Metals Engineering v.
CA (Short title) o That he suffered sleepless nights, serious anxieties,
GR # 95631 | October 28, 1991
Petition: Petition for review certiorari of CA decision
Petitioner: Metals Engineering Resources Corporation
Respondent: Court of Appeals and Plaridel Jose
(Rule 6, Rules on Civil Procedure)
DOCTRINE
If the court does not have jurisdiction to entertain the main action of the case and
dismisses the same, then the compulsory counterclaim, being ancillary to the principal
controversy, must likewise be dismissed since no jurisdiction remained for any grant
of relief under the counterclaim.
FACTS
- A Civil Case was filed by Metals Engineering against Jose to annul an
agreement to buy and sell before the Regional Trial Court of Pasig
o The agreement to buy and sell several parcels of land is patently
and plainly imperfect and incomplete as there was and could have
been no meeting of the minds of the parties in regard to the
manner, period and terms of payment or consideration.
o Consequently, it did not contemplate nor did it result to a binding
and enforceable contract to sell. In fact, as stipulated in paragraphs
3 and 4 of said "agreement", the terms of sale, including the
payment of the purchase price, are uncertain and imperfect as they
are subject to the following:
Obligation to pay 1/2 of the consideration depends
exclusively on the ability of the corporation to look for a
place to transfer its offices and that failure to locate such
will subject the agreement to an extension.
The payment of the remaining 50% shall be the subject of
a separate agreement.
- Despite the condition of the agreement, Jose prematurely caused the
preparation of a subdivision plan of the lands and offered the same for sale
through an advertisement published in Manila Bulletin
- The Corporation then wrote a letter to Jose rescinding and/or withdrawing
from the uncompleted and imperfect "Agreement" and tendered a check for
the amount of P50,000.00 representing full refund of the earnest money
previously delivered by Jose,
o The refusal of Jose to acknowledge such as well as his acts of
offering the land for sale to third person is unjustifiable and great
damage and prejudice.
- Jose then filed his Answer alleging a compulsory counterclaim.
o He had already spent a considerable amount.
o Due to the adamant and unreasonable posture of the corporation,
his timetable to generate funds and profits was severely stalled and
placed at a standstill to the damage and prejudice of his investment
and financial projection.
o His reputation has been tarnished at the very least considering that
he could not pursue his legal and business commitments.
embarrassment and similar injuries due to the indefensible and
destructive posture of the corporation
- Before the case could be heard on pre-trial, Jose filed a Motion to Expunge
the Complaint on the ground that the same did not specify the amount of
damages sought either in the body or in the prayer of the complaint.
- The trial court required then required the corporation to amend its complaint
by specifying the amount of damages prayed for, otherwise the original
complaint shall be dismissed.
- To which Jose moved for the reconsideration of the trial court's aforesaid
order stating that the court did not acquire jurisdiction when the wrong
docket fee was paid.
- RTC 1st Decision: Granted the MR and ordered the complaint be expunged
from the record on the ground that it did not acquire jurisdiction over the
case.
- Jose then filed a Motion to Set Case for Presentation of Evidence in support
of his counterclaim.
o Corporation averred that since the counterclaim is compulsory in
nature because it is necessarily connected with the same
transaction, it can no longer remain pending for independent
adjudication.
- RTC 2nd Decision: Granted motion to present evidence and denied MR
o Compulsory counterclaim is a complaint in itself and independent in
character.
o It has to be set up in the answer otherwise it will be waived or
barred and it cannot be invoked in another case, for it would be
splitting a cause of action which is not allowed under the rules.
- CA: Dismissed the special civil action for certiorari of the company
o Order is merely interlocutory in nature and that at most it is merely
an error of judgment, it cannot be corrected by certiorari.
o If to allow Jose to present evidence is a mistake, it is an error of
judgment that is not correctible by certiorari or prohibition but an
appeal which may be taken from the judgment to be rendered on
the counterclaim.
o The function of certiorari and prohibition is to keep an inferior court
within the limits of its jurisdiction and are not intended to correct
every error which may be committed in the course of a trial.
- Hence, the instant petition.
ISSUE/S
1. W/N there was jurisdictional defect committed by the RTC
2. W/N the order of the RTC cannot be the basis of a petition for certiorari and
prohibition
PROVISIONS
Rule 6
Section 6. Counterclaim. A counterclaim is any claim which a defending party may
have against an opposing party. (6a)
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Section 7. Compulsory counterclaim. 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 party's claim
and does not require for its adjudication the presence of third parties of whom the
court cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction
of the court both as to the amount and the nature thereof, except that in an original
action before the Regional Trial Court, the counter-claim may be considered
compulsory regardless of the amount. (n)
DISPOSITION
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE,
and judgment is hereby rendered DISMISSING the compulsory counterclaim of
private respondent in Civil Case No. 55560, without prejudice to the setting up of the
same in Civil Case No. 58126, both of the Regional Trial Court of Pasig, Metro
Manila.
SO ORDERED

RULING & RATIO

1. YES
- The asseveration that a compulsory counterclaim is not deemed dismissed
just because the main complaint is dismissed by the court, and that the
same has to be pursued otherwise it will forever be barred on the ground of
res judicata, should be struck down for lack of merit.
- In the present case, Jose in his responsive pleading, which is aptly titled
"Answer with Counterclaim," has properly raised a counterclaim against
corporation's claim that the agreement to buy and sell is imperfect and
incomplete.
o In fine, what Jose is in effect saying is that his counterclaim should
be allowed to proceed independently of the main action.
- Such proposition runs counter to the nature of a compulsory counterclaim in
that it cannot remain pending for independent adjudication by the court.
o Compulsory counterclaim is auxiliary to the proceeding in the
original suit and derives its jurisdictional support therefrom,
inasmuch as it arises out of or is necessarily connected with the
transaction or occurrence that is the subject matter of the
complaint.
o It follows that if the court does not have jurisdiction to entertain the
main action of the case and dismisses the same, then the
compulsory counterclaim, being ancillary to the principal
controversy, must likewise be dismissed since no jurisdiction
remained for any grant of relief under the counterclaim.
- The primary objective of a counterclaim which is to avoid and prevent circuity
of action by allowing the entire controversy between the parties to be
litigated and finally determined in one action.
o The philosophy of the rule is to discourage multiplicity of suits. 20
o The order of the trial court allowing to proceed with the presentation
of evidence in support of the counterclaim is repugnant to the very
purpose and intent of the rule on counterclaims.
2. YES
- The trial court acted without jurisdiction in proceeding with the hearing on the
counterclaim after it had dismissed the complaint to which the counterclaim
attached.
- When the lower court in the course of proceedings acts without jurisdiction or
in excess thereof or if the trial judge otherwise acted with grave abuse of
discretion that the extraordinary writ of certiorari or prohibition is afforded to
parties as a relief.
- Such a relief is available even in respect to interlocutory orders.

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