RULES OF CIVIL PROCEDURE

TOPIC: RULE 11 WHEN TO FILE RESPONSIVE PLEADINGS

METROPOLITAN BANK AND TRUST COMPANY

vs.
CPR PROMOTIONS
[ G.R. No. 200567. June 22, 2015 ]

VELASCO JR., J.:

FACTS:
CPR Promotions obtained loans from petitioner Metropolitan Bank and
Trust Company (MBTC) covered by 15 promissory notes (PN) all signed by spouses
Leoniza Reynoso and Cornelio Reynoso, as Treasurer and President of CPR
Promotions, respectively. To secure loans, spouses Reynoso executed two (2) deeds
of real estate mortgage on separate dates 1. All of the mortgaged properties are
registered under Spouses Reynoso’s names except one which is registered under
the CPR Promotions. The spouses executed a continuing surety agreement binding
themselves solidarity with CPR Promotions to pay any and all loans CPR
Promotions may have obtained from MBTC including those covered by the
promissory notes but not exceed P13,000,000.
Loans matured and the respondents defaulted to pay MBTC that prompted
the latter to file for extra-judicial foreclosure of the real estate mortgages.
Subsequently, the 2 mortgaged properties covered by TCT Nos. 624835 and
565381 were sold at a public auction sale. MBTC participated and won the public
auction being the highest bidder, thus Certificate of Sale covering the properties
were given to them. The total bid price was P13,614,00.00, however, MBTC alleged
that there remained a deficiency balance of P2,628,520.73, plus interest and
charges as stipulated upon in the PN’s and deeds of real estate mortgage. Spouses
Reynoso failed to settle the alleged deficiency, thus, MBTC filed an action for
collection of sum of money against the respondents.
The RTC ruled in favor of the petitioner and ordered the respondents to pay
MBTC. Spouses moved for reconsideration but the same was denied by the RTC.
Aggrieved party elevated the case to the Court of Appeals (CA).
The CA reversed the decision of the RTC and ordered MBTC to refund to
Spouses Reynoso the amount of P722,602.22 representing the remainder of the
proceeds of the foreclosure sale, with legal interest of six per cent (6%) per annum
from the date of filing of the answer with counterclaim on March 26, 1999, until
paid. MBTC filed a motion for reconsideration and the same was denied by the CA.

ISSUE:
When should respondents file their compulsory counterclaim?
1
February 2, 1996 over real estate covered by Transfer Certificate of Title (TCT) No. 624835 and July 18,
1996 over properties covered by TCT Nos. 565381, 263421, and 274682
RULING:
Under Section 8, Rule 11 of the Rules of Court, the respondent should
interpose his compulsory counterclaim at the time he files his Answer, and that
failure to do so shall effectively bar such claim. In this case, the respondents did
not file compulsory counterclaim to setup their claim for refund.
According to the Court, a claim for recovery of the excess in the bid price
vis-a-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.