G.R. No. 189532 , June 11, 2014
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.

FACTS

Petitioner H.S. Equities, Ltd. (HSE), a foreign corporation represented by Virginia S. Dio, invested in respondent Subic Bay Marine Exploratorium, Inc. (SBME), a domestic corporation. After an initial payment, HSE refused further payments, alleging corporate mismanagement. SBME filed an intra-corporate complaint (Civil Case No. 7572) before the RTC of Balanga City, Bataan, against petitioners for unpaid subscription balance and for allegedly dissuading other investors. Petitioners filed an Answer with Compulsory Counterclaim, seeking moral damages, litigation expenses, recovery of investment, and exemplary damages, alleging they were denied their minority protection rights and their reputation was tarnished. The RTC motu proprio dismissed the main complaint due to a defective certificate of non-forum shopping signed by SBME’s representative without specific board authority. SBME’s motion for reconsideration, which included the required board resolution, was denied. SBME appealed to the Court of Appeals (CA-G.R. CV No. 87117), but the appeal was dismissed for failure to file an appellants’ brief, and the dismissal became final and executory. Petitioners then filed a motion in the RTC to set their counterclaims for hearing. The RTC denied the motion, dismissing the counterclaims on the ground that the main case had been dismissed with finality by the CA, and thus the court lost jurisdiction over the ancillary compulsory counterclaim.

ISSUE

Whether the RTC committed an error of law in dismissing petitioners’ compulsory counterclaims on the ground that it lost jurisdiction after the main case was dismissed with finality.

RULING

Yes. The Supreme Court granted the petition, reversed the assailed RTC Orders, and remanded the case for further proceedings on the counterclaims. The Court ruled that a compulsory counterclaim, being ancillary to the principal controversy, may generally be dismissed along with the main action. However, an exception exists when the dismissal of the complaint is due to the plaintiff’s lack of cause of action or the court’s lack of jurisdiction over the plaintiff, and the counterclaim raises a question of fact that must be resolved. In such a case, the counterclaim may remain for independent adjudication. Here, the dismissal of the main complaint was based on a procedural defect (the defective verification and certification of non-forum shopping) which did not touch upon the merits of SBME’s cause of action or the court’s jurisdiction over the parties. The compulsory counterclaim, which arose out of the same transaction as the complaint, presented questions of fact separate from the grounds for the complaint’s dismissal. Therefore, the dismissal of the main action did not preclude the survival of the counterclaim for independent resolution. The RTC retained jurisdiction to hear and adjudicate the counterclaim independently.