Rule 8 (Outline, Case Digest & Full Text)

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

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
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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 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, 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 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
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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 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
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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 the
defendant 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 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 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 payment
thereof, 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 defense which, 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
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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 merely pro forma and the trial judge did not
sufficiently 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, at
monthly 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.
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The trial court rendered its Decision in favor of
Agrifina. The trial court ruled that Felicidad's obligation
had not been novated by the deeds of assignment and the
promissory 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
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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
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evidence that they received P773,000.00 from her.
We agree, however, with petitioner that the
appellate 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 purpose of 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 having
no 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 Rules also 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 SEVENTYTHREE 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;"
xxxx
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 payable
on 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 counteraffidavit of respondent Felicidad, which was appended to
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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 Complaint for 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 a
comprehensive 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 its Answer 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 Complaint was based.
RTC rendered judgment holding Filtex and
Villanueva jointly and severally liable to SIHI. Dissatisfied,
Filtex and Villanueva filed an Appeal, 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 evidence
supposedly 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 Reconsideration in 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 Decision and Resolution of 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.
CIVIL PROCEDURE
Traversing the allegations in the instant petition,

SIHI stated in its Comment that 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 of
January 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,
the Answer with
21
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Counterclaim and Answer, of Filtex and Villanueva,
respectively, did not contain any specific denial under
oath of the letters of credit, sight drafts, trust receipts and
comprehensive
surety
agreement
upon
which
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SIHI's Complaint 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.
In Benguet Exploration, Inc. vs. Court of
24
Appeals, this Court ruled that the admission of the
genuineness and due execution of a document means
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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 are
estopped 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 was
subdivided 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
CIVIL PROCEDURE
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
meikimouse

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. For
if 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.
CIVIL PROCEDURE
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 died
in 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 Quezon
an 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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Issue:
Whether or not the Spouses Gaza specifically
denied all the allegations in the complaint.
CIVIL PROCEDURE
in 1961 from Angeles Vda. de Urrutia. Petitioner also

presented receipts of payment of realty taxes.
Held:
Yes. The Sc held that the Court of Appeals failed
to consider paragraph 2 of petitioners answer. 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
respondents possession, 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 and
the 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
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 squaremeter portion of Lot 6068, a 10,468 square-meter lot
located at Pook Kalibo, Aklan. Lot 6068 is covered by
Original 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 Damages before 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 of
compensation 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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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 petitioner
prove that the "taking" of the occupied 4,901 squaremeter 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 adequately
established.
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
CIVIL PROCEDURE
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 PreTrial Brief:
I. BRIEF STATEMENT OF THE RESPONDENTS
CLAIM
1. 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 not
require 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.
meikimouse
CIVIL PROCEDURE
Full Text Cases - Rule 8 - Manner of Making Allegations in Pleadings

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.
aggravated by the fact that defendant mill

has only a paid up capital stock of
P500,000.00, hence, said loans are far
2
beyond the limits fixed by law;
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.
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).
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:
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
1
Administration;"
After the defendants FFMC, the adhering planters, and the
Sugar 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,
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 any
tortious action against the plaintiffs and,
consequently, the plaintiffs have no cause of
action against the defendants PNB and
3
NIDC.
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.
meikimouse
CIVIL PROCEDURE
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
4
defendant.
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
13
another person to do or accomplish a wrong," assuming, of
course, that there was such a wrong.
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
5
and no other. The court may not consider other matters
6
outside of the Complaint. Defenses averred by the defendant
are not to be taken into consideration in ruling on the
7
motion. The allegations in the Complaint must be accepted as
true and it is not permissible to go beyond and outside of them
8
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
9
Complaint.
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.
SO ORDERED.
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 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
10
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
11
action. 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
12
must be alleged and proven."
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
meikimouse
CIVIL PROCEDURE

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.
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
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 certiorari seeking
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, Branch
XIV), 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.
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 failed
and 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.
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 by
promissory 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 of
account, copy of which is attached hereto
and made a part hereof as Annex D
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
meikimouse
CIVIL PROCEDURE

and refused to pay said Far East accounts
and have already defaulted in their solidary
obligation under said "continuing Guaranty."
2 Denying for lack of merit the Motion for

Summary Judgment and the Supplemental
Motion for Summary Judgment;
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 "Continuing
Guaranty,". . . plaintiff has been constrained
to file suit against them . . .
(pp. 32-36, Rollo.)
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;
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.
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 denial
of 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 certiorari filed 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
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 of
pre[s]cription:
THE COURT OF APPEALS GRAVELY ERRED IN

RULING FOR A REOPENING OF THE TRIAL
FOR 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
meikimouse
CIVIL PROCEDURE

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 case
directly 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 the probative value of the evidence presented by the partieslitigants. 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 fact by the contending parties sprung forth. It is
thus quite obvious that the controversy centered on, and the
doubt 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 not
sufficient 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, a
complaint, "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.,
meikimouse
CIVIL PROCEDURE
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
valuable consideration, BPI granted several loans, evidenced by
promissory notes, and extended credit facilities in the form of
trust receipts to Far East (photocopies of said notes and receipts
were duly attached to the Complaint); (2) said promissory notes
and trust receipts had matured; and (3) despite repeated
requests and demands for payment thereof, 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
defense which, having been raised, should, as correctly ruled by
the Court of Appeals (DBP vs. Ozarraga, 15 SCRA 48 [1965]), 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 (Ramos vs. Condez, 20
SCRA 1146 [1967]). 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 (Adamo, et al. vs. Intermediate
Appellate Court, et al., 191 SCRA 195 [1990]).
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
(Ortiz v. Garcia, 15 Phil. 192 [1910]).
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 merely pro
forma and the trial judge did not sufficiently address the issue of
whether or not a demand for payment in fact made by BPI and
duly received by herein petitioner Far East.
WHEREFORE, the instant petition is hereby DENIED and the
decision of the Court of Appeals hereby AFFIRMED. No special
pronouncement is made as to costs.
SO ORDERED.
meikimouse

G.R. No. 166704
December 20, 2006
AGRIFINA
AQUINTEY, petitioner,
vs.
SPOUSES FELICIDAD AND RICO TIBONG, respondents.
DECISION
CIVIL PROCEDURE
6
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 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 paragraphs 2 and 2.1 of 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
7
receipt. They prayed for that the complaint be dismissed.
CALLEJO, SR., J.:

Before us is a petition for review under Rule 45 of the Revised
1
Rules on Civil Procedure of the Decision of the Court of Appeals
in CA-G.R. CV No. 78075, which affirmed with modification the
2
Decision of the Regional Trial Court (RTC), Branch 61, Baguio
3
City, and the Resolution of the appellate court denying
reconsideration thereof.
In their Pre-Trial Brief, the spouses Tibong maintained that they

have never obtained any loan from Agrifina without the benefit
8
of a written document.
On August 17, 2000, the trial court issued a Pre-Trial Order
where the following issues of the case were defined:
The Antecedents
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, at monthly 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. The
complaint contained the following prayer:
WHEREFORE, premises considered, it is most
respectfully prayed of this Honorable Court, after due
notice and hearing, to render judgment ordering
defendants to pay plaintiff the following:
a). SEVEN HUNDRED SEVENTY-THREE
THOUSAND
PESOS
(P773,000.00)
representing the principal obligation of the
defendants with the stipulated interests of
six (6%) percent per month from May 11,
1999 to date and or those that are
stipulated on the contracts as mentioned
from paragraph two (2) of the complaint.
b). FIFTEEN PERCENT (15%) of the total
accumulated obligations as attorney's fees.
c). Actual expenses representing the filing
fee and other charges and expenses to be
incurred during the prosecution of this case.
Further prays for such other relief and remedies just
4
and equitable under the premises.
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
5
covering the loaned amounts.
Whether or not plaintiff is entitled to her claim

of P773,000.00;
Whether or not plaintiff is entitled to stipulated
interests in the promissory notes; and
Whether or not the parties are entitled to their claim
9
for damages.
The Case for Petitioner
Agrifina and Felicidad were classmates at the University of
Pangasinan. Felicidad's husband, Rico, also happened to be a
distant relative of Agrifina. Upon Felicidad's prodding, Agrifina
agreed to lend money to Felicidad. According to Felicidad,
Agrifina would be earning interests higher than those given by
the bank for her money. Felicidad told Agrifina that since she
(Felicidad) was engaged in the sale of dry goods at the GP
Shopping Arcade, she would use the money to buy bonnels and
10
thread. Thus, Agrifina lent a total sum of P773,000.00 to
Felicidad, and each loan transaction was covered by either a
11
promissory note or an acknowledgment receipt. Agrifina stated
that she had lost the receipts signed by Felicidad for the
following
amounts: P100,000.00,P34,000.00
12
and P2,000.00. The particulars of the transactions are as
follows:
Amount
Date Obtained
Interest Per Mo. D
P 100,000.00
May 11, 1989
6%
4,000.00
June 8, 1989
50,000.00
June 13, 1989
6%
60,000.00
Aug. 16, 1989
7%
Ja
205,000.00
Oct. 13, 1989
7%
Ja
128,000.00
Oct. 19, 1989
7%
Ja
2,000.00
Nov. 12, 1989
6%
10,000.00
June 13, 1990
80,000.00
Jan. 4, 1990
meikimouse

34,000.00
6%
100,000.00
July 14, 1989
5%
According to Agrifina, Felicidad was able to pay only her loans

14
amounting to P122,600.00.
In July 1990, Felicidad gave to Agrifina City Trust Bank Check No.
126804 dated August 25, 1990 in the amount ofP50,000.00 as
15
partial payment. However, the check was dishonored for
16
having been drawn against insufficient funds. Agrifina then
filed a criminal case against Felicidad in the Office of the City
Prosecutor. An Information for violation of Batas Pambansa
Bilang 22 was filed against Felicidad, docketed as Criminal Case
No. 11181-R. After trial, the court ordered Felicidad to
pay P50,000.00. Felicidad complied and paid the face value of
17
the check.
In the meantime, Agrifina learned that Felicidad had re-loaned
18
the amounts to other borrowers. Agrifina sought the
assistance of Atty. Torres G. A-ayo who advised her to require
Felicidad to execute deeds of assignment over Felicidad's
debtors. The lawyer also suggested that Felicidad's debtors
execute promissory notes in Agrifina's favor, to "turn over" their
loans from Felicidad. This arrangement would facilitate
collection of Felicidad's account. Agrifina agreed to the
19
proposal. Agrifina, Felicidad, and the latter's debtors had a
20
conference where Atty. A-ayo explained that Agrifina could
21
apply her collections as payments of Felicidad's account.
From August 7, 1990 to October, 1990, Felicidad executed
22
deeds of assignment of credits (obligations) duly notarized by
Atty. A-ayo, in which Felicidad transferred and assigned to
Agrifina the total amount of P546,459.00 due from her
23
debtors. In the said deeds, Felicidad confirmed that her
debtors were no longer indebted to her for their respective
loans. For her part, Agrifina conformed to the deeds of
assignment relative to the loans of Virginia Morada and Corazon
24
Dalisay. She was furnished copies of the deeds as well as the
25
promissory notes.
The following debtors of Felicidad executed promissory notes
where they obliged themselves to pay directly to Agrifina:
Debtors
Juliet & Tommy Tibong
Corazon Dalisay
Rita Chomacog
Antoinette Manuel
Rosemarie Bandas
Fely Cirilo
Virginia Morada
Carmelita Casuga
Merlinda Gelacio
Total
Account
P50,000.00
8,000.00
4,480.00
12,000.00
8,000.00
63,600.00
62,379.00
59,000.00
17,200.00
P284,659.00
Agrifina narrated that Felicidad showed to her the way to the

debtors' houses to enable her to collect from them. One of the
debtors, Helen Cabang, did not execute any promissory note but
conformed to the Deed of Assignment of Credit which Felicidad
27
executed in favor of Agrifina. Eliza Abance conformed to the
deed of assignment for and in behalf of her sister, Fely
28
Cirilo. Edna Papat-iw was not able to affix her signature on the
CIVIL PROCEDURE
deed
of assignment
sign the promissory note because she
October
19, 1989 nor
29
was in Taipei, 13
Taiwan.
October 1989
Following the execution of the deeds of assignment and
promissory notes, Agrifina was able to collect the total amount
30
of P301,000.00 from Felicidad's debtors. In April 1990, she
tried to collect the balance of Felicidad's account, but the latter
31
told her to wait until her debtors had money. When Felicidad
reneged on her promise, Agrifina filed a complaint in the Office
of the Barangay Captain for the collection of P773,000.00.
32
However, no settlement was arrived at.
The Case for Respondents
Felicidad testified that she and her friend Agrifina had been
33
engaged in the money-lending business. Agrifina would lend
34
her money with monthly interest, and she, in turn, would relend the money to borrowers at a higher interest rate. Their
business relationship turned sour when Agrifina started
complaining that she (Felicidad) was actually earning more than
35
Agrifina. Before the respective maturity dates of her debtors'
loans, Agrifina asked her to pay her account since Agrifina
needed money to buy a house and lot in Manila. However, she
told Agrifina that she could not pay yet, as her debtors' loan
36
payments were not yet due. Agrifina then came to her store
every afternoon to collect from her, and persuaded her to go to
37
Atty. Torres G. A-ayo for legal advice. The lawyer suggested
that she indorse the accounts of her debtors to Agrifina so that
the latter would be the one to collect from her debtors and she
38
would no longer have any obligation to Agrifina. She then
executed deeds of assignment in favor of Agrifina covering the
sums of money due from her debtors. She signed the deeds
39
prepared by Atty. A-ayo in the presence of Agrifina. Some of
the debtors signed the promissory notes which were likewise
prepared by the lawyer. Thereafter, Agrifina personally
40
collected from Felicidad's debtors. Felicidad further narrated
that she received P250,000.00 from one of her debtors, Rey
41
Rivera, and remitted the payment to Agrifina.
Agrifina testified, on rebuttal, that she did not enter into a relending business with Felicidad. When she asked Felicidad to
consolidate her loans in one document, the latter told her to
42
seek the assistance of Atty. A-ayo. The lawyer suggested that
Felicidad assign her credits in order to help her collect her
43
loans. She agreed to the deeds of assignment to help Felicidad
Date of Instrument
Date
Payable
44
collect from the debtors.
August 7, 1990
November 4, 1990 and February 4, 1991
August
1990 20, 2003, the
No trial
datecourt rendered its Decision45 in
On7,January
August
8, 1990
September
23, 1990
favor
of Agrifina. The fallo
of the decision
reads:
October 19, 1990
March 30, 1991
August 8, 1990 WHEREFORE, February
judgment3,is1991
rendered in favor of the
plaintiff and against
the defendants ordering the latter
September 13, 1990
No date
(sic)9,the
following amounts:
August 9, 1990 to pay the plaintiffs
February
1991
August 28, 1990
February 28, 1991
1. P472,000 as actual obligation 26
with the stipulated
August 29, 1990
November 29, 1990
interest of 6% per month from May 11, 1999 until the
said obligation is fully paid. However, the amount
of P50,000 shall be deducted from the total
accumulated interest for the same was already paid
by the defendant as admitted by the plaintiff in her
complaint,
2. P25,000 as attorney's fees,
3. [T]o pay the costs.
meikimouse

SO ORDERED.
46
The trial court ruled that Felicidad's obligation had not been
novated by the deeds of assignment and the promissory 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. Considering,
however, Agrifina's admission that she was able to collect from
Felicidad's debtors the total amount of P301,000.00, this should
47
be deducted from the latter's accountability. Hence, the
balance, exclusive of interests, amounted to P472,000.00.
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. The fallo of the decision reads:
WHEREFORE, in view of the foregoing, the decision
dated January 20, 2003 of the RTC, Baguio City,
Branch 61 in Civil Case No. 4370-R is
hereby MODIFIED. Defendants-appellants are hereby
ordered to pay the balance of the total indebtedness
in the amount of P51,341.00 plus the stipulated
interest of 6% per month from May 11, 1999 until the
finality of this decision.
SO ORDERED.
48
The appellate court sustained the trial court's ruling that

Felicidad's obligation to Agrifina had not been novated by the
deeds of assignment and promissory notes executed in the
latter's favor. Although Agrifina was subrogated as a new
creditor in lieu of Felicidad, Felicidad's obligation to Agrifina
under the loan transaction remained; there was no intention on
their part to novate the original obligation. Nonetheless, the
appellate court held that the legal effects of the deeds of
assignment could not be totally disregarded. The assignments of
credits were onerous, hence, had the effect of payment, pro
tanto, of the outstanding obligation. The fact that Agrifina never
repudiated or rescinded such assignments only shows that she
had accepted and conformed to it. Consequently, she cannot
collect both from Felicidad and her individual debtors without
running afoul to the principle of unjust enrichment. Agrifina's
primary recourse then is against Felicidad's individual debtors
on the basis of the deeds of assignment and promissory notes.
The CA further declared that the deeds of assignment executed
by Felicidad had the effect of payment of her outstanding
obligation to Agrifina in the amount of P585,659.00. It ruled
that, since an assignment of credit is in the nature of a sale, the
assignors remained liable for the warranties as they are
responsible for the existence and legality of the credit at the
time of the assignment.
CIVIL PROCEDURE
49
Both parties moved to have the decision reconsidered, but the

50
appellate court denied both motions on December 21, 2004.
Agrifina, now petitioner, filed the instant petition, contending
that
1. The Honorable Court of Appeals erred in ruling that
the deeds of assignment in favor of petitioner has the
effect of payment of the original obligation even as it
ruled out that the original obligation and the assigned
credit are distinct and separate and can stand
independently from each other;
2. The Honorable Court of Appeals erred in passing
upon issues raised for the first time on appeal; and
3. The Honorable Court of Appeals erred in resolving
51
fact not in issue.
Petitioner avers that the appellate court erred in ruling that
respondents' original obligation amounted to onlyP637,000.00
(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 thanP773,000.00 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. As gleaned from the trial court's pretrial order, the main issue is whether or not she should be made
to pay this amount.
Petitioner further maintains that the CA erred in deducting the
total amount of P585,659.00 covered by the deeds of
assignment executed by Felicidad and the promissory notes
executed by the latter's debtors, and that the balance of
respondents' account was only P51,341.00. Moreover, the
appellate court's ruling that there was no novation runs counter
to its holding that the primary recourse was against Felicidad's
debtors. Petitioner avers that of the 11 deeds of assignment and
52
promissory notes, only two bore her signature. She insists that
she is not bound by the deeds which she did not sign. By
assigning the obligation to pay petitioner their loan accounts,
Felicidad's debtors merely assumed the latter's obligation and
became co-debtors to petitioner. Respondents were not
released from their obligation under their loan transactions, and
she had the option to demand payment from them or their
debtors. Citing the ruling of this Court in Magdalena Estates,
53
Inc. v. Rodriguez, petitioner insists that the first debtor is not
released from responsibility upon reaching an agreement with
the creditor. The payment by a third person of the first debtor's
obligation does not constitute novation, and the creditor can
still enforce the obligation against the original debtor. Petitioner
also cites the ruling of this Court in Guerrero v. Court of
54
Appeals.
In their Comment on the petition, respondents aver that by
virtue of respondent Felicidad's execution of the deeds of
assignment, and the original debtors' execution of the
promissory notes (along with their conformity to the deeds of
meikimouse

assignment with petitioner's consent), their loan accounts with
petitioner amounting to P585,659.00 had been effectively
extinguished. Respondents point out that this is in accordance
with Article 1291, paragraph 2, of the Civil Code. Thus, the
original debtors of respondents had been substituted as
petitioner's new debtors.
Respondents counter that petitioner had been subrogated to
their right to collect the loan accounts of their debtors. In fact,
petitioner, as the new creditor of respondents' former debtors
had been able to collect the latter's loan accounts which
amounted to P301,000.00. The sums received by respondents'
debtors were the same loans which they obliged to pay to
petitioner under the promissory notes executed in petitioner's
favor.
Respondents aver that their obligation to petitioner cannot
stand or exist separately from the original debtors' obligation to
petitioner as the new creditor. If allowed to collect from them
as well as from their original debtors, petitioner would be
enriching herself at the expense of respondents. Thus, despite
the fact that petitioner had collected P172,600.00 from
respondents and P301,000.00 from the original debtors,
petitioner still sought to collect P773,000.00 from them in the
RTC. Under the deeds of assignment executed by Felicidad and
the original debtors' promissory notes, the original debtors'
accounts were assigned to petitioner who would be the new
creditor. In fine, respondents are no longer liable to petitioner
for the balance of their loan account inclusive of interests.
Respondents also insist that petitioner failed to prove that she
(petitioner) was merely authorized to collect the accounts of the
original debtors so as to to facilitate the payment of
respondents' loan obligation.
The Issues
The threshold issues are: (1) whether respondent Felicidad
Tibong borrowed P773,000.00 from petitioner; and (2) whether
the obligation of respondents to pay the balance of their loans,
including interest, was partially extinguished by the execution of
the deeds of assignment in favor of petitioner, relative to the
loans of Edna Papat-iw, Helen Cabang, Antoinette Manuel, and
Fely Cirilo in the total amount of P371,000.00.
The Ruling of the Court
We have carefully reviewed 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 onlyP673,000.00. They asserted
that petitioner failed to adduce concrete evidence that they
55
received P773,000.00 from her.
We agree, however, with petitioner that the appellate 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
56
support his denial.
CIVIL PROCEDURE
Section 11, Rule 8 of the same Rules provides that allegations of

57
the complaint not specifically denied are deemed admitted.
The purpose of 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
58
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 having no 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 Rules also provides that material averments in
the complaint other than those as to the amount of
unliquidated damages shall be deemed admitted when not
59
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
60
belief.
In the present case, petitioner alleged the following in her
complaint:
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
61
Annex "A;"
xxxx
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"
62
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
meikimouse
CIVIL PROCEDURE

that respondent Felicidad signed and submitted a counteraffidavit 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 payable on 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 aP100,000.00
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 ofP301,000.00,
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.
There is no longer a need for the Court to still resolve the issue
of whether respondents' obligation to pay the balance of their
loan account to petitioner was partially extinguished by the
promissory notes executed by Juliet Tibong, Corazon Dalisay,
Rita Chomacog, Carmelita Casuga, Merlinda Gelacio and
Antoinette Manuel because, as admitted by petitioner, she was
able to collect the amounts under the notes from said debtors
and applied them to respondents' accounts.
Under Article 1231(b) of the New Civil Code, novation is
enumerated as one of the ways by which obligations are
extinguished. Obligations may be modified by changing their
object or principal creditor or by substituting the person of the
63
debtor. The burden to prove the defense that an obligation
64
has been extinguished by novation falls on the debtor. The
nature of novation was extensively explained in Iloilo Traders
65
Finance, Inc. v. Heirs of Sps. Oscar Soriano, Jr., as follows:
Novation may either be extinctive or modificatory,
much being dependent on the nature of the change
and the intention of the parties. Extinctive novation is
never presumed; there must be an express intention
to novate; in cases where it is implied, the acts of the
parties must clearly demonstrate their intent to
dissolve the old obligation as the moving
consideration for the emergence of the new one.
Implied novation necessitates that the incompatibility
between the old and new obligation be total on every
point such that the old obligation is completely
superseded by the new one. The test of
incompatibility is whether they can stand together,
each one having an independent existence; if they
cannot and are irreconciliable, the subsequent

obligation would also extinguish the first.
An extinctive novation would thus have the twin
effects of, first, extinguishing an existing obligation
and, second, creating a new one in its stead. This kind
of novation presupposes a confluence of four
essential requisites: (1) a previous valid obligation; (2)
an agreement of all parties concerned to a new
contract; (3) the extinguishment of the old obligation;
and (4) the birth of a valid new obligation. Novation is
merely modificatory where the change brought about
by any subsequent agreement is merely incidental to
the main obligation (e.g., a change in interest rates or
an extension of time to pay); in this instance, the new
agreement will not have the effect of extinguishing
the first but would merely supplement it or supplant
66
some but not all of its provisions. (Citations Omitted)
Novation which consists in substituting a new debtor (delegado)
in the place of the original one (delegante) may be made even
without the knowledge or against the will of the latter but not
without the consent of the creditor. Substitution of the person
of the debtor may be effected by delegacion, meaning, the
debtor offers, and the creditor (delegatario), accepts a third
person who consents to the substitution and assumes the
obligation. Thus, the consent of those three persons is
67
necessary. In this kind of novation, it is not enough to extend
the juridical relation to a third person; it is necessary that the
old debtor be released from the obligation, and the third person
68
or new debtor take his place in the relation. Without such
release, there is no novation; the third person who has assumed
the obligation of the debtor merely becomes a co-debtor or a
surety. If there is no agreement as to solidarity, the first and the
69
new debtor are considered obligated jointly.
70
In Di Franco v. Steinbaum, the appellate court ruled that as to

the consideration necessary to support a contract of novation,
the rule is the same as in other contracts. The consideration
need not be pecuniary or even beneficial to the person
promising. It is sufficient if it be a loss of an inconvenience, such
as the relinquishment of a right or the discharge of a debt, the
postponement of a remedy, the discontinuance of a suit, or
forbearance to sue.
71
In City National Bank of Huron, S.D. v. Fuller, the Circuit Court

of Appeals ruled that the theory of novation is that the new
debtor contracts with the old debtor that he will pay the debt,
and also to the same effect with the creditor, while the latter
agrees to accept the new debtor for the old. A novation is not
made by showing that the substituted debtor agreed to pay the
debt; it must appear that he agreed with the creditor to do
so. Moreover, the agreement must be based on the
consideration of the creditor's agreement to look to the new
debtor instead of the old. It is not essential that acceptance of
the terms of the novation and release of the debtor be shown
by express agreement. Facts and circumstances surrounding the
transaction and the subsequent conduct of the parties may
show acceptance as clearly as an express agreement, albeit
72
implied.
We find in this case that the CA correctly found that
respondents' obligation to pay the balance of their account with
petitioner was extinguished, pro tanto, by the deeds of
assignment of credit executed by respondent Felicidad in favor
of petitioner.
meikimouse

An assignment of credit is an agreement by virtue of which the
owner of a credit, known as the assignor, by a legal cause, such
as sale, dation in payment, exchange or donation, and without
the consent of the debtor, transfers his credit and accessory
rights to another, known as the assignee, who acquires the
power to enforce it to the same extent as the assignor could
73
enforce it against the debtor. It may be in the form of sale, but
at times it may constitute a dation in payment, such as when a
debtor, in order to obtain a release from his debt, assigns to his
74
creditor a credit he has against a third person.
75
In Vda. de Jayme v. Court of Appeals, the Court held

that dacion en pago is the delivery and transmission of
ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of the obligation. It is a
special mode of payment where the debtor offers another thing
to the creditor who accepts it as equivalent of payment of an
outstanding debt. The undertaking really partakes in one sense
of the nature of sale, that is, the creditor is really buying the
thing or property of the debtor, payment for which is to be
charged against the debtor's obligation. As such, the essential
elements of a contract of sale, namely, consent, object certain,
and cause or consideration must be present. In its modern
concept, what actually takes place in dacion en pago is an
objective novation of the obligation where the thing offered as
an accepted equivalent of the performance of an obligation is
considered as the object of the contract of sale, while the debt
is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or novation, to
76
have the effect of totally extinguishing the debt or obligation.
The requisites for dacion en pago are: (1) there must be a
performance of the prestation in lieu of payment (animo
solvendi) which may consist in the delivery of a corporeal thing
or a real right or a credit against the third person; (2) there must
be some difference between the prestation due and that which
is given in substitution (aliud pro alio); and (3) there must be an
agreement between the creditor and debtor that the obligation
is immediately extinguished by reason of the performance of a
77
prestation different from that due.
All the requisites for a valid dation in payment are present in
this case. As gleaned from the deeds, respondent Felicidad
assigned to petitioner her credits "to make good" the balance of
her obligation. Felicidad testified that she executed the deeds to
enable her to make partial payments of her account, since she
could not comply with petitioner's frenetic demands to pay the
account in cash. Petitioner and respondent Felicidad agreed to
relieve the latter of her obligation to pay the balance of her
account, and for petitioner to collect the same from
respondent's debtors.
Admittedly, some of respondents' debtors, like Edna Papat-iw,
were not able to affix their conformity to the deeds. In an
assignment of credit, however, the consent of the debtor is not
essential for its perfection; the knowledge thereof or lack of it
affecting only the efficaciousness or inefficaciousness of any
payment that might have been made. The assignment binds the
debtor upon acquiring knowledge of the assignment but he is
entitled, even then, to raise against the assignee the same
78
defenses he could set up against the assignor necessary in
order that assignment may fully produce legal effects. Thus, the
duty to pay does not depend on the consent of the debtor. The
purpose of the notice is only to inform that debtor from the
date of the assignment. Payment should be made to the
assignee and not to the original creditor.
CIVIL PROCEDURE
The transfer of rights takes place upon perfection of the

contract, and ownership of the right, including all appurtenant
79
accessory rights, is acquired by the assignee who steps into
the shoes of the original creditor as subrogee of the
80
latter from that amount, the ownership of the right is acquired
by the assignee. The law does not require any formal notice to
bind the debtor to the assignee, all that the law requires
is knowledge of the assignment. Even if the debtor had not been
notified, but came to know of the assignment by whatever
means, the debtor is bound by it. If the document of assignment
is public, it is evidence even against a third person of the facts
which gave rise to its execution and of the date of the latter.
The transfer of the credit must therefore be held valid and
effective from the moment it is made to appear in such
instrument, and third persons must recognize it as such, in view
of the authenticity of the document, which precludes all
suspicion of fraud with respect to the date of the transfer or
81
assignment of the credit.
As gleaned from the deeds executed by respondent Felicidad
relative to the accounts of her other debtors, petitioner was
authorized to collect the amounts of P6,000.00 from Cabang,
and P63,600.00 from Cirilo. They obliged themselves to pay
petitioner. Respondent Felicidad, likewise, unequivocably
declared that Cabang and Cirilo no longer had any obligation to
her.
Equally significant is the fact that, since 1990, when respondent
Felicidad executed the deeds, petitioner no longer attempted to
collect from respondents the balance of their accounts. It was
only in 1999, or after nine (9) years had elapsed that petitioner
attempted to collect from respondents. In the meantime,
petitioner had collected from respondents' debtors the amount
of P301,000.00.
While it is true that respondent Felicidad likewise authorized
petitioner in the deeds to collect the debtors' accounts, and for
the latter to pay the same directly, it cannot thereby be
considered that respondent merely authorized petitioner to
collect the accounts of respondents' debtors and for her to
apply her collections in partial payments of their accounts. It
bears stressing that petitioner, as assignee, acquired all the
rights and remedies passed by Felicidad, as assignee, at the time
82
of the assignment. Such rights and remedies include the right
to collect her debtors' obligations to her.
Petitioner cannot find solace in the Court's ruling in Magdalena
Estates. In that case, the Court ruled that the mere fact that
novation does not follow as a matter of course when the
creditor receives a guaranty or accepts payments from a third
person who has agreed to assume the obligation when there is
no agreement that the first debtor would be released from
responsibility. Thus, the creditor can still enforce the obligation
against the original debtor.
In the present case, petitioner and respondent Felicidad agreed
that the amounts due from respondents' debtors were intended
to "make good in part" the account of respondents. Case law is
that, an assignment will, ordinarily, be interpreted or construed
in accordance with the rules of construction governing contracts
generally, the primary object being always to ascertain and
carry out the intention of the parties. This intention is to be
derived from a consideration of the whole instrument, all parts
of which should be given effect, and is to be sought in the words
83
and language employed.
meikimouse
CIVIL PROCEDURE
Indeed, the Court must not go beyond the rational scope of the
words used in construing an assignment, words should be
construed according to their ordinary meaning, unless
something in the assignment indicates that they are being used
in a special sense. So, if the words are free from ambiguity and
expressed plainly the purpose of the instrument, there is no
occasion for interpretation; but where necessary, words must
be interpreted in the light of the particular subject
84
matter. And surrounding circumstances may be considered in
order to understand more perfectly the intention of the parties.
Thus, the object to be accomplished through the assignment,
and the relations and conduct of the parties may be considered
in construing the document.
Although it has been said that an ambiguous or uncertain
assignment should be construed most strictly against the
assignor, the general rule is that any ambiguity or uncertainty in
the meaning of an assignment will be resolved against the party
who prepared it; hence, if the assignment was prepared by the
assignee, it will be construed most strictly against him or
85
her. One who chooses the words by which a right is given
ought to be held to the strict interpretation of them, rather than
86
the other who only accepts them.
Considering all the foregoing, we find that respondents still have
a balance on their account to petitioner in the principal amount
of P33,841.00, the difference between their loan of P773,000.00
less P585,659.00, the payment of respondents' other debtors
amounting to P103,500.00, and the P50,000.00 payment made
by respondents.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The
Decision and Resolution of the Court of Appeals
are AFFIRMED with MODIFICATION in that the balance of the
principal account of the respondents to the petitioner
is P33,841.00. No costs.
SO ORDERED.
meikimouse

G.R. No. 119800
November 12, 2003
FILIPINAS TEXTILE MILLS, INC. and BERNARDINO

VILLANUEVA, Petitioners,
vs.
COURT OF APPEALS and STATE INVESTMENT HOUSE,
INC. Respondents.
DECISION
Tinga, J.:
Before this Court is a Petition for Review on Certiorari assailing
1
2
the Decision and Resolution of the Court of Appeals dated June
16, 1994 and April 19, 1995, respectively, affirming
3
the Decision of the Regional Trial Court dated July 23, 1990
which found the petitioners Filipinas Textile Mills, Inc. ("Filtex")
and Bernardino Villanueva ("Villanueva") jointly and severally
liable to respondent State Investment House, Inc. ("SIHI") for
the amount ofP7,868,881.11.
The antecedent facts are as follows:
4
On December 6, 1985, SIHI instituted a Complaint for the

collection of the sum of P3,118,949.75, with interest, penalties,
exemplary damages, attorneys fees and costs of suit against
herein petitioners Filtex and Villanueva.
In its Complaint, SIHI alleged that sometime in 1983, 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
5
letters of credit authorizing Indo-Philippine Textile Mills, Inc.
("Indo-Phil"), Texfiber Corporation ("Texfiber"), and Philippine
Polyamide Industrial Corporation ("Polyamide") "to value" on
SIHI such drafts as may be drawn by said corporations against
Filtex for an aggregate amount not exceeding P3,737,988.05.
Filtex used these domestic letters of credit to cover its purchase
of various textile materials from Indo-Phil, Texfiber and
Polyamide. Upon the sale and delivery of the merchandise,
6
Indo-Phil, Texfiber and Polyamide issued several sight drafts on
various dates with an aggregate value of P3,736,276.71 payable
to the order of SIHI, which were duly accepted by Filtex.
Subsequently, the sight drafts were negotiated to and acquired
in due course by SIHI which paid the value thereof to Indo-Phil,
Texfiber and Polyamide for the account of Filtex.
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 a
7
comprehensive surety agreement on November 9, 1982,
whereby he guaranteed, jointly and severally with Filtex, the full
and punctual payment at maturity to SIHI of all the
indebtedness of Filtex. The essence of the comprehensive
surety agreement was that it shall be a continuing surety until
such time that the total outstanding obligation of Filtex to SIHI
had been fully settled.
In order to ensure the payment of the sight drafts
aforementioned, Filtex executed and issued to SIHI several trust
8
receipts of various dates, which were later extended with the
issuance of replacement trust receipts all dated June 22, 1984,
covering the merchandise sold. Under the trust receipts, Filtex
agreed to hold the merchandise in trust for SIHI, with liberty to
CIVIL PROCEDURE
sell the same for SIHI's account but without authority to make
any other disposition of the said goods. Filtex likewise agreed to
hand the proceeds, as soon as received, to SIHI "to apply"
against any indebtedness of the former to the latter. Filtex also
agreed to pay SIHI interest at the rate of 25% per annum from
the time of release of the amount to Indo-Phil, Texfiber and
Polyamide until the same is fully paid, subject to SIHI's option to
reduce the interest rate. Furthermore, in case of delay in the
payment at maturity of the aggregate amount of the sight drafts
negotiated to SIHI, said amount shall be subject to two percent
(2%) per month penalty charge payable from the date of default
until the amount is fully paid.
Because of Filtex's failure to pay its outstanding obligation
despite demand, SIHI filed a Complaint on December 6, 1985
praying that the petitioners be ordered to pay, jointly and
severally, the principal amount of P3,118,949.75, plus interest
and penalties, attorney's fees, exemplary damages, costs of suit
and other litigation expenses.
9
In its Answer with Counterclaim, Filtex interposed special and

affirmative defenses, i.e., the provisions of the 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
10
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 Complaint was based.
On July 23, 1990, the Regional Trial Court of Manila rendered
11
judgment holding Filtex and Villanueva jointly and severally
liable to SIHI. Dissatisfied, Filtex and Villanueva filed
12
an Appeal, 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 evidence
supposedly because of non-payment of documentary stamp
13
taxes as required by the Internal Revenue Code.
In its assailed Decision, the Court of Appeals 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
14
Court." The appellate court also ruled that there remained an
unpaid balance as of January 31, 1989 of P868,881.11 for which
15
Filtex and Villanueva are solidarily liable.
The appellate court denied the petitioners' Motion for
16
17
Reconsideration in its Resolution, ruling that the petitioners
failed to raise new and substantial matters that would warrant
the reversal of its Decision. However, due to certain
typographical oversights, the Court of Appeals modified
its Decision and stated that the correct unpaid balance as of
January 31, 1989 was actually P7,868,881.11, excluding
18
litigation and other miscellaneous expenses and filing fees.
In asking this Court to reverse and set aside the
aforementioned Decision and Resolution of the Court of
Appeals, the petitioners argued that the appellate court should
meikimouse
CIVIL PROCEDURE
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.
seal, an acknowledgment, or revenue stamp, which it lacks, are

waived by him.
Traversing the allegations in the instant petition, SIHI stated in

19
its Comment that 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 of January 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.
Interestingly, the petitioners questioned the admissibility of

these documents rather belatedly, at the appeal stage even.
25
Their respective answers to SIHI's Complaint were silent on
this point. The rule is well-settled that points of law, theories,
issues and arguments not adequately brought to the attention
of the trial court need not, and ordinarily will not, be considered
by a reviewing court as they cannot be raised for the first time
on appeal because this would be offensive to the basic rules of
26
fair play, justice and due process.
The threshold issue in this case is 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
20
Revenue Code.
We rule in the affirmative. As correctly noted by the
21
22
respondent, the Answer with Counterclaim and Answer, of
Filtex and Villanueva, respectively, did not contain any specific
denial under oath of the letters of credit, sight drafts, trust
receipts and comprehensive surety agreement upon which
23
SIHI's Complaint 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.
24
In Benguet Exploration, Inc. vs. Court of Appeals, this Court

ruled that the admission of the genuineness and due execution
of a document means 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
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 are estopped from
claiming that the documents are inadmissible in evidence for
non-payment thereof.
Hence, the petitioners can no longer dispute the admissibility of

the letters of credit, sight drafts, trust receipts and
comprehensive surety agreement. However, this does not
preclude the petitioners from impugning these documents by
evidence of fraud, mistake, compromise, payment, statute of
27
limitations, estoppel and want of consideration.
This brings us to the petitioners' contention that they have
already fully paid their obligation to SIHI and have, in fact,
overpaid by P415,722.53. This matter is purely a factual issue.
28
In Fortune Motors (Phils.) Corporation vs. Court of Appeals, it
was held that "the jurisdiction of this Court in cases brought
before it from the Court of Appeals under Rule 45 of the Rules
of Court is limited to reviewing or revising errors of law. It is not
the function of this Court to analyze or weigh evidence all over
again unless there is a showing that the findings of the lower
court are totally devoid of support or are glaringly erroneous as
to constitute serious abuse of discretion. Factual findings of the
Court of Appeals are conclusive on the parties and carry even
more weight when said court affirms the factual findings of the
29
trial court."
It should be noted that the issue of overpayment as well as the
proof presented by the petitioners on this point merely rehash
those submitted before the Court of Appeals. The appellate
court affirmed the trial court and passed upon this issue by
exhaustively detailing the amounts paid as guaranty deposit, the
payments made and the balance due for every trust receipt.
This Court shall not depart from the findings of the trial court
and the appellate court, supported by the preponderance of
evidence and unsatisfactorily refuted by the petitioners, as they
are.
As a final issue, Villanueva contended that the comprehensive
surety agreement is null and void for lack of consent of Filtex
and SIHI. He also alleged that SIHI materially altered the terms
and conditions of the comprehensive surety agreement by
granting Filtex an extension of the period for payment thereby
releasing him from his obligation as surety. We find these
contentions specious.
meikimouse
CIVIL PROCEDURE
In the first place, the consent of Filtex to the surety may be

assumed from the fact that Villanueva was the signatory to the
30
sight drafts and trust receipts on behalf of Filtex. Moreover, in
31
its Answer with Counterclaim, Filtex admitted the execution of
the comprehensive surety agreement with the only qualification
that it was not a means to induce SIHI to issue the domestic
letters of credit. Clearly, had Filtex not consented to the
comprehensive surety agreement, it could have easily objected
to its validity and specifically denied the same. SIHI's consent to
the surety is also understood from the fact that it demanded
payment from both Filtex and Villanueva.
As regards the purported material alteration of the terms and
conditions of the comprehensive surety agreement, we rule that
the extension of time granted to Filtex to pay its obligation did
not release Villanueva from his liability. As this Court held
32
in Palmares vs. Court of Appeals:
"The neglect of the creditor to sue the principal at the time the
debt falls due does not discharge the surety, even if such delay
continues until the principal becomes insolvent
The raison d'etre for the rule is that there is nothing to prevent
the creditor from proceeding against the principal at any time.
At any rate, if the surety is dissatisfied with the degree of
activity displayed by the creditor in the pursuit of his principal,
he may pay the debt himself and become subrogated to all the
rights and remedies of the creditor.
It may not be amiss to add that leniency shown to a debtor in
default, by delay permitted by the creditor without change in
the time when the debt might be demanded, does not
constitute an extension of the time of payment, which would
release the surety. In order to constitute an extension
discharging the surety, it should appear that the extension was
for a definite period, pursuant to an enforceable agreement
between the principal and the creditor, and that it was made
without the consent of the surety or with a reservation of rights
with respect to him. The contract must be one which precludes
the creditor from, or at least hinders him in, enforcing the
principal contract within the period during which he could
otherwise have enforced it, and precludes the surety from
33
paying the debt."
Lastly, with regard to Villanueva's assertion that the 25% annual
interest to be paid by Filtex in case it failed to pay the amount
released to suppliers was inserted by SIHI without his consent,
suffice it to say that the trust receipts bearing the alleged
insertion of the 25% annual fee are countersigned by him. His
pretension of lack of knowledge and consent thereto is
obviously contrived.
In view of the foregoing, we find the instant petition bereft of
merit.1wphi1
WHEREFORE, premises considered, the petition is DENIED and
the assailed Decision and Resolution of the Court of Appeals
concurring with the decision of the trial court are hereby
AFFIRMED. Costs against the petitioners.
SO ORDERED.
meikimouse

G.R. No. L-57821 January 17, 1985
SEGUNDINO TORIBIO, EUSEBIA TORIBIO, and the HEIRS OF
OLEGARIO TORIBIO, represented by his widow, ADELA DE LOS
REYES, petitioners,
vs.
THE HON. JUDGE ABDULWAHID A. BIDIN, in his capacity as
Presiding Judge, Branch I, Court of First Instance, City of
Zamboanga,
DALMACIO
RAMOS,
and
JUANITO
CAMACHO, respondents.
GUTIERREZ, J.:
This petition is premised on the interpretation and application
of Sections 7 and 8, Rule 8 of the Revised Rules of Court on
actionable documents, which state:
SEC. 7. Action or defense based on
document. Whenever an action or
defense is based upon a written instrument
or document, the substance of such
instrument or document shall be set forth in
the pleading, and the original or a copy
thereof shall be attached to the pleading as
an exhibit, which shall be deemed to be a
part of the pleading, or said copy may with
like effect be set forth in the pleading.
SEC. 8. How to contest genuineness of such
documents. 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; but this provision does not
apply when the adverse party does not
appear to be a party to the instrument or
when compliance with an order for an
inspection of the original instrument is
refused.
The present controversy stems from a complaint filed by the
petitioners against private respondents Dalmacio Ramos and
Juanita Camacho.
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 was subdivided 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 (8)
children namely: Dionoso, Eufremia, Alfonso, Rafael, Petrona,
Olegario, Segundino and Eusebia, all surnamed Toribio, who
eight heirs, Eufremia, Alfonso and Petrona, sold their in the
property to Ramon Ledesma. Rafael also sold his share to
Dinisio 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.
CIVIL PROCEDURE
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, petitioners Segundino Eusebia and
Olegario alleging that their shares had never been sold nor in
any wise transferred or disposed to others filed a case against
herein private respondents for recovery of hereditary rights.
How Juanito Camacho, who was entitled to only a total area of
931 square meters, nor, how one Dalmacio Ramos, Jr., acquired
share of the property was allegedly not known to them.
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.
Petitioners, thereupon, filed a constancia with a 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 plaintiffs-petitioners, not any
document. They 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.
The initial issue brought before us is 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.
The records show that the deeds of sale are actionable
documents.
Jurisprudence has centered mainly on a discussion of actionable
documents as basis of a plaintiff's cause of action. Little has
been said of actionable documents being the foundation of a
defense. The Rule, however, covers both an action or a defense
based on documents.
The situation obtaining in the case at bar is not a common one.
The usual case is between plaintiff and defendant where, the
meikimouse

latter, as his defense, would present a document to which both
parties are parties and which states that the former relinquishes
his rights to the defendant. In the case at bar, we have a
situation where the defendant presented a document in his
defense, a document to which the plaintiff is a party 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.
The petitioners alleged in their complaint that their shares in
the inheritance left by their mother were never sold nor in any
wise transferred or disposed to others.
The defendants, in their answers, declare:
xxx xxx xxx
... that the hereditary shares of plaintiffs
OLEGARIO TORIBIO, SEGUNDINO TORIBIO
and EUSEBIA TORIBIO were likewise sold,
transferred and conveyed, first in favor of
DIONISIO TORIBIO by virtue of two (2) deeds
of sale executed in due form on October 24,
1964 and November 2, 1964, respectively,
and thereafter, by DIONISIO TORIBIO in
favor of defendants JUANITO A. CAMACHO
and DALMACIO C. RAMOS, JR., on November
11, 1964 as adverted to in the preceding
paragraph, as will be discussed further in the
specific and/or affirmative defenses
hereunder; ...
As heretofore alleged, the hereditary shares
of all the plaintiffs herein in and over Lot
1943-B were all sold, transferred and
conveyed in favor of DIONISIO TORIBIO
plaintiffs
OLEGARIO
TORIBIO
and
SEGUNDINO TORIBIO on October 24, 1964
and that of plaintiff EUSEBIA TORIBIO on
November 2, 1964, by virtue of two (2)
deeds of sale all of which were
acknowledged before Notary Public for and
within the City of Zamboanga, Atty.
Armando B. Torralba and entered as Doc.
No. 6, Page No. 3, Book No. IX, Series of
1964, respectively, in his notarial register,
xerox copies of which are appended hereto
to form integral part hereof as Annexes "1"
& "2", respectively.
From the foregoing, 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 following question furnishes an absolute test as to the
essentiality of any allegation: Can it be made the subject of a
material issue? In other words, if it be denied, win the failure to
prove it decide the case in whole or in part? If it will not, the
fact is not essential. It is not one of those which constitute the
cause of action, defense, or reply (Sutherland's Code of
CIVIL PROCEDURE
Pleading, Practice and Forms, p. 82). A fact is essential if it

cannot be stricken out without leaving the statement of the
cause of action or defense insufficient.
Apart from alleging that the documents in this case are merely
evidentiary, the petitioners also point out that the deeds of sale
purportedly executed by them were in favor of their brother,
Dionisio, who in turn executed deeds of sale in favor of the
respondents. Under this circumstance, does the genuineness
and due execution of the deeds evidencing the two transactions
have to be denied under oath?
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.
For if 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.
The petitioners further alleged that this case falls under the
exception to Section 8, Rule 8 which provides:
SECTION 8. ... but this provision does not
apply when the adverse party does not
appear to be a party to the instrument.
As early as Lim-Chingco v. Terariray (5 Phil. 120), this Court gave
the reason for the rule on contesting actionable documents. The
purpose is:
Reasonably construed, the purpose of the
enactment (sec. 103) appears to have been
to relieve a party of the trouble and expense
of proving in the first instance an alleged
fact, the existence or nonexistence of which
is necessarily within the knowledge of the
adverse party, and of the necessity (to his
opponent's case) of establishing which such
adverse party is notified by his opponent's
pleading.
This being so, the documents have to be treated in like manner.
The petitioners are themselves parties to the deeds of sale
which are sought to be enforced against them. The complaint
was filed by the petitioners. They filed suit to recover their
hereditary properties. The new owners introduced deeds of sale
as their main defense. In other words, the petitioners brought
the issue upon themselves. They should meet it properly
according to the Rules of Court.
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.
meikimouse
CIVIL PROCEDURE
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.
It bears repeating that rules of procedure should be liberally

construed to the end that substantial justice may be served. As
stated in Pongasi v. Court of Appeals (71 SCRA 614):
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. (In re Dick's Estate, 235 N.W. 401). 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.
We repeat what We said in Obut v. Court of

Appeals, et al., supra, that 'what should
guide judicial action is the principle that a
party-litigant is to be given the fullest
opportunity to establish the merits of his
complaint or defense rather than for him to
lose life, liberty, honor or property on
technicalities.
In dispensing justice Our action must reflect
a deep insight into the failings of human
nature, a capability for making allowances
for human error and/or negligence, and the
ability to maintain the scales of justice
happily well-balanced between these virtues
and the application of the law.
Paragraphs 11 and 13 of the petitioners' complaint reads:

xxx xxx xxx
11. That the share of herein Plaintiffs were
never sold or in any wise transferred or
disposed to others;
xxx xxx xxx
13. That just how and by what means
Defendant, JUANITO CAMACHO was able to
acquire the total area of 931 square meters,
is not known; however, the acquisition
might have been effected, the same was in
fraud of herein plaintiffs; and so with the
share of Defendant, DALMACIO C. RAMOS,
Jr., herein Plaintiffs, jointly and/or severally,
do not know the person; and, however he
might have acquired the said share of ONE
FOURTH () of the property, was not from
either, much less all of the Plaintiffs;
An interpretation of a rule of procedure which would not deny

to the petitioners their rights to their inheritance is warranted
by the circumstances of this case.
WHEREFORE, the order of the respondent court dated July 20,
1981 is hereby REVERSED and SET ASIDE. The Regional Trial
Court which took over the cases of the respondent court is
ordered to receive the petitioners' evidence regarding the
genuineness and due execution of the disputed deeds of sale.
SO ORDERED.
xxx xxx xxx

The complaint was verified under oath by the petitioners.
The petitioners' counsel was obviously lulled into complacency
by two factors. First, the plaintiffs, now petitioners, had already
stated under oath that they never sold, transferred, or disposed
of their shares in the inheritance to others. Second, the usual
procedure is for a defendant to specifically deny under oath the
genuineness and due execution of documents set forth in and
annexed to the complaint. Somehow, it skipped counsel's
attention that the rule refers to either an action or
a defense based upon a written instrument or document. It
applies to both plaintiffs and defendants.
Under the facts of this case, the private respondents were
placed on adequate notice by Paragraph 11 of the verified
complaint that they would be caned upon during trial to prove
the genuineness or due execution of the disputed deeds of sale.
Moreover, the heirs of Olegario Toribio, his widow and minor
children represented by their mother, are among the plaintiffspetitioners. They are not parties to the deeds of sale allegedly
executed by their father, aunt, and uncle. They are not required
to deny the deeds of sale under oath. The private respondents
will still have to introduce evidence to establish that the deeds
of sale are genuine and that they were truly executed by the
parties with authority to dispose of the disputed property.
meikimouse
CIVIL PROCEDURE

G.R. No. 126863
January 16, 2003
On June 1, 1994, the MTC dismissed the complaint and

counterclaim.
SPOUSES NAPOLEON L. GAZA and EVELYN GAZA, SPOUSES

RENATO PETIL and MELY PETIL, BRGY. SEC. VICTORIO A.
CONDUCTO and BRGY. TANOD ARTURO ALAON, petitioners,
vs.
RAMON J. LIM and AGNES J. LIM, respondents.
SANDOVAL-GUTIERREZ, J.:
1
The present petition for review on certiorari seeks to set aside

the Decision dated April 29, 1995 and the Resolution dated
2
October 10, 1996 of the Court of Appeals in CA-G.R. SP No.
36997 reversing the Decision of the Regional Trial Court, Branch
63, Calauag, Quezon in Civil Case No. C-1031 for forcible entry.
The factual milieu of this case is as follows:
On February 20, 1961, Napoleon Gaza purchased a parcel of
land with an area of 5,270 square meters located
inBarangay Sta. Maria, Calauag, Quezon, from Angeles Vda. de
Urrutia. The Register of Deeds of Lucena City then cancelled the
latter's title and issued Transfer Certificate of Title (TCT) No. T47263 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 died in 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 No. 2490, PCA Copra Business
Registration No. 6265/76 and Mayor's Permit dated December
31, 1976. Sometime in November 1993, they designated Emilio
Herrera as caretaker of the property.
On November 28, 1993, the padlock of the main gate was
destroyed. According to Napoleon Gaza, the siblings Ramon and
Agnes Lim and Emilio Herrera, 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, Ramon and Agnes Lim maintain that on
November 28, 1993, 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.
On December 13, 1993, Ramon and Agnes Lim filed with the
Municipal Trial Court (MTC) of Calauag, Quezon an action for
forcible entry against spouses Napoleon and Evelyn Gaza,
docketed as Special Civil Action No. 845.
On December 21, 1993, spouses Gaza filed with the same court
their answer with compulsory counterclaim.
On appeal, the Regional Trial Court (RTC), Branch 63, Calauag,

Quezon, affirmed the MTC Decision with modification, thus:
"WHEREFORE, in the light of the foregoing
considerations the judgment of the lower court is
hereby AFFIRMED and the appeal is DENIED with the
modification that the plaintiffs are ordered to pay the
amount of P5,000.00 as moral damages and P5,000.00
by way of exemplary damages to the defendants
spouses Napoleon Gaza and Evelyn Gaza.
"SO ORDERED."
On April 29, 1995, Ramon and Agnes Lim filed with the Court of
Appeals a petition for review, docketed therein as CA-G.R. SP
4
No. 36997. In its Decision, the Court of Appeals reversed and
set aside the Decision of the RTC, thus:
"WHEREFORE, premises considered, the petition is
hereby GIVEN DUE COURSE. The decision of the
Regional Trial Court of Calauag, Quezon, Branch 63,
affirming the decision of the Municipal Trial Court, is
hereby REVERSED and SET ASIDE and a new one is
rendered ordering the private respondents and all
persons claiming rights under them to vacate the
premises in question and surrender its possession to
the petitioners.
"SO ORDERED."
Spouses Gaza filed a motion for reconsideration but was denied.
Hence, they filed with this Court the present petition for review
on certiorari ascribing to the Court of Appeals the following
errors:
"I. THE COURT OF APPEALS ERRED IN FAILING TO RULE
THAT THERE WAS NO IMPLIED ADMISSION ON THE
PART OF PETITIONERS THAT PRIVATE RESPONDENTS
HAD BEEN IN PRIOR AND ACTUAL PHYSICAL
POSSESSION OF SUBJECT PROPERTY SINCE 1975.
"II. THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN RESOLVING THE INSTANT CASE ON
MERE TECHNICALITIES AND IN APPLYING THE RULES
OF PROCEDURE IN A VERY RIGID MANNER, THEREBY
DENYING PETITIONERS SUBSTANTIAL JUSTICE.
"III. THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN IGNORING THE VOLUMINOUS
EVIDENCE ADDUCED BY THE PETITIONERS IN
SUBSTANTIATING THEIR PRIORITY IN POSSESSION OF
SUBJECT PROPERTY, SAID ERROR BECOMING EVEN
MORE MANIFEST IN THE LIGHT OF THE GLARING
PAUCITY OF EVIDENCE OF PRIVATE RESPONDENTS TO
SUPPORT THEIR ALLEGED POSSESSION.
"IV. THE COURT OF APPEALS ERRED IN FAILING TO
TAKE INTO ACCOUNT THE FINAL AND EXECUTORY
JUDGMENT OF CONVICTION OF RESPONDENT AGNES
LIM FOR TRESPASSING INTO SUBJECT PROPERTY,
CLEARLY EVIDENCING PETITIONERS' PRIOR AND
ACTUAL MATERIAL POSSESSION AND PRIVATE
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CIVIL PROCEDURE

RESPONDENTS' PREDISPOSITION FOR FALSEHOOD,
THE TRUTH OF THE MATTER BEING OF SAID PROPERTY
AND THAT IT IS PRIVATE RESPONDENTS WHO HAVE
FORCIBLY ENTERED THE PROPERTY IN DISPUTE.
"V. THE COURT OF APPEALS ERRED IN RESOLVING THE
ISSUE OF IMPLIED ADMISSION, NOT BEING ONE OF
THE ISSUES DELIMITED IN THE PRE-TRIAL ORDER OF
5
17 FEBRUARY 1994."
We resolve the issues jointly.
Section 11, Rule 8 of the 1997 Rules of Civil Procedure, as
amended, 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. Section
10 of the same Rule provides the manner in which specific
denial must be made:
"Section 10. Specific Denial. A defendant must
specify each material allegation of fact the truth of
which he does not admit and, whenever practicable,
shall set forth the substance of the matters upon
which he relies to support his denial. Where a
defendant desires to deny only a part of an averment,
he shall specify so much of it as is true and material
and shall deny only the remainder. Where a
defendant is without knowledge or information
sufficient to form a belief as to the truth of a material
averment made in the complaint, he shall so state,
and this shall have the effect of a denial."
Three (3) 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
6
effect of a denial.
The Court of Appeals held that spouses Gaza, petitioners, failed
to deny specifically, in their answer, paragraphs 2, 3 and 5 of the
complaint for forcible entry quoted as follows:
"xxx
xxx
xxx
"2. That plaintiffs are the actual and joint occupants

and in prior continuous physical possession since 1975
up to Nov. 28, 1993 of a certain commercial
compound described as follows:
"A certain parcel of land situated in Bo. Sta. Maria,
Calauag, Quezon. Bounded on the N., & E., by Julian
de Claro; on the W., by Luis Urrutia. Containing an
area of 5,270 square meters, more or less. Declared
under Ramon J. Lim's Tax Dec. No. 4576 with an Ass.
Value of P26,100.00
"3. That plaintiffs have been using the premises
mentioned for combined lumber and copra business.
Copies of plaintiffs' Lumber Certificate of Registration
No. 2490 and PCA Copra Business Registration No.

6265/76 are hereto attached as Annexes "A" and "B"
respectively; the Mayor's unnumbered copra dealer's
permit dated Dec. 31, 1976 hereto attached as Annex
"C";
"xxx
xxx
xxx
"5. That defendants' invasion of plaintiffs' premises

was accomplished illegally by detaining plaintiffs'
caretaker Emilio Herrera and his daughter inside the
compound, then proceeded to saw the chain that held
plaintiffs' padlock on the main gate of the compound
and then busted or destroyed the padlock that closes
the backyard gate or exit. Later, they forcibly opened
the lock in the upstairs room of plaintiff Agnes J. Lim's
quarters and defendants immediately filled it with
other occupants now. Copy of the caretaker's (Emilio
Herrera) statement describing in detail is hereto
attached as Annex "D";
"xxx
xxx
xxx."
The Court of Appeals then concluded that since petitioners did

not deny specifically in their answer the above-quoted
allegations in the complaint, they judicially admitted that
Ramon and Agnes Lim, respondents, "were in prior physical
possession of the subject property, and the action for forcible
entry which they filed against private respondents (spouses
Gaza) must be decided in their favor. The defense of private
respondents that they are the registered owners of the subject
property is unavailing."
We observe that the Court of Appeals failed to consider
paragraph 2 of petitioners' answer quoted as follows:
"2. That defendants specifically deny the allegations in
paragraph 2 and 3 of the complaint for want of
knowledge or information sufficient to form a belief as
to the truth thereof, the truth of the matter being
those alleged in the special and affirmative defenses
8
of the defendants;"
Clearly, 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. Petitioners did
not merely allege they have no knowledge or information
sufficient to form a belief as to truth of those allegations in the
complaint, but added the following:
"SPECIAL AND AFFIRMATIVE DEFENSES
"That defendants hereby reiterate, incorporate and
restate the foregoing and further allege:
"5. That the complaint states no cause of action;
"From the allegations of plaintiffs, it appears that their
possession of the subject property was not supported
by any concrete title or right, nowhere in the
complaint that they alleged either as an owner or
lessee, hence, the alleged possession of plaintiffs is
questionable from all aspects. Defendants Sps.
Napoleon Gaza and Evelyn Gaza being the registered
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owner of the subject property has all the right to
enjoy the same, to use it, as an owner and in support
thereof, a copy of the transfer certificate of title No. T47263 is hereto attached and marked as Annex "AGaza" and a copy of the Declaration of Real Property is
likewise attached and marked as Annex "B-Gaza" to
form an integral part hereof;
"6. That considering that the above-entitled case is an
ejectment case, and considering further that the
complaint did not state or there is no showing that the
matter was referred to a Lupon for conciliation under
the provisions of P.D. No. 1508, the Revised Rule on
Summary Procedure of 1991, particularly Section 18
thereof provides that such a failure is jurisdictional,
hence subject to dismissal;
"7. That the Honorable Court has no jurisdiction over
the subject of the action or suit;
"The complaint is for forcible entry and the plaintiffs
were praying for indemnification in the sum of
P350,000.00 for those copra, lumber, tools, and
machinery listed in par. 4 of the complaint and
P100,000.00 for unrealized income in the use of the
establishment, considering the foregoing amounts not
to be rentals, Section 1 A (1) and (2) of the Revised
Rule on Summary Procedure prohibits recovery of the
same, hence, the Honorable Court can not acquire
jurisdiction over the same. Besides, the defendants
Napoleon Gaza and Evelyn Gaza being the owners of
those properties cited in par. 4 of the complaint
except for those copra and two (2) live carabaos
outside of the subject premises, plaintiffs have no
rights whatsoever in claiming damages that it may
suffer, as and by way of proof of ownership of said
properties cited in paragraph 4 of the complaint
attached herewith are bunched of documents to form
an integral part hereof;
"8. That plaintiffs' allegation that Emilio Herrera was
illegally detained together with his daughter was not
true and in support thereof, attached herewith is a
copy of said Herrera's statement and marked as Annex
"C-Gaza."
xxx
xxx
xxx."
The above-quoted paragraph 2 and 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 respondents'
possession, stressing that they (petitioners) are the registered
owners and lawful occupants thereof.
Respondents' reliance on Warner Barnes and Co., Ltd. vs.
10
Reyes in maintaining that petitioners made an implied
admission in their answer is misplaced. In the cited case, the
defendants' answer merely alleged that they were "without
knowledge or information sufficient to form a belief as to the
truth of the material averments of the remainder of the
complaint" and "that they hereby reserve the right to present
an amended answer with special defenses and
11
counterclaim." In the instant case, petitioners enumerated
their special and affirmative defensesin their answer. They also
CIVIL PROCEDURE
specified therein each allegation in the complaint being denied

by them. They particularly alleged they are the registered
owners and lawful possessors of the land and denied having
wrested possession of the premises from the respondents
through force, intimidation, threat, strategy and stealth. They
asserted that respondents' purported possession is
"questionable from all aspects." They also averred that they
own all the personal properties enumerated in respondents'
complaint, except the two carabaos. Indeed, nowhere in the
answer can we discern an implied admission of the allegations
of the complaint, specifically the allegation that petitioners have
priority of possession.
Thus, the Court of Appeals erred in declaring that herein
petitioners impliedly admitted respondents' allegation that they
have prior and continuous possession of the property.
We now resolve the basic substantial issue. 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
12
stealth. It must be stressed, though, that he cannot succeed
where it appears that, as between himself and the defendant,
13
the latter had a possession antedating his own. To ascertain
this, it is proper to look at the situation as it existed before the
14
first act of spoliation occurred. Such determination in this case
requires a review of factual evidence, generally proscribed in a
15
petition like this. Considering, however, the conflicting factual
findings of the MTC and RTC on one hand, and 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 (TCT No. T47263) 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.
A disinterested witness, Barangay Secretary Victorio Conducto
of Sta. Maria, Calauag, Quezon, in his Affidavit attached to the
16
instant petition, stated that since 1968, spouses Gaza have
been in possession of the property and that respondents never
occupied the property even for business purposes. Upon the
closure of their business, petitioners designated Numeriano
Ernesto and Renato Petil as caretakers of the lot. Upon the
other hand, respondents' allegation of prior possession of the
premises is anchored on spurious documents. The Lumber
Certificate of Registration of Business Name No. 78-2490, for
one, does not specifically refer to the disputed property. It was
issued to them at a different address. Tax Declaration No. 3581-220 in the name of R. J. Lim is not a certified true copy of the
17
original. Also, respondents' purported PCA Certificate of
18
Registration No. 6265/76 as copra dealer and the Mayor's
19
Permit are expired documents. Not even their supposed
caretaker, Emilio Herrera, submitted an affidavit confirming that
they are the lawful possessors of the property.
Furthermore, respondent Agnes Lim was later convicted by the
MTC of Calauag, Quezon in Criminal Case No. 7405 for
20
trespassing into the subject property. The MTC Decision
confirms the falsity of respondents' claim of prior possession. It
bears emphasis that the MTC Decision was affirmed in toto by
the RTC of Calauag, Quezon, Branch 63 in Criminal Case No.
21
2725-C.
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CIVIL PROCEDURE
Where a dispute over possession arises between two persons,

the person first having actual possession is the one who is
entitled to maintain the action granted by law; otherwise, a
mere usurper without any right whatever, might enter upon the
property of another and, by allowing himself to be ordered off,
could acquire the right to maintain the action of forcible entry
and detainer, however momentary his intrusion might have
22
been.
In this case, evidence clearly shows that petitioners are the true
owners and, therefore, the lawful possessors of the land. Verily,
respondents' allegation of actual possession and that
petitioners deprived them of such possession by means of force,
intimidation and threat are clearly untenable.
WHEREFORE, the petition is GRANTED and the assailed Decision
of the Court of Appeals in CA-G.R. SP No. 36997 dated March
12, 1996 is REVERSED and SET ASIDE. The Decision of the RTC,
Branch 63, Calauag, Quezon in Civil Case No. C-1031 affirming
the MTC Decision dismissing respondents' complaint
is REINSTATED, with modification in the sense that the award of
moral and exemplary damages in favor of petitioners is deleted.
SO ORDERED.
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G.R. No. 157847 August 25, 2005
REPUBLIC OF THE PHILIPPINES, represented by the AIR
TRANSPORTATION
OFFICE
(ATO), Petitioners,
vs.
LEODIGARIO SARABIA, HERMENIGILDO DE LA CRUZ, DELIA
REBUTAR, MILDRED ROSE, ANITA DE LA CRUZ, ERLINDA
LUCERIO, GEORGIE DE LA CRUZ, FELMA DE LA CRUZ, FELINO DE
LA
CRUZ,
TERESITA
SAMSON,
EVANGELINE
COLOMER, Respondents.
DECISION
GARCIA, J.:
Before the Court is this petition for review on certiorari under
1
Rule 45 of the Rules of Court, assailing the decision dated
November 18, 2002 of the Court of Appeals in CA-G.R. CV No.
66124, which affirmed the November 26, 1999 decision of the
Regional Trial Court at Aklan, Branch 5, in an expropriation case
thereat filed by the petitioner. The affirmed decision of the trial
court dispositively reads:
WHEREFORE, judgment is hereby rendered:
1. Fixing the amount of P800.00 per square meter as just
compensation to be paid by plaintiff to defendants for the
taking of the subject property indicated as Lot 6068-A in the
Sketch Plan (Annex B, complaint) containing an area of 4,901
square meters which is a portion of the bigger parcel of land
covered by Original Certificate of Title No. P-15596. The
aggregate amount shall earn legal interest of 6% per annum
commencing from November 11, 1999 until the finality of this
Decision, thereafter, 12% interest per annum from the finality of
the Decision on the remaining unpaid amount until full
payment.
2. Ordering the defendants to withdraw the amount of
P50,000.00 deposited provisionally with the Land Bank Kalibo
Branch, Kalibo, Aklan, by the Air Transportation Office under
Savings Account No. 0452-1084-45 to be deducted therefrom
the costs of P10,600.00 and balance shall be deducted from the
aggregate amount of the just compensation; and
CIVIL PROCEDURE
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 Damages before 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 of compensation 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.
On August 6, 1999, the trial court appointed three (3)
commissioners to ascertain the just compensation for the
subject property.
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 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.
3. Declaring the plaintiffs lawful right to retain possession of

the subject property and to appropriate it for the public purpose
it was intended for, i.e., the operations of the airport control
tower, Kalibo crash fire rescue station, airport terminal and
headquarters of the PNP Aviation Security, upon full payment of
the just compensation thereat as fixed in paragraph 1 hereof.
During the hearing of September 3, 1999, the trial court

directed petitioner to present evidence to prove that the
remaining portion not actually and physically occupied by the
government is still needed for public purpose. However,
petitioner countered that there is no need to present evidence
thereon considering that almost one-half (1/2) of the entire
property subject of the case has already been in fact occupied
and devoted to public purpose.
Plaintiff is directed to pay the costs of P9,600.00 representing

the Commissioners fees equivalent to P800.00 per session for
each commissioner, and P1,000.00 to Mr. Remegio M. Bautista
as the designated secretary of the commissioners.
The trial court ignored petitioners posturing and issued an

3
order disposing, as follows:
SO ORDERED.
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 by Original Certificate of Title No. P15596 of the Register of Deeds of Aklan in the names of the
private respondents who are heirs of the late Segundo De la
Cruz.
WHEREFORE, the Court finds and so holds that the additional

area consisting of 5,567 square meters or Lot 6068-B (unshaded
portion in Annex "B"- Complaint) is not needed by the plaintiff
for public use or purpose, but only the shaded portion, Lot
6068-A, containing an area of 4,901 square meters.
SO ORDERED.
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4
CIVIL PROCEDURE
Eventually, in a decision dated November 26, 1999, 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.
Hence, there appears no error in the lower courts ruling that

the "taking" for the purposes of fixing just compensation be
considered on November 11, 1999, the date of the issuance of
the writ of possession, as well as the lower courts adherence to
the recommendation of the commissioners.
In so adjudging, the trial court relied on Republic vs. Honorable

5
Lucerito Tagle, et al., and thus fixed the just compensation for
the 4,901 square-meter portion based on the current market
value not at the time of the taking which was in 1956, but at the
time of the issuance of the writ of possession on November 11,
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.
Petitioner moved for a reconsideration of the appellate courts

decision but its motion was denied by said court in its resolution
of April 1, 2003.
Unable to accept the trial courts decision for allegedly being

contrary to law and established jurisprudence, petitioner
Republic filed a notice of appeal and record on appeal, which
the trial court approved on January 18, 2000. Hence, the entire
records of the case were transmitted to the Court of Appeals,
whereat the Republics appeal was docketed as CA-G.R. CV No.
66124.
Hence, petitioners present recourse.

As we see it, the sole question presented herein involves the
precise time at which just compensation should be fixed:
whether as of the time of actual taking of possession by the
expropriating entity, as insisted by petitioner Republic, or at the
issuance of the writ of possession pursuant to the expropriation
proceedings, as maintained by the respondents and sustained
by both the trial court and the Court of Appeals.
Before going any further, however, we take exception to the
appellate courts finding that evidence is wanting on the fact of
petitioners taking possession of the disputed 4,901 squaremeter portion in 1956.
In the herein assailed decision dated November 18, 2002, the

Court of Appeals AFFIRMED the appealed decision of the trial
court, thus:
WHEREFORE, premises considered, the assailed decision dated
November 26, 1999 of the Regional Trial Court, Branch 5, Kalibo,
Aklan in Civil Case No. 5543 is hereby AFFIRMED.
SO ORDERED.
In its decision, the appellate court placed emphasis on the
alleged failure of petitioner prove that the "taking" of the
occupied 4,901 square-meter portion of Lot 6068 occurred in
1956. More specifically, it ruled:
Granting that indeed plaintiff-appellants possession took place
in 1956, said possession pertained to a "portion" of said lot. The
admission of plaintiff-appellant that the encroachment covered
a wider and wider area as time passed, puts into issue the
character of said possession. Was it "taking" in the sense of
expropriation?
The expropriation of real property does not include mere
physical entry or occupation of land. The physical entry and
occupation of the property in 1956 should include all the rights
that may be exercised by an owner of the subject property.
Plaintiff-appellant failed to show that it intended to acquire
physical possession but also the legal right to possess and
ultimately to own the subject property.
Disconsolately, the assailed decision reveals inaction of plaintiffappellant 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.
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 adequately established.
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 PreTrial Brief contain irrefutable admissions. Thus, in their
7
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.
8
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 CLAIM

1. 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
meikimouse

has been occupied by the plaintifffor 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 PreTrial 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 not
10
require 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
11
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
12
not.
This Court is thus convinced that the taking of the occupied
4,901 square-meter portion of Lot 6068 occurred in 1956.
In the context of the States inherent power of eminent domain,
there is a "taking" when the owner is actually deprived or
dispossessed of his property; where there is a practical
destruction or a material impairment of the value of his
property; or when he is deprived of the ordinary use
13
thereof. There is a "taking" in this sense when the
expropriator enters private property not only for a momentary
period but for a more permanent duration, for the purpose of
devoting the property to a public use in such a manner as to
oust the owner and deprive him of all beneficial enjoyment
14
thereof. After all, ownership "is nothing without the inherent
rights of possession, control and enjoyment". Where, as here,
the owner is deprived of the ordinary and beneficial use of his
property or of its value by its being diverted to public use, there
15
is taking within the constitutional sense.
This brings us to the issue of when the just compensation for
the property taken should be reckoned.
Petitioner argues, and rightly so, that the just compensation
fixed by the trial court based on the market value of the
property after the commencement of the expropriation
proceedings contradicts established jurisprudence that the
value of the property as it was when the government took
possession of the land represents its true value.
In a long line of cases, we have consistently ruled that
compensation for property expropriated must be determined as
of the time the expropriating authority takes possession thereof
16
and not as of the institution of the proceedings.
CIVIL PROCEDURE
17
So it is that in Republic vs. Lara, et al, this Court, quoting from

18
its earlier decision in Provincial Government vs. Caro, ruled:
The value of the property should be fixed as of the date when it
was taken and not the date of the filing of the proceedings. For
where property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enhanced by the public
purpose for which it is taken; the entry by the plaintiff upon the
property may have depreciated its value thereby; or, there may
have been a natural increase in the value of the property from
the time it is taken to the time the complaint is filed, due to
general economic conditions. The owner of private property
should be compensated only for what he actually loses; it is not
intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property
at the time it is taken. This is the only way the compensation to
be paid can be truly just; i.e., "just" not only to the individual
whose property is taken, "but to the public, which is to pay for
it" xxx.
The instant case is akin to that of Jose Ma. Ansaldo vs. Francisco
19
S. Tantuico, Jr. and Baltazar Aquino, decided 1990, where two
(2) lots of private ownership were taken by the government and
used for the widening of a road more than 40 years without the
benefit of any action of eminent domain or agreement with its
owners, albeit without protest by the latter. In a decision in that
case, penned by then Chief Justice Andres Narvasa, this Court,
20
citing the earlier case of Republic vs. PNB, wrote:
Normally, of course, where the institution of an expropriation
action precedes the taking of the property subject thereof, the
just compensation is fixed as of the time of the filing of the
complaint. This is so provided by the Rules of Court, the
assumption of possession by the expropriator ordinarily being
conditioned on its deposits with the National or Provincial
Treasurer of the value of the property as provisionally
ascertained by the court having jurisdiction of the proceedings.
There are instances, however, where the expropriating agency
takes over the property prior to the expropriation suit, as in this
case although, to repeat, the case at bar is quite extraordinary
in that possession was taken by the expropriator more than 40
years prior to suit. In these instances, this Court has ruled that
the just compensation shall be determined as of the time of
taking, not as of the time of filing of the action of eminent
domain.
xxx xxx xxx
" (W)hen plaintiff takes possession before the institution of
the condemnation proceedings, the value should be fixed as of
the time of the taking of said possession, not of filing of the
complaint and the latter should be the basis for the
determination of the value, when the taking of the property
involved coincides with or is subsequent to, the commencement
of the proceedings. Indeed, otherwise, the provision of Rule 69,
Section 3, directing that compensation be determined as of the
date of the filing of the complaint would never be operative.
We are not, however, in accord with petitioners assertion that
the just compensation for the entire Lot 6068should be fixed in
the amount based on its assessed value in 1956. There is
nothing on record that petitioner occupied the remaining 5,567
square-meter portion of Lot 6068, neither did it ever present
proof that said unoccupied portion is necessary for public use,
meikimouse
CIVIL PROCEDURE
except for its self-serving allegation that said portion is needed

for the expansion and other improvement of the airport.
WHEREFORE, the petition is PARTIALLY GRANTED. The
November 18, 2002 decision of the Court of Appeals in CA-G.R
CV No. 66124 is MODIFIED in the sense that the computation of
just compensation for the 4,901 square-meter portion of Lot
6860 should be based on its fair market value in 1956.
SO ORDERED.
meikimouse

Rule 8 (Outline, Case Digest &amp; Full Text)

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Rule 8 (Outline, Case Digest &amp; Full Text)

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Outline: Rule 8 - Manner of Making Allegations in Pleadings

Lesson for August 23, 2014

Condition precedent - Sec. 3, Rule 8

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

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

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

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

sufficiency can only be determined by considering the

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

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

genuineness and due execution of the trust receipts and

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

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

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

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

loans secured by respondent from her amounted to

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

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

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

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

Traversing the allegations in the instant petition,

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

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

a complaint for the recovery of the hereditary rights

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

Specific denials - Sec. 10, Rule 8

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

in 1961 from Angeles Vda. de Urrutia. Petitioner also

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

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

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

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

aggravated by the fact that defendant mill

The defendants. except the Sugar Quota Administrator, filed

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

xxx xxx xxx

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

It is basic that the Complaint must contain a concise statement

When the ground for dismissal is that the Complaint states no

WHEREFORE, without resolving the issue in the main case

The subject Amended and Supplemental Complaint fails to meet

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

4. That because of Far East's failure and

Minerva C. genevea for petitioners.

6. That on various dates and for valuable

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

8. That because of far East's failure and

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

2 Denying for lack of merit the Motion for

15. That because of the failure and refusal of

3 Striking off from the records the order

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

4 Ordering the Sheriff to desist

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

THE COURT OF APPEALS GRAVELY ERRED IN

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

is the fact that the acknowledgment of debt and the demands

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

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

December 20, 2006

Rule 8 (Outline, Case Digest & Full Text)

Rule 8 (Outline, Case Digest & Full Text)