Case Summary (G.R. No. 207376)
Key Dates (selected, excluding the Supreme Court decision date)
Contracts and assignments: 2005–2008 (CTS facility availments and deeds of assignment). Default and discovery of alleged fraudulent Contracts to Sell: first quarter 2010; PNB’s final demand letter: August 5, 2010. Pasay RTC order finding probable fraud and issuing writ of preliminary attachment: August 25–27, 2010. Respondents’ damage suit filed in Pasig RTC: August 10, 2011. Pasig RTC dismissal of respondents’ complaint for lack of jurisdiction: April 2, 2012. Pasig RTC orders denying Padilla’s motion to set her counterclaims for pre-trial and denying reconsideration: November 12, 2012 and May 8, 2013 (orders later assailed in this petition).
Applicable Law and Governing Charter
Governing constitutional framework for the decision: the 1987 Philippine Constitution (applicable because the decision date falls after 1990). Controlling procedural law: the 1997 Rules of Civil Procedure (as amended), specifically Section 7, Rule 6 (compulsory counterclaims) and Section 3, Rule 17 (effect of dismissal of complaint). Doctrinal principles invoked: the rule on compulsory counterclaims, the principle of judicial stability (non-interference with co-equal courts), and the distinction between jurisdiction over a plaintiff’s complaint and jurisdiction over a defendant’s compulsory counterclaim.
Factual Background (transactional and procedural essentials)
PNB extended CTS financing to Globe Asiatique and Filmal, secured by deeds of assignment covering substantial accounts receivable. PNB later claimed widespread irregularities in the Contracts to Sell (many with nonexistent buyers/addresses), declared respondents in default, and demanded payment of approximately P974,377,159.10. PNB instituted a recovery suit in the Pasay RTC alleging fraud and obtained a writ of preliminary attachment after filing an application supported by an affidavit executed by petitioner Aida Padilla. Respondents resisted in Pasay and also brought an independent damage suit in the Pasig RTC against Padilla and the Pasay presiding judge, alleging malice, perjury and other wrongful acts in securing the attachment. Padilla filed compulsory counterclaims in the Pasig action seeking damages for the alleged unfounded suit.
Proceedings in the Pasay RTC (summary)
In Civil Case No. R-PSY-10-04228, the Pasay RTC found probable fraud and issued a writ of preliminary attachment after PNB posted a bond. Defendants filed motions to dismiss and to discharge the attachment, and a range of interlocutory motions ensued (motions for summary judgment, motions to set for pre-trial, omnibus motions, amended answers with counterclaims, etc.). The Pasay RTC denied several of defendants’ motions and set hearing dates on summary judgment and on motions to discharge the attachment.
Proceedings in the Pasig RTC (summary)
Respondents filed a damage action in Pasig RTC against Padilla and Judge Gutierrez asserting, among other things, novation by agreement of loan terms and claiming that Padilla executed a perjured affidavit that caused the issuance of illegal orders in Pasay. Padilla filed an answer with compulsory counterclaims and moved for a preliminary hearing on affirmative defenses, asserting forum shopping and litis pendentia. The Pasig RTC dismissed respondents’ complaint for lack of jurisdiction (concluding that the suit improperly impinged on matters pending in the Pasay RTC and violated the principle of judicial stability). Padilla’s motion to set her compulsory counterclaims for pre-trial was denied on the ground that hearing the counterclaims would indirectly interfere with the Pasay RTC’s orders; her motion for reconsideration was likewise denied.
Legal Issue Presented
Whether a court may take cognizance of a defendant’s compulsory counterclaim and proceed with its adjudication when the corresponding plaintiff’s complaint has been dismissed for lack of jurisdiction (or on grounds that the complaint improperly impinges upon matters pending in a co-equal court), particularly where the counterclaim arises from the alleged unlawfulness or maliciousness of the plaintiff’s suit.
Controlling Rules and Precedents Considered
- Section 7, Rule 6, 1997 Rules of Civil Procedure: defines compulsory counterclaim as one arising out of or connected with the transaction constituting the opposing party’s claim and requires its pleading where cognizable by regular courts.
- Section 3, Rule 17, 1997 Rules of Civil Procedure (as amended): provides that dismissal of a complaint for the plaintiff’s fault is without prejudice to the defendant’s right to prosecute any pending counterclaims in the same or a separate action; the amendment supersedes prior inconsistent jurisprudence.
- Metals Engineering Resources Corp. v. Court of Appeals (1991): older authority holding that dismissal of the complaint for lack of jurisdiction carries with it dismissal of an ancillary counterclaim; acknowledged and contrasted with later rules and cases.
- Pinga v. Heirs of German Santiago and subsequent rulings (Perkin Elmer Singapore Pte Ltd. v. Dakila; Rizal Commercial Banking Corp. v. Royal Cargo): clarify that under the 1997 Rules and post-amendment doctrine a compulsory counterclaim may be treated independently — jurisdiction over the counterclaim must be assessed separately from the dismissed complaint; counterclaims based on damages arising from the filing of an unfounded suit may survive dismissal of the main action; the court should not mechanically dismiss counterclaims simply because the complaint was dismissed.
- Principle of judicial stability (Cojuangco v. Villegas and related authority): ordinarily prevents a court from indirectly or directly revisiting the orders of a co-equal court; however, this principle does not automatically bar adjudication of a counterclaim that can be resolved without reexamining the co-equal court’s orders.
Court’s Analysis and Reasoning
The Supreme Court treated the question as one purely of law (appropriate for Rule 45 review) and analyzed the nature and purpose of compulsory counterclaims under the 1997 Rules. The Court emphasized the post-1997 amendment regime that expressly preserves a defendant’s right to prosecute counterclaims notwithstanding dismissal of the plaintiff’s complaint in many instances. It distinguished earlier inconsistent jurisprudence (e.g., Metals Engineering) as effectively abandoned insofar as it conflicts with the amended Rules.
App
...continue readingCase Syllabus (G.R. No. 207376)
Citation and Panel
- Reported at 740 Phil. 754, First Division, G.R. No. 207376, August 06, 2014.
- Decision penned by Justice Villarama, Jr.
- Concurrence noted: Sereno, C.J. (Chairperson), Bersamin, Mendoza,* and Reyes, JJ.; with Mendoza designated additional member per Special Order No. 1738 dated July 31, 2014.
- Petition for review filed under Rule 45, assailing Orders dated November 12, 2012 and May 8, 2013 of the Regional Trial Court (RTC) of Pasig City, Branch 155, in Civil Case No. 73132, which denied petitioner’s motion to set her counterclaim for pre-trial and denied petition for reconsideration respectively.
Parties and Roles
- Petitioner: Aida Padilla, Senior Vice-President of the Remedial Management Group of Philippine National Bank (PNB), who signed the Verification and Certification of Non-Forum Shopping and executed an Affidavit in Support of the Application for the Issuance of the Writ of Preliminary Attachment in Pasay litigation.
- Respondents/Plaintiffs in Pasig Case: Globe Asiatique Realty Holdings Corporation and Filmal Realty Corporation, represented by Delfin S. Lee (President) and Dexter L. Lee (Vice-President), who initiated Civil Case No. 73132 in RTC Pasig.
- Other respondent in related case and principal creditor: Philippine National Bank (PNB), plaintiff in Civil Case No. R-PSY-10-04228-CV before RTC Pasay City.
Factual Antecedents — CTS Facility Transactions and Assignments
- From 2005 to 2008, PNB entered into several Contracts to Sell (CTS) Facility Agreements with Globe Asiatique and Filmal to finance the purchase of certain accounts receivable arising from the sale of subdivision houses as evidenced by contracts to sell.
- PNB initially agreed to make available CTS Facilities not exceeding P200,000,000.00; those availments were later increased to a total of P1,200,000,000.00.
- Respondents executed several Deeds of Assignment in favor of PNB covering accounts receivable aggregating P1,195,926,390.72.
- In those instruments respondents acknowledged the total amount of P1,395,665,564.69 released to them by PNB in consideration of the accounts receivable.
- Sometime in the first quarter of 2010 respondents defaulted in payment of outstanding balances and in delivery of transfer certificates of title corresponding to the assigned accounts receivables; PNB declared them in default under the CTS Facility Agreements.
- PNB claimed, in the course of credit monitoring and verification, that it discovered 231 out of 240 Contracts to Sell had either inexistent buyer addresses or inexistent buyer names, or both.
- On August 5, 2010, PNB made a formal and final demand upon respondents to pay/settle the outstanding obligation totalling P974,377,159.10.
PNB’s Case in RTC Pasay (Civil Case No. R-PSY-10-04228-CV) — Nature and Relief Sought
- PNB instituted Civil Case No. R-PSY-10-04228-CV against Globe Asiatique, Filmal, Delfin S. Lee and Dexter L. Lee for recovery of sum of money and damages with prayer for a writ of preliminary attachment.
- PNB’s complaint alleged fraudulent acts and misrepresentations by respondents in obtaining PNB’s conformity to the CTS Facility Agreements and the release of various sums totalling P974,377,159.10.
- PNB accused respondents of falsely representing that they had valid and subsisting contracts to sell, thereby showing no intention to pay loan obligations.
- The Verification and Certification of Non-Forum Shopping attached to the complaint was signed by Aida Padilla, who also executed an affidavit in support of the application for the writ of preliminary attachment.
RTC Pasay Proceedings and Writ of Preliminary Attachment
- On August 25, 2010, the RTC of Pasay City issued an Order granting PNB’s application for preliminary attachment, finding defendants guilty of fraud in contracting their outstanding loan applications as revealed by plaintiff’s evidence.
- The writ of preliminary attachment was issued on August 27, 2010 after PNB posted the attachment bond as ordered.
- Defendants (Delfin and Dexter Lee) filed an Answer with Counterclaim and motion to dismiss, contending they were not personally liable under the CTS Facility Agreements and seeking discharge of the preliminary attachment.
- Globe Asiatique and Filmal likewise filed Answer with Counterclaim denying allegations of fraud and asserting timely payments; they also moved to discharge the preliminary attachment and challenged petitioner Padilla’s affidavit as lacking personal knowledge.
- The Pasay RTC, in an Order dated April 29, 2011, denied defendants’ motion to dismiss, motions to discharge preliminary attachment and other related motions, and ordered further proceedings including hearings on summary judgment and motions to discharge.
- Parties filed numerous motions thereafter, including motions for reconsideration, motions for summary judgment, motions to admit amended answers with compulsory counterclaims, omnibus motions, motions to discharge the writ, and other procedural motions, listed chronologically in the record.
Filing of Pasig RTC Case (Civil Case No. 73132) and Allegations Against Petitioner and Judge Gutierrez
- On August 10, 2011, defendants in the Pasay action filed a Complaint for Damages in the RTC of Pasig City, Branch 155 (Civil Case No. 73132), naming Judge Pedro De Leon Gutierrez and Aida Padilla in their personal capacities.
- Respondents alleged Globe Asiatique and Filmal were successful developers and that petitioner’s “malicious and devastating unfounded civil action” inflicted havoc on their businesses and lives.
- Respondents alleged the CTS Facility Agreements had been novated to a term loan commencing May 31, 2010 and expiring April 30, 2012, and that petitioner knew of the novation and that the obligation was not yet due and demandable.
- Despite such alleged knowledge, respondents accused petitioner of executing a “perjured” affidavit in support of the application for writ of preliminary attachment before the Pasay RTC.
- Respondents sought to hold Judge Gutierrez personally liable for issuing the writ of preliminary attachment despite alleged adequate security for the obligation and contended the attachment bond posted by PNB General Insurers Company, Inc. was insufficient relative to its declared capital.
- Prayer for relief included moral and exemplary damages, litigation expenses, attorney’s fees, and costs of suit.
Procedural Defenses, Counterclaims, and Motions in Pasig Case
- Judge Gutierrez moved to dismiss on grounds of lack of cause of action and lack of jurisdiction over his person, asserting co-equal and concurrent jurisdiction.
- Petitioner Padilla filed an Answer With Compulsory Counterclaims asserting:
- Respondents submitted a false certification of non-forum shopping and engaged in forum shopping (omitting a criminal complaint pending in Pasay City Prosecutor’s Office).
- Litis pendentia (pendency of related actions).
- Failure to attach the allegedly actionable document (the supposed new term loan) in violation of Section 7, Rule 8 of the Rules of Court