Rule 8 (Outline, Case Digest & Full Text)

8/10/2019 Rule 8 (Outline, Case Digest & Full Text)

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Outline: Rule 8 - Manner of Making Allegations in Pleadings CIVIL PROCEDURE

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Lesson for August 23, 2014

Saturday

Manner of Making Allegations in Pleadings

Allegations in a pleading

a) Manner of making allegations - Rule 8, Secs. 1 and 2

- Bacolod-Murcia Milling Co. Inc. v. First Farmers Milling Co. Inc., G.R. No. L-29041, March 24, 1981

- Far East Marble (Phils.) Inc. v. CA, G.R. No. 94093, August 10, 1993

i. Condition precedent - Sec. 3, Rule 8

ii. Fraud, mistake, malice, intent, knowledge and other condition of the mind, judgments, official

documents or acts - Sec. 5, Rule 8

b) Pleading an actionable document - Secs. 7, 8 & 9, Rule 8

- Aquintey v. Sps. Tibong, G.R. No. 166704, December 20, 2006

- Filipinas Textile Mills Inc. v. CA, G.R. No. 119800, November 12, 2003

- Toribio v. J. Bidin, G.R. No. L-57821, January 17, 1985

c) Specific denials - Sec. 10, Rule 8

- Sps. Gaza v. Lim, G.R. No. 126863, January 16, 2003

i. Effect of failure to make specific denials - Sec. 11, Rule 8

- Republic v. Sarabia, G.R. No. 157847, August 25, 2005

ii. When a specific denial requires an oath - Sec. 11, Rule 8


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Case Digest: Rule 8 - Manner of Making Allegations in Pleadings CIVIL PROCEDURE

mmeikimouse

Manner of making allegations - Rule 8, Secs. 1 and 2

BACOLOD-MURCIA MILLING CO. INC. vs FIRST FARMERS

MILLING CO. INC.

G.R. No. L-29041, March 24, 1981

Facts:

Plaintiff-appellant Bacolod-Murcia Milling Co.,

Inc. (BMMC) filed for Injunction and Prohibition with

Damages against defendants First Farmers Milling Co., Inc.

(FFMC), and others including Administrator Nolan of the

Sugar Quota Administration (SQA). Plaintiff alleged that in

1964, the FFMC established and operated a sugar central

known as First Farmers Sugar Central. For the crop years

1964-1966, the other defendants transferred their quota

A allotments and are actually milling their sugar with

the respondents, which illegal transfer has been over the

vigorous protest and objections of the plaintiff, but the

unwarranted and unjustified approval of the SQA.After the defendants had filed their respective

Answers, BMMC filed a Motion to Admit Amended and

Supplemental Complain. As Amended, PNB and National

Investment and Development Corp. (NIDC) were included

as party defendants in the Amended and Supplemental

Complaint since they were creditors of the respondents

prior to the instant case, since both loaned to the sugar

mill about P16M to assist in the illegal creation and

operation of the mill. This was aggravated by the fact that

defendant mill has only a paid up capital stock of P500K,

said loans are far beyond the limits fixed by law.

PNB and NIDC filed their Answer contending that

they have no participation in the alleged illegal

transaction and that the granting of loans in favor of

FMMC did not violate any rights of the plaintiff, thus,

BBMC have no cause of action against them.

The trial court dismissed the amended complaint

against PNB and NIDC on the ground of lack of cause of

action.

Issue:Whether or not the allegations of the Amended

and Supplemental Complaint constituted a sufficient

cause of action against the PNB and NIDC.

Held:

A negative finding is called for.

It is basic that the Complaint must contain a concise

statement of the ultimate facts constituting the plaintiff's

cause of action. "Ultimate facts" are the important and

substantial facts which either directly form and basis of

the plaintiff's primary right and duty, or directly make up

the wrongful acts or omissions by the defendant.

When the ground for dismissal is that the

Complaint states no cause of action, the rule is that its

sufficiency can only be determined by considering the

facts alleged in the Complaint and no other. The court

may not consider other matters outside of the

Complaint. Defenses averred by the defendant are not to

be taken into consideration in ruling on the motion. The

allegations in the Complaint must be accepted as true and

it is not permissible to go beyond and outside of them for

date or facts. And the test of sufficiency of the facts

alleged is whether or not the Court could render a valid

judgment as prayed for accepting as true the exclusive

facts set forth in the Complaint.

The subject Amended and Supplemental

Complaint fails to meet the test. It should be noted that it

charges PNB and NIDC with having assisted in the illegal

creation and operation of defendant sugar mill. Granting,

for the sake of argument, that, indeed, assistance in the

"illegal" act was rendered, the same, however, is not

supported by well-pleaded averments of facts. Nowhere isit alleged that defendants-appellees had notice,

information or knowledge of any flaw, much less any

illegality, in their co-defendants' actuations, assuming that

there was such a flaw or illegality. This absence is fatal

and buoy-up instead the PNB-NIDC's position of lack of

cause of action.

Although it is averred that the defendants' acts

were done in bad faith, the Complaint does not contain

any averment of facts showing that the acts were done in

the manner alleged. Such a bare statement neither

establishes any right or cause of action on the part of the

plaintiff-appellant. It is a mere conclusion of law not

sustained by declarations of facts, much less admitted by

defendants-appellees. It does not, therefore, aid in any

wise the complaint in setting forth a cause of

action. Defendants-appellees are not fairly apprised of

the act or acts complained of.

While it is a settled rule that a defective

complaint may be cured by the introduction of sufficient

evidence so as to constitute the cause of action which the

plaintiff intended to set forth in the complaint, the samemerits the Court's blessings only and unless there is no

objection or opposition from the side of the defendant. It

is obvious that the defendants-appellees, in the case at

bar, were vigilant of their right and were on their guard

from the very initiation of the complaint against them.

Plaintiff-appellant's allegation "that defendants

NIDC and PNB have extended loans to defendant sugar

mill ..., to assist in the illegal creation and operation of

said mill, hence, a joint tortfeasor in the trespass of

plaintiff's rights. ..." is, therefore, a mere conclusion not

warranted by sufficient facts. What appears from the

record is that PNB and NIDC came into the picture in the

ordinary and usual course of its business after the

borrowing entity had established itself as capable of being


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treated as a new milling district (FFMC is officially

designated as Mill District No. 49) because it could already

operate and had its array of adhering planters. "The doing

of an act which is in itself perfectly lawful win not render

one liable as for a tort, simply because the unintended

effect of such act is to enable or assist another person to

do or accomplish a wrong," assuming, of course, that

there was such a wrong.

WHEREFORE, without resolving the issue in the

main case regarding the alleged illegal creation and

operation of First Farmers Milling, Co., Inc., there having

been no presentation of evidence as yet in the lower

Court, the challenged Order dismissing the Amended and

Supplemental Complaint against defendants-appellees as

well as the Order denying reconsideration thereof, is

hereby affirmed, and the appeal dismissed. Costs against

plaintiff-appellant.

Manner of making allegations - Rule 8, Secs. 1 and 2

FAR EAST MARBLE (PHILS.) INC. vs CA

G.R. No. 94093, August 10, 1993

Facts:

Respondent BPI filed a complaint for foreclosure

of chattel mortgage with replevin against petitioner Far

East Marble (Phils.), Inc. (Far East), Ramon A. Tabuena and

Luis R. Tabuena, Jr. before the RTC of the National Capital

Judicial Region stationed in Manila.

Far East filed an answer with compulsory

counterclaim admitting the genuineness and due

execution of the promissory notes attached as Annexes A,

B, and C to the complaint, but alleging further that saidnotes became due and demandable on November 19,

1976, respectively. On the basis of the maturity dates of

the notes, Far East thereupon raised the affirmative

defenses of prescription and lack of cause of action as it

denied the allegation of the complaint that BPI had made

previous repeated requests and demands for payment.

Far East claimed that during the more than 10 years which

elapsed from the dates of maturity of said obligations up

to the time the action for foreclosure of the chattel

mortgage securing said obligations was filed, it had not

received from BPI or its predecessor any demand for

payment and thus, it had "labored under the belief that

they [the obligations] have already been written off" in

the books of BPI. Moreover, Far East denied the

genuineness and due execution of the trust receipts and

of the Statement of Account. A motion to hear affirmative

defenses was attached to the answer.

BPI filed an opposition to the motion to hear

affirmative defenses, alleging that its cause of action

against Far East have not prescribed, since within 10 years

from the time its cause of action accrued, various written

extrajudicial demands were sent by BPI and received by

Far East.

On the same date, BPI filed a motion for

summary judgment on the ground that since Far East had

admitted the genuineness and due execution of the

promissory notes and the deed of chattel mortgage

annexed to its complaint, there was no genuine issue as

to any material fact, thus entitling BPI to a favorable

judgment as a matter of law in regard to its causes of

action and on its right to foreclose the chattel mortgage.

TC dismissed the complaint against thedefendant Far East Marble (Phils.) Inc. for lack of cause of

action and on grounds of prescription and denying for lack

of merit the Motion for Summary Judgment and the

Supplemental Motion for Summary Judgment.

An appeal therefrom was forthwith interposed

by BPI, assailing the findings of the trial court with respect

to its finding that BPI's cause of action has prescribed and

the consequent denial of the motion for summary

judgment.

CA rendered a decision setting aside the order of

the court of origin and remanding the case to said court

for further proceedings, "including the resolution anew of

plaintiff's motion for summary judgment . . ., reception of

the evidence of the parties and, thereafter, to decide the

case as the facts may warrant."

Issue:

Whether or not the general allegation of BPI that

"despite repeated requests and demands for payment,

Far East has failed to pay" is sufficient to establish BPI's

cause of action.

Held:

Yes. The trial court's finding that BPI's claims due

to prescription, can no longer prosper, is inextricably

connected with, and underpinned by, its other conclusion

that BPI's allegation that it made "repeated requests and

demands for payment" is not sufficient to state a cause of

action. Moreover, in its questioned Order the trial court

held that:

Apart from the fact that the complaint

failed to allege that the period of prescription

was interrupted, the phrase "repeated requests

and demands for payment" is vague and

incomplete as to establish in the minds of the


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defendant, or to enable the Court to draw a

conclusion, that demands or acknowledgment [of

debt] were made that could have interrupted the

period of prescription.

Seemingly, therefore, the trial court believed

that the interruption of the prescriptive period to institute

an action is an ULTIMATE FACT which had to be expressly

and indispensably pleaded by BPI in its complaint, and

that failure to so alleged such circumstance is fatal to

BPI's cause of action.

SC believed and held otherwise.

Section 3 of Rule 6 state that a "complaint is a

concise statement of the ultimate facts constituting the

plaintiff's cause or causes of action." Further elaborating

thereon, Section 1 of Rule 8 declares that every pleading,

including, of course, a complaint, "shall contain in a

methodical and logical form, a plain, concise and directstatement of the ultimate facts . . . omitting the

statement of mere evidentiary facts." "Ultimate facts"

are the essential and substantial facts which either form

the basis of the primary right and duty or which directly

make up the wrongful acts or omissions of the while

"evidentiary facts" are those which tend to prove or

establish said ultimate facts.

What then are the ultimate facts which BPI had

to allege in its complaint so as to sufficiently establish its

cause of action?

Basically, a cause of action consists of three

elements, namely: (1) the legal right of the plaintiff; (2)

the correlative obligation of the defendant; and (3) the act

or omission of the defendant in violation of said legal

right. These elements are manifest in BPI's complaint,

particularly when it was therein alleged that: (1) for

valuable consideration, BPI granted several loans,

evidenced by promissory notes, and extended credit

facilities in the form of trust receipts to Far East; (2) said

promissory notes and trust receipts had matured; and (3)

despite repeated requests and demands for paymentthereof, Far East had failed and refused to pay.

Clearly then, the general allegation of BPI that

"despite repeated requests and demands for payment,

Far East has failed to pay" is sufficient to establish BPI's

cause of action. Besides, prescription is not a cause of

action; it is a defensewhich, having been raised, should,

as correctly ruled by the Court of Appeals be supported

by competent evidence. But even as Far East raised the

defense of prescription, BPI countered to the effect that

the prescriptive period was interrupted and renewed by

written extrajudicial demands for payment and

acknowledgment by Far East of the debt.

A complaint is sufficient if it contains sufficient

notice of the cause of action even though the allegation

may be vague or indefinite, for in such case, the recourse

of the defendant would be to file a motion for a bill of

particulars. It is indeed the better rule that, pleadings, as

well as remedial laws, should be liberally construed so

that the litigants may have ample opportunity to prove

their respective claims so as to avoid possible denial of

substantial justice due to legal technicalities.

In the case at bar, the circumstances of BPI

extending loans and credits to Far East and the failure of

the latter to pay and discharge the same upon maturity

are the only ultimate facts which have to be pleaded,

although the facts necessary to make the mortgage valid

enforceable must be proven during the trial.

In fine, the finding of the trial court that prescription has

set in is primarily premised on a misappreciation of the

sufficiency of BPI's allegation as above discussed. The

records will show that the hearing conducted by the trial

court was merelypro forma and the trial judge did notsufficiently address the issue of whether or not a demand

for payment in fact made by BPI and duly received by

herein petitioner Far East.

Pleading an actionable document - Secs. 7, 8 & 9, Rule 8

AQUINTEY vs SPS. TIBONG

G.R. No. 166704, December 20, 2006

Facts:

On May 6, 1999, petitioner Agrifina Aquintey

filed before the RTC of Baguio City, a complaint for sum of

money and damages against the respondents, spouses

Felicidad and Rico Tibong. Agrifina alleged that Felicidad

had secured loans from her on several occasions, atmonthly interest rates of 6% to 7%. Despite demands, the

spouses Tibong failed to pay their outstanding loan,

amounting to P773,000.00 exclusive of interests.

In the complaint, Agrifina appended a copy of the

Counter-Affidavit executed by Felicidad in I.S. No. 93-334,

as well as copies of the promissory notes and

acknowledgment receipts executed by Felicidad covering

the loaned amounts.

In their Answer with Counterclaim, spouses

Tibong admitted that they had secured loans from

Agrifina. The proceeds of the loan were then re-lent to

other borrowers at higher interest rates. They, likewise,

alleged that they had executed deeds of assignment in

favor of Agrifina, and that their debtors had executed


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promissory notes in Agrifina's favor. According to the

spouses Tibong, this resulted in a novation of the original

obligation to Agrifina. They insisted that by virtue of these

documents, Agrifina became the new collector of their

debtors; and the obligation to pay the balance of their

loans had been extinguished.

The spouses Tibong specifically denied the

material averments in the complaint. While they did not

state the total amount of their loans, they declared that

they did not receive anything from Agrifina without any

written receipt. They prayed for that the complaint be

dismissed.

In their Pre-Trial Brief, the spouses Tibong

maintained that they have never obtained any loan from

Agrifina without the benefit of a written document.

The trial court rendered its Decision45

in favor of

Agrifina. The trial court ruled that Felicidad's obligation

had not been novated by the deeds of assignment and thepromissory notes executed by Felicidad's borrowers. It

explained that the documents did not contain any express

agreement to novate and extinguish Felicidad's obligation.

It declared that the deeds and notes were separate

contracts which could stand alone from the original

indebtedness of Felicidad.

On appeal, the CA affirmed with modification the

decision of the RTC and stated that, based on the

promissory notes and acknowledgment receipts signed by

Felicidad, the appellants secured loans from the appellee

in the total principal amount of only P637,000.00, not

P773,000.00 as declared by the trial court. The CA found

that, other than Agrifina's bare testimony that she had

lost the promissory notes and acknowledgment receipts,

she failed to present competent documentary evidence to

substantiate her claim that Felicidad had, likewise,

borrowed the amounts of P100,000.00, P34,000.00, and

P2,000.00. Of the P637,000.00 total account, P585,659.00

was covered by the deeds of assignment and promissory

notes; hence, the balance of Felicidad's account

amounted to only P51,341.00.Petitioner avers that the appellate court erred in

ruling that respondents' original obligation amounted to

only P637,000.00 (instead of P773,000.00) simply because

she lost the promissory notes/receipts which evidenced

the loans executed by respondent Felicidad Tibong. She

insists that the issue of whether Felicidad owed her less

than P773,000.00 was not raised by respondents during

pre-trial and in their appellate brief; the appellate court

was thus proscribed from taking cognizance of the issue.

Petitioner avers that respondents failed to deny,

in their verified answer, that they had secured the

P773,000.00 loan; hence, respondents are deemed to

have admitted the allegation in the complaint that the

loans secured by respondent from her amounted to

P773,000.00.

Issue:

Whether or not the CA erred in reversing the decision of

the RTC simply because petitioner failed to present any

document or receipt signed by Felicidad.

Held:

The brief of respondents as appellants in the CA,

and find that, indeed, they had raised the issue of

whether they received P773,000.00 by way of loans from

petitioner. They averred that, as gleaned from the

documentary evidence of petitioner in the RTC, the total

amount they borrowed was only P673,000.00. They

asserted that petitioner failed to adduce concrete

evidence that they received P773,000.00 from her.55

We agree, however, with petitioner that theappellate court erred in reversing the finding of the RTC

simply because petitioner failed to present any document

or receipt signed by Felicidad.

Section 10, Rule 8 of the Rules of Civil Procedure

requires a defendant to "specify each material allegation

of fact the truth of which he does not admit and,

whenever practicable, x x x set forth the substance of the

matters upon which he relies to support his denial.

Section 11, Rule 8 of the same Rules provides

that allegations of the complaint not specifically denied

are deemed admitted.

The purposeof requiring the defendant to make

a specific denial is to make him disclose the matters

alleged in the complaint which he succinctly intends to

disprove at the trial, together with the matter which he

relied upon to support the denial. The parties are

compelled to lay their cards on the table.

A denial is not made specific simply because it is

so qualified by the defendant. A general denial does not

become specific by the use of the word "specifically."

When matters of whether the defendant alleges havingno knowledge or information sufficient to form a belief

are plainly and necessarily within the defendant's

knowledge, an alleged "ignorance or lack of information"

will not be considered as a specific denial.

Section 11, Rule 8 of the Rulesalso provides that

material averments in the complaint other than those as

to the amount of unliquidated damages shall be deemed

admitted when not specifically denied. Thus, the answer

should be so definite and certain in its allegations that the

pleader's adversary should not be left in doubt as to what

is admitted, what is denied, and what is covered by

denials of knowledge as sufficient to form a belief.

In the present case, petitioner alleged the following

in her complaint:
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2. That defendants are indebted to the plaintiff in the

principal amount of SEVEN HUNDRED SEVENTY-

THREE THOUSAND PESOS (P773,000.00) Philippine

Currency with a stipulated interest which are broken

down as follows. The said principal amounts was

admitted by the defendants in their counter-affidavit

submitted before the court. Such affidavit is hereby

attached as Annex "A;"

x x x x

H) The sum of THIRTY FOUR THOUSAND PESOS

(P34,000.00) with interest at six (6%) per cent per

month and payable on October 19, 1989, however[,]

the receipt for the meantime cannot be recovered as

it was misplaced by the plaintiff but the letter of

defendant FELICIDAD TIBONG is hereby attached as

Annex "H" for the appreciation of the Honorable

court;

I) The sum of ONE HUNDRED THOUSAND PESOS(P100,000.00) with interest at five (5%) percent per

month, obtained on July 14, 1989 and payable on

October 14, 1989. Such receipt was lost but admitted

by the defendants in their counter-affidavit as

attached [to] this complaint and marked as Annex "A"

mentioned in paragraph one (1); x x x

In their Answer, respondents admitted that they

had secured loans from petitioner. While the allegations

in paragraph 2 of the complaint were specifically denied,

respondents merely averred that petitioner and

respondent Felicidad entered into an agreement for the

lending of money to interested borrowers at a higher

interest rate. Respondents failed to declare the exact

amount of the loans they had secured from petitioner.

They also failed to deny the allegation in paragraph 2 of

the complaint that respondent Felicidad signed and

submitted a counter-affidavit in I.S. No. 93-334 where she

admitted having secured loans from petitioner in the

amount of P773,000.00. Respondents, likewise, failed to

deny the allegation in paragraph 2(h) of the complaint

that respondents had secured a P34,000.00 loan payableon October 19, 1989, evidenced by a receipt which

petitioner had misplaced. Although respondents

specifically denied in paragraph 2.11 of their Answer the

allegations in paragraph 2(I) of the complaint, they merely

alleged that "they have not received sums of money from

the plaintiff without any receipt therefor."

Respondents, likewise, failed to specifically deny

another allegation in the complaint that they had secured

a P100,000.00 loan from petitioner on July 14, 1989; that

the loan was payable on October 14, 1989; and evidenced

by a receipt which petitioner claimed to have lost. Neither

did respondents deny the allegation that respondents

admitted their loan of P100,000.00 in the counter-

affidavit of respondent Felicidad, which was appended to

the complaint as Annex "A." In fine, respondents had

admitted the existence of their P773,000.00 loan from

petitioner.

We agree with the finding of the CA that petitioner

had no right to collect from respondents the total amount

of P301,000.00, which includes more than P178,980.00

which respondent Felicidad collected from Tibong,

Dalisay, Morada, Chomacog, Cabang, Casuga, Gelacio, and

Manuel. Petitioner cannot again collect the same amount

from respondents; otherwise, she would be enriching

herself at their expense. Neither can petitioner collect

from respondents more than P103,500.00 which she had

already collected from Nimo, Cantas, Rivera, Donguis,

Fernandez and Ramirez.


FILIPINAS TEXTILE MILLS INC. vs CA

G.R. No. 119800, November 12, 2003

Facts:

SIHI instituted a Complaintfor the collection of

the sum with interest, penalties, exemplary damages,

attorneys fees and costs of suit against herein petitioners

Filtex and Villanueva. SIHI alleged that Filtex applied for

domestic letters of credit to finance the purchase of

various raw materials for its textile business. Finding the

application to be in order, SIHI issued on various dates

domestic letters of credit

authorizing Indo-Philippine

Textile Mills, Inc. Filtex used these domestic letters of

credit to cover its purchase of various textile materials

from Indo-Phil, Texfiber and Polyamide. Allegedly by way

of inducement upon SIHI to issue the aforesaid domestic

letters of credit and "to value" the sight drafts issued by

Indo-Phil, Texfiber and Polyamide, Villanueva executed acomprehensive surety agreement whereby he

guaranteed, jointly and severally with Filtex, the full and

punctual payment at maturity to SIHI of all the

indebtedness of Filtex. In order to ensure the payment of

the sight drafts aforementioned, Filtex executed and

issued to SIHI several trust receipts of various dates.

Because of Filtex's failure to pay its outstanding

obligation despite demand, SIHI filed a Complaint praying

that the petitioners be ordered to pay, jointly and

severally, the principal amount of P3m , plus interest and

penalties, attorney's fees, exemplary damages, costs of

suit and other litigation expenses.

In itsAnswer with Counterclaim,Filtex interposed

special and affirmative defenses, i.e., the provisions of the


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trust receipts, as well as the comprehensive surety

agreement, do not reflect the true will and intention of

the parties, full payment of the obligation, and lack of

cause of action. For his part, Villanueva interposed the

same special and affirmative defenses and added that the

comprehensive surety agreement is null and void and

damages and attorney's fees are not legally

demandable. The petitioners, however, failed to

specifically deny under oath the genuineness and due

execution of the actionable documents upon which

the Complaintwas based.

RTC rendered judgment holding Filtex and

Villanueva jointly and severally liable to SIHI. Dissatisfied,

Filtex and Villanueva filed anAppeal,primarily contending

that they have fully paid their indebtedness to SIHI and

asserting that the letters of credit, sight drafts, trust

receipts and comprehensive surety agreement upon

which the Complaint is based are inadmissible in evidencesupposedly because of non-payment of documentary

stamp taxes as required by the Internal Revenue Code.

CA debunked the petitioners' contention that

the letters of credit, sight drafts, trust receipts and

comprehensive surety agreement are inadmissible in

evidence ruling that the petitioners had "in effect,

admitted the genuineness and due execution of said

documents because of their failure to have their answers

placed under oath, the complaint being based on

actionable documents in line with Section 7, Rule 8 of the

Rules of Court."

The appellate court denied the

petitioners' Motion for Reconsiderationin its Resolution,

ruling that the petitioners failed to raise new and

substantial matters that would warrant the reversal of

its Decision.

In asking the SC to reverse and set aside the

aforementioned Decisionand Resolutionof the Court of

Appeals, the petitioners argued that the appellate court

should not have admitted in evidence the letters of credit,sight drafts, trust receipts and comprehensive surety

agreement for lack of the requisite documentary stamps

thereon. They hypothesized that their implied admission

of the genuineness and due execution of these

documents for failure to specifically deny the same under

oath should not be equated with an admission in evidence

of the documents and an admission of their obligation.

They also maintained that they have fully paid the

obligation and, in fact, have made an excess payment in

the amount of P415,722.53. In addition, Villanueva

asserted that the comprehensive surety agreement which

he executed is null and void, inadmissible in evidence and

contains material alterations. Thus, he claimed that he

should not be held solidarily liable with Filtex.

Traversing the allegations in the instant petition,

SIHI stated in its Commentthat in their respective answers

to the complaint, the petitioners expressly admitted the

due execution of the letters of credit, sight drafts and

trust receipts and their obligation arising from these

documents. Having done so, they could no longer

question the admissibility of these documents. Moreover,

their allegation of inadmissibility of these documents is

inconsistent with their defense of full payment. SIHI also

reasoned that the documentary stamps, assuming they

are required, are for the sole account of Filtex not only

because the letters of credit were issued at its instance

and application but also because it was the issuer and

acceptor of the trust receipts and sight drafts,

respectively. As regards the petitioners' allegation of full

payment, SIHI stressed that the appellate court had

already resolved this issue in its favor by ruling that there

remained an unpaid balance of P7,868,881.11 as ofJanuary 31, 1989 for which the petitioners were held

solidarily liable. Besides, by quoting substantial portions

of their appellants' Brief in the instant petition, the

petitioners merely repeated the issues that have already

been passed upon by the appellate court. Finally, SIHI

asserted the validity and admissibility of the

comprehensive surety agreement.

Issue:

Whether or not the letters of credit, sight drafts,

trust receipts and comprehensive surety agreement are

admissible in evidence despite the absence of

documentary stamps thereon as required by the Internal

Revenue Code.

Held:

SC ruled in the affirmative. As correctly noted by

the respondent, theAnswerwith

Counterclaim21

andAnswer,22

of Filtex and Villanueva,

respectively, did not contain any specific denial under

oath of the letters of credit, sight drafts, trust receipts andcomprehensive surety agreement upon which

SIHI's Complaint23

was based, thus giving rise to the

implied admission of the genuineness and due execution

of these documents. Under Sec. 8, Rule 8 of the Rules of

Court, when an action or defense is founded upon a

written instrument, copied in or attached to the

corresponding pleading as provided in the preceding

section, the genuineness and due execution of the

instrument shall be deemed admitted unless the adverse

party, under oath, specifically denies them, and sets forth

what he claims to be the facts.

InBenguet Exploration, Inc. vs. Court of

Appeals,24

this Court ruled that the admission of the

genuineness and due execution of a document means
http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt21http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt21http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt23http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt23http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt23http://www.lawphil.net/judjuris/juri2001/feb2001/gr_117434_2001.htmlhttp://www.lawphil.net/judjuris/juri2001/feb2001/gr_117434_2001.htmlhttp://www.lawphil.net/judjuris/juri2001/feb2001/gr_117434_2001.htmlhttp://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt24http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt24http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt24http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt24http://www.lawphil.net/judjuris/juri2001/feb2001/gr_117434_2001.htmlhttp://www.lawphil.net/judjuris/juri2001/feb2001/gr_117434_2001.htmlhttp://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt23http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/nov2003/gr_119800_2003.html#fnt21


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mmeikimouse

that the party whose signature it bears admits that he

voluntarily signed the document or it was signed by

another for him and with his authority; that at the time it

was signed it was in words and figures exactly as set out in

the pleading of the party relying upon it; that the

document was delivered; and that any formalities

required by law, such as a seal, an acknowledgment, or

revenue stamp, which it lacks, are waived by him.

Moreover, under Section 173 of the Internal

Revenue Code the liability for payment of the stamp taxes

is imposed on "the person making, signing, issuing,

accepting, or transferring" the document. As correctly

pointed out by SIHI, Filtex was the issuer and acceptor of

the trust receipts and sight drafts, respectively, while the

letters of credit were issued upon its application. On the

other hand, Villanueva signed the comprehensive surety

agreement. Thus, being among the parties obliged to pay

the documentary stamp taxes, the petitioners areestopped from claiming that the documents are

inadmissible in evidence for non-payment thereof.


TORIBIO vs J. BIDIN

G.R. No. L-57821, January 17, 1985

Facts:

Engracio Francisco and Juliana Esteban were the

registered owners of the parcel of land Zamboanga. At the

death of said spouses, they were survived by their ten

(10) children who inherited their state in equal pro

indiviso shares. Subsequently, the property wassubdivided among the heirs and a portion designated as

Lot No. 1943-B was allotted to the Justa Francisco. Justa

died and was survived among by eight children. Three of

her children sold their share to Ramon Ledesma. Rafael

sold also his share to his brother, who in turn sold the

same to Ramon Ledesma. Thus, the latter acquired four

(4) shares out of eight (8) shares, or a pro indiviso share

of Lot 1943-B.

Subsequently, Dionisio sold his own hereditary

share in the aforesaid estate of his mother to Juanito

Camacho, who by said sale acquired a 1/8 pro indiviso

share of the property. The three other heirs who were the

petitioners in this case, alleged that they never sold their

share nor transferred or disposed the same to others, file

a complaint for the recovery of the hereditary rights

against the private respondent.

In their answer, the defendants-respondents

alleged that the shares of plaintiffs-petitioners had

likewise been sold to Dionisio Toribio, their brother, who,

in turn, sold the same to Juanito Camacho and Dalmacio

Ramos. The alleged sale from petitioners to Dionisio and

the sale from Dionisio to the respondents were evidenced

by deeds of sale, xerox copies of which were appended to

and made an integral part of the respondents' partition

agreement between the respondents and also a xerox

copy of the respondents' transfer certificates of title.

While testifying during the trial, Eusebia Toribio was asked

whether she executed any sale of her share in the parcel

of land in litigation.

The counsel for private respondents objected,

raising the proper mode of contesting the genuineness of

an actionable document pursuant to Sections 7 and 8,Rule 8 of the Revised Rules of Court. The trial court

sustained the objection.

The petitioners filed a constancia with motion for

reconsideration stating that the documents submitted by

the respondents were merely evidentiary in nature, not a

cause of action or defense, the due execution and

genuineness of which they had to prove.

They alleged that the subject of litigation was the

hereditary shares of petitioners, not any document. They

also stated that the defense consisting mainly of transfer

certificates of titles in the respondents' names originating

from the sale from petitioners to Dionisio and from the

latter to the respondents were merely evidentiary in

nature. They argued that a simple specific denial without

oath is sufficient.

The court denied the motion for reconsideration.

The documents attached to the respondents' answer and

made an integral part thereof were declared to be the

very foundation or basis of the respondents' defense and

not merely evidentiary in nature.

Hence, this petition for review on certiorari.

Issue:

Whether or not the deeds of sale allegedly

executed by the petitioners in favor of their brother

Dionisio Toribio and appended to the respondents'

answer are merely evidentiary in nature or the very

foundation of their defense which must be denied under

oath by the petitioner.

Held:

As to the first issue: No. The record shows that

the document is actionable. In the case at hand, we have

a situation where the defendant presented a document in

his defense, a document to which the plaintiff is a party


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mmeikimouse

but to which defendant is not. Thus, the question arises as

to whether or not the document is included as a

necessary part of the defense so as to make it actionable.

As to the abovementioned issue: it is clear that

the respondents anchor their defense on the deeds of

sale by virtue of which the hereditary rights of all the

petitioners over Lot 1943-B were sold, transferred, and

conveyed in favor of their brother, Dionisio Toribio, who

in turn sold the same to herein respondents. The deed of

sale executed by the petitioners in favor of their brother

Dionisio is an essential and indispensable part of their

defense to the allegation that the petitioners had never

disposed of their property. The deed of sale executed by

Dionisio Toribio in favor of the respondents, by itself,

would be insufficient to establish a defense against the

petitioners' claims. If the petitioners deny that they ever

sold their shares in the inherited lot to their brother

Dionisio, a failure to prove the sale would be decisive. Forif it can be shown that no conveyance of the property was

executed by the petitioners, then Dionisio Toribio had no

right to convey what did not belong to him. The

respondents could acquire only the rights that Dionisio

had over the disputed property.

The genuineness and due execution of the deed

between the co-heirs is also elemental to the defense of

the respondents. The first deeds of sale, to which the

respondents were not parties but which they seek to

enforce against the parties are also actionable

documents. Moreover the petitioner asserts that this case

was an exception to sec 8 rule 8.

The SC held that it was lack of merit. Sections 7

and 8 of Rule 8, therefore, apply. The proper procedure

was for the petitioners to specifically deny under oath the

genuineness and due execution of the questioned deeds

of sale and to set forth what they claim to be the facts.

However, the oversight or negligence of petitioners'

counsel in not properly drafting a reply to the answer and

an answer to the counter claim is not necessarily fatal to

their cause.The facts of the case and equitable

considerations constrain us to grant the petition and to

set aside the questioned order of the respondent court.

As stated earlier, the reason for the rule is to enable the

adverse party to know beforehand whether he will have

to meet the issue of genuineness or due execution of the

document during trial. While mandatory, the rule is a

discovery procedure and must be reasonably construed to

attain its purpose, and in a way as not to effect a denial of

substantial justice. The interpretation should be one

which assist the parties in obtaining a speedy,

inexpensive, and most important, a just determination of

the disputed issues.

Specific denials - Sec. 10, Rule 8

SPS. GAZA vs LIM

G.R. No. 126863, January 16, 2003

Facts:

Napoleon Gaza purchased a parcel of land with

an area of 5,270 square meters located in Barangay Sta.

Maria, Calauag, Quezon, from Angeles Vda. de Urrutia.

The Register of Deeds of Lucena City then cancelled the

latters title and issued Transfer Certificate of Title in the

name of Napoleon Gaza. Thereafter, Napoleon Gaza and

his wife Evelyn engaged in the lumber and copra business.

They constructed a huge lumber shed on the

property and installed engines, machinery and tools for a

lumber mill. They also utilized a portion of the property as

storage for copra. In 1975, they ceased engaging in

business. They padlocked the gates of the property,

leaving it to the care of Numeriano Ernesto. When he diedin 1991, spouses Gaza designated Renato Petil as the new

caretaker of the land. On the other hand, Ramon and

Agnes Lim, both half-siblings of Napoleon Gaza, claimed

that they have used the same lot for their lumber and

copra business since 1975, as shown by Lumber

Certificate of Registration, PCA Copra Business

Registration and Mayor's Permit dated December 31,

1976. Sometime in November 1993, they designated

Emilio Herrera as caretaker of the property. The padlock

of the main gate was destroyed.

According to Napoleon Gaza, the respondent

entered the property by breaking the lock of the main

gate. Thereafter, they occupied a room on the second

floor of the warehouse without the consent of Renato

Petil who was then outside the premises. For their part,

Respondents maintained that spouses Gaza detained

Emilio Herrera and his daughter inside the compound and

destroyed the padlocks of the gates. Thereafter, said

spouses forcibly opened Agnes Lim's quarters at the

second floor of the warehouse and occupied it.

Ramon and Agnes Lim filed with MTC of Quezonan action for forcible entry against Spouses Gaza. On the

other hand, Spouses Gaza filed the same with compulsory

counter claim. The MTC dismissed the complaint and

counterclaim. The RTC affirmed the MTC's decision with

modification.

Ramon and Agnes Lim filed a petition for review

with the CA which reversed the decision of the RTC.

Spouses Gaza filed a motion for reconsideration but it was

denied by the CA on the Ground that the spouses failed to

deny specifically, in their answer the complaint for

forcible entry.


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mmeikimouse

Issue:

Whether or not the Spouses Gaza specifically

denied all the allegations in the complaint.

Held:

Yes. The Sc held that the Court of Appeals failed

to consider paragraph 2 of petitionersanswer. There are

three modes of specific denial are contemplated by the

above provisions, namely: (1) by specifying each material

allegation of the fact in the complaint, the truth of which

the defendant does not admit, and whenever practicable,

setting forth the substance of the matters which he will

rely upon to support his denial; (2) by specifying so much

of an averment in the complaint as is true and material

and denying only the remainder; (3) by stating that the

defendant is without knowledge or information sufficient

to form a belief as to the truth of a material averment in

the complaint, which has the effect of a denial.Petitioners specifically denied the allegations

contained in paragraphs 2 and 3 of the complaint that

respondents have prior and continuous possession of the

disputed property which they used for their lumber and

copra business. Special and Affirmative Defenses

contained in petitioners answer glaringly show that

petitioners did not admit impliedly that respondents have

been in prior and actual physical possession of the

property.

Actually, petitioners are repudiating vehemently

respondentspossession, stressing that they (petitioners)

are the registered owners and lawful occupants thereof.

Respondents' reliance on Warner Barnes and Co., Ltd. vs.

Reyes in maintaining that petitioners made an implied

admission in their answer is misplaced. In an action for

forcible entry, the plaintiff must prove that he was in prior

possession of the land or building and that he was

deprived thereof by means of force, intimidation, threat,

strategy or stealth.

It must be stressed, though, that he cannot

succeed where it appears that, as between himself andthe defendant, the latter had a possession antedating his

own. To ascertain this, it is proper to look at the situation

as it existed before the first act of spoliation occurred.

Such determination in this case requires a review of

factual evidence, generally proscribed in a petition like

this. Considering, however, the conflicting factual findings

of the MTC and RTC on one hand, and the Court of

Appeals on the other, this Court takes exception to the

general rule in order to resolve the factual issues raised by

the parties. Petitioners possession of the property has

been sufficiently established by evidence. The title to the

property is in the name of petitioner Napoleon Gaza. On

record is a deed of sale showing that he bought the land

in 1961 from Angeles Vda. de Urrutia. Petitioner also

presented receipts of payment of realty taxes.

Effect of failure to make specific denials - Sec. 11, Rule 8

REPUBLIC vs SARABIA

G.R. No. 157847, August 25, 2005

Facts:

Sometime in 1956, the Air Transportation Office

(ATO) took possession and control of some 4,901 square-

meter portion of Lot 6068, a 10,468 square-meter lot

located at Pook Kalibo, Aklan. Lot 6068 is covered byOriginal Certificate of Title No. P-15596 of the Register of

Deeds of Aklan in the names of the private respondents

who are heirs of the late Segundo De la Cruz.

Initially, the ATO utilized the subject occupied

portion of Lot 6068 as an airport parking area. In time,

several structures were erected thereon, including the

control tower, the Kalibo crash fire rescue station, the

Kalibo airport terminal and the headquarters of the PNP

Aviation Security Group.

In 1995, stores and restaurants made of light

materials were constructed on the area outside the 4,901

square-meter portion occupied by ATO. In 1997, private

respondents filed a complaint for Recovery of Possession

with Damagesbefore the Municipal Trial Court of Kalibo.

The case, docketed as Civil Case No. 1644, is now pending

in said court. ATO intervened in that case and alleged that

the occupants of the stores and restaurants are its

lessees.

Petitioner assured private respondents that they

would be paid the fair market value of the subject land.

However, the parties did not agree on the amount ofcompensation therefor.

On June 25, 1998, petitioner Republic of the

Philippines, represented by the Air Transportation Office,

filed with the Regional Trial Court at Aklan an action for

the expropriation of the entire Lot 6068, thereat docketed

as Civil Case No. 5543.

Upon conduct of ocular inspection and hearing,

the commissioners submitted a report to the trial court

with the following recommendation: NOW THEREFORE,

after a brief discussion and in consideration of the

premises herein above presented, the Commissioners

hereby recommends (sic) and fix the value of 4,901 sq. m.

at P800.00 pesos per square meter and the remaining


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mmeikimouse

area of 5,567 square meters at P500.00 per square meter

as offered by the defendants.

On pre-trial, petitioner submitted a sketch plan

of Lot 6068, showing the relative location of the 4,901

square-meter portion it actually occupied.

The trial court adopted the aforestated

commissioners report which fixed the just compensation

for the 4,901 square-meter portion of Lot 6068 at P800.00

per square meter, the current market value of the

property in 1999. To the trial court, the date of the

issuance of the writ has to be considered in fixing the just

compensation because the same signified petitioners

proper acquisition and taking of the property which

involves not only physical possession but also the legal

right to possess and own the same.

The Court of Appeals AFFIRMED the appealed

decision of the trial court. In its decision, the appellate

court placed emphasis on the alleged failure of petitionerprove that the "taking" of the occupied 4,901 square-

meter portion of Lot 6068 occurred in 1956. Also, the

assailed decision reveals inaction of plaintiff-appellant in

proving its present claim which should have been done

the earliest possible opportunity. It was stated that the

plaintiff, despite receipt of copy of aforesaid report and

the expiration of the prescribed period to file any

comment thereto, opted not to file any pleading relative

thereto. Upon the other hand, the defendants interposed

no objection to said report.

Issue:

Whether or not private respondents admissions in their

Answer and Pre-Trial Brief are judicial admissions which

render the taking of the lot in 1956 conclusive or even

immutable.

Held:

Petitioner contends that contrary to what the

appellate court found, the taking of the property in 1956

or at least a wide portion thereof, was adequatelyestablished.

We agree with petitioner Republic that sufficient

evidence exists to prove that the taking occurred

sometime in 1956.

As borne by the records, private respondents

Answer and Pre-Trial Brief contain irrefutable admissions.

Thus, in their Answer, respondents declared, among

others, as follows:

1. That they admit each and every allegation in

paragraphs 1,2,3,4,5 and 6 of the complaint. They admit

that the portion of the land sought to be expropriated

which is indicated by the white shaded of the sketch plan

which is attached as ANNEX "B" of the complaint with an

area of 4,901 square meters, more or less, has been in the

possession of the plaintiff since 1956 up to the present.

Significantly, paragraph 6 of the complaint which

is among those admitted by the respondents, reads:

6. The subject property has been in possession

and control of ATO since 1956 and was initially devoted to

parking area. At present, several structures, are erected

on the area, to wit: the control tower, Kalibo crash fire

rescue station, the Kalibo airport terminal and the

headquarters of the Philippine National Police (PNP)

Aviation Security Group. Also, a part of the lot is leased to

concessionaires selling local products and souvenir items.

The remaining portion is intended for the expansion and

other improvement of the airport.

Besides, respondents no less averred in their Pre-

Trial Brief:

I. BRIEF STATEMENT OF THE RESPONDENTS

CLAIM1. That the defendants are the owners of that

certain parcel of land located at Pook, Kalibo, Aklan,

Philippines, which is covered by Original Certificate Title

No. T-1559-6. A portion of the land has been occupied by

the plaintiff for many years now which portion of land is

indicated on the sketch plan which is marked Annex "B"

of the complaint.

xxx xxx xxx

I1. ADMISSION

xxx xxx xxx

2. That this land has been in the possession of the plaintiff

for many years now without paying any rental to the

defendants. (Emphasis supplied)

xxx xxx xxx

Surely, private respondents admissions in their

Answer and Pre-Trial Brief are judicial admissions which

render the taking of the lot in 1956 conclusive or even

immutable. And well-settled is the rule that an

admission, verbal or written, made by a party in the

course of the proceedings in the same case, does notrequire proof. A judicial admission is an admission made

by a party in the course of the proceedings in the same

case, for purposes of the truth of some alleged fact,

which said party cannot thereafter disprove. Indeed, an

admission made in the pleading cannot be controverted

by the party making such admission and are conclusive

as to him, and that all proofs submitted by him contrary

thereto or inconsistent therewith should be ignored

whether objection is interposed by a party or not.


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Full Text Cases - Rule 8 - Manner of Making Allegations in Pleadings CIVIL PROCEDURE

mmeikimouse

G.R. No. L-29041 March 24, 1981

BACOLOD-MURCIA MILLING CO., INC., plaintiff-appellant,

vs.

FIRST FARMERS MILLING CO., INC., ETC.; RAMON NOLAN in his

capacity as Administrator of the Sugar Quota Administration,

ET AL., defendants; PHILIPPINE NATIONAL BANK and

NATIONAL INVESTMENT AND DEVELOPMENT

CORPORATION, defendants-appellees.

MELENCIO-HERRERA, J.:

This is an appeal taken by Bacolod-Murcia Milling Co., Inc. from

the Order dated November 28, 1967 issued by the Court of First

Instance of Rizal, Branch VI (Pasig), in Civil Case No. 9185, as

well as the Order dated March 5, 1968 denying the Motion for

its reconsideration. The Order had dismissed, after a preliminary

hearing, on the ground of lack of cause of action, the Amended

and Supplemental Complaint against the defendants Philippine

National Bank (PNB) and National Investment and Development

Corporation (NIDC).

Plaintiff-appellant had commenced, on March 18, 1966, an

action for Injunction and Prohibition with Damages against

defendants First Farmers Milling Co., Inc. (FFMC), various named

planters including those similarly situated, and Ramon Nolan in

his capacity as Administrator of the Sugar Quota Administration.

It was alleged,

9. That in the year 1964 the defendant First

Farmers Milling Co., Inc., established and

operated a sugar central known as the First

Farmers Sugar Central and for the crop years

1964-65 and 1965-66, the defendants

transferred their quota "A" allotments to

their co-defendant First Farmers Milling Co.,

Inc. and are actually milling their sugar with

the said First Farmers Milling Co., Inc., which

illegal transfer has been made over the

vigorous protest and objections of the

plaintiff, but with the unwarranted,

unjustified and likewise illegal approval of

their co-defendant the Sugar Quota

Administration;"1

After the defendants FFMC, the adhering planters, and theSugar Quota Administrator had filed their respective Answers,

plaintiff-appellant filed, on May 2, 1967, a Motion to admit

Amended and Supplemental Complaint. As amended, PNB and

NIDC were included as new defendants in view of the FFMC

allegation in its Answer that the non-inclusion of PNB and NIDC

as party defendants, "who became creditors of defendant FFMC

central prior to the institution of the instant case, and who

therefore are necessary parties, is fatal to the complaint. " It

was alleged this time,

20. That defendants NIDC and PNB have

extended loans to defendant sugar mill in

the amount of P12,210,000.00 on June 18,1965, and P4,000,000.00 on Dec. 14, 1966,

respectively, to assist in the illegal creation

and operation of said mill, hence, a joint

tortfeasor in the trespass of plaintiff's rights,

aggravated by the fact that defendant mill

has only a paid up capital stock of

P500,000.00, hence, said loans are far

beyond the limits fixed by law;2

It was then prayed that defendants be ordered

... jointly and severally to pay plaintiff actual

and exemplary damages of not less than Fl

million pesos and attorney's fees in the

amount of 101-C of said damages, plus legal

interest from the filing of the original

complaint, plus costs.

The defendants. except the Sugar Quota Administrator, filed

their respective Answer to the Amended and Supplemental

Complaint. For their part, PNB and NIDC followed this with a

Motion to Set for Preliminary Bearing their special and

affirmative defenses, which were also grounds for dismissal.

Opposition, reply memoranda, rejoinder, and supplementary

reply memoranda on the Motion were submitted by the

contending parties.

In their Answer, the PNB and NIDC had contended:

xxx xxx xxx

5. That both the defendants PNB and NIDC

have no participation whatsoever either

directly or indirectly on the alleged illegal

(transaction) transfers of the defendant

planters from the plaintiff to the defendant

mill, and therefore, the defendants PNB and

NIDC could not be held liable for any

damage that the plaintiffs alleged to have

suffered from the said particular act

complained of;

6. That the granting of loans by the

defendants PNB and NIDC in favor of the

defendant mill to finance the construction of

a sugar central did not violate any rights of

the plaintiff in view of the fact that the said

loans were extended in the ordinary and

usual course of business, as specifically

authorized-under the respective Charter of

the defendants PNB and NIDC, hence, the

latter defendants did not commit anytortious action against the plaintiffs and,

consequently, the plaintiffs have no cause of

action against the defendants PNB and

NIDC.3

As stated at the outset, the trial Court dismissed the Amended

and Supplemental Complaint against the PNB and the NIDC

after a preliminary hearing on the ground of lack of cause of

action.

The only issue then is whether or not the allegations of the

Amended and Supplemental Complaint constituted a sufficient

cause of action against the PNB and NIDC.

A negative finding is called for.


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mmeikimouse

It is basic that the Complaint must contain a concise statement

of the ultimate facts constituting the plaintiff's cause of action.

"Ultimate facts" are the important and substantial facts which

either directly form and basis of the plaintiff's primary right and

duty, or directly make up the wrongful acts or omissions by the

defendant.4

When the ground for dismissal is that the Complaint states no

cause of action, the rule is that its sufficiency can only bedetermined by considering the facts alleged in the Complaint

and no other.5The court may not consider other matters

outside of the Complaint.6Defenses averred by the defendant

are not to be taken into consideration in ruling on the

motion.7The allegations in the Complaint must be accepted as

true and it is not permissible to go beyond and outside of them

for date or facts.8And the test of sufficiency of the facts alleged

is whether or not the Court could render a valid judgment as

prayed for accepting as true the exclusive facts set forth in the

Complaint.9

The subject Amended and Supplemental Complaint fails to meet

the test. It should be noted that it charges PNB and NIDC withhaving assisted in the illegal creation and operation of

defendant sugar mill. Granting, for the sake of argument, that,

indeed, assistance in the "illegal" act was rendered, the same,

however, is not supported by well-pleaded averments of facts.

Nowhere is it alleged that defendants-appellees had notice,

information or knowledge of any flaw, much less any illegality,

in their co-defendants' actuations, assuming that there was such

a flaw or illegality. This absence is fatal and buoy-up instead the

PNB-NIDC's position of lack of cause of action.

Although it is averred that the defendants' acts were done in

bad faith,10

the Complaint does not contain any averment of

facts showing that the acts were done in the manner alleged.

Such a bare statement neither establishes any right or cause of

action on the part of the plaintiff-appellant. It is a mere

conclusion of law not sustained by declarations of facts, much

less admitted by defendants-appellees. It does not, therefore,

aid in any wise the complaint in setting forth a cause of

action.11

Defendants-appellees are not fairly apprised of the act

or acts complained of.

Besides, bad faith is never presumed (Civil Code, Art. 527). And,

it has been held that "to support a judgment for damages,facts

which justify the inference of a lack or absence of good faith

must be alleged and proven."12

While it is a settled rule that a defective complaint may be cured

by the introduction of sufficient evidence so as to constitute the

cause of action which the plaintiff intended to set forth in the

complaint, the same merits the Court's blessings only and unless

there is no objection or opposition from the side of the

defendant. It is obvious that the defendants-appellees, in the

case at bar, were vigilant of their right and were on their guard

from the very initiation of the complaint against them.

Plaintiff-appellant's allegation "that defendants NIDC and PNB

have extended loans to defendant sugar mill ..., to assist in the

illegal creation and operation of said mill, hence, a joint

tortfeasor in the trespass of plaintiff's rights. ..." is, therefore, a

mere conclusion not warranted by sufficient facts. What

appears from the record is that PNB and NIDC came into the

picture in the ordinary and usual course of its business after the

borrowing entity had established itself as capable of being

treated as a new milling district (FFMC is officially designated as

Mill District No. 49) because it could already operate and had its

array of adhering planters. "The doing of an act which is in itself

perfectly lawful win not render one liable as for a tort, simply

because the unintended effect of such act is to enable or assist

another person to do or accomplish a wrong,"13

assuming, of

course, that there was such a wrong.

WHEREFORE, without resolving the issue in the main case

regarding the alleged illegal creation and operation of FirstFarmers Milling, Co., Inc., there having been no presentation of

evidence as yet in the lower Court, the challenged Order

dismissing the Amended and Supplemental Complaint against

defendants-appellees as well as the Order denying

reconsideration thereof, is hereby affirmed, and the appeal

dismissed. Costs against plaintiff-appellant.

SO ORDERED.


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mmeikimouse

G.R. No. 94093 August 10, 1993

FAR EAST MARBLE (PHILS.), INC., LUIS R. TABUENA, JR. and

RAMON A. TABUENA, petitioners,

vs.

HONORABLE COURT OF APPEALS and BANK OF PHILIPPINE

ISLANDS, respondents.

Minerva C. genevea for petitioners.

Sabino B. Padilla IV for Bank of the Philippines Islands.

MELO, J.:

This has reference to a petition for review by certiorariseeking

the reversal of the decision of the Court of Appeals dated June

26, 1990, in CA-G.R. CV No. 14404 (Bellosillo (P), Marigomen,

Sempio-Diy, JJ.) which set aside the order of the Regional Trial

Court of the National Capital Judicial Region (Manila, BranchXIV), dated June 1, 1987 and remanded the case to the court a

quo for further proceedings on the grounds that the complaint

for foreclosure of chattel mortgage with replevin had not

prescribed and that, there being a cause of action, further

proceedings, including the resolution of the motion for

summary judgment may be pursued.

The antecedent facts of the case may be chronicled as follows:

On February 5, 1987, herein respondent Bank of the Philippines

Islands (BPI) filed a complaint for foreclosure of chattel

mortgage with replevin against petitioner Far East Marble

(Phils.), Inc. (Far East), Ramon A. Tabuena and Luis R. Tabuena,Jr. which was docketed as Civil Case No. 87-39345 of Branch XIV

of the Regional Trial Court of the National Capital Judicial Region

stationed in Manila.

The complaint pertinently alleged:

FIRST CAUSE OF ACTION AGAINST FAR EAST

2. That on various dates and for valuable

consideration, the defendant Far East

received from Commercial Bank and Trust

Company . . . now merged with and into the

plaintiff bank . . . several loans evidenced bypromissory notes executed by said Far East,

photo copies of which are attached hereto

and made integral parts hereof as Annexes

A, B and C.

3. That said promissory notes . . . .have long

matured but despite repeated requests and

demands for payment thereof with interests

and related charges due, Far East has failed

and refused to pay. The account due on said

promissory notes with interests and related

charges as of 10 September 1986 is

P4,471,854.32 itemized in a statement ofaccount, copy of which is attached hereto

and made a part hereof as Annex D

4. That because of Far East's failure and

refusal in bad faith to pay its long past due

obligations under the promissory notes

above alleged, plaintiff was constrained to

file this suit . . .

SECOND CAUSE OF ACTION AGAINST FAR

EAST

6. That on various dates and for valuable

consideration, the defendant Far East

received from and was extended by . . .

plaintiff

Bank . . . credit facilities in the form of Trust

Receipts, photo copies of which are hereto

attached and made integral parts hereof as

Annexes E, F, G, H, I and J.

7. That said Trust Receipts . . . have long

matured and despite repeated requests and

demands for payment thereof with interests

and related charges due Far East has failedand refused to pay. The amount due on said

Trust Receipts with interests and related

charges as of 10 September 1986 is

P2,170,476.62 as itemized in a statement of

account, copy of which is attached hereto

and made an integral part hereof as

Annex K.

8. That because of far East's failure and

refusal to pay its long past due obligations

under the Trust Receipts above alleged,

plaintiff was constrained to file this suit . . .

xxx xxx xxx

10. That in September 1976 Far East

executed in favor of . . . plaintiff Bank . . . a

Chattel Mortgage, photocopy of which is

attached hereto and made an integral part

hereof as Annex L, to secure the payment of

its loan obligations including interests and

related charges. . .

xxx xxx xxx

CAUSE OF ACTION AGAINST INDIVIDUAL

DEFENDANTS RAMON A. TABUENA AND

LUIS R. TABUENA, JR.

13. That in September 1976, defendants

Ramon A. Tabuena and Luis R. Tabuena, Jr.

executed in favor of . . . plaintiff Bank . . . a

"continuing guaranty" photocopy of which is

attached hereto and made a part hereof as

Annex M, whereby they bind

themselves,jointly and severally, to answer

for the loan obligations to the Bank of

defendant Far East.

14. That despite requests and demands for

their payment of Far East's long past due

accounts, said defendants Ramon A.

Tabuena and Luis R. Tabuena, Jr. have failed


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and refused to pay said Far East accounts

and have already defaulted in their solidary

obligationunder said "continuing Guaranty."

15. That because of the failure and refusal of

defendants Ramon A. Tabuena and Luis R.

Tabuena, Jr. in bad faith to pay Far East's

past due accounts under their solidary

obligation stipulated in said "ContinuingGuaranty,". . . plaintiff has been constrained

to file suit against them . . .

(pp. 32-36, Rollo.)

On March 10, 1987, Far East filed an answer with compulsory

counterclaim admitting the genuineness and due execution of

the promissory notes attached as Annexes A, B, and C to the

complaint, but alleging further that said notes became due and

demandable on November 19, 1976, respectively. On the basis

of the maturity dates of the notes, Far East thereupon raised

the affirmative defenses of prescription and lack of cause of

action as it denied the allegation of the complaint that BPI had

made previous repeated requests and demands for payment.Far East claimed that during the more than 10 years which

elapsed from the dates of maturity of said obligations up to the

time the action for foreclosure of the chattel mortgage securing

said obligations was filed, it had not received from BPI or its

predecessor any demand for payment and thus, it had "labored

under the belief that they [the obligations] have already been

written off" in the books of BPI. Moreover, Far East denied the

genuineness and due execution of the trust receipts and of the

Statement of Account (pp. 78-79, Rollo). A motion to hear

affirmative defenses was attached to the answer.

On March 16, 1987, BPI filed an opposition to the motion to

hear affirmative defenses, alleging that its cause of action

against Far East have not prescribed, since within 10 years from

the time its cause of action accrued, various written

extrajudicial demands (attached thereto as Annexes "A" and

"A-1") were sent by BPI and received by Far East. Moreover, BPI

offered several written documents whereby Far East supposedly

acknowledged its debt to BPI (Annexes "B" to "B-6). Withal, BPI

maintained, the ten-years prescriptive period to enforce its

written contract had not only been interrupted, but was

renewed.

On the same date, BPI filed a motion for summary judgment on

the ground that since Far East had admitted the genuineness

and due execution of the promissory notes and the deed of

chattel mortgage annexed to its complaint, there was no

genuine issue as to any material fact, thus entitling BPI to a

favorable judgment as a matter of law in regard to its causes of

action and on its right to foreclose the chattel mortgage.

On June 1, 1987, the trial court issued an order to the following

effect:

WHEREFORE, the Court issues this Order:

1 Dismissing the complaint against the

defendant Far East Marble (Phils.) Inc. for

lack of cause of action and on grounds ofpre[s]cription:

2 Denying for lack of merit the Motion for

Summary Judgment and the Supplemental

Motion for Summary Judgment;

3 Striking off from the records the order

of March 6, 1987 and recalling the writ of

replevin issued by this Court, and dismissing

all the contempt charges;

4 Ordering the Sheriff to desist

permanently from enforcing the writ of

seizure and to return all the property seized

by him under the Writ of Replevin, to the

defendant Far East Marble (Phils.) Inc.

immediately from receipt of a copy of this

order, and in case of his failure to do so, the

value thereof shall be charged against the

replevin bond. (pp. 89-90, Rollo.)

An appeal therefrom was forthwith interposed by BPI, assailing

the findings of the trial court with respect to its finding that

BPI's cause of action has prescribed and the consequent denialof the motion for summary judgment.

On June 26, 1990, the Court of Appeals rendered a decision

setting aside the June 1, 1987 order of the court of origin and

remanding the case to said court for further proceedings,

"including the resolution anew of plaintiff's motion for summary

judgment . . ., reception of the evidence of the parties and,

thereafter, to decide the case as the facts may warrant." (pp.

98-99, Rollo.)

Hence, the instant petition for review on certiorarifiled by Far

East, anchored on the following assigned errors:

I

THE COURT OF APPEALS ERRED WHEN IT

DISREGARDED THE FINDINGS OF THE TRIAL

COURT THAT PRESCRIPTION HAS SET IN

OBLIVIOUS OF THE FACT THAT THIS FINDING

WAS REACHED AFTER DUE HEARING.

II

THE COURT OF APPEALS GRAVELY ERRED IN

RULING FOR A REOPENING OF THE TRIALFOR THE RECEPTION OF EVIDENCE ON BOTH

ISSUES OF PRESCRIPTION AND SUMMARY

JUDGMENT WHEN THESE WERE ALREADY

TRIED AND WEIGHED BY THE TRIAL COURT.

III

THE COURT OF APPEALS ERRED IN

ASSUMING JURISDICTION OVER THE CASE

CONSIDERING THAT THE ISSUES RAISED

THEREIN INVOLVE PURE QUESTIONS OF

LAW. (p. 14, Rollo.)

The issue of jurisdiction being basis, we shall endeavor to

dispose of it ahead of the other topics raised by petitioners


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Petitioner Far East maintains the position that the Court of

Appeals stepped beyond the limits of its authority when it

assumed jurisdiction over the appeal filed by BPI inasmuch as

said appeal raised only the pure questions of law or whether or

not the trial court erred: (1) in dismissing BPI's complaint for

lack of cause of action; (2) in finding that BPI's cause of action

had prescribed; and (3) in ruling that BPI is not entitled to

summary judgment on its causes of action against Far East.

Consequently, Far East contends, BPI should have taken its casedirectly to this Court.

There is no dispute with respect to the fact that when an appeal

raises only pure questions of law, it is only this Court which has

jurisdiction to entertain the same (Article VIII, Section 5 (2) (e),

1987 Constitution; Rule 45, Rules of Court; see also Santos, Jr.

vs. Court of Appeals, 152 SCRA 378 [1987]). On the other hand,

appeals involving both questions of law and fact fall within the

exclusive appellate jurisdiction of the Court of Appeals. At this

point, there seems to be a need to distinguish a question of law

from a question of fact.

It has been held in a number of cases (Medina vs. Asistio, Jr .,191 SCRA 218 [1990]; Gan vs. Licup Design Group, Inc., G.R. NO.

94264, July 24, 1990, En Banc, Minute Resolution; Pilar

Development Corp. vs. Intermediate Appellate Court, et al., 146

SCRA 215 [1986]; Ramos vs. Pepsi-Cola Bottling Co., 19 SCRA

289 [1967]; Consolidated Mines, Inc. vs. Court of Tax Appeals, et

al., 58 SCRA 618 [1974]), that there is a "question of law" when

there is doubt or difference of opinion as to what the law is on

certain state of facts and which does not call for an examination

of theprobative value of the evidence presentedby the parties-

litigants. On the other hand, there is a "question of fact" when

the doubt or controversy arises as to the truth or falsity of the

alleged facts. Simply put, when there is no dispute as to fact,the

question of whether or not the conclusion drawn therefrom is

correct is a question of law.

In the case at bar, BPI alleged in its complaint (Rollo, p. 42) that

on various dates and for valuable consideration, it extended to

Far East several loans, evidenced by promissory notes, and

credit facilities in the form of trust receipts, and that despite

repeated requests and demands for payment thereof, Far East

had failed and refused to pay. Thus BPI sought foreclosure of

the chattel mortgage securing such indebtedness.

In its answer (Rollo, p. 78), Far East admitted the genuineness

and due execution of the promissory notes involved in the case,

but denied BPI's allegation that repeated demands for payment

were made by BPI on it. Far East then raised the affirmative

defenses of prescription and lack of cause of action, arguing that

since the promissory notes matured in 1976 while BPI filed its

action to foreclose the chattel mortgage only in 1987 (or more

than 10 years from the time its cause of action accrued), and

there being no demand for payment which would interrupt the

period of prescription for instituting said action, BPI's claims

have prescribed.

BPI, however, countered that its allegation of repeated

demands on Far East for payment sufficiently stated a cause of

action; that within ten years from the time its cause of action

accrued in 1976, it sent written extrajudicial demands on Far

East requesting payment of its due and outstanding obligations;that within that 10-years period, it received written

acknowledgments of debt from Far East; and, that these

demands for payment and acknowledgments of debt effectively

interrupted and renewed the prescriptive period. Worth noting

is the fact that the acknowledgment of debt and the demands

for payment, including the affidavits of BPI's counsel who

prepared the demand letter and that of BPI's messenger who

allegedly personally delivered said letters to Far East were duly

annexed to BPI's pleadings.

From the foregoing exchange of pleading, the conflicting

allegations of factby the contending parties sprung forth. It is

thus quite obvious that the controversy centered on, and thedoubt arose with respect to, the very existence of previous

demands for payment allegedly made by BPI on petitioner Far

East, receipt of which was denied by the latter. This dispute or

controversy inevitably raised a question of fact. Such being the

case, the appeal taken by BPI to the Court of Appeals was

proper.

We now come to petitioner's first two assigned errors.

The trial court's finding that BPI's claims due to prescription, can

no longer prosper, is inextricably connected with, and

underpinned by, its other conclusion that BPI's allegation that it

made "repeated requests and demands for payment" is notsufficient to state a cause of action. Moreover, in its questioned

Order (Rollo, p. 88) dated June 1, 1987, the trial court held that:

Apart from the fact that the complaint failed

to allege that the period of prescription was

interrupted, the phrase "repeated requests

and demands for payment" is vague and

incomplete as to establish in the minds of

the defendant, or to enable the Court to

draw a conclusion, that demands or

acknowledgment [of debt] were made that

could have interrupted the period of

prescription. (p. 88,Rollo.).

Seemingly, therefore, the trial court believed that the

interruption of the prescriptive period to institute an action is

an ULTIMATE FACT which had to be expressly and indispensably

pleaded by BPI in its complaint, and that failure to so alleged

such circumstance is fatal to BPI's cause of action.

We believe and hold otherwise.

Section 3 of Rule 6 state that a "complaint is a concise

statement of the ultimate facts constituting the plaintiff's cause

or causes of action." Further elaborating thereon, Section 1 of

Rule 8 declares that every pleading, including, of course, acomplaint, "shall contain in a methodical and logical form, a

plain, concise and direct statement of the ultimate facts . . .

omitting the statement of mere evidentiary facts." "Ultimate

facts" are the essential and substantial facts which either form

the basis of the primary right and duty or which directly make

up the wrongful acts or omissions of the defendant (Tantuico,

Jr. vs. Republic of the Phil., et al., 204 SCRA 428 [1991]), while

"evidentiary facts" are those which tend to prove or establish

said ultimate facts.

What then are the ultimate facts which BPI had to allege in its

complaint so as to sufficiently establish its cause of action?

Basically, a cause of action consists of three elements, namely:

(1) the legal right of the plaintiff; (2) the correlative obligation of

the defendant; and (3) the act or omission of the defendant in

violation of said legal right (Nabus vs. Court of Appeals, et al.,


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193 SCRA 732 [1991]); Rebollido vs. Court of Appeals et al., 170

SCRA 800 [1989]). These elements are manifest in BPI's

complaint, particularly when it was therein alleged that: (1) for

Documents

Rule 8 (Outline, Case Digest & Full Text)