swiss Banks.

The basis for the forfeiture in favor of the government cannot be

deemed to have been established and our judgment thereon,

perforce, must also have been without basis.

WHEREFORE, the decision of this Court dated September 19,

2000 is reconsidered and set aside, and this case is now being set

for further proceedings. 12

Hence, the instant petition. In filing the same, petitioner argues

that the Sandiganbayan, in reversing its September 19, 2000

decision, committed grave abuse of discretion amounting to lack

or excess of jurisdiction considering that

I

PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE

WITH THE REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO.

1379:chanrob1es virtual 1aw library

A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY

THE PERSONAL CIRCUMSTANCES OF FERDINAND E. MARCOS

AND IMELDA R. MARCOS AS PUBLIC OFFICIALS BUT ALSO THE

EXTENT OF THEIR SALARIES AS SUCH PUBLIC OFFICIALS, WHO

UNDER THE CONSTITUTION, WERE PROHIBITED FROM

ENGAGING IN THE MANAGEMENT OF FOUNDATIONS.

B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF

THE SWISS DEPOSITS AND THEIR OWNERSHIP

THEREOF:chanrob1es virtual 1aw library

1. ADMISSIONS IN PRIVATE RESPONDENTS ANSWER;

2. ADMISSION IN THE GENERAL/SUPPLEMENTAL AGREEMENTS

THEY SIGNED AND SOUGHT TO IMPLEMENT;

3. ADMISSION IN A MANIFESTATION OF PRIVATE RESPONDENT

IMELDA R. MARCOS AND IN THE MOTION TO PLACE THE RES IN

CUSTODIA LEGIS; AND

4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN

RIGHTS VICTIMS.

C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE

INCOME OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS

PUBLIC OFFICIALS.

D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION

OF UNLAWFULLY ACQUIRED WEALTH.

II

SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS

HAVE NOT RAISED ANY GENUINE ISSUE OF FACT CONSIDERING

THAT:chanrob1es virtual 1aw library

A. PRIVATE RESPONDENTS DEFENSE THAT SWISS DEPOSITS

WERE LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO TENDER

AN ISSUE BUT IS CLEARLY A SHAM; AND


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mmeikimouse

B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS

DEPOSITS, PRIVATE RESPONDENTS ABANDONED THEIR SHAM

DEFENSE OF LEGITIMATE ACQUISITION, AND THIS FURTHER

JUSTIFIED THE RENDITION OF A SUMMARY JUDGMENT.

III

THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED.

IV

THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE

OF DISCRETION IN REVERSING HIMSELF ON THE GROUND THAT

ORIGINAL COPIES OF THE AUTHENTICATED SWISS DECISIONS

AND THEIR "AUTHENTICATED TRANSLATIONS" HAVE NOT BEEN

SUBMITTED TO THE COURT, WHEN EARLIER THE

SANDIGANBAYAN HAS QUOTED EXTENSIVELY A PORTION OF THE

TRANSLATION OF ONE OF THESE SWISS DECISIONS IN HIS

PONENCIA DATED JULY 29, 1999 WHEN IT DENIED THE

MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US DOLLARS

($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS.

V

PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR

OBJECTION TO THE AUTHENTICITY OF THE SWISS FEDERAL

SUPREME COURT DECISIONS. 13

Petitioner, in the main, asserts that nowhere in the respondents

motions for reconsideration and supplemental motion for

reconsideration were the authenticity, accuracy and admissibility

of the Swiss decisions ever challenged. Otherwise stated, it was

incorrect for the Sandiganbayan to use the issue of lack ofauthenticated translations of the decisions of the Swiss Federal

Supreme Court as the basis for reversing itself because

respondents themselves never raised this issue in their motions

for reconsideration and supplemental motion for

reconsideration. Furthermore, this particular issue relating to the

translation of the Swiss court decisions could not be resurrected

anymore because said decisions had been previously utilized by

the Sandiganbayan itself in resolving a "decisive issue" before it.

Petitioner faults the Sandiganbayan for questioning the non-

production of the authenticated translations of the Swiss Federal

Supreme Court decisions as this was a marginal and technical

matter that did not diminish by any measure the conclusiveness

and strength of what had been proven and admitted before the

Sandiganbayan, that is, that the funds deposited by the Marcoses

constituted ill-gotten wealth and thus belonged to the Filipino

people.

In compliance with the order of this Court, Mrs. Marcos filed her

comment to the petition on May 22, 2002. After several motions

for extension which were all granted, the comment of Mrs.

Manotoc and Ferdinand, Jr. and the separate comment of Mrs.

Araneta were filed on May 27, 2002.

Mrs. Marcos asserts that the petition should be denied on the

following grounds:chanrob1es virtual 1aw library

A.

PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT

THE SANDIGANBAYAN.

B.

THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN

SETTING THE CASE FOR FURTHER PROCEEDINGS. 14

Mrs. Marcos contends that petitioner has a plain, speedy and

adequate remedy in the ordinary course of law in view of the

resolution of the Sandiganbayan dated January 31, 2000directing petitioner to submit the authenticated translations of

the Swiss decisions. Instead of availing of said remedy, petitioner

now elevates the matter to this Court. According to Mrs. Marcos,

a petition for certiorariwhich does not comply with the

requirements of the rules may be dismissed. Since petitioner has

a plain, speedy and adequate remedy, that is, to proceed to trial

and su

rule 6 (outline, case digest & full text)

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