FIRST DIVISION President, respectively, of the
two corporations. PNB thereby
[G.R. No. 207376. August 6,
2014.]
AIDA
PADILLA, petitioner,  Pesos
vs. GLOBE ASIATIQUE
REALTY HOLDINGS
CORPORATION,
FILMAL REALTY
CORPORATION,
DELFIN S. LEE and
DEXTER L.
LEE,  respondents.
DECISION
VILLARAMA, JR., J  :
p
Assailed in this petition for
review under Rule 45 are the
Orders 1 dated November 12,
2012 denying the motion to set
the counterclaim for pre-trial and
May 8, 2013 denying petitioner's
motion for reconsideration,
issued by the Regional Trial Court
(RTC) of Pasig City, Branch 155 in
Civil Case No. 73132.
Factual Antecedents
From the years 2005 to
2008, Philippine National Bank
(PNB) entered into several
Contracts to Sell (CTS) Facility
Agreements 2 with respondents
Globe Asiatique Realty Holdings
Corporation (Globe Asiatique) and
Filmal Realty Corporation (Filmal)
represented by Delfin S. Lee and
Dexter L. Lee, President and Vice-
agreed to make available to
Globe Asiatique and Filmal CTS
Facility in the amount not
exceeding Two Hundred Million
(P200,000,000.00) to
finance the purchase of certain
Accounts Receivables or the in-
house installment receivables of
respondents arising from the sale
of subdivision houses in their real
estate/housing projects as
evidenced by contracts to sell.
These availments were later
increased to a total amount of
One Billion Two Hundred Million
Pesos (P1,200,000,000.00). 3
Pursuant to and as a
condition for the CTS Facility
availments, respondents
executed in favor of PNB several
Deeds of Assignment 4 covering
accounts receivables in the
aggregate amount of One Billion
One Hundred Ninety-Five Million
Nine Hundred Twenty-Six
Thousand Three Hundred Ninety
Pesos and Seventy-two centavos
(P1,195,926,390.72). In the said
instruments, respondents
acknowledged the total amount
of One Billion Three Hundred
Ninety Five Million Six Hundred
Sixty-Five Thousand Five Hundred
Sixty-Four Pesos and Sixty-nine
centavos (P1,395,665,564.69)
released to them by PNB in
consideration of the aforesaid
accounts receivables. 5
Sometime in the first quarter
of 2010, respondents defaulted in
the payment of their outstanding CTS Facility Agreements and the
balance and delivery to PNB of release of various sums to
transfer certificates of title respondents in the total amount
corresponding to the assigned of P974,377,159.10. PNB accused
accounts receivables, for which respondents of falsely
PNB declared them in default representing that they have valid
under the CTS Facility and subsisting contracts to sell,
Agreements. Subsequently, which evidently showed they had
respondents made partial no intention to pay their loan
payments and made proposals for obligations. The Verification and
paying in full its obligation to PNB Certification of Non-Forum
as shown in the exchange of Shopping attached to the
correspondence between complaint was signed by PNB's
respondents and PNB.  SDTIaE Senior Vice-president of the
Remedial Management Group,
In a letter dated August 5,
Aida Padilla, who likewise
2010, 6 PNB made a formal and
executed an "Affidavit in Support
final demand upon respondents to
of the Application for the
pay/settle the total amount of
Issuance of the Writ of
P974,377,159.10 representing
Preliminary Attachment".
their outstanding obligation. In
the course of credit monitoring Proceedings in the Pasay
and verification, PNB claimed it City RTC (Civil Case No.
discovered 231 out of 240 R-PSY-10-04228-CV)
Contracts to Sell to have either On August 25, 2010, the
inexistent addresses of buyers or Pasay City RTC issued an
the names of the buyers are non- Order 7 granting PNB's
existent or both. application for issuance of
Thereafter, PNB instituted preliminary attachment after
Civil Case No. R-PSY-10-04228- finding that defendants Globe
CV (Philippine National Bank v. Asiatique and Filmal "through the
Globe Asiatique Realty Holdings active participation or
Corporation, Filmal Realty connivance/conspiracy of
Corporation, Delfin S. Lee and defendants Delfin and Dexter Lee
Dexter L. Lee) for recovery of from the revealing evidence
sum of money and damages with presented by plaintiff are guilty of
prayer for writ of preliminary fraud in contracting their
attachment before the RTC of outstanding loan applications to
Pasay City. plaintiff Philippine National Bank
(PNB)". 8 The writ of preliminary
In their complaint, PNB
attachment was accordingly
alleged in detail the fraudulent
issued on August 27, 2010 after
acts and misrepresentations
PNB complied with the posting of
committed by respondents in
attachment bond as ordered by
obtaining PNB's conformity to the
the court. 9
 Defendants Delfin Lee and
Dexter Lee filed their Answer
with Counterclaim with motion to
dismiss, arguing that PNB has no
cause of action against them as
there is nothing in the CTS
denied defendants' motion to
dismiss, motions to discharge
preliminary attachment and to
expunge or suspend proceedings,
as well as PNB's motion to
expunge.  DIEAHc

Facility Agreements that suggest

In succession, the parties in
they are personally liable or serve
Civil Case No. R-PSY-10-04228-CV
as guarantors for Globe Asiatique
filed the following motions:
and Filmal, and that they were
just sued as signatories of the 1) Defendants' Motion
CTS Facility Agreements. They for
likewise filed a motion to Reconsideration
discharge preliminary of the Order
attachment. 10  aIcSED
dated April 29,
2011 filed on May
Defendants Globe Asiatique
27, 2011;
and Filmal also filed their Answer
with Counterclaim denying PNB's 2) Plaintiff's Motion to
allegations of fraud and Set Case for Pre-
misrepresentation particularly trial Conference
after PNB had accepted payments filed on June 8,
from the corporations. In their 2011;
motion to discharge preliminary 3) Plaintiff's Motion
attachment, Globe Asiatique and for Summary
Filmal asserted that the Judgment filed
allegations of fraud in the on June 28, 2011;
complaint are without basis and
no proof was presented by 4) Defendants' Motion
plaintiff on the existence of for Leave to
preconceived fraud and lack of Admit Attached
intention to pay their obligations, Amended Answer
citing their timely payments made with Compulsory
to PNB. They further assailed the Counterclaim
affidavit executed by Aida Padilla filed on July 12,
who they claimed has no personal 2011;
knowledge of the subject 5) Defendants'
transactions and there being no Omnibus Motion
allegation of threat or possibility (a) to discharge
that defendant corporations will the writ of
dispose of their properties in attachment on
fraud of their creditors. 11 the ground of
In its Order 12 dated April newly discovered
29, 2011, the Pasay City RTC evidence; (b) set
preliminary
 hearing on 8) Plaintiff's Motion to
affirmative Expunge
defenses pleaded defendants'
in the amended Reply (on
answer; (c) issue defendants'
preliminary motion to set
attachment hearing) filed on
against plaintiff April 30, 2012.
on account of
Meanwhile, and before the
fraud in incurring
Pasay City RTC could act upon
the obligation as
the foregoing motions,
alleged in the
defendants Globe Asiatique,
amended answer;
Filmal, Delfin S. Lee and Dexter L.
and (d) render
Lee filed on August 10, 2011 a
partial summary
complaint 13 for Damages in the
judgment on the
RTC of Pasig City, Branch 155
compulsory
docketed as Civil Case No. 73132.
counterclaim,
filed on July 26, On May 18, 2012, the Pasay
2011; DECcAS
City RTC issued an
Order 14 resolving the pending
6) Defendants' Motion
motions, as follows:
for
Reconsideration WHEREFORE, the
of the Order motion for
dated July 29, reconsideration of the
Order dated 27 May
2011, with
2011 is denied insofar
Motion to
as the prayer to
Continue with the reconsider denial of the
Proceedings motion to dismiss.
Involving However, the prayer to
Defendants' expunge the
Omnibus Motion, Manifestation filed on 26
filed on August November 2010 is
31, 2011; granted thus, the
Manifestation is
7) Defendants' Motion expunged.
to Set for Hearing
their earlier The motion for
leave and to admit
motion to
amended answer is
discharge the
denied. The motion for
writ of reconsideration of the
attachment filed Order dated 29 July
on January 24, 2011 is likewise denied.
2012; and The other prayers in the
 omnibus motion to set and devastating unfounded civil
preliminary hearing of action" filed by Aida Padilla
affirmative defenses  in (petitioner) which wrought havoc
the amended answer, to their businesses and lives. As
issuance of preliminary
to the CTS Facility Agreements
attachment based
with PNB, respondents alleged
thereon and for partial
that these were already novated
summary judgment on
the compulsory by the parties who agreed upon a
counterclaims in the term loan starting May 31, 2010
amended answer are and to expire on April 30, 2012.
denied. Plaintiff's But despite her knowledge of
motion to expunge such novation and that the
defendants' reply is obligation was not yet due and
likewise denied.  CAaDTH demandable, petitioner with
Hearing on malice and evident bad faith still
plaintiff's motion for executed a "perjured" Affidavit in
summary judgment is support of the application for writ
set on 19 June 2012 at of preliminary attachment before
8:30 a.m., while hearing the Pasay City RTC.  cAaTED

on defendants' motion
to discharge the writ of
Respondents likewise
preliminary attachment sought to hold Judge Gutierrez
is set on 26 June 2012 personally liable for issuing the
at 8:30 a.m. writ of preliminary attachment in
favor of PNB notwithstanding that
Action on
the obligation subject of PNB's
plaintiff's motion to set
the case for pre-trial is complaint was sufficiently
deferred until after secured by the value of real
resolution of the motion properties sold to it by virtue of
for summary judgment. the CTS Facility Agreements and
deeds of assignment of accounts
SO ORDERED. 15
receivables. They further
Pasig City RTC Case contended that Judge Gutierrez
(Civil Case No. 73132) blindly approved the attachment
In their Complaint against bond offered by PNB's sister
Judge Pedro De Leon Gutierrez company, PNB General Insurers
and Aida Padilla (both sued in Company, Inc. despite the fact
their personal capacity), that from its submitted
respondents claimed that Globe documents, said insurer's
Asiatique and Filmal are well- authorized capital stock is only
known and successful real estate P400 million while its paid-up
developers whose projects were capital is only P312.6 million,
"being continuously supported by which is way below the
various banks and other financial P974,377,159.10 attachment bond
institutions prior to the malicious it issued.
 Respondents thus prayed for personally liable for her official
a judgment ordering petitioner acts done for and in behalf of
and Judge Gutierrez to pay moral PNB.  cESDCa

damages, exemplary damages,

On January 5, 2012,
litigation expenses, attorney's
petitioner filed a motion for
fees and cost of suit.
preliminary hearing on affirmative
Judge Gutierrez moved to defenses, contending that
dismiss 16 the complaint against respondents are parroting the
him on the following grounds: (1) very same arguments raised and
respondents have no cause of relying on the same evidence
action against him; and (2) the they presented before the Pasay
Pasig City court has no City RTC to establish the alleged
jurisdiction over the case and his novation and purported
person, movant being of co-equal insufficiency of the attachment
and concurrent jurisdiction. bond, which issues are still
pending in the said court. It was
Petitioner filed her Answer
thus stressed that respondents
with Compulsory
are evidently guilty of forum
Counterclaims, 17 praying for the
shopping. 18
dismissal of respondents'
complaint on the following Respondents filed their
grounds: (1) submission of a false Comment/Opposition, 19 arguing
certification of non-forum that there is nothing in their
shopping by respondents and complaint that would slightly
their blatant commission of suggest they are asking the Pasig
willful, deliberate and City RTC to issue any injunction
contumacious forum shopping or otherwise issue an order
(respondents failed to disclose a setting aside the writ of
criminal complaint preliminary attachment issued by
entitled "Tbram Cuyugan v. Aida the Pasay City RTC, and neither
Padilla and Members of the Board did they ask for a ruling on
of Directors of PNB" , docketed as whether said writ is illegal or
I.S. No. XV-13-INV-11-H-01208 whether Judge Gutierrez
pending before the office of the committed a grave abuse of
City Prosecutor of Pasay City); discretion. They asserted that
(2) litis pendentia; (3) what they seek from the Pasig
respondents' failure to attach the City RTC is to allow them to
alleged actionable recover damages from Judge De
document, i.e., the supposed Leon for his tortious action in
"new term loan", in violation of approving PNB's attachment
Section 7, Rule 8 of the Rules of bond. They also insisted that
Court; (4) failure to state a cause forum shopping and litis
of action against petitioner; and pendentia are absent in this
(5) petitioner cannot be held case, contrary to petitioner's
claims. Respondents likewise On May 7, 2012, petitioner
opposed 20 the motion to dismiss filed a Motion to Set
filed by Judge Gutierrez, citing Counterclaims for Pre-Trial
this Court's ruling in J. King & Conference. 24
Sons Company, Inc. v. Judge
On October 22, 2012, the
Agapito L. Hontanosas, Jr. 21 in
Pasig City RTC denied
support of their position that the
respondents' motion for
separate complaint before
reconsideration of the April 2,
another forum against the judge
2012 Order dismissing their
for his actionable wrong in a
complaint. 25 Respondents filed a
pending case before him can
Notice of Appeal 26 under
proceed independently without
Section 1 (a), Rule 41 of
necessarily interfering with the
the Rules of Court.  ESHAcI

court's jurisdiction, as what

happened in the said case where
the judge was merely penalized
for gross misconduct and gross
ignorance of the law without
actually invalidating the judge's
order approving the counter-bond
without reviewing the documents
presented. 
AaCcST
On November 12, 2012, the
Pasig City RTC issued the first
questioned Order, which reads:
xxx xxx xxx
Records show that
this Court, through then
Acting Presiding Judge
Amorfina Cerrado-Cezar,

In her Reply, 22 petitioner issued an Order dated

reiterated her previous arguments April 2, 2012, dismissing
and additionally contended that in the case on the ground
that issues involved in
any event, there is no basis for
this case already
respondents' claim for damages
impinge upon the
arising from the issuance of the
validity of the Order
writ of preliminary attachment dated August 25, 2010
before the Pasay City RTC and Writ of Attachment
considering that PNBGEN Bond dated August 27, 2010
No. SU-JC14-HO-10-0000001-00 is issued by the Regional
valid and sufficient to secure and Trial Court, Branch 119,
answer for whatever damages Pasay City, a court of
respondents may have suffered concurrent and
by reason of such issuance coordinate jurisdiction,
should it be finally decided that in Civil Case No. R-PSY-
PNB was not entitled to the said 10-04228
entitled "Philippine
bond.
National Bank vs. Globe
On April 2, 2012, the RTC of Asiatique Realty
Pasig City issued an Holdings Corp., et
Order 23 dismissing Civil Case al." The ruling in said
No. 73132 for lack of jurisdiction. Order dated April 2,
2012, was affirmed by
this Court per its Order thereby interfering,
dated October 22, 2012, albeit indirectly, with
whereby it reiterated said issues. This is
that acting on the precisely the very evil
plaintiffs' Complaint is a which the Court sought
brazen violation of the to avoid when it
principle of judicial dismissed the plaintiffs'
stability, which complaint. Therefore,
essentially states that upholding once more the
the judgment or order of principle of judicial
a court of competent stability, this Court is
jurisdiction may not be impelled to refuse to
interfered with by any hear the counterclaims
court of concurrent of defendant Padilla.
jurisdiction for the
WHEREFORE,
simple reason that the
premises considered,
power to open, modify
the instant Motion filed
or vacate the said order
by defendant Aida
is not only possessed
Padilla is DENIED
but is restricted to the
without prejudice to the
court in which the
re-filing of defendant
judgment or order is
Aida Padilla's causes of
rendered or issued.
action against herein
(Cojuangco vs. Villegas,
plaintiffs after final
184 SCRA 374)
resolution of Civil Case
The foregoing No. R-PSY-10-04228
principles are equally entitled "Philippine
applicable to the National Bank vs. Globe
counterclaims of Aida Asiatique Realty
Padilla. Indeed, to hear Holdings Corp., et
the counterclaims of al." SDTIaE

defendant Aida Padilla

SO ORDERED.
will open the door, so to
(Emphasis supplied.)
speak, for the plaintiffs
to interpose as Petitioner's motion for
ostensible defenses its reconsideration was likewise
claims regarding the denied under the second assailed
alleged illegality of the Order 27 dated May 8, 2013, as
aforesaid orders and follows:
writ of attachment
issued by the RTC of xxx xxx xxx
Pasay City. In effect this Defendant Padilla
Court will be forced to argues that this Court
dwell upon issues has jurisdictional
involving the pending competence and
civil case in the RTC authority to resolve her
Branch 199,Pasay City, counterclaims
notwithstanding the
dismissal of the
Complaint dated August
10, 2011 for violation of
the principle of judicial
stability. The resolution
of her compulsory
counterclaims will not
require this Court to
look into or pass upon
the validity of the acts
of the Regional Trial
Court of Pasay City,
Branch 119 in issuing
the Writ of Attachment
dated August 27, 2010.
Defendant Padilla's
counterclaims arose
directly from the
malicious filing by the
plaintiffs of the
Complaint and are
compulsory
counterclaims which
must be raised and
resolved in the same
action as the Complaint.
The Court remains
unpersuaded of the
propriety of proceeding
to hear defendant
Padilla's counterclaims.
As movant herself
stated, the grant of her
counterclaim calls for
the determination of the
issue of whether or not
herein plaintiffs had
maliciously filed the
above-entitled
Complaint against
defendants. Necessarily
, the Court in threshing
out such issue would be
constrained to rule on
whether the plaintiffs
filed their complaint
with a sinister design
knowing fully well that
their cause of action
was baseless. Thus, the
Court would have to
pass upon the veracity
or genuineness of
plaintiffs' claims that
they were unjustly
injured by the orders
and processes issued by
RTC Branch 119, Pasay
City, in Civil Case No. R-
PSY-10-04228 entitled 
"Philippine National
Bank vs. Globe
Asiatique Realty
Holdings Corp., et
al." Hence, whatever
ruling this Court may
arrive at on said issues
would inevitably
impinge upon matters
already pending before
the RTC Branch 119,
Pasay City.  SEcITC
Once more, under
the principle of juridical
stability, the Court is
constrained to refuse to
hear defendant Padilla's
counterclaims. Verily,
this Court cannot allow
itself to interfere —
either directly, as
desired by plaintiff, or
indirectly, as defendant
Padilla would have it —
with the acts of a co-
equal court.
WHEREFORE,
premises considered,
the instant Motion for
Reconsideration filed by
defendant Aida Padilla
is hereby DENIED
without prejudice to the
 re-filing of defendant
Aida Padilla's causes of
action against herein
plaintiffs after
resolution of Civil Case
No. R-PSY-10-04228
entitled "Philippine
National Bank vs. Globe
Asiatique Realty
Holdings Corp., et al."
SO ORDERED.
(Emphasis supplied.)
The Petition
Petitioner came directly to
this Court raising the primordial
legal issue of whether or not a
court can take cognizance of a
compulsory counterclaim despite
the fact that the corresponding
complaint was dismissed for lack
of jurisdiction.
The present petition was de-
consolidated from seven other
petitions involving respondents
and their transactions with Home
Development Mutual Fund, as
well as the pending criminal
complaints arising therefrom. 28
The Court's Ruling
Before we resolve the legal
question presented, we first
address the issue of propriety of
petitioner's resort to Rule 45.
Respondents are incorrect in
arguing that petitioner adopted
the wrong mode of appeal, stating
that the remedy from the
dismissal of her counterclaims
without prejudice is a petition
for certiorari under Rule 65 and
not an appeal under Rule 45.  ACDIcS
There is no dispute with
respect to the fact that when an
appeal raises only pure questions
of law, this Court has jurisdiction
to entertain the same. 29 Section
1, Rule 45 of the 1997 Rules of
Civil Procedure, as amended,
provides:
SECTION
1.  Filing of petition
with Supreme Court. —
A party desiring to
appeal
by certiorari from a
judgment or final order
or resolution of the
Court of Appeals, the
Sandiganbayan, the
Regional Trial Court or
other courts whenever
authorized by law, may
file with the Supreme
Court a verified petition
for review oncertiorari.
The petition shall raise
only questions of law
which must be distinctly
set forth.
In Republic v. Sunvar Realty
Development Corporation, 30 this
Court held:
Respondent
Sunvar argued that
petitioners' resort to a
Rule 45 Petition for
Review
on Certiorari before
this Court is an improper
mode of review of the
assailed RTC Decision.
Allegedly, petitioners
should have availed
themselves of a Rule 65
Petition instead, since
the RTC Decision was
an order of dismissal of
the Complaint, from RTC in the exercise of
which no appeal can be its original jurisdiction;
taken except by (2) by a petition for
a certiorari petition. review under Rule 42,
whereby judgment was
The Court is
rendered by the RTC in
unconvinced of the
the exercise of its
arguments of
appellate jurisdiction;
respondent Sunvar and
and (3) by a petition for
holds that the resort by
review
petitioners to the
on certiorari before the
present Rule 45 Petition
Supreme Court under
is perfectly within the
Rule 45. "The first mode
bounds of our
of appeal is taken to the
procedural rules.
[Court of Appeals] on
As respondent questions of fact or
Sunvar explained, no mixed questions of fact
appeal may be taken and law. The second
from an order of the RTC mode of appeal is
dismissing an action brought to the CA on
without prejudice, but questions of fact, of law,
the aggrieved party may or mixed questions of
file acertiorari petition fact and law. The third
under Rule 65. mode of appeal is
Nevertheless, the Rules elevated to the Supreme
do not prohibit any of Court only on questions
the parties from filing a of law." (Emphasis
Rule 45 Petition with supplied.) ATHCDa

this Court, in case only

There is a question
questions of law are
of law when the issue
raised or involved. This
does not call for an
latter situation was one
examination of the
that petitioners found
probative value of the
themselves in when
evidence presented or
they filed the instant
of the truth or falsehood
Petition to raise only
of the facts being
questions of law.
admitted, and the doubt
In Republic v. concerns the correct
Malabanan, the Court application of law and
clarified the three jurisprudence on the
modes of appeal from matter. The resolution
decisions of the RTC, to of the issue must rest
wit: (1) by ordinary solely on what the law
appeal or appeal by writ provides on the given
of error under Rule 41, set of circumstances.
whereby judgment was
In the instant
rendered in a civil or
case, petitioners raise
criminal action by the
 only questions of law
with respect to the
jurisdiction of the RTC
to entertain
a certiorari petition
filed against the
interlocutory order of
the MeTC in an unlawful
detainer suit. At issue in
the present case is the
correct application of
the Rules on Summary
Procedure; or, more
specifically, whether the
RTC violated the Rules
when it took cognizance
and granted
the certiorari petition
against the denial by the
MeTC of the Motion to
Dismiss filed by
respondent Sunvar. This
is clearly a question of
this is clearly a question of law,
petitioner appropriately filed in
this Court a Rule 45 petition.
On the lone issue raised in
the petition, we rule for the
petitioner.
A counterclaim is any claim
which a defending party may have
against an opposing party. 31 It is
in the nature of a cross-
complaint; a distinct and
independent cause of action
which, though alleged in the
answer, is not part of the
answer. 32
Counterclaims may be either
compulsory or permissive.
Section 7, Rule 6 of the 1997
Rules of Civil
Procedure provides:  SAcCIH

law that involves the

SEC.
proper interpretation of
7. Compulsory
the Rules on Summary
counterclaim. — A
Procedure. Therefore,
compulsory
the instant Rule 45
counterclaim is one
Petition has been
which, being cognizable
properly lodged with
by the regular courts of
this Court.
justice, arises out of or
In this case, petitioner is connected with the
raises the lone issue of whether transaction or
the Pasig City RTC was correct in occurrence constituting
refusing to hear her the subject matter of
counterclaims after the dismissal the opposing party's
claim and does not
of respondents' complaint for lack
require for its
of jurisdiction. Said issue involves
adjudication the
the proper interpretation of
presence of third parties
the 1997 Rules of Civil of whom the court
Procedure, as amended, cannot acquire
specifically on whether the jurisdiction. Such a
dismissal of the complaint counterclaim must be
automatically results in the within the jurisdiction of
dismissal of counterclaims the court both as to the
pleaded by the defendant. Since amount and the nature
 thereof, except that in Under the 1997 Rules of
an original action before Civil Procedure, it is now
the Regional Trial Court, explicitly provided that the
the counterclaim may dismissal of the complaint due to
be considered
failure of the plaintiff to
compulsory regardless
prosecute his case is "without
of the amount.
prejudice to the right of the
In this case, petitioner's defendant to prosecute his
counterclaim for damages raised counterclaim in the same or in a
in her answer before the Pasig separate action". 35 The effect of
City RTC is compulsory, alleging this amendment on previous
suffering and injury caused to her rulings on whether the dismissal
as a consequence of the of a complaint carries with it the
unwarranted filing of the baseless dismissal of the counterclaims as
complaint filed by respondents. well, was discussed in the case
Said court, however, dismissed of Pinga v. The Heirs of German
her counterclaim upon the same Santiago, 36thus:  DEHaTC

ground of lack of jurisdiction as

Similarly, Justice
its resolution supposedly would
Feria notes that "the
entail passing upon the validity of present rule reaffirms
orders and processes still the right of the
pending before the Pasay City defendant to move for
RTC. the dismissal of the
complaint and to
In  Metals Engineering
prosecute his
Resources Corp. v. Court of
counterclaim, as stated
Appeals, 33 we reversed the trial in the separate opinion
court's order allowing private [of Justice Regalado
respondent to proceed with the in  BA Finance.] Retired
presentation of his evidence in Court of Appeals Justice
support of his counterclaim after Herrera pronounces that
the complaint was dismissed for the amendment to
not paying the correct docket fee Section 3, Rule 17
and hence the trial court did not settles that "nagging
acquire jurisdiction over the case. question" whether the
We held that if the court does not dismissal of the
complaint carries with it
have jurisdiction to entertain the
the dismissal of the
main action of the case and
counterclaim, and
dismisses the same, then the opines that by reason of
compulsory counterclaim, being the amendments, the
ancillary to the principal rulings in Metals
controversy, must likewise be Engineering,
dismissed since no jurisdiction International Container,
remained for any grant of relief and  BA Finance "may
under the counterclaim. 34 be deemed abandoned".
On the effect of whatever nature in the
amendment to Section same or separate
3, Rule 17, the action. We confirm
commentators are in that BA Finance and all
general agreement, previous rulings of the
although there is less Court that are
unanimity of views inconsistent with this
insofar as Section 2, present holding are now
Rule 17 is concerned. abandoned. (Emphasis
supplied.)
To be certain,
when the Court Subsequently, in  Perkin
promulgated the 1997 Elmer Singapore Pte Ltd. v.
Rules of Civil Procedure, Dakila Trading
including the amended Corporation 37 this Court held
Rule 17, those previous
that while the declaration
jural doctrines that were
in Pinga refers to instances
inconsistent with the
covered by Section 3, Rule 17 on
new rules incorporated
in the 1997 Rules of dismissal of complaints due to
Civil Procedure were the fault of plaintiff, it does not
implicitly abandoned preclude the application of the
insofar as incidents same rule when the dismissal
arising after the was upon the instance of
effectivity of the new defendant who correctly argued
procedural rules on 1 lack of jurisdiction over its
July 1997.  BA Finance, person. Further, in stark
or even the doctrine departure from Metals
that a counterclaim may Engineering, we declared that the
be necessarily
court's jurisdiction over
dismissed along with
respondent's complaint is not to
the complaint, clearly
conflicts with the 1997
be confused with jurisdiction over
Rules of Civil Procedure. petitioner's counterclaim, viz.:
The abandonment . . . . Petitioner
of  BA Finance as seeks to recover
doctrine extends as far damages and attorney's
back as 1997, when the fees as a consequence
Court adopted the new of the unfounded
Rules of Civil Procedure. suit filed by respondent
. . . we thus rule that the against it. Thus,
dismissal of a complaint petitioner's compulsory
due to fault of the counterclaim is only
plaintiff is without consistent with its
prejudice to the right of position that the
the defendant to respondent wrongfully
prosecute any pending filed a case against it
counterclaims of and the RTC erroneously
exercised jurisdiction Still anchored on the
over its person.  EHTISC
pronouncement in Pinga, we then
Distinction must categorically ruled that a
be made in Civil Case counterclaim arising from the
No. MC99-605 as to the unfounded suit may proceed
jurisdiction of the RTC despite the dismissal of the
over respondent's complaint for lack of jurisdiction
complaint and over over the person of defendant-
petitioner's counterclaimant, thus:
counterclaim — while it
may have no jurisdiction Also in the case
over the former, it may of Pinga v. Heirs of
exercise jurisdiction German Santiago, the
over the latter. The Court discussed the
compulsory situation wherein the
counterclaim attached very filing of the
to petitioner's complaint by the
Answer ad plaintiff against the
cautelam can be defendant caused the
treated as a separate violation of the latter's
action, wherein rights. As to whether
petitioner is the plaintiff the dismissal of such a
while respondent is the complaint should also
defendant. Petitioner include the dismissal of
could have instituted a the counterclaim, the
separate action for the Court acknowledged
very same claims but, that said matter is still
for the sake of debatable, viz.:
expediency and to avoid Whatever the
multiplicity of suits, it nature of the
chose to demand the counterclaim, it
same in Civil Case No. bears the same
MC99-605. Jurisdiction integral
of the RTC over the characteristics as
subject matter and the a complaint;
parties in the namely a cause (or
counterclaim must thus causes) of action
be determined constituting an act
separately and or omission by
independently from the which a party
jurisdiction of the same violates the right
court in the same case of another. The
over the subject matter main difference
and the parties in lies in that the
respondent's cause of action in
complaint. 38 (Emphasi the counterclaim
s supplied.) is maintained by
the defendant counterclaim that
against the the very act of the
plaintiff, while the plaintiff in filing
converse holds the complaint
true with the precisely causes
complaint. Yet, as the violation of the
with a complaint, a defendant's rights.
counterclaim Yet even in such
without a cause of an instance, it
action cannot remains debatable
survive. SAcCIH whether the
dismissal or
. . . if the
withdrawal of the
dismissal of the
complaint is
complaint
sufficient to
somehow
obviate the
eliminates the
pending cause of
cause(s) of the
action maintained
counterclaim, then
by the defendant
the counterclaim
against the
cannot survive.
plaintiff.
Yet that hardly is
the case, Based on the
especially as a aforequoted ruling of the
general rule. More Court, if the dismissal of
often than not, the the complaint somehow
allegations that eliminates the cause of
form the the counterclaim, then
counterclaim are the counterclaim cannot
rooted in an act or survive. Conversely, if
omission of the the counterclaim itself
plaintiff other than states sufficient cause
the plaintiff's very of action then it should
act of filing the stand independently of
complaint. and survive the
Moreover, such dismissal of the
acts or omissions complaint. Now, having
imputed to the been directly confronted
plaintiff are often with the problem of
claimed to have whether the compulsory
occurred prior to counterclaim by reason
the filing of the of the unfounded suit
complaint may prosper even if the
itself. The only main complaint had
apparent been dismissed, we rule
exception to this in the affirmative.
circumstance is if
It bears to
it is alleged in the
emphasize that
petitioner's in the present action,
counterclaim against under threat of losing
respondent is for his right to claim the
damages and attorney's same ever again in any
fees arising from the other court, yet make
unfounded suit. While his right totally
respondent's Complaint dependent on the fate of
against petitioner is the respondent's
already dismissed, complaint.
petitioner may have very
If indeed the Court
well already incurred
dismisses petitioner's
damages and litigation
counterclaim solely on
expenses such as
the basis of the
attorney's fees since it
dismissal of
was forced to engage
respondent's Complaint,
legal representation in
then what remedy is left
the Philippines to
for the petitioner? It can
protect its rights and to
be said that he can still
assert lack of
file a separate action to
jurisdiction of the courts
recover the damages
over its person by virtue
and attorney's fees
of the improper service
based on the unfounded
of summons upon it.
suit for he cannot be
Hence, the cause of
barred from doing so
action of petitioner's
since he did file the
counterclaim is not
compulsory
eliminated by the mere
counterclaim in the
dismissal of
present action, only that
respondent's
it was dismissed when
complaint. 
respondent's Complaint
SIcEHD

It may also do well was dismissed.

to remember that it is However, this reasoning
this Court which is highly flawed and
mandated that claims irrational considering
for damages and that petitioner, already
attorney's fees based on burdened by the
unfounded suit damages and attorney's
constitute compulsory fees it may have
counterclaim which incurred in the present
must be pleaded in the case, must again incur
same action or, more damages and
otherwise, it shall be attorney's fees in
barred. It will then be pursuing a separate
iniquitous and the action, when, in the first
height of injustice to place, it should not have
require the petitioner to been involved in any
make the counterclaim case at all.  cSIACD
 Since petitioner's attachment before the Pasay City
counterclaim is RTC) — with hints at possible
compulsory in nature criminal prosecution apart from
and its cause of action that criminal complaint already
survives that of the
lodged in the Pasig City
dismissal of
Prosecutor's Office. The Pasig
respondent's complaint,
City RTC clearly erred in refusing
then it should be
resolved based on its to hear the counterclaims upon
own merits and the same ground for dismissal of
evidentiary the complaint, i.e., lack of
support. 39 (Additional jurisdiction in strict observance
emphasis supplied.) of the policy against interference
with the proceedings of a co-
The above ruling was
equal court.
applied in Rizal Commercial
Banking Corporation v. Royal Respondents contend that if
Cargo Corporation 40 where we petitioner is allowed to prove her
granted petitioner's prayer for counterclaims before the Pasay
attorney's fees under its City RTC, they have no choice but
Compulsory Counterclaim to justify their action in filing
notwithstanding the dismissal of their case before the Pasig City
the complaint. RTC by going back to the
allegations in their complaint that
In the present case, the RTC
they are merely vindicating
of Pasig City should have allowed
themselves against the perjured
petitioner's counterclaim to
affidavit executed by petitioner
proceed notwithstanding the
which led to the issuance of the
dismissal of respondents'
illegal orders of the Pasay City
complaint, the same being
RTC that resulted to the damage
compulsory in nature and with its
and injury sustained by
cause not eliminated by such
respondents. Obviously,
dismissal. It bears stressing that
respondents are invoking the
petitioner was hailed to a
same principle of judicial stability
separate court (Pasig City RTC)
which we find inapplicable insofar
even while the dispute between
as petitioner's counterclaim
PNB and respondents was still
arising from respondents'
being litigated, and she already
unfounded suit.
incurred expenses defending
herself, having been sued by As petitioner set forth in her
respondents in her personal Compulsory Counterclaim, there
capacity. The accusations hurled is actually no necessity for the
against her were serious (perjury Pasig City RTC, in ruling on the
and misrepresentation in merits of the counterclaim, to
executing the affidavit in support pass upon the validity of the writ
of the application for writ of of attachment and related orders
issued by the Pasay City RTC. jurisdiction and
Precisely, petitioner faulted the powers or
respondents in prematurely, and maliciously
in a contumacious act of forum delayed the
disposition of a
shopping, filing a separate
case — is an
damage suit when there is no
essentially judicial
final judicial determination yet of
function, lodged by
any irregularity in the attachment existing law and
proceedings before the Pasay immemorial
City RTC.  ETIcHa
practice in a
5.95. In this hierarchy of courts
regard, it must be noted and ultimately in
that in filing the present the highest court
suit, plaintiffs' goal is to of the land. To
have the Honorable repeat, no other
Court reexamine and entity or official of
review the the Government,
pronouncements made not the
by defendant Judge prosecution or
Gutierrez in the Pasay investigation
case. With all due service or any
respect, the Honorable other branch, nor
Court certainly has no any functionary
such power over the thereof, has
Pasay Court which is a competence to
co-equal court. While review a judicial
the power to determine order or decision
whether or not a — whether final
judgment or order is and executory or
unjust is a judicial not — and
function, the hierarchy pronounce it
of courts should be erroneous so as to
respected: lay the basis for a
criminal or
"To belabor administrative
the obvious, the complaint for
determination of rendering an
whether or not a unjust judgment or
judgment or order order. That
is unjust — or was prerogative
(or was not) belongs to the
rendered within courts alone."
the scope of the [Emphasis
issuing judge's supplied]
authority, or that
the judge had 5.96. Accordingly, 
exceeded his since there is no "final
 judicial pronouncement"
yet on whether the filing
of the PNB
Complaint and the
issuance of the writ of
preliminary attachment
violate any law, neither
is there any basis for
defendant Padilla to be
held liable for damages
on account of her
official acts as Head of
the Remedial
Management Group of
PNB.
5.97. Clearly, the
filing of this baseless, if
not contemptuous, suit
is nothing but a
continuation of
plaintiffs' fraudulent
attempt to evade the
payment of undeniably
due and demandable
obligations. Accordingly,
the complaint against
defendant Padilla should
be dismissed for utter
lack of
merit. 41 (Emphasis
supplied.)
Ironically, while it is the
respondents who erroneously and
maliciously asked the Pasig City
RTC to pass upon these issues
still pending in a co-equal court,
for which reason the said court
dismissed their complaint,
petitioner was not allowed to
prove her counterclaim by reason
of the unfounded suit in the same
case as purportedly it will entail
verifying respondents' claim that
they were prejudiced by the
orders and processes in the
Pasay City RTC. This situation
exemplifies the rationale
in Perkin Elmer Singapore Pte
Ltd. 42 on requiring the petitioner
to make the counterclaim in the
present action, under threat of
losing such right to claim the
same ever again any other
court, yet make such right of the
petitioner totally dependent on
the fate of the respondents'
complaint.  cIECTH
As fittingly expressed by
petitioner in her Reply:
Pertinently, it is
relevant to note that
respondents never
denied in
their Comment  that the
institution of the case a
quo was premature and
violated the principle of
judicial stability. Stated
otherwise, respondents
admit that they are the
ones who have invited
the court a quo to
interfere with the
rulings of the Pasay
Court, which
fortunately, the former
refused to do so. To
allow the respondents
to cite their own
unlawful actions as a
shield against the harm
that they have inflicted
upon petitioner Padilla
would indubitably allow
the respondents to
profit from their own
misdeeds. With due
respect, this cannot be
countenanced by the
Honorable Court. 43
 WHEREFORE, the petition Forbes Park Village in Makati
is GRANTED. The Orders dated City, whereas the petitioner is the
November 12, 2012 and May 8, duly authorized association in
2013 of the Regional Trial Court said village. On December 2,
of Pasig City, Branch 155 in Civil 1985, the USSR engaged the
Case No. 73132 are services of petitioner for the
hereby REVERSED and SET construction of a multi-level
ASIDE. Said court is hereby office and staff apartment
directed to proceed with the building at said lot, which would
presentation of evidence in be used by the trade
support of the compulsory representative of the USSR. Due
counterclaim of petitioner Aida to USSR's representation that it
Padilla. would be building a residence for
its trade representative, the
SO ORDERED.
respondent authorized its
 (Padilla v. Globe Asiatique
|||
construction and work began
Realty Holdings Corp., G.R. No. shortly thereafter. Before the
207376, [August 6, 2014], 740 start of the construction,
PHIL 754-777) respondent discovered the
second plan submitted by the
petitioner to the Makati City
SECOND DIVISION government for the construction
of a multi-level apartment
[G.R. No. 133119. August 17, building in said property. Because
2000.] of this, respondent enjoined
further construction work and it
FINANCIAL BUILDING suspended all permits of entry for
CORPORATION, petiti the personnel and materials of
oner, vs. FORBES petitioner in said construction
PARK ASSOCIATION, site. Petitioner filed to the
INC.,  respondent. Regional Trial Court of Makati a
complaint for injunction and
Carpio Villaraza & Cruz  for damages with prayer for
petitioner. preliminary injunction against
respondent for the said action. On
Quasha Ancheta Peña & April 28, 1987, the trial court
Nolasco  for respondent. issued a writ of preliminary
injunction against respondent,
SYNOPSIS but the Court of Appeals nullified
it and dismissed the complaint.
The Union of Soviet Socialist Aggrieved, petitioner filed a
Republic (USSR) was the owner of petition to the Court, but same
a 4,223 square meter residential was dismissed. After the
lot located at No. 10, Narra Place, petitioner's case was terminated
with finality, respondent filed
with the RTC of Makati a
complaint for damages against
petitioner arising from the
violation of its rules and
regulations. On September 26,
1994, the trial court rendered a
decision in favor of the
respondent and against herein
petitioner. On appeal, the
appellate court affirmed the
decision of the lower court.
Hence this petition.  DaTISc
The Supreme Court granted
the petition. The Court ruled that
the instant case is barred due to
respondent's failure to set it up
as a compulsory counterclaim in
the prior injunction suit initiated
by petitioner against respondent.
A compulsory counterclaim is one
which arises out of or is
necessarily connected with the
transaction or occurrence that is
the subject matter of the
opposing party's claim. If it is
within the jurisdiction of the court
and it does not require for its
adjudication the presence of third
parties over whom the court
cannot acquire jurisdiction, such
compulsory counterclaim is
barred if it is not set up in the
action filed by the opposing party.
Therefore, respondent's claim in
the instant action should have
been filed as a counterclaim in
the injunction suit filed by
petitioner. Moreover, the Court
said that respondent's
counterclaim at that time is now
barred since respondent file a
motion to dismiss the injunction
suit filed by petitioner. A does
compulsory counterclaim is
auxiliary to the proceeding in the
original suit and derives its
jurisdictional support therefrom.
A counterclaim presupposes the
existence of a claim against the
party filing the counterclaim.
Hence, where there is no claim
against the counterclaimant, the
counterclaim is improper and it
must be dismissed, more so
where the complaint is dismissed
at the instance of the
counterclaimant. In other words,
if the dismissal of the main action
results in the dismissal of the
counterclaim already filed, it
stands to reason that the filing of
a motion to dismiss the complaint
is an implied waiver of the
compulsory counterclaim
because the grant of the motion
ultimately results in the dismissal
of the counterclaim. Accordingly,
the petition was granted and the
decision of the Court of Appeals
was reversed and set aside.
SYLLABUS
1. REMEDIAL LAW; CIVIL
PROCEDURE; COMPULSORY
COUNTERCLAIM, EXPLAINED;
TESTS TO DETERMINE WHETHER
COUNTERCLAIM IS COMPULSORY
OR NOT. — A compulsory
counterclaim is one which arises
out of or is necessarily connected
with the transaction or
occurrence that is the subject
matter of the opposing party's
claim. If it is within the
jurisdiction of the court and it
not require for its
adjudication the presence of third
parties over whom the court
cannot acquire jurisdiction, such
compulsory counterclaim is
barred if it is not set up in the
action filed by the opposing party.
Thus, a compulsory counterclaim
cannot be the subject of a
separate action but it should
instead be asserted in the same
suit involving the same
transaction or occurrence, which
gave rise to it. To determine
whether a counterclaim is
compulsory or not, we have
devised the following tests: (1)
Are the issues of fact or law
raised by the claim and the
counterclaim largely the same?
(2) Would res judicatabar a of the counterclaim. Thus, the
subsequent suit on defendant's
claim absent the compulsory
counterclaim rule? (3) Will
substantially the same evidence
support or refute plaintiffs claim
as well as the defendant's
counterclaim? and (4) Is there
any logical relation between the
claim and the counterclaim?
Affirmative answers to the above
queries indicate the existence of
a compulsory counterclaim.
2. ID.; ID.; ID.; IF THE
DISMISSAL OF THE MAIN ACTION
RESULTS IN THE DISMISSAL OF
THE COUNTERCLAIM ALREADY
FILED, THE FILING OF A MOTION
TO DISMISS THE COMPLAINT IS
AN IMPLIED WAIVER OF THE
COMPULSORY COUNTERCLAIM.
— A compulsory counterclaim is
auxiliary to the proceeding in the
original suit and derives its
jurisdictional support therefrom.
A counterclaim presupposes the
existence of a claim against the
party filing the counterclaim.
Hence, where there is no claim
against the counterclaimant, the
counterclaim is improper and it
must be dismissed, more so
where the complaint is dismissed
at the instance of the
counterclaimant. In other words,
if the dismissal of the main action
results in the dismissal of the
counterclaim already filed, it
stands to reason that the filing of
a motion to dismiss the complaint
is an implied waiver of the
compulsory counterclaim
because the grant of the motion
ultimately results in the dismissal
filing of a motion to dismiss and
the setting up of a compulsory
counterclaim are incompatible
remedies. In the event that a
defending party has a ground for
dismissal and a compulsory
counterclaim at the same time,
he must choose only one remedy.
If he decides to file a motion to
dismiss, he will lose his
compulsory counterclaim. But if
he opts to set up his compulsory
counterclaim, he may still plead
his ground for dismissal as an
affirmative defense in his answer.
The latter option is obviously
more favorable to the defendant
although such fact was lost on
Forbes Park. The ground for
dismissal invoked by Forbes Park
in Civil Case No. 16540 was lack
of cause of action. There was no
need to plead such ground in a
motion to dismiss or in the
answer since the same was not construction of a multi-level
deemed waived if it was not office and staff apartment
pleaded. Nonetheless, Forbes building at the said lot, which
Park still filed a motion to dismiss would be used by the Trade
and thus exercised bad judgment Representative of the
in its choice of remedies. Thus, it USSR. 3 Due to the USSR's
has no one to blame but itself for representation that it would be
the consequent loss of its building a residence for its Trade
counterclaim as a result of such Representative, Forbes Park
choice. authorized its construction and
work began shortly thereafter.  EScaIT

On June 30, 1986, Forbes

DECISION
Park reminded the USSR of
existing regulations 4 authorizing
DE LEON,  JR.,  J  :
p
only the construction of a single-
family residential building in each
Before us is petition for lot within the village. It also
review on certiorari of the elicited a reassurance from the
Decision 1 dated March 20, 1998 USSR that such restriction has
of the Court of Appeals 2 in CA- been complied with. 5 Promptly,
GR CV No. 48194 entitled "Forbes the USSR gave its assurance that
Park Association, Inc. vs. it has been complying with all
Financial Building Corporation," regulations of Forbes
finding Financial Building Park. 6 Despite this, Financial
Corporation (hereafter, Financial Building submitted to the Makati
Building) liable for damages in City Government a second
favor of Forbes Park Association, building plan for the construction
Inc. (hereafter, Forbes Park), for of a multi-level apartment
violating the latter's deed of building, which was different from
restrictions on the construction the first plan for the construction
of buildings within the Forbes of a residential building submitted
Park Village, Makati. to Forbes Park.
The pertinent facts are as Forbes Park discovered the
follows: second plan and subsequent
ocular inspection of the USSR's
The then Union of Soviet
subject lot confirmed the
Socialist Republic (hereafter,
violation of the deed of
USSR) was the owner of a 4,223
restrictions. Thus, it enjoined
square meter residential lot
further construction work. On
located at No. 10, Narra Place,
March 27, 1987, Forbes Park
Forbes Park Village in Makati
suspended all permits of entry for
City. On December 2, 1985, the
the personnel and materials of
USSR engaged the services of
Financial Building in the said
Financial Building for the
construction site. The parties (b) P1,000,000.00 as moral
attempted to meet to settle their damages; (c) P1,000,000.00 as
differences but it did not push exemplary damages; and (d)
through. P1,000,000.00 as attorney's
fees. 10 On September 26, 1994,
Instead, on April 9, 1987,
the trial court rendered its
Financial Building filed in the
Decision 11 in Civil Case No. 89-
Regional Trial Court of Makati,
5522 in favor of Forbes Park and
Metro Manila, a Complaint 7 for
against Financial Building, the
Injunction and Damages with a
dispositive portion of which
prayer for Preliminary Injunction
reads, to wit:
against Forbes Park docketed as
Civil Case No. 16540. The latter, "WHEREFORE, in
in turn, filed a Motion to Dismiss view of the foregoing,
on the ground that Financial the Court hereby
Building had no cause of action renders judgment in
favor of the plaintiff and
because it was not the real party-
against the defendant:
in-interest.
(1) Ordering the
On April 28, 1987, the trial
defendant to
court issued a writ of preliminary remove/demolish the
injunction against Forbes Park illegal structures within
but the Court of Appeals nullified three (3) months from
it and dismissed the complaint in the time this judgment
Civil Case No. 16540 altogether. becomes final and
We affirmed the said dismissal in executory, and in case
our Resolution, 8 promulgated on of failure of the
April 6, 1988, in G.R. No. 79319 defendant to do so, the
entitled "Financial Building plaintiff is authorized to
Corporation, et al. vs. Forbes demolish/remove the
structures at the
Park Association, et al."
expense of the
After Financial Building's defendant;
case, G.R. No. 79319, was (2) Ordering the
terminated with finality, Forbes defendant to pay
Park sought to vindicate its rights damages, to wit:
by filing on October 27, 1989 with
(a) P3,000,000.00
the Regional Trial Court of Makati
as actual damages
a Complaint 9 for Damages,
by way of
against Financial Building, demolition
docketed as Civil Case No. 89- expenses;
5522, arising from the violation of
(b) P1,000,000.00
its rules and regulations. The
as exemplary
damages claimed are in the
damages;
following amounts: (a)
P3,000,000.00 as actual damages;
 (c) P500,000.00 as AND CAUSES OF
attorney's fees; ACTION THEREIN
ARE BARRED BY
(d) the costs of
PRIOR JUDGMENT
suit.
AND/OR ARE
SO ORDERED." DEEMED WAIVED
FOR ITS FAILURE
Financial Building appealed
TO INTERPOSE
the said Decision of the trial court
THE SAME AS
in Civil Case No. 89-5522 by way COMPULSORY
of a petition for review COUNTERCLAIMS
on certiorari 12 entitled IN CIVIL CASE NO.
"Financial Building Corporation 16540;
vs. Forbes Park Association, Inc."
II. THE COURT OF
to the Court of Appeals and
APPEALS
docketed therein as CA-GR CV GRAVELY ERRED
No. 48194. However, the Court of IN NOT
Appeals affirmed it in its DISMISSING THE
Decision 13 dated March 20, COMPLAINT FILED
1998, the dispositive portion of BY RESPONDENT
which reads: FPA AGAINST
PETITIONER FBC
"WHEREFORE, the
SINCE
Decision dated
RESPONDENT FPA
September 26, 1994 of
HAS NO CAUSE OF
the Regional Trial Court
ACTION AGAINST
of Makati is AFFIRMED
PETITIONER FBC;
with the modification
that the award of III. THE COURT OF
exemplary damages, as APPEALS
well as attorney's fees, GRAVELY ERRED
is reduced to fifty IN AWARDING
thousand pesos DAMAGES IN
(P50,000.00) each." FAVOR OF
RESPONDENT FPA
Hence, this petition, wherein DESPITE THE
Financial Building assigns the FACT THAT ON
following errors: THE BASIS OF THE
I. "THE COURT OF EVIDENCE ON
APPEALS RECORD,
GRAVELY ERRED RESPONDENT FPA
IN NOT IS NOT ENTITLED
DISMISSING THE THERETO AND
COMPLAINT FILED PETITIONER FBC
BY RESPONDENT IS NOT LIABLE
FPA DESPITE THE THEREFOR;
FACT THAT ITS IV. THE COURT OF
ALLEGED CLAIMS APPEALS ERRED
 IN ORDERING THE whether a counterclaim is
DEMOLITION OF compulsory or not, we have
THE ILLEGAL devised the following tests: (1)
STRUCTURES Are the issues of fact or law
LOCATED AT NO.
raised by the claim and the
10 NARRA PLACE,
counterclaim largely the same?
FORBES PARK,
(2) Would res judicata  bar a
MAKATI CITY,
CONSIDERING subsequent suit on defendant's
THAT THE SAME claim absent the compulsory
ARE LOCATED ON counterclaim rule? (3) Will
DIPLOMATIC substantially the same evidence
PREMISES" 14 support or refute plaintiff's claim
as well as the defendant's
We grant the petition.
counterclaim? and (4) Is there
First. The instant case is any logical relation between the
barred due to Forbes Park's claim and the counterclaim?
failure to set it up as a Affirmative answers to the above
compulsory counterclaim in Civil queries indicate the existence of
Case No. 16540, the prior a compulsory counterclaim. 18
injunction suit initiated by
Undoubtedly, the prior Civil
Financial Building against Forbes
Case No. 16540 and the instant
Park.
case arose from the same
A compulsory counterclaim occurrence — the construction
is one which arises out of or is work done by Financial Building
necessarily connected with the on the USSR's lot in Forbes Park
transaction or occurrence that is Village. The issues of fact and
the subject matter of the law in both cases are identical.
opposing party's claim. 15 If it is The factual issue is whether the
within the jurisdiction of the court structures erected by Financial
and it does not require for its Building violate Forbes Park's
adjudication the presence of third rules and regulations, whereas
parties over whom the court the legal issue is whether
cannot acquire jurisdiction, such Financial Building, as an
compulsory counterclaim is independent contractor working
barred if it is not set up in the for the USSR, could be enjoined
action filed by the opposing from continuing with the
party. 16 construction and be held liable
Thus, a compulsory for damages if it is found to have
counterclaim cannot be the violated Forbes Park's rules.
subject of a separate action but it As a result of the
should instead be asserted in the controversy, Financial Building
same suit involving the same seized the initiative by filing the
transaction or occurrence, which prior injunction case, which was
gave rise to it. 17 To determine
anchored on the contention that
Forbes Park's prohibition on the
construction work in the subject
premises was improper. The
instant case on the other hand
was initiated by Forbes Park to
compel Financial Building to
remove the same structures it
has erected in the same premises
involved in the prior case and to
claim damages for undertaking
the said construction. Thus, the
logical relation between the two
cases is patent and it is obvious
that substantially the same
evidence is involved in the said
cases. 
CaASIc
Moreover, the two cases
involve the same parties. The
aggregate amount of the claims
in the instant case is within the
jurisdiction of the regional trial
court, had it been set up as a
counterclaim in Civil Case No.
16540. Therefore, Forbes Park's
claims in the instant case should
have been filed as a counterclaim
in Civil Case No. 16540.
Second. Since Forbes Park
filed a motion to dismiss in Civil
Case No. 16540, its existing
compulsory counterclaim at that
time is now barred.
A compulsory counterclaim
is auxiliary to the proceeding in
the original suit and derives its
jurisdictional support
therefrom. 19 A counterclaim
presupposes the existence of a
claim against the party filing the
counterclaim. Hence, where there
is no claim against the
counterclaimant, the
counterclaim is improper and it
must dismissed, more so where
the complaint is dismissed at the
instance of the
counterclaimant. 20 In other
words, if the dismissal of the
main action results in the
dismissal of the counterclaim
already filed, it stands to reason
that the filing of a motion to
dismiss the complaint is an
implied waiver of the compulsory
counterclaim because the grant
of the motion ultimately results in
the dismissal of the counterclaim.
Thus, the filing of a motion
to dismiss and the setting up of a
compulsory counterclaim are
incompatible remedies. In the
event that a defending party has
a ground for dismissal and a
compulsory counterclaim at the
same time, he must choose only
one remedy. If he decides to file a
motion to dismiss, he will lose his
compulsory counterclaim. But if
he opts to set up his compulsory
counterclaim, he may still plead
his ground for dismissal as an
affirmative defense in his
answer. 21The latter option is
obviously more favorable to the
defendant although such fact was
lost on Forbes Park.
The ground for dismissal
invoked by Forbes Park in Civil
Case No. 16540 was lack of
cause of action. There was no
need to plead such ground in a
motion to dismiss or in the
answer since the same was not
deemed waived if it was not
pleaded. 22 Nonetheless, Forbes
Park still filed a motion to dismiss
and thus exercised bad judgment
in its choice of remedies. Thus, it
has no one to blame but itself for
the consequent loss of its
counterclaim as a result of such
choice.
Inasmuch as the action for
damages filed by Forbes Park
should be as it is hereby
dismissed for being barred by the
prior judgment in G.R. No. 79319
(supra) and/or deemed waived by
Forbes Park to interpose the
same under the rule on
compulsory counterclaims, there
is no need to discuss the other
issues raised by the herein
petitioner.
WHEREFORE, the instant
petition is hereby GRANTED and
the Decision dated March 20,
1998 of the Court of Appeals in
CA-G.R. CV No. 48194 is hereby
REVERSED and SET ASIDE.  SCIAaT

Costs against respondent

Forbes Park Association, Inc.
SO ORDERED.
 (Financial Building Corp. v.
|||

Forbes Park Association, Inc.,

G.R. No. 133119, [August 17,
2000], 392 PHIL 895-905)