See - G.R. No. 189532
"x x x.
Petitioners here raise the solitary issue of the propriety of the dismissal of their counterclaim on the basis of the reasoning of the lower court that the counterclaim derives its jurisdictional support from the complaint which has already been dismissed. Petitioners maintain that the court a quo erred in arriving at the legal conclusion that the counterclaim can no longer stand for independent adjudication after the main case was already dismissed with finality. In order to resolve this issue, the Court need only to look into the pleadings, depositions, admissions, and affidavits submitted by the respective parties without going into the truth or falsity of such documents. Consequently, the petitioners’ remedy for assailing the correctness of the dismissal of their counterclaims, involving as it does a pure question of law, indeed lies with this Court. Now to the issue of the propriety of the dismissal of the counterclaim.
The dismissal of the complaint resulted from respondents’ failure to append to the complaint a copy of the board resolution authorizing Desmond to sign the certificate of non-forum shopping on behalf of SBME. The subsequent dismissal of the counterclaim, in turn, erroneously proceeded from the ratio that since the main action has already been dismissed with finality by the appellate court, the lower court has lost its jurisdiction to grant any relief under the counterclaim.
In the significant case of Pinga v. Heirs of German Santiago,23 this Court speaking through Justice Dante Tinga, resolved the nagging question as to whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim. Putting to rest the remaining confusion occasioned by Metals Engineering Resources Corp. v. Court of Appeals24 and BA Finance Corporation v. Co,25 the Court articulated that, in light of the effectivity of the 1997 Rules of Civil Procedure, the correct and prevailing doctrine is as follows:
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule17, 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 of BA Finance as 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 that BA Finance and all previous rulings of the Court that are inconsistent with this present holding are now abandoned.
x x x x
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.26 Reviewing the vacated position, in Metals Engineering Resources Corp., severance of causes of action was not be permitted in order to prevent circuity of suits and to avert the possibility of inconsistent rulings based on the same set of facts, viz:
For all intents and purposes, such proposition runs counter to the nature of a compulsory counterclaim in that it cannot remain pending for independent adjudication by the court. This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and derives its jurisdictional support therefrom, inasmuch as it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the complaint. It follows that if the court does not have jurisdiction to entertain the main action of the case and dismisses the same, then the compulsory counterclaim, being ancillary to the principal controversy, must likewise be dismissed since no jurisdiction remained for any grant of relief under the counterclaim.
The aforementioned doctrine is in consonance with the primary objective of a counterclaim which is to avoid and prevent circuity of action by allowing the entire controversy between the parties to be litigated and finally determined in one action, wherever this can be done with entire justice to all parties before the court. The philosophy of the rule is to discourage multiplicity of suits.1âwphi1 It will be observed that the order of the trial court allowing herein private respondent to proceed with the presentation of his evidence in support of the latter's counterclaim is repugnant to the very purpose and intent of the rule on counterclaims.27
In BA Finance Corporation, we likewise refused to entertain the compulsory counterclaim after the trial court lost its jurisdiction in the main case, thus:
The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the court." This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom.
Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main action of the case, as when it dismisses the same, then the compulsory counterclaim being ancillary to the principal controversy, must likewise be similarly dismissed since no jurisdiction remains for the grant of any relief under the counterclaim.28
As the rule now stands, the nature of the counterclaim notwithstanding, the dismissal of the complaint does not ipso jure result in the dismissal of the counterclaim, and the latter may remain for independent adjudication of the court, provided that such counterclaim, states a sufficient cause of action and does not labor under any infirmity that may warrant its outright dismissal. Stated differently, the jurisdiction of the court over the counterclaim that appears to be valid on its face, including the grant of any relief thereunder, is not abated by the dismissal of the main action. The court’s authority to proceed with the disposition of the counterclaim independent of the main action is premised on the fact that the counterclaim, on its own, raises a novel question which may be aptly adjudicated by the court based on its own merits and evidentiary support.
In Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporartion,29 a case on all fours with the present one, we expounded our ruling in Pinga and pointed out that the dismissal of the counterclaim due to the 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, thus: Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the counterclaim, then the counterclaim cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently of and survive the dismissal of the complaint. Now, having been directly confronted with the problem of whether the compulsory counterclaim by reason of the unfounded suit may prosper even if the main complaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioner's counterclaim against respondent is for damages and attorney's fees arising from the unfounded suit. While respondent's Complaint against petitioner is already dismissed, petitioner may have very well already incurred damages and litigation expenses such as attorney's fees since it was forced to engage legal representation in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the improper service of summons upon it. Hence, the cause of action of petitioner's counterclaim is not eliminated by the mere dismissal of respondent's complaint.30 (Emphasis theirs).
Once more, we allow the counterclaim of the petitioners to proceed independently of the complaint of the respondents.
x x x."
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