G.R. No. 146019 ; June 8, 2004
ARMANDO M. LASCANO, petitioner, vs. UNIVERSAL STEEL SMELTING CO., INC., REYNALDO U. LIM and HON. REGIONAL TRIAL COURT OF QUEZON CITY, respondents.

FACTS

Petitioner Armando Lascano ordered steel bars from respondent Universal Steel Smelting Co., Inc. (USSCI) for a construction project. The delivered materials, valued at ₱104,268, were received by petitioner’s representative. Upon USSCI’s demand for payment, Lascano denied placing the order. USSCI subsequently filed a criminal complaint for estafa, which was dismissed by the prosecutor. News items about the case were published. Lascano then filed a civil complaint for damages against USSCI and its Vice-President for malicious prosecution. The Regional Trial Court (RTC) dismissed Lascano’s complaint and, on USSCI’s counterclaim, ordered Lascano to pay the cost of the steel bars with interest, moral and exemplary damages, and attorney’s fees.
Lascano appealed, but the Court of Appeals (CA) dismissed his appeal for failure to pay docket fees. After the CA resolution became final, the RTC granted USSCI’s motion for execution. Lascano filed a motion for reconsideration, which was denied. He then filed a special civil action for certiorari with the CA, which dismissed it for late filing. Lascano elevated the case to the Supreme Court via a petition for review.

ISSUE

(1) Whether the Court of Appeals erred in dismissing the special civil action for certiorari on procedural grounds. (2) Whether the RTC’s decision, which dismissed Lascano’s complaint and granted USSCI’s counterclaim, was valid.

RULING

On the procedural issue, the Supreme Court ruled that the CA erred. The 60-day period to file certiorari was interrupted when Lascano filed a timely motion for reconsideration of the RTC’s order granting execution. The period resumed upon notice of the denial. His petition was filed within the remaining period, making it timely. The Court emphasized that rules of procedure should be liberally construed to serve substantial justice.
On the merits, the Supreme Court affirmed the RTC’s substantive decision but modified the damages. The Court found that Lascano failed to prove malicious prosecution, as USSCI had probable cause to file the estafa case based on the unpaid delivery. The filing was not motivated by malice but was a legitimate effort to collect a debt. Furthermore, USSCI’s counterclaim for the unpaid steel bars was compulsory, as it arose from the same transaction that was the subject of Lascano’s complaint. A compulsory counterclaim does not require payment of separate docket fees for the court to acquire jurisdiction over it. However, the Court reduced the awarded moral damages from ₱100,000 to ₱10,000 and exemplary damages from ₱50,000 to ₱5,000, finding the original amounts excessive. The order for Lascano to pay the principal debt with interest and attorney’s fees was sustained.