Tuesday, March 10, 2015

Cruz Agana v. Lagman

Facts
·          18 March 1996 – Cruz-Agana filed a Complaint for annulment of title with prayer for preliminary mandatory injunction against Serrano Enterprises.
§   Cruz-Agana claims that as the sole heir of one Teodorico Cruz, she is the sole owner of the disputed lot.
§   the lot was fraudulently sold to Eugenio Lopez, Jr. who later on transferred the lot to Serrano Enterprises.
·          Serrano filed its Answer with compulsory counterclaim.
·          Cruz moved to dismiss respondent’s counterclaim for lack of a CNFS.
·          11 March 1999 – RTC denied Cruz’s MTD respondent’s counterclaim. 
§   respondent’s counterclaim is compulsory and excluded from Rule 7.5
·          Petitioner filed an MR invoking the mandatory nature of a CNFS under SC AC 04-94.
·          25 May 1999 – RTC reversed its order and dismissed respondent’s counterclaim for lack of a CNFS.
·          Serrano filed a MR: AC No. 04-94 does not apply to compulsory counterclaims (Santo Tomas)
·           4 June 1999 – RTC again reversed itself and recalled its Order dismissing respondent’s counterclaim.
·          Petitioner comes before this Court through Rule 65.
Issue
Can a compulsory counterclaim pleaded in an Answer be dismissed on the ground of a failure to accompany it with a CNFS?
Ruling
·          Santo Tomas University Hospital v. Surla clarified the scope of AC No. 04-94 with respect to counterclaims. 
o    circular is intended primarily to cover “an initiatory pleading or an incipient application of a party asserting a claim for relief.” 
·          The distinction between a compulsory and a permissive counterclaim is vital in the application of the circular:
o    Counterclaims by its very nature as being auxiliary to the proceedings in the suit and as deriving its substantive and jurisdictional support can only be pleaded in the answer and not remain outstanding for independent resolution except by the court where the main case pends.
o    Rule 8.5 does not include a claim which cannot be independently set up.
·          Ponciano v. Judge Parentela,  Peaches Jr
o    AC No. 04-94 does not apply to compulsory counterclaims.  The circular applies to initiatory and similar pleadings. 
o    A compulsory counterclaim set up in the answer is not an “initiatory” or similar pleading.  The initiatory pleading is the plaintiff’s complaint.  A respondent has no choice but to raise a compulsory counterclaim the moment the plaintiff files the complaint.  Otherwise, respondent waives the compulsory counterclaim.
o    compulsory counterclaim is a reaction or response, mandatory upon pain of waiver, to an initiatory pleading which is the complaint.
sc’s right to promulgate and amend rules
·          Petitioner is mistaken that Santo Tomas and Ponciano are “contrary to the mandate of AC No. 04-94” and other procedural laws.
·          The Constitution expressly bestows on this Court the power to promulgate rules concerning the pleading, practice and procedure in all courts. Procedural matters are within the sole jurisdiction of this Court to prescribe.  AC No. 04-94 is an issuance of this Court. It covers a matter of procedure. AC No. 04-94 is not an enactment of the Legislature.  This Court has the exclusive jurisdiction to interpret, amend or revise the rules it promulgates, as long as the rules do not diminish, increase, or modify substantive rights.   
distinction between a permissive and a compulsory claim
·          If it is a permissive counterclaim, the lack of a CNFS is fatal.  If it is a compulsory counterclaim, the lack of a CNFS is immaterial.
·          A compulsory counterclaim is any claim for money or other relief, which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of plaintiff’s complaint. It is compulsory in the sense that it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and will be barred in the future if not set up in the answer to the complaint in the same case.  Any other counterclaim is permissive.

·          Respondent’s counterclaim as set up in its answer states: “unwarranted [litigation] of the plaintiff”
·          The counterclaim is so intertwined with the main case that it is incapable of proceeding independently.  The counterclaim will require a re-litigation of the same evidence if the counterclaim is allowed to proceed in a separate action.  Even petitioner recognizes that respondent’s counterclaim is compulsory. A compulsory counterclaim does not require a CNFS because a compulsory counterclaim is not an initiatory pleading.

Petition is DENIED for lack of merit.  

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