G.R. No. L-16592 - Icasiano vs. Icasiano

Plaintiff Enrique Icasiano filed a complaint on July 31, 1959, seeking the recovery of P20,000 plus interest and attorney’s fees from defendant Felisa Icasiano.
Defendant Felisa Icasiano, within the reglementary period (November 9, 1959), filed an answer that admitted some of the allegations in the complaint, denied others, and set up special defenses.
In addition to her answer, the defendant raised two counterclaims:

The first counterclaim for a sum of money allegedly representing an amount borrowed by the plaintiff (stated as PI50 in the record, which later is referenced as P150 when set off against the plaintiff’s claim).
The second counterclaim sought moral and exemplary damages, attorney’s fees, and litigation expenses, in an amount the court might find just and reasonable.

The lower court, on December 7, 1959, granted the dismissal of the first counterclaim, denied the motion to strike out the paragraph, and set the hearing date for January 7, 1960, at 8:30 a.m.
Notice of the order was served on the defendant on December 17, 1959, who filed her notice of appeal and an appeal bond three days later.
The plaintiff countered with a motion to strike out the defendant’s appeal with respect to the setting of the hearing, arguing:

That the order fixing the hearing date was interlocutory and not appealable; and
That the appeal served merely as a dilatory tactic.

The lower court denied the plaintiff’s motion on December 19, 1959, thereby allowing the appeal from the dismissal of the defendant’s first counterclaim and from the order setting the hearing.
The plaintiff also filed a motion to dismiss the appeal on February 4, 1960, specifically challenging the appeal as frivolous in reviewing the interlocutory dismissal of the counterclaim and the setting of the hearing. This motion was denied by the Court on February 17, 1960, and a subsequent motion for reconsideration by the plaintiff was also denied.

The main ground contested in the appeal was whether or not the lower court erred in dismissing defendant’s first counterclaim based on the assertion that the court lacked jurisdiction to entertain it.
An underlying issue was the appealability of the interlocutory order dismissing the counterclaim since interlocutory orders generally are not appealable until final judgment.
The record indicates that the plaintiff’s acquiescence (by not objecting to the defendant’s appeal regarding the dismissal of the counterclaim or to the amended record on appeal) played an important role in the appellate proceedings.

Did the lower court err in holding that it lacked jurisdiction to entertain and decide on the defendant’s first counterclaim?
Was the dismissal of the counterclaim proper under the applicable rules of procedure and law?

Given that the order dismissing the counterclaim was interlocutory in nature, was it subject to appeal?
What effect did the plaintiff’s acquiescence have on the appeal from what was originally deemed an interlocutory order?

Under Articles 1278, 1279, 1286, and 1290 of the Civil Code, could the defendant invoke compensation as a means to offset the plaintiff’s claim even without a formal plea of “compensation” in her counterclaim?
Did the elements of compensation, as provided in the Civil Code, exist in the present case to justify the counterclaim as a valid set-off against the plaintiff’s claim?