A compulsory counterclaim is a claim that a defending party has against an opposing party which arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing party's claim. It is cognizable by the regular courts of justice and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.
A compulsory counterclaim must be set up in the answer of the defending party if it exists at the time the answer is filed. A compulsory counterclaim not raised in the same action is barred, unless otherwise allowed by the Rules.
The requirements for a compulsory counterclaim include: (a) it is cognizable by regular courts; (b) it arises out of or is connected with the subject matter of the opposing claim; (c) it does not require third parties beyond the court's jurisdiction; and (d) it must be within the court's jurisdiction regarding amount and nature. An exception exists in an original action before the Regional Trial Court (RTC), where the counterclaim may be considered compulsory regardless of the amount.
The tests to determine if a counterclaim is compulsory include whether: (a) issues of fact and law are largely the same; (b) res judicata would bar a subsequent suit; (c) substantially the same evidence would support or refute both claims; and (d) there is any logical relation between the claims.
A compulsory counterclaim is auxiliary to the original suit and derives its jurisdictional support from it. It is not considered an initiatory pleading. Historically, docket fees were not required for compulsory counterclaims. However, effective August 16, 2004, docket fees are now required for compulsory counterclaims. A certification against forum shopping is not required for a compulsory counterclaim because it is not an initiatory pleading.
Failure to answer a compulsory counterclaim is generally not a cause for a default declaration, especially if it merely reiterates special defenses or raises issues deemed joined by the complaint. The issues raised in a compulsory counterclaim are deemed automatically joined by the allegations of the complaint.
If a counterclaim arises after the answer is filed or was omitted due to excusable reasons, it may be set up by supplemental pleading or amendment with leave of court before judgment.
Dismissal of the main action, particularly due to the plaintiff's fault, does not necessarily dismiss a compulsory counterclaim; it may be prosecuted in the same or a separate action. However, filing a motion to dismiss the complaint instead of an answer is incompatible with setting up a compulsory counterclaim, and the counterclaim is deemed waived upon dismissal of the main action at the instance of the counterclaimant.