The damage prevention ability works even if it has no counters, as long as some effect keeps its toughness above zero.
Remove one counter each time it would be damaged. If it was going to take more than one point of damage, you prevent all the damage and still only remove one counter.
If unpreventable damage is applied to this card, you still remove a counter even though the prevention fails.
If this card takes damage from multiple sources at once (for example if it is blocked by multiple creatures in combat), it only loses one counter.