2. Dismissal upon Motion by Plaintiff; Effect on Counterclaim

H. Dismissal of Actions (Rule 17)

DISMISSAL UPON MOTION BY PLAINTIFF; EFFECT ON EXISTING COUNTERCLAIM

Characteristics

• Dismissal by a motion to dismiss filed by the plaintiff
• Made after service of answer or motion for summary judgment
• Requires approval of court (matter of judicial discretion)
• Dismissal is without prejudice to refiling unless otherwise stated in the order

A Dismissal Upon Motion by Plaintiff is NOT for the purpose of voluntarily abandoning his claim when the intention was to expedite the enforcement of his rights and there was clearly no inaction nor lack of interest on his part. Prescription, therefore, does not run. (Antonio, Jr. vs. Morales G.R. 165552, 2007)

Under Rule 17, Section 3, a defendant may move to dismiss the case if the plaintiff defaults; it does not contemplate a situation where the dismissal was due to lack of jurisdiction.

Thus, when respondents filed the second case, they were merely refiling the same claim that had been previously dismissed on the basis of lack of jurisdiction. When they moved to dismiss the second case, the motion to dismiss can be considered as the first dismissal at the plaintiffs instance. Accordingly, the dismissal at this instance is a matter of right that is not subject to the trial court's discretion.

For this reason, the trial court issued its order dismissing case 2, without prejudice. When respondents filed the third case on substantially the same claim, there was already one prior dismissal at the instance of the plaintiffs and one prior dismissal at the instance of the defendants.

While it is true that there were two previous dismissals on the same claim, it does not necessarily follow that the re-filing of the claim was barred by Rule 17, Section 1. In granting the dismissal of the second case, the trial court specifically orders the dismissal to be without prejudice. It is only when the trial court's order either is silent on the matter, or states otherwise, that the dismissal will be considered an adjudication on the merits. (Ching v. Cheng, G.R. No. 175507, 2014)

Effect on Counterclaim

The dismissal of the complaint does not necessarily carry with it the dismissal of the counterclaim, compulsory or otherwise. The dismissal of the complaint is without prejudice to the right of the defendants to prosecute the counterclaim. (Pinga v. Santiago, G.R. No. 170354, 2006)

Counterclaim NOT dismissed if pleaded by a defendant prior to the service upon him of the plaintiff’s motion for dismissal. Dismissal of the action upon motion by the plaintiff is WITHOUT prejudice to the right of the defendant to prosecute his counterclaim in a separate action.

Counterclaim can be resolved in the same action if defendant manifests such preference within 15 days from notice of the motion.

These alternative remedies of the defendant are available to him regardless of whether his counterclaim is compulsory OR permissive.

If the dismissal of the complaint somehow eliminates the cause of the counterclaim, then the counterclaim also cannot survive. Conversely, if the counterclaim itself states sufficient cause of action then it should stand independently and survive the dismissal of the complaint. (Perkin Elmer Singapore Pte. Ltd. vs. Dakila Trading Corporation G.R. 172242, 2007)

Effect on Counterclaim

Dismissal of the action is WITHOUT prejudice to the right of the defendant to prosecute his counterclaim in the same OR in a separate action.

DISMISSAL OF COUNTERCLAIM, CROSSCLAIM OR THIRD-PARTY COMPLAINT

The provisions under Rule 17 apply to the dismissal of any counterclaim, cross-claim or third-party complaint.

A dismissal or discontinuance of an action operates to annul orders, rulings or judgments previously made in the case, as well as all proceedings had in connection therewith and renders all pleadings ineffective.

Test to Determine Whether a Counterclaim is Compulsory or Permissive

• Are the issues of fact or law raised by the claim and the counterclaim largely the same?
• Would res judicata bar a subsequent suit on defendant’s claim absent the compulsory counterclaim rule?
• Will substantially the same evidence support or refute plaintiff’s claim as well as the defendant’s counterclaim? and
• Is there any logical relation between the claim and the counterclaim? Affirmative answers to the above queries indicate the existence of a compulsory counterclaim. (See Financial Building v. FPA, G.R. No. 133119, 2000)

Despite the lack of jurisdiction of the court to adjudicate on the counterclaim, the same may nevertheless be pleaded in the same action, not to obtain affirmative relief because the court, for want of jurisdiction cannot do so. The purpose would merely be as a defense to weaken the plaintiff’s claim. (Maceda v. Court of Appeals, G.R. No. 83545, 1989)

A party who desires to plead a compulsory counterclaim should NOT file a motion to dismiss. If he files a motion to dismiss and the complaint is dismissed there will be no chance to invoke the counterclaim. (Riano, Civil Procedure: A Restatement for the bar, 2nd ed, 2009)

A dismissal of the complaint does not carry with it the dismissal of the counterclaim.

(2) PERMISSIVE COUNTERCLAIM

A counterclaim is permissive if any of the elements of a compulsory counterclaim is absent (see above).

The most commonly treated feature of a permissive counterclaim is its absence of a logical connection with the subject matter of the complaint. (International Container Terminal Services Inc. v. CA, G.R. No. 90530, 1992)

A permissive counterclaim does not necessarily arise out of or is not directly connected with the subject matter of the first claim; it can be filed as a separate case altogether. There is a need to pay for docket fees since it is seen as a different action altogether with defendants becoming ‘plaintiffs’ in respect of such counterclaim. (Reillo v. San Jose, G.R. No. 166393, 2009)

The counterclaim must be existing at the time of the filing the answer, though not at the commencement of the action for under Section 3 of the former Rule 10, the counterclaim or crossclaim must be one which he may have “at the time” against the opposing party. (BDO v. CA, G.R. No. 160354, 2005)

If the compulsory counterclaim is by reason of an unfounded suit then it may prosper even if the main complaint is dismissed. The cause of action of the counterclaimant is not eliminated by the mere dismissal of the main complaint. (Padilla v. Globe Asiatique, G.R. No. 207376, 2014)

The rule that “the additional docket fee therefor shall constitute a lien on the judgment” applies only to damages arising after the filing of the complaint or similar pleading, for then it will not be possible for the claimant to specify nor speculate as to the amount thereof. (GSIS v. Caballero, G.R. No. 158090, 2010)

EFFECT ON THE COUNTERCLAIM WHEN THE COMPLAINT IS DISMISSED

The defending party has the right to prosecute the counterclaim in the same or separate action notwithstanding the dismissal of the complaint, and without regard as to the permissive or compulsory nature of the counterclaim. (Rule 17, Secs. 2 and 3)

Three situations involving the effect of a dismissal of a complaint on the counterclaim already set up

• When the defendant does not file a motion to dismiss. Instead, he files an answer, which includes a counterclaim, and utilizes certain grounds for a motion to dismiss as affirmative defenses. (Rule 16, Sec. 6)

Note: Rule 16 under the New Rules has been entirely deleted. Nevertheless, a dismissal of the action where the counterclaim is raised as an affirmative defense shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer.

• When the plaintiff himself files a motion to dismiss his complaint after the defendant has pleaded his answer with a counterclaim, and the court grants the motion. Again, the dismissal shall be without prejudice to the right of the defendant to prosecute his counterclaim in a separate action unless within 15 days from notice of the motion he manifests his preference to have his counterclaim resolved in the same action. (Rule 17, Sec. 2)
• When complaint is dismissed through the plaintiff’s fault and at a time when a counterclaim has already been set up. The dismissal is without prejudice to the right of the defendant to prosecute his counterclaim in the same or separate action. (Rule 17, Sec. 3)