RULE 34 & 35
Philippines-Land Valuation and Landowners'
G.R. No. 156304 October 23, 2006
ANACLETO R. MENESES, FRANCISCO C.
MENESES, CECILIA C. MEMESES, RAMON M.
VASCO, CARMENCITA M. VASCO-ALIVIA,
VICTOR A. MENESES, MA. ROSARIO
MENESES-CARREON, GAVINO A. MENESES,
ARTEMIO A. MENESES, JR., MA. CARMEN R.
BONGGA, MA. THERESA M. RODRIGO,
JACINTO M. RODRIGO, MA. ELIZABETH M.
RODRIGO, MARTIN M. RODRIGO, JOSE
ANTONIO M. RODRIGO, DOMINGO M.
SALONGA, CAROLINA M. SALONGA,
CORAZON M. SALONGA, CRISTINA M.
SALONGA, CARMELITA M. SALONGA,
CYNTHIA M. SALONGA and MARILYN F.
SALONGA, petitioners,
vs.
SECRETARY OF AGRARIAN REFORM, LAND
BANK OF THE PHILIPPINES, RODRIGO
VELAYO, ANGEL SOLIMAN, RICARDO
MASASU, REGINA STA. ANA, JUANITO
CASTRO, SEVERINO LIGON, MARCELINO
CUEVAS, MANOLO GARCIA, RODRIGO
URBANO, FELIX BINUYA, GORGONIO CATU,
ERLINDA ABLAZA, IGMEDIO SANTOS,
FLORENTINA SUSPAN, PEDRO SUPAN,
GABRIEL PONCE, FELIPE PONCE, MAGNO
PONCE, RELELCIO PONCE, IRENEO RAMOS,
ORLANDO TAYAO, EULALIO TRINIDAD,
MOISES MORALES, LAZARO MATIAS,
FORTUNATA MANUGON, ROMEO MANUZON,
and DAMASO DURIA, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Petitioners were co-owners pro-indiviso of an
irrigated rice land in Barangay Batasan, San
Miguel, Bulacan, measuring 60.8544 hectares
and registered in the name of their grandparents,
the spouses Ramon Meneses and Carmen
Rodriguez-Meneses. On October 21, 1972, the
property was distributed to farmer-beneficiaries
by virtue of Presidential Decree No. 27 (P.D. No.
27).
On July 16, 1993, petitioners filed with the
Regional Trial Court (RTC) of Bulacan, Branch
13, a complaint for determination and payment
of just compensation. Petitioners alleged that
from the time the land was distributed to
farmer-beneficiaries in 1972 up to the time of the
filing of the complaint, no payment or rentals has
been made, and titles have already been issued
to the farmer-beneficiaries. Petitioners also
alleged that the fair market value of the property
is P6,000,000.00.1
The farmer-beneficiaries, the Land Bank of the
Compensation III (LBP-LVLCO III), the
Department of Agrarian Reform (DAR) Secretary,
and the DAR all filed their respective Answers.
For their part, the farmer-beneficiaries alleged
that the land valuation establishing the average
gross production per hectare by the Barangay
Committee on Land Production (BCLP) based
on three normal crop years before P.D. No. 27 is
in accordance with the existing guidelines and
procedure on Operation Land Transfer; they
have no unpaid rentals; and jurisdiction over the
case lies with the Department of Agrarian
Reform Adjudication Board (DARAB).2
Meanwhile, the LBP-LVLCO III averred that it
has been acting in good faith in discharging its
obligations, and that the computation was
obtained through the valuation processes of the
DAR on lands covered by P.D. No. 27 and
Executive Order No. 228 (E.O. No. 228). The
LBP-LVLCO III likewise alleged that jurisdiction
over the case lies with the DARAB.3
The DAR Secretary, on the other hand, alleged
that the valuation of the property was pursuant to
the Operation Land Transfer under P.D. No. 27
and the reckoning date should be at the time of
the taking of the property, i.e., October 21,
1972.4
Lastly, the DAR claimed that the filing of the
case is premature since there is no valuation yet
made by the DAR based on E.O. No. 228, and
petitioners must cooperate with the DAR by
submitting all the necessary papers for proper
valuation and expeditious payment of the land.
The DAR also claimed that it must first determine
the valuation before resort to the court can be
made.5
Thereafter, in an Order dated June 22, 1994, the
RTC dismissed the complaint for lack of cause of
action. According to the RTC, the determination
of just compensation must first be filed with the
DAR and not the Special Agrarian Court.6
Petitioners filed a motion for reconsideration,
which was partially granted by the RTC in its
Order dated September 7, 1994, setting aside its
order of dismissal, ordering the suspension of
the proceedings and archiving the case until
primary determination has been made on the
issue of just compensation.7
On October 5, 1994, petitioners filed a complaint
for determination and payment of just
compensation with the DARAB. The DARAB,
however, dismissed the complaint on the ground
that it has no jurisdiction to hear and decide
valuation cases covered by P.D. No. 27, as the
same is within the exclusive administrative
powers of the Office of the Secretary.8 Because
of the foregoing dismissal, petitioners filed with
the RTC a motion to re-open and calendar case
for hearing,9 which was granted by the RTC.
In an Order dated May 9, 1996, the RTC, with
the agreement of the parties, constituted
Commissioners to determine just
10
compensation, but the same was dissolved per
its Report and Recommendation dated October
9, 1996, 11as granted by the RTC in its Order
dated October 11, 1996.12
Pre-trial was terminated on July 10, 1997, and
petitioners were scheduled to present their
evidence.13 During the hearing held on August
14, 1997, the parties agreed as to the issue to be
resolved – "whether or not the plaintiffs
[petitioners] are entitled to just compensation as
provided for in Republic Act No. 6657 (R.A. No.
6657) and the Constitution of 1987 and not P.D.
No. 27 which was the basis of valuation made by
defendants Secretary of Agrarian Reform and
the Land Bank of the Philippines of the subject
parcel of land which was acquired in October 21,
1972."14 The parties were then given a period
within which to fie their respective motions for
judgment on the pleadings and
comment/opposition thereto, after which the
case shall be deemed submitted for resolution.15
On February 7, 1998, the RTC rendered its
Decision dismissing the complaint. It was the
RTC's ruling that since the subject property was
taken from petitioners on October 21, 1972
under the DAR's Operation Land Transfer
pursuant to P.D. No. 27, then just compensation
must be based on the value of the property at
the time of taking.
Thus, petitioners filed an appeal with the Court of
Appeals (CA), docketed as CA-G.R. CV No.
60355, where petitioners prayed for a remand of
the case to the RTC for further proceedings
and/or reception of evidence on the just and fair
market value of the property.
On May 30, 2002, the CA16 rendered its Decision
dismissing the appeal.17 Petitioners filed a
motion for reconsideration, but the same was
denied on the grounds that it was filed 44 days
late and the CA found no
cogent reason to reverse or modify its
Decision.18
Hence, this petition for review
on certiorari based on the following reasons:
I - THAT THE APPEALED DECLISION (sic) IS
RENDERED BY THE COURT OF APPEALS
NOT IN ACCORDANCE WITH LAW OR WITH
APPLICABLE DECISIONS OF THE SUPREME
COURT.19
II - THAT THE COURT OF APPEALS HAS
DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL
PROCEEDINGS OR HAS SANCTIONED SUCH
DEPARTURE BY THE LOWER COURT.20
Petitioners argue that the CA erred in sustaining
the propriety of the motion for judgment on the
pleadings filed by respondents with the RTC. It
was the CA's ruling that the motion for judgment
on the pleadings was proper since respondents
can be considered as plaintiffs in a counter-claim.
Petitioners also impute error in the CA's ruling
that the RTC properly dismissed the case since it
appears that there was no initial valuation yet
made by the DARAB.
Respondents, however, argue that the CA
Decision dated May 30, 2002 is already final and
executory due to petitioners' failure to
seasonably file a motion for reconsideration.
Respondents also argue, among others, that the
applicable law in this case is P.D. No. 27 and
E.O. No. 228, which provides for the formula for
the determination of just compensation, as
recognized in the cases of Land Bank of the
Philippines v. Court of Appeals, 378 Phil. 1248
(1999), and Gabatin v. Land Bank of the
Philippines, G.R. No. 148223, November 25,
2004, 444 SCRA 176.
The Courts finds merit in the petition.
It is true that petitioners' failure to file their motion
for reconsideration within the reglementary
period rendered the CA Decision dated May 30,
2002 final and executory. For all intents and
purposes, said Decision should now be
immutable and unalterable; however, the Court
relaxes this rule in order to serve substantial
justice considering (a) matters of life, liberty,
honor or property, (b) the existence of special or
compelling circumstances, (c) the merits of the
case, (d) a cause not entirely attributable to the
fault or negligence of the party favored by the
suspension of the rules, (e) a lack of any
showing that the review sought is merely
frivolous and dilatory, and (f) the other party will
not be unjustly prejudiced thereby.21
The explanation of petitioners' counsel for the
delayed filing of the motion for reconsideration
was that their law firm secretary failed to inform
the court of their change of address.22 This, of
course, is not a valid excuse. As a general rule, a
client is bound by the acts of his counsel,
including even the latter's mistakes and
negligence. But where such mistake or neglect
would result in serious injustice to the client, a
departure from this rule is warranted. To cling to
the general rule is to condone rather than rectify
a serious injustice to petitioners whose only fault
was to repose his faith and entrust his innocence
to his lawyer.23
In Ginete v. Court of Appeals,24 the Court
disregarded the failure of the petitioners to file a
motion for reconsideration of the CA's dismissal,
and instead, ruled that their counsel's negligence
should not prejudice the merits of their case, as
they were bound to lose their alleged rightful
share in their inheritance to a 59-hectare
property.
In Philippine Ports Authortity v. Sargasso
Construction & Development Corp.,25 the Court
excused the Office of the Government Corporate
Counsel's belated filing of the notice of appeal
because sustaining the finality of the CA's
dismissal of the appeal would leave the
petitioner no other remedy to assail the decision
of the trial court, and it would then have to
implement the award of the reclamation project
to the respondents for the enhancement of the
San Fernando, La Union port for the price
of P30,794,230.89 without the benefit of a public
bidding, and sans the approval of its Board of
Directors.
After reviewing the records of this case, the
Court resolves to give due course to the case in
order to put to rest the issues herein presented,
specially in light of the Court's ruling in Solmayor
v. Arroyo,26 to wit:
Furthermore, we must bear in mind that
procedural rules are intended to ensure the
proper administration of law and justice. The
rules of procedure ought not to be applied in a
very rigid, technical sense, for they are adopted
to help secure, not override, substantial justice.
A deviation from its rigid enforcement may thus
be allowed to attain its prime objective, for after
all, the dispensation of justice is the core reason
for the existence of courts. Moreover, we
cannot shy away from our constitutionally
mandated duty to questions of law set forth
in this petition which hinges on the
determination of the rights of herein litigants
in the light of a very important piece of social
legislation, Presidential Decree No. 27, which
aims for the equitable distribution and
ownership of land, without disregarding the
property rights of landowners. Thus, for
pragmatic reasons and consideration of justice
and equity, the Court must put to rest the issues
presented before us. (Emphasis supplied)
If the Court sustains the CA Decision, which
affirmed the RTC Decision, petitioners will be left
holding an empty bag, so to speak. It should be
noted that the property subject of this case has
already been distributed to the
farmer-beneficiaries way back in 1972, and up to
now, 34 years later, petitioners have yet to enjoy
the fruits of its value. Moreover, petitioners will
be left without any recourse as regards the
resolution of the issue of just compensation
since both the RTC and the DARAB already
dismissed the separate complaints for just
compensation filed before them. Indeed, the
"Court has the power to except a particular case
from the operation of the rule whenever the
purposes of justice requires it because what
should guide judicial action is that a party is
given the fullest opportunity to establish the
merits of his action or defense rather than for
him to lose life, honor, or property on mere
technicalities."27
On the propriety of the filing of a motion for
judgment on the pleadings by the LBP and
adopted by the DAR Secretary – the Court finds
that the CA erred in sustaining its propriety.
Rule 34, Section 1 of the Rules of
Court,28 provides that a judgment on the
pleadings is proper when an answer fails to
render an issue or otherwise admits the material
allegations of the adverse party's pleading. The
essential question is whether there are issues
generated by the pleadings. A judgment on the
pleadings may be sought only by a claimant,
who is the party seeking to recover upon a claim,
counterclaim or cross-claim; or to obtain a
declaratory relief.29
In this case, the separate Answers filed by the
respondents definitely tendered issues, as it
made specific denials of the material allegations
in the complaint and asserted affirmative
defenses, which would bar recovery by
petitioners. Moreover, it was erroneous for the
RTC to require the filing of a motion for judgment
on the pleadings and for the LBP and the DAR
Secretary to file the same since in the first place,
the latter are neither plaintiffs in the case nor
counter-claimants or cross-claimants.
What the RTC obviously meant to be filed was a
motion for summary judgment, a procedural
device designed for the prompt disposition of
actions, which may be rendered if the pleadings,
supporting affidavits, depositions and
admissions on file show that, after a summary
hearing, there is no genuine issue regarding any
material fact, except as to the amount of
damages, and the moving party is entitled to a
judgment as a matter of law, and which may be
applied for by either a claimant or a defending
party.30 This is obvious from the fact that
although the Answers raised issues, these were
not factual ones requiring trial, nor were they
genuine issues,31 as the parties were able to
agree to limit the same to whether petitioners are
entitled to just compensation under R.A. No.
6657 and not P.D. No. 27.32
The Court also finds that the CA erred in
sustaining the RTC ruling that just compensation
in this case should be based on the value of the
property at the time of taking, October 21, 1972,
which is the effectivity date of P.D. No. 27.
Respondent correctly cited the case of Gabatin v.
Land Bank of the Philippines,33 where the Court
ruled that "in computing the just compensation
for expropriation proceedings, it is the value of
the land at the time of the taking [or October 21,
1972, the effectivity date of P.D. No. 27], not at
the time of the rendition of judgment, which
should be taken into consideration." Under P.D.
No. 27 and E.O. No. 228, the following formula is
used to compute the land value for palay:
LV (land value) = 2.5 x AGP x GSP x (1.06)n
It should also be pointed out, however, that in
the more recent case of Land Bank of the
Philippines vs. Natividad,34the Court
categorically ruled: "the seizure of the
landholding did not take place on the date of
effectivity of P.D. No. 27 but would take effect on
the payment of just compensation." Under
Section 17 of R.A. No. 6657, the following
factors are considered in determining just
compensation, to wit:
Sec. 17. Determination of Just
Compensation. - In determining just
compensation, the cost of acquisition of the
land, the current value of like properties, its
nature, actual use and income, the sworn
valuation by the owner, the tax declarations,
and the assessment made by government
assessors shall be considered. The social and
economic benefits contributed by the
farmers and the farm-workers and by the
Government to the property as well as the
non-payment of taxes or loans secured from
any government financing institution on the
said land shall be considered as additional
factors to determine its valuation. (Emphasis
supplied)
Consequently, the question that arises is which
of these two rulings should be applied?
Under the circumstances of this case, the Court
deems it more equitable to apply the ruling in
the Natividad case. In said case, the Court
applied the provisions of R.A. No. 6657 in
computing just compensation for property
expropriated under P.D. No. 27, stating, viz.:
Land Bank's contention that the property was
acquired for purposes of agrarian reform on
October 21, 1972, the time of the effectivity of
PD 27, ergo just compensation should be based
on the value of the property as of that time and
not at the time of possession in 1993, is likewise
erroneous. In Office of the President,
Malacañang, Manila v. Court of Appeals, we
ruled that the seizure of the landholding did not
take place on the date of effectivity of PD 27 but
would take effect on the payment of just
compensation.
Under the factual circumstances of this case,
the agrarian reform process is still
incomplete as the just compensation to be
paid private respondents has yet to be
settled. Considering the passage of Republic
Act No. 6657 (RA 6657) before the completion
of this process, the just compensation
should be determined and the process
concluded under the said law. Indeed, RA
6657 is the applicable law, with PD 27 and EO
228 having only suppletory effect,
conformably with our ruling in Paris v.
Alfeche.
xxxx
It would certainly be inequitable to determine just
compensation based on the guideline provided
by PD 27 and EO 228 considering the DAR's
failure to determine the just compensation for a
considerable length of time. That just
compensation should be determined in
accordance with RA 6657, and not PD 27 or EO
228, is especially imperative considering that just
compensation should be the full and fair
equivalent of the property taken from its owner
by the expropriator, the equivalent being real,
substantial, full and ample.
In this case, the trial court arrived at the just
compensation due private respondents for their
property, taking into account its nature as
irrigated land, location along the highway,
market value, assessor's value and the volume
and value of its produce. This Court is convinced
that the trial court correctly determined the
amount of just compensation due private
respondents in accordance with, and guided by,
RA 6657 and existing
35
jurisprudence. (Emphasis supplied)
As previously noted, the property was
expropriated under the Operation Land Transfer
scheme of P.D. No. 27 way back in 1972. More
than 30 years have passed and petitioners are
yet to benefit from it, while the
farmer-beneficiaries have already been
harvesting its produce for the longest time.
Events have rendered the applicability of P.D.
No. 27 inequitable. Thus, the provisions of R.A.
No. 6657 should apply in this case.
Finally, the Court sustains petitioners' contention
that the CA erred in ruling that the RTC correctly
dismissed their complaint. Even assuming that
the RTC was correct in holding that P.D. No. 27
applies, still it should not have simply dismissed
the complaint after resolving the issue of which
law should apply. Instead, it should have
proceeded to determine the just compensation
due to petitioners.
Records show that the complaint for just
compensation was first filed in the RTC, but this
was dismissed in the Order dated June 22, 1994,
for the reason that the determination of just
compensation must first be filed with the
DAR.36 Conformably with said ruling, petitioners
filed the complaint with the DAR, which
dismissed the same on the ground that it has no
jurisdiction to hear and decide valuation cases
covered by P.D. No. 27.37 Because of said
dismissal, petitioners went back to the RTC for
the re-opening of the case. Petitioners' case was
obviously thrown back and forth between the two
venues, and with the RTC's second dismissal,
they were left hanging and without any recourse,
which, of course, is iniquitous considering that
their property has already long been
expropriated by the government and its fruits
enjoyed by the farmer-beneficiaries.
Given the foregoing conclusion, this case should
then be remanded to the Regional Trial Court
(RTC) of Bulacan, Branch 13, for the final
determination of just compensation.
WHEREFORE, the petition is GRANTED. The
Decision dated May 30, 2002 and Resolution
dated December 9, 2002 rendered by the Court
of Appeals in CA-G.R. CV No. 60355
is REVERSED and SET ASIDE. The records of
this case is ordered REMANDED to Regional
Trial Court (RTC) of Bulacan, Branch 13, for
further proceedings with deliberate dispatch and
in accordance with the Court's discussion in this
Decision.
No costs.
SO ORDERED.
G.R. No. 173526 August 28, 2008
BENJAMIN BITANGA, petitioner,
vs.
PYRAMID CONSTRUCTION ENGINEERING
CORPORATION, respondent.
DECISION
CHICO-NAZARIO, J.:
Assailed in this Petition for Review under Rule
451 of the Revised Rules of Court are: (1) the
Decision2 dated 11 April 2006 of the Court of
Appeals in CA-G.R. CV No. 78007 which
affirmed with modification the partial
3
Decision dated 29 November 2002 of the
Regional Trial Court (RTC), Branch 96, of
Quezon City, in Civil Case No. Q-01-45041,
granting the motion for summary judgment filed
by respondent Pyramid Construction and
Engineering Corporation and declaring petitioner
Benjamin Bitanga and his wife, Marilyn Bitanga
(Marilyn), solidarily liable to pay P6,000,000.000
to respondent; and (2) the Resolution4dated 5
July 2006 of the appellate court in the same case
denying petitioner’s Motion for Reconsideration.
The generative facts are:
On 6 September 2001, respondent filed with the
RTC a Complaint for specific performance and
damages with application for the issuance of a
writ of preliminary attachment against the
petitioner and Marilyn. The Complaint was
docketed as Civil Case No. Q-01-45041.
Respondent alleged in its Complaint that on 26
March 1997, it entered into an agreement with
Macrogen Realty, of which petitioner is the
President, to construct for the latter the
Shoppers Gold Building, located at Dr. A. Santos
Avenue corner Palayag Road, Sucat, Parañaque
City. Respondent commenced civil, structural,
and architectural works on the construction
project by May 1997. However, Macrogen Realty
failed to settle respondent’s progress billings.
Petitioner, through his representatives and
agents, assured respondent that the outstanding
account of Macrogen Realty would be paid, and
requested respondent to continue working on
the construction project. Relying on the
assurances made by petitioner, who was no less
than the President of Macrogen Realty,
respondent continued the construction project.
In August 1998, respondent suspended work on
the construction project since the conditions that
it imposed for the continuation thereof, including
payment of unsettled accounts, had not been
complied with by Macrogen Realty. On 1
September 1999, respondent instituted with the
Construction Industry Arbitration Commission
(CIAC) a case for arbitration against Macrogen
Realty seeking payment by the latter of its
unpaid billings and project costs. Petitioner,
through counsel, then conveyed to respondent
his purported willingness to amicably settle the
arbitration case. On 17 April 2000, before the
arbitration case could be set for trial, respondent
and Macrogen Realty entered into a
Compromise Agreement,5 with petitioner acting
as signatory for and in behalf of Macrogen
Realty. Under the Compromise Agreement,
Macrogen Realty agreed to pay respondent the
total amount of P6,000,000.00 in six equal
monthly installments, with each installment to be
delivered on the 15th day of the month, beginning
15 June 2000. Macrogen Realty also agreed that
if it would default in the payment of two
successive monthly installments, immediate
execution could issue against it for the unpaid
balance, without need of judgment or decree
from any court or tribunal. Petitioner guaranteed
the obligations of Macrogen Realty under the
Compromise Agreement by executing a Contract
of Guaranty6 in favor of respondent, by virtue of
which he irrevocably and unconditionally
guaranteed the full and complete payment of the
principal amount of liability of Macrogen Realty
in the sum of P6,000,000.00. Upon joint motion
of respondent and Macrogen Realty, the CIAC
approved the Compromise Agreement on 25
April 2000.7
However, contrary to petitioner’s assurances,
Macrogen Realty failed and refused to pay all
the monthly installments agreed upon in the
Compromise Agreement. Hence, on 7
September 2000, respondent moved for the
issuance of a writ of execution8 against
Macrogen Realty, which CIAC granted.
On 29 November 2000, the sheriff 9 filed a return
stating that he was unable to locate any property
of Macrogen Realty, except its bank deposit
of P20,242.33, with the Planters Bank, Buendia
Branch.
Respondent then made, on 3 January 2001, a
written demand10 on petitioner, as guarantor of
Macrogen Realty, to pay the P6,000,000.00, or
to point out available properties of the Macrogen
Realty within the Philippines sufficient to cover
the obligation guaranteed. It also made verbal
demands on petitioner. Yet, respondent’s
demands were left unheeded.
Thus, according to respondent, petitioner’s
obligation as guarantor was already due and
demandable. As to Marilyn’s liability, respondent
contended that Macrogen Realty was owned
and controlled by petitioner and Marilyn and/or
by corporations owned and controlled by them.
Macrogen Realty is 99% owned by the Asian
Appraisal Holdings, Inc. (AAHI), which in turn is
99% owned by Marilyn. Since the completion of
the construction project would have redounded
to the benefit of both petitioner and Marilyn
and/or their corporations; and considering,
moreover, Marilyn’s enormous interest in AAHI,
the corporation which controls Macrogen Realty,
Marilyn cannot be unaware of the obligations
incurred by Macrogen Realty and/or petitioner in
the course of the business operations of the said
corporation.
Respondent prayed in its Complaint that the
RTC, after hearing, render a judgment ordering
petitioner and Marilyn to comply with their
obligation under the Contract of Guaranty by
paying respondent the amount
of P6,000,000.000 (less the bank deposit of
Macrogen Realty with Planter’s Bank in the
amount of P20,242.23) and P400,000.000 for
attorneys fees and expenses of litigation.
Respondent also sought the issuance of a writ of
preliminary attachment as security for the
satisfaction of any judgment that may be
recovered in the case in its favor.
Marilyn filed a Motion to Dismiss,11 asserting that
respondent had no cause of action against her,
since she did not co-sign the Contract of
Guaranty with her husband; nor was she a party
to the Compromise Agreement between
respondent and Macrogen Realty. She had no
part at all in the execution of the said contracts.
Mere ownership by a single stockholder or by
another corporation of all or nearly all of the
capital stock of another corporation is not by
itself a sufficient ground for disregarding the
separate personality of the latter corporation.
Respondent misread Section 4, Rule 3 of the
Revised Rules of Court.
The RTC denied Marilyn’s Motion to Dismiss for
lack of merit, and in its Order dated 24 January
2002 decreed that:
The Motion To Dismiss Complaint Against
Defendant Marilyn Andal Bitanga filed on
November 12, 2001 is denied for lack of merit
considering that Sec. 4, Rule 3, of the Rules of
Court (1997) specifically provides, as follows:
"SEC. 4. Spouses as parties. – Husband and
wife shall sue or be sued jointly, except as
provided by law."
and that this case does not come within the
exception.12
Petitioner filed with the RTC on 12 November
2001, his Answer13 to respondent’s Complaint
averring therein that he never made
representations to respondent that Macrogen
Realty would faithfully comply with its obligations
under the Compromise Agreement. He did not
offer to guarantee the obligations of Macrogen
Realty to entice respondent to enter into the
Compromise Agreement but that, on the contrary,
it was respondent that required Macrogen Realty
to offer some form of security for its obligations
before agreeing to the compromise. Petitioner
further alleged that his wife Marilyn was not
aware of the obligations that he assumed under
both the Compromise Agreement and the
Contract of Guaranty as he did not inform her
about said contracts, nor did he secure her
consent thereto at the time of their execution.
As a special and affirmative defense, petitioner
argued that the benefit of excussion was still
available to him as a guarantor since he had set
it up prior to any judgment against him.
According to petitioner, respondent failed to
exhaust all legal remedies to collect from
Macrogen Realty the amount due under the
Compromise Agreement, considering that
Macrogen Realty still had uncollected credits
which were more than enough to pay for the
same. Given these premise, petitioner could not
be held liable as guarantor. Consequently,
petitioner presented his counterclaim for
damages.
At the pre-trial held on 5 September 2002, the
parties submitted the following issues for the
resolution of the RTC:
(1) whether the defendants were liable under the
contract of guarantee dated April 17, 2000
entered into between Benjamin Bitanga and the
plaintiff;
(2) whether defendant wife Marilyn Bitanga is
liable in this action;
(3) whether the defendants are entitled to the
benefit of excussion, the plaintiff on the one
hand claiming that it gave due notice to the
guarantor, Benjamin Bitanga, and the
defendants contending that no proper notice was
received by Benjamin Bitanga;
(4) if damages are due, which party is liable; and
(5) whether the benefit of excussion can still be
invoked by the defendant guarantor even after
the notice has been allegedly sent by the plaintiff
although proper receipt is denied.14
On 20 September 2002, prior to the trial proper,
respondent filed a Motion for Summary
Judgment.15 Respondent alleged therein that it
was entitled to a summary judgment on account
of petitioner’s admission during the pre-trial of
the genuineness and due execution of the
Contract of Guaranty. The contention of
petitioner and Marilyn that they were entitled to
the benefit of excussion was not a genuine issue.
Respondent had already exhausted all legal
remedies to collect from Macrogen Realty, but its
efforts proved unsuccessful. Given that the
inability of Macrogen Realty as debtor to pay the
amount of its debt was already proven by the
return of the writ of execution to CIAC unsatisfied,
the liability of petitioner as guarantor already
arose.16 In any event, petitioner and Marilyn
were deemed to have forfeited their right to avail
themselves of the benefit of excussion because
they failed to comply with Article 206017 of the
Civil Code when petitioner ignored respondent’s
demand letter dated 3 January 2001 for payment
of the amount he guaranteed.18 The duty to
collect the supposed receivables of Macrogen
Realty from its creditors could not be imposed on
respondent, since petitioner and Marilyn never
informed respondent about such uncollected
credits even after receipt of the demand letter for
payment. The allegation of petitioner and Marilyn
that they could not respond to respondent’s
demand letter since they did not receive the
same was unsubstantiated and insufficient to
raise a genuine issue of fact which could defeat
respondent’s Motion for Summary Judgment.
The claim that Marilyn never participated in the
transactions that culminated in petitioner’s
execution of the Contract of Guaranty was
nothing more than a sham.
In opposing respondent’s foregoing Motion for
Summary Judgment, petitioner and Marilyn
countered that there were genuinely disputed
facts that would require trial on the merits. They
appended thereto an affidavit executed by
petitioner, in which he declared that his spouse
Marilyn could not be held personally liable under
the Contract of Guaranty or the Compromise
Agreement, nor should her share in the conjugal
partnership be made answerable for the
guaranty petitioner assumed, because his
undertaking of the guaranty did not in any way
redound to the benefit of their family. As
guarantor, petitioner was entitled to the benefit of
excussion, and he did not waive his right thereto.
He never received the respondent’s demand
letter dated 3 January 2001, as Ms. Dette
Ramos, the person who received it, was not an
employee of Macrogen Realty nor was she
authorized to receive the letter on his behalf. As
a guarantor, petitioner could resort to the benefit
of excussion at any time before judgment was
rendered against him.19 Petitioner reiterated that
Macrogen Realty had uncollected credits which
were more than sufficient to satisfy the claim of
respondent.
On 29 November 2002, the RTC rendered a
partial Decision, the dispositive portion of which
provides:
WHEREFORE, summary judgment is rendered
ordering defendants SPOUSES BENJAMIN
BITANGA and MARILYN ANDAL BITANGA to
pay the [herein respondent], jointly and severally,
the amount of P6,000,000.00, less P20,242.23
(representing the amount garnished bank
deposit of MACROGEN in the Planters Bank,
Buendia Branch); and the costs of suit.
Within 10 days from receipt of this partial
decision, the [respondent] shall inform the Court
whether it shall still pursue the rest of the claims
against the defendants. Otherwise, such claims
shall be considered waived.20
Petitioner and Marilyn filed a Motion for
Reconsideration of the afore-quoted Decision,
which the RTC denied in an Order dated 26
January 2003.21
In time, petitioner and Marilyn filed an appeal
with the Court of Appeals, docketed as CA-G.R.
CV 78007. In its Decision dated 11 April 2006,
the appellate court held:
UPON THE VIEW WE TAKE OF THIS CASE,
THUS, the judgment appealed from must be, as
it hereby is, MODIFIED to the effect that
defendant-appellant Marilyn Bitanga is adjudged
not liable, whether solidarily or otherwise, with
her husband the defendant-appellant Benjamin
Bitanga, under the compromise agreement or
the contract of guaranty. No costs in this
instance.22
In holding that Marilyn Bitanga was not liable,
the Court of Appeals cited Ramos v. Court of
Appeals,23 in which it was declared that a
contract cannot be enforced against one who is
not a party to it. The Court of Appeals stated
further that the substantial ownership of shares
in Macrogen Realty by Marilyn Bitanga was not
enough basis to hold her liable.
The Court of Appeals, in its Resolution dated 5
July 2006, denied petitioner’s Motion for
Reconsideration24 of its earlier Decision.
Petitioner is now before us via the present
Petition with the following assignment of errors:
I
THE COURT OF APPEALS GRAVELY ERRED
IN AFFIRMING THE VALIDITY OF THE
PARTIAL SUMMARY JUDGMENT BY THE
REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH 96, DESPITE THE CLEAR
EXISTENCE OF DISPUTED GENUINE AND
MATERIAL FACTS OF THE CASE THAT
SHOULD HAVE REQUIRED A TRIAL ON THE
MERITS.
II
THE COURT OF APPEALS GRAVELY ERRED
IN NOT UPHOLDING THE RIGHT OF
PETITIONER BENJAMIN M. BITANGA AS A
MERE GUARANTOR TO THE BENEFIT OF
EXCUSSION UNDER ARTICLES 2058, 2059,
2060, 2061, AND 2062 OF THE CIVIL CODE OF
THE PHILIPPINES.25
As in the two courts below, it is petitioner’s
position that summary judgment is improper in
Civil Case No. Q-01-45041 because there are
genuine issues of fact which have to be threshed
out during trial, to wit:
(A) Whether or not there was proper service of
notice to petitioner considering the said letter of
demand was allegedly received by one Dette
Ramos at Macrogen office and not by him at his
residence.
(B) Whether or not petitioner is entitled to the
benefit of excussion?26
We are not persuaded by petitioner’s arguments.
Rule 35 of the Revised Rules of Civil Procedure
provides:
Section 1. Summary judgment for claimant. – A
party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a
declaratory relief may, at any time after the
pleading in answer thereto has been served,
move with supporting affidavits, depositions or
admissions for a summary judgment in his favor
upon all or any part thereof.
For a summary judgment to be proper, the
movant must establish two requisites: (a) there
must be no genuine issue as to any material fact,
except for the amount of damages; and (b) the
party presenting the motion for summary
judgment must be entitled to a judgment as a
matter of law. Where, on the basis of the
pleadings of a moving party, including
documents appended thereto, no genuine issue
as to a material fact exists, the burden to
produce a genuine issue shifts to the opposing
party. If the opposing party fails, the moving
party is entitled to a summary judgment.27
In a summary judgment, the crucial question is:
are the issues raised by the opposing party not
genuine so as to justify a summary judgment?28
First off, we rule that the issue regarding the
propriety of the service of a copy of the demand
letter on the petitioner in his office is a sham
issue. It is not a bar to the issuance of a
summary judgment in respondent’s favor.
A genuine issue is an issue of fact which
requires the presentation of evidence as
distinguished from an issue which is a sham,
fictitious, contrived or false claim. To forestall
summary judgment, it is essential for the
non-moving party to confirm the existence of
genuine issues, as to which he has substantial,
plausible and fairly arguable
defense, i.e.,29 issues of fact calling for the
presentation of evidence upon which reasonable
findings of fact could return a verdict for the
non-moving party, although a mere scintilla of
evidence in support of the party opposing
summary judgment will be insufficient to
preclude entry thereof.
Significantly, petitioner does not deny the receipt
of the demand letter from the respondent. He
merely raises a howl on the impropriety of
service thereof, stating that "the address to
which the said letter was sent was not his
residence but the office of Macrogen Realty,
thus it cannot be considered as the correct
manner of conveying a letter of demand upon
him in his personal capacity."30
Section 6, Rule 13 of the Rules of Court states:
SEC. 6. Personal service. – Service of the
papers may be made by delivering personally a
copy to the party or his counsel, or by leaving it
in his office with his clerk or with a person
having charge thereof. If no person is found in
his office, or his office is not known, or he has no
office, then by leaving the copy, between the
hours of eight in the morning and six in the
evening, at the party’s or counsel’s residence, if
known, with a person of sufficient age and
discretion then residing therein.
The affidavit of Mr. Robert O. Pagdilao,
messenger of respondent’s counsel states in
part:
2. On 4 January 2001, Atty. Jose Vicente B.
Salazar, then one of the Associates of the
ACCRA Law Offices, instructed me to deliver to
the office of Mr. Benjamin Bitanga a letter dated
3 January 2001, pertaining to Construction
Industry Arbitration Commission (hereafter,
"CIAC") Case No. 99-56, entitled "Pyramid
Construction Engineering Corporation vs.
Macrogen Realty Corporation."
3. As instructed, I immediately proceeded to the
office of Mr. Bitanga located at the 12th Floor,
Planters Development Bank Building, 314
Senator Gil Puyat Avenue, Makati City. I
delivered the said letter to Ms. Dette Ramos, a
person of sufficient age and discretion, who
introduced herself as one of the employees of Mr.
Bitanga and/or of the latter’s
31
companies. (Emphasis supplied.)
We emphasize that when petitioner signed the
Contract of Guaranty and assumed obligation as
guarantor, his address in the said contract was
the same address where the demand letter was
served.32 He does not deny that the said place of
service, which is the office of Macrogen, was
also the address that he used when he signed as
guarantor in the Contract of Guaranty. Nor does
he deny that this is his office address; instead,
he merely insists that the person who received
the letter and signed the receiving copy is not an
employee of his company. Petitioner could have
easily substantiated his allegation by a
submission of an affidavit of the personnel
manager of his office that no such person is
indeed employed by petitioner in his office, but
that evidence was not submitted.33 All things are
presumed to have been done correctly and with
due formality until the contrary is proved.
This juris tantum presumption stands even
against the most well-reasoned allegation
pointing to some possible irregularity or
anomaly.34 It is petitioner’s burden to overcome
the presumption by sufficient evidence, and so
far we have not seen anything in the record to
support petitioner’s charges of anomaly beyond
his bare allegation. Petitioner cannot now be
heard to complain that there was an irregular
service of the demand letter, as it does not
escape our attention that petitioner himself
indicated "314 Sen. Gil Puyat Avenue, Makati
City" as his office address in the Contract of
Guaranty.
Moreover, under Section 6, Rule 13 of the Rules
of Court, there is sufficiency of service when the
papers, or in this case, when the demand letter
is personally delivered to the party or his counsel,
or by leaving it in his office with his clerk or
with a person having charge thereof, such as
what was done in this case.
We have consistently expostulated that in
summary judgments, the trial court can
determine a genuine issue on the basis of the
pleadings, admissions, documents, affidavits or
counter affidavits submitted by the parties. When
the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine
issue or question as to any fact, and summary
judgment is called for.35
The Court of Appeals was correct in holding that:
Here, the issue of non-receipt of the letter of
demand is a sham or pretended issue, not a
genuine and substantial issue. Indeed, against
the positive assertion of Mr. Roberto O. Pagdilao
(the private courier) in his affidavit that he
delivered the subject letter to a certain Ms. Dette
Ramos who introduced herself as one of the
employees of [herein petitioner] Mr. Benjamin
Bitanga and/or of the latter’s companies, said
[petitioner] merely offered a bare denial. But
bare denials, unsubstantiated by facts, which
would be admissible in evidence at a
hearing, are not sufficient to raise a genuine
issue of fact sufficient to defeat a motion for
summary judgment.36
We further affirm the findings of both the RTC
and the Court of Appeals that, given the settled
facts of this case, petitioner cannot avail himself
of the benefit of excussion.
Under a contract of guarantee, the guarantor
binds himself to the creditor to fulfill the
obligation of the principal debtor in case the
latter should fail to do so. The guarantor who
pays for a debtor, in turn, must be indemnified by
the latter. However, the guarantor cannot be
compelled to pay the creditor unless the latter
has exhausted all the property of the debtor and
resorted to all the legal remedies against the
debtor. This is what is otherwise known as the
benefit of excussion.37
Article 2060 of the Civil Code reads:
Art. 2060. In order that the guarantor may make
use of the benefit of excussion, he must set it up
against the creditor upon the latter’s demand for
payment from him, and point out to the creditor
available property of the debtor within Philippine
territory, sufficient to cover the amount of the
debt.38
The afore-quoted provision imposes a condition
for the invocation of the defense of excussion.
Article 2060 of the Civil Code clearly requires
that in order for the guarantor to make use of the
benefit of excussion, he must set it up against
the creditor upon the latter’s demand for
payment and point out to the creditor available
property of the debtor within the Philippines
sufficient to cover the amount of the debt.39
It must be stressed that despite having been
served a demand letter at his office, petitioner
still failed to point out to the respondent
properties of Macrogen Realty sufficient to cover
its debt as required under Article 2060 of the
Civil Code. Such failure on petitioner’s part
forecloses his right to set up the defense of
excussion.
Worthy of note as well is the Sheriff’s return
stating that the only property of Macrogen Realty
which he found was its deposit of P20,242.23
with the Planters Bank.
Article 2059(5) of the Civil Code thus finds
application and precludes petitioner from
interposing the defense of excussion. We quote:
Art. 2059. This excussion shall not take place:
xxxx
(5) If it may be presumed that an execution on
the property of the principal debtor would not
result in the satisfaction of the obligation.
As the Court of Appeals correctly ruled:
We find untenable the claim that the [herein
petitioner] Benjamin Bitanga cannot be
compelled to pay Pyramid because the
Macrogen Realty has allegedly sufficient assets.
Reason: The said [petitioner] had not genuinely
controverted the return made by Sheriff Joseph
F. Bisnar, who affirmed that, after exerting
diligent efforts, he was not able to locate any
property belonging to the Macrogen Realty,
except for a bank deposit with the Planter’s Bank
at Buendia, in the amount of P20,242.23. It is
axiomatic that the liability of the guarantor arises
when the insolvency or inability of the debtor to
pay the amount of debt is proven by the return of
the writ of execution that had not been
unsatisfied.40
WHEREFORE, premises considered, the instant
petition is DENIED for lack of merit. The
Decision of the Court of Appeals dated 11 April
2006 and its Resolution dated 5 July 2006
are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 170483 April 19, 2010
MANUEL C. BUNGCAYAO, SR., represented
in this case by his Attorney-in-fact ROMEL R.
BUNGCAYAO,Petitioner,
vs.
FORT ILOCANDIA PROPERTY HOLDINGS,
AND DEVELOPMENT
CORPORATION, Respondent.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for
review1 assailing the 21 November 2005
Decision2 of the Court of Appeals in CA-G.R. CV
No. 82415.
The Antecedent Facts
Manuel C. Bungcayao, Sr. (petitioner) claimed to
be one of the two entrepreneurs who introduced
improvements on the foreshore area of Calayab
Beach in 1978 when Fort Ilocandia Hotel started
its construction in the area. Thereafter, other
entrepreneurs began setting up their own stalls
in the foreshore area. They later formed
themselves into the D’Sierto Beach Resort
Owner’s Association, Inc. (D’Sierto).
In July 1980, six parcels of land in Barrio
Balacad (now Calayad) were transferred, ceded,
and conveyed to the Philippine Tourism
Authority (PTA) pursuant to Presidential Decree
No. 1704. Fort Ilocandia Resort Hotel was
erected on the area. In 1992, petitioner and
other D’Sierto members applied for a foreshore
lease with the Community Environment and
Natural Resources Office (CENRO) and was
granted a provisional permit. On 31 January
2002, Fort Ilocandia Property Holdings and
Development Corporation (respondent) filed a
foreshore application over a 14-hectare area
abutting the Fort Ilocandia Property, including
the 5-hectare portion applied for by D’Sierto
members. The foreshore applications became
the subject matter of a conflict case, docketed
Department of Environment and Natural
Resources (DENR) Case No. 5473, between
respondent and D’Sierto members. In an
undated Order,3 DENR Regional Executive
Director Victor J. Ancheta denied the foreshore
lease applications of the D’Sierto members,
including petitioner, on the ground that the
subject area applied for fell either within the titled
property or within the foreshore areas applied for
by respondent. The D’Sierto members appealed
the denial of their applications. In a
Resolution4 dated 21 August 2003, then DENR
Secretary Elisea G. Gozun denied the appeal on
the ground that the area applied for encroached
on the titled property of respondent based on the
final verification plan.
In a letter dated 18 September
5
2003, respondent, through its Public Relations
Manager Arlene de Guzman, invited the D’Sierto
members to a luncheon meeting to discuss
common details beneficial to all parties
concerned. Atty. Liza Marcos (Atty. Marcos),
wife of Governor Bongbong Marcos, was present
as she was asked by Fort Ilocandia hotel officials
to mediate over the conflict among the parties.
Atty. Marcos offered ₱300,000 as financial
settlement per claimant in consideration of the
improvements introduced, on the condition that
they would vacate the area identified as
respondent’s property. A D’Sierto member made
a counter-offer of ₱400,000, to which the other
D’Sierto members agreed.
Petitioner alleged that his son, Manuel
Bungcayao, Jr., who attended the meeting,
manifested that he still had to consult his parents
about the offer but upon the undue pressure
exerted by Atty. Marcos, he accepted the
payment and signed the Deed of Assignment,
Release, Waiver and Quitclaim6 in favor of
respondent.
Petitioner then filed an action for declaration of
nullity of contract before the Regional Trial Court
of Laoag, City, Branch 13 (trial court), docketed
as Civil Case Nos. 12891-13, against
respondent. Petitioner alleged that his son had
no authority to represent him and that the deed
was void and not binding upon him.
Respondent countered that the area upon which
petitioner and the other D’Sierto members
constructed their improvements was part of its
titled property under Transfer Certificate of Title
No. T-31182. Respondent alleged that
petitioner’s sons, Manuel, Jr. and Romel,
attended the luncheon meeting on their own
volition and they were able to talk to their parents
through a cellular phone before they accepted
respondent’s offer. As a counterclaim,
respondent prayed that petitioner be required to
return the amount of ₱400,000 from respondent,
to vacate the portion of the respondent’s
property he was occupying, and to pay damages
because his continued refusal to vacate the
property caused tremendous delay in the
planned implementation of Fort Ilocandia’s
expansion projects.
In an Order7 dated 6 November 2003, the trial
court confirmed the agreement of the parties to
cancel the Deed of Assignment, Release,
Waiver and Quitclaim and the return of ₱400,000
to respondent. Petitioner’s counsel, however,
manifested that petitioner was still maintaining its
claim for damages against respondent.
Petitioner and respondent agreed to consider
the case submitted for resolution on summary
judgment. Thus, in its Order8 dated 28
November 2003, the trial court considered the
case submitted for resolution. Petitioner filed a
motion for reconsideration, alleging that he
manifested in open court that he was
withdrawing his earlier manifestation submitting
the case for resolution. Respondent filed a
Motion for Summary Judgment.
The trial court rendered a Summary
Judgment9 dated 13 February 2004.
The Decision of the Trial Court
The trial court ruled that the only issue raised by
petitioner was his claim for damages while
respondent’s issue was only his claim for
possession of the property occupied by
petitioner and damages. The trial court noted
that the parties already stipulated on the issues
and admissions had been made by both parties.
The trial court ruled that summary judgment
could be rendered on the case.
The trial court ruled that the alleged pressure on
petitioner’s sons could not constitute force,
violence or intimidation that could vitiate consent.
As regards respondent’s counterclaim, the trial
court ruled that based on the pleadings and
admissions made, it was established that the
property occupied by petitioner was within the
titled property of respondent. The dispositive
portion of the trial court’s decision reads:
WHEREFORE, the Court hereby renders
judgment DISMISSING the claim of plaintiff for
damages as it is found to be without legal basis,
and finding the counterclaim of the defendant for
recovery of possession of the lot occupied by the
plaintiff to be meritorious as it is hereby
GRANTED. Consequently, the plaintiff is hereby
directed to immediately vacate the premises
administratively adjudicated by the executive
department of the government in favor of the
defendant and yield its possession unto the
defendant. No pronouncement is here made as
yet of the damages claimed by the defendant.
SO ORDERED.10
Petitioner appealed from the trial court’s
decision.
The Decision of the Court of Appeals
In its 21 November 2005 Decision, the Court of
Appeals affirmed the trial court’s decision in toto.
The Court of Appeals sustained the trial court in
resorting to summary judgment as a valid
procedural device for the prompt disposition of
actions in which the pleadings raise only a legal
issue and not a genuine issue as to any material
fact. The Court of Appeals ruled that in this case,
the facts are not in dispute and the only issue to
be resolved is whether the subject property was
within the titled property of respondent. Hence,
summary judgment was properly rendered by
the trial court.
The Court of Appeals ruled that the
counterclaims raised by respondent were
compulsory in nature, as they arose out of or
were connected with the transaction or
occurrence constituting the subject matter of the
opposing party’s claim and did not require for its
adjudication the presence of third parties of
whom the court could not acquire jurisdiction.
The Court of Appeals ruled that respondent was
the rightful owner of the subject property and as
such, it had the right to recover its possession
from any other person to whom the owner has
not transmitted the property, including petitioner.
The dispositive portion of the Court of Appeals’
decision reads:
WHEREFORE, the assailed decision dated
February 13, 2004 of the Regional Trial Court of
Laoag City, Branch 13 is hereby AFFIRMED in
toto.
SO ORDERED.11
Thus, the petition before this Court.
The Issues
Petitioner raises the following issues in his
Memorandum:12
1. Whether respondent’s counterclaim is
compulsory; and
2. Whether summary judgment is appropriate in
this case.
The Ruling of this Court
The petition has merit.
Compulsory Counterclaim
A compulsory counterclaim is any claim for
money or any 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 the
plaintiff’s complaint.13 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.14Any other counterclaim is
permissive.15
The Court has ruled that the compelling test of
compulsoriness characterizes a counterclaim as
compulsory if there should exist a logical
relationship between the main claim and the
counterclaim.16 The Court further ruled that 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.17
The criteria to determine whether the
counterclaim is compulsory or permissive are as
follows:
(a) Are issues of fact and law raised by the claim
and by the counterclaim largely the same?
(b) Would res judicata bar a subsequent suit on
defendant’s claim, absent the compulsory rule?
(c) Will substantially the same evidence support
or refute plaintiff’s claim as well as defendant’s
counterclaim?
(d) Is there any logical relations between the
claim and the counterclaim?
A positive answer to all four questions would
indicate that the counterclaim is compulsory.18
In this case, the only issue in the complaint is
whether Manuel, Jr. is authorized to sign the
Deed of Assignment, Release, Waiver and
Quitclaim in favor of respondent without
petitioner’s express approval and authority. In an
Order dated 6 November 2003, the trial court
confirmed the agreement of the parties to cancel
the Deed of Assignment, Release, Waiver and
Quitclaim and the return of ₱400,000 to
respondent. The only claim that remained was
the claim for damages against respondent. The
trial court resolved this issue by holding that any
damage suffered by Manuel, Jr. was personal to
him. The trial court ruled that petitioner could not
have suffered any damage even if Manuel, Jr.
entered into an agreement with respondent
since the agreement was null and void.
Respondent filed three counterclaims. The first
was for recovery of the ₱400,000 given to
Manuel, Jr.; the second was for recovery of
possession of the subject property; and the third
was for damages. The first counterclaim was
rendered moot with the issuance of the 6
November 2003 Order confirming the agreement
of the parties to cancel the Deed of Assignment,
Release, Waiver and Quitclaim and to return the
₱400,000 to respondent. Respondent waived
and renounced the third counterclaim for
damages.19 The only counterclaim that remained
was for the recovery of possession of the subject
property. While this counterclaim was an
offshoot of the same basic controversy between
the parties, it is very clear that it will not be
barred if not set up in the answer to the
complaint in the same case. Respondent’s
second counterclaim, contrary to the findings of
the trial court and the Court of Appeals, is only a
permissive counterclaim. It is not a compulsory
counterclaim. It is capable of proceeding
independently of the main case.
The rule in permissive counterclaim is that for
the trial court to acquire jurisdiction, the
counterclaimant is bound to pay the prescribed
docket fees.20 Any decision rendered without
jurisdiction is a total nullity and may be struck
down at any time, even on appeal before this
Court.21 In this case, respondent did not dispute
the non-payment of docket fees. Respondent
only insisted that its claims were all compulsory
counterclaims. As such, the judgment by the trial
court in relation to the second counterclaim is
considered null and void22 without prejudice to a
separate action which respondent may file
against petitioner.1avvphi1
Summary Judgment
Section 1, Rule 35 of the 1997 Rules of Civil
Procedure provides:
Section 1. Summary Judgment for claimant. - A
party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a
declaratory relief may, at any time after the
pleading in answer thereto has been served,
move with supporting affidavits, depositions or
admissions for a summary judgment in his favor
upon all or any part thereof.
Summary judgment has been explained as
follows:
Summary judgment is a procedural device
resorted to in order to avoid long drawn out
litigations and useless delays. When the
pleadings on file show that there are no genuine
issues of fact to be tried, the Rules allow a party
to obtain immediate relief by way of summary
judgment, that is, when the facts are not in
dispute, the court is allowed to decide the case
summarily by applying the law to the material
facts. Conversely, where the pleadings tender a
genuine issue, summary judgment is not proper.
A "genuine issue" is such issue of fact which
requires the presentation of evidence as
distinguished from a sham, fictitious, contrived or
false claim. Section 3 of the said rule provides
two (2) requisites for summary judgment to be
proper: (1) there must be no genuine issue as to
any material fact, except for the amount of
damages; and (2) the party presenting the
motion for summary judgment must be entitled to
a judgment as a matter of law. A summary
judgment is permitted only if there is no genuine
issue as to any material fact and a moving party
is entitled to a judgment as a matter of law. A
summary judgment is proper if, while the
pleadings on their face appear to raise issues,
the affidavits, depositions, and admissions
presented by the moving party show that such
issues are not genuine.23

Since we have limited the issues to the damages

claimed by the parties, summary judgment has
been properly rendered in this case.

WHEREFORE, we MODIFY the 21 November

2005 Decision of the Court of Appeals in CA-G.R.
CV No. 82415 which affirmed the 13 February
2004 Decision of the Regional Trial Court of
Laoag City, Branch 13, insofar as it ruled that
respondent’s counterclaim for recovery of
possession of the subject property is compulsory
in nature. We DISMISS respondent’s permissive
counterclaim without prejudice to filing a
separate action against petitioner.

SO ORDERED.