RULE 5

Uniform Procedure In Trial Courts

Section 1. Uniform procedure. The
procedure in the Municipal Trial Courts shall
be the same as in the Regional Trial Courts,
except (a) where a particular provision
expressly or impliedly applies only to either of
said courts, or (b) in civil cases governed by
the Rule on Summary Procedure. (n)
Section 2. Meaning of terms. The term
"Municipal Trial Courts" as used in these Rules
shall include Metropolitan Trial Courts,
Municipal Trial Courts in Cities, Municipal Trial
Courts, and Municipal Circuit Trial Courts. (1a
Procedure In Regional Trial Courts
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
G.R. No. 200804

January 22, 2014

A.L. ANG NETWORK, INC., Petitioner,

vs.
EMMA MONDEJAR, accompanied by her
husband, EFREN MONDEJAR, Respondent.
Facts:
On March 23, 2011, petitioner filed a
complaint for sum of money before the MTCC,
seeking to collect from respondent the amount
of P23,111.71 which represented her unpaid
water bills for the period June 1, 2002 to
September 30, 2005.
Petitioner claimed that it was duly
authorized to supply water to and collect
payment therefor from the homeowners of
Regent Pearl Subdivision, one of whom is
respondent.
From June 1, 2002 until September
30, 2005, respondent and her family
consumed a total of 1,150 cubic meters (cu.
m.)
of
water,
which
amounted
to P28,580.09. However, she only paid the
amount of P5,468.38, thus, leaving a balance
of P23,111.71 which was left unpaid despite
petitioners repeated demands.
In defense, respondent contended that
since April 1998 up to February 2003, she
religiously paid the agreed monthly flat rate
of P75.00 for her water consumption.
Notwithstanding their agreement that the same
would be adjusted only upon prior notice to the

homeowners, petitioner unilaterally charged

her unreasonable and excessive adjustments
far above the average daily water consumption
for a household of only 3 persons. She also
questioned the propriety and/or basis of the
aforesaid claim.
In the interim, petitioner disconnected
respondents water line for not paying the
adjusted water charges since March 2003 up
to August 2005.
On June 10, 2011, the MTCC
rendered a Decision holding that since
petitioner was issued a Certificate of Public
Convenience by the National Water Resources
Board (NWRB) only on August 7, 2003, then, it
can only charge respondent the agreed flat
rate of P75.00 per month prior thereto or the
sum of P1,050.00 for the period June 1, 2002
to August 7, 2003. Thus, given that respondent
had made total payments equivalent
to P1,685.99 for the same period, she should
be considered to have fully paid petitioner.
Moreover, the MTCC noted that
petitioner failed to submit evidence showing
(a) the exact date when it actually began
imposing the NWRB approved rates; and (b)
that the parties had a formal agreement
containing the terms and conditions thereof,
without which it cannot establish with certainty
respondents obligation.
Aggrieved, petitioner filed a petition for
certiorari under Rule 65 of the Rules of Court
before the RTC, ascribing grave abuse of
discretion on the part of the MTCC in finding
that it failed to establish with certainty
respondents obligation, and in not ordering
the latter to pay the full amount sought to be
collected.
On November 23, 2011, the RTC
issued a Decision dismissing the petition for
certiorari, finding that the said petition was only
filed to circumvent the non-appealable nature
of small claims cases as provided under
Section 23 of the Rule of Procedure on Small
Claims Cases. To this end, the RTC ruled that
it cannot supplant the decision of the MTCC
with another decision directing respondent to
pay petitioner a bigger sum than that which
has been awarded.
Petitioner
moved
for
reconsideration but was denied in an
Order dated February 16, 2012, hence, the
instant petition.

Issue:
Whether or not petitioners recourse under
Rule 65 of the Rules of Court assailing the
propriety of the MTCC Decision in the subject
small claims case is the proper remedy.
Ruling:
Yes. Section 23 of the Rule of Procedure for
Small Claims Cases states that:
SEC. 23. Decision. After the hearing, the
court shall render its decision on the same
day, based on the facts established by the
evidence (Form 13-SCC). The decision shall
immediately be entered by the Clerk of Court
in the court docket for civil cases and a copy
thereof forthwith served on the parties.
The decision shall be final and unappealable.
Considering the final nature of a small
claims case decision under the abovestated rule, the remedy of appeal is not
allowed, and the prevailing party may, thus,
immediately
move
for
its
execution. Nevertheless, the proscription
on appeals in small claims cases, similar to
other proceedings where appeal is not an
available remedy, does not preclude the
aggrieved party from filing a petition for
certiorari under Rule 65 of the Rules of
Court. This general rule has been enunciated
in the case of Okada v. Security Pacific
Assurance Corporation,wherein it was held
that:
In a long line of cases, the Court has
consistently ruled that "the extraordinary writ of
certiorari is always available where there is no
appeal or any other plain, speedy and
adequate remedy in the ordinary course of
law." In Jaca v. Davao Lumber Co., the Court
ruled:
x x x Although Section 1, Rule 65 of the
Rules of Court provides that the special
civil action of certiorari may only be
invoked when "there is no appeal, nor any
plain, speedy and adequate remedy in the
course of law," this rule is not without
exception. The availability of the ordinary
course of appeal does not constitute
sufficient ground to prevent a party from
making use of the extraordinary remedy of
certiorari where appeal is not an adequate
remedy or equally beneficial, speedy and

sufficient. It is the inadequacy not the

mere absence of all other legal remedies
and the danger of failure of justice without
the writ that usually determines the
propriety of certiorari.
This ruling was reiterated in Conti v. Court of
Appeals:
Truly, an essential requisite for the availability
of the extraordinary remedies under the Rules
is an absence of an appeal nor any "plain,
speedy and adequate remedy" in the ordinary
course of law, one which has been so defined
as a "remedy which (would) equally (be)
beneficial, speedy and sufficient not merely a
remedy which at some time in the future will
bring about a revival of the judgment x x x
complained of in the certiorari proceeding, but
a remedy which will promptly relieve the
petitioner from the injurious effects of that
judgment and the acts of the inferior court or
tribunal" concerned. x x x (Emphasis supplied)
In this relation, it may not be amiss to placate
the RTCs apprehension that respondents
recourse before it (was only filed to circumvent
the non-appealable nature of [small claims
cases], because it asks [the court] to supplant
the decision of the lower [c]ourt with another
decision directing the private respondent to
pay the petitioner a bigger sum than what has
been awarded." Verily, a petition for
certiorari, unlike an appeal, is an original
action designed to correct only errors of
jurisdiction and not of judgment. Owing to
its nature, it is therefore incumbent upon
petitioner to establish that jurisdictional errors
tainted the MTCC Decision. The RTC, in turn,
could either grant or dismiss the petition based
on an evaluation of whether or not the MTCC
gravely abused its discretion by capriciously,
whimsically,
or
arbitrarily
disregarding
evidence that is material to the controversy.
In view of the foregoing, the Court thus finds
that petitioner correctly availed of the remedy
of certiorari to assail the propriety of the MTCC
Decision in the subject small claims case,
contrary to the RTCs ruling.
Likewise, the Court finds that petitioner filed
the said petition before the proper forum (i.e.,
the RTC). To be sure, the Court, the Court
of Appeals and the Regional Trial Courts
have concurrent jurisdiction to issue a writ
of
certiorari. Such
concurrence
of
jurisdiction, however, does not give a party
unbridled freedom to choose the venue of

his action lest he ran afoul of the doctrine

of hierarchy of courts. Instead, a becoming
regard for judicial hierarchy dictates that
petitions for the issuance of writs of certiorari
against first level courts should be filed with
the Regional Trial Court, and those against the
latter, with the Court of Appeals, before resort
may be had before the Court. This procedure
is also in consonance with Section 4, Rule 65
of the Rules of Court.
Hence, considering that small claims cases
are exclusively within the jurisdiction of the
Metropolitan Trial Courts, Municipal Trial
Courts in Cities, Municipal Trial Courts, and
Municipal Circuit Trial Courts, certiorari
petitions assailing its dispositions should
be filed before their corresponding
Regional Trial Courts. This petitioner
complied with when it instituted its petition for
certiorari before the RTC which, as previously
mentioned, has jurisdiction over the same. In
fine, the RTC erred in dismissing the said
petition on the ground that it was an improper
remedy, and, as such, the case must be
reinstated and remanded thereto for its proper
disposition.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
RULE 6
Kinds Of Pleadings
Section 1. Pleadings defined. Pleadings are
the written statements of the respective claims
and defenses of the parties submitted to the
court for appropriate judgment. (1a)
Section 2. Pleadings allowed. The claims of
a party are asserted in a complaint,
counterclaim, cross-claim, third (fourth, etc.)party complaint, or complaint-in-intervention.
The defenses of a party are alleged in the
answer to the pleading asserting a claim
against him.
An answer may be responded to by a reply. (n)
Section 3. Complaint. The complaint is the
pleading alleging the plaintiff's cause or
causes of action. The names and residences
of the plaintiff and defendant must be stated in
the complaint. (3a)

Section 4. Answer. An answer is a pleading

in which a defending party sets forth his
defenses. (4a)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
PBCom v. Spouses Go, G.R. No. 175514,
February 14, 2011
On September 30, 1999, respondent
Jose C. Go (Go) obtained two loans from
PBCom, evidenced by two promissory notes,
embodying
his
commitment
to
payP17,982,222.22 for the first loan, and P80
million for the second loan, within a ten-year
period from September 30, 1999 to September
30, 2009. Go executed two (2) pledge
agreements, both dated September 29, 1999,
covering shares of stock in Ever Gotesco
Resources and Holdings, Inc. The first pledge,
valued at P27,827,122.22, was to secure
payment of the first loan, while the second
pledge, valued at P70,155,100.00, was to
secure the second loan.
Two years later, however, the market
value of the said shares of stock plunged to
less than P0.04 per share. Thus, PBCom, as
pledgee, notified Go in writing on June 15,
2001, that it was renouncing the pledge
agreements.
Later, PBCom filed before the RTC a
complaint for sum of money with prayer for a
writ of preliminary attachment against Go and
his wife, Elvy T. Go(Spouses Go), docketed as
Civil Case No. 01-101190. PBCom alleged
that Spouses Go defaulted on the two (2)
promissory notes, having paid only three (3)
installments on interest paymentscovering
the months of September, November and
December 1999. Consequently, the entire
balance of the obligations of Go became
immediately due and demandable. PBCom
made repeated demands upon Spouses Go
for the payment of said obligations, but the
couple imposed conditions on the payment,
such as the lifting of garnishment effected by
the Bangko Sentral ng Pilipinas (BSP) on Gos
accounts.
Spouses Go filed their Answer with
Counterclaim denying the material allegations
in the complaint and stating, among other
matters, that:

8.
The
promissory note referred to in
the complaint expressly state
that the loan obligation is
payable within the period of
ten (10) years. Thus, from the
execution date of September
30, 1999, its due date falls on
September 30, 2009 (and not
2001 as erroneously stated in
the complaint). Thus, prior
to September 30, 2009, the
loan obligations cannot be
deemed
due
and
demandable.
In
conditional
obligations, the acquisition of
rights, as well as the
extinguishment or loss of
those already acquired, shall
depend upon the happening
of the event which constitutes
the condition. (Article 1181,
New Civil Code)
9.
Contrary
to the plaintiffs proferrence,
defendant Jose C. Go had
made substantial payments in
terms
of
his
monthly
payments. There is, therefore,
a
need
to
do
some
accounting works (sic) to
reconcile the records of both
parties.
10.
While
demand is a necessary
requirement to consider the
defendant
to
be
in
delay/default, such has not
been complied with by the
plaintiff since the former is not
aware of any demand made
to him by the latter for the
settlement of the whole
obligation.
11.
Undenia
bly, at the time the pledge of
the shares of stock were
executed, their total value is
more than the amount of the
loan or at the very least,
equal to it. Thus, plaintiff was
fully secured insofar as its
exposure is concerned.

12.
And even
assuming without conceding,
that the present value of said
shares x x x went down, it
cannot be considered as
something permanent since
the prices of stocks in the
market either increases (sic)
or decreases (sic) depending
on the market forces. Thus, it
is highly speculative for the
plaintiff to consider said
shares to have suffered
tremendous decrease in its
value. More so, it is unfair for
the plaintiff to renounce or
abandon
the
pledge
agreements.

On September 28, 2001, PBCom filed

a verified motion for summary judgment
anchored on the following grounds:
I.
MATERI
AL AVERMENTS OF THE
COMPLAINT ADMITTED BY
DEFENDANT-SPOUSES IN
THEIR
ANSWER
TO
OBVIATE THE NECESSITY
OF TRIAL
II.
NO REAL
DEFENSES
AND
NO
GENUINE ISSUES AS TO
ANY
MATERIAL
FACT
WERE TENDERED BY THE
DEFENDANT-SPOUSES IN
THEIR ANSWER
III.
PLANTIFF
S CAUSES OF ACTIONS
ARE
SUPPORTED
BY
VOLUNTARY ADMISSIONS
AND
AUTHENTIC
DOCUMENTS WHICH MAY
NOT BE CONTRADICTED.
PBCom contended that the Answer
interposed no specific denials on the material
averments in paragraphs 8 to 11 of the
complaint such as the fact of default, the entire
amount being already due and demandable by
reason of default, and the fact that the bank
had made repeated demands for the payment
of the obligations.

Spouses Go opposed the motion for

summary judgment arguing that they had
tendered genuine factual issues calling for the
presentation of evidence.

The RTC granted PBComs motion in its

Judgment dated January 25, 2002 ordering
defendants to pay plaintiff jointly and severally
the following: 1.
The total amount
of P117,567,779.75,
plus interests and
penalties as stipulated in the two promissory
notes; 2. A sum equivalent to 10% of the
amount involved in this case, by way of
attorneys fees; and 3. The costs of suit.

CA reversed and set

aside the
assailed judgment of the RTC, denied
PBComs motion for summary judgment, and
ordered the remand of the records to the court
of origin for trial on the merits.
ISSUE:
Whether or not Spouses Gos denial in their
Answer constitutes specific denials required by
the Rules on the material averments in
paragraphs 8 to 11 of the complaint.
Held:
Yes. Under the Rules, every pleading must
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.
To specifically deny a material allegation,
a defendant must specify each material
allegation of fact the truth of which he does not
admit, and whenever practicable, shall set forth
the substance of the matters upon which he
relies to support his denial. Where a defendant
desires to deny only a part of an averment, he
shall specify so much of it as is true and
material and shall deny only the remainder.
Where a defendant is without knowledge or
information sufficient to form a belief as to the
truth of a material averment made in the
complaint, he shall so state, and this shall have
the effect of a denial.

Rule 8, Section 10 of the Rules of Civil

Procedure contemplates three (3) modes of
specific denial, namely: 1) by specifying each
material allegation of the fact in the complaint,
the truth of which the defendant does not
admit, and whenever practicable, setting forth
the substance of the matters which he will rely
upon to support his denial; (2) by specifying so
much of an averment in the complaint as is true
and material and denying only the remainder;
(3) by stating that the defendant is without
knowledge or information sufficient to form a
belief as to the truth of a material averment in
the complaint, which has the effect of a denial.
The purpose of requiring the defendant
to make a specific denial is to make him
disclose the matters alleged in the complaint
which he succinctly intends to disprove at the
trial, together with the matter which he relied
upon to support the denial. The parties are
compelled to lay their cards on the table.
The Supreme court denied the petition
for review on certiorari under Rule 45 filed by
petitioner
Philippine
Bank
of
Communications (PBCom) seeking
to
set
aside the July 28, 2006 Decision, and the
November 27, 2006 Resolution of the Court of
Appeals (CA) in CA G.R. CV No. 77714. (The
CA decision reversed and set aside
the January 25, 2002Decision of the Regional
Trial Court, Branch 42, Manila (RTC), which
granted the motion for summary judgment and
rendered judgment on the basis of the
pleadings and attached documents.)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
BPI vs. Spouse Royeco
G.R. No. 176664

Facts:
On August 23, 1993, spouses Reynaldo and
Victoria Royeca (respondents) executed and
delivered to Toyota Shaw, Inc. a Promissory
Note for P577,008.00 payable in 48 equal
monthly installments of P12,021.00, with a
maturity date of August 18, 1997. The
Promissory Note provides for a penalty of 3%

for every month or fraction of a month that an

installment remains unpaid.

To secure the payment of said Promissory

Note, respondents executed a Chattel
Mortgage in favor of Toyota over a certain
motor vehicle.

Toyota, with notice to respondents, executed a

Deed of Assignment transferring all its rights,
title, and interest in the Chattel Mortgage to
Far East Bank and Trust Company (FEBTC).

Claiming that the respondents failed to pay

four (4) monthly amortizations FEBTC sent a
formal demand to respondents on March 14,
2000 asking for the payment thereof, plus
penalty. The respondents refused to pay on
the ground that they had already paid their
obligation to FEBTC.

On April 19, 2000, FEBTC filed a Complaint for

Replevin and Damages against the
respondents with the Metropolitan Trial Court
(MeTC) of Manila praying for the delivery of
the vehicle, with an alternative prayer for the
payment of P48,084.00 plus interest and/or
late payment charges at the rate of 36% per
annum from May 18, 1997 until fully paid.

In their Answer, respondents alleged that on

May 20, 1997, they delivered to the Auto
Financing Department of FEBTC eight
postdated checks in different amounts totaling
P97,281.78. The respondents further averred
that they did not receive any notice from the
drawee banks or from FEBTC that these
checks were dishonored. They explained that,
considering this and the fact that the checks
were issued three years ago, they believed in
good faith that their obligation had already
been fully paid.

On February 23, 2005, the MeTC dismissed

the case and granted the respondents
counterclaim for damages. On appeal, the
Regional Trial Court (RTC) set aside the
MeTC Decision and ordered the respondents
to pay the amount claimed by the petitioner.

The RTC denied the respondents motion for

reconsideration. The respondents elevated the
case to the Court of Appeals (CA) through a
petition for review. They succeeded in
obtaining a favorable judgment when the CA
set aside the RTCs Decision and reinstated
the MeTCs Decision on July 12, 2006.

Issue:
Who has the burden of proof in this case?

Rulings:
In civil cases, the party having the burden of
proof must establish his case by a
preponderance of evidence, or evidence which
is more convincing to the court as worthy of
belief than that which is offered in opposition
thereto. Thus, the party, whether plaintiff or
defendant, who asserts the affirmative of
an issue has the onus to prove his
assertion in order to obtain a favorable
judgment. For the plaintiff, the burden to
prove its positive assertions never parts.
For the defendant, an affirmative defense is
one which is not a denial of an essential
ingredient in the plaintiffs cause of action,
but one which, if established, will be a
good defense i.e. an "avoidance" of the
claim.

To establish their defense, the respondents

therefore had to present proof, not only that
they delivered the checks to the petitioner, but
also that the checks were encashed. The
respondents failed to do so. Had the checks
been actually encashed, the respondents
could have easily produced the cancelled
checks as evidence to prove the same.

Instead, they merely averred that they believed

in good faith that the checks were encashed
because they were not notified of the dishonor
of the checks and three years had already
lapsed since they issued the checks.
Because of this failure of the respondents to
present sufficient proof of payment, it was no
longer necessary for the petitioner to prove
nonpayment, particularly proof that the checks
were dishonored. The burden of evidence is
shifted only if the party upon whom it is lodged
was able to adduce preponderant evidence to
prove its claim.

Section 5. Defenses. Defenses may either

be negative or affirmative.
(a) A negative defense is the specific
denial of the material fact or facts
alleged in the pleading of the claimant
essential to his cause or causes of
action.

(b) An affirmative defense is an

allegation of a new matter which, while
hypothetically admitting the material
allegations in the pleading of the
claimant, would nevertheless prevent
or bar recovery by him. The affirmative
defenses include fraud, statute of
limitations, release, payment, illegality,
statute of frauds, estoppel, former
recovery, discharge in bankruptcy, and
any other matter by way of confession
and avoidance. (5a)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Lefarge Cement Philippines vs CCC, Lim,

Mariano
Facts:

Petitioner Lafarge Cement Philippines,

Inc. (Lafarge) -- on behalf of its
affiliates and other qualified entities,
including Petitioner Luzon Continental
Land Corporation (LCLC) -- agreed to
purchase the cement business of
Respondent Continental Cement
Corporation (CCC).

On October 21, 1998, both parties

entered into a Sale and Purchase
Agreement (SPA). At the time of the
foregoing transactions, petitioners
were well aware that CCC had a case
pending with the Supreme Court. The
case was docketed as GR No.
119712, entitled Asset Privatization
Trust (APT) v. Court of Appeals and
Continental Cement Corporation.
In anticipation of the liability that the
High Tribunal might adjudge against
CCC, the parties, under Clause 2 (c)
of the SPA, allegedly agreed to retain
from the purchase price a portion of
the contract price in the amount
of P117,020,846.84 -- the equivalent
of US$2,799,140. This amount was to
be deposited in an interest-bearing
account in the First National City Bank
of New York (Citibank) for payment to
APT.
However, petitioners allegedly refused
to apply the sum to the payment to
APT, despite the subsequent finality of
the Decision in GR No. 119712 in
favor of the latter and the repeated
instructions of Respondent
CCC. Fearful that nonpayment to APT
would result in the foreclosure, not just
of its properties covered by the SPA
with Lafarge but of several other
properties as well, CCC filed before
the Regional Trial Court of Quezon
City on June 20, 2000, a Complaint
with Application for Preliminary
Attachment against petitioners.
Petitioners moved to dismiss the
Complaint on the ground that it
violated the prohibition on forumshopping. The trial court denied the
Motion to Dismiss in its November 14,
2000 Order, petitioners elevated the
matter before the Court of Appeals in
CA-GR SP No. 68688.
In the meantime, to avoid being in
default and without prejudice to the
outcome of their appeal, petitioners
filed their Answer and Compulsory
Counterclaims ad Cautelam before the
trial court in Civil Case No. Q-0041103. In their Answer, they denied

the allegations in the Complaint. They

prayed -- by way of compulsory
counterclaims against Respondent
CCC, its majority stockholder and
president Gregory T. Lim, and its
corporate secretary Anthony A.
Mariano -- for the sums of
(a) P2,700,000 each as actual
damages, (b) P100,000,000 each as
exemplary damages,
(c) P100,000,000 each as moral
damages, and (d) P5,000,000 each as
attorneys fees plus costs of suit.
Petitioners alleged that CCC, through
Lim and Mariano, had filed the
baseless Complaint in Civil Case No.
Q-00-41103 and procured the Writ of
Attachment in bad faith. Relying on
this Courts pronouncement
in Sapugay v. CA,[5] petitioners prayed
that both Lim and Mariano be held
jointly and solidarily liable with
Respondent CCC.

Issue:
Whether or not the RTC gravely erred in ruling
that
(i)

(ii)
(iii)

petitioners counterclaims against

Respondents Lim and Mariano are
not compulsory;
Sapugay v. Court of Appeals is
inapplicable here; and
petitioners violated the rule on
joinder of causes of action.

Ruling:
(i)

Petitioners Counterclaims
Compulsory.
(Principles laid down)
Counterclaims are defined in
Section 6 of Rule 6 of the Rules of
Civil Procedure as any claim
which a defending party may have
against an opposing party. They
are generally allowed in order to
avoid a multiplicity of suits and to
facilitate the disposition of the
whole controversy in a single
action, such that the defendants
demand may be adjudged by a
counterclaim rather than by an

independent suit. The only

limitations to this principle are (1)
that the court should have
jurisdiction over the subject
matter of the counterclaim, and
(2) that it could acquire
jurisdiction over third parties
whose presence is essential for
its adjudication.
A counterclaim may either be
permissive or compulsory. It is
permissive if it does not arise out
of or is not necessarily connected
with the subject matter of the
[11]
opposing partys claim. A
permissive counterclaim is
essentially an independent claim
that may be filed separately in
another case.
A counterclaim is compulsory
when its object arises out of or is
necessarily connected with the
transaction or occurrence
constituting the subject matter of
the opposing partys claim and
does not require for its
adjudication the presence of third
parties of whom the court cannot
acquire jurisdiction.
Criteria to determine whether a
counterclaim is compulsory or
permissive: 1) Are issues of fact
and law raised by the claim and by
the counterclaim largely the
same? 2) Would res judicata bar a
subsequent suit on defendants
claim, absent the compulsory
counterclaim rule? 3) Will
substantially the same evidence
support or refute plaintiffs claim
as well as defendants
counterclaim? 4) Is there any
logical relation between the claim
and the counterclaim? A positive
answer to all four questions would
indicate that the counterclaim is
compulsory.
Adopted in Quintanilla v.
CA[14] and reiterated in Alday v.
[15]
FGU Insurance Corporation, the
compelling test of

compulsoriness characterizes a
counterclaim as compulsory if
there should exist a logical
relationship between the main
claim and the counterclaim. There
exists such a relationship when
conducting separate trials of the
respective claims of the parties
would entail substantial
duplication of time and effort by
the parties and the court; when
the multiple claims involve the
same factual and legal issues; or
when the claims are offshoots of
the same basic controversy
between the parties.
The allegations show that
petitioners counterclaims for
damages were the result of
respondents (Lim and Mariano)
act of filing the Complaint and
securing the Writ of Attachment in
bad faith.
Aside from the fact that petitioners
counterclaim for damages cannot be the
subject of an independent action, it is the
same evidence that sustains petitioners
counterclaim that will refute private
respondents own claim for damages. This
is an additional factor that characterizes
petitioners counterclaim as compulsory.
Moreover, using the compelling test of
compulsoriness, we find that, clearly, the
recovery of petitioners counterclaims is
contingent upon the case filed by
respondents; thus, conducting separate
trials thereon will result in a substantial
duplication of the time and effort of the
court and the parties.
Since the counterclaim for damages is
compulsory, it must be set up in the same
action; otherwise, it would be barred
forever. If it is filed concurrently with the
main action but in a different proceeding, it
would be abated on the ground of litis
pendentia; if filed subsequently, it would
meet the same fate on the ground of res
judicata.
(ii)

Sagupay vs CA is applicable to
the case at bar.
Among the issues raised
in Sapugay was whether

Cardenas, who was not a party to

the original action, might
nevertheless be impleaded in the
counterclaim. We disposed of this
issue as follows:
A counterclaim is defined as any claim for
money or other relief which a defending
party may have against an opposing
party. However, the general rule that a
defendant cannot by a counterclaim bring
into the action any claim against persons
other than the plaintiff admits of an
exception under Section 14, Rule 6 which
provides that when the presence of
parties other than those to the original
action is required for the granting of
complete relief in the determination of a
counterclaim or cross-claim, the court
shall order them to be brought in as
defendants, if jurisdiction over them
can be obtained. The inclusion,
therefore, of Cardenas in petitioners
counterclaim is sanctioned by the rules.
The prerogative of bringing in new parties
to the action at any stage before judgment
is intended to accord complete relief to all
of them in a single action and to avert a
duplicity and even a multiplicity of suits
thereby.
The inclusion of a corporate officer or
stockholder -- Cardenas in Sapugay or
Lim and Mariano in the instant case -- is
not premised on the assumption that the
plaintiff corporation does not have the
financial ability to answer for damages,
such that it has to share its liability with
individual defendants. Rather, such
inclusion is based on the allegations of
fraud and bad faith on the part of the
corporate officer or stockholder. These
allegations may warrant the piercing of the
veil of corporate fiction, so that the said
individual may not seek refuge therein, but
may be held individually and personally
liable for his or her actions.
While the Court does rule that the
counterclaims against Respondent CCCs
president and manager may be properly filed,
the determination of whether both can in fact
be held jointly and severally liable with
respondent corporation is entirely another
issue that should be ruled upon by the trial
court.

However,
while
a
compulsory
counterclaim may implead persons not parties
to the original complaint, the general rule -- a
defendant in a compulsory counterclaim need
not file any responsive pleading, as it is
deemed to have adopted the allegations in the
complaint as its answer -- does not apply. The
filing of a responsive pleading is deemed a
voluntary submission to the jurisdiction of the
court; a new party impleaded by the plaintiff in
a compulsory counterclaim cannot be
considered to have automatically and
unknowingly submitted to the jurisdiction of the
court. A contrary ruling would result in
mischievous consequences whereby a party
may be indiscriminately impleaded as a
defendant in a compulsory counterclaim; and
judgment rendered against it without its
knowledge, much less participation in the
proceedings,
in
blatant
disregard
of
rudimentary due process requirements.
In summary, we make the following
pronouncements:
1. The counterclaims against
Respondents CCC, Gregory T. Lim
and Anthony A. Mariano are
compulsory.
2. The counterclaims may properly
implead Respondents Gregory T.
Lim and Anthony A. Mariano, even if
both were not parties in the original
Complaint.
3. Respondent CCC or any of the three
solidary debtors (CCC, Lim or
Mariano) may include, in a Motion to
Dismiss, defenses available to their
co-defendants; nevertheless, the
same Motion cannot be deemed to
have been filed on behalf of the said
co-defendants.
4. Summons must be served on
Respondents Lim and Mariano
before the trial court can obtain
jurisdiction over them.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
YULIENCO V. CA:
FACTS:
Civil Case No. Q-95-23691 was instituted by
private respondent Advance Capital
Corporation (ACC) against petitioner Felipe

Yulienco to recover the amount of

P30,631,162.19 plus interests and penalty,
which was apparently extended as a loan to
the petitioner, as evidenced by four promissory
notes. Each promissory note also provided for
an interest rate of 30% per annum.
In its complaint, the ACC alleged that
petitioner failed and refused to pay the
amounts reflected in the promissory notes
upon their maturity and despite several
demands to pay made to the petitioner, the
last one being sent on January 9, 1995.
Petitioner filed his answer on July 17, 1995,
alleging in sum, that the trial court cannot
acquire jurisdiction over ACC's complaint
because there is another case pending
between ACC and the petitioner involving the
same subject matter, and that ACC's
complaint should have been filed as a
necessary and compulsory counterclaim in the
said case.
On April 19, 1996, petitioner filed a
memorandum/motion to dismiss with the trial
court, setting up the special and affirmative
defenses in his answer as grounds for the
dismissal of ACC's suit. The Trial Court struck
down said motion.
Thereafter, YULIENCO filed before the Court
of Appeals a petition for certiorari, prohibition
and/or injunction, docketed as CA-G.R. SP
No. 42835, questioning the aforementioned
orders of the RTC of Quezon City. YULIENCO
challenged the jurisdiction of the RTC over
Civil Case No. Q-95-23691 principally on the
ground of litis pendentia.
The Court of Appeals rejected YULIENCO's
argument and consequently dismissed the
petition in its decision of 4 December 1997. It
found that "bar of litis pendencia [sic] will not
operate in the present suit, inasmuch as there
appears to be no identity in the subject matter
from which the reliefs prayed for in the actions
pending were premised. Hence, this petition.
ISSUE:
Whether or not Civil Case No. Q-95-23691 of
the RTC of Quezon City is separate and
distinct from Special Civil Case No. 93-2521 of
the RTC of Makati City, hence, there is no

violation of the rule concerning splitting causes

of action or the necessary joinder of causes of
action.
RULING:
The Court ruled in the affirmative.
A counterclaim is defined as any claim for
money or other relief which a defending party
may have against an opposing party.[6] A
counterclaim is compulsory if (a) it arises out
of, or is necessarily connected with, the
transaction or occurrence which is the subject
matter of the opposing party's claim; (b) it does
not require for its adjudication the presence of
third parties of whom the court cannot acquire
jurisdiction; and (c) the court has jurisdiction to
[7]
entertain the claim. In other words, a
compulsory counterclaim cannot be made the
subject of a separate action but should be
asserted in the same suit involving the same
transaction or occurrence giving rise to it.[8]
The criteria or tests by which the
compulsory or permissive nature of specific
counterclaims can be determined are as
follows:
(1) Are the issues of fact and law
raised by the claim and
counterclaim largely the same?
(2) Would res
judicata bar
a
subsequent suit on defendant's
claim absent the compulsory
counterclaim rule?
(3) Will substantially the same
evidence support or refute
plaintiff's claim as well as
defendant's counterclaim?
(4) Is there any logical relation
between the claim and the
[9]
counterclaim?
Stripped of its legalese and trivial details,
Special Civil Case No. 93-2521 of the RTC of
Makati City is basically an injunction suit, a
petition for prohibition. On the other hand,
Civil Case No. Q-95-23691 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. Specifically, YULIENCO attempts to
prevent (1) the foreclosure of the real estate
mortgages which he executed to secure his
monetary obligations, (2) the issuance of
certificates of sale in cases of mortgages

already foreclosed, and (3) the sale of his

specific club membership certificates and
shares of stocks in ACC. Promissory notes
are also involved in that case but they are
specifically identified as Promissory Notes
Nos. 315, 317 and 318, and are intimately
related to or secured by the real estate
mortgages. In Civil Case No. Q-95-23691,
ACC simply seeks to collect from YULIENCO
his unpaid monetary obligations covered by
specific but unsecured Promissory Notes
Nos. 56, 57, 59 and 60. 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.[10] A
judgment in Special Civil Action No. 93-2521
will not therefore bar Civil Case No. Q-9523691; "this, [additionally] on the theory that
what is barred by prior judgment are not only
the matters squarely raised and litigated, but
all such matters as could have been raised but
were not."[11] Obviously, each averment by
ACC for the collection of a sum of money
covered by Promissory Notes Nos. 56, 57 59
and 60 is not a "matter" that could have been
raised as counterclaim in the injunction suit.
In light of the above showing, there was
no violation of the rule against splitting causes
of action or necessary joinder of causes of
action.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 6. Counterclaim. A counterclaim is
any claim which a defending party may have
against an opposing party. (6a)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Mercado v. Court of Appeals, G.R. No.
169576, October 17, 2008
FACTS:
San Miguel Corporation (SMC) extended to
Leonides Mercado, a distributor of SMCs beer
products since 1967, a P7.5 million credit line.
To secure his purchases, Mercado assigned 3
China Bank Corporation certificates of deposit
amounting to P5 million to SMC and executed
a continuing hold-out agreement stating:
Any demand made by
[SMC] on [CBC],
claiming default on
my/our part shall be
conclusive on [CBC]
and shall serve as
absolute authority for
[CBC] to encash the
[CBC certificates of
deposit] in accordance
with the third
paragraph of this HoldOut Agreement,
whether or not I/we
have in fact defaulted
on any of my/our
obligations with [SMC],
it being understood
that the issue of
whether or not there
was factual default
must be threshed out
solely between me/us
and [SMC]
He also submitted three surety bonds from
Eastern Assurance and Surety Corporation
(EASCO) totaling P2.6 million. Consequently
after SMC notified CBC that Mercado failed to
pay it asked CBC to release the proceeds of
the assigned certificates of deposit which CBC
approved. On March 2, 1992, Mercado filed an
action to annul the continuing hold-out
agreement and deed of assignment in the
Regional Trial Court (RTC) of Manila claiming
that such agreement allowed forfeiture without
the benefit of foreclosure which is void in view
of Article 2088 of the Civil Code. He argued
that he had already settled his recent
purchases on credit but SMC erroneously
applied the said payments to his old accounts
not covered by the continuing hold-out
agreement.
On March 18, 1992, SMC filed its answer with
counterclaim against Mercado and contended

that Mercado delivered only two CBC

certificates of deposit amounting to P4.5
million and asserted that the execution of the
continuing hold-out agreement and deed of
assignment was a recognized business
practice. Furthermore,
because
Mercado
admitted his outstanding liabilities, SMC
sought payment of the lees products he
withdrew (or purchased on credit) worth
P7,468,153.75.
On April 23, 1992, SMC filed a third-party
complaint against EASCO to collect the
proceeds of the surety bonds submitted by
Mercado.
On September 14, 1994, Mercado filed an
urgent manifestation and motion seeking the
dismissal of the complaint. He claimed that he
was no longer interested in annulling the
continuing hold-out agreement and deed of
assignment. The RTC, however, denied the
motion. Instead, it set the case for pre-trial.
Thereafter, trial ensued.
During trial, Mercado acknowledged the
accuracy of SMCs computation of his
outstanding liability as of August 15,
1991. Thus, the RTC dismissed the complaint
and ordered Mercado and EASCO (to the
extent of P2.6 million or the value of its bonds)
to jointly and severally pay SMC the amount
of P7,468,153.75.
Aggrieved, Mercado and EASCO appealed to
the Court of Appeals (CA) insisting that
Mercado did not default in the payment of his
obligations to SMC but CA affirmed the RTC
decision in toto. Mercado and EASCO both
moved for reconsideration but their respective
motions were denied.
On October 28, 2005, EASCO filed a petition
for review on certiorari but eventually agreed
to settle its liability with SMC. The petition was
terminated on September 19, 2007. When
Mercado passed away, he was substituted by
his heirs, petitioners Racquel D. Mercado,
Jimmy D. Mercado, Henry D. Mercado,
Louricar D. Mercado and Virgilio D. Mercado.
Petitioners subsequently filed this petition
asserting that the CA erred in affirming the
RTC decision in toto. The said decision
(insofar as it ordered Mercado to pay
SMC P7,468,153.75)
was void.
SMCs
counterclaim was permissive in nature.
Inasmuch as SMC did not pay docket fees, the
RTC never acquired jurisdiction over the
counterclaim.

ISSUE:
Whether or not SMCs counterclaim is
permissive or compulsory in nature.

CA-G.R. CV No. 45546, that denied petitioners

action for damages against respondent Bayer
Philippines Inc. (Bayerphil) and instead granted the

HELD:
The SC held that SMCs counterclaim, being
logically related to Mercados claim, was
compulsory in nature. Consequently, the
payment of docket fees was not necessary
for the RTC to acquire jurisdiction over the
subject matter.

latters

A counterclaim (or a claim which a

defending party may have against any
party) may be compulsory or permissive. A
counterclaim that (1) arises out of (or is
necessarily connected with) the transaction
or occurrence that is the subject matter of
the opposing partys claim; (2) falls within
the jurisdiction of the court and (3) does
not require for its adjudication the
presence of third parties over whom the
court cannot acquire jurisdiction, is
compulsory. Otherwise, a counterclaim is
merely permissive.

Bayerphils distributors/dealers of its agricultural

When Mercado sought to annul the continuing

hold-out agreement and deed of assignment
(which he executed as security for his credit
purchases), he in effect sought to be freed
from them. While he admitted having
outstanding obligations, he nevertheless
asserted that those were not covered by the
assailed accessory contracts. For its part,
aside from invoking the validity of the said
agreements, SMC therefore sought to collect
the payment for the value of goods Mercado
purchased
on
credit. Thus,
Mercados
complaint and SMCs counterclaim both
touched the issues of whether the continuing
hold-out agreement and deed of assignment
were valid and whether Mercado had
outstanding liabilities to SMC. The same
evidence would essentially support or refute
Mercados claim and SMCs counterclaim.

The parties had a disagreement as to the

entitlement and computations of the discounts
of Calibre. It withheld the payment to Bayerphil
and compelled the former to reconcile its accounts.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

CALIBRE TRADERS, INC., vs. BAYER

PHILIPPINES, INC.,

counterclaim

for P1,272,103.07,

representing unpaid purchases of Bayerphils

products.

Calibre Traders, Inc. (Calibre) was one of

chemicals within the provinces of Pangasinan and

Tarlac. Their last distributorship agreement was
effective from June 1989 to June 1991. However,
Bayerphil stopped delivering stocks to Calibre on
July 31, 1989 after the latter failed to settle its
unpaid

accounts

in

the

total

amount

of P1,751,064.56.

In a letter dated August 16, 1989, Calibre

requested Bayerphil for a reconciliation of
accounts. It enumerated the following claims that
amounted to P968,265.82.
Calibre sent follow-up letters dated September 17,
October 13, and November 16, 1989.
On September 29, 1989, Bayerphils credit and
collection officer, Leon Abesamis, conferred with
Calibres General Manager Mario Sebastian
(Sebastian). The attempt to settle failed. Again, on
October 27, 1989, Bayerphils Sales Manager of
the Agro Division, Vidal Lingan, met with
Sebastian. The results of their discussion were put

July 31, 2002 Decision and the December 19,

in writing. Bayerphils explained that there are

some claims in the form of rebates should not be
granted to the petitioners, save those which have
valid justifications. Respondents assert that they
are fair to the petitioners in dealing with their claims,
as they granted their requests. Bayerphils offered

2003 Resolution of the Court of Appeals (CA) in

to grant Calibres claims so that they may finally

Facts:
This is petition for review on certiorari assails the

settle its unpaid accounts totaling to P934,086.92

by a reply dated November 24, 1989. Bayerphils
gave a deadline on or before December 8, 1989.
Respondent conditioned on the premise that failure
to remit the said amount through a bank shall be a
cause for the cancellation of the respondents offer.

Bayerphil thus prayed for the collection

of P1,272,103.07, with interest of 14% per annum
accruing daily and compounded monthly from the
date of default (as provided in the dealership
agreement); P1,000,000.00 exemplary damages;

In his December 8, 1989 letter, Sebastian

and, P200,000.00 attorneys fees and costs of suit.

expressed discontent in Bayerphils refusal to credit

Bayerphil also moved that Mario Sebastian and his

his claims in full and underscored the alleged

wife Minda (Sebastians) be impleaded as co-

inaction of Bayerphil in reconciling Calibres

defendants.

accounts. This was followed by a demand letter

requiring

Bayerphil

to

pay

the

sum

Calibre opposed Bayerphils motion to

of P10,000,000.00 for the damages it had allegedly

implead the Sebastians and moved to strike out the

caused to Calibre. Bayerphil replied, reminding

counterclaim, reasoning that the spouses are not

that Calibre owed it P1,272,103.07 as of December

parties in its suit against Bayerphil and thus are not

31, 1989.

the proper parties to the counterclaim. Bayerphil

contended that both causes of action arose from

Accusing Bayerphil of maliciously breaching the

the same contract of distributorship, and that the

distributorship agreement by manipulating Calibres

Sebastians inclusion is necessary for a full

accounts, withholding discounts and rebates due it,

adjudication of Bayerphils counterclaim to avoid

charging unwarranted penalties, refusing to supply

duplication of suits.

goods, and favoring the new distributors/dealers to

In its October 24, 1990 Resolution, the trial court

drive it out of business, Calibre, on March 14, 1990,

rejected Calibres arguments and granted the

filed a suit for damages, before the Regional Trial

motion to implead the Sebastians as co-defendants

Court

in the counterclaim.

(RTC)

of

Pasig.

Calibre

prayed

for P8,000,000.00 actual damages, representing

alleged actual losses and profits; P2,000,000.00

The spouses then filed their answer to Bayerphils

award as alleged damage to its goodwill and

counterclaim and raised the issue that the

business reputation; P3,500,000.00 as exemplary

counterclaim against them is permissive, and since

damages; and, attorneys fees of P1,500,000.00.

Bayerphil failed to pay the required docket fees, the

trial court has no jurisdiction over the counterclaim.

In its Answer with Counterclaim, Bayerphil denied

its alleged wanton appointment of other distributors
and maintained that Calibre filed the damage suit to
avoid paying its overdue accounts. Considering
that those purchased on credit remained unpaid,
Bayerphil had to refuse to further supply Calibre
with its products.

On December 6, 1993, the trial court rendered

judgment favoring Calibre and dismissing the
Counter-Complaint of the defendant against
Spouses Mario and Minda Sebastian.
CA reversed the RTCs decision and favored
Bayerphils counterclaim. Later, the appellate court
denied the MR of the petitioner.

based upon competent proof and the best

Issue/s:
1.
2.

evidence obtainable by the injured party.

The

projected sum of P10 million sales cannot thus be

Whether or not Calibre is entitled to an

award and damages
Whether or not the relief granted to
Bayerphils counterclaim is proper.

the

proper

base

in

computing

actual

damages. Calibre computed its lost income based

only on its capability to sell around P10 Million, not
on the actual income earned in the past years to

Held:
1.

properly compute the average income/profit. At

No, Calibre is not entitled to an award and
damages.

any rate, since Calibre had no cause of action at all

against Bayerphil, there can be no basis to award it
with damages.

There is no adequate proof that Bayerphil

was guilty of abusing its rights. [G]ood faith is
presumed and that the burden of proving bad faith

2. Yes, the grant of the respondents

counterclaim is proper.

rests upon a party alleging the same. In civil

cases, the law requires that the party who alleges a
fact and substantially asserts the affirmative of the
issue has the burden of proving it. This is where
Calibre failed. Bayerphil never ignored the request
for accounts reconciliation. Bayerphil acted on
Calibres letter and sent its representatives to meet
with Sebastian. Bayerphils second letter, wherein
some claims were additionally granted, was on
Bayerphils part an act of concession in its desire to
be paid since Calibre remained adamant in not
paying its accounts. If ever Calibre found the
second letter to be apparently inconsistent with the
first letter, bad faith cannot be immediately imputed
to Bayerphil since the latter is not precluded from
making

prompt

corrections

in

its

computations. This matter involves an honest

difference in the computation of the amount, and/or
a variance in opinion as to the validity of the
claims. under actual or compensatory damages,
indemnification comprises not only the value of the
loss suffered, but likewise the profits the obligee
failed to obtain.

To justify a grant of actual or

compensatory damages, the amount of loss must

be proved with a reasonable degree of certainty,

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. 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 x x x if not set up in the answer
to the complaint in the same case. Any
other claim is permissive. [The] Court
has already 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 defendant's claims, absent the
compulsory counterclaim rule? (3) Will

substantially the same evidence support

jurisdiction. As regards the nature of the claims of

or refute plaintiff's claim as well as the

the parties, neither is it required that they be of the

defendant's counterclaim? and (4) Is there

same nature, only that they arise from the same

any logical relation between the claim and

transaction or occurrence.

the counterclaim, such that the conduct of

separate trials of the respective claims of

All along, Bayerphil has never evaded payment of

the parties would entail a substantial

the docket fees on the honest belief that its

duplication of effort and time by the parties

counterclaim was compulsory.

and the court? The fourth test is the

gainsaid that the emerging trend in the rulings of

compelling test of compulsoriness.

this Court is to afford every party litigant the

It cannot be

amplest opportunity for the proper and just

Bayerphils suit may independently proceed in a

determination of his cause, free from the

separate

and

constraints of technicalities. Rules on the payment

obligations of the parties are anchored on the same

of filing fees have already been relaxed. It is a

contract, the causes of action they filed against

settled doctrine that although the payment of the

each other are distinct and do not involve the same

prescribed

factual issues. We find no logical relationship

requirement, its non-payment x x x should not

between the two actions in a way that the recovery

result in the automatic dismissal of the case

or dismissal of plaintiffs suit will establish a

provided the docket fees are paid within the

foundation for the others claim. The counterclaim

applicable prescriptive period. The prescriptive

for collection of money is not intertwined with or

period therein mentioned refers to the period within

contingent on Calibres own claim for damages,

which a specific action must be filed. It means that

which was based on the principle of abuse of

in every case, the docket fee must be paid before

rights. Both actions involve the presentation of

the lapse of the prescriptive period. In accordance

different pieces of evidence. Calibres suit had to

with the aforementioned rules on payment of

present evidence of malicious intent, while

docket fees, the trial court upon a determination

Bayerphils objective was to prove nonpayment of

that Bayerphils counterclaim was permissive,

purchases. The allegations highlighting bad faith

should have instead ordered Bayerphil to pay the

are different from the transactions constituting the

required

subject matter of the collection suit. Respondents

counterclaim, giving it reasonable time but in no

counterclaim was only permissive. Hence, the CA

case beyond the reglementary period. Considering

erred in ruling that Bayerphils claim against the

the foregoing discussion, we find no need to

petitioners

remand the case to the trial court for the resolution

action. Although

partakes

of

the

rights

compulsory

counterclaim. The rules and jurisprudence do not

docket

docket

fees

fees

is

for

the

jurisdictional

permissive

of Bayerphils counterclaim.

require that the parties to the counterclaim be the

original parties only. In fact, the presence of third

WHEREFORE, the July 31, 2002 Decision of the

parties is allowed, the only provision being their

Court of Appeals in CA-G.R. CV No. 45546

capacity to be subjected under the courts

is AFFIRMED. Considering that the counterclaim

mismanagement in the handling of

corporate funds.

is permissive, respondent Bayer Philippines, Inc.

is ORDERED to pay the prescribed docket fees
with

the Regional Trial Court of Pasig City within

Consequently, SBME initiated an intracorporate dispute before the RTC of

Balanga City, Bataan against
petitioners HSE and Dio. Before
petitioners could file their answer to
the complaint, respondents impleaded
its Corporate Secretary, Atty. Winston
Ginez, as additional defendant. In their
Amended Complaint , SBME
essentially alleged that HSE unjustly
refused to pay the balance of its
unpaid subscription effectively
jeopardizing the companys expansion
project. It was further alleged by
SBME that Dio tried to dissuade local
investors and financial institutions from
putting in capital to SBME by imputing
defamatory acts against Desmond. To
protect the interest of the corporation
and its stockholders, SBME sought
that petitioners be enjoined from
committing acts inimical to the interest
of the company.

To refute the claims of respondents,

petitioners maintained in their Answer
with Compulsory Counterclaim that it
would be highly preposterous for them
to dissuade investors and banks from
putting in money to SBME considering
that HSE and Dio are stakeholders of
the company with substantial
investments therein.

In turn, petitioners countered that their

reputation and good name in the
business community were tarnished
as a result of the filing of the instant
complaint, and thus prayed that they
be indemnified.

It was alleged that after the filing of the

instant complaint, Desmond, in
collusion with other Board of Directors
of SBME, managed to unjustly deny
HSE and Dio their rights under the
Subscription Agreement. To curb
similar socially abhorrent actions,
petitioners prayed that SBME and its
Board of Directors, namely, Desmond,
John Corcoran, Gaile Laule and
Gregorio Magdaraog, be jointly and
severally held liable to pay exemplary
damages in the amount of
US$2,000,000.00.

fifteen (15) days from receipt of this Decision.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
VIRGINIA S. DIO and H.S. EQUITIES,
LTD., Petitioners,
vs.
SUBIC BAY MARINE EXPLORATORIUM,
INC., represented by its Chairman and
Chief Executive Officer, TIMOTHY
DESMOND, Respondents.
G.R. No. 189532
June 11, 2014
Facts:

Petitioner H.S. Equities, Ltd., (HSE) is

a foreign corporation duly organized
and existing under the laws of the
British Virgin Islands, with registered
address at Akara Building, 24 De
Castro Street, Wickhams Cay I, Road
Town, Tortola, British Virgin Islands. It
entered into an isolated transaction
subject of the instant case. It is
represented in this action by petitioner
Virginia S. Dio (Dio).
Respondent Subic Bay Marine
Exploratorium, Inc. (SBME) is a
domestic corporation, duly organized
and existing under the Philippine laws
and is represented in this action by its
Chief Executive Officer, respondent
Timothy Desmond (Desmond).
In 2002, SBME decided to expand its
business by operating a beach resort
inside the property administered by
the Subic Bay Metropolitan Authority
(SBMA).
HSE (formerly known as Westdale
Assets Limited) thru its authorized
director, Dio, agreed to invest the
amount of US$2,500,000.00 with
SBME by purchasing 750,000
common shares with a par value
of P100 per share from the increase in
its authorized capital stock. After HSE
initially paid US$200,000.00 for its
subscription, it refused to further lay
out money for the expansion project of
the SBME due to the alleged

After petitioners filed their Answer with

Compulsory Counterclaim, the RTC,
issued an Order dated 15 August 2005
motu proprio dismissing the civil case
and was grounded on the defective
certificate of non-forum shopping
which was signed by Desmond without
specific authority from the Board of
Directors of SBME.

Armed with a board resolution

specifically authorizing Desmond to
sign the certificate of non-forum
shopping on behalf of SBME,
respondents moved that the civil case
be reinstated and further proceedings
thereon be conducted. A copy of such
authority was attached by respondents
to their Motion for Reconsideration.

For lack of merit, RTC denied

respondents motion and affirmed the
dismissal in an Order dated 22
September 2005. The court a quo
ruled that the belated submission of a
board resolution evidencing
Desmonds authority to bind the
corporation did not cure the initial
defect in the complaint and declared
that strict compliance with procedural
rules is enjoined for the orderly
administration of justice.

Aggrieved by the lower courts refusal

to reinstate their complaint,
respondents elevated the matter
before the Court of Appeals assailing
the propriety of the 15 August 2005
and 22 September 2005 RTC Orders
via Petition for Review .
For failure of the respondents to file
their appellants brief, the appellate
court proceeded to dismiss and
consider the case closed and
terminated in its Resolution dated 2
January 2007.

After respondents failed to seasonably

move for the reconsideration of the
aforementioned Resolution, the
dismissal became final and executory,
as shown in the Entry of
Judgment dated 3 May 2007.

The procedural incidents before the

appellate court having been resolved
with finality, petitioners went back to
the RTC to file a motion to set their
counterclaims for hearing which was

opposed by the respondents on the

ground that the filing of the
compulsory counterclaims was not
accompanied by payment of the
required docket fees precluding the
court from acquiring jurisdiction over
the case.

Acting on the motions filed by the

opposing parties, the RTC, in an Order
dated 3 April 2009 granted the motion
of the respondents, thereby directing
the dismissal of petitioners
counterclaims but not on the ground of
non-payment of docket fees. In
disallowing petitioners counterclaims
to proceed independently of
respondents complaint, the lower
court pointed out that in view of the
dismissal of the main case, which has
already been affirmed with finality by
the appellate court, it has already lost
its jurisdiction to act on petitioners
counterclaim, the compulsory
counterclaim being merely ancillary to
the principal controversy.

In an Order dated 26 August 2009, the

RTC refused to reconsider its earlier
disposition. Petitioners filed this instant
Petition for Review on Certiorari on
pure question of law seeking the
reversal of the 3 April 2009 and 26
August 2009 RTC Orders.

Issue:
Whether or not the Trial Court committed an
error of law when it refused to set [petitioners]
counterclaims for hearing on the ground that
the case was deemed "Closed and
Terminated" by the Court Of Appeals after the
latter dismissed respondents appeal because
of their failure to file their appellants brief.
Ruling:
Petitioners here raise the solitary issue of the
propriety of the dismissal of their counterclaim
on the basis of the reasoning of the lower court
that the counterclaim derives its jurisdictional
support from the complaint which has already
been dismissed. Petitioners maintain that the
court a quo erred in arriving at the legal
conclusion that the counterclaim can no longer
stand for independent adjudication after the
main case was already dismissed with finality.
In order to resolve this issue, the Court need
only to look into the pleadings, depositions,

admissions, and affidavits submitted by the

respective parties without going into the truth
or falsity of such documents. Consequently,
the petitioners remedy for assailing the
correctness of the dismissal of their
counterclaims, involving as it does a pure
question of law, indeed lies with this Court.
The dismissal of the complaint resulted from
respondents failure to append to the complaint
a copy of the board resolution authorizing
Desmond to sign the certificate of non-forum
shopping on behalf of SBME. The subsequent
dismissal of the counterclaim, in turn,
erroneously proceeded from the ratio that
since the main action has already been
dismissed with finality by the appellate court,
the lower court has lost its jurisdiction to grant
any relief under the counterclaim.
In the significant case of Pinga v. Heirs of
German Santiago, this Court speaking
through Justice Dante Tinga, resolved the
nagging question as to whether or not the
dismissal of the complaint carries with it the
dismissal of the counterclaim. Putting to rest
the remaining confusion occasioned by Metals
Engineering Resources Corp. v. Court of
Appeals and BA Finance Corporation v.
Co, the Court articulated that, in light of the
effectivity of the 1997 Rules of Civil Procedure,
the correct and prevailing doctrine is as
follows:
To be certain, when the Court
promulgated the 1997 Rules of Civil
Procedure, including the amended
Rule17, those previous jural doctrines
that were inconsistent with the new
rules incorporated in the 1997 Rules of
Civil Procedure were implicitly
abandoned insofar as incidents arising
after the effectivity of the new
procedural rules on 1 July 1997. BA
Finance, or even the doctrine that a
counterclaim may be necessarily
dismissed along with the complaint,
clearly conflicts with the 1997 Rules of
Civil Procedure. The abandonment of
BA Finance as doctrine extends as far
back as 1997, when the Court adopted
the new Rules of Civil Procedure. If,
since then, such abandonment has not
been affirmed in jurisprudence, it is
only because no proper case has
arisen that would warrant express
confirmation of the new rule. That
opportunity is here and now, and we
thus rule that the dismissal of a
complaint due to fault of the

plaintiff is without prejudice to the

right of the defendant to prosecute
any pending counterclaims of
whatever nature in the same or
separate action. We confirm that BA
Finance and all previous rulings of the
Court that are inconsistent with this
present holding are now abandoned.
xxxx
Thus, the present rule embodied in Sections 2
and 3 of Rule 17 ordains a more equitable
disposition of the counterclaims by ensuring
that any judgment thereon is based on the
merit of the counterclaim itself and not on the
survival of the main complaint. Certainly, if the
counterclaim is palpably without merit or
suffers jurisdictional flaws which stand
independent of the complaint, the trial court is
not precluded from dismissing it under the
amended rules, provided that the judgment or
order dismissing the counterclaim is premised
on those defects. At the same time, if the
counterclaim is justified, the amended rules
now unequivocally protect such counterclaim
from peremptory dismissal by reason of the
dismissal of the complaint. Reviewing the
vacated position, in Metals Engineering
Resources Corp., severance of causes of
action was not be permitted in order to prevent
circuity of suits and to avert the possibility of
inconsistent rulings based on the same set of
facts, viz:
For all intents and purposes, such
proposition runs counter to the nature
of a compulsory counterclaim in that it
cannot remain pending for
independent adjudication by the court.
This is because a compulsory
counterclaim is auxiliary to the
proceeding in the original suit and
derives its jurisdictional support
therefrom, inasmuch as it arises out of
or is necessarily connected with the
transaction or occurrence that is the
subject matter of the complaint. It
follows that if the court does not have
jurisdiction to entertain the main action
of the case and dismisses the same,
then the compulsory counterclaim,
being ancillary to the principal
controversy, must likewise be
dismissed since no jurisdiction
remained for any grant of relief under
the counterclaim.

The aforementioned doctrine is in consonance

with the primary objective of a counterclaim
which is to avoid and prevent circuity of action
by allowing the entire controversy between the
parties to be litigated and finally determined in
one action, wherever this can be done with
entire justice to all parties before the court.
The philosophy of the rule is to discourage
multiplicity of suits.1wphi1 It will be
observed that the order of the trial court
allowing herein private respondent to proceed
with the presentation of his evidence in
support of the latter's counterclaim is
repugnant to the very purpose and intent of the
rule on counterclaims.
In BA Finance Corporation, we likewise
refused to entertain the compulsory
counterclaim after the trial court lost its
jurisdiction in the main case, thus:
The rule is that a compulsory
counterclaim cannot "remain pending
for independent adjudication by the
court." This is because a compulsory
counterclaim is auxiliary to the
proceeding in the original suit and
merely derives its jurisdictional support
therefrom.
Thus, it necessarily follows that if the
trial court no longer possesses
jurisdiction to entertain the main action
of the case, as when it dismisses the
same, then the compulsory
counterclaim being ancillary to the
principal controversy, must likewise be
similarly dismissed since no
jurisdiction remains for the grant of
any relief under the counterclaim.
As the rule now stands, the nature of the
counterclaim notwithstanding, the dismissal of
the complaint does not ipso jure result in the
dismissal of the counterclaim, and the latter
may remain for independent adjudication of
the court, provided that such counterclaim,
states a sufficient cause of action and does not
labor under any infirmity that may warrant its
outright dismissal. Stated differently, the
jurisdiction of the court over the counterclaim
that appears to be valid on its face, including
the grant of any relief thereunder, is not abated
by the dismissal of the main action. The courts
authority to proceed with the disposition of the
counterclaim independent of the main action is
premised on the fact that the counterclaim, on
its own, raises a novel question which may be

aptly adjudicated by the court based on its own

merits and evidentiary support.
In Perkin Elmer Singapore Pte Ltd. v. Dakila
Trading Corporartion, a case on all fours with
the present one, we expounded our ruling in
Pinga and pointed out that the dismissal of the
counterclaim due to the fault of the plaintiff is
without prejudice to the right of the defendant
to prosecute any pending counterclaims of
whatever nature in the same or separate
action, thus: Based on the aforequoted ruling
of the Court, if the dismissal of the complaint
somehow eliminates the cause of the
counterclaim, then the counterclaim cannot
survive. Conversely, if the counterclaim itself
states sufficient cause of action then it should
stand independently of and survive the
dismissal of the complaint. Now, having been
directly confronted with the problem of whether
the compulsory counterclaim by reason of the
unfounded suit may prosper even if the main
complaint had been dismissed, we rule in the
affirmative.
It bears to emphasize that petitioner's
counterclaim against respondent is for
damages and attorney's fees arising from the
unfounded suit. While respondent's Complaint
against petitioner is already dismissed,
petitioner may have very well already incurred
damages and litigation expenses such as
attorney's fees since it was forced to engage
legal representation in the Philippines to
protect its rights and to assert lack of
jurisdiction of the courts over its person by
virtue of the improper service of summons
upon it. Hence, the cause of action of
petitioner's counterclaim is not eliminated by
the mere dismissal of respondent's complaint.
Once more, we allow the counterclaim of
the petitioners to proceed independently of
the complaint of the respondents.
WHEREFORE, premises considered, the
petition is GRANTED.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Cabaero v. Hon. Cantos, G.R. No. 102942,
April 18, 1997
Petitioner: Amado F. Cabaero and Carmen C.
Perez, Amado organized the joint business
venture together with Epifanio Ceralde herein
respondent to the case, Aqualand Ventures &
Management Corporation.

Petitioners, conspired and falsely

pretending with intent to defraud Epifanio
Ceralde.
Amado F. Cabaero, Senior VicePresident
of
Aqualand
Ventures
&
Management Corporation.
Carmen C. Perez, encashed the
check and misappropriated, misapplied and
converted the said amount for their own
personal use and benefit.

Respondent: Hon. Alfredo C. Santos in his

capacity as Presiding Judge of the RTC of
Manila, Br. VII, and Epifanio Ceralde, latter
was defrauded with the amount P1,550,000.00

Principles: Actions; Pleadings and Practice;

Waiver; A motion attacking a pleading or a
proceeding shall include all objections not so
included shall be deemed waived.
Counterclaims; Docket Fees; No
docket fee are required to be paid in
connection with the filing of a compulsory
counterclaim.
Counterclaims is defined as any
claim for money or other relief which a
defending party may have against an opposing
party, while Compulsory Counterclaim is one
which at the time of suit arises out of, or is
necessarily connected with, the same
transaction or occurrence that is subject matter
of plaintiff's complaint.

Right:
Obligation:
Violation:

Facts: A special civil action was filed by the

petitioners in the Supreme Court by way of
Certiorari.

The present petition emanated from

Crim. Case No. 90-18826 of the RTC of
Manila. Said case commenced on October 18,
1990, with the filing of an information against
petitioners charging them with estafa for
allegedly defrauding private respondent
Epifanio Cerlade of the sum of P1,550,000.00.
In the said case, that in or about and
during the period comprised between
September, 1987 and October 30, 1987, in the
city of Manila, Philippines, the said accused,
conspiring and confederating together and
mutually helping each other, did then and
there wilfully, unlawfully and feloniously
defraud on Epifanio Cerlade by inducing said
Epifiano Cerlade to advance the total amount
of P1,550,000.00 to be paid to M.C. Castro
Construction, Co. representing the purchase
price of 6 parcels of land located in
Pangasinan which the Aqualand Ventures &
Management Corporation, a joint business
venture organized by accused Amado F.
Cabaero and the said Epifanio Ceralde,
purchased from the said company, with the
understanding that the said amount would be
returned to Epifanio Ceralde as soon as the
loan for P1,500,000.00 applied for by the said
Aqualand
Ventures
&
Management
Corporation with Solid Bank, of which the said
accused Amado F. Cabaero is the Senior
Vice-President, is released, but both accused,
once the said loan has been approved by the
bank, in furtherance of their conspiracy and
falsely pretending that accused Carmen C.
Perez had been authorized by the said
Aqualand
Ventures
&
Management
Corporation to receive the check for
P1,500,000.00 for and in its own behalf,
succeeded in inducing the cashier of said Solid
Bank to release the same to accused Carmen
C. Perez, thereby enabling her to encash the
aforesaid check, and instead of turning over
the said amount to the said Epifanio Ceralde,
accused failed and refused, and still failed and
refused despite of repeated demands made to
that effect, and with intent to defraud,
misappropriated, misapplied and converted the
said amount to their own personal use and
benefit, to the damage and prejudice of the
said Epifanio Ceralde in the aforesaid amount
of P1,550,000.00, Philippine Currency.

Thus, on January 7, 1991, petitioners

were arraigned and entered a plea of not
guilty.
On February 5, 1991, Atty. Ambrosio
Blanco entered his appearance as private
prosecutor.
Thereon, on February 11, 1991, the
Presiding Judge of the RTC of Manila, Branch
IV, Hon. Elisa R. Israel inhibited herself out of
delicadeza from further hearing the case
pursuant to Section 1 of Rule 137 of the Rules
of Court after considering that the
complainant is a relative by affinity of a
nephew of her husband.
Thereafter, the case was re-raffled to
Branch VII presided over by respondent Judge
Alfredo Cantos.
On April 2, 1991, petitioners filed an
answer with counterclaim alleging that the
money loaned from Solid Bank mentioned in
the information was duly applied to the
purchase of the 6 parcels of land in
Pangasinan, and that the filing of said
information was unjustified and malicious.
Thus, petitioners prayed that the
information be dismissed or quashed and the
civil action impliedly instituted in the criminal
action; ordering the complaining witness
Ceralde to pay to them P1,500,000.00 as
moral damages, P550,000.00 as exemplary
damages, P100,000.00 as attorney's fees;
and, P20,000.00 as litigation expenses.
Hence, accused pray for such other reliefs,
legal and equitable in the premises.
During the initial hearing on April 15,
1991, the prosecution verbally moved that the
answer with the counterclaim be expunged
from the records and/or dismissed. The
respondent judge, after the exchange of
arguments between the two parties gave the
contending parties time to submit a
Memorandum and Comment or Opposition.
The Memorandum of the private
prosecutor justified his Motion to Expunge the
answer with counterclaim for 2 reasons: (1) the
trial court had no jurisdiction over the answer
with countercalim for non-payment of the

prescribed docket fees and (2) the

compulsory counterclaim against complainant
is barred for failure to file it before
arraignment.
In their Opposition, petitioners argued
that this court in Javier vs IAC laid down, for
procedural soundness, the rule that a
counterclaim should be permitted in a criminal
action where the civil aspect in not served.
Further, inasmuch as petitioners' counterclaim
was compulsory in nature, they were not
required to pay docket fees therefor.
Additionally, the Rules do not specifically
provide for filing of counterclaims in crimanal
cases, whereas Section 3 of Rule 9 and
Section 9 of Rules 6 allow the filing, with leave
of court, of a counterclaim at any time before
judgment. Thus, petitioners contended that
their filing was within the proper period.
Thereon, respondent Judge Cantos
granted the prosecutions' Motion to Expunge
in an order dated July 1, 1991 and denied the
petitioners' motion for reconsideration in an
order dated August 21, 1991.
On the theory that there is no plain,
speedy and adequate remedy in the ordinary
course of law, the petitioners through counsel,
filed this instant petition.

Issue: WON the counterclaim of the accused

can be tried together with the criminal case
filed against petitioners.

Ruling: NO. The Court ruled that the

counterclaim of the cannot be tried together
with the criminal case because, as already
discussed, it will unnecessarily complicate and
confuse the criminal proceedings. Thus, the
trial court should confine itself to the criminal
aspect and the possible civil liability of the
accused arising out of the crime. The
counterclaim (and cross-claim or third party
complaint, if any) should be set aside or
refused cognizance without prejudice to their

filing in separate proceedings at the proper

time.
As explained in the case of Javier vs
IAC, allowing and hearing counterclaims (and
possibly
crossclaims
and
third-party
complaints) in a criminal action will surely
delay the said action. The primary issue in a
criminal prosecution that is under the control of
state prosecutors is the guilt of the accused
and his civil liability arising from the same act
or omission. Extending the civil action arising
from the same acts or omission to
counterclaims, cross-claims and third-party
complaints
, and allowing the accused
and other parties to submit evidence of their
respective claims will complicate the
disposition of the criminal case.
In addition, adjudication of compulsory
counterclaims and/or related claims or
pleadings logically includes the application of
other rules which, by their very nature, apply
only to civil actions. The following matters may
be invoked in connection with the filing of an
answer with a counterclaim: the genuineness
and due execution of an actionable document
which are deemed admitted unless specifically
denied under oath, affirmative defenses like
res judicata, prescription, and statute of frauds
which are deemed waived by failure to
interpose tham as affirmative defenses in an
answer; and the failure of a defendant to file
an answer seasonably may result in his
defaultin the civil aspect but not in the criminal.
As a consequence of these matters, the entry
of plea during arraignment will no longer signal
joinder of issues in a criminal action.
Further, in an impliedly instituted civil
action, an accused is not sufficiently apprised
of the specific basis of the claims against him.
An accused learns of the implied institution of
a civil action from the contents of an
information. An information, however, is filed in
behalf of the People of the Philippines. Hence,
it does not contain the ultimate facts relating
to the civil liability of the accused.
At
balance,
until
there
are
definitiverules of procedure to govern the
institution, prosecution and resolution of the
civil aspect (and the consequences and

implications thereof) impliedly instituted in a

criminal case, trial courts should limit their
jurisdiction to the civil liability of the accused
arising from the criminal case.
Wherefore, the questioned orders
dated July 1,1991 and August 21, 1991 are
hereby modified.
The counterclaim of the accused is
hereby set aside without prejudice. The
respondent RTC of Manila is directed to
proceed with the trial of the criminal action and
the civil action arising from the criminal offense
that is impliedly instituted therein, with all
judicios dispatch. No costs.

Notes:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 7. Compulsory counterclaim. 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 the
subject 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. Such a
counterclaim must be within the jurisdiction of
the court both as to the amount and the nature
thereof, except that in an original action before
the Regional Trial Court, the counter-claim
may be considered compulsory regardless of
the amount. (n)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 8. Cross-claim. A cross-claim is any
claim by one party against a co-party arising
out of the transaction or occurrence that is the
subject matter either of the original action or of
a counterclaim therein. Such cross-claim may
include a claim that the party against whom it
is asserted is or may be liable to the crossclaimant for all or part of a claim asserted in
the action against the cross-claimant. (7)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 9. Counter-counterclaims and countercrossclaims. A counter-claim may be
asserted against an original counter-claimant.

A cross-claim may also be filed against an

original cross-claimant. (n)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 10. Reply. A reply is a pleading, the
office or function of which is to deny, or allege
facts in denial or avoidance of new matters
alleged by way of defense in the answer and
thereby join or make issue as to such new
matters. If a party does not file such reply, all
the new matters alleged in the answer are
deemed controverted.
If the plaintiff wishes to interpose any claims
arising out of the new matters so alleged, such
claims shall be set forth in an amended or
supplemental complaint. (11)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 11. Third, (fourth, etc.)party
complaint. A third (fourth, etc.) party
complaint is a claim that a defending party
may, with leave of court, file against a person
not a party to the action, called the third
(fourth, etc.) party defendant for
contribution, indemnity, subrogation or any
other relief, in respect of his opponent's claim.
(12a)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 12. Bringing new parties. When the
presence of parties other than those to the
original action is required for the granting of
complete relief in the determination of a
counterclaim or cross-claim, the court shall
order them to be brought in as defendants, if
jurisdiction over them can be obtained. (14)
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Section 13. Answer to third (fourth, etc.)
party complaint. A third (fourth, etc.)
party defendant may allege in his answer his
defenses, counterclaims or cross-claims,
including such defenses that the third (fourth,
etc.) party plaintiff may have against the
original plaintiff's claim. In proper cases, he
may also assert a counterclaim against the
original plaintiff in respect of the latter's claim
against the third-party plaintiff. (n)