FACTS:

The respondent spouses filed a complaint for damages against the petitioner hospital, alleging that their son fell from his incubator while confined at the hospital. In response, the petitioner hospital filed an answer with a compulsory counterclaim seeking payment for hospital bills and damages.

The respondents filed a reply to the counterclaim, arguing that the counterclaim should be dismissed for failure to comply with a Supreme Court Administrative Circular that requires a certificate of non-forum shopping. They claimed that the circular covers both permissive and compulsory counterclaims.

The trial court agreed with the respondents and dismissed the counterclaim, stating that the circular indeed covers both permissive and compulsory counterclaims. The petitioner hospital filed a motion for clarification and reconsideration, but it was denied.

The petitioner then filed a petition for certiorari with the Court of Appeals, seeking a review of the trial court's ruling. However, the Court of Appeals dismissed the petition, upholding the trial court's decision and stating that the circular applies to both permissive and compulsory counterclaims.

Now, the petitioner hospital seeks a review of the Court of Appeals' ruling.

ISSUES:

1. Can a compulsory counterclaim be dismissed for a failure to accompany it with a certificate of non-forum shopping?

RULING:

1. No, the Supreme Court ruled that the certificate of non-forum shopping requirement in Administrative Circular No. 04-94 does not apply to compulsory counterclaims. The provision is intended for initiatory pleadings, which a compulsory counterclaim, by its nature as ancillary to the main claim, is not. Therefore, the claim for moral, exemplary damages and attorney's fees should be reinstated, but not the claim for unpaid hospital bills, which required the certificate.

PRINCIPLES:

• Certificate of Non-Forum Shopping Required only for initiatory pleadings and not applicable to compulsory counterclaims.

• Compulsory vs. Permissive Counterclaims A compulsory counterclaim arises from the same transaction as the plaintiff's claim and does not require a separate certificate of non-forum shopping.

• Final vs. Interlocutory Orders A final order disposes of a case or an issue, whereas an interlocutory order leaves further proceedings necessary.

• Extraordinary Remedies Certiorari is not the proper remedy for errors that do not involve jurisdiction or grave abuse of discretion if an appeal is available and adequate.