Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=40392:g-r-no-133119-august-17,-2000-financial-building-corp-v-forbes-park-association&amp;catid=1396&amp;Itemid=566
Timestamp: 2019-04-26 04:23:56+00:00

Document:
FINANCIAL BUILDING CORPORATION, Petitioner, v. FORBES PARK ASSOCIATION, INC., Respondent.
On June 30, 1986, Forbes Park reminded the USSR of existing regulations 4 authorizing only the construction of a single-family residential building in each lot within the village. It also elicited a reassurance from the USSR that such restriction has been complied with. 5 Promptly, the USSR gave its assurance that it has been complying with all regulations of Forbes Park. 6 Despite this, Financial Building submitted to the Makati City Government a second building plan for the construction of a multi-level apartment building, which was different from the first plan for the construction of a residential building submitted to Forbes Park.
Forbes Park discovered the second plan and subsequent ocular inspection of the USSR’s subject lot confirmed the violation of the deed of restrictions. Thus, it enjoined further construction work. On March 27, 1987, Forbes Park suspended all permits of entry for the personnel and materials of Financial Building in the said construction site. The parties attempted to meet to settle their differences but it did not push through.
Instead, on April 9, 1987, Financial Building filed in the Regional Trial Court of Makati, Metro Manila, a Complaint 7 for Injunction and Damages with a prayer for Preliminary Injunction against Forbes Park docketed as Civil Case No. 16540. The latter, in turn, filed a Motion to Dismiss on the ground that Financial Building had no cause of action because it was not the real party-in-interest.
First. The instant case is barred due to Forbes Park’s failure to set it up as a compulsory counterclaim in Civil Case No. 16540, the prior injunction suit initiated by Financial Building against Forbes Park.
Undoubtedly, the prior Civil Case No. 16540 and the instant case arose from the same occurrence — the construction work done by Financial Building on the USSR’s lot in Forbes Park Village. The issues of fact and law in both cases are identical. The factual issue is whether the structures erected by Financial Building violate Forbes Park’s rules and regulations, whereas the legal issue is whether Financial Building, as an independent contractor working for the USSR, could be enjoined from continuing with the construction and be held liable for damages if it is found to have violated Forbes Park’s rules.
Moreover, the two cases involve the same parties. The aggregate amount of the claims in the instant case is within the jurisdiction of the regional trial court, had it been set up as a counterclaim in Civil Case No. 16540. Therefore, Forbes Park’s claims in the instant case should have been filed as a counterclaim in Civil Case No. 16540.
Second. Since Forbes Park filed a motion to dismiss in Civil Case No. 16540, its existing compulsory counterclaim at that time is now barred.
A compulsory counterclaim is auxiliary to the proceeding in the original suit and derives its jurisdictional support therefrom. 19 A counterclaim presupposes the existence of a claim against the party filing the counterclaim. Hence, where there is no claim against the counterclaimant, the counterclaim is improper and it must dismissed, more so where the complaint is dismissed at the instance of the counterclaimant. 20 In other words, if the dismissal of the main action results in the dismissal of the counterclaim already filed, it stands to reason that the filing of a motion to dismiss the complaint is an implied waiver of the compulsory counterclaim because the grant of the motion ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up of a compulsory counterclaim are incompatible remedies. In the event that a defending party has a ground for dismissal and a compulsory counterclaim at the same time, he must choose only one remedy. If he decides to file a motion to dismiss, he will lose his compulsory counterclaim. But if he opts to set up his compulsory counterclaim, he may still plead his ground for dismissal as an affirmative defense in his answer. 21 The latter option is obviously more favorable to the defendant although such fact was lost on Forbes Park.
The ground for dismissal invoked by Forbes Park in Civil Case No. 16540 was lack of cause of action. There was no need to plead such ground in a motion to dismiss or in the answer since the same was not deemed waived if it was not pleaded. 22 Nonetheless, Forbes Park still filed a motion to dismiss and thus exercised bad judgment in its choice of remedies. Thus, it has no one to blame but itself for the consequent loss of its counterclaim as a result of such choice.
Inasmuch as the action for damages filed by Forbes Park should be as it is hereby dismissed for being barred by the prior judgment in G.R. No. 79319 (supra) and/or deemed waived by Forbes Park to interpose the same under the rule on compulsory counterclaims, there is no need to discuss the other issues raised by the herein petitioner.
Costs against respondent Forbes Park Association, Inc.
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.
1.	Penned by Associate Justice Fermin A. Martin, Jr. and concurred in by Associate Justices Conrado M. Vasquez, Jr. and Artemio G. Tuquero, Rollo, pp. 75-89.
4.	Forbes Park Association, Inc. Rules and Regulations, 1984 edition, Rollo, pp. 299-320.
14.	Petition, entitled "Financial Building Corporation v. Forbes Park Association, Inc. and docketed as CA-G.R. CV No. 48194, Rollo, pp. 9-74.
15.	Sec. 3, Rule 6 of the 1964 Rules of Court, which were the rules in effect at the time of the pendency of Civil Case No. 16540.
16.	Sec. 4, Rule 9, id.
17.	Yulienco v. Court of Appeals, G.R. No. 131692, June 10, 1999. Citing Valencia v. Court of Appeals, 263 SCRA 275, 288 (1996).
18.	Sec. 4, Rule 9, id.
19.	Metals Engineering Resources Corp. v. Court of Appeals, 203 SCRA 273, 282 (1991); Santo Tomas University Hospital v. Surla 294 SCRA 382, 392 (1998).
20.	Ibid., p. 283; Intestate Estate of Amado B. Dalisay v. Marasigan 257 SCRA 509, 513-514 (1996); International Container Terminal Services, Inc. v. Court of Appeals, 214 SCRA 456, 462 (1992).
21.	Sec. 5, Rule 16, 1964 Rules of Court, which was then in effect; under Sec. 6, Rule 16 of the 1997 Rules on Civil Procedure, if the action is dismissed as a result of the affirmative defense pleaded in the answer, the counterclaim pleaded in the answer may continue in the same action.
22.	Caiña v. Court of Appeals, 239 SCRA 252, 265 (1994).

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