Title
BA Fice Corp. vs. Co
Case
G.R. No. 105751
Decision Date
Jun 30, 1993
BA Finance sued respondents over a credit dispute; complaint dismissed for nonappearance at pre-trial, carrying compulsory counterclaim. SC reversed CA, reinstating dismissal.
Font Size:

Case Digest (G.R. No. 105751)

Facts:

Parties Involved:

  • Petitioner: BA Finance Corporation (plaintiff in the lower court).
  • Respondents: Rufino Co, Highline Mercantile, Inc., Lucita Veloso Yap, Cloverleaf Supermarket, Inc., San Andres Commercial, and the Court of Appeals.

Subject Matter:

  • The case arose from a credit accommodation in the form of a discounting line granted by BA Finance Corporation to Rufino Co, with suretyship agreements executed by the other respondents.

Procedural Background:

  1. BA Finance Corporation filed a complaint to recover a sum of money from the respondents.
  2. Respondents filed an Amended Answer to Complaint with Compulsory Counterclaim, alleging overpayments and damages.
  3. The case was set for a Pre-Trial Conference, which was repeatedly reset.
  4. On 19 December 1989, BA Finance Corporation’s counsel failed to attend the Pre-Trial Conference.
  5. Respondents moved for the dismissal of the complaint, which the trial court granted without prejudice.
  6. On 22 January 1990, respondents moved to set the reception of evidence for their counterclaim. Petitioner opposed this motion.
  7. The trial court denied respondents' motion on 2 April 1990, prompting them to appeal to the Court of Appeals.
  8. The Court of Appeals reversed the trial court’s order on 18 December 1991, directing the trial court to set the reception of evidence for the counterclaim.
  9. Petitioner’s motion for reconsideration was denied on 2 June 1992, leading to the filing of the instant petition.

Issue:

  1. Primary 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?
  2. Sub-Issue: Whether the Court of Appeals erred in reversing the trial court’s order and allowing the respondents to present evidence on their counterclaim after the dismissal of the complaint.

Ruling:

The Supreme Court granted the petition and reversed the decision of the Court of Appeals. The dismissal of the complaint carried with it the dismissal of the compulsory counterclaim. The trial court’s order dismissing the case was reinstated.

Ratio:

  1. Nature of Compulsory Counterclaim:

    • A compulsory counterclaim arises out of or is connected with the transaction or occurrence that is the subject matter of the opposing party’s claim.
    • It does not require the presence of third parties, and the court has jurisdiction to entertain it.
    • In this case, the counterclaim was compulsory because it was intertwined with the main claim.
  2. Effect of Dismissal of Complaint:

    • A compulsory counterclaim cannot remain pending for independent adjudication if the main action is dismissed.
    • The dismissal of the complaint removes the jurisdictional basis for the counterclaim.
    • The Court cited Justice Vicente Abad Santos: “If the civil case is dismissed, so also is the counterclaim filed therein.”
  3. Procedural Lapse by Respondents:

    • Respondents moved for the dismissal of the complaint but did not reserve their right to maintain the counterclaim.
    • They filed their motion to set the reception of evidence for the counterclaim 33 days after the dismissal, by which time the dismissal had become final.
  4. Equity and Justice:

    • The Court acknowledged the potential harshness of the rule but emphasized that respondents failed to follow the proper procedure.
    • The proper recourse for a defendant wishing to pursue a compulsory counterclaim is to move for the plaintiff to be declared non-suited on the complaint and in default on the counterclaim, reserving the right to present evidence ex parte.
  5. Finality of Dismissal Order:

    • The trial court’s dismissal order had already become final, and the Court of Appeals erred in setting it aside.

Conclusion:

The Supreme Court ruled that the dismissal of the complaint for the plaintiff’s failure to appear at the pre-trial carries with it the dismissal of the compulsory counterclaim. The Court of Appeals’ decision was reversed, and the trial court’s order dismissing the case was reinstated.


Jur is an AI-powered legal research platform in the Philippines for case digests, summaries, and jurisprudence. AI-generated content may contain inaccuracies; please verify independently.