UNIFORM PROCEDURE IN THE COURTS

1.) ELIZA ZUÑIGA-SANTOS v. MARIA DIVINA GRACIA SANTOS-GRAN AND REGISTER OF DEEDS OF MARIKINA CITY
G.R. No. 197380, October 08, 2014; PERLAS-BERNABE, J.

DOCTRINE: Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a
particular action. The former refers to the insufficiency of the allegations in the pleading, while the latter to the
insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at
the earliest stages of the proceedings through a motion to dismiss, while dismissal for lack of cause of action
may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions or
evidence presented by the plaintiff.

FACTS: Petitioner filed a complaint for annulment of sale and revocation of title against respondents for
annulment of sale and revocation of title against respondent.

Petitioner’s Contention:

(a) She was the registered owner of three (3) parcels of land located in the Municipality of
Montalban, Rizal, prior to their transfer in the name of private respondent Gran;

(b) She has a second husband by the name of Lamberto Santos, with whom she did not have any
children;

(c) She was forced to take care of Lamberto’s alleged daughter, Gran, whose birth certificate
was forged to make it appear that the latter was petitioner’s daughter;

(d) Pursuant to void and voidable documents, i.e., a Deed of Sale, Lamberto succeeded in
transferring the subject properties in favor of and in the name of Gran;

(e) Despite diligent efforts, said Deed of Sale could not be located; and

(f) She discovered that the subject properties were transferred to Gran sometime in November
2005. Accordingly, petitioner prayed, inter alia, that Gran surrender to her the subject
properties and pay damages, including costs of suit.

Respondent’s Contention:

(a) The action filed by petitioner had prescribed since an action upon a written contract must be
brought within ten (10) years from the time the cause of action accrues, or in this case, from the
time of registration of the questioned documents before the Registry of Deeds;

(b) The Amended Complaint failed to state a cause of action as the void and voidable documents
sought to be nullified were not properly identified nor the substance thereof set forth, thus,
precluding the RTC from rendering a valid judgment in accordance with the prayer to surrender
the subject properties.

Lower Court: RTC granted Gran’s motion and dismissed the Amended Complaint for its failure to state a
cause of action, considering that the deed of sale sought to be nullified was not attached. It likewise
held that the certificates of title covering the subject properties cannot be collaterally attacked and that
 since the action was based on a written contract, the same had already prescribed under Article 1144 of
the Civil Code.

Court of Appeals: CA sustained the dismissal of petitioner’s Amended Complaint but on the ground of
insufficiency of factual basis. It disagreed with the RTC’s finding that the said pleading failed to state a
cause of action since it had averred that: (a) petitioner has a right over the subject properties being the
registered owner thereof prior to their transfer in the name of Gran; (b) Lamberto succeeded in
transferring the subject properties to his daughter, Gran, through void and voidable documents; and (c)
the latter’s refusal and failure to surrender to her the subject properties despite demands violated
petitioner’s rights over them. The CA likewise ruled that the action has not yet prescribed since an
action for nullity of void deeds of conveyance is imprescriptible.

ISSUE: Whether or not the dismissal of petitioner’s Amended Complaint should be sustained.

HELD: Failure to state a cause of action and lack of cause of action are distinct grounds to dismiss a particular
action. The former refers to the insufficiency of the allegations in the pleading, while the latter to the
insufficiency of the factual basis for the action. Dismissal for failure to state a cause of action may be raised at
the earliest stages of the proceedings through a motion to dismiss, while dismissal for lack of cause of action
may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions or
evidence presented by the plaintiff.

In the case at bar, both the RTC and the CA were one in dismissing petitioner’s Amended Complaint, but varied
on the grounds thereof – that is, the RTC held that there was failure to state a cause of action while the CA ruled
that there was insufficiency of factual basis.

While the Amended Complaint does allege that petitioner was the registered owner of the subject properties in
dispute, nothing in the said pleading or its annexes would show the basis of that assertion, either through
statements/documents tracing the root of petitioner’s title or copies of previous certificates of title registered in
her name. Instead, the certificates of title covering the said properties that were attached to the Amended
Complaint are in the name of Gran.

Clearly, the claim that the sale was effected through "voidable and void documents" partakes merely of a
conclusion of law that is not supported by any averment of circumstances that will show why or how such
conclusion was arrived at. In fact, what these "voidable and void documents" are were not properly stated
and/or identified.

In the case at bar, a reading of the allegations of the Amended Complaint failed to show that petitioner
remained in possession of the subject properties in dispute. On the contrary, it can be reasonably deduced that
it was Gran who was in possession of the subject properties, there being an admission by the petitioner that the
property covered by TCT No. 224174 was being used by Gran’s mother-in-law. In fact, petitioner’s relief in the
Amended Complaint for the "surrender" of three (3) properties to her bolsters such stance.
And since the new titles to the subject properties in the name of Gran were issued by the Registry of Deeds of
Marikina on the following years: TCT No. 224174 in 1992, TCT No. N-5500 in 1976, and TCT No. N-4234 in 1975,
the filing of the petitioner’s complaint before the RTC in 2006 was obviously beyond the ten-year prescriptive
period, warranting the Amended Complaint’s dismissal all the same. Petition denied.

2.) FINANCIAL BUILDING CORPORATION vs. FORBES PARK ASSOCIATION, INC (G.R. No. 133119. August 17, 2000; DE
LEON, JR., J.)
DOCTRINE: A counterclaim presupposes the existence of a claim against the party filing 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 counterclaimants.

FACTS: Union of Soviet Socialist Republic (USSR) was the owner of a residential lot located at Forbes Park Village
in Makati City. On December 1985, the USSR engaged the services of petitioner Financial Building Corp. for the
construction of an office and staff apartment building at the said lot. Due to the USSRs representation that it
would be building a residence for its Trade Representative, Forbes Park authorized its construction and work
began shortly thereafter.
On June 1986, Forbes Park reminded the USSR of existing regulation, allowing only the construction of a single-
family residential building in each lot within the village. Promptly, the USSR gave its assurance that it has been
complying with all regulations. Despite this, Financial Building submitted to the Makati City Government a
second building plan for the construction of a multi-level apartment building.
ASSERTION: Forbes Park discovered the second plan and subsequent ocular inspection of the subject lot
confirmed the violation of the restrictions. Thus, it enjoined further construction work by suspending all
permits of entry for the personnel and materials of Financial Building in the said construction site.
COMPLAINT (by Petitioner): In April 1987, Financial Building filed in the RTC of Makati, a Complaint for
Injunction and Damages with a prayer for Preliminary Injunction against Forbes Park.
RESPONDENT’S COUNTER: The respondent, in turn, filed a Motion to Dismiss on the ground that
Financial Building had no cause of action because it was not the real party-in-interest.
RTC MAKATI (1st COMPLAINT ): The trial court issued a writ of preliminary injunction against Forbes Park.
COURT OF APPEALS (1st COMPLAINT): Nullified RTC decision and dismissed the complaint.
SC (1st COMPLAINT): Affirmed the dismissal.

COMPLAINT (by Respondent): After the first case was terminated with finality, Forbes Park sought to
vindicate its rights by filing with RTC Makati a Complaint for Damages against Financial Building, arising
from the violation of its rules and regulations.
RTC MAKATI (2nd COMPLAINT): On September 1994, the trial court rendered its Decision in favor of
Forbes Park and against Financial Building.
COURT OF APPEALS (2nd COMPLAINT) Financial Building appealed the said Decision of the trial court in
by way of a petition for review on certiorari, however, the Court of Appeals affirmed the RTC Decision.

Thus this petition before the SC.

Issue: Whether or not the alleged claims and causes of action therein are barred by prior judgment and/or
deemed waived for its failure to interpose the same as compulsory counterclaim in the civil case.

Held: Yes. The SC held that a counterclaim is one which arises out of or is necessarily connected with the
transaction or occurrence that is the subject matter of 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 the third parties over whom
the court cannot acquire jurisdiction, such compulsory counter claim is barred if it is not set up in the action filed
by the opposing party.
The first controversy, petitioner FBC seized the initiative by filing a prior injunction case, which was anchored on
the contention that Forbes Park's prohibition on the construction in the subject premises was improper.
 The instant case on the other hand, was initiated by Forbes Park to compel FBC to remove the same structures it
has erected in the same premises involved in the prior case, and it claims damages for undertaking the said
construction. Thus, it is clear that there is a logical relation between the two cases and it is obvious that
substantially the same evidence is involved in both cases. The compulsory counterclaim is now barred because
Forbes Park filed a motion to dismiss.
A compulsory counterclaim is auxiliary to the proceeding in the original suits and derives its jurisdiction support
therefrom. A counterclaim presupposes the existence of a claim against the party filing 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 counterclaimants. In other words, if the
dismissal of the main action result the dismissal of counterclaim already filed, it stand 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.

3.) DE LIMA V. GATDULA (G .R. NO. 204528 FEBRUARY 19, 2013; LEONEN, J.)

Doctrine:
Facts: On February 2012, respondent Magtanggol Gatdula filed a Petition for the Issuance of a Writ of Amparo in
the RTC of Manila. The case was raffled to Judge Pampilo, Jr. on the same day. The Amparo was directed against
petitioners De Lima et al.
Respondent Gatdula’s Prayer: Respondent wanted De Lima, et al “to cease and desist from framing him up for
the fake ambush incident by filing bogus charges of Frustrated Murder against Gatdula in relation to the alleged
ambush incident”.
Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons and ordered De Lima, et
al. to file an Answer. The hearing was held allegedly for determining whether a temporary protection order may
be issued. During that hearing, counsel for De Lima, et al. manifested that a Return, not an Answer, is
appropriate for Amparo cases. In March 2012, Judge Pampilo, in his Order, insisted that “[s]ince no writ has
been issued, return is not the required pleading but answer.” The judge noted that the Rules of Court apply
suppletorily in Amparo cases. He opined that Rules on Summary Procedure applied and thus the Judge required
petitioners to file and Answer. Even without a Return nor an Answer, he ordered the parties to file their
respective memoranda within five (5) working days after that hearing. Since the period to file an Answer had not
yet lapsed by then, the judge also decided that the memorandum of De Lima, et al. would be filed in lieu of their
Answer.
RTC- MANILA: On March 2012, the RTC rendered a “Decision” granting the issuance of the Writ of Amparo. The
RTC also granted the interim reliefs prayed for, namely: temporary protection, production and inspection
orders. The production and inspection orders were in relation to the evidence and reports involving an on-going
investigation of the attempted assassination of Deputy Director Esmeralda. It is not clear from the records how
these pieces of evidence may be related to the alleged threat to the life, liberty or security of the respondent
Gatdula. The subsequent MR filed by De Lima, et al was denied by the RTC.

De Lima, et al thus came to the SC assailing the March 20 RTC Decision via Rule 45.

Issue: Whether or not the Writ of Amparo can be executed and reviewed.

Held: No. RTC committed several procedural errors on issuing the privilege of the Writ of Amparo. The Decision
dated of March 2012 could not be the judgment or original order that is appealable under Sec. 19 of the Rule on
the Writ of Amparo. This Decision pertained to the issuance of the writ, not the judgment. The SC also found
many irregularities committed by the RTC:
1. The insistence on filing of an Answer was inappropriate. It is the Return that serves as the responsive
pleading for petitions for the issuance of Writs of Amparo.
A. The requirement to file an Answer is contrary to the intention of the Court to provide a speedy
remedy to those whose right to life, liberty and security are violated or are threatened to be
violated.
B. A writ of Amparo is a special proceeding. It is a remedy by which a party seeks to establish a status,
a right or particular fact. It is not a civil nor a criminal action, hence, the application of the Revised
Rule on Summary Procedure is seriously misplaced.
2. The holding of a hearing on the main case prior to the issuance of the writ and the filing of a Return.
Without a Return, the issues could not have been properly joined.
3. The court required a memorandum in lieu of a responsive pleading (Answer) of De Lima, et al
A. The Return in Amparo cases allows the respondents to frame the issues subject to a hearing. Hence,
it should be done prior to the hearing, not after.
B. A memorandum, on the other hand, is a synthesis of the claims of the party litigants and is a final
pleading usually required before the case is submitted for decision.
C. One cannot substitute for the other since these submissions have different functions in facilitating
the suit.
D. A memorandum is a prohibited pleading under the Rule on the Writ of Amparo.

It is also of note that the privilege of the Writ of Amparo is different from the actual order called the Writ of
Amparo. The privilege includes availment of the entire procedure outline in the Rule on the Writ of Amparo.
After examining the petition and its attached affidavits, the Return and the evidence presented in the summary
hearing, the judgment should detail the required acts from the respondents that will mitigate, if not totally
eradicate, the violation of or the threat to the petitioner’s life, liberty or security. A judgment which simply
grants the “privilege of the writ” cannot be executed.

The procedural irregularities in the RTC affected the mode of appeal that petitioners used in elevating the
matter to this Court. When it is the judge himself who disregards the rules of procedure, delay and confusion
result.

Petition for Review is not the proper remedy to assail the March 2012 Order. A Petition for Certiorari, on the
other hand is prohibited. However, simply dismissing the present petition will cause grave injustice to the
parties involved. The rules can be suspended on the following grounds:

(1) Matters of life, liberty, honor or property,

(2) The existence of special or compelling circumstances,

(3) The merits of the case,

(4) A cause not entirely attributable to the fault or negligence of the party favored by the suspension of
the rules,

(5) A lack of any showing that the review sought is merely frivolous and dilatory, and

(6) The other party will not be unjustly prejudiced thereby.

4.) VIRGINIA S. DIO and H.S. EQUITIES, LTD., Petitioners, vs. SUBIC BAY MARINE EXPLORATORIUM, INC., represented
by its Chairman and Chief Executive Officer, TIMOTHY DESMOND, Respondents. (G.R. No. 189532 June 11, 2014)

Facts: In 2002, SBME decided to expand its business by operating a beach resort inside the property
administered by the Subic Bay Metropolitan Authority (SBMA). HSE, thru its authorized director, Virgina Dio,
agreed to invest the amount of US$2,500,000.00 with SBME by purchasing common shares of stock. After HSE
initially paid US$200,000.00 for its subscription, it refused to pay out money for the expansion project of the
SBME due to the alleged mismanagement in the handling of corporate funds. Consequently, SBME initiated an
intracorporate dispute before the RTC Bataan against petitioners HSE and Dio.

SBME’s Contention: In their Amended Complaint, SBME essentially alleged that HSE unjustly refused to
pay the balance of its unpaid subscription effectively jeopardizing the company‘s expansion project. It
was further alleged by SBME that Dio tried to dissuade local investors and financial institutions from
putting in capital to SBME by imputing defamatory acts against Desmond. To protect the interest of the
corporation and its stockholders, SBME sought that petitioners be enjoined from committing acts
inimical to the interest of the company.

HSE’s Contention: To refute the claims of respondents, petitioners maintained in their Answer with
Compulsory Counterclaim that it would be highly preposterous for them to dissuade investors and banks
from putting in money to SBME considering that HSE and Dio are stakeholders of the company with
substantial investments therein.

SBME’s Counter- Contention: In turn, petitioners countered that their reputation and good name in the
business community were tarnished as a result of the filing of the instant complaint, and thus prayed
that they be indemnified. It was alleged that after the filing of the instant complaint, Desmond, in
collusion with other Board of Directors of SBME, managed to unjustly deny HSE and Dio their rights
under the Subscription Agreement. To curb similar socially abhorrent actions, petitioners prayed that
SBME and its Board of Directors, namely, Desmond, John Corcoran, Gaile Laule and Gregorio
Magdaraog, be jointly and severally held liable to pay exemplary damages in the amount of
US$2,000,000.00.

RTC Bataan: The TC issued an Order dismissing the civil case and was grounded on the defective
certificate of non-forum shopping which was signed by SBME CEO Desmond without specific authority
from the Board of Directors of SBME. Even with a SBME Board Resolution, RTC denied respondents‘
motion and affirmed the dismissal, ruling that the belated submission of a board resolution evidencing
Desmond‘s authority to bind the corporation did not cure the initial defect in the complaint and
declared that strict compliance with procedural rules is enjoined for the orderly administration of
justice. Aggrieved by the lower court‘s refusal to reinstate their complaint, respondents elevated the
matter before the Court of Appeals assailing the propriety of RTC Orders via Petition for Review.

Court of Appeals: For failure of the respondents to file their appellants‘ brief, the appellate court
proceeded to dismiss and consider the case closed and terminated. After respondents failed to
seasonably move for the reconsideration of the aforementioned Resolution, the dismissal became final
 and executory. The procedural incidents before the appellate court having been resolved with finality,
petitioners went back to the RTC to file a motion to set their counterclaims for hearing, which was
opposed by the respondents on the ground that the filing of the compulsory counterclaims was not
accompanied by payment of the required docket fees precluding the court from acquiring jurisdiction
over the case.

RTC Bataan: Acting on the motions filed by the opposing parties, the RTC in 2009 granted the motion of
the respondents, thereby directing the dismissal of petitioners‘ counterclaims but not on the ground of
non-payment of docket fees. In disallowing petitioners‘ counterclaims to proceed independently of
respondents‘ complaint, the lower court pointed out that in view of the dismissal of the main case,
which has already been affirmed with finality by the appellate court, it has already lost its jurisdiction to
act on petitioners‘ counterclaim, the compulsory counterclaim being merely ancillary to the principal
controversy. Petitioners filed an instant Petition for Review on Certiorari on pure question of law
seeking the reversal of the two RTC Orders.

Issue: Whether or not the Trial Court committed an error of law when it refused to set [petitioners‘]
counterclaims for hearing on the ground that the case was deemed "Closed and Terminated" by the Court Of
Appeals after the latter dismissed respondents‘ appeal because of their failure to file their appellants‘ brief.

Ruling: YES. 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. 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, this Court resolved the nagging question as to
whether or not the dismissal of the complaint carries with it the dismissal of the counterclaim. 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 Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in the
1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the
new procedural rules on 1 July 1997.
Thus, the SC rules 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. 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 suffer 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.
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.
PETITION GRANTED.

5.) AIDA PADILLA vs. GLOBE ASIATIQUE REALTY HOLDINGS CORPORATION (G.R. No. 207376, August 6, 2014;
VILLARAMA, JR., J.)

Facts: From the years 2005 to 2008, Philippine National Bank (PNB) entered into several Contracts to Sell (CTS)
Facility Agreements with respondents Globe Asiatique Realty Holdings Corporation (Globe Asiatique) and Filmal
Realty Corporation (Filmal), represented by Delfin and Dexter Lee. PNB thereby agreed to make available to
Globe Asiatique and Filmal CTS Facility in the amount not exceeding P 200M. These availments were later
increased to a total amount of P 1.2B. As a condition for the CTS Facility availments, respondents executed in
favor of PNB several Deeds of Assignment covering accounts receivables in the aggregate amount of P 1.195B.
However, in 2010, respondents defaulted in the payment of their outstanding balance and delivery to PNB of
transfer certificates of title corresponding to the assigned accounts receivables, for which PNB declared them in
default under the CTS Facility Agreements. Thereafter, PNB instituted Civil Case for recovery of sum of money
and damages with prayer for writ of preliminary attachment before the RTC of Pasay City against the
respondents.

PNB’s Allegation (Pasay RTC): PNB alleges the fraudulent acts and misrepresentations committed by
respondents in obtaining PNB’s conformity to the CTS Facility Agreements and the release of various sums to
respondents. PNB also accused respondents of falsely representing that they have valid and subsisting contracts
to sell, which evidently showed they had no intention to pay their loan obligations.

Defendants Delfin Lee and Dexter Lee (Pasay RTC): In their Answer with Counterclaim with motion to dismiss,
they argued that PNB has no cause of action against them as there is nothing in the CTS Facility Agreements that
suggest they are personally liable or serve as guarantors for Globe Asiatique and Filmal.

Defendants Globe Asiatique and Filmal (Pasay RTC): In their Answer with Counterclaim, they denied PNB’s
allegations of fraud and misrepresentation and they asserted that the allegations of fraud in the complaint are
without basis and no proof was presented by plaintiff on the existence of preconceived fraud and lack of
intention to pay their obligations, citing their timely payments made to PNB. They further assailed the affidavit
executed by petitioner PNB SVP Aida Padilla who they claimed has no personal knowledge of the subject
transactions and there being no allegation of threat or possibility that defendant corporations will dispose of
their properties in fraud of their creditors.
Pasay RTC: Denied defendants’ motion to dismiss, motions to discharge preliminary attachment and to expunge
or suspend proceedings, as well as PNB’s motion to expunge. Defendants filed an MR, which was denied by the
Pasay RTC.

PASIG RTC
Pasig RTC: Respondents Lee, Globe Asiatique, et al. filed against petitioner Padilla for damages before the Pasig
RTC, contending that Padilla’s filing of civil action against them was malicious and ruined their reputations. As
for As to the CTS Facility Agreements with PNB, respondents alleged that these were already novated by the
parties who agreed upon a term loan. But despite her knowledge of such novation and that the obligation was
not yet due and demandable; petitioner with evident bad faith still executed a "perjured" Affidavit in support of
the application for writ of preliminary attachment before the Pasay City RTC. Respondents likewise sought to
hold Judge Gutierrez personally liable for issuing the writ of preliminary attachment in favor of PNB
notwithstanding that the obligation subject of PNB’s complaint was sufficiently secured by the value of real
properties sold to it by virtue of the CTS Facility Agreements and deeds of assignment of accounts receivables.

Respondents thus prayed for a judgment ordering petitioner and Judge Gutierrez to pay moral damages,
exemplary damages, litigation expenses, attorney’s fees and cost of suit.

Judge Gutierrez moved to dismiss the complaint against him on the following grounds: (1) respondents have no
cause of action against him; and (2) the Pasig City court has no jurisdiction over the case and his person, movant
being of co-equal and concurrent jurisdiction.

Petitioner filed her Answer With Compulsory Counterclaims, praying for the dismissal of respondents’ complaint
on the following grounds: (1) submission of a false certification of non-forum shopping by respondents and their
blatant commission of willful, deliberate and contumacious forum shopping; (2) litis pendentia; (3) respondents’
failure to attach the alleged actionable document, i.e.the supposed "new term loan", in violation of Section 7,
Rule 8 of the Rules of Court; (4) failure to state a cause of action against petitioner; and (5) petitioner cannot be
held personally liable for her official acts done for and in behalf of PNB.

On January 5, 2012, petitioner filed a motion for preliminary hearing on affirmative defenses, contending that
respondents are parroting the very same arguments raised and relying on the same evidence they presented
before the Pasay City RTC to establish the alleged novation and purported insufficiency of the attachment bond,
which issues are still pending in the said court.

Respondents filed their Comment/Opposition, arguing that there is nothing in their complaint that would slightly
suggest they are asking the Pasig City RTC to issue any injunction or otherwise issue an order setting aside the
writ of preliminary attachment issued by the Pasay City RTC, and neither did they ask for a ruling on whether
said writ is illegal or whether Judge Gutierrez committed a grave abuse of discretion. They asserted that what
they seek from the Pasig City RTC is to allow them to recover damages from Judge De Leon for his tortious
action in approving PNB’s attachment bond. They also insisted that forum shopping and litis pendentia are
absent in this case, contrary to petitioner’s claims.

On April 2, 2012, the RTC of Pasig City issued an Order dismissing Civil Case No. 73132 for lack of jurisdiction. On
October 22, 2012, the Pasig City RTC denied respondents’ motion for reconsideration of the April 2, 2012 Order
dismissing their complaint. Respondents filed a Notice of Appeal under Section 1(a), Rule 41 of the Rules of
Court.
Issue: 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.

Held: 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:

SEC. 7. Compulsory counterclaim.– A compulsory counterclaim is one which, being cognizable by the regular
courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter
of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the
court cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction of the court both as to the
amount and the nature thereof, except that in an original action before the Regional Trial Court, the
counterclaim may be considered compulsory regardless of the amount.

In this case, petitioner’s counterclaim for damages raised in her answer before the Pasig City RTC is compulsory,
alleging suffering and injury caused to her as a consequence of the unwarranted filing of the baseless complaint
filed by respondents. Said court, however, dismissed her counterclaim upon the same ground of lack of
jurisdiction as its resolution supposedly would entail passing upon the validity of orders and processes still
pending before the Pasay City RTC. In Metals Engineering Resources Corp. v. Court of Appeals, we reversed the
trial court’s order allowing private respondent to proceed with the presentation of his evidence in support of his
counterclaim after the complaint was dismissed for not paying the correct docket fee and hence the trial court
did not acquire jurisdiction over the case. We held 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.34

Under the 1997 Rules of Civil Procedure, it is now explicitly provided that the dismissal of the complaint due to
failure of the plaintiff to prosecute his case is "without prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action." The effect of this amendment on previous rulings on whether
the dismissal of a complaint carries with it the dismissal of the counterclaims as well was discussed in the case of
Pinga v. The Heirs of German Santiago, thus:

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.] 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 amendments, the rulings in Metals Engineering, International Container, and
BA Finance" may be deemed abandoned." On the effect of amendment to Section 3, Rule 17, the commentators
are in general agreement, although there is less unanimity of views insofar as Section 2, Rule 17 is concerned.
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17,
those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil
Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new procedural rules
on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with
the complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The abandonment of BA Finance as
doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure. … 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.