Elizalde Trading Corp. v. Moscoso
REITERATIONFacts
The Antecedents: Petitioner Elizalde Trading Corporation filed a complaint against Pedro Basilio for an unpaid purchase price of merchandise. While the action was pending, Pedro Basilio died, and intestate estate proceedings were instituted. Respondent Pilar S. Basilio was appointed administratrix. Petitioner filed its claim for P536.66 (balance of the original indebtedness) in the intestate proceedings, which was admitted by the administratrix and approved by the court on August 23, 1952. Procedural History: Despite court orders compelling payment, the administratrix failed to settle the claim. Petitioner filed several motions, including a motion to declare the administratrix in contempt. On January 25, 1956, the administratrix filed a reply, asserting a counterclaim for P1,000.00 for gasoline, oil, and diesel fuel allegedly furnished by the deceased's establishment to Florentine Craft Works (Teresa Marble Works), which the administratrix claimed belonged to petitioner. The respondent Judge, in an order dated January 26, 1956, sustained this belated counterclaim, holding that the claim of Elizalde Trading Corporation was subject to this counterclaim. Petitioner's motion for reconsideration was denied, with the court stating that in the interest of justice and equity, the administratrix should be given a chance to prove her offsetting claim. Petitioner's subsequent motion for reconsideration was also denied. The Petition: Petitioner filed a petition for certiorari, praying for the annulment of the order dated August 4, 1956, and for an order compelling the administratrix to pay the P536.66 claim, which had become final and executory.
Issue(s)
Whether the respondent Judge committed grave abuse of discretion in allowing the administratrix to present a belated counterclaim against a final and executory claim. Whether the administratrix's alleged counterclaim, based on an obligation of a third party, could be set off against the petitioner's admitted claim.
Ruling
The Supreme Court granted the petition, annulling and setting aside the order of the respondent Judge dated August 4, 1956, and ordering the respondent administratrix to forthwith pay the petitioner's P536.66 claim.
Ratio Decidendi
On the issue of allowing the belated counterclaim: The Court held that the respondent Judge committed grave abuse of discretion. Petitioner's claim for P536.66 was duly filed, admitted by the administratrix, and approved by the court on August 23, 1952. No appeal or steps were taken to set aside this approval. Several orders were issued compelling payment, but the administratrix failed to comply. The order approving the claim became final and executory before the administratrix asserted her counterclaim on January 25, 1956. The counterclaim was based on an alleged credit for gasoline, oil, and diesel fuel furnished not to the petitioner, but to Florentine Craft Works (Teresa Marble Works). This counterclaim was filed out of time, as per Section 10 of Rule 87 of the Rules of Court, which mandates that a counterclaim or claim in offset must be barred forever if not presented within the prescribed period. The Court emphasized that equity cannot be invoked when the petitioner's claim was admitted, the order approving it became final and executory, and the counterclaim pertains to an obligation with which the petitioner had no connection. On the validity of the counterclaim: The Court found the counterclaim legally untenable. The alleged obligation of P1,000.00 was contracted by Florentine Craft Works (Teresa Marble Works), not by the petitioner Elizalde Trading Corporation. Therefore, it could not be legally set off against the petitioner's claim. The administratrix's assertion that the Florentine Craft Works belonged to the petitioner and that the deceased had sent a letter requesting payment was insufficient to establish the petitioner's direct liability for the obligation of a separate entity. The Court reiterated that the counterclaim was filed beyond the period allowed by the Rules of Court, rendering it barred forever.
Main Doctrine
A counterclaim asserted against a claimant in an intestate estate proceeding, which is filed after the claimant's money claim has already been approved by the court and has become final and executory, cannot be validly entertained, especially when the counterclaim is based on an obligation not contracted by the claimant.