1. Alba vs.
Malapajo
Doctrine
 To determine whether a counterclaim is
compulsory or permissive, we have
devised the following tests:
 Are the issues of fact and
law raised by the claim and
by the counterclaim largely
the same?
 Would res judicata bar a
subsequent suit on
defendants’ claims, absent
the compulsory
counterclaim rule
 Will substantially the same
evidence support or refute
plaintiffs’ claim as well as
the defendants’
counterclaim?
 Is there any logical relation
between the claim and the
counterclaim?
Facts
 Alba filed with the RTC of Roxas City a complaint
against Malapajo for the recovery of ownership
of a certain parcel of land and/or declaration of
nullity or cancellation of title and damages
alleging forgery over the transaction.
 Malapajo, in his answer with counterclaim,
questioned the propriety of Alba’s claim
asserting that (1) they were innocent purchasers
for value and (2) that Malapajo owed them a to the amount and the nature thereof,
certain sum of money secured by the subject
properties
 Alba now questions the jurisdiction of the RTC of
Roxas City over Malapajo’s Permissive
Counterclaim contending that there should have
been payment of docket fees and a filing of a
certification against forum shopping
 The RTC ruled in favor of Malapajo finding that
his counterclaim is compulsory in nature and
thus, does not require the payment of docket
fees
 The CA affirmed the order of the RTC
Issue
 Whether or not Malapajo’s Counterclaim is
Permissive in nature?
Ruling
 No
 A counterclaim is any claim which a
defending party may have against an
opposing party.
 A compulsory counterclaim is one which,
being cognizable by the regular courts of
justice, arises out of or is connected with
the transaction or occurrence constituting
the subject matter of the opposing party's
claim and does not require for its
adjudication the presence of third parties
of whom the court cannot acquire
jurisdiction. Such a counterclaim must be
within the jurisdiction of the court both as
except that in an original action before
the Regional Trial Court, necessarily
connected with the subject matter of the
opposing party's claim or even where
there is such a connection, the Court has
no jurisdiction to entertain the claim or it
requires for adjudication the presence of
third persons over whom the court
acquire jurisdiction. A compulsory
counterclaim is barred if not set up in the
same action.
 To determine whether a counterclaim is
compulsory or permissive, we have
devised the following tests:
 Are the issues of fact and
law raised by the claim and
by the counterclaim largely
the same?
 Would res judicata bar a
subsequent suit on
defendants’ claims, absent
the compulsory
counterclaim rule
 Will substantially the same
evidence support or refute
plaintiffs’ claim as well as
the defendants’
counterclaim?
 Is there any logical relation
between the claim and the
counterclaim?
 A positive answer to all four questions
would indicate that the counterclaim
is compulsory.
 Petitioner seeks to recover the subject
property by assailing the validity of
the deed of sale on the subject
property which he allegedly executed
in favor of respondents Malapajo on
the ground of forgery. Respondents
counterclaimed that, in case the deed
of sale is declared null and void, they
be paid the loan petitioner obtained
from them plus the agreed monthly
interest which was covered by a real
estate mortgage on the subject
property executed by petitioner in
favor of respondents.
 There is a logical relationship between
the claim and the counterclaim, as the
counterclaim is connected with the
transaction or occurrence constituting
the subject matter of the opposing
party's claim. Notably, the same
evidence to sustain respondents'
counterclaim would disprove
petitioner's case. In the event that
respondents could convincingly
establish that petitioner actually
executed the promissory note and the
real estate mortgage over the subject
property in their favor then
petitioner's complaint might fail.
Petitioner's claim is so related
logically to respondents' counterclaim,
such that conducting separate trials
for the claim and the counterclaim
would result in the substantial
duplication of the time and effort of
the court and the parties.
 Since respondents' counterclaim is
compulsory, it must be set up in the
same action; otherwise, it would be
barred forever. If it is filed
concurrently with the main action but
in a different proceeding, it would be
abated on the ground of litis
pendentia; if filed subsequently, it
would meet the same fate on the
ground of res judicata.
 There is, therefore, no need for
respondents to pay docket fees and to
file a certification against forum
shopping for the court to acquire
jurisdiction over the said
counterclaim.
2. March 11, 2015 G.R. No. 155701
LIM TECK CHUAN, Petitioner, vs. SERAFIN UY and
LEOPOLDA CECILIO, LIM SING CHAN @ HENRY LIM,
Respondents.
A. DOCTRINE
A dismissal of an action is different from a mere dismissal of the
complaint. For this reason, since only the complaint and not the
action is dismissed, the defendant in spite of said dismissal may
still prosecute his counterclaim in the same action.
B. RELEVANT FACTS
Antonio owns a parcel of land in Lapulapu, Cebu, which he sold
to a certain Francisco but the title’s registration was not
transferred to the new owner. Thereafter, Serafin bought the
parcel of land from Francisco. Francisco failed to have the title of
the said land transferred in the name of Serafin. Hence, Serafin
filed an action in court for the re-issuance of the owner’s
duplicate of the certificate of title. The suit filed by Serafin was
granted by the court. However, a certain Lim Teck Chuan,
claiming to be one of the heirs of Antonio, the original owner,
filed an opposition and sought to have the court’s decision
nullified saying that the certificate of title was not lost and is
actually in his custody as the rightful owner. As the case was
pending, Henry Lim, claiming to be the sole heir of Antonio, sold
the land to a certain Leopolda.
Seeking to secure his rights, Serafin filed an action for quieting of
title. Leopolda filed an Answer before the court with
corresponding counterclaim against Serafin and cross-claim
against Henry Lim. Lim Teck Chuan also filed an Answer and
accompanying counterclaim and crossclaim against other
persons claiming ownership over the land. Thereafter, Serafin
and Leopolda filed a Joint Motion to Dismiss due to amicable
settlement and waiver of counterclaims. Lim Teck Chuan
opposed the motion to dismiss while reiterating that he intends to
have his counterclaims and cross-claims resolved in the present
case.
The lower court dismissed the case in its entirety with its
counterclaims and cross-claims.
C. PERTINENT ISSUE
Whether or not dismissal of the complaint upon motion of the
plaintiff also calls for the dismissal of the counterclaims and
cross-claims filed by the defendant therein.
D. CATEGORICAL RULING

No, the RTC erred when it dismissed the case when the present
rules state that the dismissal shall be limited only to the
complaint. A dismissal of an action is different from a mere
dismissal of the complaint. For this reason, since only the
complaint and not the action is dismissed, the defendant in spite
of said dismissal may still prosecute his counterclaim in the
same action.
The Rules recognize the right of the defendant to prosecute the
counterclaim either in the same or separate action
notwithstanding the dismissal of the complaint, and without
regard as to the permissive or compulsory nature of the
counterclaim.
3. Metropolitan Bank vs. CPR Promotions (G.R. No.
200567, June 22, 2015; Velasco Jr.,J)
Doctrine: It is elementary that a defending party's compulsory
counterclaim should be interposed at the time he files his
Answer, and that failure to do so shall effectively bar such claim.
Facts: Respondent, CPR Promotions obtained loans from
petitioner, MBTC. These loans were covered by promissory
notes signed by respondents, spouses Reynoso. To secure the
loans spouses Reynoso executed two deeds of real estate
mortgage. Upon maturity of the loans, respondents defaulted,
MBTC filed a petition for extra-judicial foreclosure of the real
estate mortgages. Subsequently, the mortgaged properties were
sold at a public auction and MBTC being the highest bidder.
Notwithstanding the foreclosure of the mortgaged properties
MBTC alleged that there remained a deficiency balance of Php
2, 628,520.73, plus interest and charges as stipulated and
agreed upon in the promissory notes and deeds of real estate
mortgages. Respondents failed to settle the alleged deficiency.
Thus, MBTC filed an action for collection of sum of money
against respondents before the RTC. The RTC ruled in favor of
MBTC, however, on appeal CA reversed the decision of the RTC
and ordered Metrobank to refund to respondents’ spouses
Reynoso the amount of PhP 722,602.22 representing the
remainder of the proceeds of the foreclosure sale plus legal
interest of 6% in favor of respondents. Petitioner asserts that the
CA’s grant of a refund is erroneous because respodents never
set up a counterclaim for refund of any amount.
Issue/s:
1. Whether or not a claim for recovery of an excess in the bid
price should be set up in the action for payment of a deficiency
filed by MBTC against spouses Reynoso as a compulsory
counterclaim.
2. Whether or not respondents able to timely setup their claim for
refund for the deficiency of the proceeds of the foreclosure sale.
Ruling:
1. Yes.
In determining whether a counterclaim is compulsory or
permissive, We have, in several cases, utilized the following
tests:(1) Are the issues of fact or law raised by the claim and the
counterclaim largely the same?; (2) Would res judicata bar a
subsequent suit on defendant's claims, absent the compulsory
counterclaim rule?; (3) Will substantially the same evidence
support or refute plaintiffs claim as well as the defendant's
counterclaim?; and (4) Is there any logical relation between the
claim and the counterclaim, such that the conduct of separate
trials of the respective claims of the parties would entail a
substantial duplication of effort and time by the parties and the
court?.
This test is the "compelling test of compulsoriness." Based on
the above tests, it is evident that a claim for recovery of the
excess in the bid price vis-a-vis the amount due should be
interposed as a compulsory counterclaim in an action for
recovery of a deficiency filed by the mortgagee against the
debtor-mortgagor. First, in both cases, substantially the same
evidence is needed in order to prove their respective
claim. Second, adjudication in favor of one will necessarily bar
the other since these two actions are absolutely incompatible
with each other; a debt cannot be fully paid and partially unpaid
at the same time. Third, these two opposing claims arose from
the same set of transactions. And finally, if these two claims
were to be the subject of separate trials, it would definitely entail
a substantial and needless duplication of effort and time by the
parties and the court, for said actions would involve the same
parties, the same transaction, and the same evidence. The only
difference here would be in the findings of the courts based on
the evidence presented with regard to the issue of whether or not
the bid prices substantially cover the amounts due.
2. No. Respondents belatedly raised their compulsory
counterclaim.
It is elementary that a defending party's compulsory counterclaim
should be interposed at the time he files his Answer, and that
failure to do so shall effectively bar such claim. As it appears
from the records, what respondents initially claimed herein were
moral and exemplary damages, as well as attorney's fees. Then,
realizing, based on its computation, that it should have sought
the recovery of the excess bid price, respondents set up another
counterclaim, this time in their Appellant's Brief filed before the
CA. Unfortunately, respondents' belated assertion proved fatal to
their cause as it did not cure their failure to timely raise such
claim in their Answer. Consequently, respondents' claim for the
excess, if any, is already barred.
4. NELSON P. VALDEZ, Petitioner, v. ATTY. ANTOLIN
ALLYSON DABON, JR., Respondent.
DOCTRINE
A negative pregnant is a form of negative expression which
carries with it an affirmation or at least an implication of some
kind favorable to the adverse party.
FACTS
 Petitioner Valdez filed a case for disbarment against
Respondent Dabon, a division clerk of the CA, for gross
immorality for allegedly carrying on an adulterous
relationship with his wife, Sonia Valdez, who was a
 court stenographer, which was made possible by sexual
assaults and maintained through threat and
intimidation.
 Respondent Dabon categorically denies all of the
accusation against him and that the same was baseless
and unfounded and that the complaint for disbarment
was merely calculated to harass, annoy and besmirch
his reputation.
 the IBP Commission on Bar Discipline found that the
charge against respondent Atty. Dabon had been
sufficiently proven. The IBP recommended that Dabon
be disbarred
 Dabon’s MR having been denied, he appealed to the SC,
thus, the present petition
ISSUE
WON Atty Dabon should be disbarred
HELD
 YES. Lawyers have been repeatedly reminded by the
Court that possession of good moral character is both a
condition precedent and a continuing requirement to
warrant admission to the Bar and to retain membership
in the legal profession.
 To begin with, the Court notes from the respondent's
Comment that he appeared to be perplexed as to
whether or not he would admit his extramarital liaisons
with Sonia. As Investigating Commissioner Chan stated
in his report, Atty. Dabon interposed a blanket denial of
the romantic involvement but at the same time, he
seemed to have tacitly admitted the illicit affair only
that it was not attended by sexual assaults, threats
and intimidations. The Court also observed that he
devoted considerable effort to demonstrate that the
affair did not amount to gross immoral conduct and
that no sexual abuse, threat or intimidation was exerted
upon the person of Sonia, but not once did he squarely
deny the affair itself.
 In other words, the respondent's denial is a negative
Facts:
pregnant, a denial coupled with the admission of
substantial facts in the pleading responded to which are
not squarely denied. Stated otherwise, a negative
pregnant is a form of negative expression which carries
with it an affirmation or at least an implication of some
kind favorable to the adverse party. Where a fact is
alleged with qualifying or modifying language and the
words of the allegation as so qualified or modified are
literally denied, it has been held that the qualifying
circumstance alone is denied while the fact itself is
admitted.20 It is clear from Atty. Dabon's Comment that
his denial only pertained as to the existence of a forced
illicit relationship. Without a categorical denial thereof,
he is deemed to have admitted his consensual affair
with Sonia.
5. REPUBLIC OF THE PHILIPPINES vs HON.
SANDIGANBAYAN, FERDINAND MARCOS, AND
IMELDA ROMUALDEZ MARCOS
GR No. 152154 ; 15 July 2003
 A negative pregnant is a denial pregnant with the
admission of the substantial facts in the pleading
responded to which are not squarely denied, in effect an
admission of the averments it was directed at. It is a form
of negative expression which carries with it an affirmation
or at least an implication of some kind favorable to the
adverse party.
 A profession of ignorance about a fact which is patently
and necessarily within the pleader’s knowledge or means
of knowing is as ineffective as no denial at all.
 The form of denial based on ignorance or lack of
information must be availed of with sincerity and in good
faith, and certainly not for the purpose of confusing the
adverse party as to what allegations of the petition are
really being challenged, nor should it be made for the
purpose of delay.
 This case involves the ill-gotten wealth of the
Marcoses whereby the Republic, through Presidential
Commission on Good Governance (PCGG) filed
before the Sandiganbayan a petition for forfeiture
seeking for the declaration of aggregate amount of
US$356M deposited in escrow in PNB as ill-gotten
wealth.
 The funds were said to be previously held by various
foreign foundations in certain Swiss banks.
 Republic also sought for the forfeiture of US$25M and
US$5M in treasury notes which exceeded the Marcos
couple’s salaries, other lawful income as well as
income from legitimately acquired property. Said
treasury notes are now frozen at BSP, by virtue of
freeze order issued by PCGG.
 Respondents filed their answer.
 Before case was set for pre-trial, a General
Agreement and Supplemental Agreements were
executed by Marcos children and PCGG Chairman
Gunigundo for a global settlement of assets of the
Marcos family. The General agreement provided for
the fact that Petitioner obtained a judgment from
Swiss Federal Tribunal that the US$365M belongs in
principle to the Republic of the Philippines.
 Marcos children filed a motion for approval of said
agreements, whereby Ferdinand Jr was presented as
witness for establishing partial implementation of
agreements.
 Petitioner filed a motion for summary judgment
and/or judgment on pleadings.
 Imelda Marcos filed opposition to motion which was
later adopted by the children.
 SB denied motion for summary judgment on the
ground that motion to approve compromise
 agreement took precedence over motion for
summary judgment.
 Imelda filed a manifestation she was not a party to
the motion for approval, that she owned 90% of the
funds with the 10% belonging to the Marcos estate.
 Petitioner filed with District Attorney in Zurich an
additional request for transfer of deposits to an
escrow account in PNB, which was granted. Such
ruling was upheld by Swiss Federal SC
 Marcos children moved that funds be placed in
custodia legis because the deposit in escrow was in
danger of dissipation by petitioner. SB granted the
motion.
 Petitioner filed a motion for summary judgment on
the grounds that the essential facts which warrant
forfeiture are admitted by respondents in pleadings
and that respondents’ admission that they do not
have any interest or ownership tenders no genuine
issue as to any material fact in the action.
 SB granted motion.
 Imelda filed a Motion for Reconsideration
 SB reversed its resolution thus denying the motion for
summary judgment as the evidence did not prove
that money in Swiss Bank belonged to Marcos
spouses because no legal proof exists in record.
Issue:
Whether respondents failed to deny allegations in
the manner required by the rules
Held:
 Yes.
 Respondents’ lame denial of allegations had the
earmark of a negative pregnant.
 A negative pregnant is a denial pregnant with the
admission of the substantial facts in the pleading
responded to which are not squarely denied. It is a
form of negative expression which carries with it an
affirmation or at least an implication of some kind
favorable to adverse party.
 When matters regarding which respondents claim to
have no knowledge or information sufficient to form
a belief are plainly and necessarily within their
knowledge, their alleged ignorance or lack of
information will not be considered a specific denial—
a profession of ignorance about a fact which is
patently and necessarily within the pleader’s
knowledge or means of knowing is as ineffective as
no denial at all.
 In the instant case, the Marcoses did not only present
unsubstantiated assertions but in truth attempted to
mislead and deceive this Court by presenting an
obviously contrived defense.
 Simply put, a profession of ignorance about a fact
which is patently and necessarily within the pleader’s
knowledge or means of knowing is as ineffective as
no denial at all.
 Respondents’ ineffective denial thus failed to
properly tender an issue and the averments
contained in the petition for forfeiture were deemed
judicially admitted by them.
 Despite the serious and specific allegations against
the Marcoses, they responded by simply saying that
they had no knowledge or information sufficient to
form a belief as to the truth of allegations.
 Mrs. Marcos’ privity to the transactions was in fact
evident from her signatures on some of the vital
documents attached to the petition for forfeiture
which Mrs. Marcos failed to specifically deny as
required by the rules.
 It is worthy to note that the pertinent documents
attached to the petition for forfeiture were even
signed personally by respondent Mrs. Marcos and her
late husband, Ferdinand E. Marcos, indicating that
said documents were within their knowledge.
6. CANELAND vs. ALON
DOCTRINE: A negative pregnant is a "form of negative
expression which carries with it an affirmation or at least an
implication of some kind favorable to the adverse party.
Injunction is not a cause of action in itself but
merely a provisional remedy, an adjunct to a main suit.
FACTS: On July 15, 1999, Caneland Sugar Corporation
(petitioner) filed with the Regional Trial Court (RTC) of Silay City,
Branch 40, a complaint for damages, injunction, and nullity of
mortgage against the Land Bank of the Philippines (respondent)
and Sheriff Eric B. de Vera, praying for the following reliefs:
issuance of a temporary restraining order enjoining respondent
and the Sheriff from proceeding with the auction sale of
petitioner’s property; declaration of nullity of any foreclosure
sale to be held; declaration of nullity of the mortgage
constituted over petitioner’s property in favor of respondent;
and award of damages.
Since then, the auction sale was suspended but
nevertheless got rescheduled in November 15, 1999 in
accordance with P.D. 385 which states that it is mandatory for
government financial institutions to foreclose collaterals and/or
securities for any loan and no restraining order, temporary or
permanent injunction shall be issued by the court against any
government financial institution in any action taken by such
institution in compliance with the mandatory foreclosure
provided by said law.
Petitioner contends in the main that the RTC’s act of
authorizing the foreclosure of its property amounts to a
prejudgment of the case since it amounts to a ruling that
respondent has a valid mortgage in its favor. Petitioner also
argues, among others, that Presidential Decree (P.D.) No. 385 is
not applicable inasmuch as at the time of the lease to Sunnix,
Inc., the management and control of its operations has already
been virtually taken over by respondent.
On the other hand, respondent maintains that: P.D. No.
385 prohibits the issuance of an injunctive order against
government financial institutions; the CA did not commit any
grave abuse of discretion; the RTC Order merely dealt with the
propriety of the injunctive order and not the validity of the
mortgage; and the issue of the propriety of the injunctive order
has been rendered moot and academic by the foreclosure sale
conducted and the issuance of a certificate of sale by the sheriff.
ISSUE: Whether or not the prayer for injunction by the
petitioner should prosper.
HELD: No, records show that the foreclosure sale which
petitioner sought to be enjoined by the RTC has already been
carried out by the Sheriff, and in fact, a Certificate of Sale dated
June 26, 2000 was issued to respondent. There is, therefore, no
more actual case or controversy between the parties insofar as
the RTC’s refusal to enjoin the sale is concerned. The Court
emphasized that “Injunction is not a cause of action in itself but
merely a provisional remedy, an adjunct to a main suit. When
the act sought to be enjoined had become fait accompli, only
the prayer for provisional remedy should be denied. However,
the trial court should still proceed with the determination of the
principal action so that an adjudication of the rights of the
parties can be had.”
Petitioner does not dispute its loan obligation with
respondent. Petitioner’s bone of contention before the RTC is
that the promissory notes are silent as to whether they were
covered by the Mortgage Trust Indenture and Mortgage
Participation on its property covered by TCT No. T-11292. It
does not categorically deny that these promissory notes are
covered by the security documents. These vague assertions are,
in fact, negative pregnants, i.e., denials pregnant with the
admission of the substantial facts in the pleading responded to
which are not squarely denied. A negative pregnant is a "form
of negative expression which carries with it an affirmation or at
least an implication of some kind favorable to the adverse party.
It is a denial pregnant with an admission of the substantial facts
alleged in the pleading. Where a fact is alleged with qualifying
or modifying language and the words of the allegation as so
qualified or modified are literally denied, has been held that the
qualifying circumstances alone are denied while the fact itself is
admitted."
Petitioner’s allegations do not make out any justifiable
basis for the granting of any injunctive relief. Even when the
mortgagors were disputing the amount being sought from
them, upon the non-payment of the loan, which was secured by
the mortgage, the mortgaged property is properly subject to a
foreclosure sale. This is in consonance with the doctrine that to
authorize a temporary injunction, the plaintiff must show, at
least prima facie, a right to the final relief.