1.

ALBERTO T. REYES
v.
THE COURT OF APPEALS and TEODORO KALAW, JR.
FACTS:
Petitioners were the lessees of a building owned by Teodoro Kalaw. Petitioners received notices to
vacate the premises to give way for the demolition of the building in order that a new one may be
erected thereon. A total of three notices were sent out by Kalaw to remind his tenants of the impending
demolition. The last notice gave Petitioners 24 hours within which to leave the premises. As scheduled,
Kalaw began the demolition of the building, and fenced the area around it. The tenants, who were still
occupying the premises, filed a complaint for forcible entry and detainer with the City Court, praying for
a writ of preliminary injunction, and damages. Kalaw counterclaimed for ejectment and damages for
alleged loss of the use of the premises. The City Court rendered a decision in favor Petitioners which
Kalaw appealed to the then Court of First Instance. The CFI reversed the decision of the City Court and
ordered Petitioners to vacate the premises, and to pay the rentals which fell due during the suit. Such
decision was affirmed by the Court of Appeals with an additional award of temperate damages in favor
of Kalaw. Petitioners contest the award of such damages, arguing that since such damages were not
raised during the trial at the City Court, the same may not be awarded by the Court of Appeals.
ISSUE :
Whether or not the failure to claim temperate damages level prohibits a claim for the same in a
separate action.
HELD :
Since temperate damages are neither "rents" nor "reasonable compensation for the use and occupation
of the premises," nor "fair rental value" as above-stated, and since the agreed rental itself was adjudged
in favor of Kalaw, the Supreme Court is constrained to deny the temperate damages awarded by the
Court of Appeals.The Rules expressly provide that upon appeal from the judgment of a justice of the
peace to the court of first instance, the ease shall stand for trial de novo (Section 9, Rule 40). This
provision has been interpreted to mean that parties are prevented from raising issues in the court of first
instance which were not raised in the justice of the peace court. While said damages arose out of, or are
necessarily connected with, the same transaction or occurrence which was the wrongful withholding of
possession, they are not a compulsory counterclaim because they exceed the jurisdiction of the inferior
court. A compulsory counterclaim is barred if not set up, when applied to municipal courts presupposes
that the amount involved is within the said court's jurisdiction. The reason for the rule relating to
counterclaims is to avoid multiplicity of suits and to dispose of the whole matter in controversy in one
action. This reason, however, does not obtain where the amount exceeds the jurisdiction of the inferior
court. 59 | P a g e
2.
ALICE A.I. SANDEJAS
v.
SPS. ARTURO IGNACIO, JR. and EVELYN IGNACIO
FACTS:
A blank check was left by Arturo Igmacio in the possession of his sisters, Rosita and Alice Sandejas
intended for the payment of the lease of a property, for the benefit of his nephew, Benjamin Espiritu.
The amount and the date of the check were left blank because Arturo did not know the details of the
renewal of the aforesaid lease. The sisters, believing that Rosita was entitled to Three Million Pesos from
Arturo, by virtue of the sale of a property which they allegedly co-owned, went to the Security Bank and
Trust Company to open a joint account, in which they deposited the said blank check, which they filled
in by writing the amount of Three Million Pesos. In this transaction, Alice got her driver, Kudera, to stand
in as Dr. Borja, the payee of the check. No ID was required of Kudera pursuant to the standing policy of
the bank, and the check was thereafter validly cleared. When the time came that Arturo questioned
such transaction, the whole amount of Three Million had already been withdrawn by Rosita and Alice.
Subsequently, a complaint was filed by Arturo and his wife for recovery of a sum of money, against SBTC
and its officers, and Alice, Rosita, and Benjamin. Alice and Rosita filed their respective answers, in which
Rosita interposed a counterclaim in hers, owing to the alleged Three Million that Arturo did not give her,
but should have, in light of the sale of the property they co-owned.
ISSUE :
Whether or not the counterclaim is merely permissive.
HELD :
The Supreme Court has laid down the following tests to determine whether a counterclaim is
compulsory or not, to wit: (1) Are the issues of fact or law raised by the claim and the counterclaim
largely the same? (2) Would res judicata bar a subsequent suit on defendants’ claims, absent the
compulsory counterclaim rule? (3) Will substantially the same evidence support or refute plaintiffs claim
as well as the defendants counterclaim? And, (4) Is there any logical relation between the claim and the
counterclaim, such that the conduct of separate trials of the respective claims of the parties would entail
a substantial duplication of effort and time by the parties and the court? Court agrees with the view of
the RTC that Rosita's counterclaim for the recovery of her alleged share in the sale of the property is
permissive in nature. The evidence needed to prove respondents' claim to recover the amount of Three
Million Pesos from petitioners is different from that required to establish Rosita's demands for the
recovery of her alleged share in the sale of the subject property. The recovery of respondents' claim is
not contingent or dependent upon the establishment of Rosita'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.
3.

PRO-LINE SPORTS CENTER

v.
COURT OF APPEALS, et al.
FACTS:
Petitioner instituted a criminal case against Universal Athletics and Industrial Products, Inc. for Unfair
Competition, claiming that the latter was manufacturing fake “Spalding” balls. A search warrant was
issued after having been duly applied for, and during the search, machineries and equipment used in the
manufacture of said fake balls were placed under judicial custody. However, the case was dismissed
with finality since the element of actual sale to the public of such goods was not proven by Pro-Line.
After dismissal, Universal filed a civil suit for damages against Pro-Line for alleged malicious and baseless
prosecution, citing the application for the search warrant, the actual search, and the seizure of the
equipment of Universal, among other grounds. Pro-Line naturally denied all allegations in the complaint.
Further, it also filed a counterclaim for damages based mainly on the unauthorized and illegal
manufacture by Universal of fake “Spalding” balls. Both the trial court and the Court of Appeals
rendered a decision in favor of the claim of Universal, while dismissing at the same time Pro-Line’s
counter claim.
ISSUE :
Whether or not the counterclaim should be sustained.
HELD :
Counterclaim for damages by the Pro-Line based on the illegal and unauthorized manufacture of
"Spalding" balls certainly constitutes an independent cause of action which can be the subject of a
separate complaint for damages against Universal. However, this separate civil action cannot anymore
be pursued as it is already barred by res judicata, the judgment in the criminal case (against Universal)
involving both the criminal and civil aspects of the case for unfair competition. To recall, petitioner Pro-
Line, upon whose initiative the criminal action for unfair competition against respondent Universal was
filed, did not institute a separate civil action for damages nor reserve its right to do so. Thus the civil
aspect for damages was deemed instituted in the criminal case. No better manifestation of the intent of
petitioner to recover damages in the criminal case can be expressed than their active participation in the
prosecution of the civil aspect of the criminal case through the intervention of their private prosecutor.
Obviously, such intervention could only be for the purpose of recovering damages or indemnity because
the offended party is not entitled to represent the People of the Philippines in the prosecution of a
public offense. A counterclaim partakes of the nature of a complaint and/or a cause of action against the
plaintiffs. It is in itself a distinct and independent cause of action, so that when properly stated as such,
the defendant becomes, in respect to the matter stated by him, an actor, and there are two
simultaneous actions pending between the same parties, where each is at the same time both a plaintiff
and defendant. A counterclaim stands on the same footing and is to be tested by the same rules, as if it
were an independent action. 56 | P a g e
4.
FELIPE YULIENCO
v.
COURT OF APPEALS and ADVANCE CAPITAL CORPORATION
FACT:
An action for collection of a sum of money based on promissory notes was filed by private respondent
against petitioner in the Regional Trial Court. Petitioner filed a motion to dismiss on the ground of litis
pendentia since another case between the same parties was then being tried in the RTC of Makati.
Private respondent claims that the two cases are not the same, in that they involve different causes of
action, i.e. different promissory notes. The trial court agreed with private respondent. On petition for
certiorari, prohibition and/or injunction, Yulienco claimed private respondent is barred from instituting
the case filed with the Quezon City RTC since it should have been filed as a compulsory counterclaim in
the Makati case. Private respondent, for its part, maintains that the two cases are distinct and separate
from each other since the Quezon City case is an ordinary collection suit, while the Makati case is for
injunction, and that the two cases involve different promissory notes. The Court of Appeals denied said
petition and affirmed the decision of the trial court.
ISSUE:
Whether or not the suit for collection of money was proper.
HELD:
A counterclaim is defined as any claim for money or other relief which a defending party may have
against an opposing party. The Makati case is basically an injunction suit, a petition for prohibition. On
the other hand, the Quezon City suit is an ordinary action for collection of sums of money. In the former,
Yulienco essentially seeks to prohibit or enjoin the disposition and/or sale of his property, the proceeds
of which will answer for his unpaid obligations to ACC. Promissory notes are also involved in that case
but they are specifically identified as different, and are intimately related to or secured by the real
estate mortgages. In the Quezon City case, ACC simply seeks to collect from YULIENCO his unpaid
monetary obligations covered by specific but unsecured Promissory Notes. Needless to say, they are not
the promissory notes subject of the first action. Neither are they substantially, intimately and reasonably
relevant to nor even remotely connected with the promissory notes and the cause of action in the
injunction suit. Simply put, the promissory notes in both cases differ from and are not related to each
other. There is, therefore, a dissimilarity in the subject matter of both cases arising from separate and
distinct transactions and necessarily requiring different evidence to support the divergent claims. More
importantly, the "one compelling test of compulsoriness" i.e., the logical relationship between the claim
and counterclaim, does not apply here. To reiterate, there is no logical relationship between Yulienco's
petition for injunctive relief and ACC's collection suit, hence separate trials of the respective claims of
the parties will not entail a substantial duplication of effort and time as the factual and/or legal issues
involved, as already explained, are dissimilar and distinct.
5. CONSUELO V. CALO
v.
AJAX INTERNATIONAL, INCORPORATED
FACTS:
Petitioner ordered from Ajax International, Inc. several feet of John Shaw wire rope. Upon delivery of
the wire rope, petitioner found out that it was short of 30 feet, which prompted her to communicate
with Ajax for either completion of delivery or account adjustment in view of the undelivered wire rope.
Petitioner did not receive any response from Ajax, and instead, a complaint was filed for collection of
sum of money was against her by one Adolfo Benavides (Benavides), who claimed to have acquired the
outstanding credit account of petitioner from Ajax. Subsequently, a judgment by default was entered,
and a writ of execution was issued against petitioner. A petition for certiorari, prohibition and
mandamus was applied for which was granted and the case was remanded for further proceedings.
Petitioner then filed a complaint against Ajax asking for completion of delivery or that she be relieved
from paying for the 300 feet of wire rope which remained undelivered, which complaint included a
prayer for damages. Ajax moved for dismissal of the case on the ground that the subject of the present
suit was intimately related to the case between Benavides and petitioner, which motion was granted by
the court, which found Calo’s claim to be a compulsory counter-claim, which should be filed in the
Benavides case.
ISSUE :
Whether or not the claim is in the nature of a compulsory counterclaim
HELD
The dismissal of the complaint by the court because of the pendency of the Benavides case is based on
the supposition that former’s claim is a compulsory counter-claim that should be filed in the latter case.
There is no question that it arises out of the same transaction which is the basis of Benavides’ complaint
and does not require the presence of third parties over whom the municipal court could not acquire
jurisdiction. However, Calo's claim is not a compulsory counterclaim in the Benavides case for the simple
reason that the amount thereof exceeds the jurisdiction of the municipal court. The rule that a
compulsory counterclaim not set up is barred, when applied to the municipal court, presupposes that
the amount involved is within the said court's jurisdiction. As noted, it would come to the absurd
situation where a claim must be filed with the municipal court which it is prohibited from taking
cognizance of, being beyond its jurisdiction. Besides, the reason underlying the rule, which is to settle all
related controversies in one sitting only, does not obtain. For, even if the counterclaim in excess of the
amount cognizable by the inferior court is set up, the defendant cannot obtain positive relief. The Rules
allow this only for the defendant to prevent plaintiff from recovering from him. This means that should
the court find both plaintiff's complaint and defendant's counterclaim (for an amount exceeding said
court's jurisdiction) meritorious, it will simply dismiss the complaint on the ground that defendant has a
bigger credit. Since defendant still has to institute a separate action for the remaining balance of his
counterclaim, the previous litigation did not really settle all related controversies.
63 | P a g e CIVIL PROCEDURE Rule 7
NELSIE CAÑETE
v.
GENUINO ICE COMPANY
FACTS:
A complaint for cancellation of title was filed by petitioners against Genuino Ice Company regarding
several parcels of land. In the complaint, petitioners alleged that Genuino Ice, as well as its
predecessors-in-interest were never in actual, adverse, and physical possession of the subject
properties. The petitioners alleged that this being the fact of the matter, they are ineligible to have
acquired the properties pursuant to the Friar Lands Act. Genuino Ice moved to dismiss the complaint,
which motion was denied by the trial court. Petitioners filed a Second Amended Complaint, which
sought to annul, in addition to the titles already alleged in the complaint, several more titles which
Genuino Ice holds. Genuino Ice once again moved for dismissal of the Second Amended Complaint for,
among others, lack of a valid cause of action. The trial court denied this second motion to dismiss, which
prompted Genuino Ice to file a petition for certiorari with the Court of Appeals. The CA granted Genuino
Ice’s petition for certiorari, and dismissed the second amended complaint for failure to state a cause of
action.
ISSUE :
Whether or not the complaint properly stated a cause of action
HELD :
It is axiomatic that the averments of the complaint determine the nature of the action, and
consequently, the jurisdiction of the courts. This is because the complaint must contain a concise
statement of the ultimate facts constituting the plaintiff's cause of action and must specify the relief
sought. No rule is better established than that which requires the complaint to contain a statement of all
the facts constituting the plaintiff's cause of action.The basic rules of proper pleading and procedure
require that every pleading shall contain in a methodical and logical form, a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case
may be, omitting the statement of mere evidentiary facts. A pleading should state the ultimate facts
essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact, or
conclusions of law. General allegations that a contract is valid or legal, or is just, fair and reasonable, are
mere conclusions of law. Likewise, allegations that a contract is void, voidable, invalid, illegal, ultra vires,
or against public policy, without stating facts showing its invalidity, are mere conclusions of law. In the
resolution of a motion to dismiss based on failure to state a cause of action, only the facts alleged in the
complaint as well as its annexes must be considered. The test in such case is whether a court can render
a valid judgment on the complaint based upon the facts alleged and pursuant to the prayer therein. 64 |
Page
CIVIL PROCEDURE Rule 7
BANCO FILIPINO SAVINGS BANK
v.
COURT OF APPEALS
FACTS:
When petitioner Banco Filipino reached the allowable limit in branch site holdings, pursuant to the
General Banking Act, it conceived and organized Tala Realty as a transferee corporation in order to
effectively continue to expand its business. Petitioner then sold to Tala Realty some of the former’s
branch sites, which it then leased thereafter from Tala Realty. All was going well, until Tala Realty
demanded payment of increased rentals, deposits and goodwill from petitioner, with a threat of
ejectment in case of failure to comply with such demands. However, petitioner alleged that a trust was
created by virtue of the transactions it had with Tala Realty, and that the latter was established only to
serve as a corporate medium to warehouse the legal titles of the subject properties for the beneficial
interest of petitioner. Petitioner failed to comply prompting Tala Realty filed numerous ejectment suits
against the former, and compelled petitioner to file seventeen actions for recovery of real properties, all
of which were uniformly worded in their material allegations. Tala Realty filed separate motions to
dismiss, which were granted by the trial court. Petitioner moved for reconsideration, but the trail court
denied such motion. Instead of filing an appeal, however, petitioner filed a petition for certiorari under
Rule 65 with the Court of Appeals, which dismissed the same, on the ground that such recourse to Rule
65 is “patently malapropos.”
ISSUE :
Whether or not a petition for certiorari is the proper action.
HELD :
The proper remedy from the adverse resolutions of the Court of Appeals is an ordinary appeal to this
Court via a petition for review under Rule 45 and not a petition for certiorari under Rule 65.
The availability to Banco Filipino of the remedy of a petition for review from the decision of the Court of
Appeals effectively foreclosed its right to resort to a petition for certiorari. a\ special civil action for
certiorari under Rule 65 lies only when there is no appeal nor plain, speedy and adequate remedy in the
ordinary course of law. Certiorari is not allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy. The remedies of appeal and certiorari are mutually exclusive and
not alternative or successive. In the case at bar, Banco Filipino has failed to show any valid reason why
the issues raised in its petition for certiorari could not have been raised on appeal. To justify its resort to
a special civil action for certiorari under Rule 65, it erroneously claims that an appeal is not a speedy and
adequate remedy because further delay in the disposition of this case would effectively deprive Banco
Filipino of the full use and enjoyment of its properties. However, the further delay that would
inadvertently result from the dismissal of the instant petition is one purely of Banco Filipino's own doing.
The Supreme Court cannot countenance an intentional departure from established rules of procedure
simply to accommodate a case that has long been pending in the courts of law because of the party's
own fault or negligence. 65 | P a g e
CIVIL PROCEDURE Rule 7
GLICERIA SARMIENTO
v.
EMERITA ZARATAN
FACTS:
Petitioner filed an ejectment case against respondent Emerita Zaratan, in which judgment was rendered
in favor of Sarmiento by the trial court. Respondent accordingly filed her notice of appeal, and pursuant
to such, the Regional Trial Court directed Respondent to submit her memorandum in accordance with
the Rules of Court. On the last day for filing such memorandum, Respondent’s counsel filed a motion for
extension of time within which to file said memorandum, which was not acted upon in due time.
Nevertheless, six days after the lapse of the fifteen-day reglementary period, Respondent filed her
memorandum. The trial court dismissed the appeal on the ground of the filing of the requisite
memorandum after the lapse of the reglementary period for perfecting an appeal. Respondent moved
for reconsideration of such dismissal, which motion was denied by the RTC. Aggrieved, Respondent filed
a Petition for Certiorari with the Court of Appeals, which was granted, and in effect nullified and set
aside the Orders of the RTC, and the reinstatement of Respondent’s appeal. From this pronouncement,
Sarmiento filed a motion for reconsideration, alleging that in terms of procedure, there was a fatal error
committed by Respondent when the latter, in the verification, stated that Respondent was the
respondent, when in fact, she was the petitioner, thus implying that Respondent did not understand
what she was signing. According to Sarmiento, this defect of the verification renders the petition
without legal effect.
ISSUE :
Whether or not such defect in the verification is a fatal defect which merits outright dismissal of the
case
HELD
A verification is required to secure an assurance that the allegations of the petition have been made in
good faith, or are true and correct, not merely speculative. This requirement is simply a condition
affecting the form of pleadings and non-compliance therewith does not necessarily render it fatally
defective. Perusal of the verification in question shows there was sufficient compliance with the
requirements of the Rules and the alleged defects are not so material as to justify the dismissal of the
petition in the Court of Appeals. The defects are mere typographical errors. There appears to be no
intention to circumvent the need for proper verification and certification, which are intended to assure
the truthfulness and correctness of the allegations in the petition and to discourage forum shopping.