VILLACERAN, Kent-Kent R.

Section JD-E CIVPRO

3. RULE 9 Financial Building Corp. vs. Forbes Park Association, G.R. No. 133119, August 17, 2000

Section 2

Facts:
USSR informed Forbes Park that it engaged the services of Financial Building to construct a
residence. When Forbes Park discovered that USSR is really building an apartment building, it enjoined
further construction work on the site as it violated the existing rules that only single-family residential
buildings are allowed to be built within the village. Financial Building filed a complaint in the RTC for
injunction and damages against Forbes Park. Forbes Park filed a Motion to Dismiss on the ground that
Financial Building has no cause of action as it was not a real party-in-interest.

The case was dismissed, but Forbes Park filed a separate complaint for damages against
Financial Building arising from the violation of its rules and regulations. RTC favored Forbes Park
awarding damages. On appeal, the CA affirmed the decision, hence the present petition for certiorari.

Issue:
Whether or not Forbes Park’s case is barred due to its failure to set it up as a compulsory
counterclaim in the prior injunction suit initiated by Financial Building.

Ruling:
Yes. The Court ruled that Forbes Park’s case is barred due to its failure to set it up as a
compulsory counterclaim in the prior injunction suit initiated by Financial Building. A compulsory
counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence
that is the subject matter of the opposing party’s claim.

In this case, the prior and instant case arose from the same occurrence, involving the same
parties. Forbes Park filed a motion to dismiss in Civil Case No. 16540, hence, its existing compulsory
counterclaim at that time is now barred. 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.