EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION, respondent. - COUNTERLCAIM

Facts:

FGU Insurance Corporation filed a complaint with the RTC of Makati alleging that Alday owed it P114,650.76, representing unliquidated cash advances, unremitted costs of premiums and other charges incurred as an insurance agent. Respondent also prayed for exemplary damages, attorneys fees, and costs of suit. Petitioner filed her answer and by way of counterclaim, asserted her right for the payment of P104,893.45, representing direct commissions, profit commissions and contingent bonuses and for accumulated premium reserves amounting to P500,000.00. In addition, petitioner prayed for attorneys fees, litigation expenses, moral damages and exemplary damages for the allegedly unfounded action filed by respondent.

Respondent filed a Motion to Strike Out Answer With Compulsory Counterclaim And To Declare Defendant In Default because petitioners answer was allegedly filed out of time. However, the trial court denied the motion. A few weeks later, respondent filed a motion to dismiss petitioners counterclaim, contending that the trial court never acquired jurisdiction over the same because of the non-payment of docket fees by petitioner. In response, petitioner asked the trial court to declare her counterclaim as exempt from payment of docket fees since it is compulsory and that respondent be declared in default for having failed to answer such counterclaim.

The trial court granted the motion to dismiss. The court found petitioners counterclaim to be merely permissive and held that petitioners failure to pay docket fees prevented the court from acquiring jurisdiction over the same. The Court of Appeals sustained the trial court.

Issues:

1. Whether or not the respondent is estopped from questioning her non-payment of docket fees because it did not raise this particular issue when it filed its first motion.

2. Whether or not the Court of Appeals had jurisdiction to entertain the appeal of the petitioner.

3. Whether or not the counterclaim was permissive or compulsory

Held:

1. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it. In the case at bar, respondent cannot be considered as estopped from assailing the trial

court’s jurisdiction over petitioners counterclaim since this issue was raised by respondent with the trial court itself the body where the action is pending - even before the presentation of any evidence by the parties and definitely, way before any judgment could be rendered by the trial court.

2. This objection to the CA’s jurisdiction is raised for the first time before this Court. Although the lack of jurisdiction of a court may be raised at any stage of the action, a party may be estopped from raising such questions if he has actively taken part in the very proceedings which he questions, belatedly objecting to the court’s jurisdiction in the event that that the judgment or order subsequently rendered is adverse to him. In this case, respondent actively took part in the proceedings before the CA by filing its appellees brief with the same. Its participation, when taken together with its failure to object to the jurisdiction during the entire duration of the proceedings before such court, demonstrates a willingness to abide by the resolution of the case by such tribunal and accordingly, respondent is now most decidedly estopped.

3. BOTH. A compulsory counterclaim is one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing parties’ claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. In Valencia v. Court of Appeals, this Court set the criteria to determine whether a counterclaim is compulsory or permissive,

a. Are the issues of fact and law raised by the claim and counterclaim largely the same?

b. Would res judicata bar a subsequent suit on defendants claim absent the compulsory counterclaim rule?chanroblesvirtuallawlibrary

c. Will substantially the same evidence support or refute plaintiffs claim as well as defendants counterclaim?chanroblesvirtuallawlibrary

d. Is there any logical relation between the claim and the counterclaim?chanroblesvirtuallawlibrary

Another test, applied in Quintanilla v. Court of Appeals, is the compelling test of compulsoriness which requires a logical relationship between the claim and counterclaim, that is, where conducting separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court.

Petitioner’s counterclaim for commissions, bonuses, and accumulated premium reserves is merely permissive. The evidence required to prove petitioners claims differs from that needed to establish respondent’s demands for the recovery of cash accountabilities from petitioner, such as cash advances and costs of premiums. This conclusion is further reinforced by petitioners own admissions since she declared in her answer that respondents cause of action, unlike her own, was not based upon the Special Agents Contract.

However, petitioners claims for damages, allegedly suffered as a result of the filing by respondent of its complaint, are compulsory.

The rule on the payment of filing fees has been laid down by the Court in the case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion

a. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.chanroblesvirtuallawlibrary

b. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.chanroblesvirtuallawlibrary

c. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.chanroblesvirtuallawlibrary

In Suson v. Court of Appeals, the Court explained that although the payment of the prescribed docket fees is a jurisdictional requirement, its non-payment does not result in the automatic dismissal of the case provided the docket fees are paid within the applicable prescriptive or reglementary period. Coming now to the case at bar, it has not been alleged by respondent and there is nothing in the records to show that petitioner has attempted to evade the payment of the proper docket fees for her permissive counterclaim. As a matter of fact, after respondent filed its motion to dismiss petitioners counterclaim based on her failure to pay docket fees, petitioner immediately filed a motion with the trial court, asking it to declare her counterclaim as compulsory in nature and therefore exempt from docket fees and, in addition, to declare that respondent was in default for its failure to answer her counterclaim. The trial court should have instead given petitioner a reasonable time, but in no case beyond the applicable prescriptive or reglementary period, to pay the filing fees for her permissive counterclaim.

UST VS SURLA – PLEADINGS

“the rule does not require a certification against forum shopping for a compulsory counterclaim, because it cannot be the subject of a separate and independent adjudication; It is not therefore, an initiatory pleading,” (in Riano, 2007, page 58).

Respondent spouses sued petitioner hospital for damages before the Regional Trial

Court of Quezon City based on their claim that their son, Emmanuel Cesar Surla,

while confined at the said hospital for having been born prematurely, had accidentally

fallen from his incubator possibly causing serious harm on the child. In its answer with

compulsory counterclaim, petitioner asserted that respondents still owed to it hospital

bills for their son's confinement thereat, and claimed moral and exemplary damages,

plus attorney's fees. Respondents sought dismissal of petitioner's counterclaim on the

ground that it was not accompanied with a certificate of non-forum shopping pursuant

to Supreme Court Administrative Circular No. 04-94. Petitioner, however, contended

that since its counterclaim was compulsory in nature, the circular did not apply to it.

The trial court dismissed petitioner's counterclaim as the circular does not distinguish

whether the counterclaim should be permissive or compulsory. Petitioner's petition

for certiorari with the Court of Appeals was dismissed. Hence, this appeal.

The Supreme Court ruled that the language of Circular No. 04-94 distinctly suggests

that it is primarily intended to cover an initiatory pleading or an incipient application of

a party asserting a claim for relief. The circular has not been contemplated to include

a kind of claim which, by its very nature as being auxiliary to the proceedings in the

suit and as deriving its substantive and jurisdictional support therefrom, can only be

appropriately pleaded in the answer and not remain outstanding for independent

resolution except by the court where the main case pends. The appealed decision

was modified and the claim for moral, exemplary damages and attorney's fees of

petitioner was ordered reinstated.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; FINAL JUDGMENT OR

ORDER, DISTINGUISHED FROM INTERLOCUTORY ORDER. — The concept of a

final judgment or order. distinguished from an interlocutory issuance, is that the former

decisively puts to a close, or disposes of, a case or a disputed issue leaving nothing

else to be done by the court in respect thereto. Once that judgment or order is

rendered, the adjudicative task of the court is likewise ended on the particular matter

involved. An order is interlocutory, upon the other hand, if its effects would only be

provisional in character and would still leave substantial proceedings to be further had

by the issuing court in order to put the controversy to rest.

2. ID.; ID.; ID.; ERROR OF JUDGMENT, NOT REVIEWABLE BY EXTRAORDINARY

REMEDY OF CERTIORARI. — As a rule, errors of judgment, as well as of procedure,

neither relating to the jurisdiction of the court nor involving grave abuse of discretion,

are not reviewable by the extraordinary remedy of certiorari. As long as a court acts

within its jurisdiction and does not gravely abuse its discretion in the exercise thereof,

any supposed error committed by it will amount to nothing more than an error of

judgment reviewable by a timely appeal and not assailable by a special civil action

of certiorari. This rule, however, is not a rigid and inflexible technicality. This Court has

not too infrequently given due course to a petition for certiorari even when the proper

remedy would have been an appeal, where valid and compelling considerations could

warrant such a recourse. Certiorari has been deemed to be justified, for instance, in

order to prevent irreparable damage and injury to a party where the trial judge has

capriciously and whimsically exercised his judgment, or where there may be danger of

clear failure of justice, or where an ordinary appeal would simply be inadequate to

relieve a party from the injurious effects of the judgment complained of.

3. ID.; FORUM-SHOPPING; ADMINISTRATIVE CIRCULAR NO. 04-94; PURPOSE.

— It bears stressing, once again, that the real office of Administrative Circular No. 04-

94, made effective on 01 April 1994, is to curb the malpractice commonly referred to

also as forum-shopping. It is an act of a party against whom an adverse judgment has

been rendered in one forum of seeking and possibly getting a favorable opinion in

another forum, other than by appeal or the special civil action of certiorari or the

institution of two or more actions or proceedings grounded on the same cause on the

supposition that one or the other court would make a favorable disposition. The

language of the circular distinctly suggests that it is primarily intended to cover an

initiatory pleading or an incipient application of a party asserting a claim for relief.

4. ID.; ID.; ID.; APPLICATION IN CASE OF COUNTERCLAIM. — It should not be too

difficult, foregoing rationale of the circular aptly taken, to sustain the view that the

circular in question has not, in fact, been contemplated to include a kind of claim

which, but its very nature as being auxiliary to the proceedings in the suit and as

deriving its substantive and jurisdictional support therefrom, can only be appropriately

pleaded in the answer and not remain outstanding for independent resolution except

by the court where the main case pends. Prescinding from the foregoing, the proviso

in the second paragraph of Section 5, Rule 8, of the 1997 Rules of Civil Procedure,

i.e., that the violation of the anti-forum shopping rule "shall not be curable by mere

amendment . . . but shall be cause for the dismissal of the case without prejudice,"

being predicated on the applicability of the need for a certification against forum

shopping, obviously does not include a claim which cannot be independently set up.

Petitioner, nevertheless, is entitled to a mere partial relief. The so-called

"counterclaim" of petitioner really consists of two segregative parts: (1) for unpaid

hospital bills of respondents' son, Emmanuel Surla, in the total amount of P82,632.10;

and (2) for damages, moral and exemplary, plus attorney's fees by reason of the

alleged malicious and unfounded suit filed against it. It is the second, not the first,

claim that the Court here refers to as not being initiatory in character and thereby not

covered by the provisions of Administrative Circular No. 04-94.

||| (Santo Tomas University Hospital v. Spouses Surla, G.R. No. 129718, [August 17, 1998], 355 PHIL 804-815)