GR 95631; (October, 1991) (Digest)
G.R. No. 95631 October 28, 1991
METALS ENGINEERING RESOURCES CORPORATION, petitioner, vs. COURT OF APPEALS and PLARIDEL JOSE, respondents.
FACTS
Petitioner Metals Engineering Resources Corporation filed a complaint for annulment of an “Agreement to Buy and Sell” against private respondent Plaridel Jose before the Regional Trial Court (RTC) of Pasig. The petitioner alleged the agreement was imperfect and unenforceable as essential terms, particularly the manner and period of payment of the purchase price, were left for future determination. The petitioner rescinded the agreement and tendered a refund of the earnest money, which Jose refused.
Private respondent Jose, in his Answer, interposed a compulsory counterclaim for damages, alleging he had incurred expenses for subdividing and advertising the property. The RTC, after a pre-trial, dismissed the petitioner’s complaint for failure to prosecute. The court, however, proceeded to hear Jose’s compulsory counterclaim ex parte, eventually rendering a judgment against the petitioner. The Court of Appeals dismissed the petitioner’s subsequent special civil action for certiorari and prohibition, prompting this petition.
ISSUE
Whether the trial court acted without jurisdiction or with grave abuse of discretion in proceeding to hear and decide the compulsory counterclaim after dismissing the main complaint.
RULING
Yes. The Supreme Court reversed the Court of Appeals and dismissed the compulsory counterclaim. The legal logic is anchored on the nature of a compulsory counterclaim under the Rules of Court. A compulsory counterclaim is auxiliary to the main proceeding and derives its jurisdictional support from the court’s jurisdiction over the main action. Consequently, when the main complaint is dismissed, the court loses jurisdiction over the compulsory counterclaim attached to it.
The trial court’s order of dismissal for failure to prosecute was a final dismissal of the complaint, not a mere interlocutory order. Therefore, upon that dismissal, the court no longer had the authority to proceed with the compulsory counterclaim. The proper remedy for the private respondent was to re-file his claim as an independent action or, as noted in this case, to pursue it in a separate pending case (Civil Case No. 58126) where he had already raised the same claims. The Court of Appeals erred in treating the trial court’s order as interlocutory and in failing to correct the lower court’s act of exceeding its jurisdiction, which is precisely the office of the extraordinary writs of certiorari and prohibition.