Case Digest: BANCO DE ORO UNIVERSAL BANK v. COURT OF APPEALS, et al.

Case Digest: BANCO DE ORO UNIVERSAL BANK v. COURT OF APPEALS, et al.

          Having failed to comply with the Credit Line Agreement (CLA) obligation, Banco de Oro Universal Bank filed before the Regional Trial Court of Quezon City (RTC) an application for an extrajudicial foreclosure of the mortgaged properties against Gabriel and Ma. Geraldine Locsin. Subsequently, the Locsins filed a complaint against BDO, the RTC Clerk of Court and Ex-Oficio Sheriff of Quezon City, and Sheriff VI Marino V. Cahero, for Specific Performance, Tort and Damages with Prayer for the Issuance of a Temporary Restraining Order (TRO) and a Writ of Preliminary Injunction. The RTC denied the issuance of a TRO.

         A Supplemental Complaint was filed by the Locsins. They repleaded in toto the allegations in their Complaint and additionally alleged that BDO proceeded with the public auction of the properties covered by the mortgage in the CLA “contrary to law.”BDO admitted that the public auction took place but it denied that it was contrary to law

          More than eight months after the Locsins filed their Supplemental Complaint, BDO filed a complaint against them before the Mandaluyong RTC for Collection of Sum of Money. To such, the Locsins filed a Motion to Dismiss on the ground that it should have been raised as compulsory counterclaim in their complaint and by failing to raise it as such, it is now “barred by the rules.” The RTC denied the same.

             The Locsins appealed to the Court of Appeals which reversed the decision of the Mandaluyong RTC finding that BDO‘s complaint was a compulsory counterclaim which should have been raised in its Answer to the Locsins‘ complaint, and having failed to do so, it is now barred.

ISSUE:

Whether or not BDO‘s complaint is barred for failure to raise it as a compulsory counterclaim in its Answer to the Locsins‘ complaint

HELD:

The Court held that until after the Locsins allegedly refused and failed to settle the alleged deficiency amount of their outstanding obligation, despite BDO‘s letter of demand sent to the Locsins, BDO‘s cause of action had not arisen. BDO could not, therefore, have set its claim assuming arguendo that it is a compulsory counterclaim.

The counterclaim must be existing at the time of the filing of the answer, though not at the commencement of action-a premature counterclaim cannot be set in the answer. The party who fails to interpose a counterclaim although arising out of or is necessarily connected with the transaction or occurrence of the plaintiff‘s suit but which did not exist or mature at the time said party files his answer is not thereby barred from interposing such claim in a future litigation.

The setting up of such “after-acquired counterclaim,” is merely permissive, not compulsory. At all events, even if the claim of BDO is a compulsory counterclaim which should have been set up in its Answer to the Locsins‘ Supplemental Complaint, technicality should give way to justice and equity to enable BDO to pursue its “after-acquired” claim against the Locsins.