Republic of the Philippines

Supreme Court
11th Judicial Region
REGIONAL TRIAL COURT
Branch 22
Tagum, Davao del Norte
PEDRO JOSE,
Plaintiff
CIVIL CASE NO. XXX-123-11
-versus- For: Collection of Money with
Damages and Attorney’s Fees
JOSEPH BAGONGHARI,
Defendant.
x--------------------------------------//

ANSWER WITH COUNTERCLAIMS

DEFENDANTS, through the undersigned counsel, most

respectfully file their Answer in response to the Complaint of
the Plaintiffs and interpose as well as their counterclaim
against the latter, to wit:

ADMISSIONS AND DENIALS

1. Paragraphs 1 and 2 are hereby admitted;

2. Paragraph 3 of the Complaint is denied insofar as the

allegations that Plaintiff was only promised to receive
commission of 3% percent of the principal obligation,
since Defendant was also entitled to a Fifteen Thousand
Pesos (P15,000) monthly salary as per agreement with
the Plaintiff;

3. Insofar as the allegations mentioned in Paragraph 4, the

Defendant hereby admit the stipulation;

4. The allegations in Paragraph 5 are denied the truth

being that the Defendant does not have to remit any
obligation/s to Plaintiff since Ana Balayon’s (“Balayon”
for brevity) payment was accordingly for a loan to the
Defendant, in his personal capacity coming from his

Page 1 of 11
Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 personal savings, and not from the loan Balayon
obtained from the company of the Plaintiff;

5. Defendant denies paragraph 6 of the Complaint

specifically in regard to the repeated demands made
by the Plaintiff for lack of information or sufficient to form
a reasonable belief thereof;

AFFIRMATIVE AND SPECIAL DEFENSES

6. The defendant repleads by incorporation all the

foregoing allegations and further states, THAT:
The transaction between Balayon
and Defendant is in his personal capacity
and not as an agent of the Plantiff.

7. The payment made by Balayon to the defendant was in

his personal capacity, as a friend of Balayon, that the
defendant lends her a sum of money from his personal
savings;

8. When the Defendant received the payment from

Balayon, the former issued an acknowledgment receipt
in lieu of the payment for the loan. A copy of the said
receipt is herein attached as Annex “1”.

9. The Paragraph 1, Article 1311 of the Civil Code of the

Philippines expressly provides that:

“Contracts take effect only between the parties,

their assigns and heirs, except in case where the
rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or
by provision of law.”

10. As further illustrated by the Supreme Court in the case of

Philippine National Bank v. Teresita Tan Dee, et.al., [GR
No. 182128, February 19, 2014],

“The basic principle of relativity of contracts is that

contracts can only bind the parties who entered
into it, and cannot favor or prejudice a third
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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 person, even if he is aware of such contract and
has acted with knowledge thereof. “Where there
is no privity of contract, there is likewise no
obligation or liability to speak about.”

11. In the case at bar, applying the stipulations mentioned

in paragraphs 8 and 9 of this Answer, it can be inferred
that the transaction between Balayon and the
Defendant is apparently regarding their contract with
each other and not with the Plaintiff’s company and
cannot favor or prejudice the latter even if he is aware
of such contract and has acted with knowledge.

12. Article 1953 of the New Civil Code provides that a

person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is
bound to pay to the creditor an equal amount of the
same kind and quality.

13. Thus, Defendant should not be held liable for the

alleged unpaid loan obligations made by Balayon
against the Plaintiff’s company for the former, as a
debtor, is bound to pay to the Defendant, as the
creditor, and not to the Plaintiff’s company.

The obligation of the Defendant

against the Plaintiff is extinguished
by way of compensation

14. Contrary to the Plaintiff’s assertion, the parties entered

into an agreement wherein the Plaintiff promised to pay
Defendant a monthly salary of Fifteen Thousand Pesos
(P15,000.00), plus a commission of three percent (3%), as
compensation for the services rendered by the
Defendant to the Plaintiff’s company.

15. As mentioned in the paragraph 3 of the complaint, the

services that the Defendant was tasked is to accept
loan applications and release such to client-customers
of the Plaintiff’s company.

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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
16. Moreover, the Plaintiff also agreed to an additional task
and the Defendant was entrusted to receive monies
from clients.

17. In gratia argumenti that the Defendant is merely an

agent of the Plaintiff, the parties still entered into an
agreement with a promise to pay Defendant a definite
salary.

18. Article 1356 of the Civil Code of the Philippines expressly

provides that:

“Contracts shall be obligatory, in whatever

form they may have been entered into,
provided all the essential requisites for their
validity are present. However, when the law
requires that a contract be in some form in
order that it may be valid or enforceable, or
that a contract be proved in a certain way,
that requirement is absolute and
indispensable. In such cases, the right of the
parties stated in the following article cannot be
exercised.”

19. As a rule, a contract is binding and obligatory between

the parties regardless of the form it may have been
entered into. Based on their agreement, the Defendant
is entitled to the monthly salary and not only the three
percent (3%) commission. In spite of the parties’
agreement, the Plaintiff failed to comply with his
obligation to pay Defendant’s monthly salary since the
beginning of the latter’s employment.

20. Furthermore, the Plaintiff has an outstanding obligation

amounting to Two Hundred Eighty Five Thousand Pesos
(P285,000.00) which the Defendant is entitled to as
salary from December 2018 to June 2020, on top of the
commission promised by the Plaintiff.

21. Upon being granted his loan application by the Plaintiff,

the Defendant refrained from demanding his unpaid
salaries, which were then applied for compensation of
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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 his loan. Accordingly, the Plaintiff proceeded with not
paying the same.

22. Article 1706 of the Civil Code of the Philippines expressly

provides that:

“Withholding of the wages, except for a debt

due, shall not be made by the employer.”

23. Article 1706, however, should be read together with

Articles 1278 and 1279 of the same Code, which read
as follows:

“Article 1278. Compensation shall take place

when two persons, in their own right, are creditors
and debtors of each other. Compensation is the
extinguishment to the concurrent amount of the
debts of two persons who, in their own right, are
debtors and creditors of each other.”

“ARTICLE 1279. In order that compensation may

be proper, it is necessary:

(1) That each one of the obligors be bound

principally, and that he be at the same time
a principal creditor of the other;
(2) That both debts consist in a sum of money,
or if the things due are consumable, they be
of the same kind, and also of the same
quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
and
(5) That over neither of them there be any
retention or controversy, commenced by
third persons and communicated in due
time to the debtor.”

24. In relation to said provisions, the Supreme Court held in

the case of Logwin Air+Ocean Philippines, Inc. v. Taki,
[GR 252259 (Notice), August 26, 2001], that

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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 “…offsetting of unpaid loan and cash advances
from Taki’s [employee] salary is pursuant to Article
1278 and 1279 of the Civil Code of the Philippines,
in relation to Article 113(c) of the Labor Code and
Article 1706 of the Civil Code. Offsetting of Taki’s
[employee’s] unsettled obligations from his salary
shall take place because the parties are creditors
and debtors of each other in their own right.”

25. It is apparent that compensation may take place

between the unsettled obligation of the Defendant and
his unpaid salaries. This is further elucidated in the case
of Cebu People's Multi-Purpose Cooperative v.
Carbonilla, Jr., G.R. No. 212070, [January 27, 2016],
wherein the Supreme Court ruled that:

“Pursuant to Article 1278 in relation to Article 1706

of the Civil Code and Article 113 (c) of the Labor
Code, compensation can take place between
two persons who are creditors and debtors of
each other. Considering that Carbonilla, Jr. had
existing debts to CPMPC which were incurred
during the existence of the employer-employee
relationship, the amount which may be due him in
wages was correctly deducted therefrom. ”

26. Since the Defendant had an existing debt to the Plaintiff

which was incurred during his employment with the
latter, the amount which may be due him in wages was
appropriately deducted to offset his unsettled
obligation.

COUNTERCLAIMS

ANSWERING defendant repleads all the foregoing

allegations and by way of counterclaims, further states THAT:

27. The instant suit instituted by Plaintiff is unfounded and

baseless. It was filed based on self-serving and private
documents that do not have probative value and do not
bind Defendants. Plaintiff has no cause of action
necessary to pursue the case.
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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 28. An award of moral damages would require certain
conditions to be met, to wit: (1)first, there must be an
injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be
culpable act or omission factually established; (3) third,
the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant;
and (4) fourth, the award of damages is predicated on
any of the cases stated in Article 2219 of the Civil Code.1

29. Here, the Plaintiff’s premature and unjustified suit

against herein defendant caused him to suffer and
continue to suffer mental anguish, moral shock, and
serious anxiety for which the plaintiff should be made to
pay One Hundred Thousand Pesos (P100,000.00) as
moral damages;

30. The purpose of exemplary damages is to serve as a

deterrent to future and subsequent parties from the
commission of a similar offense. Exemplary damages may
also be awarded in this case to serve as a deterrent to
those who use fraudulent means to evade their liabilities.2

31. Hence, plaintiff’s ruse and evident bad faith in

compelling defendant to litigate and as corrective
measure, so as to dissuade those who may emulate
plaintiff’s fraudulent, reckless and malevolent acts and
manners, defendant prays for exemplary damages in
the same amount of One Hundred Thousand Pesos
(P100,000.00).

32. Since the award of exemplary damages is proper,

attorney’s fees and cost of the suit may also be
recovered3 and due to the baseless filing of this instant
suit, Defendant was constrained to engage the services
of counsel for a fee of One Hundred Fifty Thousand
Pesos (P150,000.00), as acceptance fee, and
appearance fee of Two Thousand Five Hundred Pesos
(P2,500.00) for every hearing.

1 Arco Pulp and Paper Co., Inc., et.al v. Dan T. Lim [GR No. 206806, June 25, 2014]
2 Ibid.
3 Ibid.
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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 RELIEF

WHEREFORE, in view of the foregoing, Defendant most

respectfully pray to this Honorable Court, after due notice
and hearing, that:

1. The complaint be dismissed for absence of cause of

action;

2. On the counterclaims, find Plaintiff to pay Defendants;

a. The Moral damages in the amount of P100,000, or
as such as this Honorable Court may find deem
proper;
b. Exemplary damages in the amount of P100,000, or
as such as this Honorable Court may find deem
proper;
c. Attorney’s fees in the amount of P150,000; and
d. Appearance fee of P2,500 per hearing.

Defendant likewise pray for other relief just and

equitable under the premises.

Submitted this February 25, 2022, Tagum City, Davao del

Norte, Philippines.

By:

ATTY. SIMONN LEWIS M. DUMAGUING

PTR No. 123123; 01/03/2022; Tagum City, Davao del Norte
IBP No. 123456; 11/11/22
Davao del Norte Chapter
Roll of Attorneys No. XXXXXX
TIN 123-456-789-XXX
MCLE Compliance No. VII-000321
Issued on January 01, 2022
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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 EXPLANATION OF SERVICE

Copies of the herein is hereto filed before this Honorable

Court and the Complainant thru registered mail due to distance
and lack of adequate messengerial personnel.

ATTY. SIMONN LEWIS M. DUMAGUING

COPY FURNISHED BY REGISTERED MAIL:

ATTY. IRISH QUEEN A. BORRES Date: February 25, 2022
Prk. Talisay, Tagum City, RD No. 895 028 105 AA
Davao del Norte, 8100

Page 9 of 11
Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
Republic of the Philippines)
City of Tagum )s.s.
x---------------------------------x

VERIFICATION AND CERTIFICATION

I, Joseph Bagonghari, of legal age, Filipino, Single and with

resident address at Tagum City, Davao del Norte, after having duly sworn
to in accordance with law, do hereby depose and state that –

1. That I have caused the above Answer to be prepared and has read
the contents and known to be true and correct according to my personal
knowledge;

2. That I have not commenced any other action or proceeding

involving the same issues in the Supreme Court, the Court of Appeals,
and other Tribunals or Agency;

3. That, thereafter I have learn that a similar action or proceeding has

been filed, or is pending before the Supreme Court, Court of Appeals and
other Tribunal or agency, I undertake to report that fact within five (5)
days from notice or knowledge thereof to this Honorable Office.

IN WITNESS WHEREOF, I have hereunto affixed my signature

this February 25, 2022 at Tagum City, Davao del Norte, Philippines.

JOSEPH BAGONGHARI
Affiant
DL No. L12-345-6789

SUBSCRIBED AND SWORN to before me this February 25,

2022, in the City of Tagum, Davao Del Norte Philippines. Affiant
exhibited to me his Driver’s License ID as his competent proof of
identity.

Doc No._________;
Page No. ________;
Book No.________;
Series of 2022.

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Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City
 ANNEX “1”

Page 11 of 11
Answer with Counterclaims
Jose v. Bagonghari
Civil Case No. XXX-123-11; For Collection of Money with
Damages and Attorney’s Fees; RTC 22, Tagum City