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Apolinaria Lopez vs Tranquilino Gloria

On June 18, 1907, an action (case No. 604) was brought in the CFI of Leyte
against Tranquilino Gloria by Apolinaria Lopez, who alleged that she is the owner
of two parcels of land situated in the districts of Tabunan and Magkasa of the
municipality of Cabalian, Leyte. That Tranquilino Gloria and 2 others disturbed her
possession over the said lands by entering and forcibly gathering the fruits thereof
against her consent. She prays that the court prevent the defendant from
performing any act contrary to her rights and to issue a perpetual mandatory

In his answer, Tranquilino Gloria denied all the allegations and alleged in a cross-
complaint that he is the absolute owner of the lands described. That in 1907, the
Lopez took possession of the land and refused to return it to him, causing
damages amounting to Php1,000. He prays that the (1) court absolve him from
the action of the plaintiff, (2) declare him the owner of said land, and (3) that
plaintiff pay him Php1000 as damages.

Evidence presented in the trial shows that the property was sold to Gloria in the
years 1892 and 1894 by Gerardo, Francisco, Benigno, and Dionisio Balugu
(brothers). In 1906, the same was sold by Dionisio Balugu to Apolinaria Lopez. On
this, the court recognized the ownership of Gloria, ordering Lopez to return the
same without the damages because Lopez was in good faith.

On November 22, 1911 Lopez filed a new action against Gloria recognizing that a
former suit has been adjudged between them and that Gloria has already taken
possession of the lands. However, he did not pay the necessary lawful expenses of
Php2672 which represents improvements on the land including the sugar mill,
fruit-bearing coconuts, sugar cane, and corn which existed at time of possession.
Plaintiff pays for the recovery of the amount or the right to retain the land until
complete reimbursement.

Defendant filed an answer admitting facts in the action except the cost of the
improvements, praying that the courts dismiss the complaint. The court rendered
a decision in favor of the defendant to which Lopez moved for new trial on the
ground that judgment was contrary to the weight of the evidence.

It must be noted that at the time a cross-complaint was filed in Case 604 (July
1910), the improvements were already present and were there as early as 1907.

The defendant claims that the action for recovery of Lopez should have been
presented in Case 604 as a counterclaim at the time he filed his cross complaint.
That failure to do the same, the plaintiff cannot maintain the claim anymore,
pursuant to Section 97 of the Civil Procedure.

The word counterclaim is a translation from the Spanish text reconvencion. It is

a claim presented by a defendant in opposition to or deduction from the claim of
the plaintiff. It generally embraces both set-off and recoupment although
broader and more comprehensive. It secures to defendant a full relief with a
separate action at law.

"Recoupment (reconvencion) is the act of rebating or recouping a part of a claim

upon which one is sued by means of a legal or equitable right resulting from a
counterclaim arising out of the same transaction."

"Set-off (compensacion) is a counter-demand which a defendant holds against a

plaintiff, arising out of a transaction extrinsic of plaintiffs cause of action, the
object of which is to liquidate the whole or a part of plaintiffs demand, according
to the amount of the set-off, and like the modern recoupment is in the nature of a
cross action."

According to the Code of New York a counterclaim (contrarreclamacion) should

tend in some way to lessen or neutralize what the plaintiff is trying to recover and,
according to the doctrine laid down in California, the facts upon which it is based
should be such as to give to the defendant the right to bring a separate action
against the plaintiff. Otherwise, if it only constitutes a good defense, it would not
be "counterclaim".

Both recoupment (reconvencion) and set-off (compensacion) are counterclaims,

the difference is that recoupment arises out of the same transaction upon which
the plaintiffs action is based, and set-off is of a transaction distinct from that on
which said action is based.

From the said doctrines it is also inferred that both recoupment (reconvencion)
and set-off (compensacion) have the character of a genuine action in favor of the
defendant against the plaintiff in such a manner that, independent of any other
consideration, a genuine action is constituted for the defendant which could be
employed separately against the plaintiff.

Furthermore, an essential condition of a counterclaim; is that it tends to lessen or

neutralize what the plaintiff is trying to recover. It neither denies the facts of the
action of the plaintiff is based nor bases it on facts which directly destroy the
action or cause of action of the plaintiff.

Nor does it need to have for its object to obtain a positive remedy distinct from the
payment of money, like a writ of injunction or the specific performance of a
contract, because it would not then be a counterclaim (contrarreclamacion) but a
cross-complaint (contrademanda) which is governed by section 98 of the Code of
Civil Procedure.

Essential requisites of a counterclaim which includes recoupment and set-off are:

(1) That the same be essentially a genuine action of the defendant against the
plaintiff; (2) that the same should have as its object to neutralize, wholly or
partially, that which the plaintiff is trying to obtain; (3) that the same does not
have for its object to destroy directly the action of the plaintiff; and (4) that same
ought not to pray for a positive remedy distinct from the payment of money.

While both recoupment and set off are kinds of counterclaim, there is a distinction
between the two. Section 97, Par 1 of Civil Procedure speaks of recoupment, a
counterclaim arising out of the same transaction as the cause of action and
existing at the time of presentation of the action of the plaintiff.

Section 97, Par 2 on the other hand refers to set-off which speaks of a transaction
distinct from the plaintiffs cause of action.

When Lopez asked for a write of injunction in Case 604, was she obliged to also
present her claim for the improvements placed on the land?

Whether or not in answering the cross-complaint of Gloria, Lopez should have set
up recoupment for the improvements?

Case 604 by final judgment held Gloria the owner of the parcel of lands and
declared Lopez to be in good faith in his placing of improvements therein.

In Case 604, Gloria did not file a complaint for recovery of the land but rather, a
writ of injunction to protect his interest. Lopez for his part alleged himself to be
the owner of the lands and exercised an action for recovery. If Gloria, when
exercising the remedy of injunction, had asked for the reimbursement of the value
of the improvements, this might give rise to a presumption of tacit confession that
she is not the true owner of the land.

If plaintiff was convinced in good faith that she is the lawful owner of the land, it is
absurd to oblige her to claim the improvements she put on the land in the same

As to the second issue, the answer is still NO. In answering the cross-complaint,
the plaintiff is not obliged to set up recovery of value of improvements for the
reason that plaintiff was in possession of the lands in good faith. The defendant in
his defense was not claiming any rights over the improvement but was only asking
for damages.

Wherefore, by virtue of Article 453 of the Civil Code granting a builder in good
faith compensation for necessary expenses and the retention of the thing until
payment, it is declared that Lopez is the owner of the improvements existing on
the lands owned by Gloria. Defendant is ordered to pay the plaintiff a total of
P2003 with legal interest of 6% per annum from the date of his possession of the
land until payment in full.