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Lina vs.

CA and Northern Motors

G.R. No. L-63397; April 9, 1985
Remedy of a defending party declared in default after judgment and before judgment becomes final and executory

Doctrine Defaulted defendant must not forthwith file a petition for certiorari, but must first exhaust the
remedies available to him
Facts  Private respondent Northern Motors filed with the CFI a case for sum of money with
damages against Petitioner Lina.
 April 22, 1982, Petitioner was served with summons together with a copy of the complaint.
 May 8, 1982, upon the lapse of the period to file an answer or motion by petitioner, private
respondent filed a motion to declare him in default.
 At this time respondent court was still unaware of the fact that on May 5, 1982, the herein
petitioner had sent to it, by registered mail, a motion for extension of twenty days from May
7, 1982, within which to file an answer, and which motion was received by the respondent
court only on May 19, 1982.
 May 19, 1982, Petitioner filed his opposition to the aforesaid motion inviting attention to the
fact that he had filed a motion for extension of time to file responsive pleading within the
reglementary period.
 May 26, 1982, respondent judge issued an order declaring petitioner in default and allowing
private respondent to adduce its evidence ex parte.
 Petitioner filed his answer to the complaint.
Trial Court  Respondent court rendered its decision in favor of private respondent.
Decision  Petitioner filed a motion to set aside decision. But respondent judge denied the same.
Appeal via  Petitioner filed with the CA a petition for certiorari/prohibition
CA Decision  CA denied on the ground that the Order declaring petitioner in default had the necessary
and logical implication that the petitioner's opposition to the motion to declare defendant in
default, based upon the ground that he had asked for extension of time to file responsive
pleading, was disapproved or denied by the court.
Appeal via  Petitioner filed with the SC Petition for certiorari/prohibition
Whether or not certiorari is proper in a case where judgment by default was rendered without an
Issue order of default being furnished petitioner and where meritorious defenses exist, which are for
the trial court to evaluate and which evaluation was not done in this case.
SC Ruling No. Under the Rules of Court, the remedies available to a defendant in the Court of First
Instance (now Regional Trial Court) are:

a) The defendant in default may, at any time after discovery thereof and before judgment,
file a motion, under oath, to set aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable neglect, and that he has a
meritorious defense; (Sec. 3, Rule 18)
b) If the judgment has already been rendered when the defendant discovered the default,
but before the same has become final and executory, he may file a motion for new trial
under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and
executory, he may file a petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence
or to the law, even if no petition to set aside the order of default has been presented by
him. (Sec. 2, Rule 41)

Petitioner in this case did not avail himself of any of the above remedies. Instead, he went to the
appellate court on certiorari/prohibition. On this point, respondent appellate court aptly said:

... where the judgment rendered by the respondent court is the one sought to be
annulled, a petition for relief, under Rule 38 of the Revised Rules of Court, which is a
remedy in the ordinary course of law, could have been just as plain, adequate and
speedy as certiorari. Such a remedy could have been granted by the respondent court.
And if the respondent court still denies the petition, then petitioner can take an appeal on
the order denying the petition, and in the course of such appeal petitioner can also assail
the judgment on the merits upon the ground that it is supported by the evidence, or it is
contrary to law.
Metropolitan Bank and Trust Co. vs. CPR Promotions and Spouses Reynoso
G.R. No. 200567 June 22, 2015

Doctrine It is elementary that a defending party’s compulsory counterclaim should be interposed at the
time he files his Answer, and that failure to do so shall effectively bar such claim.
Facts  Respondent CPR Promotions obtained loans covered by promissory notes all signed by
respondents spouses Reynoso, as Treasurer and President of CPR Promotions from
petitioner MBTC.
 To secure the loans, spouses Reynoso executed two deeds of real estate mortgage.
 Upon maturity of the loans, respondents defaulted, prompting MBTC to file a petition for
extra-judicial foreclosure of the real estate mortgages.
 Subsequently, the mortgaged properties were sold at a public auction sale. MBTC
participated therein and submitted the highest bid. As a result petitioner was issued the
corresponding Certificates of Sale.
 Notwithstanding the foreclosure of the mortgaged properties MBTC alleged that there
remained a deficiency balance plus interest and charges as stipulated.
 Despite petitioner’s repeated demands, respondents failed to settle the alleged deficiency.
Thus, petitioner filed an action for collection of sum of money against respondent spouses.
Trial Court  RTC ruled in favor of petitioner.
Decision  Respondents moved for reconsideration of the RTC’s Decision, but which was denied.
Appeal via -----
CA Decision  The decision appealed from is reversed. The appellate court found that petitioner failed to
prove that there was a deficiency, since the records failed to corroborate the claimed
amount. As noted by the CA, "Petitioner did not even introduce the continuing surety
agreement on which the trial court gratuitously based its decision."
Appeal via Petition for Review on Certiorari under Rule 45
Issue Whether or not Respondents were able to timely setup their claim for refund.
SC Ruling No.
A counterclaim is compulsory if:
a) it arises out of or is necessarily connected with the transaction or occurrence which is the
subject matter of the opposing party’s claim;
b) it does not require for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction; and
c) the court has jurisdiction to entertain the claim both as to its amount and nature, except that in
an original action before the RTC, the counterclaim may be considered compulsory regardless
of the amount.

In determining whether a counterclaim is compulsory or permissive, We have, in several cases, utilized

the following tests:
(1) Are the issues of fact or law raised by the claim and the counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on defendant’s claims, absent the compulsory
counterclaim rule?
(3) Will substantially the same evidence support or refute plaintiff’s claim as well as the
defendant’s counterclaim?
(4) Is there any logical relation between the claim and the counterclaim, such that the conduct of
separate trials of the respective claims of the parties would entail a substantial duplication of
effort and time by the parties and the court? This test is the "compelling test of
Based on the above tests, it is evident that a claim for recovery of the excess in the bid price vis-à-vis
the amount due should be interposed as a compulsory counterclaim in an action for recovery of a
deficiency filed by the mortgagee against the debtor-mortgagor.

Having determined that a claim for recovery of an excess in the bid price should be set up
in the action for payment of a deficiency as a compulsory counterclaim, We rule that
respondents failed to timely raise the same.

It is elementary that a defending party’s compulsory counterclaim should be interposed at

the time he files his Answer, and that failure to do so shall effectively bar such claim.
Unfortunately, respondents’ belated assertion proved fatal to their cause as it did not cure their
failure to timely raise such claim in their Answer. Consequently, respondents’ claim for the
excess, if any, is already barred.