Belated raising of compulsory counterclaim

Rule 6 of the Rules of Court defines a compulsory counterclaim follows:
Section 7. Compulsory counterclaim. — A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to the amount and the nature thereof, except that in an original action before the Regional Trial Court, the counterclaim may be considered compulsory regardless of the amount.
Accordingly, a counterclaim is compulsory if: (a) it arises out of or is necessarily connected with the transaction or occurrence which is the subject matter of the opposing party's claim; (b) it does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction; and (c) the court has jurisdiction to entertain the claim both as to its amount and nature, except that in an original action before the RTC, the counterclaim may be considered compulsory regardless of the amount.[1]

In determining whether a counterclaim is compulsory or permissive, the Supreme Court has, in several cases, utilized the following tests:[2]

(1) Are the issues of fact or law raised by the claim and the counterclaim largely the same?

(2) Would res judicata bar a subsequent suit on defendant's claims, absent the compulsory counterclaim rule?

(3) Will substantially the same evidence support or refute plaintiffs claim as well as the defendant's counterclaim?

(4) Is there any logical relation between the claim and the counterclaim, such that the conduct of separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court? This test is the "compelling test of compulsoriness."[3]

Based on the above tests, in MBTC v. CPR Promotions (G.R. No. 200567, June 22, 2015), claim for recovery of the excess in the bid price vis-a-vis the amount due was not interposed as a compulsory counterclaim in an action for recovery of a deficiency filed by the mortgagee against the debtor-mortgagor. According to the High Court, it should be been so interposed. First, in both cases, substantially the same evidence is needed in order to prove their respective claims. Second, adjudication in favor of one will necessarily bar the other since these two actions are absolutely incompatible with each other; a debt cannot be fully paid and partially unpaid at the same time. Third, these two opposing claims arose from the same set of transactions. And finally, if these two claims were to be the subject of separate trials, it would definitely entail a substantial and needless duplication of effort and time by the parties and the court, for said actions would involve the same parties, the same transaction, and the same evidence. The only difference in MBTC v. CPR Promotions would be in the findings of the courts based on the evidence presented with regard to the issue of whether or not the bid prices substantially cover the amounts due.

The Supreme Court determined that a claim for recovery of an excess in the bid price should be set up in the action for payment of a deficiency as a compulsory counterclaim. It was ruled that respondents failed to timely raise such compulsory counterclaim. In short, if there is an excess in the bid prices (compared with the amount due) after foreclosure, public sale, etc., the party entitled thereto should interpose it as counterclaim if and when the creditor files an action for recovery of an alleged deficiency. In even simpler terms, the issue of whether there was excess or deficiency in the purchase price after foreclosure must be settled in only one action to avoid duplication of proceedings to resolve two issues that virtually can resolve a single dispute.

It is elementary that a defending party's compulsory counterclaim should be interposed at the time he files his Answer,[4] and that failure to do so shall effectively bar such claim.[5] As it appears from the records of MBTC v. CPR Promotions, what respondents initially claimed were moral and exemplary damages, as well as attorney's fees.[6] Then, realizing, based on its computation, that it should have sought the recovery of the excess bid price, respondents set up another counterclaim, this time in their Appellant's Brief filed before the Court of Appeals.[7] Unfortunately, respondents' belated assertion proved fatal to their cause as it did not cure their failure to timely raise such claim in their Answer. Consequently, respondents' claim for the excess, if any, is already barred.


[1] Sps. Mendiola v. CA, G.R. No. 159746, July 18, 2012, 677 SCRA 27.

[2] Calibre Traders, Inc. v. Bayer Philippines, Inc., G.R. No. 161431, October 13, 2010, 633 SCRA 34; citing Sandejas v. Ignacio, Jr., G.R No. 155033, December 19, 2007, 541 SCRA 61, 77, citing Tan v. Kaakhay Finance Corporation, 452 Phil. 637, 646-647 (2003), Intestate Estate of Dalisay v. Hon. Marasigan, 327 Phil. 298, 301 (1996) and Quintanilla v. Court of Appeals, 344 Phil. 811, 819 (1997).

[3] Id.; citing Alday v. FGU Insurance Corporation, 402 Phil. 962, 972 (2001).

[4] Section 8, Rule 11 of the Rules of Court on the filing of compulsory counterclaims provides that "[a] compulsory counterclaim or a cross-claim that a defending party has at the time he files his answer shall be contained therein." See Sps. Mendiola v. CA, G.R. No. 159746, July 18, 2012.

[5] Section 2, Rule 9 of the Rules of Court provides that: "A compulsory counterclaim, or a cross- claim, not set up shall be barred."

[6] MBTC v. CPR Promotions (G.R. No. 200567, June 22, 2015).

[7] MBTC v. CPR Promotions (G.R. No. 200567, June 22, 2015).

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