RULE 8

Manner of Making Allegations in Pleadings

SECTION 1. In general. — Every pleading shall contain in a methodical and logical form, a plain,
concise and direct statement of the ultimate facts on which the party pleading relies for his claim
or defense, as the case may be, omitting the statement of mere evidentiary facts. (1)

If a defense relied on is based on law, the pertinent provisions thereof and their applicability to
him shall be clearly and concisely stated. (n)

Evidentiary Facts - Facts which will prove the ultimate facts. They should not be stated in the
pleading. They should be brought out during the trial. They are proper during the trial but they
have no place in the pleadings.

Ultimate Facts - May be filed through either a separate or an amended pleading. May be granted
in whole or in part as not all the allegations questioned by the movant are necessarily so
ambiguous as to require clarification. Ultimate facts are those which are essential to one’s cause
or defense.

Q: How do you determine whether a fact is essential to your cause of action or defense?

A: The test to determine whether a fact is essential to your cause of action is: if the statement in
the pleading cannot be deleted. Because if you delete it, the statement of your cause of action or
defense become incomplete, a certain cause of action disappears then it must be a statement of
ultimate fact. Pagtinanggal mo, wala ka ng cause of action. But if you delete it and there is still
cause of action, then it is not an ultimate fact.

Q: What are the essential elements of a cause of action?

A: The following:
1. Statement of the right;
2. Statement of the obligation;
3. Statement of the violation; and
4. Statement of damage.

SECTION 2. Alternative causes of action or defenses. — A party may set forth two or more
statements of a claim or defense alternatively or hypothetically, either in one cause of action or
defense or in separate causes of action or defenses. When two or more statements are made in the
alternative and one of them if made independently would be sufficient, the pleading is not made
insufficient by the insufficiency of one or more of the alternative statements. (2)

G.R. No. 94093 August 10, 1993

FAR EAST MARBLE (PHILS.), INC., LUIS R. TABUENA, JR. and RAMON A. TABUENA,
petitioners,
vs.
HONORABLE COURT OF APPEALS and BANK OF PHILIPPINE ISLANDS, respondents.
Minerva C. genevea for petitioners.
Sabino B. Padilla IV for Bank of the Philippines Islands.

MELO, J.:
This has reference to a petition for review by 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.
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

4. That because of Far East's failure and refusal in bad faith to pay its long past due obligations
under the promissory notes above alleged, plaintiff was constrained to file this suit . . .
SECOND CAUSE OF ACTION AGAINST FAR EAST

6. That on various dates and for valuable consideration, the defendant Far East received from and
was extended by . . . plaintiff
Bank . . . credit facilities in the form of Trust Receipts, photo copies of which are hereto attached
and made integral parts hereof as Annexes E, F, G, H, I and J.

7. That said Trust Receipts . . . have long matured and despite repeated requests and demands for
payment thereof with interests and related charges due Far East has 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.

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 and refused to pay said Far
East accounts and have already defaulted in their solidary obligation under said "continuing
Guaranty.”

15. That because of the failure and refusal of defendants Ramon A. Tabuena and Luis R. Tabuena,
Jr. in bad faith to pay Far East's past due accounts under their solidary obligation stipulated in said
"Continuing Guaranty,". . . plaintiff has been constrained to file suit against them . . .
(pp. 32-36, Rollo.)
On March 10, 1987, Far East filed an answer with compulsory counterclaim admitting the
genuineness and due execution of the promissory notes attached as Annexes A, B, and C to
the complaint, but alleging further that said notes became due and demandable on November
19, 1976, respectively. On the basis of the maturity dates of the notes, Far East thereupon raised
the affirmative defenses of prescription and lack of cause of action as it denied the allegation
of the complaint that BPI had made previous repeated requests and demands for payment.
Far East claimed that during the more than 10 years which elapsed from the dates of maturity of
said obligations up to the time the action for foreclosure of the chattel mortgage securing said
obligations was filed, it had not received from BPI or its predecessor any demand for payment and
thus, it had "labored under the belief that they [the obligations] have already been written off" in
the books of BPI. Moreover, Far East denied the genuineness and due execution of the trust receipts
and of the Statement of Account (pp. 78-79, Rollo). A motion to hear affirmative defenses was
attached to the answer.
On March 16, 1987, BPI filed an opposition to the motion to hear affirmative defenses,
alleging that its cause of action against Far East have not prescribed, since within 10 years
from the time its cause of action accrued, various written extrajudicial demands (attached
thereto as Annexes "A" and "A-1") were sent by BPI and received by Far East. Moreover,
BPI offered several written documents whereby Far East supposedly acknowledged its debt
to BPI (Annexes "B" to "B-6). Withal, BPI maintained, the ten-years prescriptive period to
enforce its written contract had not only been interrupted, but was renewed.
On the same date, BPI filed a motion for summary judgment on the ground that since Far East had
admitted the genuineness and due execution of the promissory notes and the deed of chattel
mortgage annexed to its complaint, there was no genuine issue as to any material fact, thus entitling
BPI to a favorable judgment as a matter of law in regard to its causes of action and on its right to
foreclose the chattel mortgage.
On June 1, 1987, the trial court issued an order to the following effect:
WHEREFORE, the Court issues this Order:
1 — Dismissing the complaint against the defendant Far East Marble (Phils.) Inc. for lack of cause
of action and on grounds of pre[s]krypton:
2 — Denying for lack of merit the Motion for Summary Judgment and the Supplemental Motion
for Summary Judgment;
3 — Striking off from the records the order of March 6, 1987 and recalling the writ of replevin
issued by this Court, and dismissing all the contempt charges;
4 — Ordering the Sheriff to desist permanently from enforcing the writ of seizure and to return all
the property seized by him under the Writ of Replevin, to the defendant Far East Marble (Phils.)
Inc. immediately from receipt of a copy of this order, and in case of his failure to do so, the value
thereof shall be charged against the replevin bond. (pp. 89-90, Rollo.)
An appeal therefrom was forthwith interposed by BPI, assailing the findings of the trial court with
respect to its finding that BPI's cause of action has prescribed and the consequent 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
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
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 parties-litigants. On the
other hand, there is a "question of fact" when the doubt or controversy arises as to the truth
or falsity of the alleged facts. Simply put, when there is no dispute as to fact, the question of
whether or not the conclusion drawn therefrom is correct is a question of law.
In the case at bar, BPI alleged in its complaint (Rollo, p. 42) that on various dates and for valuable
consideration, it extended to Far East several loans, evidenced by promissory notes, and credit
facilities in the form of trust receipts, and that despite repeated requests and demands for payment
thereof, Far East had failed and refused to pay. Thus BPI sought foreclosure of the chattel mortgage
securing such indebtedness.
In its answer (Rollo, p. 78), Far East admitted the genuineness and due execution of the
promissory notes involved in the case, but denied BPI's allegation that repeated demands for
payment were made by BPI on it. Far East then raised the affirmative defenses of
prescription and lack of cause of action, arguing that since the promissory notes matured in
1976 while BPI filed its action to foreclose the chattel mortgage only in 1987 (or more than
10 years from the time its cause of action accrued), and there being no demand for payment
which would interrupt the period of prescription for instituting said action, BPI's claims
have prescribed.
BPI, however, countered that its allegation of repeated demands on Far East for payment
sufficiently stated a cause of action; that within ten years from the time its cause of action accrued
in 1976, it sent written extrajudicial demands on Far East requesting payment of its due and
outstanding obligations; that within that 10-years period, it received written acknowledgments of
debt from Far East; and, that these demands for payment and acknowledgments of debt effectively
interrupted and renewed the prescriptive period. Worth noting is the fact that the acknowledgment
of debt and the demands for payment, including the affidavits of BPI's counsel who prepared the
demand letter and that of BPI's messenger who allegedly personally delivered said letters to Far
East were duly annexed to BPI's pleadings.
From the foregoing exchange of pleading, the conflicting allegations of 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., 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.
Feliciano, Bidin, Romero and Vitug, JJ., concur.

Section 3. Conditions precedent. — In any pleading a general averment of the performance or

occurrence of all conditions precedent shall be sufficient. (3)

A complaint is sufficient if it contains sufficient notice of the cause of action even

though the allegation may be vague or indefinite, for in such case, the recourse of the
defendant would be to file a motion for a bill of particulars. It is indeed the better rule that,
pleadings, as well as remedial laws, should be liberally construed so that the litigants may have
ample opportunity to prove their respective claims so as to avoid possible denial of substantial
justice due to legal technicalities (Adamo, et al. vs. Intermediate Appellate Court, et al., 191 SCRA
195 [1990]).

Section 4. Capacity. — Facts showing the capacity of a party to sue or be sued or the authority
of a party to sue or be sued in a representative capacity or the legal existence of an organized
association of person that is made a party, must be averred. A party desiring to raise an issue as to
the legal existence of any party or the capacity of any party to sue or be sued in a representative
capacity, shall do so by specific denial, which shall include such supporting particulars as are
peculiarly within the pleader's knowledge. (4)
Section 5. Fraud, mistake, condition of the mind. — In all averments of fraud or mistake the
circumstances constituting fraud or mistake must be stated with particularity. Malice, intent,
knowledge, or other condition of the mind of a person may be averred generally.(5a)

Section 6. Judgment. — In pleading a judgment or decision of a domestic or foreign court,

judicial or quasi-judicial tribunal, or of a board or officer, it is sufficient to aver the judgment or
decision without setting forth matter showing jurisdiction to render it. (6)

Section 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. (7)

Section 8. How to contest 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 the requirement of an oath 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. (8a)

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.

Section 9. Official document or act. — In pleading an official document or official act, it is

sufficient to aver that the document was issued or the act done in compliance with law. (9)

[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 the Decision[1] and Resolution[2]
of the Court of Appeals dated June 16, 1994 and April 19, 1995, respectively, affirming the
Decision[3] 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 of P7,868,881.11.
The antecedent facts are as follows:

On December 6, 1985, SIHI instituted a Complaint[4] 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 letters of credit[5] 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, Indo-Phil,
Texfiber and Polyamide issued several sight drafts[6] 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
comprehensive surety agreement[7] 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 receipts[8] 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 sell the same for
SIHIs 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 SIHIs 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 Filtexs 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, attorneys fees,
exemplary damages, costs of suit and other litigation expenses.
In its Answer with Counterclaim,[9] 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 damages and
attorneys fees are not legally demandable.[10] 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 judgment[11] holding Filtex and
Villanueva jointly and severally liable to SIHI. Dissatisfied, Filtex and Villanueva filed an
Appeal,[12] 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.[13]
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 Court.[14] The appellate court also ruled that there remained an unpaid
balance as of January 31, 1989 of P868,881.11 for which Filtex and Villanueva are solidarily
liable.[15]
The appellate court denied the petitioners Motion for Reconsideration[16] in its Resolution,[17]
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 litigation and other miscellaneous expenses and filing fees.[18]
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 not have admitted in
evidence the letters of credit, sight drafts, trust receipts and comprehensive surety agreement for
lack of the requisite documentary stamps thereon. They hypothesized that their implied admission
of the genuineness and due execution of these documents for failure to specifically deny the same
under oath should not be equated with an admission in evidence of the documents and an admission
of their obligation. They also maintained that they have fully paid the obligation and, in fact, have
made an excess payment in the amount of P415,722.53. In addition, Villanueva asserted that the
comprehensive surety agreement which he executed is null and void, inadmissible in evidence and
contains material alterations. Thus, he claimed that he should not be held solidarily liable with
Filtex.
Traversing the allegations in the instant petition, SIHI stated in its Comment[19] 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.
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 Revenue Code.[20]
We rule in the affirmative. As correctly noted by the respondent, the Answer with
Counterclaim[21] and Answer,[22] of Fillet 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 SIHIs Complaint[23] 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 Appeals,[24] 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 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.
Interestingly, the petitioners questioned the admissibility of these documents rather belatedly, at
the appeal stage even. Their respective answers[25] to SIHIs 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 fair play, justice and due process.[26]
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
limitations, estoppel and want of consideration.[27]
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. In Fortune
Motors (Phils.) Corporation vs. Court of Appeals,[28] 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 trial court.[29]
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.
In the first place, the consent of Filtex to the surety may be assumed from the fact that
Villanueva was the signatory to the sight drafts and trust receipts on behalf of Filtex.[30]
Moreover, in its Answer with Counterclaim,[31] 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. SIHIs 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 in Palmares vs. Court of Appeals:[32]
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 detre 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 paying the debt.[33]
Lastly, with regard to Villanuevas 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.
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.
Bellosillo, (Chairman), Quisumbing, Austria-Martinez and Callejo, Sr., JJ., concur.

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 to the complaint, he shall so state, and this shall have the
effect of a denial. (10a)

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 effect of a denial.[6]

POUSES 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.
DECISION
SANDOVAL-GUTIERREZ, J.:
The present petition for review on certiorari[1] seeks to set aside the Decision dated April 29,
1995 and the Resolution dated October 10, 1996 of the Court of Appeals[2] 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 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 (TCT) No. T-47263 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 June 1, 1994, the MTC dismissed the complaint and 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."[3]
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 No. 36997. In its Decision, the Court of Appeals[4] 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
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 17 FEBRUARY 1994.”[5]

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 effect of a denial.[6]
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
"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. Lims 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
Mayors unnumbered copra dealers permit dated Dec. 31, 1976 hereto attached as Annex C;
xxx
5. That defendants invasion of plaintiffs premises was accomplished by illegally 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. Lims quarters and defendants immediately filled it with
other occupants now. Copy of the caretakers (Emilio Herrera) statement describing in detail is
hereto attached as Annex D;
x x x.[7]
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 of the defendants;"[8]
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 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. T-47263 is hereto attached and marked as Annex "A- Gaza"
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 Emilio Herrera's
statement and marked as Annex "C-Gaza."
x x x x x x x x x."[9]
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. Reyes[10] 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
counterclaim."[11] In the instant case, petitioners enumerated their special and affirmative
defenses in their answer. They also 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 stealth.[12] 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.[13] To ascertain this, it is proper
to look at the situation as it existed before the first act of spoliation occurred.[14] Such
determination in this case requires a review of factual evidence, generally proscribed in a
petition like this.[15] 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 (TCT No. T-47263) 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 instant petition,[16] 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. 35-81-220 in the name
of R. J. Lim is not a certified true copy of the original.[17] Also, respondents' purported PCA
Certificate of Registration No. 6265/76 as copra dealer[18] and the Mayor's Permit[19] 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 trespassing into the subject property.[20] 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.
2725-C.[21]
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 been.[22]
In this case, evidence clearly shows that the 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.
Puno, (Chairman), Panganiban, Corona, and Carpio Morales, JJ., concur.

Section 11. Allegations not specifically denied deemed admitted. — Material averment in the
complaint, other than those as to the amount of unliquidated damages, shall be deemed admitted
when not specifically denied. Allegations of usury in a complaint to recover usurious interest are
deemed admitted if not denied under oath. (1a, R9)

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 Rule 45 of the Rules of Court,
assailing the decision1 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
3. Declaring the plaintiff’s 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.
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.
SO ORDERED.2
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. 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.
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.
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.
The trial court ignored petitioner’s posturing and issued an order3 disposing, as follows:
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.
Eventually, in a decision dated November 26, 1999,4 the trial court adopted the aforestated
commissioner’s report which fixed the just compensation for the 4,901 square-meter portion of
Lot 6068 at ₱800.00 per square meter, the current market value of the property in 1999.
In so adjudging, the trial court relied on Republic vs. Honorable Lucerito Tagle, et al.,5 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 petitioner’s proper
acquisition and taking of the property which involves not only physical possession but also the
legal right to possess and own the same.
Unable to accept the trial court’s 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 Republic’s appeal was docketed as CA-G.R. CV No. 66124.
In the herein assailed decision6 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-appellant’s 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 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.
Hence, there appears no error in the lower court’s 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 court’s adherence to the recommendation of the
commissioners.
Petitioner moved for a reconsideration of the appellate court’s decision but its motion was denied
by said court in its resolution of April 1, 2003.
Hence, petitioner’s 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 court’s finding that
evidence is wanting on the fact of petitioner’s taking possession of the disputed 4,901 square-
meter portion in 1956.
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,7 respondents declared, among others, as follows:
1. That they admit each and every allegation in paragraphs 1,2,3,4,5 and 6 of the complaint. They
admit that the portion of the land sought to be expropriated which is indicated by the white
shaded of the sketch plan which is attached as ANNEX "B" of the complaint with an area of
4,901 square meters, more or less, has been in the possession of the plaintiff since 1956 up to the
present.
Significantly, paragraph 6 of the complaint8 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:9
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.10 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.11 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.12
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 State’s 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
thereof.13 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 thereof.14 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 is taking within the
constitutional sense.15
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 and not as
of the institution of the proceedings.16
So it is that in Republic vs. Lara, et al,17 this Court, quoting from its earlier decision in Provincial
Government vs. Caro,18 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 S. Tantuico, Jr. and Baltazar
Aquino,19 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, citing the earlier case of
Republic vs. PNB,20 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 petitioner’s assertion that the just compensation for the
entire Lot 6068 should 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, 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.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Associate Justice
ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA
Associate Justice Associate Justice

CONCHITA CARPIO MORALES

Associate Justice
ATTESTATION
I attest that the conclusions in the above decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Associate Justice
Chairman, Third Division
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairman's Attestation,
it is hereby certified that the conclusions in the above decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court.
HILARIO G. DAVIDE, JR.
Chief Justice

Section 12. Striking out of pleading or matter contained therein. — Upon motion made by a
party before responding to a pleading or, if no responsive pleading is permitted by these Rules,
upon motion made by a party within twenty (20) days after the service of the pleading upon him,
or upon the court's own initiative at any time, the court may order any pleading to be stricken out
or that any sham or false, redundant, immaterial, impertinent, or scandalous matter be stricken out
therefrom. (5, R9)
 RULE 8

Manner in Making Allegation in a Pleading

Submitted to:

Prof. Cinderella Quinitio

Submitted by:

Duayan, Rikki Mei M.

Mercado, Arlein Princess C.
Ursaraga, Renz Mark