GR 105751; (June, 1993) (Digest)
G.R. No. 105751 June 30, 1993
BA FINANCE CORPORATION, petitioner, vs. RUFINO CO, HIGHLINE MERCANTILE, INC., LUCITA VELOSO YAP, CLOVERLEAF SUPERMARKET, INC., SAN ANDRES COMMERCIAL and COURT OF APPEALS, respondents.
FACTS
Petitioner BA Finance Corporation filed a complaint to recover a sum of money arising from a credit accommodation granted to respondent Rufino Co, with suretyship agreements from his co-defendants. After the defendants filed an Amended Answer with a Compulsory Counterclaim, the case was set for pre-trial. On December 19, 1989, the plaintiff’s counsel failed to appear at the pre-trial conference. Consequently, the defendants moved for the dismissal of the case without prejudice, which the trial court granted. On January 22, 1990, the defendants (private respondents) moved to set the reception of evidence for their counterclaim. The petitioner opposed this. The trial court denied the motion to set the counterclaim for hearing. The Court of Appeals reversed this order and directed the trial court to set the reception of evidence on the counterclaim. The petitioner’s motion for reconsideration was denied, prompting this petition.
ISSUE
Does the dismissal of the complaint for the plaintiff’s nonappearance at the pre-trial, upon motion of the defendants, carry with it the dismissal of their compulsory counterclaim?
RULING
Yes. The Supreme Court granted the petition, reversed the Court of Appeals, and reinstated the trial court’s order of dismissal. The counterclaim was compulsory in nature as it arose from the same transaction as the complaint and the same evidence would sustain the counterclaim and refute the complaint. The rule is that a compulsory counterclaim cannot remain pending for independent adjudication; it is ancillary to the principal action. Therefore, the dismissal of the complaint for failure to prosecute (due to nonappearance at pre-trial) carries with it the dismissal of the compulsory counterclaim. The Court noted that the defendants themselves moved for the dismissal and did not reserve their right to maintain the counterclaim. Furthermore, they filed their motion to set the counterclaim for hearing 33 days after the dismissal order, which had already become final. However, the Court provided guidance for the future: a defendant wishing to pursue a compulsory counterclaim after a ground for dismissal under Rule 17, Section 3 arises should not move to dismiss the complaint. Instead, the defendant should move to have the plaintiff declared non-suited on the complaint and simultaneously move to be declared in default on the compulsory counterclaim, reserving the right to present evidence ex parte on the counterclaim. This procedure was not followed by the private respondents.