G.R. No. 105376-77 - People vs. Martinez

Case Summary (G.R. No. 105376-77)

Key Dates and Procedural Posture

Critical factual and procedural dates in July 1979: check issued and delivered (16 July), Altiura’s instruction to stop payment and Bank’s inquiry to Makati Bel‑Air (17–19 July), Makati Bel‑Air’s refusal to delay presentation (20 July) and return of the original check to the Bank (28 September 1979). Trial court ordered release of funds to Altiura (18 February 1980). Later trial-court orders resolving withdrawal and dismissal motions were entered in April and July 1983. The appellate court annulled the trial court’s dismissal of Makati Bel‑Air’s counterclaim (27 June 1985). The Supreme Court reviewed the appellate court’s decision.

Applicable Law and Constitutional Basis

Governing procedural rule on counterclaims: Section 4, Rule 9 of the Revised Rules of Court (definition of a compulsory counterclaim). Governing negotiable instruments principles: Sections 28 and 52(c) of the Negotiable Instruments Law (holder in due course and related doctrines). Precedents referenced in reasoning include Javier v. IAC; Ty Tion v. Marsman and Co.; Berses v. Villanueva; and Mesina v. IAC. Because the decision under review was rendered in 1990 or later, the 1987 Philippine Constitution is identified as the constitutional framework applicable to the decision.

Factual Background — Transaction and Dispute

Altiura purchased an office condominium unit from Makati Bel‑Air and delivered to Makati Bel‑Air a manager’s check for P494,000.00 issued by the Bank as partial payment. A discrepancy arose concerning the office unit’s area: actual measurement was 124.58 square meters versus the 165 square meters stipulated in the contract. Altiura instructed the Bank to hold payment of the manager’s check because of this material discrepancy. The Bank sought Makati Bel‑Air’s position; Makati Bel‑Air responded and proposed a price reduction but later refused the Bank’s request to delay presentation for fifteen days. The Bank then filed a complaint‑in‑interpleader to have competing claims to the check adjudicated and to deposit the funds with the court.

Procedural Developments — Interpleader and Consolidation

The trial court ordered deposit of the funds in a special account. Makati Bel‑Air answered and interposed a counterclaim against the Bank (and a cross‑claim against Altiura); Altiura filed its own complaint for rescission and damages, which was later consolidated with the interpleader. Makati Bel‑Air later allegedly cancelled the sale and returned the original manager’s check to the Bank. The trial court thereafter ordered release of the funds to Altiura (18 February 1980), and ultimately addressed motions by the Bank to withdraw the interpleader and to dismiss Makati Bel‑Air’s counterclaim, including a clarificatory order dated 12 July 1983 stating that Makati Bel‑Air’s counterclaim was dismissed when the funds were released without objection.

Nature of Makati Bel‑Air’s Counterclaim

Makati Bel‑Air’s counterclaim sought P5,000,000.00 in damages, alleging that the Bank had violated its guarantee embodied in the manager’s check by effectively stopping payment, causing damages to Makati Bel‑Air (including checks it had issued against those funds). The central legal question was whether that counterclaim was compulsory under Section 4, Rule 9 (i.e., whether it “arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing party’s claim”) such that withdrawal and dismissal of the complaint‑in‑interpleader would operate to dispose of the counterclaim.

Trial Court Rulings and Rationale

The trial court concluded that its earlier order directing release of the funds to Altiura rendered the Bank’s motion to withdraw the interpleader moot and academic, and it interpreted Makati Bel‑Air’s conduct (cancellation of the sale, return of the manager’s check, and failure to oppose the release) as precluding Makati Bel‑Air’s recovery on the counterclaim. The court thus dismissed the counterclaim on the grounds that the circumstances demonstrated there was no improper or malicious recourse to interpleader by the Bank and that the counterclaim could not stand after the release.

Appellate Court Decision and Reasoning

The intermediate appellate court granted certiorari and set aside the trial court’s orders to the extent they dismissed Makati Bel‑Air’s counterclaim. The appellate court reasoned that withdrawal and dismissal of the interpleader did not ipso facto dismiss Makati Bel‑Air’s counterclaim because the counterclaim was founded on a distinct cause of action, not necessarily arising out of or tied to the Bank’s interpleader claim. Accordingly, the appellate court treated the counterclaim as separable and preserved it from dismissal by the Bank’s withdrawal.

Supreme Court’s Issue Framed on Review

The Supreme Court framed the central issue as whether Makati Bel‑Air’s counterclaim was compulsory — i.e., whether it arose out of or was necessarily connected with the transaction or occurrence that was the subject matter of the Bank’s interpleader claim — such that the withdrawal and dismissal of the Bank’s interpleader should operate to dispose of the counterclaim.

Supreme Court Analysis on Compulsory Counterclaim and Interpleader

Applying Section 4, Rule 9, the Supreme Court found that Makati Bel‑Air’s counterclaim did indeed arise out of and was necessarily connected with the same transaction that prompted the Bank to file the interpleader. The Bank’s interpleader addressed competing claims to the same funds represented by the manager’s check; Makati Bel‑Air’s counterclaim accused the Bank of bad faith in withholding or stopping payment on that check and sought damages flowing directly from the Bank’s handling of the same instrument. Because the counterclaim was based on conduct and consequences intimately related to the funds and the instrument that were the subject of the interpleader, the Court concluded the counterclaim was compulsory.

Additional Considerations: Conduct, Knowledge, and Holder in Due Course Status

The Supreme Court emphasized that Makat

Case Syllabus (G.R. No. 105376-77)

Parties

Petitioner: United Coconut Planters Bank (the Bank).
Private Respondent: Makati Bel‑Air Condominium Developers, Inc. (Makati Bel‑Air).
Other party with adverse claim: Altiura Investors, Inc. (Altiura).
Respondent judicial tribunal below: Hon. Intermediate Appellate Court.
Tribunal resolving petition: Supreme Court, Third Division (G.R. Nos. 72664-65; March 20, 1990).

Subject Matter (Instrument and Amount)

The dispute concerned a manager’s check in the amount of P494,000.00.
The manager’s check was issued by petitioner Bank, payable to Makati Bel‑Air, purchased by Altiura and delivered to Makati Bel‑Air as part payment for an office condominium unit in the Cacho‑Gonzales Building.

Relevant Chronology of Facts (as pleaded and recorded)

16 July 1979: Altiura delivered the manager’s check to Makati Bel‑Air as part payment on the office condominium unit.
17 July 1979: Petitioner Bank received instructions from Altiura to hold payment on the manager’s check due to an asserted material discrepancy in the area of the purchased office unit (unit actually measured 124.58 square meters instead of the 165 square meters stipulated in the contract).
17 July 1979: Petitioner Bank requested Makati Bel‑Air, by letter, to advise why the Bank should not issue the stop payment order requested by Altiura.
18 July 1975 (as stated in source): Bank received a reply from Makati Bel‑Air explaining its position and proposing a possible reduction of the purchase price. [date as given in source text]
19 July 1979: Altiura wrote the Bank requesting that the Bank hold payment of the manager’s check while Altiura and Makati Bel‑Air discuss the proposed reduction, and requested a 15‑day period for settlement.
19 July 1979: Bank requested Makati Bel‑Air to hold presentation of the check in abeyance for up to fifteen (15) days to allow amicable settlement.
20 July 1979: Makati Bel‑Air advised in writing that it did not agree to the Bank’s request to hold presentation of the manager’s check.
23 July 1979: Petitioner Bank filed a complaint‑in‑interpleader against Altiura and Makati Bel‑Air seeking authority to deposit the funds in a special account and to require the parties to litigate conflicting claims.
23 July 1979: Altiura filed a separate complaint for rescission of the contract of sale with damages against Makati Bel‑Air, docketed as Civil Case No. 33967; this case was later consolidated with the interpleader case.
The trial court ordered the deposit of the funds into a special account with a reputable banking institution, subject to further orders.
18 August 1979: Makati Bel‑Air filed its answer to the interpleader and incorporated a counter‑claim against petitioner Bank and a cross‑claim against Altiura.
Altiura filed an answer to the interpleader and a motion to dismiss the cross‑claim of Makati Bel‑Air.
29 August 1979: Petitioner Bank filed a “motion to withdraw complaint and motion to dismiss counter‑claim,” stating there was no longer any conflict because Makati Bel‑Air, in its answer, had alleged that it had cancelled and rescinded the sale and relinquished any claim to the funds.
28 September 1979: Makati Bel‑Air delivered to the Bank the original of the manager’s check.
18 February 1980: The trial court in Civil Case No. 33961 issued an order directing release of the funds to Altiura.
28 April 1983: The trial court issued an order resolving petitioner Bank’s motion to withdraw the complaint‑in‑interpleader and to dismiss counter‑claim, declaring the motion to withdraw moot and academic by reason of the earlier 18 February 1980 order directing release of the P494,000.00 to Altiura which Makati Bel‑Air had not opposed nor appealed from; the trial court also granted Makati Bel‑Air’s motion to consolidate Civil Case No. 33961 (interpleader) and Civil Case No. 33967 (rescission/damages).
12 July 1983: Upon motion of petitioner Bank, the trial court issued an order clarifying its 28 April 1983 order by stating that Makati Bel‑Air’s counter‑claim was dismissed when the funds were released to Altiura without Makati Bel‑Air’s objection; the same order denied Altiura’s motion to dismiss Makati Bel‑Air’s cross‑claim in Civil Case No. 33961.
Makati Bel‑Air moved for reconsideration of the 12 July 1983 clarificatory order; the motion was not successful.
Makati Bel‑Air filed a petition for certiorari with the Intermediate Appellate Court challenging dismissal of its counter‑claim.
27 June 1985: The Intermediate Appellate Court granted certiorari and nullified and set aside the trial court’s orders of 12 July and 30 August 1983 to the extent they dismissed Makati Bel‑Air’s counter‑claim, holding that withdrawal of the complaint‑in‑interpleader and its dismissal as moot did not ipso facto dismiss the counter‑claim because the counter‑claim was based on an entirely different cause of action from that in the complaint‑in‑interpleader.
Petition for Review on Certiorari was filed with the Supreme Court by petitioner Bank (G.R. Nos. 72664‑65).

Pleadings and Claims

Bank’s primary pleading: Complaint‑in‑interpleader seeking authority to deposit the funds in a special account and to require Makati Bel‑Air and Altiura to litigate their conflicting claims.
Makati Bel‑Air’s pleadings: Answer to the interpleader with a counter‑claim against Bank (for damages in the amount of P5,000,000.00) and a cross‑claim against Altiura; alleged damages based on theory that the Bank violated its guarantee in the manager’s check by effectively stopping payment, thereby causing damages because Makati Bel‑Air allegedly issued checks against those funds.
Altiura’s pleadings: Answer to inte