september 23, 2014 - rule 16 (outline, case digest & full text)

Outline: Rule 17 Dismissal of Actions CIVIL PROCEDURE

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Lesson for September 23, 2014, Saturday

Dismissal of Actions - Rule 17

1. Dismissal upon notice by plaintiff; two-dismissal rule:

Sec. 1. - Dismissal upon notice by plaintiff

- Serrano v. Cabrera, G.R. No. L-5189, September 21, 1953

- O.B. Jovenir Construction v. Macamir Realty, G.R. No. 135803, March 28, 2006

2. Dismissal upon motion by plaintiff; effect on existing counterclaim:

Sec. 2. - Dismissal upon motion of plaintiff

3. Dismissal due to the fault of plaintiff:

Sec. 3. - Dismissal due to fault of plaintiff

- Republic Planters Bank v. Molina, G.R. No. L-54287, September 28, 1988

- Pinga v. Santiago, G.R. No. 170354, June 30, 2006

- Goldloop Properties v. CA, G.R. No. 99431, August 11, 1992

4. Dismissal of counterclaim, cross-claim or third-party complaint:

Sec. 4. - Dismissal of counterclaim, cross-claim, or third-party complaint

Case Digest: Rule 17 Dismissal of Actions CIVIL PROCEDURE

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SERRANO vs CABRERA

G.R. No. L-5189, September 21, 1953

Facts:

Gaudencio Serrano was the lessee of a parcel

of land while respondent Cabrera was the lessor.

The term of the lease was six agricultural

years and the yearly rental agreed upon was 290 cavans

of palay.

The lessor brought an action to recover

rentals due and unpaid for agricultural years 1943 to

1944.

The complaint was dismissed upon a motion

which contains a provision stating that Gaudencio Serrano

as lessee has already satisfied the claims of lessor Cabrera

against him and shall deem that complaint dismissed.

Alleging and claiming that what he had paid

to her was in excess of what was due her for unpaid

rentals the lessee brought an action against the lessor and

her husband to annul the proceedings in civil case No.

141, to recover such excess payment of rentals.

Defendants moved for the dismissal of the

complaint on the ground of res judicata. Court dismissed

the complaint on the ground of res judicata.

Issue:

Whether or not the dismissal of the complaint in

the first action on the ground that defendant had paid

and satisfied all her claims before the filing of the answer

was without prejudice as provided in Section 1 Rule 30?

Held:

(Section 1 Rule 30 only applies to the part of

plaintiff (Cabrera) and not to herein petitioners.

Section 1, Rule 30, cannot be invoked in this

case, because a dismissal of the action without order of

the Court, which is without prejudice, is one by the

plaintiff before the filing of an answer by the defendant. It

means that such dismissal would not preclude the plaintiff

from bringing another action against the same defendant

on the same subject matter. Such dismissal under the rule

does not bar institution of an action by the defendant

which he could have brought in the action against him by

means of a counter-claim or cross-claim. The dismissal in

the first case was upon motion of the plaintiff consented

to by the defendant and the ground was that the latter

had paid and satisfied all the claims of the former, as

prayed for in her complaint. Order appealed from is

affirmed.


O.B. JOVENIR CONSTRUCTION vs MACAMIR REALTY

G.R. No. 135803, March 28, 2006

Facts:

Macamir Realty and Spouses Miranda (private

respondents) filed before the Makati RTC for the

annulment of certain agreements they had with Jovenir

Construction, Jovenir and Liongson (petitioners). Jovenir

Construction was contracted to complete the

construction of private respondents condominium

project. It was discovered that Jovenir Construction had

misrepresented itself as a legitimate contractor.

Respondents prayed for the issuance of a writ of

preliminary injunction.

Salud Madeja alleged that the spouses Miranda

failed to attach any Board Resolution authorizing them to

file suit on behalf of the corporation. Private respondents

filed a Motion to Withdraw Complaint, alleging that the

counsel for plaintiffs discovered a supposed technical

defect in the complaint that may be a ground for the

dismissal of this case. Private respondents prayed that

the plaintiffs be allowed to withdraw the complaint

without prejudice.

Petitioners filed an opposition to the Motion to

Withdraw Complaint. However, private respondents filed

another complaint against the same defendants, and

seeking the same reliefs as the first complaint. This time, a

Board Resolution authorizing the spouses Miranda to file

the Complaint on behalf of Macamir Realty was attached

to the complaint. This second complaint was also filed

with the Makati RTC. The Verification and Certification of

Non-Forum Shopping in the second complaint was

accomplished.

RTC granted the Motion to Withdraw Complaint.

The RTC noted in its Order

that, "an action may be

dismissed by the plaintiffs even without Order of the

Court by filing a notice of dismissal at anytime before the

service of the answer under Rule 17, Section 1 of the

Rules of Court," and accordingly considered the complaint

withdrawn without prejudice.

Petitioners filed a Motion to Dismiss the second

complaint on the ground of forum-shopping. The RTC

denied such because at the time the Motion to Withdraw

was filed, none of the defendants had filed any answer or

any responsive pleading. It was then within respondents

right to cause the dismissal of the complaint without

having to await action of the court on their motion. CA,

affirmed.

Hence, this petition.


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Issue:

Whether or not there was a valid dismissal of the

original complaint. Yes

Ruling:

Section 1, Rule 17 of the 1964 Rules of Civil Procedure

stated: Dismissal by the plaintiff An action may be

dismissed by the plaintiff without order of court by filing a

notice of dismissal at any time before service of the

answer or of a motion for summary judgment. Unless

otherwise stated in the notice, the dismissal is without

prejudice, xxx

The plaintiff was accorded the right to dismiss the

complaint without the necessity of alleging in the notice

of dismissal any ground nor of making any reservation.

Under Section 1, Rule 17 of the old Rules, the dismissal

contemplated therein could be accomplished by the

plaintiff through mere notice of dismissal, and not

through motion subject to approval by the Court.

Dismissal is ipso facto upon notice, and without prejudice

unless otherwise stated in the notice. It is due to these

considerations that the petition should be denied.

Evidently, respondents had the right to dismiss their

complaint by mere notice, since petitioners had not yet

served their answer on respondents. The Motion to

Withdraw Complaint makes clear respondents "desire to

withdraw the complaint without prejudice." That

respondents resorted to a motion to effect what they

could have instead by mere notice may be indicative of a

certain degree of ignorance of procedural rules on the

part of respondents counsel. Yet such "error," should

hardly be of fatal consequence.

The trial court has no discretion or option to deny the

motion, since dismissal by the plaintiff under Section 1,

Rule 17 is guaranteed as a matter of right to the plaintiffs.

Even if the motion cites the most ridiculous of grounds for

dismissal, the trial court has no choice but to consider the

complaint as dismissed, since the plaintiff may opt for

such dismissal as a matter of right, regardless of ground.

The original complaint could be properly considered

as having been dismissed or withdrawn. Accordingly,

when respondents filed their new complaint relating to

the same cause of action, the original complaint was no

longer pending. The certification against forum-shopping

attached to the new complaint correctly asseverated that

the old complaint was withdrawn


REPUBLIC PLANTERS BANK vs MOLINA

G.R. No. L-54287, September 28, 1988

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; ACTION; DISMISSAL

DESPITE LACK OF JURISDICTION OVER THE PERSON OF

THE DEFENDANTS NOT AN ADJUDICATION ON THE

MERITS. A judgment, to be considered res judicata,

must be binding, and must be rendered by a court of

competent jurisdiction. Otherwise, the judgment is a

nullity. The order of dismissal in Civil Case No. 116820

does not have the effect of an adjudication on the merits

of the case because the court that rendered the same did

not have the requisite jurisdiction over the persons of the

defendants therein. This being so, it cannot be the basis of

res judicata and it cannot be a bar to a lawful claim. If at

all, such a dismissal may be considered as one without

prejudice.

2. ID.; ID.; ID.; ID.; ORDER OF DISMISSAL AND DENIAL OF

MOTION FOR RECONSIDERATION, ISSUED WITH GRAVE

ABUSE OF DISCRETION. Trial courts have the duty to

dispose of controversies after trial on the merits

whenever possible. In this case, there are no indications

that petitioner intentionally failed to prosecute the case.

The delay could not be attributed to its fault. Petitioner

pursued the case with diligence but jurisdiction could not

be acquired over defendants-private respondents. The

sheriff had not yet submitted his return of the alias

summons when the action was precipitately dismissed by

the trial court. These are proven circumstances that

negate the action of respondent judge that the dismissal

of Civil Case No. 116028 has the effect of an adjudication

upon the merits and constitutes a bar to the prosecution

of Civil Case No. 129829. The court finds that the two

questioned orders of the trial court are irregular,

improper, and were issued with grave abuse of discretion

amounting to excess of jurisdiction.

3. ID.; CERTIORARI; ADEQUATE REMEDY WHERE ISSUE

INVOLVED ONE OF JURISDICTION. petitioner correctly

states that its appeal to the Court of Appeals in CA-G.R.

No. 67288 pertaining to the questioned orders of the trial

court is not an adequate remedy, because petitioner was

not able to present evidence in the trial court. The sole

issue involved in this case is one of jurisdiction, which is

appropriate for resolution by the instant petition.


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Facts:

Both complaints in Civil Case No. 116028 (Branch

XXXVI, Manila, Judge Alfredo C. Florendo) and in Civil Case

No. 129829 (Branch XX, Manila, Judge Conrado M.

Molina) were filed by petitioner Republic Planters Bank

against private respondent for the collection of a sum of

money based on a promissory note in the amount of

100,000.00.

Judge Alfredo C. Florendo dismissed Civil Case

No. 116028 for failure of the petitioner "to prosecute its

case within a reasonable length of time." A motion for

reconsideration was denied.

When Civil Case No. 129829 was filed by

petitioner, a motion to dismiss was submitted by private

respondents on the ground that the cause of action is

barred by a prior judgment (res judicata) in Civil Case No.

116028. Private respondents opined that said order was

an adjudication upon the merits. Petitioner opposed the

motion to dismiss, claiming that res judicata does not

apply because the summons and complaint in Civil Case

No. 116028 were never served upon private respondents

and, as such, the trial court never acquired jurisdiction

over private respondents and, consequently, over the

case. Petitioner maintains that the order of dismissal in

Civil Case No. 116028 never became final as against

private respondents.

The trial court (Branch XX) dismissed the

complaint in Civil Case No. 129829 on the ground that the

orders issued by Judge Alfredo C. Florendo, dismissing

Civil Case No. 116028, had become final. The trial court

ruled that the dismissal of Civil Case No. 116028 had the

effect of an adjudication upon the merits, that the

dismissal was with prejudice since the order was

unconditional, and that the lack of jurisdiction over

defendants (private respondents) in Civil Case No. 116028

was of no moment. Petitioners motion for

reconsideration was denied.

Petitioner appealed to the Court of Appeals both

questioned orders of respondent court in Civil Case No.

129829. But then, petitioner sought a more speedy

remedy in questioning said orders by filing this petition

for certiorari before this Court.

Issue:

Whether the trial court committed a grave abuse

of discretion when it ordered Civil Case No. 129829

dismissed on the ground of res judicata it appearing that

Civil Case No. 116028 was dismissed for failure of

petitioner to prosecute within a reasonable length of

time, although in the said case, the trial court never

acquired jurisdiction over the persons of private

respondents. Yes!

Held:

In the very order of dismissal of Civil Case No.

116028, the trial court admitted that it did not acquire

jurisdiction over the persons of private respondents and

yet, it held that it was of no moment as to the dismissal of

the case. Supreme Court disagreed. For the court to have

authority to dispose of the case on the merits, it must

acquire jurisdiction over the subject matter and the

parties. If it did not acquire jurisdiction over the private

respondents as parties to Civil Case No. 116028, it cannot

render any binding decision, favorable or adverse to

them, or dismiss the case with prejudice which, in effect,

is an adjudication on the merits. The controverted orders

in Civil Case No. 116028 disregarded the fundamental

principles of remedial law and the meaning and the effect

of jurisdiction. A judgment, to be considered res judicata,

must be binding, and must be rendered by a court of

competent jurisdiction. Otherwise, the judgment is a

nullity.

The order of dismissal in Civil Case No. 116028

does not have the effect of an adjudication on the merits

of the case because the court that rendered the same did

not have the requisite jurisdiction over the persons of the

defendants therein. This being so, it cannot be the basis of

res judicata and it cannot be a bar to a lawful claim. If at

all, such a dismissal may be considered as one without

prejudice.

Trial courts have the duty to dispose of

controversies after trial on the merits whenever possible.

In this case, there are no indications that petitioner

intentionally failed to prosecute the case. The delay could

not be attributed to its fault. Petitioner pursued the case

with diligence, but jurisdiction could not be acquired over

defendants-private respondents. The sheriff had not yet

submitted his return of the alias summons when the

action was precipitately dismissed by the trial court.

These are proven circumstances that negate the action of

respondent judge that the dismissal of Civil Case No.

116028 has the effect of an adjudication upon the merits

and constitutes a bar to the prosecution of Civil Case No.

129829. The court finds that the two questioned orders of

the trial court are irregular, improper, and, were issued

with grave abuse of discretion amounting to excess of

jurisdiction.

Petitioner correctly states that its appeal to the

Court of Appeals in CA-G.R. No. 67288 pertaining to the

questioned orders of the trial court is not an adequate

remedy, because petitioner was not able to present

evidence in the trial court. The sole issue involved in this

case is one of jurisdiction, which is appropriate for

resolution by the instant petition.

The questioned orders issued in Civil Case No.

129829 were reversed and set aside.


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PINGA vs SANTIAGO

G.R. No. 170354, June 30, 2006

Facts:

Petitioner Eduardo Pinga was named as one of

two defendants in a complaint for injunctionfiled with

Regional Trial Court of San Miguel, Zamboanga del Sur, by

respondent Heirs of German Santiago, represented by

Fernando Santiago.

The Complaint dated 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,

petitioner and his co-defendant disputed respondents

ownership of the properties in question, asserting that

petitioners father, Edmundo Pinga, from whom

defendants derived their interest in the properties, had

been in possession thereof since the 1930s. They 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.

The trial of the case had not yet been completed.

Moreover, respondents, as plaintiffs, had failed to present

their evidence. That, the RTC already ordered the

dismissal of the complaint after respondents counsel had

sought the postponement of the hearing scheduled then.

However, the order of dismissal was subsequently

reconsidered by the RTC, which took into account the

assurance of respondents counsel that he would give

priority to that case.

At the hearing of July 27, 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."

Respondents filed a Motion for Reconsideration

of 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 evidence ex-

parte.

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]."

Petitioners filed a Motion for Reconsideration,

but the same was denied. R

Respondents filed an Opposition to Defendants

Urgent Motion for Reconsideration, wherein they argued

that the prevailing jurisprudential rule is that "compulsory

counterclaims cannot be adjudicated independently of

plaintiffs cause of action," and "a conversu, the dismissal

of the complaint carries with it the dismissal of the

compulsory counterclaims."

Issue:

Whether or not the dismissal of the complaint

necessarily carries with it the dismissal of the compulsory

counterclaim.

Held:

Section 3, Rule 17 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 the

defendants to prosecute the counterclaim.

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

plaintiffs action and cannot remain pending for

independent adjudication.

The allegations that form the counterclaim are

rooted in an act or omission of the plaintiff other than

the plaintiffs 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


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precisely causes the violation of the defendants 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.


GOLDLOOP PROPERTIES vs CA

G.R. No. 99431, August 11, 1992

Facts:

Spouses Robles instituted a complaint for

reformation of instrument with damages maintaining that

the contract they entered into with Goldloop Properties,

Inc., on 17 June 1988 was a mortgage and not an absolute

sale. They prayed for a writ of preliminary injunction to

stop petitioner from making any encumbrance or

disposition of the property which is a prime commercial

parcel of land consisting of 618 square meters located at

San Juan, Metro Manila.

On 2 August 1989, while the application for

preliminary injunction was being heard, the parties

manifested the possibility of an amicable settlement;

whereupon, the hearing was deferred to 10 August 1989,

on which date the parties were granted fifteen (15) days

within which to submit a compromise agreement.

However, no such agreement was presented. So, the trial

court dismissed the complaint "for failure to prosecute."

Respondent-spouses received the order of

dismissal. Fourteen (14) days later, they filed their Motion

for Reconsideration wherein they intimated that

negotiations for a compromise were still ongoing.

Unfortunately, respondent-spouses failed to

include a notice of hearing in their motion. the trial court

denied the motion. Respondent-spouses received the

order of denial. They filed a notice of appeal.

Initially, the trial court gave due course to the

appeal and elevated the records to the Court of Appeals.

On 26 March 1990, on motion of petitioner, the trial court

recalled its prior order giving due course to the appeal.

Respondent-spouses filed a motion for reconsideration.

The trial court denied the motion on the ground that the

dismissal had become final and executory.

Subsequently, said respondents sued for

extension of time to file a petition for review with the

Court of Appeals. However, for their failure to allege the

date of receipt of the Order of 25 October 1989 and the

filing of the corresponding motion for reconsideration,

their motion was denied by the appellate court, and on 27

July 1990 entry of judgment was made.

Respondent-spouses instituted a petition for

mandamus in the Court of Appeals, to set aside the order

of dismissal and compel the trial court to set the case

immediately for continuation of hearing on the


Treating the petition for mandamus as one also

for certiorari, the appellate court annulled and set aside

the assailed order of dismissal and directed the lower

court to set the case for continuation of hearing on the


Petitioner moved for reconsideration but was

denied by the CA.

Issue:

whether or not the action for dismissal by the

trial court was proper?

Held:

No. As regards the dismissal of actions motu

propio, Sec. 3, Rule 17, of the Revised Rule of Court

provides

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.

The aforequoted Rule contemplates of three (3)

instances whereby a trial court may dismiss an action on

its own volition for failure to prosecute, namely: (1) where

the plaintiff fails to appear at the time of the trial; (2)

where he fails to prosecute his action for an unreasonable

length of time; and, (3) when he fails to comply with these

rules or any order of the court.

In the disputed order, the trial court obviously

relied on the last two (2) grounds in dismissing the

complaint. Notably, that respondent-spouses, as plaintiffs

in the trial court, failed to submit their compromise

agreement within fifteen (15) days, and that they failed to

take further steps to prosecute their action for an

unreasonable length of time.

Anent the first ground, it should be stressed that

the Order of 10 August 1989 only states that "[t]he parties

are given a period of fifteen (15) days from today within

which to submit a Compromise Agreement." The Order

did not even require the submission of a compromise

agreement; nor did it warn the parties that should they

fail to submit the same within the period therein given


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their case would be dismissed. As We view the Order, it

only meant that should they fail in their negotiations the

proceedings would continue from where they left off. For

sure, there was never any agreement that should the

parties fail to settle their differences in fifteen (15) days

their case would be dismissed. Nor did the parties ever

expect that in the event of their failure to submit the

contemplated compromise agreement their case would

be dismissed. Since there is nothing in the Rules that

imposes the sanction of dismissal for failing to submit a

compromise agreement, then it in obvious that the

dismissal of the complaint on the basis thereof amounts

no less to a gross procedural infirmity assailable by

certiorari. For such submission could at most be directory

and could not result in throwing out the case for failure to

effect a compromise. While a compromise is encouraged,

very strongly in fact, failure to consummate one does not

warrant any procedural sanction, much less an authority

to jettison a civil complaint worth P4,000,000.00.

The rules allows the trial court to suspend the

proceedings up to sixty (60) days, in the instant case, the

trial court only gave the parties fifteen (15) days to come

up with an amicable settlement. Indeed, it should not

have dismissed the action on its own motion because the

parties, specifically respondent-spouses, were anxious to

pursue their case as manifested in their motion for

reconsideration. Their inadvertent omission in setting

their motion for reconsideration for hearing under Rule

15 of the Rules of Court should not deprive them of their

judicial recourse. At the very least, such motion should

have been treated by the trial court as a manifestation

that the negotiation was still ongoing on the settlement of

their case. Even assuming arguendo that a dismissal was

warranted, still it should have been without prejudice

considering its extinctive effect on the spouses' cause of

action.

As to the question, whether there was indeed

failure to prosecute for an unreasonable length of time, it

is well settled that what constitutes "unreasonable length

of time" is properly left to the discretion of the trial.

Full Text: Rule 17 Dismissal of Actions CIVIL PROCEDURE

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G.R. No. L-5189 September 21, 1953

GAUDENCIO SERRANO, plaintiff-appellant, vs. DONATA CABRERA and TEODATO MAKABULOS, defendants-appellees.

Jose P. Fausto for appellant. Besa & Besa for appellees.

PADILLA, J.:

Gaudencio Serrano was the lessee of a parcel of land containing an area of 24 hectares, more or less, situated in the municipality of La Paz, Province of Tarlac. Donata Cabrera was the lessor, having inherited the parcel of land from her deceased father Eusebio Cabrera, the original lessor. Teodato Makabulos is her husband. The term of the lease was six agricultural years beginning 1 May 1941 and the yearly rental agreed upon was 290 cavans of palay. On 13 December 1946, the lessor brought an action (civil case No. 141 of the court of First Instance of Tarlac) to recover rentals due and unpaid for the agricultural years 1943-44, 1944-45, 1945-46 and 1946-47 amounting that case. On 18 December, the complaint was dismissed without costs upon a motion couched in the following terms

MOCION DE SOBRESEIMIENTO

Comparece la demandante por su infrascrito Abogado y al Hon. Juzgado respetuosamente pide:

Que en vista de que el demandado Gaudencio Serrano ha pagadoy satisfecho por completo las reclamaciones de la demandante segun las alegaciones de la demanda, la demandante ya no tiente motivos de accion contra el demandado y por la tanto procede sobreseer la causa.

Por lo tanto, de acuerdo con la Regla 30, Seccion 1, la demandante da por sobreseida esta causa.

Tarlac, Tarlac, Diciembre 16, 1946.

(Fdo.) TOMAS BESA Abogado de la demandante Tarlac, Tarlac

CONFORMES: (Fdo.) DONATA CABRERA DE MACABULOS Demandante (Fdo.) GAUDENCIO SERRANO Demandado

(pp. 50-51, amended Record on appeal.).

Alleging and claiming that what he had paid to her was in excess of what was due her for unpaid rentals the lessee brought an action (civil case No. 213 of the same Court) against the lessor and her husband to annul the procedings in civil case No. 141, to recover such excess payment of rentals. The excess amounts allegedly paid and sought to be recovered are P1,286.40 for

194546; P4946-47; P193 for court fees in connection with the attachment issued in the first case. He also prays that the promissory note for P1,000 executed and delivered by him to her be cancelled or returned to him and that she together with her husband be ordered to pay him P20,000 for damages suffered as a result of the filing of the action against him and attachment of his property.

The defendants moved for the dismissal of the complaint on the ground of res judicata and failure to estate a cause of action.

The Court dismissed the complaint on the ground of res judicata.

The plaintiff has appealed.

It is contended that the dismissal of the complaint in the first action upon the ground that as the defendant had paid and satisfied fully all her claims she no longer had any action against him, before the filing of the answer, was without prejudice, as provided for in section 1, Rule 30. It is also claimed that a thing received by one who has no right to it and which has been delivered due to errors must be returned, as provided for in article 1895 of the Civil Code.

Section 1, Rule 30, cannot be invoked in this case, because a dismissal of the action without order of the Court, which is without prejudice, is one by the plaintiff before the filing of an answer by the defendant. It means that such dismissal would not preclude the plaintiff from bringing another action against the same defendant on the same subject matter. such dismissal under the rule does not bar institution of an action by the defendant which he could have brought in the action against him by means of a counter-claim or cross-claim. The dismissal in the first case was upon motion of the plaintiff consented to by the defendant and the ground was that the latter had paid and satisfied all the claims of the former, as prayed for in her complaint. Neither are the provisions of article 1895 of the Civil Code

1 on solutio indebiti applicable to the case, because what

was received by the plaintiff and delivered by the defendant was the result of that a compromise. Article 1809 of the Civil Code

2

provides parties in interest, by giving, promising, or retaining something avoids the provocation of a suit or terminates one which has already been instituted." Article 1816 of the Civil Code provides that "A compromise shall have with respect to the parties, the same authority as res adjudicata; ...

3

The order appealed from is affirmed, with cost against the appellant.1wphl.nt


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G.R. No. 135803 March 28, 2006

O.B. JOVENIR CONSTRUCTION AND DEVELOPMENT CORPORATION, OSCAR B. JOVENIR and GREGORIO LIONGSON, Petitioners, vs. MACAMIR REALTY AND DEVELOPMENT CORPORATION, SPOUSES ROSAURO and GLORIA MIRANDA and the HONORABLE COURT OF APPEALS, Respondents.

D E C I S I O N

TINGA, J.:

In denying the present petition, the Court affirms the right of a plaintiff to cause the dismissal of the complaint at any time before service of the answer without need of affirmative action on the part of the trial court. It must be qualified though that the incidents for adjudication occurred a few months before the effectivity of the 1997 Rules of Civil Procedure

1 which now

requires that upon the filing of such notice, the court issue an order confirming the dismissal.

2 The precedental value of this

decision is thus qualified to instances occurring prior to the 1997 Rules of Civil Procedure.

On 3 February 1997,3 a complaint was filed before the Regional

Trial Court (RTC) of Makati City, with private respondents Macamir Realty and Development Corp. (Macamir Realty) and spouses Rosauro and Gloria Miranda as plaintiffs, and petitioners O.B. Jovenir Construction and Development Corp. (Jovenir Construction), Oscar B. Jovenir, and Gregorio Liongson being among the defendants. The complaint, docketed as Civil Case No. 97-256, sought the annulment of certain agreements between private respondents and petitioners, as well as damages.

4 It was alleged that Jovenir Construction was

contracted to complete the construction of private respondents condominium project. Private respondents subsequently sought the termination of their agreements with petitioners after it was discovered that Jovenir Construction had misrepresented itself as a legitimate contractor.

5 Respondents likewise prayed for the

issuance of a writ of

preliminary injunction. A hearing on the prayer appears to have been conducted on 6 February 1997.

6

It was also alleged in the complaint that Gloria Miranda was the principal stockholder and President of Macamir Realty while her husband Rosauro was the owner of the real properties on which the condominium project was being constructed.

7

Almost immediately, two of the impleaded defendants filed their respective motions to dismiss. Defendant Salud Madeja filed her motion on 6 February 1997, while Cesar Mangrobang, Sr. and Cesar Mangrobang, Jr. followed suit with their motion dated 13 February 1997. Madeja pertinently alleged that while the spouses Miranda had initiated the complaint on behalf of Macamir Realty, the real party-in-interest, they failed to attach any Board Resolution authorizing them to file suit on behalf of the corporation. Oddly enough, Madeja was a member of the Board of Directors of Macamir Realty, and she averred as a fact that said Board of Directors had not authorized the spouses Miranda to initiate the complaint against Jovenir Realty.

8

On 13 February 1997, or 10 days after the filing of the complaint, private respondents filed a Motion to Withdraw Complaint,

alleging that during the initial hearing on the prayer for preliminary injunction on 6 February 1997, counsel for plaintiffs "discovered a supposed technical defect in the complaint x x x that x x x may be a ground for the dismissal of this case."

9 Thus,

private respondents prayed that the plaintiffs be allowed to withdraw the complaint without prejudice.

Petitioners filed an opposition to the Motion to Withdraw Complaint on 18 February 1997, wherein they adopted Madejas arguments as to the lack of authority on the part of the spouses Miranda to sue on behalf of Macamir Realty. However, just one day earlier, or on 17 February 1997, private respondents filed another complaint against the same defendants save for Madeja, and seeking the same reliefs as the first complaint. This time, a Board Resolution dated 10 February 1997 authorizing the spouses Miranda to file the Complaint on behalf of Macamir Realty was attached to the complaint. This second complaint was also filed with the Makati RTC and docketed as Civil Case No. 97-379. The Verification and Certification [of] Non-Forum Shopping in the second complaint was accomplished by Rosauro Miranda, who averred as follows:

3. That other than Civil Case No. 97-256 filed on February 3, 1997 before the Regional Trial Court of Makati City which was withdrawn on February 13, 1997, I further certify that we have not commenced any other action or proceedings involving the same issue in the Supreme Court, or Court of Appeals or any other tribunal or agency; x x x

10

On 24 February 1997, 11 days after the filing of the Motion to Withdraw Complaint and seven days after the filing of the second Complaint, the Makati RTC, Branch 149, acting in Civil Case No. 97-256, granted the Motion to Withdraw Complaint. The RTC noted in its Order

11 that "an action may be dismissed by

the plaintiffs even without Order of the Court by filing a notice of dismissal at anytime before the service of the answer under Rule 17, Section 1 of the Rules of Court," and accordingly considered the complaint withdrawn without prejudice.

12

The battle then shifted to Civil Case No. 97-379, which had been raffled to Branch 136 of the Makati RTC. On 4 March 1997, petitioners filed a Motion to Dismiss the second complaint on the ground of forum-shopping. They pointed out that at the time of the filing of the second complaint on 17 February 1997, the first complaint was still pending. The Makati RTC denied the Motion to Dismiss in an Order

13 dated 23 May 1997, observing

that at the time the Motion to Withdraw Complaint was filed, none of the defendants had filed any answer or any responsive pleading. Thus, it was then within respondents right to cause the dismissal of the complaint without having to await action of the court on their motion.

14 This Order was affirmed by the

Court of Appeals

Special Sixth Division in its Decision15

dated 23 June 1998 after petitioners had assailed the RTCs order via a special civil action for certiorari filed with the appellate court.

16 Hence, the present

petition.

Petitioners now argue that under Section 1 of Rule 17 of the Rules of Civil Procedure in effect at the time of these antecedents, the plaintiff may obtain the dismissal of his own complaint before a responsive pleading has been filed through the filing of a notice of dismissal. However, respondents in this case did not file a notice of dismissal, but instead lodged a Motion to Withdraw Complaint, a motion which requires affirmative action from the court before the complaint may be


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deemed dismissed. Since the Makati RTC had granted the motion only on 24 February 1997, the first complaint had not yet been withdrawn as of 17 February 1997, when the second complaint was filed. It is thus posited that the Certification of Non-Forum Shopping attached to the second complaint was false, in that it averred that the first complaint "was withdrawn on February 13, 1997" when in fact the motion to withdraw complaint was granted only 11 days after. In sum, respondents had violated the procedural rules against forum-shopping, which at that time were incorporated in Administrative Circular No. 04-94 of the Supreme Court.

We find no error on the part of the lower courts since the denial of the motion to dismiss is wholly in accord with the Rules of Civil Procedure.

Section 1, Rule 17 of the 1964 Rules of Civil Procedure stated:

Dismissal by the plaintiff An action may be dismissed by the plaintiff without order of court by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a competent court an action based on or including the same claim. A class suit shall not be dismissed or compromised without the approval of the court.

17

Indubitably, the provision ordained the dismissal of the complaint by the plaintiff as a matter of right at any time before service of the answer.

18 The plaintiff was accorded the right to

dismiss the complaint without the necessity of alleging in the notice of dismissal any ground nor of making any reservation.

19

In Go v. Cruz,20

the Court, through Chief Justice Narvasa, has recognized that "where the dismissal of an action rests exclusively on the will of a plaintiff or claimant, to prevent which the defending party and even the court itself is powerless, requiring in fact no action whatever on the part of the court except the acceptance and recording of the causative document."

21 The facts in that case are well worth considering.

Therein, the notice of dismissal was filed by the plaintiff on 12 November 1981. Respondent filed his answer three days earlier, or on 9 November, but plaintiff was served a copy of the answer by registered mail only on 16 November. Notwithstanding the fact that the answer was filed with the trial court three days prior to the filing of the notice of dismissal, the Court still affirmed the dismissal sought by the plaintiff. The Court declared that the right of the plaintiff to cause the dismissal of the complaint by mere notice is lost not by the filing of the answer with the trial court, but upon the actual service to the plaintiff of the answer.

22

The Court further ruled that "[plaintiffs] notice ipso facto brought about the dismissal of the action then pending in the Manila Court, without need of any order or other action by the Presiding Judge. The dismissal was effected without regard to whatever reasons or motives [plaintiff] might have had for bringing it about, and was, as the same Section 1, Rule 17 points out, without prejudice, the contrary not being otherwise stated in the notice and it being the first time the action was being so dismissed."

23

It is quite clear that under Section 1, Rule 17 of the old Rules, the dismissal contemplated therein could be accomplished by the plaintiff through mere notice of dismissal, and not through

motion subject to approval by the Court. Dismissal is ipso facto upon notice, and without prejudice unless otherwise stated in the notice. It is due to these considerations that the petition should be denied.

Evidently, respondents had the right to dismiss their complaint by mere notice on 13 February 1997, since as of even date, petitioners had not yet served their answer on respondents. The Motion to Withdraw Complaint makes clear respondents "desire to withdraw the complaint without prejudice." That respondents resorted to a motion to effect what they could have instead by mere notice may be indicative of a certain degree of ignorance of procedural rules on the part of respondents counsel. Yet such "error," if it could be called as such, should hardly be of fatal consequence. Petitioners posit that the "remedy" of filing a notice of dismissal is not exclusive, respondents having the "option" of securing the courts approval to the dismissal.

24 On the contrary, the trial court has no

discretion or option to deny the motion, since dismissal by the plaintiff under Section 1, Rule 17 is guaranteed as a matter of right to the plaintiffs. Even if the motion cites the most ridiculous of grounds for dismissal, the trial court has no choice but to consider the complaint as dismissed, since the plaintiff may opt for such dismissal as a matter of right, regardless of ground.

We are in accord with the Court of Appeals when it pronounced:

While [the Motion to Withdraw Complaint] is styled as a "motion" and contains a "prayer", these are innocuous errors and superfluities that do not detract from its being a notice of dismissal made under said Section 1 of Rule 17 and which ipso facto dismissed the case. It is a hornbook rule that it is not the caption of a pleading but the allegations thereat that determines its nature.[

25] The court order of dismissal is a mere surplusage

under the circumstances and emphasized by the court a quo itself when it granted the motion "[x x x] considering that an action may be dismissed by the plaintiffs even without Order of the Court[x x x]"

26

Thus, the complaint could be properly considered as having been dismissed or withdrawn as of 13 February 1997. Accordingly, when respondents filed their new complaint relating to the same cause of action on 17 February 1997, the old complaint was no longer pending. The certification against forum-shopping attached to the new complaint correctly asseverated that the old complaint "was withdrawn on February 13, 1997."

27

Petitioners are unable to propose any convincing legal argument or any jurisprudence that would sway the Court to their point of view. At the same time, our present ruling must be distinguished from Ortigas & Company Limited Partnership v. Velasco,

28

wherein it was advanced that "theoretically every final disposition of an action does not attain finality until after fifteen (15) days therefrom, x x x the plaintiff may move to withdraw and set aside his notice of dismissal and revive his action, before that period lapses."

29 That statement was made in the context of

ruling that a plaintiff may move for the revival of the complaint dismissed on his instance under Section 1 of Rule 17 only within 15 days upon notice; otherwise the remedy of the plaintiff would be to file a new complaint. This observation in Ortigas does not detract from the fact that under Section 1, Rule 17 of the previous Rules, the complaint is deemed ipso facto dismissed on the day of the filing of the notice. This again is because dismissal at the instance of the plaintiff under Section 1,


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Rule 17 is a matter of right, and under the 1964 Rules of Civil Procedure, effective without need of any affirmative action on the part of the trial court.

As noted at the onset, the 1997 Rules of Civil Procedure now requires that upon the filing of such notice, the court issue an order confirming the dismissal.

30 The new requirement is

intended to qualify the right of a party to dismiss the action before the adverse party files an answer or asks for summary judgment.

31 Still, there is no cause to apply the 1997 Rules

retroactively to this case. A plaintiffs right to cause the dismissal of his complaint under the old rules was unqualified. Procedural rules may not be given retroactive effect if vested rights would be disturbed,

32 or if their

application would not be feasible or would work injustice.33

Since

respondents possessed an unqualified right to cause the dismissal of their complaint without need of confirmation by the trial court, as enunciated in the 1964 Rules, they did not err in asserting that their first complaint was withdrawn on the day of the filing of their motion to withdraw, and the lower courts were correct in agreeing with respondents on this point.

WHEREFORE, the Petition is DENIED. Costs against petitioners.

SO ORDERED.


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G.R. No. L-54287 September 28, 1988

REPUBLIC PLANTERS BANK petitioner, vs. HON. CONRADO M. MOLINA, as Presiding Judge, Court of First Instance of Manila, Branch XX, SARMIENTO EXPORT CORPORATION, SARMIENTO SECURITIES CORPORATION and FELICIANO SARMIENTO, JR., respondents.

Paco, Gutierrez, Dorado, Asia & Associates for petitioner.

Benjamin M. Reyes for respondents.

GANCAYCO, J.:

The principal issue raised in this case is whether the trial court committed a grave abuse of discretion when it ordered Civil Case No. 129829 dismissed on the ground of resjudicata it appearing that Civil Case No. 116028 was dismissed on May 21, 1979, for failure of petitioner to prosecute within a reasonable length of time, although in the said case, the trial court never acquired jurisdiction over the persons of private respondents.

It is not disputed that both complaints in Civil Case No. 116028 (Branch XXXVI, Manila, Judge Alfredo C. Florendo) and in Civil Case No. 129829 (Branch XX, Manila, Judge Conrado M. Molina) were filed by petitioner Republic Planters Bank against private respondent, for the collection of a sum of money based on a promissory note dated January 26, 1970, in the amount of P100,000.00.

On May 21, 1979, Judge Alfredo C. Florendo dismissed Civil Case No. 116028 for failure of the petitioner "to prosecute its case within a reasonable length of time.

1 A motion for

reconsideration of that order was denied on January 15, 1979. 2

When Civil Case No. 129829 was filed by petitioner, a motion to dismiss was submitted by private respondents on the ground that the cause of action is barred by a prior judgment (res judicata) in Civil Case No. 116028. Private respondents opined that said order was an adjudication upon the merits. Petitioner opposed the motion to dismiss, claiming that res judicata does not apply because the summons and complaint in Civil Case No. 116028 were never served upon private respondents and, as such, the trial court never acquired jurisdiction over private respondents and, consequently, over the case. Petitioner maintains that the order of dismissal in Civil Case No. 11 6028 never became final as against private respondents.

The trial court (Branch XX), in its order dated May 8, 1980, dismissed the complaint in Civil Case No. 129829 on the ground that the orders dated May 21, 1979 and June 15, 1979 issued by Judge Alfredo C. Florendo, dismissing Civil Case No. 116028, had become final. The trial court ruled that the dismissal of Civil Case No. 116028 had the effect of an adjudication upon the merits, that the dismissal was with prejudice since the order was unconditional, and that the lack of jurisdiction over defendants (private respondents) in Civil Case No. 116028 was of no moment.

3

In a motion for reconsideration of the order of May 8, 1980, petitioner reiterated its allegation that in Civil Case No. 116028, the court did not acquire jurisdiction over private respondents

and that at the time the court ordered its dismissal, a motion for an alias writ of summons was pending resolution inasmuch as the sheriff had not acted on the same.

4 The motion for

reconsideration was denied by the trial court on June 26, 1980 in Civil Case No. 129829.

5

Petitioner appealed to the Court of Appeals both questioned orders of respondent court in Civil Case No. 129829.

6 But then,

petitioner sought a more speedy remedy in questioning said orders by filing this petition for certiorari before this Court.

Under the foregoing undisputed facts, the Court finds this petition to be impressed with merit.

The questioned orders of the trial court in Civil Case No. 129829 supporting private respondent's motion to dismiss on the ground of res judicata are without cogent basis. We sustain petitioner's claim that respondent trial judge acted without or in excess of jurisdiction when he issued said orders because he thereby traversed the constitutional precept that "no person shall be deprived of property without due process of law" and that jurisdiction is vitally essential for any order or adjudication to be binding. Justice cannot be sacrificed for technicality. Originally, the action for collection of the loan, evidenced by a promissory note, was only for P100,000.00 but petitioner claims that as of March 5, 1981, the obligation was already P429,219.74. It is a cardinal rule that no one must be allowed to enrich himself at the expense of another without just cause.

In the very order of dismissal of Civil Case No. 116028, the trial court admitted that it did not acquire jurisdiction over the persons of private respondents and yet, it held that it was of no moment as to the dismissal of the case. We disagree. For the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject matter and the parties. If it did not acquire jurisdiction over the private respondents as parties to Civil Case No. 116028, it cannot render any binding decision, favorable or adverse to them, or dismiss the case with prejudice which, in effect, is an adjudication on the merits.

7 The controverted orders in Civil Case No. 116028

disregarded the fundamental principles of remedial law and the meaning and the effect of jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered by a court of competent jurisdiction. Otherwise, the judgment is a nullity.

The order of dismissal in Civil Case No. 116028 does not have the effect of an adjudication on the merits of the case because the court that rendered the same did not have the requisite jurisdiction over the persons of the defendants therein.

This being so, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal may be considered as one without prejudice.

8

Trial courts have the duty to dispose of controversies after trial on the merits whenever possible. In this case, there are no indications that petitioner intentionally failed to prosecute the case. The delay could not be attributed to its fault. Petitioner pursued the case with diligence, but jurisdiction could not be acquired over defendants-private respondents. The sheriff had not yet submitted his return of the alias summons when the action was precipitately dismissed by the trial court. These are proven circumstances that negate the action of respondent judge that the dismissal of Civil Case No. 116028 has the effect of an adjudication upon the merits and constitutes a bar to the


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prosecution of Civil Case No. 129829. The court finds that the two questioned orders of the trial court are irregular, improper, and, were issued with grave abuse of discretion amounting to excess of jurisdiction.

Petitioner correctly states that its appeal to the Court of Appeals in CA-G.R. No. 67288 pertaining to the questioned orders of the trial court is not an adequate remedy, because petitioner was not able to present evidence in the trial court. The sole issue involved in this case is one of jurisdiction, which is appropriate for resolution by the instant petition.

WHEREFORE, and by reason of the foregoing, the questioned orders dated May 8, 1980 and June 26, 1980 issued in Civil Case No. 129829 are hereby REVERSED and SET ASIDE. The records of the case are ordered returned to the trial court for trial and disposition on the merits. No costs. This decision is immediately executory.

SO ORDERED.


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G.R. No. 170354 June 30, 2006

EDGARDO PINGA, Petitioner, vs. THE HEIRS OF GERMAN, SANTIAGO represented by FERNANDO SANTIAGO, Respondents.

D E C I S I O N

TINGA, J.:

The constitutional faculty of the Court to promulgate rules of practice and procedure

1 necessarily 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."

2 The 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.

3

In 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 injunction

4 filed with Branch 29 of the Regional Trial Court (RTC)

5

of San Miguel, Zamboanga del Sur, by respondent Heirs of German Santiago, represented by Fernando Santiago. The Complaint

6 dated 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,7 petitioner and his

co-defendant disputed respondents ownership of the properties in question, asserting that petitioners father, Edmundo Pinga, from whom defendants derived their interest in the properties, had been in possession thereof since the 1930s.

8

They 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 totaling P2,100,000 plus costs of suit.

9

By 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.

10 However, 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.

11

At 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."

12

Respondents filed a Motion for Reconsideration13

of 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 evidence ex-parte. Respondents claimed that the order of the RTC allowing petitioner to present evidence ex-parte was not in accord with established jurisprudence. They cited cases, particularly City of Manila v. Ruymann

14 and

Domingo v. Santos,15

which 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]."

16 Petitioner filed a Motion for Reconsideration,

but the same was denied by the RTC in an Order dated 10 October 2005.

17 Notably, respondents filed an Opposition to

Defendants Urgent Motion for Reconsideration, wherein they argued that the prevailing jurisprudential rule

18 is that

"compulsory counterclaims cannot be adjudicated independently of plaintiffs cause of action," and "a conversu, the dismissal of the complaint carries with it the dismissal of the compulsory counterclaims."

19

The 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 [plaintiffs] Motion for Reconsideration [seeking the dismissal of the counterclaim]."

20

This 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 Plaintiffs Motion for Reconsideration is definitely not one among the established grounds for dismissal [of the counterclaim]."

21 Still, the dismissal of the counterclaim by the

RTC betrays at very least a tacit recognition of respondents


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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 plaintiffs 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 plaintiffs 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 courts 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."

22 Jurisprudence 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 support City of Manila v.

Ruymann,23

Domingo v. Santos,24

Belleza v. Huntington,25

and Froilan v. Pan Oriental Shipping Co.,

26 all 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.

27

The 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.

28 Yet, 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 plaintiffs fault. BA Finance Corp. v. Co

29

particularly 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 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."

30 The

vaunted 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 partys claim."

31

This view expressed in Morans 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 in Lim Tanhu v. Ramolete,

32 and Dalman v. City Court of Dipolog City.

33 The 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, plaintiffs 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."

34 The broad nature of

that statement gave rise to the notion that the mandatory

dismissal of the counterclaim upon dismissal of the complaint applied regardless of the cause of the complaints dismissal.

35

Notably, 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 upon motu proprio action 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,36

decided in 1972, ostensibly supplied the gap on the effect on the counterclaim of complaints dismissed under Section 3. The defendants therein


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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."

37 The 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 plaintiffs action and cannot remain pending for independent adjudication.

38

There 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 in Sta. 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.

39 Nonetheless, 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 Appeals

40 and

International Container Terminal Services v. Court of Appeals.41

In Metals, 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.

42 It 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.

43 Also, 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.

44

In International Container, the defendant filed a motion to dismiss which was granted by the trial court. The defendants

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."

45 Then 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."

46

Then in 1993, a divided Court ruled in BA Finance that 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.

47 The 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."

48 Express reliance

was made on Metals, International Container, and even Dalman in support of the majoritys thesis. BA Finance likewise 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.

49

Justice 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 defendants 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 plaintiffs 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 in Metals cited 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


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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.

50

Justice Regalado also adverted to Sta. Maria and 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 that Dalman and 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.

51

The partial dissent of Justice Regalado in BA Finance proved 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 after BA Finance was 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 courts 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 Ferias 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.

52

It 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 Regalados 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."

53 At 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 the plaintiff moves 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 plaintiffs 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 the defendant or, in the latter instance, also by the court motu proprio.

x x x x

2. The second substantial amendment to [Section 3] is with respect to the disposition of the defendants counterclaim in the event the plaintiffs 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 x

3. 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 in BA Finance Corporation vs. 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 authors separate opinion in that case, even before they were clarified by the present amendments x x x.

54

Similarly, 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 in BA Finance.]"

55 Retired

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


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amendments, the rulings in Metals Engineer

september 23, 2014 - rule 16 (outline, case digest & full text)

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