RULE-MAKING POWER OF SUPREME COURT By July of 2005, the trial of the case had not yet been completed.

Moreover, respondents, as plaintiffs, had failed to present their evidence.

EDGARDO PINGA, Petitioner, It appears that on 25 October 2004, the RTC already ordered the
vs. dismissal of the complaint after respondents’ counsel had sought the
THE HEIRS OF GERMAN, SANTIAGO represented by postponement of the hearing scheduled then. However, the order of
FERNANDO SANTIAGO, Respondents. dismissal was subsequently reconsidered by the RTC in an Order dated 9
June 2005, which took into account the assurance of respondents’
counsel that he would give priority to that case.
G.R. No. 170354             June 30, 2006
At the hearing of 27 July 2005, plaintiffs’ counsel on record failed to
Cath Riñon
appear, sending in his stead a representative who sought the
postponement of the hearing. Counsel for defendants (who include
The constitutional faculty of the Court to promulgate rules of practice and herein petitioner) opposed the move for postponement and moved
procedure necessarily carries the power to overturn judicial precedents instead for the dismissal of the case. The RTC noted that it was obvious
on points of remedial law through the amendment of the Rules of Court. that respondents had failed to prosecute the case for an unreasonable
One of the notable changes introduced in the 1997 Rules of Civil length of time, in fact not having presented their evidence yet. On that
Procedure is the explicit proviso that if a complaint is dismissed due to ground, the complaint was dismissed. At the same time, the RTC allowed
fault of the plaintiff, such dismissal is "without prejudice to the right of defendants "to present their evidence ex-parte."
the defendant to prosecute his counterclaim in the same or in a separate
action." The innovation was instituted in spite of previous jurisprudence
Respondents filed a Motion for Reconsideration of the order issued in
holding that the fact of the dismissal of the complaint was sufficient to
open court on 27 July 2005, opting however not to seek that their
justify the dismissal as well of the compulsory counterclaim.
complaint be reinstated, but praying instead that the entire action be
dismissed and petitioner be disallowed from presenting evidence ex-
FACTS: parte. Respondents claimed that the order of the RTC allowing petitioner
to present evidence ex-parte was not in accord with established
Petitioner Eduardo Pinga was named as one of two defendants in a jurisprudence.
complaint for injunction by respondent Heirs of German Santiago,
represented by Fernando Santiago. The Complaint alleged in essence On 9 August 2005, the RTC promulgated an order granting respondents’
that petitioner and co-defendant Vicente Saavedra had been unlawfully Motion for Reconsideration and dismissing the counterclaim, citing as the
entering the coco lands of the respondent, cutting wood and bamboos only ground therefor that "there is no opposition to the Motion for
and harvesting the fruits of the coconut trees therein. Respondents Reconsideration of the [respondents]." Petitioner filed a Motion for
prayed that petitioner and Saavedra be enjoined from committing "acts Reconsideration, but the same was denied by the RTC in an Order dated
of depredation" on their properties, and ordered to pay damages. 10 October 2005. Notably, respondents filed an Opposition to
Defendants’ Urgent Motion for Reconsideration, wherein they argued that
In their Amended Answer with Counterclaim, petitioner and his co- the prevailing jurisprudential rule is that "compulsory counterclaims
defendant disputed respondents’ ownership of the properties in question, cannot be adjudicated independently of plaintiff’s cause of action," and
asserting that petitioner’s father, Edmundo Pinga, from whom defendants "a conversu, the dismissal of the complaint carries with it the dismissal of
derived their interest in the properties, had been in possession thereof the compulsory counterclaims."
since the 1930s. Defendants in turn prayed that owing to respondents’
forcible re-entry in the properties and the irresponsible and reckless filing
of the case, they be awarded various types of damages instead in
amounts totaling P2,100,000 plus costs of suit.
ISSUE: governs the dismissals due to the failure of the plaintiff to prosecute the
complaint, as had happened in the case at bar. Otherwise, it is Section 2,
Whether or not the dismissal of the complaint necessarily carries the Rule 17, which then, and still is now, covered dismissals ordered by the
dismissal of the compulsory counterclaim. trial court upon the instance of the plaintiff. Yet, as will be seen in the
foregoing discussion, a discussion of Section 2 cannot be avoided as the
RULING: postulate behind that provision was eventually extended as well in cases
that should have properly been governed by Section 3.
We hold that under Section 3, Rule 17 of the 1997 Rules of Civil
Procedure, the dismissal of the complaint due to the fault of plaintiff does On the general effect of the dismissal of a complaint, regardless of
not necessarily carry with it the dismissal of the counterclaim, cause, on the pending counterclaims, previous jurisprudence laid
compulsory or otherwise. In fact, the dismissal of the complaint is emphasis on whether the counterclaim was compulsory or permissive in
without prejudice to the right of defendants to prosecute the character. The necessity of such distinction was provided in the 1964
counterclaim. Rules itself, particularly Section 2, Rule 17, which stated that in instances
wherein the plaintiff seeks the dismissal of the complaint, "if a
On a prefatory note, the RTC, in dismissing the counterclaim, did not counterclaim has been pleaded by a defendant prior to the service upon
expressly adopt respondents’ argument that the dismissal of their him of the plaintiff’s motion to dismiss, the action shall not be dismissed
complaint extended as well to the counterclaim. Instead, the RTC against the defendant’s objection unless the counterclaim can remain
justified the dismissal of the counterclaim on the ground that "there is no pending for independent adjudication by the court." 
opposition to [plaintiff’s] Motion for Reconsideration [seeking the
dismissal of the counterclaim]."This explanation is hollow, considering Spouses Sta. Maria, Jr. v. Court of Appeals , decided in 1972, ostensibly
that there is no mandatory rule requiring that an opposition be filed to a supplied the gap on the effect on the counterclaim of complaints
motion for reconsideration without need for a court order to that effect; dismissed under Section 3. The defendants therein successfully moved
and, as posited by petitioner, the "failure to file an opposition to the before the trial court for the dismissal of the complaint without prejudice
Plaintiff’s Motion for Reconsideration is definitely not one among the and their declaration in default on the counterclaim after plaintiffs therein
established grounds for dismissal [of the counterclaim]." failed to attend the pre-trial. After favorable judgment was rendered on
the counterclaim, plaintiffs interposed an appeal, citing among other
Our core discussion begins with Section 3, Rule 17 of the 1997 Rules of grounds, that the counterclaim could no longer have been heard after
Civil Procedure, which states: the dismissal of the complaint. While the Court noted that the
adjudication of the counterclaim in question "does not depend upon the
SEC. 3. Dismissal due to fault of plaintiff.—If, for no justifiable cause, the adjudication of the claims made in the complaint since they were virtually
plaintiff fails to appear on the date of the presentation of his evidence in abandoned by the non-appearance of the plaintiffs themselves," it was
chief on the complaint, or to prosecute his action for an unreasonable also added that "[t]he doctrine invoked is not available to plaintiffs like
length of time, or to comply with these Rules or any order of the court, the petitioners, who prevent or delay the hearing of their own claims and
the complaint may be dismissed upon motion of defendant or upon the allegations." The Court, through Justice JBL Reyes, noted:
court's own motion, without prejudice to the right of the defendant to
prosecute his counterclaim in the same or in a separate action. This The doctrine that the complaint may not be dismissed if the
dismissal shall have the effect of an adjudication upon the merits, unless counterclaim cannot be independently adjudicated is not
otherwise declared by the court. available to, and was not intended for the benefit of, a plaintiff
who prevents or delays the prosecution of his own complaint.
The distinction is relevant, for under the previous and current Otherwise, the trial of counterclaims would be made to depend upon the
incarnations of the Rules of Civil Procedure, it is Section 3, Rule 17 that maneuvers of the plaintiff, and the rule would offer a premium to vexing
or delaying tactics to the prejudice of the counterclaimants. It is in the
same spirit that we have ruled that a complaint may not be withdrawn Reversal of the RTC is in order, and a remand is necessary for trial on the
over the opposition of the defendant where the counterclaim is one that merits of the counterclaim.
arises from, or is necessarily connected with, the plaintiff’s action and
cannot remain pending for independent adjudication. Nonetheless, a new rule was introduced when Act No. 190 was replaced
by the 1940 Rules of Court. Section 2, Rule 30 of the 1940 Rules
Just a few months after BA Finance was decided, Justice Regalado specified that if a counterclaim is pleaded by a defendant prior to the
proposed before the Committee an amendment to Section 3, Rule 17 service of the plaintiff’s motion to dismiss, the action shall not be
that would explicitly provide that the dismissal of the complaint due to dismissed against the defendant’s objection unless the counterclaim can
the fault of the plaintiff shall be "without prejudice to the right of the remain pending for independent adjudication by the court. This
defendant to prosecute his counterclaim in the same or in a separate qualification remained intact when the 1964 Rules of Court was
action." introduced. The rule referred only to compulsory counterclaims, or
counterclaims which arise out of or are necessarily connected with the
It is apparent from their minutes of meeting that the survival of the transaction or occurrence that is the subject matter of the plaintiff’s
counterclaim despite the dismissal of the complaint under Section 3 stood claim, since the rights of the parties arising out of the same transaction
irrespective of whether the counterclaim was permissive or compulsory. should be settled at the same time.  As was evident
At present, even Section 2, concerning dismissals on motion of the in Metals, International Container and BA Finance, the rule was
plaintiff, now recognizes the right of the defendant to prosecute the eventually extended to instances wherein it was the defendant with the
counterclaim either in the same or separate action notwithstanding the pending counterclaim, and not the plaintiff, that moved for the dismissal
dismissal of the complaint, and without regard as to the permissive or of the complaint.
compulsory nature of the counterclaim.
The most potent statement of the theory may be found in Metals, which
Similarly, Justice Feria notes that "the present rule reaffirms the right of proceeds from the following fundamental premises—a compulsory
the defendant to move for the dismissal of the complaint and to counterclaim must be set up in the same proceeding or would otherwise
prosecute his counterclaim, as stated in the separate opinion [of Justice be abated or barred in a separate or subsequent litigation on the ground
Regalado in BA Finance.]" Retired Court of Appeals Justice Herrera of auter action pendant, litis pendentia or res judicata; a compulsory
pronounces that the amendment to Section 3, Rule 17 settles that counterclaim is auxiliary to the main suit and derives its jurisdictional
"nagging question" whether the dismissal of the complaint carries with it support therefrom as it arises out of or is necessarily connected with the
the dismissal of the counterclaim, and opines that by reason of the transaction or occurrence that is the subject matter of the complaint; and
amendments, the rulings in Metals Engineering, International Container, that if the court dismisses the complaint on the ground of lack of
and BA Finance "may be deemed abandoned." jurisdiction, the compulsory counterclaim must also be dismissed as it is
merely ancilliary to the main action and no jurisdiction remained for any
To be certain, when the Court promulgated the 1997 Rules of Civil grant of relief under the counterclaim.
Procedure, including the amended Rule 17, those previous jural doctrines
that were inconsistent with the new rules incorporated in the 1997 Rules The first point is derived from Section 4, Rule 9, of the 1964 Rules of
of Civil Procedure were implicitly abandoned insofar as incidents arising Court, while the two latter points are sourced from American
after the effectivity of the new procedural rules on 1 July 1997.  jurisprudence. There is no disputing the theoretical viability of these
Accordingly, the RTC clearly erred when it ordered the dismissal of the three points. In fact, the requirement that the compulsory counterclaim
counterclaim, since Section 3, Rule 17 mandates that the dismissal of the must be set up in the same proceeding remains extant under the 1997
complaint is without prejudice to the right of the defendant to prosecute Rules of Civil Procedure.
the counterclaim in the same or separate action. If the RTC were to
dismiss the counterclaim, it should be on the merits of such counterclaim. A compulsory counterclaim arises out of or is connected with the
transaction or occurrence constituting the subject matter of the opposing
party’s claim, does not require for its adjudication the presence of third WHEREFORE, the petition is GRANTED.
parties, and stands within the jurisdiction of the court both as to the
amount involved and the nature of the claim. The fact that the culpable SO ORDERED.
acts on which the counterclaim is based are founded within the same
transaction or occurrence as the complaint, is insufficient causation to
negate the counterclaim together with the complaint. The dismissal or
withdrawal of the complaint does not traverse the boundaries of time to
undo the act or omission of the plaintiff against the defendant, or vice
versa. While such dismissal or withdrawal precludes the pursuit of
litigation by the plaintiff, either through his/her own initiative or fault, it
would be iniquitous to similarly encumber the defendant who maintained
no such initiative or fault. If the defendant similarly moves for the
dismissal of the counterclaim or neglects to timely pursue such action, let
the dismissal of the counterclaim be premised on those grounds
imputable to the defendant, and not on the actuations of the plaintiff.

The formalistic distinction between a complaint and a counterclaim does

not detract from the fact that both of them embody causes of action that
have in their end the vindication of rights. While the distinction is
necessary as a means to facilitate order and clarity in the rules of
procedure, it should be remembered that the primordial purpose of
procedural rules is to provide the means for the vindication of rights. A
party with a valid cause of action against another party cannot be denied
the right to relief simply because the opposing side had the good fortune
of filing the case first. Yet this in effect was what had happened under
the previous procedural rule and correspondent doctrine, which under
their final permutation, prescribed the automatic dismissal of the
compulsory counterclaim upon the dismissal of the complaint, whether
upon the initiative of the plaintiff or of the defendant.

Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a

more equitable disposition of the counterclaims by ensuring that any
judgment thereon is based on the merit of the counterclaim itself and not
on the survival of the main complaint. Certainly, if the counterclaim is
palpably without merit or suffers jurisdictional flaws which stand
independent of the complaint, the trial court is not precluded from
dismissing it under the amended rules, provided that the judgment or
order dismissing the counterclaim is premised on those defects. At the
same time, if the counterclaim is justified, the amended rules now
unequivocally protect such counterclaim from peremptory dismissal by
reason of the dismissal of the complaint.