x-----------------------------------------x

EN BANC DECISION

DOMINGO NEYPES, LUZ G.R. No. 141524 CORONA, J.:

FAUSTINO, ROGELIO FAUSTINO,
LOLITO VICTORIANO, JACOB
OBANIA AND DOMINGO Present : Petitioners Domingo Neypes, Luz Faustino, Rogelio
CABACUNGAN,
Petitioners, DAVIDE, JR., C.J.
PUNO, Faustino, Lolito Victoriano, Jacob Obania and Domingo
PANGANIBAN,
QUISUMBING, Cabacungan filed an action for annulment of judgment and
YNARES-
SANTIAGO,
titles of land and/or reconveyance and/or reversion with
SANDOVAL-GUTIERREZ,
CARPIO,
- v e r s u s - AUSTRIA-MARTINEZ, preliminary injunction before the Regional Trial Court, Branch
CORONA,
CARPIO MORALES, 43, of Roxas, Oriental Mindoro, against the Bureau of Forest
CALLEJO,
SR.,
AZCUNA, Development, Bureau of Lands, Land Bank of the Philippines
TINGA,
CHICO- and the heirs of Bernardo del Mundo, namely, Fe, Corazon,
NAZARIO and
GARCIA, JJ.
Josefa, Salvador and Carmen.
HON. COURT OF APPEALS, HEIRS
OF BERNARDO DEL MUNDO,
namely: FE, CORAZON, JOSEFA,
In the course of the proceedings, the parties (both
SALVADOR and CARMEN, all
surnamed DEL MUNDO, LAND BANK
petitioners and respondents) filed various motions with the trial
OF THE PHILIPPINES AND HON.
ANTONIO N. ROSALES, Presiding
Judge, Branch 43, Regional Trial court. Among these were: (1) the motion filed by petitioners to
Court, Roxas, Oriental Mindoro,
Respondents. Promulgated : declare the respondent heirs, the Bureau of Lands and the
September 14,
2005 Bureau of Forest Development in default and (2) the motions to
dismiss filed by the respondent heirs and the Land Bank of the the trial court could very well resolve the issue of prescription

Philippines, respectively. from the bare allegations of the complaint itself without waiting

for the trial proper.

In an order dated May 16, 1997, the trial court, presided

by public respondent Judge Antonio N. Rosales, resolved the In an order[2] dated February 12, 1998, the trial court

foregoing motions as follows: (1) the petitioners motion to dismissed petitioners complaint on the ground that the action

declare respondents Bureau of Lands and Bureau of Forest had already prescribed. Petitioners allegedly received a copy of

Development in default was granted for their failure to file an the order of dismissal on March 3, 1998 and, on the 15th day

answer, but denied as against the respondent heirs of del thereafter or on March 18, 1998, filed a motion for

Mundo because the substituted service of summons on them reconsideration. On July 1, 1998, the trial court issued another

was improper; (2) the Land Banks motion to dismiss for lack of order dismissing the motion for reconsideration[3] which

cause of action was denied because there were hypothetical petitioners received on July 22, 1998. Five days later, on July

admissions and matters that could be determined only after 27, 1998, petitioners filed a notice of appeal[4] and paid the

trial, and (3) the motion to dismiss filed by respondent heirs of appeal fees on August 3, 1998.

del Mundo, based on prescription, was also denied because

On August 4, 1998, the court a quo denied the notice of
there were factual matters that could be determined only after
appeal, holding that it was filed eight days late. [5] This was
trial.[1]
received by petitioners on July 31, 1998. Petitioners filed a

The respondent heirs filed a motion for reconsideration motion for reconsideration but this too was denied in an order

of the order denying their motion to dismiss on the ground that dated September 3, 1998.[6]

Via a petition for certiorari and mandamus under Rule
65 of the 1997 Rules of Civil Procedure, petitioners assailed the
dismissal of the notice of appeal before the Court of Appeals.
within the reglementary period and in the manner
prescribed by law is jurisdictional and non-
compliance with such legal requirement is fatal and
effectively renders the judgment final and
executory.[8]

In the appellate court, petitioners claimed that they had Petitioners filed a motion for reconsideration of the

seasonably filed their notice of appeal. They argued that the 15- aforementioned decision. This was denied by the Court of

day reglementary period to appeal started to run only on July Appeals on January 6, 2000.

22, 1998 since this was the day they received the final order of
In this present petition for review under Rule 45 of the Rules,
the trial court denying their motion for reconsideration. When
petitioners ascribe the following errors allegedly committed by
they filed their notice of appeal on July 27, 1998, only five days
the appellate court:
had elapsed and they were well within the reglementary period

for appeal.[7]
I
On September 16, 1999, the Court of Appeals (CA)
THE HONORABLE COURT OF APPEALS ERRED
IN DISMISSING THE PETITIONERS PETITION FOR
dismissed the petition. It ruled that the 15-day period to appeal CERTIORARI AND MANDAMUS AND IN
AFFIRMING THE ORDER OF THE HON. JUDGE
should have been reckoned from March 3, 1998 or the day they ANTONIO N. ROSALES WHICH DISMISSED THE
PETITIONERS APPEAL IN CIVIL CASE NO. C-36
received the February 12, 1998 order dismissing their OF THE REGIONAL TRIAL COURT, BRANCH 43,
ROXAS, ORIENTAL MINDORO, EVEN AFTER THE
complaint. According to the appellate court, the order was the PETITIONERS HAD PAID THE APPEAL DOCKET
FEES.
final order appealable under the Rules. It held further:
II
Perforce the petitioners tardy appeal was
correctly dismissed for the (P)erfection of an appeal
THE HONORABLE COURT OF APPEALS
LIKEWISE ERRED IN RULING AND AFFIRMING
THE DECISION OR ORDER OF THE
RESPONDENT HON. ANTONIO M. ROSALES
THAT PETITIONERS APPEAL WAS FILED OUT OF
TIME WHEN PETITIONERS RECEIVED THE LAST
OR FINAL ORDER OF THE COURT ON JULY 22,
1998 AND FILED THEIR NOTICE OF APPEAL ON
JULY 27, 1998 AND PAID THE APPEAL DOCKET
FEE ON AUGUST 3, 1998.
III
THE HONORABLE COURT OF APPEALS
FURTHER ERRED IN RULING THAT THE WORDS
FINAL ORDER IN SECTION 3, RULE 41, OF THE
1997 RULES OF CIVIL PROCEDURE WILL REFER
TO THE [FIRST] ORDER OF RESPONDENT
JUDGE HON. ANTONIO M. MORALES DATED
FEBRUARY 12, 1998 INSTEAD OF THE LAST AND
FINAL ORDER DATED JULY 1, 1998 COPY OF
WHICH WAS RECEIVED BY PETITIONERS
THROUGH COUNSEL ON JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS FINALLY
ERRED IN FINDING THAT THE DECISION IN THE
CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS
APPLICABLE IN THE INSTANT CASE THEREBY
IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT
THAT THE SAID DECISION WAS RENDERED
PRIOR TO THE ENACTMENT OF THE 1997 RULES
OF CIVIL PROCEDURE.[9]
The foregoing issues essentially revolve around the period
within which petitioners should have filed their notice of
appeal.
First and foremost, the right to appeal is neither a natural right
nor a part of due process. It is merely a statutory privilege and
may be exercised only in the manner and in accordance with
the provisions of law. Thus, one who seeks to avail of the right
to appeal must comply with the requirements of the Rules.
Failure to do so often leads to the loss of the right to
appeal.[10] The period to appeal is fixed by both statute and
procedural rules. BP 129,[11] as amended, provides:
Sec. 39. Appeals. The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any
court in all these cases shall be fifteen (15) days
counted from the notice of the final order, resolution,
award, judgment, or decision appealed from.
Provided, however, that in habeas corpus cases, the
period for appeal shall be (48) forty-eight hours from
the notice of judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. ― The appeal
shall be taken within fifteen (15) days from the
notice of the judgment or final order appealed
 from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on 22, 1998, the 15-day reglementary period to appeal had not yet
appeal within thirty (30) days from the notice of
judgment or final order. lapsed when they filed their notice of appeal on July 27, 1998.

The period to appeal shall be interrupted by a timely

motion for new trial or reconsideration. No motion for What therefore should be deemed as the final order,
extension of time to file a motion for new trial or
reconsideration shall be allowed. (emphasis supplied) receipt of which triggers the start of the 15-day reglementary

period to appeal the February 12, 1998 order dismissing the

Based on the foregoing, an appeal should be taken within 15
complaint or the July 1, 1998 order dismissing the MR?
days from the notice of judgment or final order appealed from.
In the recent case of Quelnan v. VHF Philippines,
A final judgment or order is one that finally disposes of a case,
Inc.,[13] the trial court declared petitioner Quelnan non-suited
leaving nothing more for the court to do with respect to it. It is
and accordingly dismissed his complaint. Upon receipt of the
an adjudication on the merits which, considering the evidence
order of dismissal, he filed an omnibus motion to set it aside.
presented at the trial, declares categorically what the rights and
When the omnibus motion was filed, 12 days of the 15-day
obligations of the parties are; or it may be an order or judgment
period to appeal the order had lapsed. He later on received
that dismisses an action.[12]
another order, this time dismissing his omnibus motion. He

then filed his notice of appeal. But this was likewise dismissed
As already mentioned, petitioners argue that the order of July
― for having been filed out of time.
1, 1998 denying their motion for reconsideration should be
The court a quo ruled that petitioner should have
construed as the final order, not the February 12, 1998 order
appealed within 15 days after the dismissal of his complaint
which dismissed their complaint. Since they received their copy
since this was the final order that was appealable under the
of the denial of their motion for reconsideration only on July
Rules. We reversed the trial court and declared that it was
the denial of the motion for reconsideration of an order of instead opted to file a motion for reconsideration. According to

dismissal of a complaint which constituted the final order as it the trial court, the MR only interrupted the running of the 15-

was what ended the issues raised there. day appeal period.[15] It ruled that petitioners, having filed their

MR on the last day of the 15-day reglementary period to appeal,

This pronouncement was reiterated in the more recent case
had only one (1) day left to file the notice of appeal upon receipt
of Apuyan v. Haldeman et al.[14] where we again considered the
of the notice of denial of their MR. Petitioners, however, argue
order denying petitioner Apuyans motion for reconsideration as
that they were entitled under the Rules to a fresh period of 15
the final order which finally disposed of the issues involved in
days from receipt of the final order or the order dismissing their
the case.
motion for reconsideration.

Based on the aforementioned cases, we sustain petitioners view In Quelnan and Apuyan, both petitioners filed a motion

that the order dated July 1, 1998 denying their motion for for reconsideration of the decision of the trial court. We ruled

reconsideration was the final order contemplated in the Rules. there that they only had the remaining time of the 15-day

We now come to the next question: if July 1, 1998 was appeal period to file the notice of appeal. We consistently

the start of the 15-day reglementary period to appeal, did applied this rule in similar cases,[16] premised on the long-

petitioners in fact file their notice of appeal on time? settled doctrine that the perfection of an appeal in the manner

and within the period permitted by law is not only mandatory

Under Rule 41, Section 3, petitioners had 15 days
but also jurisdictional.[17] The rule is also founded on deep-
from notice of judgment or final order to appeal the decision of
seated considerations of public policy and sound practice that,
the trial court. On the 15thday of the original appeal period

(March 18, 1998), petitioners did not file a notice of appeal but
at risk of occasional error, the judgments and awards of courts appeal[21] and enhance the efficiency and dispensation of

must become final at some definite time fixed by law. [18] justice. We have since required strict observance of this

reglementary period of appeal. Seldom have we condoned late

Prior to the passage of BP 129, Rule 41, Section 3 of the
filing of notices of appeal,[22] and only in very exceptional
1964 Revised Rules of Court read:
instances to better serve the ends of justice.
Sec. 3. How appeal is taken. Appeal maybe
taken by serving upon the adverse party and filing
with the trial court within thirty (30) days from In National Waterworks and Sewerage Authority and
notice of order or judgment, a notice of appeal, an
appeal bond, and a record on appeal. The time Authority v. Municipality of Libmanan,[23] however, we declared
during which a motion to set aside the judgment or
order or for new trial has been pending shall be that appeal is an essential part of our judicial system and the
deducted, unless such motion fails to satisfy the
requirements of Rule 37. rules of procedure should not be applied rigidly. This Court has
But where such motion has been filed during
on occasion advised the lower courts to be cautious about not
office hours of the last day of the period herein
provided, the appeal must be perfected within the day
following that in which the party appealing received depriving a party of the right to appeal and that every party
notice of the denial of said motion.[19] (emphasis
supplied) litigant should be afforded the amplest opportunity for the

proper and just disposition of his cause, free from the

According to the foregoing provision, the appeal period constraint of technicalities.

previously consisted of 30 days. BP 129, however, reduced this

In de la Rosa v. Court of Appeals,[24] we stated that, as a
appeal period to 15 days. In the deliberations of the Committee
rule, periods which require litigants to do certain acts must be
on Judicial Reorganization[20] that drafted BP 129, the raison d
followed unless, under exceptional circumstances, a delay in
etre behind the amendment was to shorten the period of
the filing of an appeal may be excused on grounds of
substantial justice. There, we condoned the delay incurred by even establish new rules for a more simplified and inexpensive

the appealing party due to strong considerations of fairness and process, and the speedy disposition of cases. In the rules

justice. governing appeals to it and to the Court of Appeals, particularly

In setting aside technical infirmities and thereby giving Rules 42,[27] 43[28] and 45,[29] the Court allows extensions of

due course to tardy appeals, we have not been oblivious to or time, based on justifiable and compelling reasons, for parties

unmindful of the extraordinary situations that merit liberal to file their appeals. These extensions may consist of 15 days

application of the Rules. In those situations where or more.

technicalities were dispensed with, our decisions were not

To standardize the appeal periods provided in the Rules
meant to undermine the force and effectivity of the periods set
and to afford litigants fair opportunity to appeal their cases, the
by law. But we hasten to add that in those rare cases where
Court deems it practical to allow a fresh period of 15 days
procedural rules were not stringently applied, there always
within which to file the notice of appeal in the Regional Trial
existed a clear need to prevent the commission of a grave
Court, counted from receipt of the order dismissing a motion
injustice. Our judicial system and the courts have always tried
for a new trial or motion for reconsideration. [30]
to maintain a healthy balance between the strict enforcement

of procedural laws and the guarantee that every litigant be Henceforth, this fresh period rule shall also apply to

given the full opportunity for the just and proper disposition of Rule 40 governing appeals from the Municipal Trial Courts to

his cause.[25] the Regional Trial Courts; Rule 42 on petitions for review from

The Supreme Court may promulgate procedural rules the Regional Trial Courts to the Court of Appeals; Rule 43 on

in all courts.[26] It has the sole prerogative to amend, repeal or appeals from quasi-judicial agencies[31] to the Court of Appeals
and Rule 45 governing appeals by certiorari to the Supreme determined to refer to the July 1, 1998 order denying the

Court.[32] The new rule aims to regiment or make the appeal motion for a new trial or reconsideration.

period uniform, to be counted from receipt of the order denying

Neither does this new rule run counter to the spirit of
the motion for new trial, motion for reconsideration (whether
Section 39 of BP 129 which shortened the appeal period from
full or partial) or any final order or resolution.
30 days to 15 days to hasten the disposition of cases. The
We thus hold that petitioners seasonably filed their
original period of appeal (in this case March 3-18, 1998)
notice of appeal within the fresh period of 15 days, counted
remains and the requirement for strict compliance still
from July 22, 1998 (the date of receipt of notice denying their
applies. The fresh period of 15 days becomes significant only
motion for reconsideration). This pronouncement is not
when a party opts to file a motion for new trial or motion for
inconsistent with Rule 41, Section 3 of the Rules which states
reconsideration. In this manner, the trial court which rendered
that the appeal shall be taken within 15 days from notice of
the assailed decision is given another opportunity to review the
judgment or final order appealed from. The use of the
case and, in the process, minimize and/or rectify any error of
disjunctive word or signifies disassociation and independence
judgment. While we aim to resolve cases with dispatch and to
of one thing from another. It should, as a rule, be construed in
have judgments of courts become final at some definite time,
the sense in which it ordinarily implies.[33] Hence, the use of or
we likewise aspire to deliver justice fairly.
in the above provision supposes that the notice of appeal may

be filed within 15 days from the notice of judgment or within In this case, the new period of 15 days eradicates the

15 days from notice of the final order, which we already confusion as to when the 15-day appeal period should be

counted from receipt of notice of judgment (March 3, 1998) or

from receipt of notice of final order appealed from (July 22, WHEREFORE, the petition is hereby GRANTED and

1998). the assailed decision of the Court of

Appeals REVERSED and SET ASIDE. Accordingly, let the

To recapitulate, a party litigant may either file his notice
records of this case be remanded to the Court of Appeals for
of appeal within 15 days from receipt of the Regional Trial
further proceedings.
Courts decision or file it within 15 days from receipt of the order

(the final order) denying his motion for new trial or motion for No costs.

reconsideration. Obviously, the new 15-day period may be

SO ORDERED.
availed of only if either motion is filed; otherwise, the decision

becomes final and executory after the lapse of the original

appeal period provided in Rule 41, Section 3.

Petitioners here filed their notice of appeal on July 27,

1998 or five days from receipt of the order denying their motion

for reconsideration on July 22, 1998. Hence, the notice of

appeal was well within the fresh appeal period of 15 days, as

already discussed.[34]

We deem it unnecessary to discuss the applicability of Denso

(Philippines), Inc. v. IAC[35] since the Court of Appeals never even

referred to it in its assailed decision.

 having been filed three days beyond the reglementary period; and (2) the
Resolution[4]dated 17 February 2005 of the Court of Appeals in the same case
THIRD DIVISION
denying petitioners Motion for Reconsideration of its earlier Decision.

MAKATI INSURANCE CO., G.R. No. 167403

INC., The generative facts of the present Petition are as follows.
Petitioner, Present:

- versus - YNARES-SANTIAGO, J., Petitioner filed before the RTC a Complaint[5] against private
Chairperson,
respondents Rubills International, Inc., Tong Woon Shipping PTE., LTD.,
HON. WILFREDO D. REYES, AUSTRIA-MARTINEZ,
as Presiding Judge of the CHICO-NAZARIO, and Asian Terminals, Inc. for damages arising from breach of contract of
Regional Trial Court of Manila, NACHURA, and
Branch 36, RUBILLS REYES, JJ. carriage. In its Complaint, petitioner alleged that:
INTERNATIONAL, INC.,
TONG WOON SHIPPING PTE 3.1 [Herein private
LTD, and ASIAN TERMINALS, Promulgated: respondents] Rubills International, Inc.
INC., and Tong Woon Shipping Pte. Ltd.
Respondents. August 6, 2008 [Rubills for brevity], were and are the
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x owners, operators, charterers, bailees,
representatives, or agents of several
ocean going vessels, engaged in ocean
DECISION carriage to and from Philippine ports in
foreign trade, one of which is the vessel
M/V Cherry a common carrier, bound to
CHICO-NAZARIO, J.: observe extraordinary diligence in the
care and custody of goods while in its
protective custody.
Assailed in this Petition for Review under Rule 45[1] of the Revised Rules of
3.2 [Herein private respondent] Asian
Court are (1) the Decision[2] dated 12 August 2004 of the Court of Appeals Terminals, Inc. [ATI] was and is
the arrastre operator at the port of
dismissing the petition filed in CA-G.R. SP No. 74220 by herein
Manila and as such was charged and
petitioner Makati Insurance Co., Inc., and affirming the Order[3] dated 2 obligated with the duty of receiving
cargoes discharged from the vessels
October 2002 of the Regional Trial Court (RTC) of Manila, Branch 36, in docking at the port of Manila, of
Civil Case No. 97-84952, which dismissed petitioners Notice of Appeal for safekeeping and taking good care of the
same while in its protective custody, and
 thereafter delivering the same to the
respective consignees and/or consignees
representatives.
4.0 On or about August 11, 1996, the [private
respondents] Rubills and Tong Woon vessel M/V
CHERRY arrived in Manila and docked at Pier 15 South
Harbor, Manila, and therein completely unloaded on
September 9, 1996 a shipment of 120MT Red Beans and
153.00MT Cattle Meat Colloid covered by Bill of Lading
dated August 01, 1996, a photocopy of which is herewith
attached as Annex A and made an integral part hereof;
5.0 It was found out after the inspection of the subject
shipment that eighty four (84) ton bags of the shipment
were in apparent damaged condition, partly to badly wet
and loose/torn on sides and/or ends with
spillages/wettages to contents apparent. x x x.
xxxx
6.0 The aforesaid losses and damages sustained by the
subject shipment were directly caused and brought about
by the wanton fault, gross negligence, malevolent
mishandling and culpable disregard, recreance and/or
breach of contractual obligations of all or either of the
[private respondents] as common carrier
and arrastre operator respectively, and as a result of which
the owner/assured/consignee Silver Allies Trading
International sustained damages and losses in the total sum
of Four Hundred Twelve Thousand Two Hundred Fifty
Three & 91/100 Pesos (P412,253.91) for which [herein
petitioner]-insurer paid the consignee-assured. Thus,
[petitioner] was subrogated into the rights and interests of
the consignee-assured relative to the said losses and
damages sustained by the subject shipment;
7.0 Demands were lodged against the [private respondents]
for compensation of the amount paid by the [petitioner] to
the consignee-assured, but the [private respondents] failed,
ignored and refused to heed the same to the damage and
prejudice of the [petitioner];
8.0 [Private respondents] are guilty of wanton fault, gross
negligence, malevolent mishandling and culpable
disregard of their contractual obligations in bringing about
and contumaciously causing the losses and damages to the
said shipment x x x.[6]
Petitioner prayed in its Complaint that:
[J]udgment be rendered ordering the [herein private
respondents], jointly and severally or whichever may be
found liable, to pay [herein petitioner]:
a. Actual damages in the amount of P412,253.91 with legal
interest from the date of the filing of the complaint until
fully paid;
b. Exemplary damages in the sum of at least P20,000.00 or
as may be found proper by this Honorable Court;
c. Attorneys fees in the sum equivalent to twenty five
percent (25%) of the principal claim of P103,063.47; and
d. Litigation expenses in the sum of at least P10,000.00 or
as may be proven, plus costs of suit.[7]
After the issues were joined, the case was set for pre-trial conference. For the
failure of petitioners counsel to appear at the scheduled pre-trial conference
on 19 November 2001, RTC Presiding Judge Wilfredo D. Reyes (Judge
Reyes) dismissed the case without prejudice. His Order of even date reads:
 On third call of this case at 10:40 oclock this morning, only
counsels for [herein private
respondents] Rubills International, Inc. and Asian
Terminals, Inc. appeared. There was no appearance for
[herein petitioner] despite due notice.
Respective counsels of [private respondents] moved for the
dismissal of the case on the following grounds:
1. For failure of [petitioner] to properly appear for pre-trial
conference on September 5, 2001 considering that its
counsel and/or representative did not have the requisite
authority.
2. For failure of [petitioner] to appear at the pre-trial
conference at the proper time set on October 16, 2001
although [petitioner]s counsel came in after [private
respondents] counsel had left the court room and the case
re-set for continuation of pre-trial on November 19, 2001,
and
3. For failure of [petitioner]s counsel to appear at todays
pre-trial.
It appearing that [petitioner]s counsel has been given ample
opportunity to appear in the pre-trial conference of this case
with the requisite authority for its counsel and/or
representative and that [petitioner]s counsel has failed to so
appear for pre-trial conference, and upon motion of
[private respondents] counsel, this case is dismissed
without prejudice.
WHEREFORE, the case at bar is dismissed without
prejudice. No costs.[8]
On 29 November 2001, petitioner received the Order dated 19 November
2001 dismissing its case. On 4 December 2001, petitioner filed its Verified
Motion for Reconsideration[9] alleging that sickness prevented its counsel
from attending the pre-trial conference. On 3 July 2002, petitioner received
Judge Reyess Order dated 17 June 2002 denying its Verified Motion for
Reconsideration.[10]
According to the 17 June 2002 RTC Order:
After a careful review of the grounds relied upon by [herein
petitioner]s counsel in his verified motion for
reconsideration dated December 1, 2001, the Court has no
other recourse but to deny the same as the grounds of said
motion for reconsideration are not impressive so as to
convince the Court to reverse its Order of November 19,
2001,
WHEREFORE, [petitioner]s motion for reconsideration is
DENIED.[11]
Petitioner received notice of the afore-mentioned Order on 3 July
2002.
On 17 July 2002, petitioner filed a Notice of Appeal,[12] which was promptly
opposed by private respondents for having been filed out of
time.[13] Petitioner countered that its failure to file the Notice of Appeal on
time was due to its counsels inadvertence in computing the appeal
period. The inadvertence was allegedly due to the fact that its Verified
Motion for Reconsideration was filed by registered mail, and the messenger
who mailed it failed to attach to the records of the case the postal receipt
showing the date the said motion was mailed.[14] Petitioners counsel,
therefore, was unable to determine correctly when petitioners period to
appeal was interrupted by the filing of its Verified Motion for
Reconsideration and how many more days were left in said period when its
Motion was denied.
On 23 September 2002, petitioner filed a Motion to Admit Notice of
Appeal,[15] alleging it had no intention to delay the resolution of the case; it
had a meritorious case; and its Notice of Appeal should be granted pursuant
to the dictum that courts should not place undue importance on technicalities,
when by so doing, substantial justice is sacrificed.
On 2 October 2002, Judge Reyes issued his Order[16] dismissing petitioners
Notice of Appeal for being filed three days beyond the 15-day reglementary
period. In so ruling, Judge Reyes held that pursuant to Section 3, Rule 41 vis-
-vis Section 2, Rule 22 of the Revised Rules of Court, the period to appeal is
interrupted by a timely motion for reconsideration. Petitioner filed its
Verified Motion for Reconsideration five days after receiving the Order
dismissing the case without prejudice. Excluding the day the said motion was
filed, petitioner had only 11 days left to file a notice of appeal. Petitioner
received the Order of 17 June 2002 denying its Verified Motion for
Reconsideration on 3 July 2002. Accordingly, it had only until 14 July
2002 to file a Notice of Appeal. Petitioner, however, filed its Notice of
[17]
Appeal on 17 July 2002. Judge Reyes, therefore, held:
WHEREFORE, plaintiffs notice of appeal is ordered
dismissed as it was filed three (3) days beyond the
reglementary period.[18]
Petitioner then filed with the Court of Appeals a Petition
for Certiorari under Rule 65 of the Revised Rules of Court questioning the 2
October 2002 RTC Order dismissing its Notice of Appeal. The Petition,
however, was denied by the Court of Appeals based on the following reasons:
[F]rom an order dismissing an action without prejudice, the
remedy of the aggrieved party is to file a petition for
certiorari under Rule 65, or to re-file the case. On this
score, therefore, petitioners Notice of Appeal is clearly
dismissible.
Even assuming arguendo that appeal is petitioners proper
remedy, it should still be denied for having been filed out
of time. x x x.[19]
The Court of Appeals held:
WHEREFORE, the instant petition is hereby DISMISSED,
and the assailed Order dated October 2,
2002 AFFIRMED.[20]
The Motion for Reconsideration filed by the petitioner was denied by the
Court of Appeals in a Resolution dated 17 February 2005.
In the Petition at bar, petitioner insists that:
EXTRAORDINARY CIRCUMSTANCES
ATTENDANT TO THE CASE AT BAR WARRANT
THE LIBERAL APPLICATION OF THE RULES.[21]

We first hew our attention to the main issue for our
resolution: whether the Notice of Appeal filed by petitioner was filed out of
time.
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. The appeal
shall be taken within fifteen (15) days from notice of the
judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal
and a record on appeal within thirty (30) days from notice
of the judgment or final order.
The period of appeal shall be interrupted by a
timely motion for new trial or reconsideration. No motion
for extension of time to file a motion for new trial or
reconsideration shall be allowed.
Based on the foregoing, an appeal should be taken within 15 days
from the notice of judgment or final order appealed from.[22] A final judgment
or order is one that finally disposes of a case, leaving nothing more for the
court to do with respect to it. It is an adjudication on the merits which,
considering the evidence presented at the trial, declares categorically what
the rights and obligations of the parties are; or it may be an order or judgment
that dismisses an action.[23]
Propitious to petitioner is Neypes v. Court
Appeals,[24] promulgated on 14 September 2005 while the present Petition
was already pending before us. In Neypes, we pronounced that:
To standardize the appeal periods provided in the
Rules and to afford litigants fair opportunity to appeal their
cases, the Court deems it practical to allow a fresh period
of 15 days within which to file the notice of appeal in the
Regional Trial Court, counted from receipt of the order
dismissing a motion for a new trial or motion for
reconsideration.
Henceforth, this fresh period rule shall also
apply to Rule 40 governing appeals from the Municipal
Trial Courts to the Regional Trial Courts; Rule 42 on
petitions for review from the Regional Trial Courts to
the Court of Appeals; Rule 43 on appeals from quasi-
judicial agencies to the Court of Appeals and Rule 45
governing appeals by certiorari to the Supreme Court. The
new rule aims to regiment or make the appeal period
uniform, to be counted from receipt of the order denying
the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution.
(Emphasis ours.)
Rules of Procedure are mere tools designed to facilitate the
attainment of justice; their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote substantial justice
must always be eschewed.[25]
We justified in Neypes that:
In setting aside technical infirmities and thereby
giving due course to tardy appeals, we have not been
of
oblivious to or unmindful of the extraordinary situations
that merit liberal application of the Rules. In those
situations where technicalities were dispensed with, our
decisions were not meant to undermine the force
and effectivity of the periods set by law. But we hasten to
add that in those rare cases where procedural rules were not
 stringently applied, there always existed a clear need to
prevent the commission of a grave injustice. Our judicial
system and the courts have always tried to maintain a
healthy balance between the strict enforcement of
procedural laws and the guarantee that every litigant be
given the full opportunity for the just and proper
disposition of his cause.
The Supreme Court may promulgate procedural
rules in all courts. It has the sole prerogative to amend,
repeal or even establish new rules for a more simplified and
inexpensive process, and the speedy disposition of cases.
In the rules governing appeals to it and to the Court of
Appeals, particularly Rules 42, 43 and 45, the Court allows
extensions of time, based on justifiable and compelling
reasons, for parties to file their appeals. These extensions
may consist of 15 days or more.[26]
Hence, in the interest of substantial justice, procedural rules of the
most mandatory character in terms of compliance may be relaxed. [27]
With the advent of the "fresh period rule," parties who availed
themselves of the remedy of motion for reconsideration are now allowed to
file a notice of appeal within fifteen days from the denial of that motion. [28]
The fresh period rule is not inconsistent with Rule 41, Section 3 of
the Revised Rules of Court which states that the appeal shall be taken within
fifteen (15) days from notice of judgment or final order appealed from. The
use of the disjunctive word or signifies disassociation and independence of
one thing from another. It should, as a rule, be construed in the sense which
it ordinarily implies.[29] Hence, the use of or in the above provision supposes
that the notice of appeal may be filed within 15 days from the notice of
judgment or within 15 days from notice of the final order, which, in this case
is the 17 July 2002 RTC Order denying petitioners Verified Motion for
Reconsideration, received by petitioner on 3 July 2002.
Neither does the new rule run counter to the spirit of Section 39 of
Batas Pambansa Blg. 129 which shortened the appeal period from 30 days to
15 days to hasten the disposition of cases. The original period of appeal
remains and the requirement for strict compliance still applies. The fresh
period of 15 days becomes significant only when a party opts to file a motion
for new trial or motion for reconsideration. In this manner, the trial court
which rendered the assailed decision is given another opportunity to review
the case and, in the process, minimize and/or rectify any error of
judgment. While we aim to resolve cases with dispatch and to have
judgments of courts become final at some definite time, we likewise aspire
to deliver justice fairly.[30]
The fresh period rule finally eradicates the confusion as to when the
15-day appeal period should be counted from receipt of notice of judgment
or from receipt of notice of final order appealed from. [31]
Taking our bearings from Neypes, in Sumaway v. Urban Bank,
Inc.,[32] we set aside the denial of a notice of appeal which was purportedly
filed five days late. With the fresh period rule, the 15-day period within which
to file the notice of appeal was counted from notice of the denial of the therein
petitioners motion for reconsideration.

We followed suit in Elbia v. Ceniza,[33] wherein we applied the
principle granting a fresh period of 15 days within which to file the notice of
appeal, counted from receipt of the order dismissing a motion for new trial or
motion for reconsideration or any final order or resolution.
Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the
Philippine Islands,[34] we held that a party litigant may now file his notice of
appeal either within fifteen days from receipt of the original decision or
within fifteen days from the receipt of the order denying the motion for
reconsideration.
In De los Santos v. Vda de Mangubat,[35] we applied the same
principle of fresh period rule, expostulating that procedural law refers to the
adjective law which prescribes rules and forms of procedure in order that
courts may be able to administer justice. Procedural laws do not come within
the legal conception of a retroactive law, or the general rule against the
retroactive operation of statutes. The "fresh period rule" is irrefragably
procedural, prescribing the manner in which the appropriate period for appeal
is to be computed or determined and, therefore, can be made applicable to
actions pending upon its effectivity, such as the present case, without danger
of violating anyone elses rights.
We thus hold that when herein petitioner filed its notice of appeal
on 17 July 2002, the same was seasonably filed within the fresh period of 15
days, counted from 3 July 2002, the date it received the denial of its Verified
Motion for Reconsideration.
This fresh 15-day period within which to file notice of appeal
counted from notice of the denial of the motion for reconsideration may be
applied to petitioners case inasmuch as rules of procedure may be given
retroactive effect on actions pending and undetermined at the time of their
passage. In Republic v. Court of Appeals,[36] involving A.M. No. 00-2-03-SC,
which provided for the rule that the 60-day period within which to file a
petition for certiorari shall be reckoned from receipt of the order denying the
motion for reconsideration, we stated that rules of procedure may be given
retroactive effect to actions pending and undetermined at the time of their
passage and this will not violate any right of a person who may feel that he is
adversely affected, inasmuch as there is no vested rights in rules of procedure.
We also take note of an important declaration made by the Court of
Appeals in its assailed Decision that even if petitioners Notice of Appeal was
considered filed on time, it was dismissible for being the wrong remedy.
It bears repeating that the RTC dismissed Civil Case No. 97-84952
without prejudice. The rules[37] provide:
Rule 41
APPEAL FROM THE REGIONAL
TRIAL COURTS
Section 1. x x x
 No appeal may be taken from:
hostility. Be that as it may, it must be emphasized that this practice is applied
xxxx only under certain exceptional circumstances to prevent unnecessary delay in

(h) An order dismissing an action without prejudice. the administration of justice and so as not to unduly burden the courts.[38]

In the present case, Civil Case No. 97-84952 was initially scheduled
Indeed, under the 1997 Rules of Civil Procedure, Rule 41, Section
for pre-trial conference on 17 April 2000.[39] By agreement of the parties, the
1(h), thereof expressly provides that no appeal may be taken from an order
pre-trial conference was re-set to 8 June 2000.[40] Again, by agreement of the
dismissing an action without prejudice. It may be subject of a special civil
parties, the pre-trial conference was re-set to 6 July 2000,[41] only to be re-set
action for certiorari under Rule 65 of the Rules of Court, as amended by the
once more to 3 August 2000.[42] On 3 August 2000, petitioner filed a motion
said 1997 Rules of Civil Procedure. The Court of Appeals, therefore, acted
to re-set pre-trial conference to 11 September 2000.[43] On 11 September
correctly in stating that the Notice of Appeal filed by the petitioner was
2000, petitioners counsel was not present; thus, the pre-trial conference was
dismissible.
cancelled and re-set to 17 October 2000.[44] On 17 October 2000, the parties
manifested that they might settle the case amicably so the pre-trial conference
Even if in the interest of substantial justice, we consider the Notice
on said date was cancelled.[45] The pre-trial conference was re-set to 28
of Appeal as a Petition for Certiorari under Rule 65 of the Rules of Court,
November 2000[46] and again to 17 January 2001 upon motion of private
still no grave abuse of discretion may be attributed to the RTC in dismissing
respondent Asian Terminals, Inc.[47] Cancellation and re-setting of the pre-
Civil Case No. 97-84952.
trial conference also occurred to 28 March 2001,[48] 19 April 2001,[49] 20 June
2001,[50] 31 July 2001.[51] Then again on 5 September 2001,[52] on the ground
The Writ of Certiorari is an extraordinary remedy to correct errors of
that petitioners counsel/representative did not have the requisite authority,
jurisdiction. An act of a court or tribunal may only be considered as
and on 15 October 2001 because petitioners counsel failed to arrive at the
committed in grave abuse of discretion when the same was performed in a
proper time.[53] When petitioners counsel again failed to attend the pre-trial
capricious or whimsical exercise of judgment which is equivalent to lack of
conference on 19 November 2001, the RTC finally ordered the dismissal of
jurisdiction. The abuse of discretion must be so patent and gross as to amount
the case without prejudice.
to an evasion of positive duty or to a virtual refusal to perform a duty enjoined
by law or to act at all in contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of passion or personal
 All these postponements truly manifest a lack of interest to
prosecute on the part of the petitioner as found by the RTC. Section 3, Rule WHEREFORE, the petition is DENIED. The assailed Decision of
17 of the Rules of Court states: the Court of Appeals dated 12 August 2004 and Resolution dated 17
February 2005 are AFFIRMED.Costs against petitioner.
SEC. 3. Dismissal due to fault of plaintiff. If, for
no justifiable cause, the plaintiff fails to appear on the date
of the presentation of his evidence in chief on the SO ORDERED.
complaint, or to prosecute his action for an unreasonable
length of time, or to comply with these Rules or any order
of the court, the complaint may be dismissed upon motion
of the defendant or upon the courts own motion, without
prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court.

We have always been steadfast in ruling that in every action, the

plaintiff is duty-bound to prosecute the same with utmost diligence and with
reasonable dispatch to enable him to obtain the relief prayed for and, at the
same time, minimize the clogging of the court dockets. The expeditious
disposition of cases is as much the duty of the plaintiff as the court. It must
be remembered that a defendant in a case likewise has the right to the speedy
disposition of the action filed against him, considering that any delay in the
proceedings entails prolonged anxiety and valuable time wasted. [54]

IN ALL, we find that while it is true that the petitioners Notice of

EDGARDO PINGA, G.R. No. 170354
Appeal was timely filed based on our ruling in Neypes, said Notice of Appeal Petitioner,
was the wrong remedy.Even if considered as a Petition for Certiorari under Present:
QUISUMBING, J.,
Rule 65 of the Rules of Court, the same has no merit as discussed above. - versus - Chairperson,
CARPIO,
CARPIO MORALES, In granting this petition, the Court recognizes that the former
THE HEIRS OF GERMAN TINGA, and
SANTIAGO represented by VELASCO, JR. JJ., jurisprudential rule can no longer stand in light of Section 3, Rule 17 of the
FERNANDO SANTIAGO,
1997 Rules of Civil Procedure.
Respondents.
Promulgated:
June 30, 2006 The relevant facts are simple enough. Petitioner Eduardo Pinga was named

as one of two defendants in a complaint for injunction[4] filed with Branch 29

x--------------------------------------------------------------------------------x
of the Regional Trial Court (RTC)[5] of San Miguel, Zamboanga del Sur, by
DECISION
respondent Heirs of German Santiago, represented by Fernando Santiago.
TINGA, J.:
The Complaint[6] dated 28 May 1998 alleged in essence that petitioner and

The constitutional faculty of the Court to promulgate rules of practice and co-defendant Vicente Saavedra had been unlawfully entering the coco lands

procedure[1] necessarily carries the power to overturn judicial precedents on of the respondent, cutting wood and bamboos and harvesting the fruits of the

points of remedial law through the amendment of the Rules of Court. One of coconut trees therein. Respondents prayed that petitioner and Saavedra be

the notable changes introduced in the 1997 Rules of Civil Procedure is the enjoined from committing acts of depredation on their properties, and ordered

explicit proviso that if a complaint is dismissed due to fault of the plaintiff, to pay damages.

such dismissal is without prejudice to the right of the defendant to prosecute

In their Amended Answer with Counterclaim,[7] petitioner and his co-
his counterclaim in the same or in a separate action. [2] The innovation was
defendant disputed respondents ownership of the properties in question,
instituted in spite of previous jurisprudence holding that the fact of the
asserting that petitioners father, Edmundo Pinga, from whom defendants
dismissal of the complaint was sufficient to justify the dismissal as well of
derived their interest in the properties, had been in possession thereof since
the compulsory counterclaim.[3]
the 1930s.[8] They alleged that as far back as 1968, respondents had already

been ordered ejected from the properties after a complaint for forcible entry

was filed by the heirs of Edmundo Pinga. It was further claimed that

respondents application for free patent over the properties was rejected by the
Office of the President in 1971. Defendants in turn prayed that owing to Respondents filed a Motion for Reconsideration[13] of the order

respondents forcible re-entry in the properties and the irresponsible and issued in open court on 27 July 2005, opting however not to seek that their

reckless filing of the case, they be awarded various types of damages instead complaint be reinstated, but praying instead that the entire action be

in amounts totaling P2,100,000 plus costs of suit.[9] dismissed and petitioner be disallowed from presenting evidence ex-parte.

Respondents claimed that the order of the RTC allowing petitioner to present
By July of 2005, the trial of the case had not yet been completed. Moreover,
evidence ex-parte was not in accord with established jurisprudence. They
respondents, as plaintiffs, had failed to present their evidence. It appears that
cited cases, particularly City of Manila v. Ruymann[14] and Domingo v.
on 25 October 2004, the RTC already ordered the dismissal of the complaint
Santos,[15]which noted those instances in which a counterclaim could not
after respondents counsel had sought the postponement of the hearing
remain pending for independent adjudication.
scheduled then.[10] However, the order of dismissal was subsequently
On 9 August 2005, the RTC promulgated an order granting
reconsidered by the RTC in an Order dated 9 June 2005, which took into
respondents Motion for Reconsideration and dismissing the counterclaim,
account the assurance of respondents counsel that he would give priority to
citing as the only ground therefor that there is no opposition to the Motion
that case.[11]
for Reconsideration of the [respondents].[16] Petitioner filed a Motion for

At the hearing of 27 July 2005, plaintiffs counsel on record failed to Reconsideration, but the same was denied by the RTC in an Order dated 10

appear, sending in his stead a representative who sought the postponement of October 2005.[17] Notably, respondents filed an Opposition to Defendants

the hearing. Counsel for defendants (who include herein petitioner) opposed Urgent Motion for Reconsideration, wherein they argued that the prevailing

the move for postponement and moved instead for the dismissal of the case. jurisprudential rule[18] is that compulsory counterclaims cannot be

The RTC noted that it was obvious that respondents had failed to prosecute adjudicated independently of plaintiffs cause of action, and a conversu, the

the case for an unreasonable length of time, in fact not having presented their dismissal of the complaint carries with it the dismissal of the compulsory

evidence yet. On that ground, the complaint was dismissed. At the same time, counterclaims.[19]

the RTC allowed defendants to present their evidence ex-parte.[12]

 The matter was elevated to this Court directly by way of a Petition
for Review under Rule 45 on a pure question of law, the most relevant being
whether the dismissal of the complaint necessarily carries the dismissal of the
compulsory counterclaim.
We hold that under Section 3, Rule 17 of the 1997 Rules of Civil
Procedure, the dismissal of the complaint due to the fault of plaintiff does not
necessarily carry with it the dismissal of the counterclaim, compulsory or
otherwise. In fact, the dismissal of the complaint is without prejudice to the
right of defendants to prosecute the counterclaim.
On a prefatory note, the RTC, in dismissing the counterclaim, did
not expressly adopt respondents argument that the dismissal of their
complaint extended as well to the counterclaim. Instead, the RTC justified
the dismissal of the counterclaim on the ground that there is no opposition to
[plaintiffs] Motion for Reconsideration [seeking the dismissal of the
counterclaim].[20] This explanation is hollow, considering that there is no
mandatory rule requiring that an opposition be filed to a motion for
reconsideration without need for a court order to that effect; and, as posited
by petitioner, the failure to file an opposition to the Plaintiffs Motion for
Reconsideration is definitely not one among the established grounds for
dismissal [of the counterclaim].[21] Still, the dismissal of the counterclaim by
the RTC betrays at very least a tacit recognition of respondents argument that
the counterclaim did not survive the dismissal of the complaint. At most, the
dismissal of the counterclaim over the objection of the defendant (herein
petitioner) on grounds other than the merits of the counterclaim, despite the
provisions under Rule 17 of the 1997 Rules of Civil Procedure, constitutes a
debatable question of law, presently meriting justiciability through the instant
action. Indeed, in reviewing the assailed orders of the RTC, it is inevitable
that the Court consider whether the dismissal of the complaint, upon motion
of the defendant, on the ground of the failure to prosecute on plaintiffs part
precipitates or carries with it the dismissal of the pending counterclaims.
Our core discussion begins with Section 3, Rule 17 of the 1997
Rules of Civil Procedure, which states:
SEC. 3. Dismissal due to fault of plaintiff.If, for
no justifiable cause, the plaintiff fails to appear on the date
of the presentation of his evidence in chief on the
complaint, or to prosecute his action for an unreasonable
length of time, or to comply with these Rules or any order
of the court, the complaint may be dismissed upon motion
of defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his
counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the
merits, unless otherwise declared by the court.
The express qualification in the provision that the dismissal of the complaint
due to the plaintiffs fault, as in the case for failure to prosecute, is without
prejudice to the right of the defendant to prosecute his counterclaim in the

same or separate action. This stands in marked contrast to the provisions Ruymann,[23] Domingo v. Santos,[24] Belleza v. Huntington,[25] and Froilan v.

under Rule 17 of the 1964 Rules of Court which were superseded by the 1997 Pan Oriental Shipping Co.,[26] all of which were decided more than five

amendments. In the 1964 Rules, dismissals due to failure to prosecute were decades ago. Notably though, none of the complaints in these four cases were

governed by Section 3, Rule 17, to wit: dismissed either due to the fault of the plaintiff or upon the instance of the

defendant.[27]
SEC. 3. Failure to prosecute. If plaintiff fails to appear at
the time of the trial, or to prosecute his action for an
unreasonable length of time, or to comply with these rules
or any order of the court, the action may be dismissed upon The distinction is relevant, for under the previous and current
motion of the defendant or upon the courts own motion.
This dismissal shall have the effect of an adjudication upon incarnations of the Rules of Civil Procedure, it is Section 3, Rule 17 that
the merits, unless otherwise provided by court.
governs the dismissals due to the failure of the plaintiff to prosecute the

complaint, as had happened in the case at bar. Otherwise, it is Section 2, Rule

17, which then, and still is now, covered dismissals ordered by the trial court
Evidently, the old rule was silent on the effect of such dismissal due to failure
upon the instance of the plaintiff.[28] Yet, as will be seen in the foregoing
to prosecute on the pending counterclaims. As a result, there arose what one
discussion, a discussion of Section 2 cannot be avoided as the postulate
authority on remedial law characterized as the nagging question of whether
behind that provision was eventually extended as well in cases that should
or not the dismissal of the complaint carries with it the dismissal of the
have properly been governed by Section 3.
[22]
counterclaim. Jurisprudence construing the previous Rules was hardly

silent on the matter.

In their arguments before the RTC on the dismissal

Even though the cases cited by respondents involved different factual
of the counterclaim, respondents cited in support City of Manila v.
antecedents, there exists more appropriate precedents which they could have

cited in support of their claim that the counterclaim should have been
dismissed even if the dismissal of the complaint was upon the defendants
This view expressed in Morans Commentaries was adopted by the Court in
motion and was predicated on the plaintiffs fault. BA Finance Corp. v.
cases where the application of Section 2, Rule 17 of the 1964 Rules of Court
Co[29] particularly stands out in that regard, although that ruling is itself
was called for, such as in Lim Tanhu v. Ramolete,[32] and Dalman v. City
grounded on other precedents as well. Elucidation of these cases is in order.
Court of Dipolog City.[33] The latter case warrants brief elaboration. Therein,

the plaintiff in a civil case for damages moved for the withdrawal of her own
On the general effect of the dismissal of a complaint, regardless of cause, on
case on the ground that the dispute had not been referred to the barangay
the pending counterclaims, previous jurisprudence laid emphasis on whether
council as required by law. Over the objection of the defendant, who feared
the counterclaim was compulsory or permissive in character. The necessity
that her own counterclaim would be prejudiced by the dismissal, plaintiffs
of such distinction was provided in the 1964 Rules itself, particularly Section
motion was granted, the complaint and the counterclaim accordingly
2, Rule 17, which stated that in instances wherein the plaintiff seeks the
dismissed by the trial court. The Court refused to reinstate the counterclaim,
dismissal of the complaint, if a counterclaim has been pleaded by a defendant
opining without elaboration, [i]f the civil case is dismissed, so also is the
prior to the service upon him of the plaintiffs motion to dismiss, the action
counterclaim filed therein.[34] The
shall not be dismissed against the defendants objection unless the
broad nature of that statement gave rise to the notion that the mandatory
counterclaim can remain pending for independent adjudication by the

court.[30] The

dismissal of the counterclaim upon dismissal of the complaint applied

regardless of the cause of the complaints dismissal.[35]

vaunted commentaries of Chief Justice Moran, remarking on Section 2, Rule

17, noted that [t]here are instances in which a counterclaim cannot remain Notably, the qualification concerning compulsory counterclaims was

pending for independent adjudication, as, where it arises out of, or is provided in Section 2, Rule 17 of the 1964 Rules, the provision governing

necessarily connected with, the transaction or occurrence which is the subject dismissals by order of the court, and not Section 3, Rule 17. As stated earlier,

matter of the opposing partys claim.[31] Section 3, which covered dismissals for failure to prosecute upon motion of

the defendant or upon motu proprio action of the trial court, was silent on the
effect on the counterclaim of dismissals of such nature.
Spouses Sta. Maria, Jr. v. Court of Appeals,[36] decided in 1972, ostensibly
supplied the gap on the effect on the counterclaim of complaints dismissed
under Section 3. The defendants therein successfully moved before the trial
court for the dismissal of the complaint without prejudice and their
declaration in default on the counterclaim after plaintiffs therein failed to
attend the pre-trial. After favorable judgment was rendered on the
counterclaim, plaintiffs interposed an appeal, citing among other grounds,
that the counterclaim could no longer have been heard after the dismissal of
the complaint. While the Court noted that the adjudication of the
counterclaim in question does not depend upon the adjudication of the claims
made in the complaint since they were virtually abandoned by the non-
appearance of the plaintiffs themselves, it was also added that [t]he doctrine
invoked is not available to plaintiffs like the petitioners, who prevent or delay
the hearing of their own claims and allegations.[37] The Court, through Justice
JBL Reyes, noted:
The doctrine that the complaint may not be
dismissed if the counterclaim cannot be independently
adjudicated is not available to, and was not intended for
the benefit of, a plaintiff who prevents or delays the
prosecution of his own complaint. Otherwise, the trial of
counterclaims would be made to depend upon the
maneuvers of the plaintiff, and the rule would offer a
premium to vexing or delaying tactics to the prejudice of
the counterclaimants. It is in the same spirit that we have
ruled that a complaint may not be withdrawn over the
opposition of the defendant where the counterclaim is one
that arises from, or is necessarily connected with, the
plaintiffs action and cannot remain pending for
independent adjudication.[38]
There is no doubt that under the 1964 Rules, the dismissal of a
complaint due to the failure of the plaintiff to appear during pre-trial, as what
had happened in Sta. Maria, fell within the coverage of Section 3, Rule 17.
On the other hand, Section 2 was clearly limited in scope to those dismissals
sustained at the instance of the plaintiff.[39]Nonetheless, by the early 1990s,
jurisprudence was settling on a rule that compulsory counterclaims were
necessarily terminated upon the dismissal of the complaint not only if such
dismissal was upon motion of the plaintiff, but at the instance of the defendant
as well. Two decisions from that period stand out in this regard, Metals
Engineering Resources Corp. v. Court of Appeals[40] and International
Container Terminal Services v. Court of Appeals.[41]
In Metals, the complaint was expunged from the record after the
defendant had filed a motion for reconsideration of a trial court order
allowing the filing of an amended complaint that corrected a jurisdictional
error in the original complaint pertaining to the specification of the amount
of damages sought. When the defendant was nonetheless allowed to present the very nature of the counterclaim that it could not remain pending for

evidence on the counterclaim, the plaintiff assailed such allowance on the independent adjudication, that is, without adjudication by the court of the

ground that the counterclaim was compulsory and could no longer remain complaint itself on which the counterclaim was based.[46]

pending for independent adjudication. The Court, in finding for the plaintiff,

noted that the counterclaim was indeed compulsory in nature, and as such, Then in 1993, a divided Court ruled in BA Finance that the dismissal

was auxiliary to the proceeding in the original suit and derived its of the complaint for nonappearance of plaintiff at the pre-trial, upon motion

jurisdictional support therefrom.[42] It was further explained that the doctrine of the defendants, carried with it the dismissal of their compulsory

was in consonance with the primary objective of a counterclaim, which was counterclaim.[47] The Court reiterated the rule that a compulsory counterclaim

to avoid and prevent circuitry of action by allowing the entire controversy cannot remain pending for independent adjudication by the court as it is

between the parties to be litigated and finally determined in one action, and auxiliary to the proceeding in the original suit and merely derives its

to discourage multiplicity of suits.[43] Also, the Court noted that since the jurisdictional support therefrom.[48] Express reliance was made on Metals,

complaint was dismissed for lack of jurisdiction, it was as if no claim was International Container, and even Dalman in support of the majoritys

filed against the defendant, and there was thus no more leg for the complaint thesis. BA Finance likewise advised that the proper remedy for defendants

to stand on.[44] desirous that their counterclaims not be dismissed along with the main

complaint was for them to move to declare the plaintiffs to be non-suited on

In International Container, the defendant filed a motion to dismiss
their complaint and as in default on their compulsory counterclaim, instead
which was granted by the trial court. The defendants counterclaim was
of moving for the dismissal of the complaint.[49]
dismissed as well. The Court summarized the key question as what is the

effect of the dismissal of a complaint ordered at the instance of the defendant

Justice Regalado, joined by Chief Justice Narvasa, registered a
upon a compulsory counterclaim duly raised in its answer. [45] Then it ruled
strong objection to the theory of the majority. They agreed that the trial court
that the counterclaim did not survive such dismissal. After classifying the
could no longer hear the counterclaim, but only on the ground that defendants
counterclaim therein as compulsory, the Court noted that [i]t is obvious from
motion to be allowed to present evidence on the counterclaim was filed after

the order dismissing the complaint had already become final. They disagreed
however that the compulsory counterclaim was necessarily dismissed along
with the main complaint, pointing out that a situation wherein the dismissal
of the complaint was occasioned by plaintiffs failure to appear during pre-
trial was governed under Section 3, Rule 17, and not Section 2 of the same
rule. Justice Regalado, who ironically penned the decision in Metals cited by
the majority, explained:
Turning back to Rule 17, it is readily apparent
that Sections 2 and 3 thereof envisage different factual
and adjective situations. The dismissal of the complaint
under Section 2 is at the instance of plaintiff, for
whatever reason he is minded to move for such
dismissal, and, as a matter of procedure, is without
prejudice unless otherwise stated in the order of the
court or, for that matter, in plaintiff's motion to dismiss
his own complaint. By reason thereof, to curb any dubious
or frivolous strategy of plaintiff for his benefit or to obviate
possible prejudice to defendant, the former may not
dismiss his complaint over the defendant's objection if the
latter has a compulsory counterclaim since said
counterclaim would necessarily be divested of juridical
basis and defendant would be deprived of possible
recovery thereon in that same judicial proceeding.
Section 3, on the other hand, contemplates a
dismissal not procured by plaintiff, albeit justified by
causes imputable to him and which, in the present case,
was petitioner's failure to appear at the pre-trial. This
situation is also covered by Section 3, as extended by
judicial interpretation, and is ordered upon motion of
defendant or motu proprio by the court. Here, the issue
of whether defendant has a pending counterclaim,
permissive or compulsory, is not of determinative
significance. The dismissal of plaintiff's complaint is
evidently a confirmation of the failure of evidence to
prove his cause of action outlined therein, hence the
dismissal is considered, as a matter of evidence, an
adjudication on the merits. This does not, however,
mean that there is likewise such absence of evidence to
prove defendant's counterclaim although the same
arises out of the subject matter of the complaint which
was merely terminated for lack of proof. To hold
otherwise would not only work injustice to defendant
but would be reading a further provision into Section 3
and wresting a meaning therefrom although neither
exists even by mere implication. Thus understood, the
complaint can accordingly be dismissed, but relief can
nevertheless be granted as a matter of course to defendant
on his counterclaim as alleged and proved, with or without
any reservation therefor on his part, unless from his
conduct, express or implied, he has virtually consented to
the concomitant dismissal of his counterclaim.[50]
Justice Regalado also adverted to Sta. Maria and noted that the objections
raised and rejected by the Court therein were the same as those now relied
upon by the plaintiff. He pointed out that Dalman and International
Container, both relied upon by the majority, involved the application of
Section 2, Rule 17 and not Section 3, which he insisted as the applicable
provision in the case at bar.[51]
The partial dissent of Justice Regalado in BA Finance proved opportune, as
he happened then to be a member of the Rules of Court Revision Committee
tasked with the revision of the 1964 Rules of Court. Just a few months

after BA Finance was decided, Justice Regalado proposed before the
Committee an amendment to Section 3, Rule 17 that would explicitly provide
that the dismissal of the complaint due to the fault of the plaintiff shall be
without prejudice to the right of the defendant to prosecute his counterclaim
whether it is permissive or compulsory or all kinds of
counterclaims.
Justice Regalado opined that there is no need of making
a clarification because it is already understood that it
covers both counterclaims.[52]

in the same or in a separate action. The amendment, which was approved by

It is apparent from these minutes that the survival of the counterclaim despite
the Committee, is reflected in the minutes of the meeting of the Committee
the dismissal of the complaint under Section 3 stood irrespective of whether
held on 12 October 1993:
the counterclaim was permissive or compulsory. Moreover, when the Court

[Justice Regalado] then proposed that after the itself approved the revisions now contained in the 1997 Rules of Civil
words upon the courts own motion in the 6th line of the
Procedure, not only did Justice Regalados amendment to Section 3, Rule 17
draft in Sec. 3 of Rule 17, the following provision be
inserted: without prejudice to the right of the defendant remain intact, but the final version likewise eliminated the qualification
to prosecute his counterclaim in the same or in a
separate action. The Committee agreed with the formerly offered under Section 2 on counterclaims that can remain pending
proposed amendment of Justice Regalado.
for independent adjudication by the court.[53] At present, even Section 2,
Justice Herrera observed that under Secs. 1 to 3 of Rule 17,
it is not the action that is dismissed but the complaint. He concerning dismissals on motion of the plaintiff, now recognizes the right of
asked whether there is any distinction between complaint
and action.Justice Regalado opined that the action of the the defendant to prosecute the counterclaim either in the same or separate
plaintiff is initiated by his complaint.
action notwithstanding the dismissal of the complaint, and without regard as
Justice Feria then suggested that the dismissal be to the permissive or compulsory nature of the counterclaim.
limited to the complaint[.] Thus, in the 1st line of Sec. 1,
the words An action will be changed to a complaint; in
the 2nd line of Sec. 2, the words an action will be
changed to a complaint and in Sec. 3, the word action In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado
on the 5th line of the draft will be changed to
complaint. The Committee agreed with Justice Ferias expounds on the effects of the amendments to Section 2 and 3 of Rule 17:
suggested amendments.

CA Pao believed that there is a need to clarify the 2. Under this revised section [2], where the plaintiff moves
counterclaim that the defendant will prosecute, for the dismissal of his complaint to which a counterclaim
has been interposed, the dismissal shall be limited to the
complaint. Such dismissal shall be without prejudice to the
right of the defendant to either prosecute his counterclaim Similarly, Justice Feria notes that the present rule reaffirms the right of the
in a separate action or to have the same resolved in the
same action. Should he opt for the first alternative, the defendant to move for the dismissal of the complaint and to prosecute his
court should render the corresponding order granting and
counterclaim, as stated in the separate opinion [of Justice Regalado in BA
reserving his right to prosecute his claim in a separate
complaint. Should he choose to have his counterclaim Finance.][55] Retired Court of Appeals Justice Herrera pronounces that the
disposed of in the same action wherein the complaint had
been dismissed, he must manifest such preference to the amendment to Section 3, Rule 17 settles that nagging question whether the
trial court within 15 days from notice to him of plaintiffs
motion to dismiss.These alternative remedies of the dismissal of the complaint carries with it the dismissal of the counterclaim,
defendant are available to him regardless of whether
his counterclaim is compulsory or permissive. A similar and opines that by reason of the amendments, the rulings
alternative procedure, with the same underlying reason
therefor, is adopted in Sec. 6, Rule 16 and Sec. 3 of this in Metals Engineering, International Container, and BA Finance may be
Rule, wherein the complaint is dismissed on the motion of
deemed abandoned.[56] On the effect of amendment to Section 3, Rule 17, the
the defendant or, in the latter instance, also by the
court motu proprio. commentators are in general agreement,[57]although there is less unanimity of

xxxx views insofar as Section 2, Rule 17 is concerned.[58]

2. The second substantial amendment to [Section 3] is with

respect to the disposition of the defendants counterclaim in
the event the plaintiffs complaint is dismissed. As already To be certain, when the Court promulgated the 1997 Rules of Civil
observed, he is here granted the choice to prosecute that
counterclaim in either the same or a separate action. x x x Procedure, including the amended Rule 17, those previous jural doctrines that
x were inconsistent with the new rules incorporated in the 1997 Rules of Civil
3. With the aforestated amendments in Secs. 2 and 3 Procedure were implicitly abandoned insofar as incidents arising after the
laying down specific rules on the disposition of
counterclaims involved in the dismissal actions, the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even
controversial doctrine in BA Finance Corporation vs.
Co, et al., (G.R. No. 105751, June 30, 1993) has been the doctrine that a counterclaim may be necessarily dismissed along with the
abandoned, together with the apparent confusion on
the proper application of said Secs. 2 and 3. Said complaint, clearly conflicts with the 1997 Rules of Civil Procedure. The
sections were distinguished and discussed in the authors
abandonment of BA Finance as doctrine extends as far back as 1997, when
separate opinion in that case, even before they were
clarified by the present amendments x x x.[54] the Court adopted the new Rules of Civil Procedure. If, since then, such

abandonment has not been affirmed in jurisprudence, it is only because no

proper case has arisen that would warrant express confirmation of the new
rule. That opportunity is here and now, and we thus rule that the dismissal of
a complaint due to fault of the plaintiff is without prejudice to the right of the
defendant to prosecute any pending counterclaims of whatever nature in the
same or separate action. We confirm that BA Finance and all previous rulings
of the Court that are inconsistent with this present holding are now
abandoned.
Accordingly, the RTC clearly erred when it ordered the dismissal of the
counterclaim, since Section 3, Rule 17 mandates that the dismissal of the
complaint is without prejudice to the right of the defendant to prosecute the
counterclaim in the same or separate action. If the RTC were to dismiss the
counterclaim, it should be on the merits of such counterclaim. Reversal of the
RTC is in order, and a remand is necessary for trial on the merits of the
counterclaim.
It would be perfectly satisfactory for the Court to leave this matter at that.
Still, an explanation of the reason behind the new rule is called for,
considering that the rationale behind the previous rule was frequently
elaborated upon.
Under Act No. 190, or the Code of Procedure in Civil Actions
promulgated in 1901, it was recognized in Section 127(1) that the plaintiff
had the right to seek the dismissal of the complaint at any time before trial,
provided a counterclaim has not been made, or affirmative relief sought by
the cross-complaint or answer of the defendant.[59] Note that no qualification
was made then as to the nature of the counterclaim, whether it be compulsory
or permissive. The protection of the defendants right to prosecute the
counterclaim was indeed unqualified. In City of Manila, decided in 1918, the
Court explained:
By paragraph 1 [of Section 127], it will be seen
that, where the defendant has interposed a counterclaim, or
is seeking affirmative relief by a cross-complaint, that then,
and in that case, the plaintiff cannot dismiss the action so as
to affect the right of the defendant in his counterclaim or
prayer for affirmative relief. The reason for that exception
is clear. When the answer sets up an independent action
against the plaintiff, it then becomes an action by the
defendant against the plaintiff, and, of course, the
plaintiff has no right to ask for a dismissal of
the defendants action.[60]
Nonetheless, a new rule was introduced when Act No. 190 was replaced by
the 1940 Rules of Court. Section 2, Rule 30 of the 1940 Rules specified that
if a counterclaim is pleaded by a defendant prior to the service of the plaintiffs
motion to dismiss, the action shall not be dismissed against the defendants
objection unless the counterclaim can remain pending for independent
adjudication by the court. This qualification remained intact when the 1964
Rules of Court was introduced.[61] The rule referred only to compulsory arises out of or is necessarily connected with the transaction or occurrence

counterclaims, or counterclaims which arise out of or are necessarily that is the subject matter of the complaint;[65] and that if the court dismisses

connected with the transaction or occurrence that is the subject matter of the the complaint on the ground of lack of jurisdiction, the compulsory

plaintiffs claim, since the rights of the parties arising out of the same counterclaim must also be dismissed as it is merely ancilliary to the main

transaction should be settled at the same time.[62] As was evident action and no jurisdiction remained for any grant of relief under the

in Metals, International Container and BA Finance, the rule was eventually counterclaim.

extended to instances wherein it was the defendant with the pending

counterclaim, and not the plaintiff, that moved for the dismissal of the The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court,

complaint. while the two latter points are sourced from American jurisprudence. There is

no disputing the theoretical viability of these three points. In fact, the

We should not ignore the theoretical bases of the rule distinguishing
requirement that the compulsory counterclaim must be set up in the same
compulsory counterclaims from permissive counterclaims insofar as the
proceeding remains extant under the 1997 Rules of Civil Procedure. [66] At the
dismissal of the action is concerned. There is a particular school of thought
same time, other considerations rooted in actual practice provide a
that informs the broad proposition in Dalman that if the civil case is
counterbalance to the above-cited rationales.
dismissed, so also is the counterclaim filed therein,[63] or the more nuanced

discussions offered in Metals, International Container, and BA Finance. The

Whatever the nature of the counterclaim, it bears the same integral
most potent statement of the theory may be found in Metals,[64] which
characteristics as a complaint; namely a cause (or causes) of action
proceeds from the following fundamental premisesa compulsory
constituting an act or omission by which a party violates the right of another.
counterclaim must be set up in the same proceeding or would otherwise be
The main difference lies in that the cause of action in the counterclaim is
abated or barred in a separate or subsequent litigation on the ground of auter
maintained by the defendant against the plaintiff, while the converse holds
action pendant, litis pendentia or res judicata; a compulsory counterclaim is
true with the complaint. Yet, as with a complaint, a counterclaim without a
auxiliary to the main suit and derives its jurisdictional support therefrom as it
cause of action cannot survive.
It would then seemingly follow that if the dismissal of the complaint somehow
eliminates the cause(s) of the counterclaim, then the counterclaim cannot
survive. Yet that hardly is the case, especially as a general rule. More often
than not, the allegations that form the counterclaim are rooted in an act
or omission of the plaintiff other than the plaintiffs very act of filing the
complaint. Moreover, such acts or omissions imputed to the plaintiff are
often claimed to have occurred prior to the filing of the complaint itself.
The only apparent exception to this circumstance is if it is alleged in the
counterclaim that the very act of the plaintiff in filing the complaint
precisely causes the violation of the defendants rights. Yet even in such
an instance, it remains debatable whether the dismissal or withdrawal of
the complaint is sufficient to obviate the pending cause of action
maintained by the defendant against the plaintiff. [67]
These considerations persist whether the counterclaim in question is
permissive or compulsory. A compulsory counterclaim arises out of or is
connected with the transaction or occurrence constituting the subject matter
of the opposing partys claim, does not require for its adjudication the presence
of third parties, and stands within the jurisdiction of the court both as to the
amount involved and the nature of the claim.[68] The fact that the culpable acts
on which the counterclaim is based are founded within the same transaction
or occurrence as the complaint, is insufficient causation to negate the
counterclaim together with the complaint. The dismissal or withdrawal of the
complaint does not traverse the boundaries of time to undo the act or omission
of the plaintiff against the defendant, or vice versa. While such dismissal or
withdrawal precludes the pursuit of litigation
by the plaintiff, either through his/her own initiative or fault, it would be
iniquitous to similarly encumber the defendant who maintained no such
initiative or fault. If the defendant similarly moves for the dismissal of the
counterclaim or neglects to timely pursue such action, let the dismissal of the
counterclaim be premised on those grounds imputable to the defendant, and
not on the actuations of the plaintiff.
The other considerations supplied in Metals are anchored on the premise that
the jurisdictional foundation of the counterclaim is the complaint itself. The
theory is correct, but there are other facets to this subject that should be taken
into account as well. On the established premise that a counterclaim involves
separate causes of action than the complaint even if derived from the same
transaction or series of transactions, the counterclaim could have very well
been lodged as a complaint had the defendant filed the action ahead of the
complainant.[69] The terms ancillary or auxiliary may mislead in signifying
that a complaint innately possesses more credence than a counterclaim, yet
there are many instances wherein the complaint is trivial but the counterclaim or suffers jurisdictional flaws which stand independent of the complaint, the

is meritorious. In truth, the notion that a counterclaim is, or better still, appears trial court is not precluded from dismissing it under the amended rules,

to be merely ancillary or auxiliary is chiefly the offshoot of an accident of provided that the judgment or order dismissing the counterclaim is premised

chronology, more than anything else. on those defects. At the same time, if the counterclaim is justified, the

amended rules now unequivocally protect such counterclaim from

The formalistic distinction between a complaint and a counterclaim does not peremptory dismissal by reason of the dismissal of the complaint.

detract from the fact that both of them embody causes of action that have in
WHEREFORE, the petition is GRANTED. The Orders dated 9 August
their end the vindication of rights. While the distinction is necessary as a
2005 and 10 October 2005 of Branch 29, Regional Trial Court of San Miguel,
means to facilitate order and clarity in the rules of procedure, it should be
Zamboanga del Sur in Civil Case No. 98-012 are SET ASIDE. Petitioners
remembered that the primordial purpose of procedural rules is to provide the
counterclaim as defendant in Civil Case. No. 98-012 is REINSTATED. The
means for the vindication of rights. A party with a valid cause of action against
Regional Trial Court is ORDERED to hear and decide the counterclaim with
another party cannot be denied the right to relief simply because the opposing
deliberate dispatch.
side had the good fortune of filing the case first. Yet this in effect was what

had happened under the previous procedural rule and correspondent doctrine, SO ORDERED.
which under their final permutation, prescribed the automatic dismissal of the

compulsory counterclaim upon the dismissal of the complaint, whether upon

the initiative of the plaintiff or of the defendant. DANTE O. TINGA

Associate Justice

Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more

equitable disposition of the counterclaims by ensuring that any judgment WE CONCUR:

thereon is based on the merit of the counterclaim itself and not on the survival

of the main complaint. Certainly, if the counterclaim is palpably without merit

LEONARDO A. QUISUMBING
Associate Justice