Rule 6 (provisional Case Notes)

CASE BRIEFS – REMEDIAL LAW REVIEW I

ARTURO C. ALBA, JR., duly represented by his attorneys-in-fact, ARNULFO B. ALBA and ALEXANDER C. ALBA, Petitioner, vs. RAYMUND D. MALAPAJO, RAMIL D. MALAPAJO and the Register of Deeds for the City of Roxas, Respondents. (G.R. No. 198752; 13 January 2016) FACTS: Petitioner Arturo C. Alba, Jr., duly represented by his attorneys-in-fact, Arnulfo B. Alba and Alexander C. Alba, filed with the Regional Trial Court (RTC) of Roxas City, Branch 15, a Complaint against respondents Raymund D. Malapajo, Ramil D. Malapajo and the Register of Deeds of Roxas City for recovery of ownership and/or declaration of nullity or cancellation of title and damages. He alleges, among others, that he was the original owner of a parcel of land purchased by the Malapajos. He maintains that the deed of sale, which caused the cancellation of the land’s title in his name, was a forged document made by the Malapajoses. On the other hand, Raymund and Ramil Malapajos filed their Answer with Counterclaim, in which they claim that they were innocent purchasers for value and that the alleged forged document were presented to them already signed and notarized. They also aver that prior to the alleged sale and on several occasions, Alba had obtained loans from them and their mother which were secured by separate real estate mortgages that had never been discharged. They also allege that Alba acknowledged in par. 7 of his Complaint that the stated consideration in the Deed of Absolute Sale is P500,000.00 and he never categorically denied having received the same. Also, they claim that before Alba sold the property to them, he secured a loan from them in the sum of Six Hundred Thousand Pesos (P600,000.00) as evidenced by a Promissory Note and secured by a Real Estate Mortgage covering the parcel of land subject of this case. Consequently, as counterclaim, the Malapajos pray for damages and reimbursement of Alba’s loan from them (plus the agreed monthly interest) in the event that the assailed deed of sale is proved to be null and void on the ground of forgery. Petitioner filed a Motion to Set the Case for Preliminary Hearing, as if a Motion to Dismiss had been Filed, alleging that respondents’ counterclaims are in the nature of a permissive counterclaim, thus, there must be payment of docket fees and filing of a certification against forum shopping; and, that the supposed loan extended by respondents’ mother to petitioner, must also be dismissed as respondents are not the real parties-in-interest. Respondents filed their Opposition thereto. However, the RTC issued an Order denying Alba’s Motion, finding that respondents’ counterclaims are compulsory. Alba’s motion for reconsideration was also denied. Aggrieved, Alba, seeking to annul the RTC’s order, filed a petition for certiorari with the Court of Appeals (CA). Nonetheless, the CA dismissed said petition. Undaunted by the CA’s dismissal of his Motion for Reconsideration, Alba now comes before the Supreme Court to seek reversal of the appellate court’s decision. ISSUE: Was Malapajo’s counterclaim a permissive one, which would require the payment of docket fees and certification against non-forum shopping? RULING: No. The counterclaim of the Malapajoses are a compulsory one. As their counterclaim and Alba’s claims arise from the same subject matter, the validity of the disputed deed of absolute sale, in which the evidence required to prove their counterclaim would necessary disprove the latter’s claim. Petitioner seeks to recover the subject property by assailing the validity of the deed of sale on the subject property which he allegedly executed in favor of respondents Malapajo on the ground of forgery. Respondents counterclaimed that, in case the deed of sale is declared null and void, they be paid the loan petitioner obtained from them plus the agreed monthly interest which was covered by a real estate mortgage on the subject property executed by petitioner in favor of respondents. There is a logical relationship between the claim and the counterclaim, as the counterclaim is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim. Notably, the same evidence to sustain respondents' counterclaim would disprove Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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petitioner's case. In the event that respondents could convincingly establish that petitioner actually executed the promissory note and the real estate mortgage over the subject property in their favor then petitioner's complaint might fail. Petitioner's claim is so related logically to respondents' counterclaim, such that conducting separate trials for the claim and the counterclaim would result in the substantial duplication of the time and effort of the court and the parties. Since respondents' counterclaim 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. There is, therefore, no need for respondents to pay docket fees and to file a certification against forum shopping for the court to acquire jurisdiction over the said counterclaim.

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Resolutions dated February 28, 2011 and August 31, 2011 issued by the Court of Appeals in CA-G.R. SP No. 05594 dismissing the petition for certiorari and denying reconsideration thereof, respectively, for failure to show proper proof of service of the petition to respondents, are SET ASIDE. Acting on the petition for certiorari, we resolve to DENY the same and AFFIRM the Order dated June 4, 2010 of the Regional Trial Court of Roxas City, Branch 15, denying petitioner's motion to set the case for hearing as if a motion to dismiss had been filed, and the Order dated September 30, 2010 denying reconsideration thereof. SO ORDERED.

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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GR No. 155701, Mar 11, 2015 – LIM TECK CHUAN v. SERAFIN UY FACTS: One Antonio Lim Tanhu (Antonio), petitioner Lim Teck Chuan’s legitimate ascendant, owned a parcel of land situated in Lapu-lapu City, Cebu. Based on records, Antonio, together with his wife, Dy Ochay, sold said land to Spouses Francisco and Estrella Cabansag, as evidenced by a Deed of Sale executed on 8 January 1966. However, due to Francisco Cabansag’s busy schedule and frequent travels abroad, he failed to transfer property’s title under his name. Then, in 1988, Spouses Cabansag sold the same land to respondent Serafin Uy, as evidenced by a Deed of Sale dated 18 April 1988. In order to have the title over the land transferred to Serafin’s name, the Cabansag spouses endeavored to have the same transferred in their own name. However, they failed in doing so because they allegedly lost the owner’s copy of the property’s title. This prompted Serafin to file a Cadastral case, praying for the issuance of a new owner’s duplicate copy and the cancellation of the current title in the name of Antonio. Initially, Serafin, by order of the Cadastral Court (RTC Lapu-lapu City) to the Register of Deeds, was granted a new owner’s duplicate copy. However, the same order was nullified because Lim Teck Chuan (Chuan) filed an Opposition / Motion for Reconsideration with Manifestation for Special Apperance, alleging that he is one of Antonio’s six legitimate descendants, and that the original owner’s copy was not lost because it is under his custody. Meanwhile, one Henry Lim Ormoc, under the name of Lim Sing Chan and claiming that he is Antonio’s sole surviving heir, executed an Affidavit of Sole Adjudication / Settlement of Estate of Antonio Lim Tanhu with Deed of Sale in favor of one Leopolda Cecilio. Because of the foregoing turn of events, Serafin then filed a case for quieting of title, surrender of owner’s copy of the certificate of title, declaration of nullity of the affidavit of sole adjudication and deed of sale, and the annulment of several tax declarations (under Leopolda’s name), and other reliefs with a prayer for preliminary injunction before the RTC. To this complaint, both Leopolda and Chuan filed their respective counterclaims against Serafin, as well as cross-claims against Henry Lim. Eventually, after the conduct of pre-trial conference, the initial trial set by the RTC was postponed upon the manifestation of Serafin’s and Leopolda’s respective counsel. According to them, there is an on-going negotiation between the two for an amicable settlement. On the other hand, Chuan’s counsel manifested that Chuan was not involved in such settlement. Eventually Serafin and Leopolda filed their Joint Motion to Dismiss, averring, among others that they have amicably settled their differences over the subject property, in which Leopolda waived whatever right she may have over, and that a new TCT was procured in their common names. Serafin also maintains that Chuan’s claim on said property may be ventilated in an appropriate and independent action that he may iniate in court. Consequently, they prayed for the dismissal of Serafin’s complaint, including all the counterclaims and cross-claims attendant therein. Chuan filed his opposition to said Joint Motion to Dismiss. However, the RTC granted the later and ruled adverse against Chuan. The RTC, in dismissing the complaint, including Chuan’s counterclaim and cross-claim, opined that the Joint Motion to Dismiss was proper in view of the fact that Serafin had already obtained all the reliefs he had previously prayed for. The trial court went further and explained that nobody, not even the courts of justice, can compel Serafin to continuously litigate his case even if he doesn’t want to do so anymore. Undaunted, Chuan filed a petition for review on certiorari, under Rule 45, before the Supreme Court. He maintains that the RTC was incorrect in dismissing his counterclaim and cross-claim despite his having seasonably filed his opposition and expressed his preference to have such claims resolved in the same action. ISSUE: Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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Was the RTC correct in dismissing Chuan’s counterclaims and crossclaims together with the dismissal of Uy’s complaint? RULING: No; the RTC’s dismissal of Chuan’s counterclaims were incorrect in view of his timely motion to have the same prosecuted in the same action between him and Uy. This is because the dismissal of the complaint does not automatically result to the dismissal of the defendant’s counterclaim, regardless of whether such counterclaim is compulsory or permissive, pursuant to Rule 17 of the Rules of Court. The Supreme Court cited the following provisions of Rule 17 in ruling upon this case, to wit: SECTION 1. Dismissal upon notice by plaintiff. A complaint may be dismissed by the plaintiff by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim. SECTION 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint shall not be dismissed at the plaintiff's instance save upon approval of the court and upon such terms and conditions as the court deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion for dismissal, the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the right of the defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of the motion he manifests his preference to have his counterclaim resolved in the same action. Unless otherwise specified in the order, a dismissal under this paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the approval of the court. SECTION 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. SECTION 4. Dismissal of counterclaim, cross-claim, or third-party complaint. The provisions of this Rule shall apply to the dismissal of any counterclaim, crossclaim, or third-party complaint. A voluntary dismissal by the claimant by notice as in Section 1 of this Rule, shall be made before a responsive pleading or a motion for summary judgment is served or, if there is none, before the introduction of evidence at the trial or hearing. As can be gleaned from the assailed orders, the RTC erred when it dismissed the case when the present rules state that the dismissal shall be limited only to the complaint. A dismissal of an action is different from a mere dismissal of the complaint. For this reason, since only the complaint and not the action is dismissed, the defendant in spite of said dismissal may still prosecute his counterclaim in the same action. The case of Pinga v. Heirs of German Santiago is quite instructive which this Court finds worth reiterating. In Pinga, the Court clearly stated that the dismissal of the complaint does not necessarily result to the dismissal of the counterclaim, abandoning the rulings in Metals Engineering Resources Corporation v. Court of Appeals, Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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International Container Terminal Services, Inc. v. Court of Appeals, and BA Finance Corporation v. Co. The Court held that: “At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right of the defendant to prosecute the counterclaim either in the same or separate action notwithstanding the dismissal of the complaint, and without regard as to the permissive or compulsory nature of the counterclaim.” In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects of the amendments to Section 2 and 3 of Rule 17: “Under this revised section, where the plaintiff moves for the dismissal of his complaint to which a counterclaim has been interposed, the dismissal shall be limited to the complaint. Such dismissal shall be without prejudice to the right of the defendant to either prosecute his counterclaim in a separate action or to have the same resolved in the same action. Should he opt for the first alternative, the court should render the corresponding order granting and reserving his right to prosecute his claim in a separate complaint. Should he choose to have his counterclaim disposed of in the same action wherein the complaint had been dismissed, he must manifest such preference to the trial court within 15 days from notice to him of plaintiff's motion to dismiss. These alternative remedies of the defendant are available to him regardless of whether his counterclaim is compulsory or permissive. x x x.” In the instant case, the petitioner's preference to have his counterclaim (and crossclaims) be prosecuted in the same action was timely manifested. The records show that Serafin and Leopolda furnished the petitioner's counsel with a copy of their Joint Motion to Dismiss by posting it (via registered mail) on September 19, 2001. Said motion was filed in court the following day. On October 4, 2001, the petitioner filed his Opposition/Comment thereto. Copies of the said opposition were personally served upon the opposing parties on the same date. In paragraph 1.5 of said opposition, the petitioner expressed his preference to have his counterclaim and crossclaim prosecuted in the same case.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Orders dated April 25, 2002 and October 21, 2002 of the Regional Trial Court of Lapulapu City, Branch 27 in Civil Case No. 4786-L are MODIFIED in that the counterclaim of Lim Teck Chuan as defendant in Civil Case No. 4786-L is REINSTATED. The Regional Trial Court is ORDERED to hear and decide Lim Teck Chuan's counterclaim with dispatch. SO ORDERED.

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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METROPOLITAN BANK AND TRUST COMPANY, Petitioner, v. CPR PROMOTIONS AND MARKETING, INC. AND SPOUSES CORNELIO P. REYNOSO, JR. AND LEONIZA* F. REYNOSO, (G.R. No. 200567, June 22, 2015) FACTS: Respondent CPR Promotions and Marketing, Inc. (CPR Promotions) obtained loans, covered by 15 promissory notes. from petitioner MBTC. These promissory notes (PNs) were all signed by respondents, spouses Leoniza F. Reynoso (as Treasurer) and Cornelio P. Reynoso, Jr. (as President). These loans were secured by two (2) real estate mortgages (REMs). All of the mortgaged properties are registered under the spouses Reynoso’s names, except for TCT No. 565381, which is registered under CPR Promotions. Thereafter, the spouses Reynoso executed a continuing surety agreement binding themselves solidarily liable with CPR Promotions to pay any and all loans CPR Promotions may have obtained from MBTC, including those covered by the said PNs, but not to exceed Php13,000,000. However, upon maturity of said loans, CPR Promotions defaulted in payment. This prompted MBTC to file a petition for extrajudicial foreclosure pursuant to Act no. 3135. The mortgaged properties were then sold in two public auctions, both of which the MBTC emerged as the highest bidder. Notwithstanding the foreclosure of the mortgaged properties for the total amount of Php 13,614,000, MBTC alleged that there remained a deficiency balance of Php 2,628,520.73, plus interest and charges as stipulated agreed upon in the PNs and deeds of real estate mortgages. Despite MBTC’s repeated demands, however, respondents failed to settle the alleged deficiency. Thus, MBTC filed an action for collection of sum of money against respondents before the Regional Trial Court of Makati City. For their part, records reveal that respondents counterclaimed for moral and exemplary damages, as well as attorney’s fees. The RTC ruled in favor of MBTC. Respondents timely moved for reconsideration, but the trial court denied the same. Thereafter, they elevated the case to the Court of Appeals. At the appellate court’s level, realizing, based on its computation, that is should have sought the recovery of the excess bid price, they set up another counterclaim. This was duly considered by the CA and, consequently, ruled in favor of respondents, granting the latter its claim for refund. Aggrieved by the CA’s decision, MBTC filed the present petition before the Supreme Court. MBTC avers that the Court of Appeals abused its discretion in granting the refund claimed by respondents despite the fact that the same was only set up when the case was then elevated to the CA. ISSUES: Was the Court of Appeals correct in granting CPR Promotions and Spouses Reynoso’s counterclaim for refund of the excess bid price? RULING: No; the Court of Appeals was incorrect in granting the respondent’s counterclaim for refund. This is because such counterclaim was only set up in the Appellant’s brief, contrary to what is required in setting up a compulsory counterclaim, pursuant to Rule 11 of the Rules of Court. In ruling upon the matter, the Supreme Court provides for the definition of compulsory counterclaim laid down by Rule 6 of the Rules of Court, thus: Rule 6 of the Rules of Court defines a compulsory counterclaim as follows: 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 Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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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 counterclaim may be considered compulsory regardless of the amount. Accordingly, 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 entertain the claim both as to its amount and nature, except that in an original action before the RTC, the counterclaim may be considered compulsory regardless of the amount. In determining whether a counterclaim is compulsory or permissive, the Court has, in several cases, utilized the following tests: (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 or refute plaintiff’s claim as well as the defendant’s counterclaim? (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? This test is the “compelling test of compulsoriness.” The only difference here would be in the findings of the courts based on the evidence presented with regard to the issue of whether or not the bid prices substantially cover the amounts due. Based on the above tests, it is evident that a claim for recovery of the excess in the bid price vis-à-vis the amount due should be interposed as a compulsory counterclaim in an action for recovery of a deficiency filed by the mortgagee against the debtor-mortgagor. First, in both cases, substantially the same evidence is needed in order to prove their respective claim. Second, adjudication in favor of one will necessarily bar the other since these two actions are absolutely incompatible with each other; a debt cannot be fully paid and partially unpaid at the same time. Third, these two opposing claims arose from the same set of transactions. And finally, if these two claims were to be the subject of separate trials, it would definitely entail a substantial and needless duplication of effort and time by the parties and the court, for said actions would involve the same parties, the same transaction, and the same evidence. The only difference here would be in the findings of the courts based on the evidence presented with regard to the issue of whether or not the bid prices substantially cover the amounts due. Having determined that a claim for recovery of an excess in the bid price should be set up in the action for payment of a deficiency as a compulsory counterclaim, we rule that respondents failed to timely raise the same. It is elementary that a defending party’s compulsory counterclaim should be interposed at the time he files his Answer, and that failure to do so shall effectively bar such claim.1 As it appears from the records, what respondents initially claimed herein were moral and exemplary damages, as well as attorney’s fees. Then, realizing, based on its computation, that it should have sought the recovery of the excess bid price, respondents set up another counterclaim, this time in their Appellant’s Brief filed before the CA. Unfortunately, respondents’ belated assertion proved fatal to their cause as it did not cure their failure to timely raise such claim in their Answer. Consequently, respondents’ claim for the excess, if any, is already barred. 1

Sec. 2, Rule 9, Rules of Court – A compulsory counterclaim, or a cross-claim, not set up shall be barred. (Read vis-à-vis Rule 11 – When to File Responsive Pleadings).

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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WHEREFORE, premises considered, the instant petition is hereby PARTIALLY GRANTED. Accordingly, the Decision of the Court of Appeals dated September 28, 2011 in CA-G.R. CV No. 91424 and its February 13, 2012 Resolution are hereby AFFIRMED with MODIFICATION. The award of refund in favor of respondents in the amount of P722,602.22 with legal interest of six percent (6%) per annum is hereby DELETED. No pronouncement as to costs. SO ORDERED.

REPUBLIC OF THE PHILIPPINES, petitioner, vs. HONORABLE SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E. MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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[IMEE] MARCOS-MANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND IMELDA ROMUALDEZ MARCOS, respondents. (G.R. No. 152154. July 15, 2003) FACTS: Petitioner Republic of the Philippines (Republic), through Presidential Commission on Good Governance (PCGG) filed a Petition for Forfeiture before the Sandiganbayan against the respondents Marcoses, pursuant to RA 1379, in relation to Executive Order Nos. 1,[2] 2,[3] 14[4] and 14-A. The petition sought to declare the aggregate amount of US$356 million (now estimated to be more than US$658 million inclusive of interest), which were previously deposited in several Swiss accounts under various names of account holders, and subsequently deposited in escrow in the PNB, as ill-gotten wealth. In addition, the petition sought the forfeiture of US$25 million and US$5 million in treasury notes which exceeded the Marcos couples salaries, other lawful income as well as income from legitimately acquired property. The treasury notes are frozen at the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the PCGG. Before the case was set for pre-trial, a General Agreement and the Supplemental Agreements were executed by the Marcos children and then PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos family. Subsequently, respondent Marcos children filed a motion for the approval of said agreements and for the enforcement thereof. The General Agreement/Supplemental Agreements sought to identify, collate, cause the inventory of and distribute all assets presumed to be owned by the Marcos family under the conditions contained therein. Also, the following are the averments made by the Marcoses in their responsive pleadings before the Sandiganbayan: 

     

Respondents specifically deny paragraph 5 of the Petition in so far as it states that summons and other court processes may be served on Respondent Imelda R. Marcos at the stated address the truth of the matter being that Respondent Imelda R. Marcos may be served with summons and other processes at No. 10-B Bel Air Condominium 5022 P. Burgos Street, Makati, Metro Manila, and ADMIT the rest; Respondents specifically DENY paragraph 12 of the Petition for lack of knowledge sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions and that they cannot remember exactly the truth as to the matters alleged. Respondents specifically DENY paragraph 13 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and Balance Sheet; Respondents specifically DENY paragraph 14 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. Respondents specifically DENY paragraph 15 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. Respondents specifically DENY paragraph 16 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 16. Respondents specifically DENY paragraph 17 of the Petition insofar as it attributes willful duplicity on the part of the late President Marcos, for being false, the same being pure conclusions based on pure assumption and not allegations of fact; and specifically DENY the rest for lack of knowledge or information

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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      







sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs or the attachments thereto. 17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and that they are not privy to the activities of the BIR. 19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country’s wealth in Switzerland and hid the same under layers and layers of foundation and corporate entities for being false, the truth being that Respondents aforesaid properties were lawfully acquired. 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40, and 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents are not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired; and 26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired.

Thereafter, the Republic filed a motion for summary stating that there is no genuine fact in issue since in all facts have been admitted by the Marcoses’ based on their pleadings and other submissions during the pre-trial. The Sandiganbayan initially ruled in its favor and granted the motion. The court found that there is no issue of fact that calls for the presentation of evidence. Likewise, it declared all the funds mentioned above as ill-gotten wealth. However, upon motion of respondent Marcoses, the Sandiganbayan reversed its decision. It opined that since there is no proof of legal ownership by the Marcoses over the disputed funds, the same should be resolved through Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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presentation of evidence. Hence, it ordered dismissed the motion for summary judgement and instead ordered for the proceedings to continue. Aggrieved by said order, the Republic interposed the present petition before the Supreme Court. ISSUE: Was there grave abuse of discretion on the part of the Sandiganbayan when it ordered for the continuation of trial instead of granting the motion for summary judgment? RULING: Yes. The Sandiganbayan gravely abused its discretion in denying the Republic’s Motion for Summary Judgment even though there were no issues of genuine fact that would require the presentation of evidence, pursuant to Rule 35 of the Rules of Court and prevailing case laws. The Supreme Court ruled, thus: “We hold that respondent Marcoses failed to raise any genuine issue of fact in their pleadings. Thus, on motion of petitioner Republic, summary judgment should take place as a matter of right. In the early case of Auman vs. Estenzo, summary judgment was described as a judgment which a court may render before trial but after both parties have pleaded. It is ordered by the court upon application by one party, supported by affidavits, depositions or other documents, with notice upon the adverse party who may in turn file an opposition supported also by affidavits, depositions or other documents. This is after the court summarily hears both parties with their respective proofs and finds that there is no genuine issue between them. Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35 of the 1997 Rules of Civil Procedure… Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact which calls for the presentation of evidence as distinguished from an issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine issue for trial. Respondents defenses of lack of knowledge for lack of privity or (inability to) recall because it happened a long time ago or, on the part of Mrs. Marcos, that the funds were lawfully acquired are fully insufficient to tender genuine issues. Respondent Marcoses defenses were a sham and evidently calibrated to compound and confuse the issues. In their answer, respondents failed to specifically deny each and every allegation contained in the petition for forfeiture in the manner required by the rules. All they gave were stock answers like they have no sufficient knowledge or they could not recall because it happened a long time ago, and, as to Mrs. Marcos, the funds were lawfully acquired, without stating the basis of such assertions. Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides: A defendant must specify each material allegation of fact the truth of which he does not admit and, 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 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. Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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In their answer, respondents failed to specifically deny each and every allegation contained in the petition for forfeiture in the manner required by the rules. All they gave were stock answers like they have no sufficient knowledge or they could not recall because it happened a long time ago, and, as to Mrs. Marcos, the funds were lawfully acquired, without stating the basis of such assertions. Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides: A defendant must specify each material allegation of fact the truth of which he does not admit and, 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 the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.

The purpose of requiring respondents to make a specific denial is to make them disclose facts which will disprove the allegations of petitioner at the trial, together with the matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on the table, thus reducing the controversy to its true terms. As explained in Alonso vs. Villamor, “A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapiers thrust. On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired. However, she failed to particularly state the ultimate facts surrounding the lawful manner or mode of acquisition of the subject funds. Simply put, she merely stated in her answer with the other respondents that the funds were lawfully acquired without detailing how exactly these funds were supposedly acquired legally by them. Even in this case before us, her assertion that the funds were lawfully acquired remains bare and unaccompanied by any factual support which can prove, by the presentation of evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos family. Respondents’ denials in their answer at the Sandiganbayan were based on their alleged lack of knowledge or information sufficient to form a belief as to the truth of the allegations of the petition. It is true that one of the modes of specific denial under the rules is a denial through a statement that the defendant is without knowledge or information sufficient to form a belief as to the truth of the material averment in the complaint. The question, however, is whether the kind of denial in respondents answer qualifies as the specific denial called for by the rules. We do not think so. In Morales vs. Court of Appeals, this Court ruled that if an allegation directly and specifically charges a party with having done, performed or committed a particular act which the latter did not in fact do, perform or commit, a categorical and express denial must be made. Here, despite the serious and specific allegations against them, the Marcoses responded by simply saying that they had no knowledge or information sufficient to form a belief as to the truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how it was that they were supposedly ignorant of the facts alleged. Therefore, the allegations in the petition for forfeiture on the existence of the Swiss bank deposits in the sum of about US$356 million, not having been specifically denied by respondents in their answer, were deemed admitted by them pursuant to Section 11, Rule 8 of the 1997 Revised Rules on Civil Procedure:

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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CASE BRIEFS – REMEDIAL LAW REVIEW I

Material averment in the complaint, xxx shall be deemed admitted when not specifically denied.

By the same token, the following unsupported denials of respondents in their answer were pregnant with admissions of the substantial facts alleged in the Republics petition for forfeiture: (See last four items in the bullets above – in FACTS)… The matters referred to in paragraphs 23 to 26 of the respondents answer pertained to the creation of five groups of accounts as well as their respective ending balances and attached documents alleged in paragraphs 24 to 52 of the Republics petition for forfeiture. Respondent Imelda R. Marcos never specifically denied the existence of the Swiss funds. Her claim that the funds involved were lawfully acquired was an acknowledgment on her part of the existence of said deposits. This only reinforced her earlier admission of the allegation in paragraph 23 of the petition for forfeiture regarding the existence of the US$356 million Swiss bank deposits. . The allegations in paragraphs 47 and 48 of the petition for forfeiture referring to the creation and amount of the deposits of the Rosalys- Aguamina Foundation as well as the averment in paragraph 52-a of the said petition with respect to the sum of the Swiss bank deposits estimated to be US$356 million were again not specifically denied by respondents in their answer. The respondents did not at all respond to the issues raised in these paragraphs and the existence, nature and amount of the Swiss funds were therefore deemed admitted by them. As held in Galofa vs. Nee Bon Sing, if a defendants denial is a negative pregnant, it is equivalent to an admission. Moreover, respondents denial of the allegations in the petition for forfeiture for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions was just a pretense. Mrs. Marcos privity to the transactions was in fact evident from her signatures on some of the vital documents attached to the petition for forfeiture which Mrs. Marcos failed to specifically deny as required by the rules. It is worthy to note that the pertinent documents attached to the petition for forfeiture were even signed personally by respondent Mrs. Marcos and her late husband, Ferdinand E. Marcos, indicating that said documents were within their knowledge. How could respondents therefore claim lack of sufficient knowledge or information regarding the existence of the Swiss bank deposits and the creation of five groups of accounts when Mrs. Marcos and her late husband personally masterminded and participated in the formation and control of said foundations? This is a fact respondent Marcoses were never able to explain. Not only that. Respondents' answer also technically admitted the genuineness and due execution of the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as well as the veracity of the contents thereof. The answer again premised its denials of said ITRs and balance sheets on the ground of lack of knowledge or information sufficient to form a belief as to the truth of the contents thereof. Petitioner correctly points out that respondents' denial was not really grounded on lack of knowledge or information sufficient to form a belief but was based on lack of recollection. By reviewing their own records, respondent Marcoses could have easily determined the genuineness and due execution of the ITRs and the balance sheets. They also had the means and opportunity of verifying the same from the records of the BIR and the Office of the President. They did not. When matters regarding which respondents claim to have no knowledge or information sufficient to form a belief are plainly and necessarily within their knowledge, their alleged ignorance or lack of information will not be considered a specific denial. An unexplained denial of information within the control of the pleader, or is readily accessible to him, is evasive and is insufficient to constitute an effective denial. Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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The form of denial adopted by respondents must be availed of with sincerity and in good faith, and certainly not for the purpose of confusing the adverse party as to what allegations of the petition are really being challenged; nor should it be made for the purpose of delay. In the instant case, the Marcoses did not only present unsubstantiated assertions but in truth attempted to mislead and deceive this Court by presenting an obviously contrived defense. Simply put, a profession of ignorance about a fact which is patently and necessarily within the pleaders knowledge or means of knowing is as ineffective as no denial at all. Respondents’ ineffective denial thus failed to properly tender an issue and the averments contained in the petition for forfeiture were deemed judicially admitted by them.

NELSON P. VALDEZ, petitioner, vs. ATTY. ANTOLIN ALLYSON DABON, JR., respondent. (A.C. No. 7353. November 16, 2015) FACTS:

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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CASE BRIEFS – REMEDIAL LAW REVIEW I

ISSUE:

RULING:

Written by: MARIA KRISTINA D. SIUAGAN, RN (TINA SIUAGAN)

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