Go Tiam Ting vs. Di Ping Jo

A plaintiff's failure to reply to a counterclaim contained in the defendant's answer does not constitute an admission of that counterclaim where the allegations thereof are directly contrary to those in the complaint, because under Section 104 of the Code of Civil Procedure, the plaintiff is deemed to have controverted every material statement of the answer if he does not amend his complaint.

The parties were merchants in Iloilo, with the plaintiff engaged in selling goods and the defendants operating a business under the firm name "Joe Jo Chong" in Molo. The dispute concerned an ordinary commercial transaction involving the sale and delivery of goods on credit, governed by the Code of Civil Procedure then in effect. The case required the Court to interpret procedural rules on counterclaims and the standard for determining preponderance of evidence in civil cases.

On March 15, 1907, Go Tiam Ting filed a complaint in the Court of First Instance of Iloilo against Di Ping Jo and Dy Ping Yan, merchants doing business under the firm name "Joe Jo Chong" in Molo, claiming payment of P969.61 with costs. The plaintiff alleged that the defendants were indebted to him for goods sold and delivered during the years 1906 and 1907, which they had obligated themselves to pay but had not, despite demands. Exhibit A, a statement of account showing total purchases of P5,355.86 and a balance of P969.61, was produced in evidence.

The defendants answered on April 20, 1907, through their attorneys, alleging that they commenced business with the plaintiff on July 23, 1906, and purchased goods until February 5, 1907, with total purchases amounting to P6,155. They claimed that they had paid the total cost of the goods purchased, with an excess of P35 in their payment made on March 6, 1907. They stated that they ceased doing business with the plaintiff because, notwithstanding their agreement, the plaintiff delivered to them a bale of silk. They denied the correctness of the plaintiff's account and asserted that, on the contrary, the plaintiff owed them P35, for which they asked judgment in their favor with costs.

Evidence was adduced by both parties with their exhibits attached to the record. The trial court found that the plaintiff's accounts were kept in a proper manner and that the defendants were indebted for the balance claimed, entering judgment for the plaintiff on July 20, 1907. The defendants excepted and moved for a new trial on the ground that the evidence did not sufficiently justify the decision; the motion was overruled, and the defendants appealed.

• Failure to Reply to Counterclaim: The appellants argued that the plaintiff did not reply to the defendants' answer, which contained a counterclaim for P35, and that under sections 94, 95, and 99 of the Code of Civil Procedure, the plaintiff's failure to answer the counterclaim meant he admitted it without reservation.
• Preponderance of Evidence: The appellants argued that if the first error was not considered, judgment should be for the defendants because the evidence taken in the proceedings was perfectly balanced, and it could not be said that the plaintiff's evidence was superior to that of the defendants.

• Existence of the Debt: The appellee presented documentary evidence and the uncontradicted testimony of proper witnesses demonstrating that the defendants owed the balance of the account offered in evidence, with the complaint setting forth facts demonstrating the existence of the debt claimed.

• Effect of Failure to Reply to Counterclaim: Whether the plaintiff's failure to reply to the defendants' answer containing a counterclaim should be considered an admission of the counterclaim under the Code of Civil Procedure.
• Preponderance of Evidence: Whether the evidence presented by the plaintiff was sufficient to establish the existence of the debt and the amount claimed, notwithstanding the defendants' denial and counterclaim.

• Effect of Failure to Reply to Counterclaim: No. The plaintiff's failure to amend his complaint did not constitute an admission of the counterclaim. Under Section 104 of the Code of Civil Procedure, if the plaintiff does not amend his complaint, he is deemed to have controverted every material statement of the answer.
• Preponderance of Evidence: Yes. The preponderance of evidence favored the plaintiff, as the defendants failed to prove that they had wholly paid for the goods they admitted having taken, while the plaintiff proved that a balance of P969.61 remained unpaid.

• Effect of Failure to Reply to Counterclaim: The Court reasoned that the allegations of the defendants in their answer must be assumed to have been denied and refuted at the trial by the plaintiff, inasmuch as they are directly in opposition and contrary to those set forth in the complaint. The Court cited Section 104 of the Code of Civil Procedure, which provides that if the plaintiff does not amend his complaint, he shall be deemed to have controverted every material statement of the answer. The Court rejected the appellants' reliance on sections 94, 95, and 99 and the cited treatises, finding that the procedural rule in the Code of Civil Procedure governed the matter.

• Preponderance of Evidence: The Court applied Section 273 of the Code of Civil Procedure, which provides that in determining where the preponderance or superior weight of evidence lies, the court may consider all the facts and circumstances of the case, the witnesses' manner of testifying, their intelligence, their means and opportunity of knowing the facts, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and their personal credibility. The Court found that the defendants acknowledged having taken goods from the plaintiff but failed to prove that they had wholly paid the costs thereof, while the plaintiff proved that from the transactions and accounts between them there resulted a balance of P969.61 not paid by the defendants. The trial court's finding for the plaintiff was based on the preponderance of evidence adduced by the plaintiff in support of the reality and existence of the credit claimed.

• Deemed Controverted Allegations — Under Section 104 of the Code of Civil Procedure, if the plaintiff does not amend his complaint in reply to matters or special defenses set up in the defendant's answer, he shall be deemed to have controverted every material statement of the answer. The Court applied this rule to hold that the defendants' counterclaim was not admitted by the plaintiff's failure to reply, since the allegations were directly contrary to those in the complaint.

• Preponderance of Evidence — Under Section 273 of the Code of Civil Procedure, preponderance of evidence is determined by considering all the facts and circumstances of the case, the witnesses' manner of testifying, their intelligence, their means and opportunity of knowing the facts, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and their personal credibility. The Court applied this standard to affirm the trial court's finding that the plaintiff's evidence outweighed the defendants' unproven allegations of payment.

• "If the plaintiff does not amend his complaint, as provided in this section, he shall be deemed to have controverted every material statement of the answer." — This passage from Section 104 of the Code of Civil Procedure states the controlling rule that the plaintiff's failure to reply to a counterclaim does not constitute an admission but rather a controversion of the answer's material statements.

• "In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and the circumstances of the case, the witnesses' manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial." — This passage from Section 273 of the Code of Civil Procedure defines the standard for determining preponderance of evidence, which the Court applied in affirming the trial court's judgment for the plaintiff.

N/A — The decision cites treatises (Encyclopedia of Pleading and Practice and Escriche) cited by the appellants, but the Court did not rely on any case precedent in its reasoning.

• Section 104, Code of Civil Procedure — The Court applied this provision to hold that the plaintiff's failure to amend his complaint in response to the defendants' answer meant he was deemed to have controverted every material statement of the answer, including the counterclaim.
• Section 273, Code of Civil Procedure — The Court applied this provision to determine the preponderance of evidence, considering the facts and circumstances of the case, the witnesses' credibility, and the probability of their testimony, ultimately finding for the plaintiff.
• Sections 94, 95, and 99, Code of Civil Procedure — These provisions were cited by the appellants in support of their argument that the plaintiff's failure to answer the counterclaim constituted an admission, but the Court did not rely on them in its reasoning.

Arellano, C.J., Carson, Willard, and Tracey, JJ., concurred.