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A.

Affirmative and Negative Defenses
1. Villanueva vs. Court of Appeals

[G.R. No. 117108. November 5, 1997]

DANIEL C. VILLANUEVA, petitioner, vs. COURT OF APPEALS, LAND
REGISTRATION AUTHORITY and OO KIAN TIOK, respondents.
DECISION
PANGANIBAN, J.:

May the Register of Deeds refuse to register an application for a notice of lis
pendens on the ground that the applicant does not have any title or right of possession
over the subject properties?

The Case
Petitioner seeks reversal of the Decision[1] of Respondent Court of
Appeals[2] promulgated on August 31, 1994 in CA-G.R. SP No. 34449, which answered
the foregoing question in the affirmative:

In view of the foregoing, the Lis Pendens in question is not registrable since it
seeks to affect property not belonging to the defendant [petitioner herein], and the
action of the Register of Deeds in denying the registration of the same is hereby
sustained."
[3]

The lis pendens sought to be registered is Civil Case No. 92-2358 pending before
Branch 74 of the Regional Trial Court of Antipolo, Rizal.[4] 

The Facts
The assailed Decision fairly narrates the facts as follows:

[5]

Records show that TCT Nos. 262631; 273873 and 2777938 [sic] were issued in the
name of Valiant Realty and Development Corporation and Filipinas Textile Mills,
Inc. and the same were mortgaged in favor of Equitable Banking Corp. Upon
failure of the mortgagors to comply with the terms and conditions of the mortgage,
the bank foreclosed the mortgaged properties [and] sold the same to the Equitable
Banking Corp. as the highest bidder at public auction sale. After the expiration of
the redemption period, mortgagors did not exercise the right of redemption and as

a consequence thereof, the mortgagee sold all its rights, interests and participation
of said properties to the herein oppositor, Oo Kian Tiok.
Immediately after acquiring the rights, titles and interests of the bank in said
properties, Oo Kian Tiok took possession up to the present time, except for a brief
period of time when his possession was interrupted by the herein petitioner [who]
together with armed goons, [and] without [any] court order swooped down on the
properties and disarmed the security guards assigned therein and forcibly removed
the 30 workers therefrom, which prompted Oo Kian Tiok to file Civil Case No. 922358 against Filipinas Textile Mills, Inc., [and] Daniel Villanueva, et als. for
Recovery of Possession and Damages with Prayers for Writ of Preliminary
Mandatory Injunction and/or Temporary Order.
As a consequence, the herein petitioner, being one of the defendants of the abovementioned case, filed a formal request with the Office of the Register of Deeds to
annotate a corresponding Notice of Lis Pendens of Civil Case No. 92-2358 in the
respective Memorandum of Encumbrances of TCT Nos. 262631; 273873 and
277938 but the same was denied registration based on the following grounds, to
wit:
....that Mr. Villanueva is merely asserting possession of the property not on the title
or right over the property. While it appears that Mr. Villanueva is an officer of the
owner-corporation, Filipinas Textile Mills, Inc., the latter is no longer the owner
thereof but plaintiff Oo Tian [sic] Tiok. Moreover, no Board Resolution has been
submitted indicating that said Villanueva has been duly authorized by the former
owner to file the notice of lis pendens.
Hence, the petitioner elevated the matter on consulta [to Respondent Land
Registration Authority] pursuant to Section 117 of P.D. 1529 on the grounds that
the herein petitioner, together with his sister Terry Villanueva-Yap, Eden
Villanueva, Susan Villanueva and his brother Frank Villanueva are the lawful
owners of the 63% of the beneficial shares of Filipinas Textile Mills, Inc. and are
not merely asserting possession but also ownership over the subject properties
contrary to the conclusion submitted by the Register of Deeds. (Resolution, pp. 12)
The consulta was decided against petitioner by Respondent Land Registration
Authority and later, on appeal, by Respondent Court. Hence, this petition for review
under Rule 45 of the Rules of Court.[6]

The Issues
Petitioner assigns the following errors to Respondent Court: [7]

"A. Not appreciating petitioners compliance with all the requirements set forth
under the Land Registration Act and the Rules of Court;
B. Not finding that the petitioner duly raised the affirmative defense of ownership
over the properties subject of Civil Case No. 92-2358;
C. Not finding that the Respondent Land Registration Authority erred in assuming
jurisdiction to determine the issue of ownership over the properties subject of civil
case no. 92-2358;
D. In affirming the resolution of the Respondent Land Registration Authority in
Consulta No. 2131.
The Solicitor General, as counsel for Respondent Land Registration Authority,
summarizes the issue:[8]

Whether or not the notice of lis pendens requested by petitioner to be annotated in
the respective memorandum of encumbrances at the back of TCT Nos. 262631,
273873 and 277938 is registrable.
Stated simply, the issue is whether petitioners application for registration of the
notice of lis pendens should be rejected on the ground that it affects a property which
does not belong to him personally, but is merely claimed by a corporation, the majority
(63%) of which is owned by him and his brothers and sisters.

Respondent Courts Ruling
In dismissing petitioners appeal, Respondent Court ruled:[9]

Even if the petitioner were able to comply with all the requirements (referring to
the formalities) for the annotation of a notice of lis pendens, it does not necessarily
follow that he would ipso facto be entitled to such annotation. There is need for
him to show that he owns the subject property or that he has right or interest vis-vis its possession. The mere possession of a property does not give rise to the right
to annotate. Without such title or interest, whence would his right to annotate come
from?
The petitioner contends that the determination of registrability of a notice of lis
pendens is ministerial as far as the Register of Deeds is concerned. On the basis of
the evidence on record, this is exactly what the Register of Deeds of Rizal did - he
refused to annotate because it clearly appears from the documents submitted
(specifically, T.C.T. Nos. 262631, 273873 and 277938) that the subject parcels of
land are registered not in the name of Villanueva but in the name of Valiant Realty
and Development Corporation and co-defendant Filipinas Textile Mills, Inc. The
Register of Deeds did not attempt to go beyond what clearly appears in the

two separate and distinct persons. Thus. as the petitioner would imply. a stranger. because the registration will affect the property obviously not belonging to petitioner. and in Consulta No. It has been consistently held by public respondent LRA. respondent. (in the name of which the contested parcels of land are registered) and Villanueva are. asserts:[12] Based on the incontrovertible facts. to inquire into and try to resolve conflicting allegations of the claimants of the aforesaid property. weighed and resolved adversely to the herein petitioner. There could be no dispute as to the fact that Filipinas Textile Mills.[10] Private Respondent Oo Kian Tiok counters10 that the errors and arguments raised in the petition at bar are mere repetitions of those already discussed in [the] petition for review submitted before Respondent Court. In the instant petition. Inc. which the latter had already considered. petitioner versus the Register of Deeds of Quezon City. 146. although it may be conceded that Villanueva is in possession thereof. of which petitioner is a stockholder. (FTMI). it would appear that his possession is illegal which would not result in vesting in him any right or interest over the above-cited property. Sole Issue: Registration of Lis Pendens Who May Register Notice of Lis Pendens? Petitioner contends that a notice of lis pendens may be filed in relation to actions affecting the title to or possession of real property. who is one of the defendants in Civil Case No. defendants in Civil Case No. authorizing him to take possession of the litigated property. 430. on the other hand. before the law. Hence. repeatedly and emphatically allege that it is Filipinas Textile Mills. as in Consulta No. the notice of lis pendens requested by petitioner to be annotated on the back of the aforesaid certificates of title is not registrable. Indubitably Villanueva is not Filipinas Textiles Mills. an affirmative relief of ownership is prayed for in the answer which sanctions registration of the notice of lis pendens. Villanueva is a third person. that a notice of lis . which owns the properties in question. among whom is petitioner. As far as the said property is concerned. [11] The Solicitor General. Inc. 92-2358. 92-2358 filed before the Regional Trial Court of Antipolo. He did not attempt. The Land Registration Authority in its assailed resolution had aptly pointed out that petitioner Villanueva had not produced a board resolution of Filipinas Textile Mills. Inc. petitioner. The Courts Ruling The petition is meritorious. Branch 74. Pedro del Rosario. Inc.aforementioned Transfer Certificates of Title. the Register of Deeds of Sorsogon.

a notice of lis pendens is proper in the following cases. after proper showing that the notice is for the purpose of molesting the adverse party. and serves as a warning that one who acquires an interest over said property does so at his own risk. containing the names of the parties and the object of the action or defense.[13] The registration of a notice of lis pendens is governed by Section 24. From the time only of filing such notice for record shall a purchaser. The notice of lis pendens is an announcement to the whole world that a particular real property is in litigation.. or that he gambles on the result of the litigation over said property. and e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon. 1529. and a description of the property in that province affected thereby.: a) An action to recover possession of real estate. Rule 14 of the Rules of Court:[14] Sec. viz. and the defendant. vs. The notice of lis pendens--i. Court of Appeals. be deemed to have constructive notice of the pendency of the action.pendens is not registrable if it seeks to affect property not belonging to the defendant. at the time of filing his answer. The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court. or at any time afterwards. d) An action for partition. In an action affecting the title or the right of possession of real property. Rule 14 of the Rules of Court and Section 76 of Presidential Decree No. may record in the office of the registrar of deeds of province in which the property is situated a notice of the pendency of the action. at the time of filing the complaint. or that it is not necessary to protect the rights of the party who caused it to be recorded. that real property is involved in an action--is ordinarily recorded without the intervention of the court where the action is . and only of its pendency against parties designated by their real names. the plaintiff. when affirmative relief is claimed in such answer. Notice of lis pendens.[15] this Court enumerated the cases where a notice of lis pendens is proper: According to Section 24. or incumbrancer of the property affected thereby. Inc. 24. c) An action to remove clouds thereon.e. In Magdalena Homeowners Association. b) An action to quiet title thereto.

or to suits for the settlement and adjustment of partnership interests. [fn: 54 C. there being in some cases a lis pendens. or to redeem from a foreclosure sale. and may well be inferior and subordinate to those which may finally be determined and laid down therein. former Senator Vicente J.. The notice is but an incident in an action. or to establish a trust. In explaining the first requirement. 577-578] It is not sufficient that the title or right of possession may be incidentally affected.S.[16] Only the first requisite is at issue in this case. 583] Civil Case No. 10 L. and (c) the property or res involved must be sufficiently described in the pleadings. 24 Pac. or encumbrance against it. interest. Superior Court. 121. 627 x x x] In order that the doctrine of lis pendens may apply. Rep. [fn: 54 C. in specific real property or to enforce any lien.. 92-2358. the following elements must be present: (a) the property must be of such character as to be subject to the rule. although at the commencement of the suit there is no present vested interest. It does not affect the merits thereof. to be sure. so that purchasers thereof may lose the property or right to the possession through the appointment of a receiver. To annotate a notice of lis pendens. or lien in or on the property which it seeks to charge. the second and the third requisites are not. (b) the court must have jurisdiction both over the person and the res. and whatever rights they may acquire in the property in any voluntary action transaction are subject to the results of the action.J. nor does it place such property within the rule of lis pendens.R. St. It has also been held to apply in the case of a proceeding to declare an absolute deed a mortgage. so that purchaser of property may be bound by the judgment or decree rendered.S. 84 Cal. Thus a proceeding to forfeit the charter of a corporation does not deprive it of the power to dispose of its property. Francisco wrote:[17] x x x to all suits or actions which directly affect real property and not only those which involve the question of title. And its continuance or removal--like the continuance or removal of a preliminary attachment or injunction--is not contingent on the existence of a final judgment in the action. claim. all people who deal with the property that they so deal with it at their own risk. [fn: Havemeyer vs. but also those which are brought to establish an equitable estate. is an action for recovery of possession and damages with prayer for writ of preliminary mandatory injunction and/or temporary restraining order.A. or warn. 192. The cancellation of such a precautionary notice is therefore also a mere incident in the action. which petitioner sought to annotate. and ordinarily has no effect on the merits thereof. or right.J. it is essential that there be in existence a pending action. That civil case is an accion publiciana or a plenary action in an ordinary civil proceeding to determine the better and legal right . 327. suit or proceeding. 18 Am. and may be ordered by the Court having jurisdiction of it at any given time. It is intended merely to constructively advise. an extrajudicial one. and there can be no lis pendens because of the fact that an action or suit is contemplated. charge.pending.

20 On the other hand. the law is applied according to its express terms. and interpretation would be resorted to only where a literal interpretation would be either impossible or absurd or would lead to an injustice.26 The registration of the notice of lis pendens is done without leave of court. The Rule merely requires an affirmative relief to be claimed in the answer to enable a defendant to apply for the annotation of the notice. such that the real estate mortgage was invalid. Rule 14) Petitioner is one of the defendants in Civil Case No. The law does not require such proof from the defendant. thereby sufficiently satisfying the first requisite and placing the case squarely within the parameters set by Magdalena. Equitable Banking Corporation and Respondent Oo Kian Tiok.21 In our jurisdiction. or possession of.at the time of filing the complaint. 92-2358 alleged in their answer that there was fraud committed among Bernardino Villanueva.25 Be it remembered that a notation of lis pendens does not create a nonexistent right or lien.24 We stress that although it is not necessary for the applicant to prove his ownership or interest over the property sought to be affected by lis pendens. In effect. the subsequent auction of the mortgaged property transferred no right. 92-2358. Respondent Court concluded: it would appear that his possession is . the defendants in Civil Case No. which affects the title to. 24. Where the language of a statute is clear and unambiguous.to possess (independently of title). Hence.27 There is no requirement that the applying defendant must prove his right or interest over the property sought to be annotated. in the complaint or answer filed in the subject litigation. title and interest whatsoever to Equitable Bank as the highest bidder and thence to private respondent as buyer. Both contentions of the parties thus directly put the properties under the coverage of the rule. It serves merely as a warning to a person who purchases or contracts on the subject property that he does so at his peril and subject to the result of the pending litigation. assert a claim of possession or title over the subject property in order to give due course to his application. real property. lis pendens may be annotated only where there is an action or proceeding in court. (b) The defendant -1) at the time of filing his answer (when affirmative relief is claimed in such answer) 2) or at any time afterwards (See Sec. We cannot find any valid reason why we should add to the requirements set in the Rules. The settled doctrine in statutory construction is that legal intent is determined principally from the language of the statute.19 What private respondent sought to recover was not just possession de facto but possession de jure. the applicant must. As settled. the defendants in the civil case directly opposed the recovery of possession prayed for by the plaintiff and in fact challenged the very validity of the title of private respondent.23 Now. the following may file a notice of lis pendens:22 (a) The plaintiff -. is it necessary for him to prove to the Register of Deeds that the properties to which he seeks annotation of the notice of lis pendens belong to him as required by Respondent Court? We do not believe so. In deciding the issue of whether the application by petitioner is registerable.

30 In the case at bar. much less his capacity to sue on the mere pretext that he was not authorized by the corporation to litigate on its behalf. as it preempted the trial on the merits of the main case sought to be registered. expressly or impliedly. We emphasize that the issue at bar is the right to annotate the pendency of Civil Case No. for the reasons and facts stated herein and in their Affirmative Allegations and Affirmative Defenses. the defendants in Civil Case No. not the legal standing of petitioner to represent the corporation in the said case.29 An affirmative defense may be an allegation of new matters -. Petitioner in this case was impleaded by private respondent as one of the defendants in the trial court. estoppel.32 The following allegations in the answer illustrate the claim of petitioner for affirmative relief:33 Answering Defendants. On the other hand. release. His status as a mere stockholder can no longer be questioned in this case. he falls under the definition of the Rules as a party claiming affirmative relief. Equitable Banking Corporation and Respondent Oo Kian Tiok. title or interest whatsoever over them. a reading of the allegations in the answer will readily show that defendants (herein petitioner included) were not merely asserting a right of possession over the disputed properties. Affirmative defenses include fraud. petitioner initiated the move to annotate the lis pendens to protect the corporations right.28 This conclusion of Respondent Court was premature. or at least those not necessarily denied by the interposition of the affirmative defense itself.that is. the latter must. payment. claiming that plaintiff (herein private respondent) was not entitled at all to their possession. if proven true. an intra-corporate controversy which effectively barred a common action by the management of the corporation. Wary that the properties which were mortgaged and auctioned would be dissipated and/or passed to innocent purchasers for value. An affirmative defense admits the facts alleged by the plaintiff. considering that there was. destroys or negates the plaintiffs right of action. will defeat or bar the claim of said respondent and benefit the defendants. the material allegations of the complaint would nevertheless prevent or bar recovery by the plaintiff. statute of limitations. and other matters alleged by way of confession and avoidance. if true. while admitting. in the absence of denials. 92-2358 insist that fraud attended the agreement among Bernardino Villanueva. 92-2358. as alleged by private respondent. thus. former recovery.illegal which would not result in vesting in him any right or interest over the above-cited properties. nevertheless be taken as admitted in the defense. Even though an affirmative defense contains allegations inconsistent with those of the complaint. an affirmative relief or defense is an allegation of a new matter which. statute of frauds. facts different from those averred by the plaintiff which.31 In any event. specifically deny the following allegations in the original Complaint dated 08 May 1992: xxxxxxxxx . because he did not have any right. He correctly acted. Rather. Such fraud. illegality. they were insisting on their ownership over the said real estate. discharge in bankruptcy.

the truth being that plaintiff has no right. Register of Deeds of Pasig. Mel P. Dimat and Bienvenido Bulaong. xxxxxxxxx 3. situated in Barangay San Roque.3. Vicente A. Cainta. Rizal is owned by plaintiff. title and interest whatsoever in the said properties.C. and 3.1. Rodriguez Avenue. Cainta. and then sold at public auction auction [sic] in favor of EBC. the truth being that such compound is owned by defendant FTMI being covered by the titles of the Subject Properties which are registered in the name of defendant FTMI.000. Plaintiff is the lawful owner of three (3) parcels of land together with the properties and improvements that may be found therein. Artemio Tuquero. the truth being that the occupation of the compound by said defendants was lawful because they are duly elected and authorized directors. Susan Villanueva. 3.00) from EBC.3. Garcia. Rizal. insofar as it is alleged. Barangay San Roque. the truth being that the loan purportedly obtained by defendant Bernardino Villanueva ostensibly on behalf of defendant FTMI was not duly authorized by defendant FTMIs board of directors. 3. that: 3. officers and/or representatives of defendant FTMI which is the registered owner thereof.4.1 Defendant FTMI obtained a loan of Twenty Five Million Pesos (P25. and thus not binding upon defendant FTMI. . The Certification dated 06 April 1992 of Mr. Nos. insofar as it is alleged that: 3. Cainta.4. 262631.6 Paragraph 7. attached as Annex B to the Complaint proves that plaintiff Oo Kian Tiok purchased the rights and interests over the titles of defendant FTMI from EBC. The compound located on Amang E.1. Barangay San Roque. the truth being that such a Certification merely shows that defendant Bernardino Villanueva connived and colluded with EBC and plaintiff whereby the Subject Properties were illegally mortgaged.000. Frankie Villanueva. The compound located on Amang E.T. and 277938 of the Registry of Deeds for the Province of Rizal. 273873. Rizal was being unlawfully occupied by defendants Daniel Villanueva.6. 3.4 Paragraph 5. Eden Villanueva.4. in so far as it is made to appear that defendant FTMI is the former-owner of the three (3) lots covered by T.2. Terry Villanueva-Yu. and thereafter allegedly purchased by Oo Kian Tiok through a Redemption Contract. Rodriguez Avenue.5 Paragraph 6. the truth being that defendant FTMI remains as the registered owner of the aforementioned three (3) lots.3.

defendant FTMI. and Francisco. there was. the truth being that since the Subject Properties were never validly mortgaged nor foreclosed. Plaintiff is an innocent bystander and is allegedly being helplessly dragged into the controversy. on official leave.3. the truth being that the alleged mortgage was never authorized by defendant FTMIs board of directors and therefore. improvements.12. insofar as it is stated that defendant FTMI had one (1) year from 01 August 1988. not binding upon defendant FTMI. 3.12. thereby defeating the very purpose and rationale of the registration. 262631. the petition is hereby GRANTED. or until 01 August 1989. The action taken on 04 April 1992 is merely an offshoot of an intracorporate controversy between the owners and stockholders of defendant FTMI.2. insofar as it is made to appear that: 3. Romero. Narvasa. with all the buildings. in reality. xxxxxxxxx 3. To require that an applicant must prove his ownership or his interest over the property sought to be affected with the notice of lis pendens will unduly restrict the scope of the rule. concur. no period within which to redeem the Subject Properties.6..12.8 Paragraph 10. a party questioning the ownership of the registered owner will litigate his or her case without an assurance that the property will be protected from unwanted alienation during the pendency of the action. SO ORDERED. .. The assailed Decision is REVERSED and SET ASIDE. the truth being that the action taken on 04 April 1992 was a valid exercise by defendant FTMI and/or its authorized representatives of its power of administration over its own properties. WHEREFORE. to redeem the Subject Properties. Paragraph 15. xxxxxxxxx 3. to EBC on 14 July 1982. 273873 and 277938.2 Defendant FTMI mortgaged the Subject Properties. machineries and equipment thereon. The Land Registration Authority is hereby ORDERED to annotate the application for a notice of lis pendens in TCT Nos. In such case.1. C. No costs. the truth being that plaintiff is conniving and colluding with defendant Bernardino Villanueva in order to wrest ownership and possession of the Subject Properties from its registered owner. JJ. Melo. (Chairman).J. in order to favor defendant Bernardino Villanueva.

MENDOZA. Mrs. JR. 2012 x --------------------------------------------------------------------------------------. Promulgated: February 8. Redulla). Valentina C. G. JOSEFA BORROMEO CAPISTRANO. Capistrano authorized her daughter.: This case is about the sufficiency of the defendants allegations in the answer denying the due execution and genuineness of the plaintiffs actionable documents and the kind of evidence needed to prove forgery of signature. ECI further alleged that Mrs.2. Capistrano) applied for membership at the Manila Yacht Club (MYC) under the latters widowmembership program..x DECISION ABAD. No. Capistrano (Mrs.PERALTA.[1] Mrs. to claim from ECI her credit card and ATM application form.versus . . The Facts and the Case Petitioner Equitable Cardnetwork. Capistrano EQUITABLE CARDNETWORK. 180157 Petitioner.. Capistrano allegedly applied for and was granted a Visa Credit Card by ECI. JJ. Present: VELASCO.R.. J. (ECI) alleged in its complaint that in September 1997 respondent Josefa B. ABAD. Redulla signed the acknowledgment receipt[2] on behalf of her . Chairperson. Since the MYC and ECI had a credit card sponsorship agreement in which the Club would solicit for ECI credit card enrollment among its members and dependents. Redulla (Mrs. Inc. and PERLAS-BERNABE. Respondent. Equitable Card Network vs. J. INC.

Redulla was not her daughter. Capistrano. 4)authorizing Mrs. and that she never authorized her or anyone to claim a credit card for her. Redulla personally issued a P45.[4] 2) accomplishing the MYC membership information sheet[5] which contained a request for an ECI Visa card. Capistranos account with ECI. On November 24. After trial. that Mrs. Redullas check bounced upon deposit.mother. Assuming she applied for such a card. Redulla.000. and litigation expenses. Mrs. Mrs. the action should have been brought against Mrs. But Mrs. Mrs. [7] and 6) using the credit card in buying merchandise worthP217. Capistrano got hold of the card. having failed to deny under oath the genuineness and due execution of ECIs actionable documents that were attached to the complaint. Capistrano impliedly admitted the genuineness and due execution of those documents. their genuineness and due execution shall be deemed admitted unless the defendant specifically denies them under oath and states what he claims to be the facts. The RTC said that when an action is founded upon written documents. 1998 a collection suit against her before the Regional Trial Court (RTC) of Cebu City. Because Mrs. Mrs. Capistrano asked the court to hold ECI liable to her for moral and exemplary damages. the RTC[3] ruled that. 1997 Mrs.[6] 5) applying for an ATM Card with ECI. she supposedly started using it.[8] A . Capistrano was unable to settle her P217.36 as indicated in the sales slips. In effect she admitted: 1) applying for membership at the MYC. Redulla posed as Mrs. Redulla to receive the Visa card issued in her name. she never used it.00 check as partial payment of Mrs.235. Capistrano and fooled ECI into issuing the card to her. But she refused to pay. 3) holding herself liable for all obligations incurred in the use of such card. After Mrs. prompting ECI to file on February 30. ECI demanded payment from her. attorneys fees. Mrs. Consequently. Capistrano denied ever applying for MYC membership and ECI credit card. Answering the complaint.235.36 bill.

The Issues Presented The issues presented are: 1. Mrs.235. 2007 the CA reversed the trial courts decision and dismissed ECIs complaint. Whether or not the CA correctly ruled that.mere statement that the documents were procured by fraudulent representation does not raise any issue as to their genuineness and due execution. although Mrs. such evidence cured the vagueness in her answer. said the RTC. Capistrano to pay ECIs claim of P217. Capistrano sufficiently proved by evidence that her signatures had been forged. On May 10. Capistranos answer was somewhat infirm. Capistrano failed to make an effective specific denial of the actionable documents attached to the complaint.36 plus interests. Capistrano failed to present strong and convincing evidence that her signatures on the document had been forged. Capistrano could no longer raise the defense of forgery since this had been cut-off by her failure to make a specific denial. having verified her answer. in her verification. She did not present a handwriting expert who could attest to the forgery. The trial court ordered Mrs. Since ECI failed to make a timely objection to its admission. although Mrs. deny signing those documents or state that they were false or fabricated. she overcame this omission by presenting parol evidence to which ECI failed to object. still she raised the issue of the genuineness and due execution of ECIs documents during trial by presenting evidence that she never signed any of them. Besides.[10] The CA ruled that. Capistrano appealed the decision to the Court of Appeals (CA). the CA ruled that Mrs. The RTC reasoned that she did not. she should be deemed to have denied those documents under oath. [9] The RTC rejected Mrs. The RTC added that respondent Mrs. attorneys fees and litigation expenses. Further. Mrs. and . Capistranos argument that.

Whether or not the CA correctly ruled that Mrs. which provides: SECTION 8. the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party. When an action or defense is founded upon a written instrument. 2) When the defendant wants to deny only a part or a qualification of an averment in the complaint. How to contest such documents. and 3) When the defendant is without knowledge and information sufficient to form a belief as to the truth of a material averment made in the complaint. Capistrano presented clear and convincing evidence that her signatures on the actionable documents had been forged. which fact is essential to the latters cause of action. and sets forth what he claims to be the facts. But the rule that applies when the defendant wants to contest the documents attached to the claimants complaint which are essential to his cause of action is found in Section 8. specifically denies them. Ruling of the Court One. .[11] Specific denial has three modes. An answer to the complaint may raise a negative defense which consists in defendants specific denial of the material fact that plaintiff alleges in his complaint. copied in or attached to the corresponding pleading as provided in the preceding Section. he shall so state and this shall have the effect of a denial. Thus: 1) The defendant must specify each material allegation of fact the truth of which he does not admit and whenever practicable set forth the substance of the matters on which he will rely to support his denial. he must specify so much of the averment as is true and material and deny the remainder. Rule 8 of the Rules of Court. but the requirement of an oath does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused.2. under oath.

She never authorized any person to get her card. as widow of a deceased member of the Manila Yacht Club. That in connection with her application for membership in the Manila Yacht Club.To determine whether or not respondent Mrs. xxxx ECIs complaint: 5. Capistranos answer: 3. respectively. the plaintiff will send a statement of account to defendant . Valentina Redulla to get the said credit card including her ATM application form from the plaintiff which enabled the defendant to avail of the cash advance facility with the use of said card. ECIs complaint: 3. Copy of the Manila Yacht Club Information Sheet is hereto attached as Annex A. That defendant authorized her daughter. xxxx ECIs complaint: 6. She specifically denies paragraph[s] 3 and 4 of the complaint for want of sufficient knowledge to form a belief as to the veracity of the allegations contained therein and for the reasons stated in her special and affirmative defenses. That with the use of the said Manila Yacht Club Visa Card. C. Capistranos answer: 4. That sometime in 1997. application form and acknowledgment receipt showing that Valentina C. defendant applied for membership. and D. the pertinent averments of the complaint and defendant Capistranos answer are here reproduced. Capistrano effectively denied the genuineness and due execution of ECIs actionable documents as provided above. defendant applied for and was granted a Manila Yacht Club Visa Card in accordance with Credit Card Sponsorship Agreement entered into between the plaintiff and the Manila Yacht Club wherein Manila Yacht Club shall solicit applications for the Manila Yacht Club Visa Cards from Manila Yacht Club members and dependents. Copy of the authorization letter. Mrs. 4. She specifically denies paragraph 5 of the complaint for want of sufficient knowledge to form a belief as to the allegations contained therein.Valentina Redulla is not her daughter. Redulla received the said credit card are hereto attached as Annexes B. defendant could purchase goods and services from local and accredited stores and establishments on credit and could make cash advances from ATM machines since it is the plaintiff who pays first the said obligations and later at a stated period every month. Mrs. Mrs.

235.75% per month and service charge at 1. Mrs. It is quite peculiar that herein defendants alleged account would be paid with a personal check of somebody not related to her. Granting ex gratia argumenti that defendant did indeed . Mrs.00 in partial payment of defendants account with the plaintiff. Copy of said said check is hereto attached as Annex G. 0127617 dated November 24. That defendant has an unpaid principal obligation to the plaintiff in the amount of P217.showing how much she owes the plaintiff for the payments it previously made on her behalf. Copy of the monthly statement of accounts for the months of November and December 1997 are hereto attached as Annexes E and F. Mrs. She specifically denies paragraph 6 of the complaint for want of sufficient knowledge to form a belief as to the veracity of the allegations contained therein and for the reasons as stated in her special and affirmative defenses. interest at 1. Capistranos answer: 5. Mrs. Valentina C. 1997 in the amount of P45. Capistranos answer: 7. 1997. 9. She specifically denies paragraph 7 of the complaint for want of sufficient knowledge to form a belief as to the veracity of the allegations contained therein. That on November 24. She denies paragraph 10 for want of sufficient knowledge as to the veracity of the allegations contained therein and for the reasons stated in her special and affirmative defenses. That when the said check was deposited in the bank. She denies paragraph[s] 8 and 9 for want of sufficient knowledge to form a belief as to the veracity of the allegations contained therein and for the reasons aforestated. xxxx ECIs complaint: 10. xxxx ECIs complaint: 8. Capistranos answer: 6.326.000. Redulla issued Solidbank Check No. defendants daughter. Capistranos answer: 8. the same was dishonored for the reason Account Closed. That it is the agreement of the parties that in the event that an account is overdue. Mrs. xxxx ECIs complaint: 7. respectively.25% will be charged to the defendant.

thus. real or imaginary.84 will be charged as attorneys fees and P53. Mrs. She has never authorized anyone to get her alleged card for the preceding reason. In all modesty.84 and incur litigation expenses in the amount of P30. That it is further provided as one of the terms and conditions in the issuance of the Manila Yacht Club Card that in the event that collection is enforced through court action. She denies paragraph[s] 11 and 12 for want of sufficient knowledge to form a belief as to the veracity of the allegations therein. 14.00.000. Redulla is not her daughter.apply for a card. That plaintiff made demands on the defendant to pay her obligation but despite said demands. Defendant repleads by reference all the foregoing allegations which are relevant and material hereto. Defendant denies having applied for membership with the Equitable Cardnetwork. 12. monetary or otherwise to herein plaintiff. . xxxx ECIs complaint 11. Inc. 12. any damage or expense. This Valentina C. Capistranos answer 9. Capistranos special and affirmative defenses read as follows: 10. as a widow of a deceased member of the Manila Yacht Club. xxxx Further. 13. she has no obligation. If ever there was any demand sent to herein defendant the same would have been rejected on valid and lawful grounds.998. Plaintiff has no cause of action against herein answering defendant.998. defendant has failed and refused to pay her obligation and still fails and refuses to pay her obligation to the plaintiff and settle her obligation. still. she vehemently denies using the same to purchase goods from any establishment on credit. 25% of the amount due of P53.998. it would be totally uncalled for if she would not honor a valid obligation towards any person or entity. Therefore. defendant being a member of one of the prominent families of Cebu and being a board member of the Borromeo Brothers Estate whose holdings include Honda Cars Cebu as well as other prestigious establishments.84 will be charged as liquidated damages. Therefore. 11. being not a member. Mrs. incurred or sustained by the plaintiff should be for its sole and exclusive account. compelling the plaintiff to file the present action and hire the services of counsel for the amount of P53.

Capistranos evidence that her signatures on the subject documents were forged. Capistrano denied these allegations for lack of knowledge as to their truth. On the other hand. since ECI did not object on time to Mrs. like an admission in the answer of the genuineness and true execution of the plaintiffs actionable documents. like a person must know if he is married or not. ECIs allegations. therefore. Capistrano refused to pay ECI for them. She surmises that this Valentina Redulla has been posing as Josefa Capistrano.15.[12]This mode of denial is by itself obviously ineffectual since a person must surely know if he applied for a credit card or not. vehemently denies having used the card to purchase any merchandise on credit. supported by the attached documents. still. He must also know if he used the card and if he did not pay the card company for his purchases. Therefore. A persons denial for lack of knowledge of things that by their nature he ought to know is not an acceptable denial. 16. She. plaintiffs cause of action should have been directed towards this Redulla. issues not raised by the pleadings may be tried with the implied consent of the parties as when one of them fails to object to the evidence adduced by the other concerning such unimpleaded issues. she never made any purchases with the use thereof. . can only be contradicted by showing that defendant made such admission through palpable mistake. Mrs.[13] But the CA fails to reckon with the rule that a partys admissions in the course of the proceedings. such omission cured her defective denial of their genuineness and due execution.[14]Here. the CA ruled that. The CAs ruling on this point is quite incorrect. Capistrano never claimed palpable mistake in the answer she filed. Mrs. Redulla for a credit card and that the former used it to purchase goods on credit yet Mrs. Capistrano applied through Mrs. are that Mrs. In substance. Even granting for the sake of argument that herein answering defendant did indeed authorized somebody to pick up her card. In any event. True.

monetary or otherwise to herein plaintiff. Inc. Capistrano effectively denied the genuineness and due execution of ECIs actionable documents. Capistrano denied the transactions with ECI for lack of knowledge. And. Parenthetically. Mrs. Capistrano denied ECIs actionable documents merely for lack of knowledge which denial. it was her way of saying that such transactions took place without her knowing. As the Court ruled in Elayda v. being not a member. Mrs. Capistrano in fact denied ECIs documented allegations that she applied for a credit card. since Mrs. when Mrs. 12. she in effect denied under oath the genuineness and due execution . It does not matter that the other party failed to object to the contradictory evidence so adduced. as pointed out above. She has never authorized anyone to get her alleged card for the preceding reason. and used it. In the Special and Affirmative Defenses section of her answer. it seems that. Such reasons form part of her answer. Notwithstanding the above. But this inadequacy was cured by her quick assertion that she was also denying the allegations regarding those actionable documents for the reasons as stated in her special and affirmative defenses. was given one. as a widow of a deceased member of the Manila Yacht Club. Capistranos evidence at the trial that the subject documents were forgeries. She said: 11.[15] the trial court may reject evidence that a party adduces to contradict a judicial admission he made in his pleading since such admission is conclusive as to him. True. contrary to the RTCs finding. Court of Appeals. Capistranos above additional reasons denying ECIs allegations regarding its actionable documents. is inadequate since by their nature she ought to know the truth of the allegations regarding those documents. Mrs. Defendant denies having applied for membership with the Equitable Cardnetwork. Neither the RTC nor the CA can ignore Mrs. Therefore. Capistrano in fact verified her claim that she had no part in those transactions. she has no obligation.It is of no moment that plaintiff ECI failed to object to Mrs. the Court holds that the CA correctly ordered the dismissal of ECIs action since.

she is not barred from introducing evidence that those documents were forged. the evidence for the defense shows that it was not likely for Mrs.[18] an Extra-judicial Settlement of Estate of Deceased Person. while useful.[16] What is more. CV 79424 dated May 10. weak. Capistrano to have applied for a credit card since she was already 81 years old. .[19] a Waiver of Rights. Capistrano. and suffering from senility at the time in question. WHEREFORE. apart from presenting an officer who identified its documents. SO ORDERED. Mrs. Here. ECI presented no other evidence to support its claim that Mrs. The Court finds no reason to take exception from the CAs finding. is not indispensable in examining or comparing handwritings or signatures. as the CA found. 2007 that directed the dismissal of the complaint against respondent Josefa B.[17] Further. For this reason. whereas she made the alleged cash advances and purchases using the credit card in different malls in Cebu City.[20]and a handwritten note.[23] The matter here is not too technical as to preclude the CA from examining the signatures and ruling on whether or not they are forgeries. Bohol. Capistranos specimen signatures on a Deed of Sale.R. On the other hand. bedridden. clearly varied from the signatures found on ECIs documents.of the documents supporting them. the Court DISMISSES the petition and AFFIRMS the order of the Court of Appeals in CA-G. she had been staying in Cagayan de Oro under the care of his son Mario. Two. Capistrano did business with it. and Muntinlupa City.[21] executed at about the time in question.[22] The testimony of a handwriting expert.

Specific Denials 3. Section 7 of Rule 9 of the Rules of court. Lichauco and Picazo for appellee. 1954 for judgment on the pleadings on the ground that the answer failed to tender an issue. the appellants filed an answer on September 30. After having been granted an extension. the question raised is whether the allegation of want of knowledge or information as to the truth of the material averments of the complaint amounts to a mere general denial warranting judgment on the pleadings or is sufficient to tender a triable issue. the lower court held "that the denial by the defendants of the material allegations of the complaint under the guise of lack of knowledge is a general denial so as to entitle the plaintiff to judgment on the pleadings. he shall so state and this shall have the effect of a denial. defendants-appellants. This form of denial was explained in one case as follows: Just as the explicit denials of an answer should be either general or specific. 1954 and thereafter (on December 29.. Reyes G. so all denials of knowledge or information sufficient to form a belief should refer either generally to all the averments of the complain" thus intended to be denied. 1954. what is denied. provides that "where the defendant is without knowledge or information sufficient to form a belief as to the truth of material averment. GUILLERMO C.R. plaintiff-appellee. Ozaeta.B. Warner Barnes vs. That they admit paragraph 1 of the complaint. 1954. ET AL." In the present appeal taken by the defendants.. That they hereby reserve the right to present an amended answer with special defenses and counterclaim. C. As the appellants did not file any amended answer. the appellee moved on November 15. in allowing the defendant to controvert material averments not within his knowledge or information. vs. Mariano M. The would be so definite and certain in its allegation that the pleaders' adversary should not be left in doubt as to what is admitted. 2. 1954) rendered judgment in favor of the appellee. and what is covered by denials of knowledge or information . and 3. alleging: 1. In granting the motion for judgment on the pleadings. L-9531 May 14. REYES. That the defendants are without knowledge or information sufficient to form a belief as to the truth of the material averments of the remainder of the complaint.: The plaintiff-appellee filed against the defendants-appellants an action for foreclosure of mortgage on August 20.J. PARAS. No. or specifically to such as are to be denied by that particular form of plea. LTD. 1958 WARNER BARNES and CO. The lower court granted appellee's motion in the order dated December 28. The deed of mortgage sued upon was attached to the complaint as Annex "A". de Joya for appellants..

L. 43 F. no court will permit its process to be trifled with and its intelligence affronted by the offer of pleadings which any reasoning person knows can not possibly be true. citing Dahlstrom vs. it would be difficult.. etc. 399. secured by a mortgage. 1941. for he could meet the charge by saying that his denials referred only to matters of which he had in fact no knowledge or information. it was easy for and within the power of the appellants. 30. The appellants could be aided in the matter by an inquiry or verification as to its registration in the Registry of Deeds. 31. As a copy of the deed of mortgage formed part of the complaint. NE 106. Concepcion. Gemunder.S.C. as to pleadings under the. Bengzon. There are also allegations of partial payments. (Kirachbaum Eschmann. the decision appealed from is hereby affirmed with costs against the appellants. Court of Appeals . 28 U. It is alleged that the severally indebted in the sum of P9. A. 281. 4. on are readily accessible to him. it is that the appellants obviously did not have any defense or wanted to delay the proceedings. . to the common knowledge of all intelligent persons. 92. and a covenant to pay interest and attorney's fees. the purpose of delay.sufficient to form a belief.. Bautista Angelo. Pa. "An unexplained denial of information and belief of a matter of records. applies just as well to the provisions of Rule 8(b).88. Supp.906. So ordered. Juris.). and that while a reservation was made to file an amended answer. (41 Am. and Felix.. 51 F. Montemayor. Supp. . JJ. following section 723c. D. Endencia.) It is noteworthy that the answer was filed after an extension granted by the lower court.C.. Reyes. J. the means of information concerning which are within the control of the pleader. is evasive and is insufficient to constitute an effective denial.—certainly neither for the purpose of confusing the adverse party as to what allegations of the complaint are really put in issue nor for. It is hard to believe that the appellants could not have had knowledge or information as to the truth or falsity of any of said allegations. A copy of the mortgaged deed was attached and made a part of the complaint. no such pleading was presented. Martocello. If these show anything. (Icle Plant Equipment Co. if not impossible to convict him of perjury if it should transpire that some of his denials of knowledge. State statute. ." (Nieman vs.) This rule. Long."The general rule that the Court is not bound to accept statements in pleadings which are. vs. This is a foreclosure suit. The form of denial adopted by the appellants. PNB vs. were false. although allowed by the Rules of Court. does not apply where the fact as to which want of knowledge is asserted is to the knowledge of the court as plainly and necessarily within the defendants knowledge that his averment of ignorance must be palpably untrue. . concur. 98 NE 328. . to determine and so specifically allege in their answer whether or not they had executed the alleged mortgage. specifically authorizing an answer that defendant has no knowledge or information sufficient to form a belief his to the truth of an averment and giving such answer is not the effect of a denial. Under this form of denial employed by the defendant. for instance. Labrador. defaults in the payment of outstanding balance.B.A. must be availed of with sincerity and in good faith. untrue.. . 329-330.) Wherefore. Reyes.

16087.056.056. of the Decision dated July 22. after a thorough but futile search for Cagayan de Oro Branch for Account No. J.. 4. an action for a sum of money filed against the private respondent Atty. Upon request for PCI Bank Cagayan de Oro to return the amount thus transferred and delivered. SR. 90-423.: This is a petition for review on certiorari under Rule 45 of the Rules of Court. MORDENO CUA.PHILIPPINE NATIONAL BANK petitioner. wherein it alleged. 1985. Cagayan de Oro City. 16087 was carried with PCI Bank Cagayan de Oro in the name of CENTER FOR ECONOMIC AND SOCIAL STUDIES with the Defendant Mordeno Cua as the sole signatory. This message was implemented on December 20. and ATTY. Cagayan de Oro Branch and funds were withdrawn by the defendant Mordeno Cua. PNB Manila was notified that the account was not carried or maintained by Cagayan de Oro. New York.25 to Philippine National Bank. With the discovery mentioned in the preceding paragraph. that: . 16087. filed by petitioner Philippine National Bank (PNB). the PNB thru its Cable Division received a tested message from Manufacturers Hanover Trust Co. Mantrust rectified their tested message and recalled the fund stating that the money was not intended for PNB. DECISION CALLEJO. the PNB Cagayan de Oro Branch transferred and delivered the amount of $14. About the same time when the PNB Cagayan de Oro Branch transferred and delivered the amount of $14. 2. New York (Mantrust) to remit proceeds in the amount $14. This recall Order was complied by PNB on January 21. inter alia.25 to Account No.793. as amended. vs.04. Cagayan de Oro City. 1996 of the Court of Appeals which reversed and set aside the Decision of the Regional Trial Court. it was later discovered that said Account No.With this Notice. 5. respondents. Branch 24 in Civil Case No..25 to the PCI Bank Cagayan de Oro Branch. 6. Mordeno Cua.. 1985. HONORABLE COURT OF APPEALS. 16087 with the PCI Bank. [1] [2] On September 6. the PNB was informed that the whole amount was . 1990. Sometime on December 18. 3. On December 26.056. 1986 thru telex message sent to Mantrust. Branch 24. the petitioner filed a complaint against the private respondent with the Regional Trial Court. 1985 in the Peso Conversion rate of P262. Cagayan de Oro Branch under Account No..

premises considered.. 8. The latter forthwith informed the petitioner of the said fact. New York (Mantrust) directing the petitioner bank to remit the proceeds in the amount of US$14. the defendant be adjudged liable with PNB for: 1. 2.056. Thereafter. Moral damages and legal fees in the amount as may be proven during the trial. the Head Office of the Philippine National Bank (PNB) in Manila received a secret coded message thru its Cable Division from Manufacturers Hanover Trust Co.25 to PNB Cagayan de Oro Branch under Account No. Such other remedies as may be available under the premises. Cagayan de [7] . alleged that the petitioner had no causes of action against him. and that he had no knowledge sufficient to form a belief as to the truth of the allegations alleged in paragraphs 2. as plaintiff. [5] The petitioner adduced evidence that on December 18. 16087 was not maintained with the PNB. it turned out that Account No. He. it was found that the said account was maintained by the PCIB. and 9 of the complaint. Cagayan de Oro Branch.04.056. requests both verbal and written were made upon the defendant Mordeno Cua to restitute the amount of $14. 1985. it is respectfully prayed that after due hearing. however. 5. The petitioner implemented the message on December 20. Cagayan de Oro Branch. 7. judgment be rendered in its favor. [3] The petitioner.25 but all efforts failed as Mordeno Cua refused and continue to refuse to restitute or make necessary arrangement for the restitution.793. [4] In his Answer to the complaint. 3. 16085 of CESS. the truth being that with reference to paragraph 4 thereof. [6] However. The private respondent interposed counterclaims for damages against the petitioner. prayed that after due proceedings.already withdrawn by Mordeno Cua. 7.793. the sole signatory for the Center for Economic and Social Studies. Upon further verification. 1985 at the prevailing peso conversion rate in the amount of P262. 3.04 with interest until full payment. The amount of P262. admitted to being the sole signatory to the account of the Center for Economic and Social Studies (CESS) with Philippine Commercial Industrial Bank (PCIB). the private respondent. as defendant. after thorough verification. thus: WHEREFORE. he never withdrew money from PCIB from the fund transfer of the petitioner nor was he notified of the said fund transfer to the account of CESS with the PCIB.

the Court of Appeals reversed the decision of the trial court.04 pesos equivalent of $14. the dispositive portion of which reads: [8] [9] WHEREFORE. the RTC rendered judgment in favor of the petitioner.25. THE CA CONCLUSION THAT THE TESTIMONIES AND EVIDENCE ON RECORD ARE INSUFFICIENT TO PROVE THAT THE AMOUNT OF REMITTANCE WAS IN FACT CREDITED INTO THE ACCOUNT OF CESS WITH PCIB IS ERRONEOUS . judgment is hereby rendered in favor of plaintiff and against the defendant ordering the latter to pay the former the following sums: (a) P262. premises considered. with private respondent Mordeno Cua as sole signatory. [10] The trial court ruled that the petitioner adduced the requisite quantum of evidence to prove its claim against the private respondent.793.04) WAS INDEED RECEIVED BY THE APPELLANT IS ERRONEOUS CONSIDERING THAT THE PRIVATE RESPONDENTS FAILURE TO SPECIFICALLY DENY THE ALLEGATION OF PETITIONER UNDER PARAGRAPH 6 OF THE COMPLAINT CONSTITUTES A JUDICIAL ADMISSION BY PRIVATE RESPONDENT THAT HE WITHDREW THE WHOLE AMOUNT OF REMITTANCE TRANSFERRED BY PETITIONER TO PCIB FOR CREDIT TO CESS ACCOUNT.056. New York. After due hearing. and (b) P662. [11] The petitioner avers in this case that the Court of Appeals erred in reversing the decision of the trial court. This recall message was complied with by the petitioner on January 21. At about the same time. On appeal. stating that the money was not intended for PNB. Mantrust rectified its secret coded message and recalled the fund.25 (P260. Cagayan de Oro City Branch. the private respondent opted not to adduce evidence in his behalf.00 for docketing fees. After the petitioner rested its case. Written demands were then sent to respondent Cua to return or restitute the amount. Cagayan de Oro Branch by the PNB. holding that the petitioner failed to prove that the private respondent withdrew the money remitted to the account of CESS with the PCIB. EVEN ASSUMING ARGUENDO THAT PARAGRAPH 6 OF THE COMPLAINT CANNOT BE CONSIDERED JUDICIALLY ADMITTED BY PRIVATE RESPONDENT. but the latter failed to do so. 1986 thru a telex message sent to Mantrust. and insists that: THE CA CONCLUSION THAT THE TESTIMONIES AND EVIDENCE ON RECORD ARE INSUFFICIENT TO PROVE THAT THE AMOUNT OF REMITTANCE EQUIVALENT TO US$14.056.793.Oro Branch under the name of CESS.

require a defendant to specify each material allegations of fact. [T]he information on whether Mordeno Cua actually withdrew the whole amount of remittance from CESS account with PCIBank Cagayan de Oro is within the knowledge or control of Mordeno Cua being the sole signatory to the said CESS Account. The petitioner avers that the ruling of the CA. Section 10 of the Rules of Court.114.056.. he is bound to so state and this shall have the effect of a denial. The petitioner was burdened to prove that (a) it remitted the amount of US$14. The petitioners contention has no merit. WHICH LETTER WAS ADMITTED BY THE LOWER COURT AS EXHIBIT D. Rule 8. Where a defendant desires to deny part of an averment for a qualification thereof. He asserts that while the petitioner proved that the said amount was remitted to the account of CESS with the PCIB.25). to set forth the substance of the matters upon which he relies to support his denial. [12] Since the issues raised by the petitioner are interrelated. 1988 ADDRESSED TO PRIVATE RESPONDENT. the private respondent failed to specifically deny the material allegations in paragraph 6 of the complaint. the truth of which he does not admit. 16087 OF CESS WITH THEIR CAGAYAN DE ORO BRANCH THE AMOUNT OF US$14. the petitioner contends. Cagayan de Oro Branch. is that: . [13] The private respondent. In such a case.CONSIDERING THAT THE TESTIMONIES AND EVIDENCES ON RECORD PARTICULARLY THE LETTER OF PETITIONER DATED AUGUST 10. and that (b) the private respondent withdrew the said amount. Thus. is erroneous.056. it is indispensable that the matter regarding where lack of [14] . he is mandated to specify so much of the averment as true and material and shall deny the remainder. avers that he specifically denied having withdrawn or received remittances by the petitioner to the account of CESS with the PCIB. as amended. that it failed to adduce sufficient evidence to prove the material allegations in its complaint.. CLEARLY ESTABLISHED THAT PCIB MANILA CREDITED TO FCDU ACCOUNT NO. The reason for this.33 (US$14. and that the private respondents denial in paragraph E of his Answer to the Complaint was an ineffective denial. for his part.25 to the PCIB. the private respondent is deemed to have admitted that he withdrew the amount for the account of CESS with the PCIB. Cagayan de Oro Branch for the account of CESS. it failed to prove that he withdrew the said amount from the bank. we shall delve into and resolve them simultaneously. If a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment in the complaint. and whenever practicable. According to the petitioner.

paragraph 5 is DENIED. 8 and 9 are DENIED. the respondent alleged inter alia that: A. are plainly and necessarily within the defendants knowledge. B. Section 11. Paragraphs 2 and 3 is (sic) DENIED. and as AFFIRMATIVE/SPECIAL DEFENSES. his alleged ignorance or lack of information will not be considered as a specific denial. A general denial does not become specific by the use of the word specifically. Rule 8 of the said Rule. Paragraph 4 is DENIED. . D. [16] [17] In his Answer to the complaint. F. Paragraphs 7. that whether the Center for Economic and Social Studies withdrew an amount at PCIBank is purely an exercise of a bank-to-client relationship. Paragraph 6 is again DENIED. G. together with the matter which he relied upon to support the denial. defendant has no business interfering bank-tobank transactions. the truth being that defendant never withdrew money from PCIBank. 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. defendant never knew of the transaction between PCIBank and the plaintiff and the consequent rectification of the so-called tested message from Mantrust Bank that the money was not intended for the plaintiff. defendant has no knowledge sufficient to form a belief as to the truth thereof except the averment that defendant is a signatory for CENTER FOR ECONOMIC AND SOCIAL STUDIES for the bank account of the latter at PCIBank. Paragraph 1 of the complaint is ADMITTED. The parties are compelled to lay their cards on the table. defendant has no knowledge sufficient to form a belief as to the truth thereof. provides that material averments in the complaint other than those as to the amount of unliquidated damages shall be deemed admitted when not specifically denied. defendant repleads the above statements and further aver. That plaintiff has no cause of action against therein defendant. When the matters of whether the defendant alleges having no knowledge or information sufficient to form a belief. [15] A denial is not specific simply because it is so qualified by the defendant. from the funds transfer of plaintiff-bank nor notified of the fund transfer thereof by plaintiff-bank. For reason stated above. E. C.knowledge is alleged be clearly set forth so that the adverse party is informed of what is denied.

The defendants denial is.056. the same is barred by prescription and/or laches and/or estoppel. the petitioner was able to prove that. including the averment that Account No. The private respondents admissions/denials in his Answer to the complaint should be considered in their entirety and not truncated parts. as COUNTERCLAIM. [18] Thus. grossly negligent. the allegation in paragraph 4 of the complaint that the PNB. such failure did not constitute as an admission that the said amount was withdrawn by the private respondent. the private respondent did not specifically deny in paragraph E of his Answer the material averment in paragraph 6 of the complaint. I. equivalent to an admission. indeed.056. Cagayan de Oro Branch was equivalent to his admission of the truth thereof. Undeniably. Nevertheless.25 was remitted to PCIB Account No.25 had already been withdrawn by the private respondent. paragraph A to H are repleaded and furthermore aver. Cagayan de Oro Branch. in paragraph B. which plaintiff be condemned to pay ONE MILLION PESOS as moral damage and to caution other banking institution not to repeat this totally erroneous case. in paragraph C of his Answer. by reason of this suit. 16087 under the name of CESS with the private respondent as the depositors sole signatory. thus. 16087 carried by the PCIB. fright. the plaintiff be imposed and made to pay defendant exemplary damage of the same amount. the US$14. reasonable attorneys fees and costs of the suit. However. serious anxiety and social humiliation. In Paragraph C of his Answer to the averment in paragraph 4 of the complaint. that is. besmirched reputation. reckless. We agree with the private respondents contention that the petitioner was burdened to prove not only that the amount was remitted to Account No. Granting that there is a cause of action. 16087. Likewise. the private respondent specifically alleged that he never withdrew from the fund transfer of the petitioner-Bank and that he was not notified of the fund transfer by the petitioner to the PCIB. the private respondent denied the averments in paragraph 3 of the complaint. being the signatory thereto. That this suit could have been avoided by the plaintiff had it exercise (sic) sound banking practices and without being arrogant. In sum then.H. Cagayan de Oro Branch in the name of CESS. the petitioner failed to prove that the private respondent withdrew the amount from the said account. sleepless nights. Cagayan de Oro Branch transferred and delivered the amount of US$14. that the petitioner received information that the entire remittance of US$14. 16087 was carried with the PCIB. moral shock.25 to Account No. wounded feelings. the private respondents failure to specifically deny. However.056. this denial was ineffective because such fact was within the knowledge of the private respondent. but also . baseless and irresolute which gravely caused irreparable injury to the rights of the defendant as the latter is suffering untold misery.

Quisumbing. Calauag. Quezon in Civil Case No. Puno. CONDUCTO and BRGY. DECISION SANDOVAL-GUTIERREZ. petitioners. JJ. The Letter dated March 8. from Angeles Vda. C1031 for forcible entry. and Tinga.270 square meters located in Barangay Sta. The petitioner even failed to adduce evidence that the private respondent actually received the said letters. Maria. The petitioners reliance on the letters is misplaced. Costs against the petitioner. SO ORDERED. de Urrutia. the petitioner will initiate legal action. Lim SPOUSES NAPOLEON L. SP No. 1961. Calauag. The petitioner never claimed in the said letters that the private respondent had withdrawn the amount. concur. Konrad Adenaver made by CESS. Napoleon Gaza purchased a parcel of land with an area of 5. Spouses Gaza vs.R. 1995 and the Resolution dated October 10. The Letter dated August 10. 1989 merely warned the private respondent that he had thirty (30) days from receipt of the letter within which to submit an acceptable proposal regarding the amount of US$14. GAZA and EVELYN GAZA. Austria-Martinez. 1988 is merely a request for the private respondent to furnish the petitioner with a copy of the request for funds from Mr. BRGY. nor did it demand that the private respondent remit the said amount to it.25. vs. LIM. LIM and AGNES J. 36997 reversing the Decision of the Regional Trial Court.: The present petition for review on certiorari seeks to set aside the Decision dated April 29. SEC. TANOD ARTURO ALAON. 5.056. VICTORIO A. 1996 of the Court of Appeals in CA-G. otherwise. [1] [2] The factual milieu of this case is as follows: On February 20. SPOUSES RENATO PETIL and MELY PETIL. The Register of Deeds of Lucena . J.. RAMON J. [19] IN THE LIGHT OF THE FOREGOING. respondents. the petition is DENIED.that the private respondent withdrew the same in his capacity as the sole signatory of the owner of the account. Branch 63. (Chairman). Quezon.

as shown by Lumber Certificate of Registration No. Quezon. They also utilized a portion of the property as storage for copra. said spouses forcibly opened Agnes Lim's quarters at the second floor of the warehouse and occupied it. machinery and tools for a lumber mill. On December 21. both half-siblings of Napoleon Gaza. thus: "WHEREFORE. 1993.00 as moral damages and P5. in the light of the foregoing considerations the judgment of the lower court is hereby AFFIRMED and the appeal is DENIED with the modification that the plaintiffs are ordered to pay the amount of P5. 6265/76 and Mayor's Permit dated December 31. leaving it to the care of Numeriano Ernesto. Thereafter. On June 1. spouses Gaza detained Emilio Herrera and his daughter inside the compound and destroyed the padlocks of the gates. spouses Gaza filed with the same court their answer with compulsory counterclaim.00 by way of exemplary damages to the defendants spouses Napoleon Gaza and Evelyn Gaza. On the other hand. they occupied a room on the second floor of the warehouse without the consent of Renato Petil who was then outside the premises. 845. 1976. the padlock of the main gate was destroyed. spouses Gaza designated Renato Petil as the new caretaker of the land. When he died in 1991. Ramon and Agnes Lim. affirmed the MTC Decision with modification. docketed as Special Civil Action No.City then cancelled the latters title and issued Transfer Certificate of Title (TCT) No. Ramon and Agnes Lim filed with the Municipal Trial Court (MTC) of Calauag. they designated Emilio Herrera as caretaker of the property. 2490. Branch 63. Ramon and Agnes Lim maintain that on November 28. claimed that they have used the same lot for their lumber and copra business since 1975. the siblings Ramon and Agnes Lim and Emilio Herrera.000. T-47263 in the name of Napoleon Gaza. Thereafter. Napoleon Gaza and his wife Evelyn engaged in the lumber and copra business. According to Napoleon Gaza. On December 13. Thereafter. the Regional Trial Court (RTC). On November 28. Calauag. . 1994. they ceased engaging in business. Sometime in November 1993. In 1975. 1993. They padlocked the gates of the property. On appeal. For their part. They constructed a huge lumber shed on the property and installed engines. Quezon an action for forcible entry against spouses Napoleon and Evelyn Gaza. the MTC dismissed the complaint and counterclaim. entered the property by breaking the lock of the main gate. 1993. PCA Copra Business Registration No.000. 1993.

"SO ORDERED. SAID ERROR BECOMING EVEN MORE MANIFEST IN THE LIGHT OF THE GLARING PAUCITY OF EVIDENCE OF PRIVATE RESPONDENTS TO SUPPORT THEIR ALLEGED POSSESSION. . docketed therein as CA-G. SP No. THE COURT OF APPEALS ERRED IN FAILING TO TAKE INTO ACCOUNT THE FINAL AND EXECUTORY JUDGMENT OF CONVICTION OF RESPONDENT AGNES LIM FOR TRESPASSING INTO SUBJECT PROPERTY. 36997. "SO ORDERED. 1995. "II. The decision of the Regional Trial Court of Calauag. the petition is hereby GIVEN DUE COURSE. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN RESOLVING THE INSTANT CASE ON MERE TECHNICALITIES AND IN APPLYING THE RULES OF PROCEDURE IN A VERY RIGID MANNER. they filed with this Court the present petition for review on certiorari ascribing to the Court of Appeals the following errors: "I. the Court of Appeals reversed and set aside the Decision of the RTC. Ramon and Agnes Lim filed with the Court of Appeals a petition for review. THE COURT OF APPEALS ERRED IN RESOLVING THE ISSUE OF IMPLIED ADMISSION. Quezon. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN IGNORING THE VOLUMINOUS EVIDENCE ADDUCED BY THE PETITIONERS IN SUBSTANTIATING THEIR PRIORITY IN POSSESSION OF SUBJECT PROPERTY. R. THEREBY DENYING PETITIONERS SUBSTANTIAL JUSTICE." [3] On April 29. NOT BEING ONE OF THE ISSUES DELIMITED IN THE PRETRIAL ORDER OF 17 FEBRUARY 1994. premises considered. Hence." Spouses Gaza filed a motion for reconsideration but was denied. THE TRUTH OF THE MATTER BEING OF SAID PROPERTY AND THAT IT IS PRIVATE RESPONDENTS WHO HAVE FORCIBLY ENTERED THE PROPERTY IN DISPUTE "V. THE COURT OF APPEALS ERRED IN FAILING TO RULE THAT THERE WAS NO IMPLIED ADMISSION ON THE PART OF PETITIONERS THAT PRIVATE RESPONDENTS HAD BEEN IN PRIOR AND ACTUAL PHYSICAL POSSESSION OF SUBJECT PROPERTY SINCE 1975. thus: [4] "WHEREFORE. "III. Branch 63."[5] We resolve the issues jointly. affirming the decision of the Municipal Trial Court. CLEARLY EVIDENCING PETITIONERS' PRIOR AND ACTUAL MATERIAL POSSESSION AND PRIVATE RESPONDENTS' PREDISPOSITION FOR FALSEHOOD. is hereby REVERSED and SET ASIDE and a new one is rendered ordering the private respondents and all persons claiming rights under them to vacate the premises in question and surrender its possession to the petitioners. "IV. In its Decision.

Calauag. Value of P26. Containing an area of 5. Where a defendant desires to deny only a part of an averment.270 square meters. the Mayors unnumbered copra dealers permit dated Dec.. other than those as to the amount of unliquidated damages. [6] The Court of Appeals held that spouses Gaza. Lims Tax Dec. setting forth the substance of the matters which he will rely upon to support his denial. by Julian de Claro. provides that material averments in the complaint. Rule 8 of the 1997 Rules of Civil Procedure. 28. 6265/76 are hereto attached as Annexes A and B respectively. Copies of plaintiffs Lumber Certificate of Registration No. (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.Section 11.100. 1976 hereto attached as Annex C. Quezon. he shall so state. the truth of which the defendant does not admit. which has the effect of a denial. That plaintiffs have been using the premises mentioned for combined lumber and copra business. 31. & E. 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. shall set forth the substance of the matters upon which he relies to support his denial.Declared under Ramon J. That plaintiffs are the actual and joint occupants and in prior continuous physical possession since 1975 up to Nov. in their answer. on the W. Specific Denial.. as amended. No. shall be deemed admitted when not specifically denied.00 3. Maria. petitioners. whenever practicable. and this shall have the effect of a denial." Three (3) modes of specific denial are contemplated by the above provisions. namely: (1) by specifying each material allegation of the fact in the complaint. 3 and 5 of the complaint for forcible entry quoted as follows: xxx "2. Bounded on the N. 1993 of a certain commercial compound described as follows: A certain parcel of land situated in Bo. and whenever practicable. paragraphs 2. Sta. more or less. A defendant must specify each material allegation of fact the truth of which he does not admit and. (2) by specifying so much of an averment in the complaint as is true and material and denying only the remainder. Section 10 of the same Rule provides the manner in which specific denial must be made: "Section 10. by Luis Urrutia. 2490 and PCA Copra Business Registration No.. 4576 with an Ass. . he shall specify so much of it as is true and material and shall deny only the remainder. failed to deny specifically.

Petitioners did not merely allege they have no knowledge or information sufficient to form a belief as to truth of those allegations in the complaint." [8] Clearly. they judicially admitted that Ramon and Agnes Lim. petitioners specifically denied the allegations contained in paragraphs 2 and 3 of the complaint that respondents have prior and continuous possession of the disputed property which they used for their lumber and copra business. respondents. it appears that their possession of the subject property was not supported by any concrete title or right. The defense of private respondents that they are the registered owners of the subject property is unavailing. "From the allegations of plaintiffs. incorporate and restate the foregoing and further allege: "5. We observe that the Court of Appeals failed to consider paragraph 2 of petitioners answer quoted as follows: "2. That defendants specifically deny the allegations in paragraph 2 and 3 of the complaint for want of knowledge or information sufficient to form a belief as to the truth thereof. nowhere in the complaint that they alleged either as an owner or lessee. and the action for forcible entry which they filed against private respondents (spouses Gaza) must be decided in their favor. That defendants invasion of plaintiffs premises was accomplished by illegally detaining plaintiffs caretaker Emilio Herrera and his daughter inside the compound. x x x. the alleged possession of . Later. but added the following: "SPECIAL AND AFFIRMATIVE DEFENSES "That defendants hereby reiterate. That the complaint states no cause of action. were in prior physical possession of the subject property. they forcibly opened the lock in the upstairs room of plaintiff Agnes J. [7] The Court of Appeals then concluded that since petitioners did not deny specifically in their answer the above-quoted allegations in the complaint. hence. then proceeded to saw the chain that held plaintiffs padlock on the main gate of the compound and then busted or destroyed the padlock that closes the backyard gate or exit. Lims quarters and defendants immediately filled it with other occupants now. the truth of the matter being those alleged in the special and affirmative defenses of the defendants. Copy of the caretakers (Emilio Herrera) statement describing in detail is hereto attached as Annex D.xxx 5.

4 of the complaint except for those copra and two (2) live carabaos outside of the subject premises. as and by way of proof of ownership of said properties cited in paragraph 4 of the complaint attached herewith are bunched of documents to form an integral part hereof.Gaza" and a copy of the Declaration of Real Property is likewise attached and marked as Annex "B. petitioners are repudiating vehemently respondents possession. as an owner and in support thereof. "The complaint is for forcible entry and the plaintiffs were praying for indemnification in the sum of P350. 1508. particularly Section 18 thereof provides that such a failure is jurisdictional. Besides. Defendants Sps. the defendants' answer merely alleged that they were "without knowledge or information sufficient to form a belief as to the [10] . 4 of the complaint andP100.D. the defendants Napoleon Gaza and Evelyn Gaza being the owners of those properties cited in par. Reyes in maintaining that petitioners made an implied admission in their answer is misplaced. That plaintiffs' allegation that Emilio Herrera was illegally detained together with his daughter was not true and in support thereof. plaintiffs have no rights whatsoever in claiming damages that it may suffer. and considering further that the complaint did not state or there is no showing that the matter was referred to a Lupon for conciliation under the provisions of P. the Honorable Court can not acquire jurisdiction over the same. Actually.. T-47263 is hereto attached and marked as Annex "A. That the Honorable Court has no jurisdiction over the subject of the action or suit. In the cited case.000.000. and machinery listed in par. tools. attached herewith is a copy of said Emilio Herrera's statement and marked as Annex "C-Gaza. Napoleon Gaza and Evelyn Gaza being the registered owner of the subject property has all the right to enjoy the same. lumber.00 for those copra. Section 1 A (1) and (2) of the Revised Rule on Summary Procedure prohibits recovery of the same. That considering that the above-entitled case is an ejectment case. "8. No. Ltd. stressing that they (petitioners) are the registered owners and lawful occupants thereof. "6. hence. the Revised Rule on Summary Procedure of 1991.plaintiffs is questionable from all aspects. considering the foregoing amounts not to be rentals. Respondents' reliance on Warner Barnes and Co. hence. "7." [9] The above-quoted paragraph 2 and Special and Affirmative Defenses contained in petitioners answer glaringly show that petitioners did not admit impliedly that respondents have been in prior and actual physical possession of the property. vs." x x x x x x x x x.00 for unrealized income in the use of the establishment.Gaza" to form an integral part hereof. subject to dismissal. a copy of the transfer certificate of title No. to use it.

They also specified therein each allegation in the complaint being denied by them. Maria. intimidation. this Court takes exception to the general rule in order to resolve the factual issues raised by the parties. strategy or stealth. the latter had a possession antedating his own. [12] [13] [14] [15] Petitioners possession of the property has been sufficiently established by evidence. the plaintiff must prove that he was in prior possession of the land or building and that he was deprived thereof by means of force. respondents' allegation of prior possession of the premises is anchored on spurious documents. the conflicting factual findings of the MTC and RTC on one hand. intimidation. They particularly alleged they are the registered owners and lawful possessors of the land and denied having wrested possession of the premises from the respondents through force. Indeed. does not specifically [16] . On record is a deed of sale showing that he bought the land in 1961 from Angeles Vda." In the instant case. Calauag. that he cannot succeed where it appears that. Quezon. de Urrutia. spouses Gaza have been in possession of the property and that respondents never occupied the property even for business purposes. nowhere in the answer can we discern an implied admission of the allegations of the complaint. and the Court of Appeals on the other. They asserted that respondents' purported possession is "questionable from all aspects. Petitioner also presented receipts of payment of realty taxes. A disinterested witness. Considering. except the two carabaos. in his Affidavit attached to the instant petition. Upon the other hand.truth of the material averments of the remainder of the complaint" and "that they hereby reserve the right to present an amended answer with special defenses and counterclaim. [11] Thus. Barangay Secretary Victorio Conducto of Sta. however." They also averred that they own all the personal properties enumerated in respondents' complaint. 78-2490. It must be stressed. The title to the property (TCT No. The Lumber Certificate of Registration of Business Name No. threat. Such determination in this case requires a review of factual evidence. In an action for forcible entry. To ascertain this. threat. strategy and stealth. T-47263) is in the name of petitioner Napoleon Gaza. as between himself and the defendant. Upon the closure of their business. petitioners designated Numeriano Ernesto and Renato Petil as caretakers of the lot. specifically the allegation that petitioners have priority of possession. though. stated that since 1968. for one. generally proscribed in a petition like this. the Court of Appeals erred in declaring that herein petitioners impliedly admitted respondents' allegation that they have prior and continuous possession of the property. We now resolve the basic substantial issue. it is proper to look at the situation as it existed before the first act of spoliation occurred. petitioners enumerated their special and affirmative defenses in their answer.

therefore. respondents allegation of actual possession and that petitioners deprived them of such possession by means of force. Tax Declaration No. evidence clearly shows that the petitioners are the true owners and. 1996 is REVERSED and SET ASIDE. Lim is not a certified true copy of the original. [17] [18] [19] Furthermore. Branch 63. [20] [21] Where a dispute over possession arises between two persons. Quezon in Criminal Case No. 6265/76 as copra dealer and the Mayor's Permit are expired documents. the lawful possessors of the land. by allowing himself to be ordered off. [22] In this case. with modification in the sense that the award of moral and exemplary damages in favor of petitioners is deleted. intimidation and threat are clearly untenable. the person first having actual possession is the one who is entitled to maintain the action granted by law. SO ORDERED. Spouses Go . Verily. Calauag. Quezon in Civil Case No.refer to the disputed property. C-1031 affirming the MTC Decision dismissing respondents complaint is REINSTATED. The MTC Decision confirms the falsity of respondents' claim of prior possession. 2725C. could acquire the right to maintain the action of forcible entry and detainer. 36997 dated March 12. The Decision of the RTC. Not even their supposed caretaker. 6. WHEREFORE. otherwise. PBCOM vs. J. a mere usurper without any right whatever. the petition is GRANTED and the assailed Decision of the Court of Appeals in CA-G. Emilio Herrera. submitted an affidavit confirming that they are the lawful possessors of the property. respondents' purported PCA Certificate of Registration No. It bears emphasis that the MTC Decision was affirmed in toto by the RTC of Calauag. Branch 63 in Criminal Case No. 7405 for trespassing into the subject property. Also. might enter upon the property of another and. It was issued to them at a different address. respondent Agnes Lim was later convicted by the MTC of Calauag. 35-81-220 in the name of R. SP No. Quezon. however momentary his intrusion might have been. R.

(petitioner) to pay respondent Engr.R. and P20. However.000 attorneys fees. The Facts Respondent filed an action for sum of money and damages against Liberty Commercial Center. Respondent. Naga City.. materials. the additional costs of P1.80 incurred for labor. Licomcen vs. J. which ordered petitioner LICOMCEN.R.80 plus 12% interest per annum. (Liberty).000 litigation and incidental expenses.700. Petitioner. is a sister company of Liberty and that the incorporators and directors of both companies are the same.ENGR. which included some changes and revisions of the original plan at the behest of Liberty. Thus. Effect of Failure to Plead 7. and equipment on the revised plan were not paid by petitioner. DECISION CARPIO. As found by the trial court.202. Inc.777.5 The HRD Administrative Manager of Liberty testified that petitioner LICOMCEN.202. Liberty denied the material allegations of the complaint and countered that the collection suit was not filed against the real party-in-interest. The Ruling of the Trial Court The trial court found that petitioners claim that it has fully paid respondent the total cost of the project in the sum of P6. 9919. respondent amended his complaint to include petitioner as defendant. Inc. Salvador Abainza (respondent) the sum of P1. P50.202. fabrication. Inc. SALVADOR ABAINZA. The Court of Appeal affirmed the 7 November 2005 Decision4 of the Regional Trial Court. and installation of air-conditioning ductworks. Abainza G. Respondent alleged that in 1997 and 1998. INC. However. for the supply. thus: c ralawl ibra ry .000 pertains only to the cost of the original plan of the project. Engr. v. despite several demands by respondent. mainly at the LCC Central Mall. 86296.777. Respondent completed the project. No.: The Case This petition for review1 assails the 21 September 2011 Decision2 and the 6 December 2011 Resolution3 of the Court of Appeals in CA-G. Branch 8. Legazpi City. 2013 LICOMCEN.777. doing business under the name and style "ADS INDUSTRIAL EQUIPMENT".C. 199781 : February 18. CV No. petitioner (then defendant) ordered and approved the revisions in the original plan.80. Liberty failed to pay the remaining balance due on the project in the sum of P1. he was hired by Liberty to do various projects in their commercial centers. in Civil Case No.

"G-17" to "G-18". There were additional air ducting in the two big comfort rooms for customers. defendants engineering consultant. Inc. ordering the latter to pay the plaintiff the sum of Php1. Plaintiff presented the cost changes on the rework and change to 960 ton capacity.80 as its principal obligation with interest at 12% per annum until the amount is fully paid. "G-23".I.000. It was relocated to the second floor. Inc. In the original plan. Series of communications demanding payment (Exhibits "G-3" to "G-11".00 as litigation and incidental expenses. More G.202. Plaintiff prepared a plan corresponding to the changes desired by the defendants (Exhibits "D". The case against Liberty Commercial Center. There were movements of the equipment. Tan. Sheets were needed and new fittings as well. the dispositive portion of which reads: WHEREFORE. Because of the changes. mechanical engineer.7 ςrν l1 The Ruling of the Court of Appeals c ralawl ibra ry . an exhaust blower to the dondon and discaminos. Paper works for the approval of ESCA are signed by Michal Cruz. defendants wanted the aircon duct[s] changed from rectangular to round ducts because Ronald Tan.62 (Exhibits "F" to "F-26"). suggested round aircon ducts he saw abroad were preferable. The changing of the rectangular ducts to round ducts entailed additional cost in labor and materials.202. Accomplishment report had been submitted by plaintiff and approved by ESCA. Costs against defendant LICOMCEN. and Jake Ozaeta. the air handling unit (AHU) was [o]n the ground floor. Plaintiff had to remove the rectangular ducts installed.24". PREMISES CONSIDERED. defendants wanted the tonnage of the refrigeration (TR) to be increased to cool up the space. "D-2"). "G.000. The 855 tons capacity was increased to 900 [sic] tons. an electrical engineer. fresh air blower and lock machine at the food court were installed. "G-25". SO ORDERED. both employees of the defendants and a certain Mr. Inc. the sum of Php50.80 (Exhibit "G-42"). because the fittings for the rectangular ducts cannot be used in the round duct. decision is hereby rendered in favor of the plaintiff and against defendant LICOMCEN.6 ςrνl 1 On 7 November 2005. "G-26". the trial court rendered its Decision. These changes entailed additional expense for labor and materials in the sum of Php1. The total balance payable to plaintiff by defendant is Php 1. "G-35 to 42") were made but plaintiff [sic] refused to pay.355. "G-13".805. is hereby ordered DISMISSED. "D-1".During the awarding of the work.00 as attorneys fess [sic] and Php20. one of the LCC owners who came from abroad. a representative of defendants who actually supervises the construction. project was turned over in 1988 but plaintiff was not paid the balance corresponding to the changed plan of work and additional work performed by plaintiff.777. resize it to round ducts and reinstall again. Plaintiffs work was being monitored by Es De Castro and Associates (ESCA).777.

Petitioner appealed the trial courts Decision to the Court of Appeals, invoking Article 1724 of the
Civil Code which provides:

crala wlibra ry

Art. 1724. The contractor who undertakes to build a structure or any other work for a stipulated
price, in conformity with plans and specifications agreed upon with the landowner, can neither
withdraw from the contract nor demand an increase in the price on account of the higher cost of
labor or materials, save when there has been a change in the plans and specifications, provided:

cralawlib rary

(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing by both
parties.
The Court of Appeals stated that petitioner never raised Article 1724 of the Civil Code as a defense
in the trial court. Citing Section 1, Rule 9 of the Rules of Court 8 and the case of Bank of the
Philippine Islands v. Leobrera,9 the Court of Appeals ruled that petitioner cannot be allowed to
change its theory on appeal since the adverse party would then be deprived of the opportunity to
present further evidence on the new theory. Besides, the Court of Appeals held that Article 1724 of
the Civil Code is not even applicable to the case because the Contract of Agreement was never
signed by the parties considering that there were substantial changes to the original plan as the
work progressed. Thus, the Court of Appeals affirmed the trial courts Decision, finding petitioner
liable to respondent for the additional costs in labor and materials due to the revisions in the
original project.
Petitioner filed a Motion for Reconsideration, which the Court of Appeals denied in its Resolution
dated 6 December 2011. Hence, this petition.
The Issue
The issue in this case is whether petitioner is liable for the additional costs incurred for labor,
materials, and equipment on the revised project.
The Ruling of the Court
We find the petition without merit.
In this case, petitioner invoked Article 1724 of the Civil Code as a defense against respondents
claim. Petitioner alleged that respondent cannot recover additional costs since the agreement in
the change of plans and specifications of the project, the pricing and cost of materials and labor
was not in writing.
The Court of Appeals mistakenly stated that petitioner only raised Article 1724 of the Civil Code as
a defense on appeal. A perusal of the records reveals that, although petitioner did not invoke
Article 1724 of the Civil Code as a defense in its answer10 or in its pre-trial brief,11 petitioner
belatedly asserted such defense in its Memorandum12 filed before the trial court. Thus, from its
previous defense that it has fully paid its obligations to respondent, petitioner changed its theory

by adding that since the additional work done by respondent was not authorized in writing, then
respondent cannot recover additional costs. In effect, petitioner does not deny that additional
costs were incurred due to the change of plans in the original project, but justifies not paying for
such expense by invoking Article 1724 of the Civil Code.
Under Section 1, Rule 9 of the Rules of Court, defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived, with the following exceptions: (1) lack of
jurisdiction over the subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription of
the action. Clearly, petitioner cannot change its defense after the termination of the period of
testimony and after the exhibits of both parties have already been admitted by the court. The noninclusion of this belated defense in the pre-trial order barred its consideration during the trial. To
rule otherwise would put the adverse party at a disadvantage since he could no longer offer
evidence to rebut the new theory. Indeed, parties are bound by the delimitation of issues during
the pre-trial.13 As held in Villanueva v. Court of Appeals:14

ςrνl1

Pre-trial is primarily intended to insure that the parties properly raise all issues necessary to
dispose of a case. The parties must disclose during pre-trial all issues they intend to raise during
the trial, except those involving privileged or impeaching matters. Although a pre-trial order is not
meant to catalogue each issue that the parties may take up during the trial, issues not included in
the pre-trial order may be considered only if they are impliedly included in the issues raised or
inferable from the issues raised by necessary implication. The basis of the rule is simple.
Petitioners are bound by the delimitation of the issues during the pre-trial because they
themselves agreed to the same.15

ςrνl1ς ηαñ rοblε š νιr†υαl lαω lιb rα rÿ

Besides, Article 1724 of the Civil Code is not even applicable to this case. It is evident from the
records that the original contract agreement,16 submitted by respondent as evidence, which stated
a total contract price of P5,300,000, was never signed by the parties considering that there were
substantial changes in the plan imposed by petitioner in the course of the work on the
project.17 Petitioner admitted paying P6,700,000 to respondent which was allegedly the agreed
cost of the project. However, petitioner did not submit any written contract signed by both parties
which would substantiate its claim that the agreed cost of the project was only P6,700,000.
Clearly, petitioner cannot invoke Article 1724 of the Civil Code to avoid paying its obligation
considering that the alleged original contract was never even signed by both parties because of the
various changes imposed by petitioner on the original plan. The fact that petitioner paid
P1,400,00018 more than the amount stated in the unsigned contract agreement clearly indicates
that there were indeed additional costs during the course of the work on the project. It is just
unfortunate that petitioner is now invoking Article 1724 of the Civil Cide to avoid further payment
of the additional costs incurred on the project.
What was established in the trial court was that petitioner ordered the changes in the original plan
which entailed additional costs in labor and materials. The work done by respondent was closely
monitored and supervised by petitioners engineering consultant and all the paperworks relating to
the project were approved by petitioner through its representatives. We find no justifiable reason
to deviate from the findings and ruling of the trial court, which were also upheld by the Court of

Appeals. Thus, petitioner should be held liable for the additional costs incurred for labor, materials,
and equipment on the revised project.
WHEREFORE, we DENY the petition. We AFFIRM the 21 September 2011 Decision and the 6
December 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 86296.
SO ORDERED.

8. PNB vs. Court of Appeals

9. Kho vs. Court of Appeals

ELIDAD C. KHO, doing business under the name and style of KEC
COSMETICS LABORATORY, petitioner, vs. HON. COURT OF
APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, and ANG TIAM CHAY, respondents.
DECISION
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision[1] dated May 24,
1993 of the Court of Appeals setting aside and declaring as null and void the
Orders[2] dated February 10, 1992 and March 19, 1992 of the Regional Trial Court,
Branch 90, of Quezon City granting the issuance of a writ of preliminary injunction.
The facts of the case are as follows:
On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction
and damages with a prayer for the issuance of a writ of preliminary injunction,
docketed as Civil Case No. Q-91-10926, against the respondents Summerville
General Merchandising and Company (Summerville, for brevity) and Ang Tiam
Chay.
The petitioners complaint alleges that petitioner, doing business under the name
and style of KEC Cosmetics Laboratory, is the registered owner of the
copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown by
Certificates of Copyright Registration No. 0-1358 and No. 0-3678; that she also has
patent rights on Chin Chun Su & Device and Chin Chun Su for medicated cream
after purchasing the same from Quintin Cheng, the registered owner thereof in the
Supplemental Register of the Philippine Patent Office on February 7, 1980 under
Registration Certificate No. 4529; that respondent Summerville advertised and sold
petitioners cream products under the brand name Chin Chun Su, in similar containers
that petitioner uses, thereby misleading the public, and resulting in the decline in the

SP No. and. to distribute and market Chin Chun Su products in the Philippines had already been terminated by the said Taiwanese Manufacturing Company. assignee of the patent registration certificate.00) to the effect that plaintiff will pay to defendants all damages which defendants may sustain by reason of the injunction if the Court should finally decide that plaintiff is not entitled thereto. 1992. According to the petitioner. docketed as CA-G. and. Consequentially. they did not include therein a certificate of non-forum shopping. that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through misrepresentation and falsification. On May 24. the appellate court rendered a Decision in CA-G. The respondents. that the respondents should be enjoined from allegedly infringing on the copyrights and patents of the petitioner. SP No. or on August 14 1992. 27803. the dispositive portion of which reads: ACCORDINGLY.000. 1992 granting the writ of .[3] The respondents moved for reconsideration but their motion for reconsideration was denied by the trial court in an Order dated March 19. After due hearing on the application for preliminary injunction.R. a circular prohibiting forum shopping. the petition is hereby given due course and the orders of respondent court dated February 10. praying for the nullification of the said writ of preliminary injunction issued by the trial court. 1992 and March 19. 1993. the respondents did not state the docket number of the civil case in the caption of their petition and. on the other hand.petitioners business sales and income. the dispositive portion of which reads: WHEREFORE. 27803 ruling in favor of the respondents. re-packer and distributor of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan. SO ORDERED. the latter moved to dismiss the petition for violation of Supreme Court Circular No. more significantly. plaintiff is required to file with the Court a bond executed to defendants in the amount of five hundred thousand pesos (P500. the respondents filed a petition for certiorari with the Court of Appeals. for preliminary injunction. After the respondents filed their reply and almost a month after petitioner submitted her comment. the application of plaintiff Elidad C. the trial court granted the same in an Order dated February 10. that the said Taiwanese manufacturing company authorized Summerville to register its trade name Chin Chun Su Medicated Cream with the Philippine Patent Office and other appropriate governmental agencies. 1992.[4] On April 24. doing business under the style of KEC Cosmetic Laboratory. alleged as their defense that Summerville is the exclusive and authorized importer. is hereby granted.R. Kho. The respondents opposed the petition and submitted to the appellate court a certificate of non-forum shopping for their petition. 28-91. 1992. that the authority of Quintin Cheng.

(People v. 1958. By the very fact that the trademark cannot as yet be on guard and there are certain defects.. vs. G.[5] In granting the petition. No.. the appellate court ruled that: The registration of the trademark or brandname Chin Chun Su by KEC with the supplemental register of the Bureau of Patents. v.R. misplaced and grounded on shaky foundation. S. 30954 that registrants is presumed to be the owner of the mark until after the registration is declared cancelled is. 393: Registration in the Supplemental Register. chua Seco & Co. L-10612. Kiu Foo & Co. some obstacles which the use must still overcome before he can claim legal ownership of the mark or ask the courts to vindicate his claims of an exclusive right to the use of the same. v. therefore. therefore. 129 SCRA 373. Lim Hoa. It would be deceptive for a party with nothing more than a registration in the Supplemental Register to posture before courts of justice as if the registration is in the Principal Register. which is duly protected by the Trademark Law. La Yebana Co. we have held that the presumption is rebuttable. This she followed with several motions to declare respondents in contempt of court for publishing advertisements notifying the public of the promulgation of the assailed decision of the appellate .preliminary injunction and denying petitioners motion for reconsideration are hereby set aside and declared null and void. 14 Phil 534). May 30. et al. not conclusive.[6] The petitioner filed a motion for reconsideration. Davis & Co. serves as notice that the registrant is using or has appropriated the trademark. Respondent court is directed to forthwith proceed with the trial of Civil Case No. xxx xxx xxx As ratiocinated in La Chemise Lacoste. The supposed presumption not only runs counter to the precept embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark Cases but considering all the facts ventilated before us in the four interrelated petitions involving the petitioner and the respondent. Q-91-10926 and resolve the issue raised by the parties on the merits. SO ORDERED. One may be declared an unfair competitor even if his competing trademark is registered (Parke.S. it is devoid of factual basis. Unreported). Trademarks and Technology Transfer cannot be equated with registration in the principal register. Fernandez. 60 Phil 928.. As even in cases where presumption and precept may factually be reconciled. The reliance of the private respondent on the last sentence of the Patent office action on application Serial No.

R.[9] The petitioner faults the appellate court for not dismissing the petition on the ground of violation of Supreme Court Circular No. IV RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT. SP No. 27803. Hence. Also. II RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONERS MOTION FOR RECONSIDERATION.court and stating that genuine Chin Chun Su products could be obtained only from Summerville General Merchandising and Co. the trial court went on to hear petitioners complaint for final injunction and damages. In the meantime. On October 22. THE HONORABLE COURT OF APPEALS DENIED PETITIONERS RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED PETITIONERS RIGHT TO DUE PROCESS. 1993.000. the petitioner . On June 3. III IN DELAYING THE RESOLUTION OF PETITIONERS MOTION FOR RECONSIDERATION. The petitioner duly appealed the said decision to the Court of Appeals. 28-91. 1994.00) each as attorneys fees. The trial court did not award damages and costs to any of the parties but to their respective counsels were awarded Seventy-Five Thousand Pesos (P75. but recognizing the copyright of the petitioner over the oval shaped container of her beauty cream. the trial court rendered a Decision[7] barring the petitioner from using the trademark Chin Chun Su and upholding the right of the respondents to use the same. this petition anchored on the following assignment of errors: I RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON PETITIONERS MOTION TO DISMISS. the Court of Appeals promulgated a Resolution [8] denying the petitioners motions for reconsideration and for contempt of court in CA-G.

involves an inventive step and is industrially applicable. a trade name means the name or designation identifying or distinguishing an enterprise. refer to any technical solution of a problem in any field of human activity which is new. Thus. In delaying the resolution thereof.[14] Patentable inventions. Finally. We first find it appropriate to rule on whether the copyright and patent over the name and container of a beauty cream product would entitle the registrant to the use and ownership over the same to the exclusion of others. a preliminary injunction order may be granted only when the application for the issuance of the same shows facts entitling the applicant to the relief demanded. We rule in favor of the respondents. the appellate court denied the petitioners right to seek the timely appellate relief. . and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of. In order to be entitled to exclusively use the same in the sale of the beauty cream product. the scope of a copyright is confined to literary and artistic works which are original intellectual creations in the literary and artistic domain protected from the moment of their creation. the user must sufficiently prove that she registered or used it before anybody else did.contends that the appellate court violated Section 6. Rule 58 of the Revised Rules of Civil Procedure. The petitioners copyright and patent registration of the name and container would not guarantee her the right to the exclusive use of the same for the reason that they are not appropriate subjects of the said intellectual rights.[13] Meanwhile.[11] In the case at bar. copyright and patents are different intellectual property rights that cannot be interchanged with one another. or on June 3. The appellate court ruled only after the lapse of three hundred fifty-four (354) days. The name and container of a beauty cream product are proper subjects of a trademark inasmuch as the same falls squarely within its definition. Pursuant to Section 1.[12] In relation thereto. that the right of complainant is clear and unmistakable. and. either for a limited period or perpetually.[10] This is the reason why we have ruled that it must be shown that the invasion of the right sought to be protected is material and substantial. the petitioner applied for the issuance of a preliminary injunctive order on the ground that she is entitled to the use of the trademark on Chin Chun Su and its container based on her copyright and patent over the same. on the other hand. Rule 9 of the Revised Internal Rules of the Court of Appeals when it failed to rule on her motion for reconsideration within ninety (90) days from the time it is submitted for resolution. Trademark. one of the grounds for the issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the relief demanded.[15] Petitioner has no right to support her claim for the exclusive use of the subject trade name and its container. petitioner describes as arbitrary the denial of her motions for contempt of court against the respondents. 1994. that there is an urgent and paramount necessity for the writ to prevent serious damage. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods.

the provisions of Section 2. This is prohibited by Section 6. the proceedings for preliminary injunction cannot stand separately or proceed independently of the decision rendered on the merit of the main case for injunction. Rule 66 of the Revised Rules of Civil Procedure which provides that (I)n petitions for certiorari before the Supreme Court and the Court of Appeals. The merit of the main case having been already determined in favor of the applicant. We disagree. . Being an ancillary remedy. a decision denying the applicant-plaintiffs right to a final injunction. not having proven that she has registered a trademark thereto or used the same before anyone did. after the same issue has been decided on the merits. to wit: Considering that preliminary injunction is a provisional remedy which may be granted at any time after the commencement of the action and before judgment when it is established that the plaintiff is entitled to the relief demanded and only when his complaint shows facts entitling such reliefs xxx and it appearing that the trial court had already granted the issuance of a final injunction in favor of petitioner in its decision rendered after trial on the merits xxx the Court resolved to Dismiss the instant petition having been rendered moot and academic. 28-91 by filing a motion to dismiss the petition for certiorari filed in the appellate court. Inc. This is supported by our ruling in La Vista Association. We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. the trial court having appreciated the evidence presented. that is. the preliminary determination of its non-existence ceases to have any force and effect. Rule 56. (italics supplied) La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminary injunctive order moot and academic despite the fact that the decision granting a final injunction is pending appeal. The said decision on the merits of the trial court rendered the issuance of the writ of a preliminary injunction moot and academic notwithstanding the fact that the same has been appealed in the Court of Appeals. although appealed. notwithstanding the fact that the decision rendered is not yet final xxx. the petitioner improperly raised the technical objection of non-compliance with Supreme Court Circular No. the court may require the respondents to file their comment to. First. Court of Appeals[16]. v. Before giving due course thereto. The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for non-compliance with the rule on forum shopping. The dispositive portion of said decision held that the petitioner does not have trademark rights on the name and container of the beauty cream product.Consequently. a preliminary injunction order cannot be issued for the reason that the petitioner has not proven that she has a clear right over the said name and container to the exclusion of others. An injunction issued by the trial court after it has already made a clear pronouncement as to the plaintiffs right thereto. renders moot and academic any objection to the prior dissolution of a writ of preliminary injunction. Conversely. and not a motion to dismiss. is proper. shall be observed.

consequently. WHEREFORE. SP No.R. Finally. 10. the issue was raised one month after petitioner had filed her answer/comment and after private respondent had replied thereto. Rule 16 of the Revised Rules of Civil Procedure. as regards the proceedings in CA-G. But we find that petitioner contributed to this delay when she filed successive contentious motions in the same proceeding. vs. we rule that the Court of Appeals correctly denied the petitioners several motions for contempt of court. the last of which was on October 27. necessitating counter-manifestations from private respondents with the last one being filed on November 9. petitioners. The granting of an injunctive writ based on a technical ground rather than compliance with the requisites for the issuance of the same is contrary to the primary objective of legal procedure which is to serve as a means to dispense justice to the deserving party. 1994. 1993. are hereby AFFIRMED. we find that the said issue has likewise been rendered moot and academic by our ruling that she has no right over the trademark and. Dino vs. 1993. it is well-settled that non-observance of the period for deciding cases or their incidents does not render such judgments ineffective or void. She therefore could no longer submit a motion to dismiss nor raise defenses and objections not included in the answer/comment she had earlier tendered. 1993 and June 3. Thirdly. Secondly. respectively. COURT OF APPEALS and ROMAN SIO. The Decision and Resolution of the Court of Appeals dated May 24. substantial justice and equity require this Court not to revive a dissolved writ of injunction in favor of a party without any legal right thereto merely on a technical infirmity. 27803 merely announced in plain and straightforward language the promulgation of the assailed Decision of the appellate court. Under Section 1. the petition is DENIED.the petition xxx (italics supplied). Moreover. SO ORDERED. Nonetheless. to the issuance of a writ of preliminary injunction.[17] With respect to the purported damages she suffered due to the alleged delay in resolving her motion for reconsideration. a motion to dismiss shall be filed within the time for but before filing the answer to the complaint or pleading asserting a claim. With costs against the petitioner. the said decision nullifying the injunctive writ was immediately executory. The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion for reconsideration. Court of Appeals INOCENCIA YU DINO and her HUSBAND doing business under the trade name "CANDY CLAIRE FASHION GARMENTS". pursuant to Section 4 of Rule 39 of the Revised Rules of Civil Procedure. doing business under . There is nothing contemptuous about the advertisements complained of which.

000 pieces of vinyl frogs and 20. 1988."[2] Petitioners and respondent Sio entered into a contract whereby the latter would manufacture for the petitioners 20. TOY MASTER D E C I S I O N* PUNO. 1988 consisting of 1.000 pieces of frogs and mooseheads. Inc. The trial court ruled in favor of the petitioners. For failing to timely institute their action.[1] Respondent Sio is part owner and general manager of a manufacturing corporation doing business under the trade name "Universal Toy Master Manufacturing.720 pieces.[8] Petitioners then demanded from the respondent a refund of the purchase price of the returned goods in the amount of P208. This is a petition for review on certiorari to annul and set aside the amended decision of the respondent court dated January 24. Petitioner fully paid the agreed price. judgment is hereby rendered in favor of the plaintiffs Vicente and Inocencia Dino and against defendant Toy Master Manufacturing. the petitioners are forever barred from claiming a sum of money from the respondent.[3] Respondent Sio delivered in several installments the 40.: Though people say.772 pieces of frogs and mooseheads for failing to comply with the approved sample. "better late than never". The following undisputed facts gave rise to the case at bar: Petitioners spouses Dino. ordering the latter to pay the former: . doing business under the trade name "Candy Claire Fashion Garment" are engaged in the business of manufacturing and selling shirts.00.[5] The return was made on different dates: the initial one on December 12. viz: "WHEREFORE.404. respondents. 1989.00 per piece in accordance with the sample approved by the petitioners.the name "UNIVERSAL MANUFACTURING". 1989 an action for collection of a sum of money in the Regional Trial Court of Manila. 1993 decision and dismissing the plaintiff-petitioners' Complaint on the ground of prescription.[6] the second on January 11. 1989. 1994 reversing its April 30. Branch 38. As respondent Sio refused to pay. These frogs and mooseheads were to be attached to the shirts petitioners would manufacture and sell.000 pieces of vinyl mooseheads at P7.[4] Subsequently.[9] petitioners filed on July 24.[7] and the last on January 17. The last delivery was made on September 28. petitioners returned to respondent 29. J. the law frowns upon those who assert their rights past the eleventh hour.

The amount of Twenty Thousand (P20. still prescription. Petitioners claim that the Complaint they filed in the trial court on July 24. Bernad. 81190. until fully paid. The judgment of this Court is set aside and judgment is hereby rendered REVERSING the judgment of the trial court and dismissing plaintiff's complaint. The rule in Gicano vs. In its April 30. the appellate court affirmed the trial court decision. (G. We first determine the nature of the action filed in the trial court to resolve the issue of prescription. May 19. II. WHEREFORE the Motion For Reconsideration is granted.. G. Respondent contends that it was an action for breach of warranty as the sum of money petitioners sought ."[11] Hence. et al.404. this petition with the following assignment of errors: I. 1994. Gegato (supra) was reiterated in Severo v. 1993 decision. and 2. Hon. III."[10] Respondent Sio sought recourse in the Court of Appeals. May 9. amended or supplemental answer) and an amendment would no longer be feasible. supra.1. 1989 was one for the collection of a sum of money.00) Pesos as attorney's fees and the costs of this suit. if apparent on the face of the complaint. The counterclaim on the other hand is hereby dismissed for lack of merit.00) Pesos with legal interest thereon from July 5. Respondent then filed a Motion for Reconsideration and a Supplemental Motion for Reconsideration alleging therein that the petitioners' action for collection of sum of money based on a breach of warranty had already prescribed. Juanito A. Aznar. vs. On January 24. 1989. 84051. if apparent on the face of the complaint may be favorably considered (Spouses Matias B. The respondent Court of Appeals seriously erred in dismissing the complaint of the Petitioners on the ground that the action had prescribed. viz: "Even if there is failure to raise the affirmative defense of prescription in a motion to dismiss or in an appropriate pleading (answer. the respondent court reversed its decision and dismissed petitioners' Complaint for having been filed beyond the prescriptive period. The respondent Court of Appeals seriously erred in holding that the defense of prescription would still be considered despite the fact that it was not raised in the answer. No.000. The amount of Two Hundred Eight Thousand Four Hundred Four (P208. Court of Appeals.R. etc. 1988). 1989). The amended decision read in part.R.

to collect was actually a refund of the purchase price they paid for the alleged defective goods they bought from the respondent. is a contract of sale. 1467.[14] Clearly. This contract shall be governed by the following articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale. viz: "Art. 1713. but if the goods are to be manufactured specially for the customer and upon his special order. it is a contract for a piece of work. The following provisions of the New Civil Code are apropos: "Art.000 pieces of vinyl mooseheads according to the samples specified and approved by the petitioners.On the other hand. By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have." As this Court ruled in Engineering & Machinery Corporation v. whether the same is on hand at the time or not. or should they diminish its fitness for such use to such an extent that. he would not have acquired it or would have . but only upon order of the petitioners and at the price agreed upon. 1714. Court of Appeals. the provisions on warranty of title against hidden defects in a contract of sale apply to the case at bar. the contract is one for a piece of work. should they render it unfit for the use for which it is intended. labor and materials may be distinguished from a contract of sale by the inquiry as to whether the thing transferred is one not in existence and which would never have existed but for the order of the person desiring it.[12] "a contract for a piece of work. and not for the general market. We uphold the respondent's contention. At any rate. had the vendee been aware thereof." "Art. if the thing subject of the contract would have existed and been the subject of a sale to some other person even if the order had not been given then the contract is one of sale. The contractor may either employ only his labor or skill. Respondent Sio did not ordinarily manufacture these products. If the contractor agrees to produce the work from material furnished by him. 1561. whether the agreement between the parties was one of a contract of sale or a piece of work. or also furnish the material.. et al. not a sale. in consideration of a certain price or compensation."[13] The contract between the petitioners and respondent stipulated that respondent would manufacture upon order of the petitioners 20.000 pieces of vinyl frogs and 20." "Art. he shall deliver the thing produced to the employer and transfer dominion over the thing. the contract executed by and between the petitioners and the respondent was a contract for a piece of work. In such case. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market.

by reason of his trade or profession. . 1571. 1988." By returning the 29." (Emphasis supplied) There is no dispute that respondent made the last delivery of the vinyl products to petitioners on September 28. the vendee may elect between withdrawing from the contract and demanding a proportionate reduction of the price. Having failed to collect this amount. 2 of the Rules of Court. petitioners were in effect "withdrawing from the contract" as provided in Art. 1567. Article 1567 provides for the remedies available to the vendee in case of hidden defects.772 defective pieces of vinyl products and demanded a refund of their purchase price in the amount of P208. 1571 of the New Civil Code. 1564. provides: "Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. . Petitioners allege that they did not readily see these hidden defects upon their acceptance. 1567. they filed an action for collection of a sum of money.[17] the appellate court dismissed the action. with damages in either case. Sec.404. Petitioners fault the ruling on the ground that it was too late in the day for respondent to raise the defense of prescription." Petitioners aver that they discovered the defects in respondent's products when customers in their (petitioners') shirt business came back to them complaining that the frog and moosehead figures attached to the shirts they bought were torn. but said vendor shall not be answerable for patent defects or those which may be visible. except the failure to state a cause of action . viz: "Art. 1571. In the cases of Articles 1561.772 pieces of vinyl products to respondent and asking for a return of their purchase price. A hidden defect is one which is unknown or could not have been known to the vendee. viz: "Art.given a lower price for it. should have known them.[16] more than nine months from the date of last delivery. 1565 and 1566.00. Rule 9.[15] Petitioners then returned to the respondent 29. or for those which are not visible if the vendee is an expert who. 1562. 1989. " . It is also settled that the action to recover the purchase price of the goods petitioners returned to the respondent was filed on July 24. Petitioners having filed the action three months after the six-month period for filing actions for breach of warranty against hidden defects stated in Art. The prescriptive period for this kind of action is provided in Art. The law then applicable to the case at bar. Actions arising from the provisions of the preceding ten articles shall be barred after six months from the delivery of the thing sold.

(Francisco v. 28. and that if it was not raised as a defense in the trial court. Cordova. Lednicky. Feb. 100 SCRA 250. et al. et al. Sorongan. Feb. 1954. the defense of prescription cannot be raised for the first time on appeal. PNB v. it cannot be considered on appeal. the general rule being that the appellate court is not authorized to consider and resolve any question not properly raised in the lower court (Subido vs. 27 SCRA 766. to repeat. Thus. Inc. as where no statement thereof is found in the pleadings (Garcia v. is that the facts demonstrating the lapse of the prescriptive period be otherwise sufficiently and satisfactorily apparent on the record. Bambao v. or even if the defense has not been asserted at all. we held in Ramos v. It is apparent in the records that respondent made the last delivery of vinyl products to the petitioners on September 28. Vol. 32 SCRA 529. 55 O. Gegato. Osorio. 8285. Convets. . v. Jan." However. 16 SCRA 270). 28. 1988. .. Sinaon v. Lacson. v. Rule 16. Moran. 97 Phil. 784." (emphasis supplied) In Aldovino. it is deemed waived and cannot be raised for the first time on appeal in a motion for reconsideration of the appellate court's decision. p. or where a defendant has been declared in default (PNB v. In Gicano v. I. 1958. 50 O. Perez. NDC.[19] we held: ". Jan. 84 SCRA 705).[21] It is also apparent in the Complaint that petitioners instituted their action on July 24. the action may be dismissed even if the defense of prescription was not invoked by the defendant. Ericta. they claim that since the respondent failed to raise the defense of prescription in a motion to dismiss or in its answer. As a rule. The issue for resolution is whether or not the respondent Court of .[20] the Court en banc reiterated the Garcia v. Mathis doctrine cited in the Gicano case that when the plaintiff's own complaint shows clearly that the action has prescribed. Dioso. 14. et al. Rules of Court). Pacific Commission House. Sison v.(T)rial courts have authority and discretion to dimiss an action on the ground of prescription when the parties' pleadings or other facts on record show it to be indeed time-barred.G. 1958. this is not a hard and fast rule. Petitioners admit this in their Memorandum submitted to the trial court and reiterate it in their Petition for Review. Mathis. as in a motion for reconsideration (Ferrer v. either in the averments of the plaintiff's complaint. 97. or an answer which sets up such ground as an affirmative defense (Sec. 821). 1947 Edition). 15. 5. or even if the ground is alleged after judgment on the merits. Rule 16). 1. Robles. McQuaid.Thus. and it may do so on the basis of a motion to dismiss (Sec.[18] viz: "It is settled law in this jurisdiction that the defense of prescription is waivable. or otherwise established by the evidence.G. What is essential only. Chua Lamco v.. 1961. 1989. Comments on the Rules of Court. 136 SCRA 408).f. Cordova v. Alunan. 8281.

Sec. thus it cannot be said that petitioners were not given the opportunity to present evidence in the trial court to meet a factual issue. 1 of the 1997 Rules of Civil Procedure. SO ORDERED." (Emphasis supplied) WHEREFORE. Defense and objections not pleaded. This Court's application of the Osorio and Gicano doctrines to the case at bar is confirmed and now enshrined in Rule 9.Appeals could dismiss the petitioners' action if the defense of prescription was raised for the first time on appeal but is apparent in the records. viz: "Section 1. we rule that the action filed by the petitioners has prescribed. petitioners had the opportunity to oppose the defense of prescription in their Opposition to the Supplemental Motion for Reconsideration filed in the appellate court and in their Petition for Review in this Court. However. or even if the defense was not raised at all so long as the relevant dates are clear on the record. the court shall dismiss the claim. No costs. Reyes (repeat) 12. that there is another action pending between the same parties for the same cause. There are no new issues of fact arising in connection with the question of prescription. . 1994 is AFFIRMED. Court of Appeals (repeat . Barnes vs. when it appears from the pleadings that the court has no jurisdiction over the subject matter. thus carving out the case at bar as an exception from the general rule that prescription if not impleaded in the answer is deemed waived. 11. On appeal. Equally important. Following the Gicano doctrine that allows dismissal of an action on the ground of prescription even after judgment on the merits. or that the action is barred by a prior judgment or by statute of limitations. [22] Even if the defense of prescription was raised for the first time on appeal in respondent's Supplemental Motion for Reconsideration of the appellate court's decision. The dates of delivery and institution of the action are undisputed. this does not militate against the due process right of the petitioners. PNB vs. there was no new issue of fact that arose in connection with the question of prescription.Defenses and objections not pleaded whether in a motion to dismiss or in the answer are deemed waived. the petition is DENIED and the impugned decision of the Court of Appeals dated January 24.

copied in or attached to the corresponding pleading as provided in the preceding section. Dionisio sold his own hereditary share in the aforesaid estate of his mother to Juanito Camacho. Alfonso. Eufremia. Eufremia. who eight heirs. or said copy may with like effect be set forth in the pleading. Petrona. 7. GUTIERREZ. At the death of said spouses. in turn. petitioners Segundino Eusebia and Olegario alleging that their shares had never been sold nor in any wise transferred or disposed to others filed a case against herein .: This petition is premised on the interpretation and application of Sections 7 and 8. JUDGE ABDULWAHID A. sold the same to Ramon Ledesma. City of Zamboanga. who by said sale acquired a 1/8 pro indiviso share of the property. petitioners. they were survived by their ten (10) children who inherited their state in equal pro indiviso shares. Engracio Francisco and Juliana Esteban were the registered owners of the parcel of land Zamboanga. respondents. Toribio vs. L-57821 January 17. Action or defense based on document. Rafael also sold his share to Dinisio who. Segundino and Eusebia. — When an action or defense is founded upon a written instrument. — Whenever an action or defense is based upon a written instrument or document. ADELA DE LOS REYES. Defense based on Document 13. represented by his widow. No. Bidin G. J. but this provision does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused. Rafael. and JUANITO CAMACHO. THE HON. which shall be deemed to be a part of the pleading. Subsequently. which state: SEC. specifically denies them. sold their in the property to Ramon Ledesma. Rule 8 of the Revised Rules of Court on actionable documents. all surnamed Toribio. in his capacity as Presiding Judge. and the HEIRS OF OLEGARIO TORIBIO. Subsequently.R. How to contest genuineness of such documents. the property was subdivided among the heirs and a portion designated as Lot No. Olegario. Branch I. The three other heirs. the latter acquired four (4) shares out of eight (8) shares. DALMACIO RAMOS. and sets forth what he claims to be the facts. Hon. under oath. The present controversy stems from a complaint filed by the petitioners against private respondents Dalmacio Ramos and Juanita Camacho. Thus. or a ½ pro indiviso share of Lot 1943-B. Justa died and was survived among by eight (8) children namely: Dionoso. 1985 SEGUNDINO TORIBIO. the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party. SEC. the substance of such instrument or document shall be set forth in the pleading. and the original or a copy thereof shall be attached to the pleading as an exhibit. Court of First Instance. EUSEBIA TORIBIO. Alfonso and Petrona. BIDIN. vs. 8. 1943-B was allotted to the Justa Francisco.D.

. transferred and conveyed. as his defense. the latter. The records show that the deeds of sale are actionable documents. How Juanito Camacho.. filed a constancia with a motion for reconsideration stating that the documents submitted by the respondents were merely evidentiary in nature. SEGUNDINO TORIBIO and EUSEBIA TORIBIO were likewise sold. the question arises as to whether or not the document is included as a necessary part of the defense so as to make it actionable. The defendants. The documents attached to the respondents' answer and made an integral part thereof were declared to be the very foundation or basis of the respondents' defense and not merely evidentiary in nature. the due execution and genuineness of which they had to prove.private respondents for recovery of hereditary rights. While testifying during the trial. The counsel for private respondents objected. acquired ¼ share of the property was allegedly not known to them. Jurisprudence has centered mainly on a discussion of actionable documents as basis of a plaintiff's cause of action. in their answers. raising the proper mode of contesting the genuineness of an actionable document pursuant to Sections 7 and 8. Little has been said of actionable documents being the foundation of a defense. how one Dalmacio Ramos. The situation obtaining in the case at bar is not a common one.. we have a situation where the defendant presented a document in his defense. who. nor. In the case at bar. thereupon. Eusebia Toribio was asked whether she executed any sale of her share in the parcel of land in litigation. The court denied the motion for reconsideration. Hence. The Rule. . The alleged sale from petitioners to Dionisio and the sale from Dionisio to the respondents were evidenced by deeds of sale. however. not a cause of action or defense. would present a document to which both parties are parties and which states that the former relinquishes his rights to the defendant. their brother. The petitioners alleged in their complaint that their shares in the inheritance left by their mother were never sold nor in any wise transferred or disposed to others. this petition for review on certiorari. They argued that a simple specific denial without oath is sufficient. Petitioners. not any document. that the hereditary shares of plaintiffs OLEGARIO TORIBIO. sold the same to Juanito Camacho and Dalmacio Ramos. covers both an action or a defense based on documents. the defendants-respondents alleged that the shares of plaintiffs-petitioners had likewise been sold to Dionisio Toribio. Jr. Rule 8 of the Revised Rules of Court. xerox copies of which were appended to and made an integral part of the respondents' partition agreement between the respondents and also a xerox copy of the respondents' transfer certificates of title. They alleged that the subject of litigation was the hereditary shares of plaintiffs-petitioners. Thus. The initial issue brought before us is whether or not the deeds of sale allegedly executed by the petitioners in favor of their brother Dionisio Toribio and appended to the respondents' answer are merely evidentiary in nature or the very foundation of their defense which must be denied under oath by the petitioner. declare: xxx xxx xxx . They stated that the defense consisting mainly of transfer certificates of titles in the respondents' names originating from the sale from petitioners to Dionisio and from the latter to the respondents were merely evidentiary in nature. The usual case is between plaintiff and defendant where. in turn. In their answer. The trial court sustained the objection. a document to which the plaintiff is a party but to which defendant is not. who was entitled to only a total area of 931 square meters.

For if it can be shown that no conveyance of the property was executed by the petitioners. The following question furnishes an absolute test as to the essentiality of any allegation: Can it be made the subject of a material issue? In other words. Book No. the petitioners also point out that the deeds of sale purportedly executed by them were in favor of their brother. CAMACHO and DALMACIO C. RAMOS.. and thereafter. 1964.. IX. Practice and Forms. 1964 and that of plaintiff EUSEBIA TORIBIO on November 2. transferred and conveyed in favor of DIONISIO TORIBIO plaintiffs OLEGARIO TORIBIO and SEGUNDINO TORIBIO on October 24. this Court gave the reason for the rule on contesting actionable documents.first in favor of DIONISIO TORIBIO by virtue of two (2) deeds of sale executed in due form on October 24. 3. No. would be insufficient to establish a defense against the petitioners' claims. who in turn executed deeds of sale in favor of the respondents. As early as Lim-Chingco v. As heretofore alleged. the hereditary shares of all the plaintiffs herein in and over Lot 1943-B were all sold. The respondents could acquire only the rights that Dionisio had over the disputed property. or reply (Sutherland's Code of Pleading. The genuineness and due execution of the deed between the co-heirs is also elemental to the defense of the respondents. as will be discussed further in the specific and/or affirmative defenses hereunder. 6. win the failure to prove it decide the case in whole or in part? If it will not. The first deeds of sale. and conveyed in favor of their brother. a failure to prove the sale would be decisive. if it be denied. The deed of sale executed by the petitioners in favor of their brother Dionisio is an essential and indispensable part of their defense to the allegation that the petitioners had never disposed of their property.. The petitioners further alleged that this case falls under the exception to Section 8.. If the petitioners deny that they ever sold their shares in the inherited lot to their brother Dionisio. 1964 as adverted to in the preceding paragraph. 120). defense. Terariray (5 Phil. by DIONISIO TORIBIO in favor of defendants JUANITO A. Rule 8 which provides: SECTION 8. the fact is not essential. it is clear that the respondents anchor their defense on the deeds of sale by virtue of which the hereditary rights of all the petitioners over Lot 1943-B were sold. Torralba and entered as Doc. Dionisio. but this provision does not apply when the adverse party does not appear to be a party to the instrument.. on November 11. respectively. The purpose is: . Dionisio Toribio. in his notarial register. It is not one of those which constitute the cause of action. Series of 1964. From the foregoing. Under this circumstance. by itself. Page No. who in turn sold the same to herein respondents. JR. respectively. xerox copies of which are appended hereto to form integral part hereof as Annexes "1" & "2". Atty. . transferred. Armando B. A fact is essential if it cannot be stricken out without leaving the statement of the cause of action or defense insufficient. to which the respondents were not parties but which they seek to enforce against the parties are also actionable documents. 1964 and November 2. respectively. by virtue of two (2) deeds of sale all of which were acknowledged before Notary Public for and within the City of Zamboanga. 1964. then Dionisio Toribio had no right to convey what did not belong to him. Apart from alleging that the documents in this case are merely evidentiary. does the genuineness and due execution of the deeds evidencing the two transactions have to be denied under oath? The deed of sale executed by Dionisio Toribio in favor of the respondents. 82). p. .

401). Jr.W. the reason for the rule is to enable the adverse party to know beforehand whether he will have to meet the issue of genuineness or due execution of the document during trial. the purpose of the enactment (sec. the oversight or negligence of petitioners' counsel in not properly drafting a reply to the answer and an answer to the counter claim is not necessarily fatal to their cause. and so with the share of Defendant. The facts of the case and equitable considerations constrain us to grant the petition and to set aside the questioned order of the respondent court. That just how and by what means Defendant. The interpretation should be one which assist the parties in obtaining a speedy. the documents have to be treated in like manner. it skipped counsel's attention that the rule refers to either . This being so. (In re Dick's Estate. is not known. RAMOS. was not from either. 103) appears to have been to relieve a party of the trouble and expense of proving in the first instance an alleged fact. now petitioners. much less all of the Plaintiffs. The petitioners' counsel was obviously lulled into complacency by two factors. That the share of herein Plaintiffs were never sold or in any wise transferred or disposed to others. had already stated under oath that they never sold. DALMACIO C. therefore. 235 N. In other words. however he might have acquired the said share of ONE FOURTH (¼) of the property. jointly and/or severally. The new owners introduced deeds of sale as their main defense. apply. the same was in fraud of herein plaintiffs. JUANITO CAMACHO was able to acquire the total area of 931 square meters. As stated earlier. transferred. Sections 7 and 8 of Rule 8. However. and. and in a way as not to effect a denial of substantial justice. The petitioners are themselves parties to the deeds of sale which are sought to be enforced against them. First.Reasonably construed. the rule is a discovery procedure and must be reasonably construed to attain its purpose. inexpensive. and most important. The proper procedure was for the petitioners to specifically deny under oath the genuineness and due execution of the questioned deeds of sale and to set forth what they claim to be the facts. They filed suit to recover their hereditary properties. Paragraphs 11 and 13 of the petitioners' complaint reads: xxx xxx xxx 11.. herein Plaintiffs. The complaint was filed by the petitioners. a just determination of the disputed issues. the usual procedure is for a defendant to specifically deny under oath the genuineness and due execution of documents set forth in and annexed to the complaint. however. Second. xxx xxx xxx The complaint was verified under oath by the petitioners. the petitioners brought the issue upon themselves. do not know the person. or disposed of their shares in the inheritance to others. They should meet it properly according to the Rules of Court. Somehow. and of the necessity (to his opponent's case) of establishing which such adverse party is notified by his opponent's pleading. the existence or nonexistence of which is necessarily within the knowledge of the adverse party. While mandatory. the plaintiffs. xxx xxx xxx 13. the acquisition might have been effected.

14. 1990 IMPERIAL TEXTILE MILLS. WHEREFORE. are among the plaintiffs-petitioners. vs.. SO ORDERED. INC. the order of the respondent court dated July 20.M. his widow and minor children represented by their mother. Moreover. COURT OF APPEALS and THE INTERNATIONAL CORPORATE BANK.R. No. Imperial Textile vs. Melencio-Herrera.. A. that 'what should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life. The private respondents will still have to introduce evidence to establish that the deeds of sale are genuine and that they were truly executed by the parties with authority to dispose of the disputed property. and uncle. supra... 1981 is hereby REVERSED and SET ASIDE. honor or property on technicalities. Perez & Associates for private respondent. Teehankee. Batino.an action or a defense based upon a written instrument or document. petitioner. aunt. Plana. They are not required to deny the deeds of sale under oath. respondents. An interpretation of a rule of procedure which would not deny to the petitioners their rights to their inheritance is warranted by the circumstances of this case. Relova and De la Fuente. 86568 March 22. Court of Appeals (71 SCRA 614): We repeat what We said in Obut v. and the ability to maintain the scales of justice happily well-balanced between these virtues and the application of the law. Court of Appeals. the private respondents were placed on adequate notice by Paragraph 11 of the verified complaint that they would be caned upon during trial to prove the genuineness or due execution of the disputed deeds of sale. JJ. Under the facts of this case. Court of Appeals G. . the heirs of Olegario Toribio. Salud & Fabia Law Offices for petitioner. In dispensing justice Our action must reflect a deep insight into the failings of human nature. a capability for making allowances for human error and/or negligence. They are not parties to the deeds of sale allegedly executed by their father. Angala. The Regional Trial Court which took over the cases of the respondent court is ordered to receive the petitioners' evidence regarding the genuineness and due execution of the disputed deeds of sale. et al. INC. liberty. concur. It applies to both plaintiffs and defendants. It bears repeating that rules of procedure should be liberally construed to the end that substantial justice may be served. As stated in Pongasi v.

229. SO ORDERED.16. Metro Manila. (Cf.000. On August 18. J. While defendant specifically denied the aforestated promissory note alleged in the complaint. For this reason. copy of which is hereto attached as Annex "A". Sections 7 and 8 of Rule 8 of the Rules of Court provide as follows: Sec. In a decision dated October 17. 1980 the sum of Twelve Million Pesos (P12. plus the sum of P47. 4 A motion for reconsideration of said decision was likewise denied by the appellate court. Annex "A". The petitioner denied liability and alleged that one Julio Tan had no authority to negotiate and obtain a loan on its behalf. the Court of Appeals affirmed the judgment appealed from with costs against petitioner.). a decision was rendered by the trial court on December 1. p. 1986. whereby defendant obligated itself to pay plaintiff on November 16. defendant shall pay plaintiff an additional amount equal to 3% per month of the amount due as liquidated damages and a further sum equal to 10% thereof as attorney's fees. expressly stipulates that in case of nonpayment when due. 4. 1988. for valuable consideration. 35. among others. 2. Inc. 2 An answer to the complaint was filed by petitioner. this petition.00 as costs. and delivered to plaintiff Promissory Note No. — Whenever an action or defense is based upon a written instrument or document. Ordering the defendant to pay plaintiff the total sum of P40. the dispositive portion of which reads as follows: WHEREFORE.000. in due course. it was alleged. and against the defendant Imperial Textile Mills. Exhibit B — Statement of Account. Hence.00 as and for attorney's fees. 7. In an action for the collection of a sum of money that was filed by the private respondent against petitioner in the Regional Trial Court of Makati. judgment is hereby rendered in favor of the plaintiff International Corporate Bank. The promissory note. Id. Inc. Ordering the defendant to pay plaintiff the sum of P40. Exhibits E.486.000. F and G). 1980. defendant executed in favor of.GANCAYCO. Action or defense based on document. as follows: 1. The facts are undisputed. 1 Attached to the complaint as Annex A was the Promissory Note. 3 Petitioner brought an appeal to the Court of Appeals. The petition is devoid of merit. the answer was not verified. with interest thereon at the rate of 16% per annum from 17 June 1985 until fully paid (Cf. TL-0532-80.: This case involves the application of Sections 7 and 8 of Rule 8 of the Rules of Court when the action or defense is based on a written document. as follows: 3. the substance of such .00) and with interest thereon at the rate of 16% per annum.470.

Moreover. Griño-Aquino and Medialdea. Cruz.. which shall be deemed to be a part of the pleading. specifically denies them. The complaint alleged the substance of the promissory note subject of the litigation and a copy of the promissory note was attached. and sets forth what he claims to be the facts. namely: (a) by alleging the substance of such written instrument in the pleading and attaching a copy thereof to the pleading. Narvasa. 6 The claim of petitioner is that its failure to specifically deny under oath the actionable document does not prevent it from showing that one Julio Tan was not authorized to enter into the transaction and to sign the promissory note for and in behalf of the petitioner. No rule is more settled than that in an action based on a written instrument attached to the complaint. The complaint in the present case complied with the first situation under paragraph (a). SO ORDERED. the same is deemed admitted. petitioner clearly admitted the genuineness and due execution of the document and that the party whose signature appears thereon had indeed signed the same and that he has the authority to sign the same and that the agreement between the parties is what was in words and figures in the document. if the defendant fails to specifically deny under oath the genuineness and due execution of the instrument. By its omission. copied in or attached to the corresponding pleading as provided in the preceding section. 5 Section 7. — When an action or defense is founded upon a written instrument. 7 The due execution and genuineness of the document have thereby been conclusively established. There is no question likewise that the petitioner failed to specifically deny under oath the genuineness and due execution of the promissory note subject of the complaint. concur. the petition is DISMISSED. Rule 8 of the Rules of Court is explicit in that there are two ways of pleading an actionable document. with costs against petitioner. but this provision does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused. Defenses which are inconsistent with the due execution and genuineness of the written instrument are cut-off by such admission. the petitioner is a party to the instrument represented by Julio Tan so that it may not now deny the authority of Julio Tan to so represent it. and the original or a copy thereof shall be attached to the pleading as an exhibit. Sec. . JJ. or said copy may with like effect be set forth in the pleading. But precisely. This petition is at best dilatory. in this case the judgment appealed from is supported by the evidence. How to contest genuineness of such documents. under oath.instrument or document shall be set forth in the pleading. and (b) by copying the instrument in the pleading. 8. the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party. WHEREFORE.

PNB vs. Court of Appeals (repeat) .15.