J. EFFECT OF FAILURE TO PLEAD AND WHEN TO FILE RESPONSIVE PLEADINGS[G.R. No. L-41767. August 23, 1978.]

MR. AND MRS. ROMEO FERRER and ANNETTE FERRER,Petitioners, v. HON. VICENTE G. ERICTA, in his capacity as Presiding Judge of the Court of First Instance of Rizal, Quezon City, Branch XVIII, MR. AND MRS. FRANCIS PFLEIDER and DENNIS PFLEIDER,Respondents.

Delano F. Villaruz, forPetitioners.

Porderio C. David forPrivate Respondents.

SYNOPSISOn January 26, 1975, plaintiff-spouses and their daughter sued defendant-spouses and their 16-year old son for damages arising from an accident that occurred on December 31, 1970. The complaint alleged that the defendants recklessly drove a car causing it to overturn, resulting in physical injuries on plaintiffs daughter who was a passenger therein. Defendant answered that their son exercised due care in driving the car and that plaintiffs daughter was not a passenger but merely a joy rider. Subsequently, defendants moved to dismiss the complaint on the ground of prescription. Plaintiffs opposed the motion, invoking Section 2, Rule 9 which provides that "defenses and objections not pleaded in the motion to dismiss or answer are deemed waived." The judge sustained the motion and absolved defendants.

On petition for mandamus, the Supreme Court affirmed the order and held that actions for damages arising from tort prescribe in four years; and the circumstance that plaintiffs own allegation in the complaint shows clearly that the action had prescribed removes the case from the rule regarding waiver of defenses by failure to plead the same.

SYLLABUS

1. PLEADINGS; PRESCRIPTION; FAILURE TO PLEAD IN THE ANSWER. A complaint may be dismissed in the course of the proceedings on the ground of prescription, although such defense was not raised in the answer, where plaintiffs own allegation in the complaint shows clearly that the action had prescribed. Such circumstance removes this case from the rule under Sec. 2, Rule 9 regarding waiver of defenses by failure to plead the same.

2. ACTIONS; PRESCRIPTION; DAMAGES BASED ON TORT. Actions for damages arising from tort prescribe in four (4) years.

D E C I S I O N

ANTONIO,J.:

Mandamus to compel the immediate execution of the Decision of the Court of First Instance of Quezon City, Branch XVIII, presided over by respondent Judge, in Civil Case No. Q-19647, dated July 21, 1975. The pertinent facts are as follows:chanrob1es virtual 1aw library

In a complaint for damages against respondents, dated December 27, 1974 but actually filed on January 6, 1975 (Civil Case No. Q-19647), and assigned to the sala of respondent Judge, it was alleged that defendants Mr. and Mrs. Francis Pfleider, residents of Bayawan, Negros Oriental, were the owners or operators of a Ford pick-up car; that at about 5:00 oclock in the afternoon of December 31, 1970, in the streets of Bayawan, Negros Oriental, their son, defendant Dennis Pfleider, who was then only sixteen (16) years of age, without proper official authority, drove the above-described vehicle, without due regard to traffic rules and regulations, and without taking the necessary precaution to prevent injury to persons or damage to property, and as a consequence the pickup car was overturned, causing physical injuries to plaintiff Annette Ferrer, who was then a passenger therein, which injuries paralyzed her and required medical treatment and confinement at different hospitals for more than two (2) years; that as a result of the physical injuries sustained by Annette, she suffered unimaginable physical pain, mental anguish, and her parents also suffered mental anguish, moral shock and spent a considerable sum of money for her treatment. They prayed that defendants be ordered to reimburse them for actual expenses as well as other damages.

In due time, defendants filed their answer, putting up the affirmative defense that defendant Dennis Pfleider exercised due care and utmost diligence in driving the vehicle afore mentioned and alleging that Annette Ferrer and the other persons aboard said vehicle were not passengers in the strict sense of the term, but were merely joy riders and that, consequently, defendants had no obligation whatsoever to plaintiffs.

At the pre-trial on May 12, 1975, only plaintiffs-petitioners and their counsel were present. Consequently, defendants-private respondents were declared in default and the plaintiffs-petitioners were allowed to present their evidence ex parte. On May 21, 1975, petitioners moved that they be granted an extension of ten (10) days from May 22, 1975 to present her evidence, which was granted by the court a quo. The presentation of petitioners evidence was later continued by the trial court to June 16, 1975, when the deposition of Annette Ferrer was submitted by petitioners and admitted by the trial court.

On June 26, 1975, private respondents filed a motion to "set aside the order of default and subsequent pleadings" on the ground that "defendants failure to appear for pre-trial was due to accident or excusable neglect," This was opposed by petitioners on the ground that the said pleading was not under oath, contrary to the requirements of Sec. 3, Rule 18 of the Rules, and that it was not accompanied by an affidavit of merit showing that the defendants have a good defense. In view of this, the motion of private respondents was denied by respondent Judge on July 21, 1975. On the same date, respondent Judge rendered judgment against private respondents, finding that the minor, Dennis Pfleider, was allowed by his parents to operate a Ford pick-up car and because of his reckless negligence caused the accident in question, resulting in injuries to Annette, and ordering the defendants, as a result thereof, to pay jointly and severally the plaintiffs the following amounts; (1) 24,500.00 for actual expenses, hospitalization and medical expenses; (2) P24,000.00 for actual expenses for the care, medicines of plaintiff Annette for helps from December 31, 1970 to December 31, 1974; (3) P50,000.00 for moral damages; (4) P10,000.00 for exemplary damages; (5) P5,000.00 for attorneys fees; and 16) costs of suit.

On September 1, 1975, private respondents filed a Motion for Reconsideration 1 of the decision and of the order denying the motion to set aside order of default, based on the following grounds: (1) the complaint states no cause of action insofar as Mr. and Mrs. Pfleider are concerned because it does not allege that at the time of the mishap, defendant Dennis Pfleider was living with them, the fact being that at such time he was living apart from them, hence, there can be no application of Article 2180 of the Civil Code, upon which parents liability is premised; and (2) that the complaint shows on its face "that it was filed only on January 6, 1975, or after the lapse of MORE THAN FOUR YEARS from the date of the accident on December 31, 1970", likewise appearing from the complaint and, therefore, the action has already prescribed under Article 1146 of the Civil Code.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

A Supplemental Motion for Reconsideration 2 was subsequently filed by defendants-private respondents on September 10, 1975, alleging that their defense of prescription has not been waived and may be raised even at such stage of the proceedings because on the face of the complaint, as well as from the plaintiffs evidence, their cause of action had already prescribed, citing as authority the decision of this Court in Philippine National Bank v. Pacific Commission House, 3 as well as the decisions quoted therein. The Opposition 4 to the above supplemental motion interposed by plaintiffs-petitioners averred that: (a) the defense of prescription had been waived while the defense that the complaint states no cause of action "is available only at any time not later than the trial and prior to the decision" ; (b) inasmuch as defendants have been declared in default for failure to appear at the pretrial conference, they have lost their standing in court and cannot be allowed to adduce evidence nor to take part in the trial, in accordance with Section 2 of Rule 18 of the Rules of Court; and (c) the motion and supplemental motion for reconsideration are pro forma because the defenses raised therein have been previously raised and passed upon by respondent court in resolving defendants motion to set aside order of default. Being pro forma, said motion and supplemental motion do not suspend the running of the thirty-day period to appeal, which was from August 5, 1975, when defendants received a copy of the decision, to September 4, 1975, and hence the decision has already become final and executory. Plaintiffs-petitioners accordingly prayed that a writ of execution be issued to enforce the judgment in their favor.

On September 23, 1975, respondent judge, without setting aside the order of default, issued an order absolving defendants from any liability on the grounds that: (a) the complaint states no cause of action because it does not allege that Dennis Pfleider was living with his parents at the time of the vehicular accident, considering that under Article 2180 of the Civil Code, the father and, in case of his death or incapacity the mother, are only responsible for the damages caused by their minor children who live in their company; and (b) that the defense of prescription is meritorious, since the complaint was filed more than four (4) years after the date of the accident, and the action to recover damages based on quasi-delict prescribes in four (4 years. Hence, the instant petition for mandamus.

The basic issue is whether the defense of prescription had been deemed waived by private respondents failure to allege the same in their answer.

As early as Chua Lamko v. Dioso, Et Al., 5 this Court sustained the dismissal on a counterclaim on the ground of prescription, although such defense was not raised in the answer of the plaintiff. Thus, this Court held that where the answer does not take issue with the complaint as to dates involved in the defendants claim of prescription, his failure to specifically plead prescription in the answer does not constitute a waiver of the defense of prescription, it was explained that the defense of prescription, even if not raised in a motion to dismiss or in the answer, is not deemed waived unless such defense raises issues of fact not appearing upon the preceding pleading.

In Philippine National Bank v. Perez, Et Al., 6 which was an action filed by the Philippine National Bank on March 22, 1961 for revival of a judgment rendered on December 29, 1949 against Amando Perez, Gregorio Pumuntoc and Virginia de Pumuntoc pursuant to Section 6, Rule 39 of the Rules of Court, the defendants were declared in default for their failure to file their answer. There upon, the plaintiff submitted its evidence, but when the case was submitted for decision, the court a quo dismissed the complaint on the ground that plaintiffs cause of action had already prescribed under Articles 1144 and 1152 of the Civil Code. The plaintiff in said case, contending that since prescription is a defense that can only be set up by defendants, the court could not motu proprio consider it as a basis for dismissal, moved to reconsider the order, but its motion was denied. When the issue was raised to this Court, We ruled:chanrobles law library : red

"It is true that the defense of prescription can only be considered if the came is invoked as such in the answer of the defendant and that in this particular instance no such defense was invoked because the defendants had been declared in default, but such rule does not obtain when the evidence shows that the cause of action upon which plaintiffs complaint is based is already barred by the statute of limitations." (Emphasis supplied.)

Again, in Philippine National Bank v. Pacific Commission House, 7 where the action sought to revive a judgment rendered by the Court of First Instance of Manila on February 3, 1953 and it was patent from the stamp appearing on the first page of the complaint that the complaint was actually filed on May 31, 1963, this Court sustained the dismissal of the complaint on the ground of prescription, although such defense was not raised in the answer, overruling the appellants invocation of Section 2 of Rule 9 of the Rules of Court that "defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived." We held therein that." . . the fact that the plaintiffs own allegation in the complaint or the evidence it presented shows clearly that the action had prescribed removes this case from the rule regarding waiver of the defense by failure to plead the same."cralaw virtua1aw library

In the present case, there is no issue of fact involved in connection with the question of prescription. The complaint in Civil Case No. Q-19647 alleges that the accident which caused the injuries sustained by plaintiff Annette Ferrer occurred on December 31, 1970. It is undisputed that the action for damages was only filed on January 6, 1976. Actions for damages arising from physical injuries because of a tort must be filed within four years. 8 The four-year period begins from the day the quasi-delict is committed or the date of the accident. 9

WHEREFORE, the instant petition for mandamus is hereby DISMISSED, without pronouncement as to costs.

[G.R. No. L-48577. September 30, 1980.]

SULPICIO A. GARCIA,Petitioner, v. COLONEL PAUL C. MATHIS, in his capacity as Base Commander, Clark Air Force Base (CAFB) or his SUCCESSOR, and the HONORABLE COURT OF FIRST INSTANCE OF PANGASINAN, Branch IV, Dagupan City,Respondents.

D E C I S I O N

ABAD SANTOS,J.:

Petition forcertiorarito set aside the Order of the respondent judge, dated June 4, 1978, dismissing petitioners Complaint against the private respondent and another Order, dated, July 7, 1978, denying a motion to reconsider the aforesaid order.

The factual background can be briefly stated as follows:chanrob1es virtual 1aw library

In Civil Case No. D-4097 of the Court of First Instance of Pangasinan presided by the respondent judge, Sulpicio Garcia, the petitioner herein, sued Colonel Paul C. Mathis in his capacity as Base Commander, CAFB, acting for and in behalf of the United States of America. The complaint, which was filed on November 8, 1977, alleged that Garcia was a civil employee at Clark Air Force Base from May 26, 1949. August 23, 1956, when he was dismissed for alleged bribery and collusion. He prayed, inter alia, that he be reinstated to his former position, and paid back wages, moral damage, attorneys fees and costs of the suit.

The defendant Mathis entered a special appearance and a motion for the dismissal of the complaint upon the ground that the trial court had no jurisdiction over his person because he was being sued as the representative of a foreign sovereign "which has not consented and does not now consent to the maintenance of the present suit."cralaw virtua1aw library

On June 7, 1978, the respondent judge issued an Order as aforesaid the text of which reads as follows:chanrobles law library

"Without considering the issue of jurisdiction raised by the defendant in his motion to dismiss the above entitled case, the Court finds that the abuse of action has already prescribed, because paragraphs 3 and 5 of the complaint alleged that the services of the plaintiff has been terminated on August 23, 1956.

WHEREFORE, the above-entitled case is hereby dismissed."cralaw virtua1aw library

The only issue in this case is whether or not the respondent judge committed a grave abuse of discretion amounting to lack of jurisdiction when he dismissed the complaint on the ground of prescription which the defendant did not raise in any of his pleadings.

It is true that an action will not be held to have prescribed if prescription is not expressly invoked. However there are exceptions to this rule and one of them is when the plaintiffs own allegations in his complaint show clearly that the action has prescribed. (Philippine National Bank v. Pacific Commission House, G.R. No. L-22675, March 28, 1969, 27 SCRA 766). In this case the complaint shows clearly that the plaintiffs action had prescribed for he alleged that he was removed on August 23, 1956 (par. 5) but the case was filed only on November 18, 1977, after a lapse of more than 21 years. Prescinding, therefore, the defense of jurisdiction which is apparently meritorious, the complaint was properly dismissed.

It is not amiss to state here that because of the special appearance which the defendant had entered, he was constrained to confine himself to showing that the trial court did not have jurisdiction over his person and had to exclude all other non-jurisdictional grounds in his motion to dismiss otherwise he could be deemed to have abandoned his special appearance and voluntarily submitted himself to the jurisdiction of the court (Republic v. Ker & Co., Ltd.; G.R. No. L-21609, Sept. 29, 1966, 18 SCRA 207).

WHEREFORE, finding the petition to be without merit, the same is hereby dismissed without any special pronouncement as to costs.

SO ORDERED.

[G.R. NO. 170354 : June 30, 2006]EDGARDO PINGA,Petitioner,v.THE HEIRS OF GERMAN, SANTIAGO represented by FERNANDO SANTIAGO,Respondents.D E C I S I O NTINGA,J.:The constitutional faculty of the Court to promulgate rules of practice and procedure1necessarily carries the power to overturn judicial precedents on points of remedial law through the amendment of the Rules of Court. One of the notable changes introduced in the 1997 Rules of Civil Procedure is the explicit proviso that if a complaint is dismissed due to fault of the plaintiff, such dismissal is "without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action."2The innovation was instituted in spite of previous jurisprudence holding that the fact of the dismissal of the complaint was sufficient to justify the dismissal as well of the compulsory counterclaim.3In granting this petition, the Court recognizes that the former jurisprudential rule can no longer stand in light of Section 3, Rule 17 of the 1997 Rules of Civil Procedure.The relevant facts are simple enough. Petitioner Eduardo Pinga was named as one of two defendants in a complaint for injunction4filed with Branch 29 of the Regional Trial Court (RTC)5of San Miguel, Zamboanga del Sur, by respondent Heirs of German Santiago, represented by Fernando Santiago. The Complaint6dated 28 May 1998 alleged in essence that petitioner and co-defendant Vicente Saavedra had been unlawfully entering the coco lands of the respondent, cutting wood and bamboos and harvesting the fruits of the coconut trees therein. Respondents prayed that petitioner and Saavedra be enjoined from committing "acts of depredation" on their properties, and ordered to pay damages.In their Amended Answer with Counterclaim,7petitioner and his co-defendant disputed respondents' ownership of the properties in question, asserting that petitioner's father, Edmundo Pinga, from whom defendants derived their interest in the properties, had been in possession thereof since the 1930s.8They alleged that as far back as 1968, respondents had already been ordered ejected from the properties after a complaint for forcible entry was filed by the heirs of Edmundo Pinga. It was further claimed that respondents' application for free patent over the properties was rejected by the Office of the President in 1971. Defendants in turn prayed that owing to respondents' forcible re-entry in the properties and the irresponsible and reckless filing of the case, they be awarded various types of damages instead in amounts totalingP2,100,000 plus costs of suit.9By July of 2005, the trial of the case had not yet been completed. Moreover, respondents, as plaintiffs, had failed to present their evidence. It appears that on 25 October 2004, the RTC already ordered the dismissal of the complaint after respondents' counsel had sought the postponement of the hearing scheduled then.10However, the order of dismissal was subsequently reconsidered by the RTC in an Order dated 9 June 2005, which took into account the assurance of respondents' counsel that he would give priority to that case.11At the hearing of 27 July 2005, plaintiffs' counsel on record failed to appear, sending in his stead a representative who sought the postponement of the hearing. Counsel for defendants (who include herein petitioner) opposed the move for postponement and moved instead for the dismissal of the case. The RTC noted that it was obvious that respondents had failed to prosecute the case for an unreasonable length of time, in fact not having presented their evidence yet. On that ground, the complaint was dismissed. At the same time, the RTC allowed defendants "to present their evidence ex-parte."12Respondents filed a Motion for Reconsideration13of the order issued in open court on 27 July 2005, opting however not to seek that their complaint be reinstated, but praying instead that the entire action be dismissed and petitioner be disallowed from presenting evidenceex-parte. Respondents claimed that the order of the RTC allowing petitioner to present evidenceex-partewas not in accord with established jurisprudence. They cited cases, particularlyCity of Manila v. Ruymann14andDomingo v. Santos,15which noted those instances in which a counterclaim could not remain pending for independent adjudication.On 9 August 2005, the RTC promulgated an order granting respondents' Motion for Reconsideration and dismissing the counterclaim, citing as the only ground therefor that "there is no opposition to the Motion for Reconsideration of the [respondents]."16Petitioner filed a Motion for Reconsideration, but the same was denied by the RTC in an Order dated 10 October 2005.17Notably, respondents filed an Opposition to Defendants' Urgent Motion for Reconsideration, wherein they argued that the prevailing jurisprudential rule18is that "compulsory counterclaims cannot be adjudicated independently of plaintiff's cause of action," and "a conversu, the dismissal of the complaint carries with it the dismissal of the compulsory counterclaims."19The matter was elevated to this Court directly by way of a Petition for Review under Rule 45 on a pure question of law, the most relevant being whether the dismissal of the complaint necessarily carries the dismissal of the compulsory counterclaim.We hold that under Section 3, Rule 17 of the 1997 Rules of Civil Procedure, the dismissal of the complaint due to the fault of plaintiff does not necessarily carry with it the dismissal of the counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice to the right of defendants to prosecute the counterclaim.On a prefatory note, the RTC, in dismissing the counterclaim, did not expressly adopt respondents' argument that the dismissal of their complaint extended as well to the counterclaim. Instead, the RTC justified the dismissal of the counterclaim on the ground that "there is no opposition to [plaintiff's] Motion for Reconsideration [seeking the dismissal of the counterclaim]."20This explanation is hollow, considering that there is no mandatory rule requiring that an opposition be filed to a motion for reconsideration without need for a court order to that effect; and, as posited by petitioner, the "failure to file an opposition to the Plaintiff's Motion for Reconsideration is definitely not one among the established grounds for dismissal [of the counterclaim]."21Still, the dismissal of the counterclaim by the RTC betrays at very least a tacit recognition of respondents' argument that the counterclaim did not survive the dismissal of the complaint. At most, the dismissal of the counterclaim over the objection of the defendant (herein petitioner) on grounds other than the merits of the counterclaim, despite the provisions under Rule 17 of the 1997 Rules of Civil Procedure, constitutes a debatable question of law, presently meriting justiciability through the instant action. Indeed, in reviewing the assailed orders of the RTC, it is inevitable that the Court consider whether the dismissal of the complaint, upon motion of the defendant, on the ground of the failure to prosecute on plaintiff's part precipitates or carries with it the dismissal of the pending counterclaims.Our core discussion begins with Section 3, Rule 17 of the 1997 Rules of Civil Procedure, which states:SEC. 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of defendant or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court.The express qualification in the provision that the dismissal of the complaint due to the plaintiff's fault, as in the case for failure to prosecute, is without prejudice to the right of the defendant to prosecute his counterclaim in the same or separate action. This stands in marked contrast to the provisions under Rule 17 of the 1964 Rules of Court which were superseded by the 1997 amendments. In the 1964 Rules, dismissals due to failure to prosecute were governed by Section 3, Rule 17, to wit:SEC. 3.Failure to prosecute. - If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court.Evidently, the old rule was silent on the effect of such dismissal due to failure to prosecute on the pending counterclaims. As a result, there arose what one authority on remedial law characterized as "the nagging question of whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim."22Jurisprudence construing the previous Rules was hardly silent on the matter.In their arguments before the RTC on the dismissal of the counterclaim, respondents cited in supportCity of Manila v.Ruymann,23Domingo v. Santos,24Belleza v. Huntington,25andFroilan v. Pan Oriental Shipping Co.,26all of which were decided more than five decades ago. Notably though, none of the complaints in these four cases were dismissed either due to the fault of the plaintiff or upon the instance of the defendant.27The distinction is relevant, for under the previous and current incarnations of the Rules of Civil Procedure, it is Section 3, Rule 17 that governs the dismissals due to the failure of the plaintiff to prosecute the complaint, as had happened in the case at bar. Otherwise, it is Section 2, Rule 17, which then, and still is now, covered dismissals ordered by the trial court upon the instance of the plaintiff.28Yet, as will be seen in the foregoing discussion, a discussion of Section 2 cannot be avoided as the postulate behind that provision was eventually extended as well in cases that should have properly been governed by Section 3.Even though the cases cited by respondents involved different factual antecedents, there exists more appropriate precedents which they could have cited in support of their claim that the counterclaim should have been dismissed even if the dismissal of the complaint was upon the defendants' motion and was predicated on the plaintiff's fault.BA Finance Corp. v. Co29particularly stands out in that regard,although that ruling is itself grounded on other precedents as well. Elucidation of these cases is in order.On the general effect of the dismissal of a complaint, regardless of cause, on the pending counterclaims, previous jurisprudence laid emphasis on whether the counterclaim was compulsory or permissive in character. The necessity of such distinction was provided in the 1964 Rules itself, particularly Section 2, Rule 17, which stated that in instances wherein the plaintiff seeks the dismissal of the complaint, "if a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court."30Thevaunted commentaries of Chief Justice Moran, remarking on Section 2, Rule 17, noted that "[t]here are instances in which a counterclaim cannot remain pending for independent adjudication, as, where it arises out of, or is necessarily connected with, the transaction or occurrence which is the subject matter of the opposing party's claim."31This view expressed in Moran's Commentaries was adopted by the Court in cases where the application of Section 2, Rule 17 of the 1964 Rules of Court was called for, such as inLim Tanhu v. Ramolete,32andDalman v. City Court of Dipolog City.33The latter case warrants brief elaboration. Therein, the plaintiff in a civil case for damages moved for the withdrawal of her own case on the ground that the dispute had not been referred to the barangay council as required by law. Over the objection of the defendant, who feared that her own counterclaim would be prejudiced by the dismissal, plaintiff's motion was granted, the complaint and the counterclaim accordingly dismissed by the trial court. The Court refused to reinstate the counterclaim, opining without elaboration, "[i]f the civil case is dismissed, so also is the counterclaim filed therein."34The broad nature of that statement gave rise to the notion that the mandatorydismissal of the counterclaim upon dismissal of the complaint applied regardless of the cause of the complaint's dismissal.35Notably, the qualification concerning compulsory counterclaims was provided in Section 2, Rule 17 of the 1964 Rules, the provision governing dismissals by order of the court, and not Section 3, Rule 17. As stated earlier, Section 3, which covered dismissals for failure to prosecute upon motion of the defendant or uponmotu proprioaction of the trial court, was silent on the effect on the counterclaim of dismissals of such nature.Spouses Sta. Maria, Jr. v. Court of Appeals,36decided in 1972, ostensibly supplied the gap on the effect on the counterclaim of complaints dismissed under Section 3. The defendants therein successfully moved before the trial court for the dismissal of the complaint without prejudice and their declaration in default on the counterclaim after plaintiffs therein failed to attend the pre-trial. After favorable judgment was rendered on the counterclaim, plaintiffs interposed an appeal, citing among other grounds, that the counterclaim could no longer have been heard after the dismissal of the complaint. While the Court noted that the adjudication of the counterclaim in question "does not depend upon the adjudication of the claims made in the complaint since they were virtually abandoned by the non-appearance of the plaintiffs themselves," it was also added that "[t]he doctrine invoked is not available to plaintiffs like the petitioners, who prevent or delay the hearing of their own claims and allegations."37The Court, through Justice JBL Reyes, noted:The doctrine that the complaint may not be dismissed if the counterclaim cannot be independently adjudicated is not available to, and was not intended for the benefit of, a plaintiff who prevents or delays the prosecution of his own complaint. Otherwise, the trial of counterclaims would be made to depend upon the maneuvers of the plaintiff, and the rule would offer a premium to vexing or delaying tactics to the prejudice of the counterclaimants. It is in the same spirit that we have ruled that a complaint may not be withdrawn over the opposition of the defendant where the counterclaim is one that arises from, or is necessarily connected with, the plaintiff's action and cannot remain pending for independent adjudication.38There is no doubt that under the 1964 Rules, the dismissal of a complaint due to the failure of the plaintiff to appear during pre-trial, as what had happened inSta. Maria, fell within the coverage of Section 3, Rule 17. On the other hand, Section 2 was clearly limited in scope to those dismissals sustained at the instance of the plaintiff.39Nonetheless, by the early 1990s, jurisprudence was settling on a rule that compulsory counterclaims were necessarily terminated upon the dismissal of the complaint not only if such dismissal was upon motion of the plaintiff, but at the instance of the defendant as well. Two decisions from that period stand out in this regard,Metals Engineering Resources Corp. v. Court of Appeals40andInternational Container Terminal Services v. Court of Appeals.41InMetals, the complaint was expunged from the record after the defendant had filed a motion for reconsideration of a trial court order allowing the filing of an amended complaint that corrected a jurisdictional error in the original complaint pertaining to the specification of the amount of damages sought. When the defendant was nonetheless allowed to present evidence on the counterclaim, the plaintiff assailed such allowance on the ground that the counterclaim was compulsory and could no longer remain pending for independent adjudication. The Court, in finding for the plaintiff, noted that the counterclaim was indeed compulsory in nature, and as such, was auxiliary to the proceeding in the original suit and derived its jurisdictional support therefrom.42It was further explained that the doctrine was in consonance with the primary objective of a counterclaim, which was to avoid and prevent circuitry of action by allowing the entire controversy between the parties to be litigated and finally determined in one action, and to discourage multiplicity of suits.43Also, the Court noted that since the complaint was dismissed for lack of jurisdiction, it was as if no claim was filed against the defendant, and there was thus no more leg for the complaint to stand on.44InInternational Container, the defendant filed a motion to dismiss which was granted by the trial court. The defendant's counterclaim was dismissed as well. The Court summarized the key question as "what is the effect of the dismissal of a complaint ordered at the instance of the defendant upon a compulsory counterclaim duly raised in its answer."45Then it ruled that the counterclaim did not survive such dismissal. After classifying the counterclaim therein as compulsory, the Court noted that "[i]t is obvious from the very nature of the counterclaim that it could not remain pending for independent adjudication, that is, without adjudication by the court of the complaint itself on which the counterclaim was based."46Then in 1993, a divided Court ruled inBA Financethat the dismissal of the complaint for nonappearance of plaintiff at the pre-trial, upon motion of the defendants, carried with it the dismissal of their compulsory counterclaim.47The Court reiterated the rule that "a compulsory counterclaim cannot remain pending for independent adjudication by the court' as it is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom."48Express reliance was made onMetals, International Container,and evenDalmanin support of the majority's thesis.BA Financelikewise advised that the proper remedy for defendants desirous that their counterclaims not be dismissed along with the main complaint was for them to move to declare the plaintiffs to be "non-suited" on their complaint and "as in default" on their compulsory counterclaim, instead of moving for the dismissal of the complaint.49Justice Regalado, joined by Chief Justice Narvasa, registered a strong objection to the theory of the majority. They agreed that the trial court could no longer hear the counterclaim, but only on the ground that defendant's motion to be allowed to present evidence on the counterclaim was filed after the order dismissing the complaint had already become final. They disagreed however that the compulsory counterclaim was necessarily dismissed along with the main complaint, pointing out that a situation wherein the dismissal of the complaint was occasioned by plaintiff's failure to appear during pre-trial was governed under Section 3, Rule 17, and not Section 2 of the same rule. Justice Regalado, who ironically penned the decision inMetalscited by the majority, explained:Turning back to Rule 17, it is readily apparent that Sections 2 and 3 thereof envisage different factual and adjective situations. The dismissal of the complaint under Section 2 is at the instance of plaintiff, for whatever reason he is minded to move for such dismissal, and, as a matter of procedure, is without prejudice unless otherwise stated in the order of the court or, for that matter, in plaintiff's motion to dismiss his own complaint. By reason thereof, to curb any dubious or frivolous strategy of plaintiff for his benefit or to obviate possible prejudice to defendant, the former may not dismiss his complaint over the defendant's objection if the latter has a compulsory counterclaim since said counterclaim would necessarily be divested of juridical basis and defendant would be deprived of possible recovery thereon in that same judicial proceeding.Section 3, on the other hand, contemplates a dismissal not procured by plaintiff, albeit justified by causes imputable to him and which, in the present case, was petitioner's failure to appear at the pre-trial. This situation is also covered by Section 3, as extended by judicial interpretation, and is ordered upon motion of defendant or motu proprio by the court. Here, the issue of whether defendant has a pending counterclaim, permissive or compulsory, is not of determinative significance. The dismissal of plaintiff's complaint is evidently a confirmation of the failure of evidence to prove his cause of action outlined therein, hence the dismissal is considered, as a matter of evidence, an adjudication on the merits. This does not, however, mean that there is likewise such absence of evidence to prove defendant's counterclaim although the same arises out of the subject matter of the complaint which was merely terminated for lack of proof. To hold otherwise would not only work injustice to defendant but would be reading a further provision into Section 3 and wresting a meaning therefrom although neither exists even by mere implication. Thus understood, the complaint can accordingly be dismissed, but relief can nevertheless be granted as a matter of course to defendant on his counterclaim as alleged and proved, with or without any reservation therefor on his part, unless from his conduct, express or implied, he has virtually consented to the concomitant dismissal of his counterclaim.50Justice Regalado also adverted toSta. Mariaand noted that the objections raised and rejected by the Court therein were the same as those now relied upon by the plaintiff. He pointed out thatDalmanand International Container, both relied upon by the majority, involved the application of Section 2, Rule 17 and not Section 3, which he insisted as the applicable provision in the case at bar.51The partial dissent of Justice Regalado inBA Financeproved opportune, as he happened then to be a member of the Rules of Court Revision Committee tasked with the revision of the 1964 Rules of Court. Just a few months afterBA Financewas decided, Justice Regalado proposed before the Committee an amendment to Section 3, Rule 17 that would explicitly provide that the dismissal of the complaint due to the fault of the plaintiff shall be "without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action." The amendment, which was approved by the Committee, is reflected in the minutes of the meeting of the Committee held on 12 October 1993:[Justice Regalado] then proposed that after the words "upon the court's own motion" in the 6th line of the draft in Sec. 3 of Rule 17, the following provision be inserted:"without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action." The Committee agreed with the proposed amendment of Justice Regalado.Justice Herrera observed that under Secs. 1 to 3 of Rule 17, it is not the action that is dismissed but the complaint. He asked whether there is any distinction between "complaint" and "action." Justice Regalado opined that the action of the plaintiff is initiated by his complaint.Justice Feria then suggested that the dismissal be limited to the complaint[.] Thus, in the 1st line of Sec. 1, the words "An action" will be changed to "a complaint"; in the 2nd line of Sec. 2, the words "an action" will be changed to "a complaint" and in Sec. 3, the word "action" on the 5th line of the draft will be changed to "complaint." The Committee agreed with Justice Feria's suggested amendments.CA Pao believed that there is a need to clarify the counterclaim that the defendant will prosecute, whether it is permissive or compulsory or all kinds of counterclaims.Justice Regalado opined that there is no need of making a clarification because it is already understood that it covers both counterclaims.52It is apparent from these minutes that the survival of the counterclaim despite the dismissal of the complaint under Section 3 stood irrespective of whether the counterclaim was permissive or compulsory. Moreover, when the Court itself approved the revisions now contained in the 1997 Rules of Civil Procedure, not only did Justice Regalado's amendment to Section 3, Rule 17 remain intact, but the final version likewise eliminated the qualification formerly offered under Section 2 on "counterclaims that can remain pending for independent adjudication by the court."53At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right of the defendant to prosecute the counterclaim either in the same or separate action notwithstanding the dismissal of the complaint, and without regard as to the permissive or compulsory nature of the counterclaim.In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects of the amendments to Section 2 and 3 of Rule 17:2. Under this revised section [2], where theplaintiffmoves for the dismissal of his complaint to which a counterclaim has been interposed, the dismissal shall be limited to the complaint. Such dismissal shall be without prejudice to the right of the defendant to either prosecute his counterclaim in a separate action or to have the same resolved in the same action. Should he opt for the first alternative, the court should render the corresponding order granting and reserving his right to prosecute his claim in a separate complaint. Should he choose to have his counterclaim disposed of in the same action wherein the complaint had been dismissed, he must manifest such preference to the trial court within 15 days from notice to him of plaintiff's motion to dismiss.These alternative remedies of the defendant are available to him regardless of whether his counterclaim is compulsory or permissive.A similar alternative procedure, with the same underlying reason therefor, is adopted in Sec. 6, Rule 16 and Sec. 3 of this Rule, wherein the complaint is dismissed on the motion of thedefendantor, in the latter instance, also by the courtmotu proprio.x x x x2. The second substantial amendment to [Section 3] is with respect to the disposition of the defendant's counterclaim in the event the plaintiff's complaint is dismissed. As already observed, he is here granted the choice to prosecute that counterclaim in either the same or a separate action. x x x x3.With the aforestated amendments in Secs. 2 and 3 laying down specific rules on the disposition of counterclaims involved in the dismissal actions, the controversial doctrine inBA Finance Corporation v. Co, et al., (G.R. No. 105751, June 30, 1993) has been abandoned, together with the apparent confusion on the proper application of said Secs. 2 and 3. Said sections were distinguished and discussed in the author's separate opinion in that case, even before they were clarified by the present amendments x x x.54Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion [of Justice Regalado inBA Finance.]"55Retired Court of Appeals Justice Herrera pronounces that the amendment to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings inMetalsEngineering,International Container, andBA Finance"may be deemed abandoned."56On the effect of amendment to Section 3, Rule 17, the commentators are in general agreement,57although there is less unanimity of views insofar as Section 2, Rule 17 is concerned.58To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997.BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment ofBA Financeas doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. If, since then, such abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would warrant express confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action. We confirm thatBA Financeand all previous rulings of the Court that are inconsistent with this present holding are now abandoned.Accordingly, the RTC clearly erred when it ordered the dismissal of the counterclaim, since Section 3, Rule 17 mandates that the dismissal of the complaint is without prejudice to the right of the defendant to prosecute the counterclaim in the same or separate action. If the RTC were to dismiss the counterclaim, it should be on the merits of such counterclaim. Reversal of the RTC is in order, and a remand is necessary for trial on the merits of the counterclaim.It would be perfectly satisfactory for the Court to leave this matter at that. Still, an explanation of the reason behind the new rule is called for, considering that the rationale behind the previous rule was frequently elaborated upon.Under Act No. 190, or the Code of Procedure in Civil Actions promulgated in 1901, it was recognized in Section 127(1) that the plaintiff had the right to seek the dismissal of the complaint at any time before trial, "provided a counterclaim has not been made, or affirmative relief sought by the cross-complaint or answer of the defendant."59Note that no qualification was made then as to the nature of the counterclaim, whether it be compulsory or permissive. The protection of the defendant's right to prosecute the counterclaim was indeed unqualified. InCity of Manila, decided in 1918, the Court explained:By paragraph 1 [of Section 127], it will be seen that, where the defendant has interposed a counterclaim, or is seeking affirmative relief by a cross-complaint, that then, and in that case, the plaintiff cannot dismiss the action so as to affect the right of the defendant in his counterclaim or prayer for affirmative relief. The reason for that exception is clear.When the answer sets up an independent action against the plaintiff, it then becomes an action by the defendant against the plaintiff, and, of course, the plaintiff has no right to ask for a dismissal of thedefendant'saction.60Nonetheless, a new rule was introduced when Act No. 190 was replaced by the 1940 Rules of Court. Section 2, Rule 30 of the 1940 Rules specified that if a counterclaim is pleaded by a defendant prior to the service of the plaintiff's motion to dismiss, the action shall not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court. This qualification remained intact when the 1964 Rules of Court was introduced.61The rule referred only to compulsory counterclaims, or counterclaims which arise out of or are necessarily connected with the transaction or occurrence that is the subject matter of the plaintiff's claim, since the rights of the parties arising out of the same transaction should be settled at the same time.62As was evident inMetals,International ContainerandBA Finance, the rule was eventually extended to instances wherein it was the defendant with the pending counterclaim, and not the plaintiff, that moved for the dismissal of the complaint.We should not ignore the theoretical bases of the rule distinguishing compulsory counterclaims from permissive counterclaims insofar as the dismissal of the action is concerned. There is a particular school of thought that informs the broad proposition inDalmanthat "if the civil case is dismissed, so also is the counterclaim filed therein,"63or the more nuanced discussions offered inMetals,International Container, andBA Finance. The most potent statement of the theory may be found inMetals,64which proceeds from the following fundamental premises'a compulsory counterclaim must be set up in the same proceeding or would otherwise be abated or barred in a separate or subsequent litigation on the ground ofauter action pendant,litis pendentiaorres judicata; a compulsory counterclaim is auxiliary to the main suit and derives its jurisdictional support therefrom as it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the complaint;65and that if the court dismisses the complaint on the ground of lack of jurisdiction, the compulsory counterclaim must also be dismissed as it is merely ancilliary to the main action and no jurisdiction remained for any grant of relief under the counterclaim.The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court, while the two latter points are sourced from American jurisprudence. There is no disputing the theoretical viability of these three points. In fact, the requirement that the compulsory counterclaim must be set up in the same proceeding remains extant under the 1997 Rules of Civil Procedure.66At the same time, other considerations rooted in actual practice provide a counterbalance to the above-cited rationales.Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action constituting an act or omission by which a party violates the right of another. The main difference lies in that the cause of action in the counterclaim is maintained by the defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a complaint, a counterclaim without a cause of action cannot survive.It would then seemingly follow that if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that hardly is the case, especially as a general rule.More often than not, the allegations that form the counterclaim are rooted in an act or omission of the plaintiff other than the plaintiff's very act of filing the complaint. Moreover, such acts or omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the complaint itself. The only apparent exception to this circumstance is if it is alleged in the counterclaim that the very act of the plaintiff in filing the complaint precisely causes the violation of the defendant's rights. Yet even in such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff.67These considerations persist whether the counterclaim in question is permissive or compulsory. A compulsory counterclaim arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim, does not require for its adjudication the presence of third parties, and stands within the jurisdiction of the court both as to the amount involved and the nature of the claim.68The fact that the culpable acts on which the counterclaim is based are founded within the same transaction or occurrence as the complaint, is insufficient causation to negate the counterclaim together with the complaint. The dismissal or withdrawal of the complaint does not traverse the boundaries of time to undo the act or omission of the plaintiff against the defendant, or vice versa. While such dismissal or withdrawal precludes the pursuit of litigationby the plaintiff, either through his/her own initiative or fault, it would be iniquitous to similarly encumber the defendant who maintained no such initiative or fault. If the defendant similarly moves for the dismissal of the counterclaim or neglects to timely pursue such action, let the dismissal of the counterclaim be premised on those grounds imputable to the defendant, and not on the actuations of the plaintiff.The other considerations supplied inMetalsare anchored on the premise that the jurisdictional foundation of the counterclaim is the complaint itself. The theory is correct, but there are other facets to this subject that should be taken into account as well. On the established premise that a counterclaim involves separate causes of action than the complaint even if derived from the same transaction or series of transactions, the counterclaim could have very well been lodged as a complaint had the defendant filed the action ahead of the complainant.69The terms "ancillary" or "auxiliary" may mislead in signifying that a complaint innately possesses more credence than a counterclaim, yet there are many instances wherein the complaint is trivial but the counterclaim is meritorious. In truth, the notion that a counterclaim is, or better still, appears to be merely "ancillary" or "auxiliary" is chiefly the offshoot of an accident of chronology, more than anything else.The formalistic distinction between a complaint and a counterclaim does not detract from the fact that both of them embody causes of action that have in their end the vindication of rights. While the distinction is necessary as a means to facilitate order and clarity in the rules of procedure, it should be remembered that the primordial purpose of procedural rules is to provide the means for the vindication of rights. A party with a valid cause of action against another party cannot be denied the right to relief simply because the opposing side had the good fortune of filing the case first. Yet this in effect was what had happened under the previous procedural rule and correspondent doctrine, which under their final permutation, prescribed the automatic dismissal of the compulsory counterclaim upon the dismissal of the complaint, whether upon the initiative of the plaintiff or of the defendant.Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition of the counterclaims by ensuring that any judgment thereon is based on the merit of the counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the trial court is not precluded from dismissing it under the amended rules, provided that the judgment or order dismissing the counterclaim is premised on those defects. At the same time, if the counterclaim is justified, the amended rules now unequivocally protect such counterclaim from peremptory dismissal by reason of the dismissal of the complaint.WHEREFORE, the petition is GRANTED. The Orders dated 9 August 2005 and 10 October 2005 of Branch 29, Regional Trial Court of San Miguel, Zamboanga del Sur in Civil Case No. 98-012 are SET ASIDE. Petitioner's counterclaim as defendant in Civil Case. No. 98-012 is REINSTATED. The Regional Trial Court is ORDERED to hear and decide the counterclaim with deliberate dispatch.SO ORDERED.

[G.R. No. 133284. May 9, 2000.]

SPS. CLARO PONCIANO and GLORIA PONCIANO,Petitioners, v. HONORABLE JOSE J. PARENTELA, JR., Presiding Judge, Regional Trial Court of Trece Martires City, Br. 23 and SPS. ILDEFONSO CLAMOSA and LEONORA CLAMOSA,Respondents.

D E C I S I O N

GONZAGA-REYES,J.:

The instant case deals with Administrative Circular 04-94. More specifically, the primary issue is whether or not an answer which asserts a compulsory counterclaim must include a certificate of non-forum shopping, and if so, whether or not the dismissal of such compulsory counterclaim by the trial court due to the absence of such certification has the effect of a dismissal with prejudice so as to bar the party from re-filing such compulsory counterclaim.chanroblesvirtual|awlibrary

The antecedents of this case are as follows:chanrob1es virtual 1aw library

On June 13, 1995, private respondents Ildefonso and Leonora Clamosa filed a complaint for a sum of money and damages with the Regional Trial Court of Trece Martires City, Branch 23, against petitioners Claro and Gloria Ponciano for unpaid cost of labor and materials incurred by them in repairing petitioners house in San Roque, Cavite. The case was docketed as Civil Case No. TM-601. Petitioners filed a motion to dismiss the complaint for failure to state a cause of action, but the same was denied by the trial court in its Order dated September 21, 1995.

On October 18, 1995, petitioners filed their answer with compulsory counterclaim, claiming that they have paid the total contract price agreed upon; that despite this, the work of private respondents was defective; and that private respondents abandoned the renovation before it was completed. Petitioners asserted that they are entitled to be paid P250,000 to complete the renovation, and damages.

On August 23, 1996, upon motion of private respondents, the trial court ordered that petitioners counterclaim be stricken off from the record for failure to comply with Administrative Circular No. 04-94, which requires an affidavit of non-forum shopping for all initiatory pleadings in all courts. Petitioners filed a motion for reconsideration dated September 17, 1996, arguing, among others, that since their counterclaim is compulsory in nature, it is not an initiatory pleading and therefore, does not fall within the scope of Administrative Circular No. 04-94. However, on October 17, 1996, the trial court denied petitioners motion for reconsideration. 1

Petitioners questioned the trial courts orders before this Court by means of a special civil action forcertiorariunder Rule 65 of the 1997 Revised Rules of Civil Procedure, which case was docketed as G.R. No. 127701. On February 10, 1997, the Courts Second Division denied the petition for lack of merit, holding that xxx

We find there is no reversible error in the trial courts questioned order. The administrative circular invoked provides clearly that strict compliance with its mandate is imposed upon all initiatory pleadings, and that "the complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or complaint-in-intervention, petition, or application wherein a party asserts his claim or relief." It is notable that in issuing the said circular, the court did not distinguish between permissive and compulsory counterclaim, and we need not make a distinction in this regard as well. (Emphasis supplied) 2xxx

Thereafter, petitioners filed an "Answer with Amended Compulsory Counterclaim," wherein the amendment consisted of the addition of a certification under oath in compliance with the Administrative Circular No. 04-94. Initially, the trial court admitted the "Answer with Amended Compulsory Counterclaim" in its July 9, 1997 Order. However, after the filing of a motion for reconsideration by private respondents, the court reconsidered its action and expunged the amended compulsory counterclaim from the records. 3 Its ruling was explained in its Order dated December 9, 1997

After a soul-searching evaluation of the arguments in the Motion for reconsideration filed by plaintiffs thru counsel dated October 6, 1997 and the Comment/Opposition thereto field by counsel for defendants dated November 5, 1997 this Court finds the raison dentre of said Motion for Reconsideration to be impressed with merit. Surely, it would be logomachic and fallacious and what is worse, contemptible to admit defendants Amended Compulsory Counterclaim after the Honorable Supreme Court had dismissed the petition forcertiorariquestioning the Order of this Court striking-off from the record defendants compulsory counterclaim for not complying with Administrative Circular No. 04-94. As it is, the Honorable Supreme Court is the highest court of the land and this court like any other Regional Trial Court belongs to the lower strata of the judicial [sic].chanroblesvirtuallawlibrary

ACCORDINGLY, the Motion for reconsideration is hereby granted. Apropos, defendants amended compulsory counterclaim is hereby expunged and/or stricken off from the record.

SO ORDERED. 4

After its motion for reconsideration was denied by the trial court in an order dated March 17, 1998, petitioners filed the present special civil action forcertiorariunder Rule 65, assailing the trial courts orders denying admission of their amended compulsory counterclaim. They maintain that this Court did not rule in its decision in G.R. No. 127701 that the dismissal of petitioners compulsory counterclaim in Civil Case No. TM-601 for non-compliance with Administrative Circular No. 04-94 was with prejudice. Consequently, petitioners assert that they should be permitted to re-file their compulsory counterclaim provided that they comply with such circular 5 .

Administrative Circular No. 04-94 6 was issued by this Court in order to prevent the undesirable practice of forum-shopping, which exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal orcertiorari) in another, or when he institutes two or more actions or proceedings grounded on the same cause, on the chance that one or the other court would make a favorable disposition. 7 The pertinent portion of the Circular provides xxx

(1) The plaintiff,Petitioner, applicant or principal party seeking relief in the complaint, petition, application or other initiatory pleading shall certify under oath in such original pleading, or in a sworn certification annexed thereto and simultaneously filed therewith, to the truth of the following facts and undertakings: (a) he has not theretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (c) if there is any such action or proceeding which is either pending or may have been terminated, he must state the status thereof; and (d) if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or any other tribunal or agency, he undertakes to report that fact within five (5) days therefrom to the court or agency wherein the original pleading and sworn certification contemplated herein have been filed.

The complaint and other initiatory pleadings referred to and subject of this Circular are the original civil complaint, counterclaim, cross-claim, third (fourth, etc.) party complaint, or complaint-in-intervention, petition, or application wherein a party asserts his claim for relief.xxx

In resolving the issues presented in this case, it should first be asked whether, in the first place, a compulsory counterclaim pleaded in an answer must be accompanied with a certificate of non-forum shopping. This very same issue was confronted in the case of Santo Tomas University Hospital v. Surla, 8 wherein we held that the above-quoted provisions of administrative Circular No. 04-94 do not apply to compulsory counterclaims. Speaking for the Court, Justice Vitug explained that

It bears stressing, once again, that the real office of Administrative Circular No. 04-94, made effective on 01 April 1994, is to curb the malpractice commonly referred to also as forum-shopping. It is an act of a party against whom an adverse judgment has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum, other than by appeal or the special civil action ofcertiorari, or the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. The language of the circular distinctly suggests that it is primarily intended to cover an initiatory pleading or an incipient application of a party asserting a claim for relief.

It should not be too difficult, the foregoing rationale of the circular aptly taken, to sustain the view that the circular in question has not, in fact, been contemplated to include a kind of claim which, by its very nature as being auxiliary to the proceedings in the suit and as deriving its substantive and jurisdictional support therefrom, can only be appropriately pleaded in the answer and not remain outstanding for independent resolution except by the court where the main case pends. Prescinding from the foregoing, the proviso in the second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil Procedure, i.e., that the violation of the anti-forum shopping rule "shall not curable by mere amendment . . . but shall be cause for the dismissal of the case without prejudice," being predicated on the applicability of the need for a certification against forum-shopping, obviously does not include a claim which cannot be independently set up.

A compulsory counterclaim is any claim for money or other relief which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of plaintiffs complaint. It is compulsory in the sense that if it is within the jurisdiction of the court, and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, it must be set up therein, and will be barred in the future if not set up. 9

In the case at bar, there is no doubt that the counterclaims pleaded by petitioners in their answers are compulsory in nature. The filing of a separate action by petitioners would only result in the presentation of the same evidence as in Civil Case No. TM-601. Proceeding from our ruling in Santo Tomas University Hospital, petitioners need not file a certification of non-forum shopping since their claims are not initiatory in character, and therefore, are not covered by the provisions of Administrative Circular No. 04-94.

WHEREFORE, the December 9, 1997 and March 17, 1998 Orders of Branch 23 of the Regional Trial Court of Trece Martires City in Civil Case No. TM-601 are hereby SET ASIDE. The trial court is ORDERED to ADMIT petitioners answer with compulsory counterclaim. No pronouncement as to costs.

SO ORDERED.chanrobles.com : law library

[G.R. No. L-26768. October 30, 1970.]

FAUSTINO GOJO,Petitioner-Appellant, v. SEGUNDO GOYALA and ANTONINA ALMOGUERA,Respondents-Appellees.

Fernando P. Gerona, Sr. forPetitioner-Appellant.

Agustin Frivaldo forRespondents-Appellees.

SYLLABUS

1. REMEDIAL LAW; PLEADINGS AND PRACTICE; COUNTERCLAIM; COMPULSORY COUNTERCLAIM DOES NOT CALL FOR AN INDEPENDENT ANSWER. It is now settled that a plaintiff who fails or chooses not to answer a compulsory counterclaim may not be declared in default, principally because the issues raised in the counterclaim are deemed automatically joined by the allegations of the complaint.

2. ID.; ID.; ID.; COMPULSORY COUNTERCLAIM. In the instant case, there can be no doubt that appellants counterclaim was a compulsory one inasmuch as it arises out of or is necessarily connected with transaction or occurrence that is the subject matter of the complaint; the complaint alleged that the right of appellee to repurchase the property in question had already expired and asked for an order of consolidation; on the other hand, appellants counterclaim was for reformation of the deed claiming that it was only a mortgage. Thus the counterclaim was clearly inconsistent with and directly controverted the whole theory and basic allegations of the complaint.

3. ID.; ID.; COMPLAINT; DISMISSAL; FAILURE TO PROSECUTE; FAILURE TO COMPLY WITH A VOID ORDER OF A COURT WILL NOT JUSTIFY THE DISMISSAL OF THE COMPLAINT. It is true that under Section 3 of Rule 17, a complaint may be dismissed for failure to prosecute if the plaintiff fails to comply with an order of the court, but it is obvious that the said provision cannot apply when the order supposedly ignored is a void one, as in this case. Here, the trial court ordered petitioner to amend the complaint only because it was informed that one of the defendants had died, the court directing that the plaintiff should name the heirs of the deceased as defendants in lieu of said deceased. Such an order runs counter to the ruling in Case-as v. Rosales, Et. Al. (L-18707, February 28, 1967) that an order of the trial court directing the surviving plaintiff to amend the complaint was a void order inasmuch as there was no obligation on said plaintiff to amend his complaint.

4. ID.; ID.; PARTY; DEATH OF A PARTY. When certain of the parties to a civil case died and due notice thereof was given to the trial court, it devolved on the said court to order, not the amendment of the complaint, but the appearance of the legal representatives of the deceased in accordance with the procedure and manner outlined in Rule 3, Section 17 of the Rules of Court.

5. ID.; ID.; DISMISSAL OF COMPLAINT NOT PROPER WHEN THERE IS COMPULSORY COUNTERCLAIM. In line with the principle underlying Sec. 2 of Rule 17, it is not proper to dismiss a complaint when a compulsory counterclaim has been pleaded by defendant. The reason is obvious. Under the cited provision, the right of the plaintiff to move for the dismissal of an action after the defendant has filed his answer is qualified by the clause providing that: "If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiffs motion to dismiss, the action shall not be dismissed against the defendants objection unless the counterclaim can remain pending for independent adjudication by the court." With this limitation, the power of the court to dismiss the complaint upon motion of plaintiff, which is usually without prejudice, is not purely discretionary.

6. ID.; ID.; ID.; PURPOSE. The purpose of Section 2, Rule 17, Revised Rules of Court is to avoid multiplicity of suits over the same matter which would necessarily entail unnecessary expense and, what is worse, possibility of conflict and inconsistency in the resolution of the same question. The same considerations would obtain, if the defendant were the one to ask for dismissal. The best interests of justice require that conflicting claims regarding the same matter should be decided on one single proceeding.

D E C I S I O N

BARREDO,J.:

Appeal from the favorable decision of the Court of First Instance of Sorsogon on the counterclaim of respondents (herein appellees) in its Civil Case No. 1657-84 the complaint (petition) of therein petitioner (herein appellant) having been previously dismissed, without prejudice, for his failure to submit an amended complaint as required of him in the court a quos earlier order.

The record shows that on 26 May 1951, appellee Segundo Goyala together with his now deceased wife Antonina Almoguera, who was also named respondent or defendant in the complaint or petition in the court below, sold to appellant by a "Deed of Pacto de Retro Sale" a certain parcel of agricultural land having an area of approximately two and one-half hectares for P750.00, the repurchase to be made, according to the deed, within one year. It also appears from said deed that on July 4, 1951, the vendee paid another P100.00 as addition to the purchase price. About ten (10) years after the execution of the said document, or on April 12, 1961, to be precise, the vendee filed with the Court of First Instance of Sorsogon the present case against the vendors by way of a petition for consolidation of ownership of the land described and involved in the "Deed of Pacto de Retro Sale." In his petition, the vendee, herein appellant, alleged, inter alia, that the date for repurchase, May 26, 1952, having expired and the vendors not having been able to repurchase the same under the terms and conditions of the agreement, the ownership over the land involved had become consolidated in him; and that for the purpose of recording in the Registry of Property the said consolidation of ownership, it was necessary that a judicial order be issued to that effect and accordingly prayed for such an order. pred

On May 26, 1961, appellee Segundo Goyala filed an opposition or answer to the petition. He therein alleged that his wife Antonina Almoguera had died in the year 1959 and denied the allegation in the petition regarding the pacto de retro sale, "the fact of the matter being," according to him, "that on May 26, 1951, the respondents obtained a cash loan of P750.00 from the petitioner payable in one year without interest; that only on July 26, 1951, Dolores Goyala, daughter of the respondents, obtained from the petitioner the sum of P50.00 to be added and credited to the account of the respondents; and then on August 25, 1951, the said Dolores Goyala received from the petitioner another amount of P10.00 to be added to and credited to the account of the respondents, (so that) the total loan of the respondents from the petitioner aggregates P810.00 Philippine Currency" and that to guarantee the payment of the said loan, the respondents executed a mortgage in favor of the petitioner on a parcel of coconut land described in Annex A of the petition, hence, altho the deed was executed or drawn in the form of a pacto de retro sale, the true and real intention of the parties thereto was that the same was a mere mortgage to secure the payment of the original loan of P750.00 together with the additional amount received thereafter, making a total loan of P810.00, payable within one year without interest. He further alleged that in the evening of May 26, 1952, he and his wife went to the house of the petitioner and tendered to him the sum of P810.00 to pay the debt, but said petitioner refused to receive the same and to cancel the document of mortgage, Annex A. The said appellee also reiterated by way of counterclaim the foregoing allegations of his answer and prayed thus:jgc:chanrobles.com.ph

"WHEREFORE, the respondent Segundo Goyala respectfully prays this Honorable Court to dismiss the petition and render judgment in favor of the respondents as follows:jgc:chanrobles.com.ph

"(a) Ordering the petitioner to receive the sum of P810.00 tendered or deposited by the respondents in full settlement of their debts to him;

"(b) Declaring the document marked Annex A of the petition to be mortgage and not a pacto de retro sale, and ordering the same cancelled and with no more force and effect;

"(c) Ordering the petitioner to pay the respondents the sum of P1,800.00 per annum beginning May 26, 1951 until the final termination of this case as the reasonable monetary value of the products for the said property, and from this amount, there should be deducted however, the corresponding legal interest annually on said loans; and

"(d) In case, however, of the remote possibility that this Court should find the said instrument (Annex A) to be a true pacto de retro sale, and not a mere mortgage, it is hereby prayed that the petitioner be ordered to execute a deed of resale or repurchase of said property in favor of the respondents in accordance with Art. 1606 third paragraph of the Civil Code."cralaw virtua1aw library

On December 1, 1962, counsel for respondent Goyala filed a manifestation informing the trial court that the named defendant (respondent) Antonina Almoguera was already dead, she having died at Labo, Camarines Norte on March 27, 1959, and that her surviving nearest kin are her children, namely: Leonor, Pedro, Juliana, Dolores, Valentina, Soledad, Penya, Mamerta, Salvador, Genesa, Felipe and Elegio all surnamed Goyala with residences at Bulan, Sorsogon. Hearing was had on that manifestation, after which the trial court, under date of December 4, 1962, issued the following order:jgc:chanrobles.com.ph

"As prayed for in the manifestation of Atty. Agustin Frivaldo, counsel for the defendant, dated December 1, 1962, on the ground stated therein, the counsel for the plaintiff is hereby required to submit an amended Complaint substituting therein for one of the defendants, Antonina Almoguera, now deceased her successors in interest as party defendants, weithin the reglementery period."cralaw virtua1aw library

Subsequently, on January 26, 1963, appellee Goyala filed a motion to dismiss the complaint or petition on the ground that notwithstanding the lapse of 43 days after appellants receipt of a copy of the above-quoted order of the trial court, said appellant had failed and neglected to submit the amended complaint required of him. The motion was opposed by appellant; and the trial court, resolving the incident, issued the following order on February 15, 1963:jgc:chanrobles.com.ph

"The matter under consideration is the motion to dismiss filed by the defendants on the ground that the plaintiff has failed and neglected to submit the amended complaint as required in the order of this Court dated December 4, 1962, which the plaintiff had received on December 13, 1962. From December 13, 1962 when the motion to dismiss was filed, 43 days have elapsed. On February 6, 1963 when the plaintiff has again failed to file together with said opposition the required amended complaint, and altho plaintiff has requested for a reasonable extension of time within which to file the said pleading, it is regretable to state that up to the present has neglected to do so.

"WHEREFORE, the complaint is hereby dismissed without prejudice."cralaw virtua1aw library

Thereafter, on July 10, 1963, appellee filed a motion to declare appellant in default in respect of said appellees counterclaim, contained in his answer (opposition) to the dismissed complaint (petition) of appellant. This motion was granted by the trial court in its order of July 11, 1963, to wit:jgc:chanrobles.com.ph

"Upon petition of the counsel for the defendant Segundo Goyala to declare the plaintiff in default on the ground of failure on the part of the plaintiff to answer the counterclaim filed by said defendant Segundo Goyala within the reglementary period, despite the fact that the plaintiffs counsel was duly served with a copy thereof, and the plaintiffs complaint was already dismissed by this Court in its order of February 15, 1963 on the ground of neglect to submit the amended complaint as required in the Court order of December 4, 1962, the plaintiff is hereby declared in default on the counterclaim filed by said defendant Segundo Goyala.

"Let the defendant Segundo Goyala submit his evidence before the Clerk of Court, who is hereby commissioned to receive the same."chanrobles.com.ph : virtual law library

As directed in the order above-quoted, the Clerk of Court received the evidence of appellee in respect of his counterclaim and, thereafter, on November 15, 1963 the trial court rendered favorable judgment on appellees counterclaim. The pertinent portions of the decision referred to read thus:jgc:chanrobles.com.ph

"It appears that on May 26, 1951, respondents obtained a loan of P750.00 from the petitioner. To secure the loan, respondents executed a document, which was made a Deed of Pacto de Retro Sale (Exh.A), on suggestion of petitioner to exempt himself from liabilities under the Usury Law. Dolores Goyala, one of the daughters of respondents, obtained an additional loan of P50.00 on July 26, 1951, (Exh.A-1) and another P10.00 on August 19, 1951, (Exh.A-3) from the petitioner which amounts were duly authorized and acknowledged by respondent Segundo Goyala. In the late afternoon of May 26, 1952, the last day to redeem the property, Segundo Goyala, tendered the amount of P810.00 to herein petitioner in complete payment of the loan and to release the property securing the said loan, but was refused because it was already night time, and was advised instead to return the following day. When Segundo Goyala returned the following day to redeem the property he was told by petitioner that the period to redeem has already expired. Segundo Goyala testified further that he tried no less than three times to redeem the property but each time petitioner refused the redemption money.

"It appears further that the petitioner is in possession of the land since May 26, 1951, after the execution of Exhibit A up to the present time and had appropriated to himself the products during the period. It is shown further that the land is a productive coconut land and has a fair market value of P5,000.00 with an annual yield of P1,800.00."cralaw virtua1aw library

"The respondents are not however entitled to be reimbursed of the value of the products obtained by the petitioner who acted in the belief that the agreement was a Pacto de Retro Sale which turned out to be otherwise as the Court now so declares.

"WHEREFORE, in view of the foregoing the Court hereby declares the Deed of Pacto de Retro Sale (Exh.A) an equitable mortgage and respondents Segundo Goyala and the heirs of Antonina Almoguera are allowed to redeem the property; orders Faustino Gojo to withdraw the amount of P810.00 deposited with the Clerk of Court in full settlement of the loan, and hereby cancels and declares without force and effect the aforementioned Deed of Pacto de Retro Sale executed by the spouses Segundo Goyala and Antonina Almoguera in favor of Faustino Gojo. Without costs."cralaw virtua1aw library

The above quoted decision was subsequently amended in an order of December 19, 1963, as follows:jgc:chanrobles.com.ph

"It appearing that in the dispositive part of the decision there was no directive to restore the possession to the defendants upon execution, the dispositive portion of the said decision is hereby amended to include therein an additional directive ordering the plaintiff to deliver and restore the possession of the land in question to the defendants."cralaw virtua1aw library

Dissatisfied with the decision referred to, appellant appealed to the Court of Appeals which, upon its finding that the said appeal involves purely questions of law, certified the same to this Court for resolution.chanroblesvirtuallawlibrary

In his brief, appellant assigns the following errors allegedly committed by the trial court:jgc:chanrobles.com.ph

"1. THE LOWER COURT ERRED IN DECLARING PLAINTIFF IN DEFAULT WITH RESPECT TO DEFENDANTS COUNTERCLAIM;

"2. THE LOWER COURT ERRED IN DEPUTIZING OR COMMISSIONING THE CLERK OF COURT TO RECEIVE THE EVIDENCE OF THE DEFENDANT SEGUNDO GOYALA;

"3. THE LOWER COURT ERRED IN RENDERING JUDGMENT IN FAVOR OF THE RESPONDENT SEGUNDO GOYALA AND THE HEIRS OF ANTONINA ALMOGUERA ALLOWING THEM TO REDEEM THE LAND IN QUESTION FROM THE PETITIONER FAUSTINO GOJO FOR THE SUM OF P810.00."cralaw virtua1aw library

The thrust of appellants argument in respect of the first assignment of error is to the effect that there is no occasion for the trial court to declare him in default in respect of appellees counterclaim in this case, for the reasons that: (a) the said counterclaim "falls within the category of compulsory counterclaim" which does not call for an independent answer as the complaint already denies its material allegations; and (b) the dismissal of the complaint in this case without prejudice carried with it the dismissal of the said counterclaim.

The first assignment of error of appellant is well taken. It is now settled that a plaintiff who fails or chooses not to answer a compulsory counterclaim may not be declared in default, principally because the issues raised in the counterclaim are deemed automatically joined by the allegations of the complaint. 1 In the instant case, there can be no doubt that appellants counterclaim was a compulsory one inasmuch as it arises out of or is necessarily connected with transaction or occurrence that is the subject matter of the complaint; the complaint alleged that the right of appellee to repurchase the property in question had already expired and asked for an order of consolidation; on the other hand, appellants counterclaim was for reformation of the deed claiming that it was only a mortgage. Thus the counterclaim was clearly inconsistent with and directly controverted the whole theory and basic allegations of the complaint. In consequence, appellants complaint stood as the answer to appellees counterclaim; hence, the incorrectness of the trial courts order declaring the appellant in default in regard to said counterclaim is evident.

Regarding the dismissal of petitioners complaint, We hold also, that the trial court committed reversible error in ordering the same. It is true that under Section 3 of Rule 17, a complaint may be dismissed for failure to prosecute if the plaintiff fails to comply with an order of the court, but it is obvious that the said provision cannot apply when the order supposedly ignored is a void one, as in this case. Here, the trial court ordered petitioner to amend the complaint only because it was informed that one of the defendants had died, the court directing that the plaintiff should name the heirs of the deceased as defendants in lieu of said deceased. Such an order runs counter to the ruling of this Court in Caseas v. Rosales, Et. Al. 2 which is squarely applicable to the situation herein obtaining. In that case, We held:jgc:chanrobles.com.ph

"When certain of the parties to Civil Case No. 261 died and due notice thereof was given to the trial court, it devolved on the said court to order, not the amendment of the complaint, but the appearance of the legal representatives of the deceased in accordance with the procedure and manner outlined in Rule 3, Section 17 of the Rules of Court, which provide:chanrob1es virtual 1aw library

SECTION 17. Death of party.After a party dies and the claim is not thereby extinguished, the court shall order, upon proper notice, the legal representative of the deceased to appear and to be substituted for the deceased, within a period of thirty (30) days, or within such time as may be granted. If the legal representative fails to appear within said time, the court may order the opposing party to procure the appointment of a legal representative of the deceased within a time to be specified by the court, and the representative shall immediately appear for and on behalf of the interest of the deceased. The court charges involved in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint guardian ad litem for the minor heirs.

"In the case of Barrameda v. Barbara, 90 Phil. 718, this Court held that an order to amend the complaint, before the proper substitution of parties as directed by the aforequoted rule has been effected, is void and imposes upon the plaintiff no duty to comply therewith to the end that an order dismissing the said complaint, for such non-compliance, would similarly be void. In a subsequent case, Ferriera, Et. Al. v. Gonzales, Et Al., G.R. No. L-11567, July 17, 1958, this Court affirmed a similar conclusion on the determination that the continuance of a proceedings during the pendency of which a party thereto dies, without