Republic of the Philippines

SUPREME COURT
Baguio City

EN BANC

G.R. No. 102942 April 18, 1997

AMADO F. CABAERO and CARMEN C. PEREZ, petitioners,

vs.
HON. ALFREDO C. CANTOS in his capacity as Presiding Judge of the Regional Trial
Court of Manila, Br., VII, and EPIFANIO CERALDE, respondents.

PANGANIBAN, J.:

May the accused-petitioners who were charged with estafa, file an answer with counterclaim
for moral and exemplary damages plus attorney's fees and litigation expenses against the
private complainant in the same criminal action?

This is the main issue raised in this petition1 filed under Rule 65 of the Rules of Court
assailing the Orders dated July 1, 1991,2 and August 21, 1991,3 of respondent Judge "for
being contrary to law and (for) having been issued by the respondent judge in excess of his
jurisdiction and with grave abuse of discretion tantamount to lack of jurisdiction."4

The Order of July 1, 1991, reads:

THE Answer with Counterclaim filed by the accused through counsel, dated
February 12, 1991, as well as the Opposition thereto; the Memorandum filed
by the Private Prosecutor, in Support of Motion to Expunge from the Records
And/Or to Dismiss Answer with Counterclaim; the Supplement; and
Comment on Supplement, are all ordered expunged from the Records,
considering that this is a criminal case wherein the civil liability of the
accused (sic) is impliedly instituted therein.

Petitioners pleaded for reconsideration5 of said Order but respondent judge, in the Order of
August 21, 1991, denied their motion, thus:

ACTING on the Motion for Reconsideration dated July 17, 1991, of the
accused through counsel, this Court finds no merit therein, such that said
motion is hereby denied.

The Facts

This petition emanated from Crim. Case No. 90-18826 of the Regional Trial Court ("RTC") of
Manila. Said case commenced on October 18, 1990, with the filing of an Information6 against
petitioners charging them with estafa for allegedly defrauding private respondent Epifanio
Ceralde of the sum of P1,550,000.00. The accusatory portion of the Information reads as
follows:

That in or about and during the period comprised between September, 1987
and October 30, 1987, both dates inclusive, in the City of Manila, Philippines,
the said accused, conspiring and confederating together and mutually
helping each other, did then and there wilfully, unlawfully and feloniously
defraud one EPIFANIO CERALDE in the following manner, to wit: the said
accused induced and succeeded in inducing the said EPIFANIO CERALDE
to advance the total amount of P1,550,000.00 to be paid to M.C. Castro
Construction, Co. representing the purchase price of six (6) parcels of land
located in Pangasinan which the Aqualand Ventures & Management
 Corporation, a joint business venture organized by accused AMADO F.
CABAERO and the said EPIFANIO CERALDE, purchased from the said
company, with the understanding that the said amount would be returned to
the said EPIFANIO CERALDE as soon as the loan for P1,500,000.00 applied
for by the said Aqualand Ventures & Management Corporation with Solid
Bank, of which said accused AMADO F. CABAERO is the Senior Vice-
President, is released, but both accused, once the said loan has (sic) been
approved by the bank, in furtherance of their conspiracy and falsely
pretending that accused CARMEN C. PEREZ had been authorized by the
said Aqualand Ventures & Management Corporation to receive the check for
P1,500,000.00 for and in its own behalf, succeeded in inducing the cashier of
said Solid Bank to release the same to accused CARMEN C. PEREZ,
thereby enabling her to encash the aforesaid check, and instead of turning
over the said amount to the said EPIFANIO CERALDE, accused failed and
refused, and still fail and refuse, to do so despite repeated demands made to
that effect, and with intent to defraud, misappropriated, misapplied and
converted the said amount to their own personal use and benefit, to the
damage and prejudice of the said EPIFANIO CERALDE in the aforesaid
amount of P1,550,000.00, Philippine currency.

Contrary to law.

Arraigned on January 7, 1991, petitioners entered a plea of not guilty. On February 5, 1991,
Atty. Ambrosio Blanco entered his appearance as private prosecutor.7

The Presiding Judge of the RTC of Manila, Branch IV, Hon. Elisa R. Israel, in an
Order8 dated February 11, 1991, inhibited herself "out of delicadeza" from further hearing the
case pursuant to Section 1 of Rule 137 of the Rules of Court after "considering that the
complainant is a relative by affinity of a nephew of her husband." Thereafter, the case was
reraffled to Branch VII presided over by respondent Judge Alfredo Cantos.

On April 2, 1991, petitioners filed an Answer with Counterclaims9 alleging that the money
loaned from Solidbank mentioned in the Information was duly applied to the purchase of the
six (6) parcels of land in Pangasinan, and that the filing of said Information was unjustified
and malicious. Petitioners included the following prayer: 10

WHEREFORE, it is respectfully prayed that after trial judgment be rendered:

1. Dismissing, or quashing the information, and the civil action impliedly

instituted in the criminal action;

2. Ordering the complaining witness Ceralde to pay to the accused the

following amounts:

(a) P1,500,000.00 as moral damages;

(b) P500,000.00 as exemplary damages;

(c) P100,000.00 as attorney's fees; and

(d) P20,000.00, as litigation expenses.

Accused pray for such other reliefs, legal and equitable in the premises.

During the initial hearing on April 15, 1991, the prosecution verbally moved that the answer
with counterclaim be expunged from the records and/or be dismissed. The respondent judge,
after the exchange of arguments between the prosecution and the defense, gave the
contending parties time to submit a Memorandum and Comment or Opposition, respectively.

The Memorandum of the private prosecutor justified his Motion to Expunge the answer with
counterclaim for two reasons: (1) the trial court had no jurisdiction over the answer with
counterclaim for non-payment of the prescribed docket fees and (2) the "compulsory
counterclaim against complainant is barred for failure to file it before arraignment." 11

In their Opposition, petitioners argued that this Court in Javier vs. Intermediate Appellate
Court 12 laid down, for "procedural soundness," the rule that a counterclaim should be
permitted in a criminal action where the civil aspect is not reserved. Further, inasmuch as
petitioners' counterclaim was compulsory in nature, they were not required to pay docket
fees therefor. Additionally, the Rules do not specifically provide for the period for filing of
counterclaims in criminal cases, whereas Section 3 of Rule 9 and Section 9 of Rule 6 allow
the filing, with leave of court, of a counterclaim at any time before judgment. Thus, petitioners
contended that their filing was within the proper period. 13

As previously indicated, respondent Judge Cantos granted the prosecution's motion to

expunge in an Order dated July 1, 1991, and denied the petitioners' motion for
reconsideration in an Order dated August 21, 1991.

On the theory that there is no plain, speedy and adequate remedy in the ordinary course of
law, the petitioners, through counsel, filed this instant petition.

The Issue

The sole issue raised by petitioners is: 14

Whether or not the respondent judge committed grave abuse of discretion,

amounting to lack or excess of jurisdiction in ordering that the answer with
counterclaim of the petitioners in Criminal Case No. 90-88126, together with
all pleadings filed in relation thereto, be expunged from the records.

Petitioners invoke Section 1, Rule 111 of the Rules on Criminal Procedure, which provides
that unless the offended party waived, reserved or instituted the civil action prior to the
criminal action, the civil action for recovery of civil liability is impliedly instituted with the
criminal action. They contend that it is not only a right but an "outright duty" of the accused to
file an answer with counterclaim since failure to do so shall result in the counterclaim being
forever barred.

Petitioners argue that under Rule 136 of the Rules of Court, particularly Section 8 thereof,
clerks of court are instructed to "keep a general docket, each page of which shall be
numbered and prepared for receiving all the entries in a single case, and shall enter therein
all cases . . ." Thus, respondent Judge Cantos allegedly erred in expunging all records with
respect to the Answer with Counterclaim for, on appeal, "if the records elevated . . . are
incomplete and inaccurate, there arises a grave danger that the ends of justice and due
process shall not be served and instead frustrated." 15

Petitioners further allege that the Order of July 1, 1991, failed to resolve the legal issues
raised by the parties as it neglected to state the legal basis therefor, as required by Section
14, Article VIII of the Constitution, "thereby leaving the petitioners to speculate on why they
were being deprived of their right to plead and prove their defenses and counter-claim as far
as the civil aspect of the case was concerned." 16

This Court, realizing the significance of the present case, required on August 3, 1992, the
appearance of the Solicitor General as counsel for respondent court. The Republic's
counsel, in his Manifestation dated December 22, 1992, cited Javier and sided with
petitioners in maintaining that the instant "petition is meritorous."

Preliminary Matters

Litis Pendentia as a Defense

In his Memorandum dated September 30, 1992, private respondent belatedly interposes litis
pendentia to defeat the petition. He alleges that the present petition is barred by the cross-
claim of the petitioners against Aqualand Ventures and Management Corporation, of which
petitioners are stockholders and officers, in Civil Case No. 90-53035 (filed against both
petitioners and the private respondent by Solidbank on May 14, 1990). Considerations of due
process prevent us from taking up the merits of this argument in favor of private
respondent. 17 This cross-claim was never raised in the trial court — certainly not in the
Memorandum dated April 19, 1991, submitted to the court a quo in support of respondent
Ceralde's motion to expunge the answer with counterclaim. The Rules 18 require that "(a)
motion attacking a pleading or a proceeding shall include all objections then available, and
all objections not so included shall be deemed waived." Consequently and ineluctably, the
ground of litis pendentia which was not argued in the court a quo is deemed waived. 19

The Payment of Filing Fees

Anent filing fees, we agree with petitioners that inasmuch as the counterclaim is compulsory,
there is no necessity to pay such fees, as the Rules do not require them. This Court already
clarified in Sun Insurance Office, Ltd. (SIOL), vs. Asuncion 20 the instances when docket fees
are required to be paid to enable the court to acquire jurisdiction:

1. It is not simply the filing of the complaint or appropriate initiatory pleading,

but the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the subject-matter or nature of the action. Where the filing of
the initiatory pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and

similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may also allow payment of
said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period. (Emphasis supplied)

Obviously, no docket fees are required to be paid in connection with the filing of a
compulsory counterclaim.

The Main Issue: Propriety of

Answer with Counterclaim

In Javier upon which petitioners anchor their thesis, the Court held that a counterclaim for
malicious prosecution is compulsory in nature; thus, it should be filed in the criminal case
upon the implied institution of the civil action.

The facts in Javier may be summarized as follows:

Leon S. Gutierrez, Jr., private respondent therein, was charged with violation of BP Blg. 22
before the Regional Trial Court of Makati. The civil case had not been expressly reserved,
hence it was impliedly instituted with the criminal action.

Later, Accused Gutierrez filed a complaint for damages against Private Complainants
(Petitioners) Javiers before the Regional Trial Court of Catarman, Northern Samar, wherein
he alleged that he had been merely inveigled by the Javiers into signing the very check that
was the subject of the criminal case.

In resolving the question of whether he can raise that claim in a separate civil action for
damages filed by him against petitioners therein, this Court, speaking through Mr. Justice
Isagani A. Cruz (Ret.), ruled: 21

It was before the Makati court that the private respondent, as defendant in
the criminal charge of violation of B.P. Blg. 22, could explain why he had
issued the bouncing check. As the civil action based on the same act was
also deemed filed there, it was also before that same court that he could offer
evidence to refute the claim for damages made by the petitioners. This he
should have done in the form of a counterclaim for damages for his alleged
deception by the petitioners. In fact, the counterclaim was compulsory and
 should have been filed by the private respondent upon the implied institution
of the civil action for damages in the criminal action.

A counterclaim is compulsory and is considered barred if not set up where

the following circumstances are present: (1) that it arises out of, or is
necessarily connected with the transaction or occurrence that is the subject
matter of the opposing party's claim; (2) that it does not require for its
adjudication the presence of third parties of whom the court cannot acquire
jurisdiction, and (3) that the court has jurisdiction to entertain the claim.

All these circumstances are present in the case before the Regional Trial
Court of Makati.

This being so, it was improper for the private respondent to file his civil
complaint in the Regional Trial Court of Northern Samar alleging the very
defense he should be making in the Regional Trial Court of Makati. It is, of
course, not possible for him now to invoke a different defense there because
he would be contradicting his own verified complaint in the Regional Trial
Court in Northern Samar. In effect, therefore, he is arguing that both courts
have jurisdiction to consider the same claim of deception he is making in
connection with the same transaction and involving the same parties.
(Emphasis supplied)

In Javier, the accused maintained in his separate action for damages that he had been
inveigled by the private complainants into signing what was alleged to be a bouncing check.
In the present case, petitioners claim in their answer with counterclaim that they never
personally benefited from the allegedly defrauded amount nor did they spend the same for a
purpose other than that agreed upon with Private Respondent Ceralde. Thus, in both cases,
the accused seek recovery of damages for what they perceive to be malicious prosecution
against them.

As categorically recognized in the case of Javier, a claim for malicious prosecution or

"grossly unfounded suit" as a compulsory counter-claim has no appropriate venue other than
the same criminal case which is alleged to be a malicious suit. The counterclaim stands on
the same footing and is to be tested by the same rules as if it were an independent
action. 22 A counterclaim is defined as any claim for money or other relief which a defending
party may have against an opposing party. 23 Compulsory counterclaim is one which at the
time of suit arises out of, or is necessarily connected with, the same transaction or
occurrence that is the subject matter of plaintiff's complaint. 24 It is compulsory in the sense
that if it is within the jurisdiction of the court, and does not require for its adjudication the
presence of third parties over whom the court cannot acquire jurisdiction, it must be set up
therein, and will be barred in the future if not set
up. 25

In justifying his Order, Judge Cantos ruled that "this is a criminal case wherein the civil
liability of the accused (sic) is impliedly instituted therein." This justification begs the
question. Basically, that is the reason why petitioners herein filed their answer with
counterclaim for, apparently, in hiring a private prosecutor, Private Respondent Ceralde
intended to prosecute his civil claim together with the criminal action. Hence, as a protective
measure, petitioners filed their counterclaim in the same case. Since under Section 1, Rule
111 26 of the Revised Rules of Court, the civil action which is deemed impliedly instituted with
the criminal action, if not waived or reserved, includes recovery of indemnity under the
Revised Penal Code, and damages under Article 32, 33, 34 and 2176 of the Civil Code
arising from the same act or omission of the accused, should not the accused have the right
to file a counterclaim in the criminal case? Obviously, the answer is in the affirmative, as was
held in Javier.

In ruling that an action for damages for malicious prosecution should have been filed as a
compulsory counterclaim in the criminal action, the Court in Javier sought to avoid multiplicity
of suits. The Court there emphasized that the civil action for malicious prosecution should
have been filed as a compulsory counterclaim in the criminal action. The filing of a separate
civil action for malicious prosecution would have resulted in the presentation of the same
evidence involving similar issues in two proceedings: the civil action impliedly instituted with
the criminal action, and the separate civil action for damages for malicious prosecution.

Some Reservations in
the Application of Javier

The logic and cogency of Javier notwithstanding, some reservations and concerns were
voiced out by members of the Court during the deliberations on the present case. These
were engendered by the obvious lacuna in the Rules of Court, which contains no express
provision for the adjudication of a counterclaim in a civil action impliedly instituted in a
criminal case. The following problems were noted:

1) While the rules on civil procedure 27 expressly recognize a defendant's entitlement to plead
his counterclaim and offer evidence in support thereof, 28 the rules on criminal
procedure 29 which authorize the implied institution of a civil action in a criminal case are, in
contrast, silent on this
point 30 and do not provide specific guidelines on how such counterclaim shall be pursued.

2) A judgment in a criminal action is not required to provide for the award of a counterclaim.
Thus, Section 2, Rule 120 of the Rules of Court, states:

Sec. 2. Form and contents of judgment. —

xxx xxx xxx

If it is for conviction, the judgment shall state (a) the legal qualifications of the
offense constituted by the acts committed by the accused, and the
aggravating or mitigating circumstances attending the commission thereof, if
there are any; (b) the participation of the accused in the commission of the
offense whether as principal, accomplice, or accessory after the fact; (c) the
penalty imposed upon the accused; and (d) the civil liability or damages
caused by the wrongful act to be recovered from the accused by the offended
party, if there is any, unless the enforcement of the civil liability by a separate
action has been reserved or waived. (Emphasis supplied)

3) Allowing and hearing counterclaims (and possibly cross-claims and third-party complaints)
in a criminal action will surely delay the said action. The primary issue in a criminal
prosecution that is under the control of state prosecutors is the guilt of the accused and his
civil liability arising from the same act or omission. 31 Extending the civil action arising from
the same act or omission to counterclaims, cross-claims and third-party complaints, and
allowing the accused and other parties to submit evidence of their respective claims will
complicate the disposition of the criminal case.

4) Adjudication of compulsory counterclaims and/or related claims or pleadings logically

includes the application of other rules which, by their very nature, apply only to civil actions.
The following matters may be invoked in connection with the filing of an answer with a
counterclaim: the genuineness and due execution of an actionable document which are
deemed admitted unless specifically denied under oath; 32 affirmative defenses like res
judicata, prescription and statute of frauds which are deemed waived by failure to interpose
them as affirmative defenses in an answer; and the failure of a defendant to file an answer
seasonably may result in his default in the civil aspect but not in the criminal. As a
consequence of these matters, the entry of plea during arraignment will no longer signal
joinder of issues in a criminal action.

5) In an impliedly instituted civil action, an accused is not sufficiently apprised of the specific
basis of the claims against him. An accused learns of the implied institution of a civil action
from the contents of an information. An information, however, is filed in behalf of the People
of the Philippines. Hence, it does not contain the ultimate facts relating to the civil liability of
the accused. Section 6, Rule 110 of the Rules of Court, provides:

Sec. 6. Sufficiency of complaint or information. — A complaint or information

is sufficient if it states the name of the accused; the designation of the
 offense by the statute; the acts or omissions complained of as constituting
the offense; the name of the offended party; the approximate time of the
commission of the offense; and the place wherein the offense was
committed.

The foregoing section does not mandate the inclusion of the ultimate facts which can be
specifically admitted or denied in an answer.

6) Because an accused is not sufficiently apprised of the specific basis of the civil action
against him, he may file a motion for bill of particulars or take advantage of discovery
procedures. The end result, in any case, will be delay and complication in the criminal action
and even confusion among the parties.

7) The Rules of Court does not specify the reckoning date for the filing of an answer in an
impliedly instituted civil action. In an ordinary civil action, an answer should be filed within
fifteen (15) days from service of summons. The concept of summons, however, is alien to a
criminal action. So, when does the 15-day period begin?

8) Moreover, an accused can file his answer with counterclaim only after the initial hearing,
because the private complainant may still reserve
his civil action at any time before the prosecution commences to present evidence. 33 On the
other hand, an answer in an ordinary civil action should be filed before the start of hearing,
because hearing commences only after the issues have been joined, i.e., after the
responsive pleadings have been filed.

9) Confusion in the application of the rules on civil procedure will certainly encourage litigants
to challenge before appellate courts interlocutory incidents of the impliedly instituted civil
action. While these challenges are pending, the criminal actions that demand speedy
resolution, particularly where the accused is denied bail in capital offenses, will stagnate.
Witnesses may disappear or lose recollection of their intended testimony, and the
prosecutors may lose momentum and interest in the case. And the accused is effectively
deprived of his right to speedy trial.

10) On top of the above procedural difficulties, some members of the Court believe that a
cause of action for malicious prosecution may be premature because there is as yet no
finding of such wrongful prosecution. This fact is precisely what the trial court still has to
determine.

By the foregoing discussion, we do not imply any fault in Javier. The real problem lies in the
absence of clear-cut rules governing the prosecution of impliedly instituted civil actions and
the necessary consequences and implications thereof. For this reason, the counter-claim of
the accused cannot be tried together with the criminal case because, as already discussed, it
will unnecessarily complicate and confuse the criminal proceedings. Thus, the trial court
should confine itself to the criminal aspect and the possible civil liability of the accused
arising out of the crime. The counter-claim (and cross-claim or third party complaint, if any)
should be set aside or refused cognizance without prejudice to their filing in separate
proceedings at the proper time. 34

At balance, until there are definitive rules of procedure 35 to govern the institution, prosecution
and resolution of the civil aspect (and the consequences and implications thereof) impliedly
instituted in a criminal case, trial courts should limit their jurisdiction to the civil liability of the
accused arising from the criminal case.

On the other hand, this Court is only too well aware that the antecedent case was filed in the
Respondent Court on October 18, 1990. Although it has dragged on for more than six (6)
years now, trial has yet to start because of the herein procedural question raised
on certiorari. In view of this, it is to the best interest of the parties that the trial of the criminal
action should now proceed. The trial has waited too long; it is time to continue and finish it
with all reasonable dispatch. In fairness to the accused, he may file separate proceedings to
litigate his counterclaim after the criminal case is terminated and/or in accordance with the
new Rules which may be promulgated as and when they become effective.
WHEREFORE, premises considered, the questioned Orders dated July 1, 1991 and August
21, 1991 are hereby MODIFIED. The counter-claim of the accused is hereby set aside
without prejudice. The Respondent Regional Trial Court of Manila is DIRECTED to proceed
with the trial of the criminal action and the civil action arising from the criminal offense that is
impliedly instituted therein, with all judicious dispatch. No. costs.

SO ORDERED.

Davide, Jr., Romero, Bellosillo, Melo, Puno, Mendoza, Francisco and Torres, Jr., JJ., concur.

Narvasa, C.J. and Kapunan, J., concurs in the result.

Hermosisima, Jr., J., is on leave.

Separate Opinions

REGALADO, J., concurring:

I concur in the result, not only because the majority has adopted my suggestion that the
conjoined civil action be reserved1 for separate determination, but specifically because such
a remedial solution presents a practical and definitive response to two contending concerns
in the court below, and frees the wheels of criminal justice to grind towards the conclusion of
the much-delayed penal proceeding.

Petitioners are reportedly apprehensive that their counterclaim, being compulsory in nature
from their view, may be deemed waived if not duly raised in Criminal Case No. 18826 of the
court a quo since the civil action against which that counterclaim is interposed has been
impliedly instituted therein. On the other hand, as commendably expounded in the main
opinion, the procedural practice, pleadings and contingencies attendant to civil cases may
not only relegate the criminal case to the background but may even deny the accused their
right to speedy trial since either the trial or appellate courts concerned could be enmeshed in
the ramifications arising from the civil case.

Reacting with judicial acuity, the Court notes the seeming hiatus in the law and rules on this
point, directs a study and formulation of a remedial Rule thereon, and orders the criminal
action to proceed sans consideration of the civil aspect which in effect is deconsolidated from
the former and reserved for later adjudication.

I essay this separate opinion, however, as there may be other cases presenting the same
factual features, hence involving the same issues which culminated in the long impasse in
this case; and because the trial courts may either not apply the procedure adopted here
should there be some variances in said cases, or be of the belief that only this Court has the
power to motu proprio order the reservation of the civil aspect considering that its joint
institution with the criminal case is a right granted to the offended party.

Pending the promulgation of the corresponding Rule addressing the situation which called for
the ad hoc resolution thereof in this case, I respectfully submit the following observations
which may be of possible assistance in cases of the same mould as the one at bar.

To my mind, and based on the presentation of this case in the main opinion, the trial court
did not err in granting the prosecution's motion to dismiss the counterclaim and deny
consideration thereof in the criminal proceeding. Its error lay in the grounds it advanced to
justify such disposition. For that matter, the reasons adduced by the private prosecutor in his
motion to expunge the answer with the counterclaim were off-tangent; and, from the
discussion of the ponente, the arguments of petitioners in resisting the dismissal of their
counterclaim, while supposedly proffering a solution, would in turn create another problem.

What seems to have been overlooked, however, are the elemental facts which could create
a cause of action for and thereby be the basis for pleading that counterclaim. Just like a
complaint, a counterclaim must be grounded upon a valid, complete and enforceable cause
of action, failing which it is dismissible on that ground or, a in thereto, for prematurity. That is
why, in some states in the American jurisdiction, a counterclaim is called a counter-
complaint.

The counterclaim involved in the present case is putatively founded upon the alleged
malicious prosecution of herein petitioners by the filing of the estafa charge against them in
the trial court. Since, however, there is now no crime of malicious prosecution per se and
only its civil law concept is maintained,2 the civil action for redress of such grievance, by
reason of its affinity with the criminal case from which it arose, was intended by them to be
adjudicated through a counterclaim filed therein. Their offered justification for such procedure
is that since the estafa case included the civil liability arising therefrom, then the counterclaim
can properly be raised to defeat or diminish the recovery sought by the complainant in that
civil aspect.

However, in the factual milieu of the present case, it would appear that petitioners do not yet
have a cause of action for a civil case of malicious prosecution against private
respondent. Denuncia falsa or malicious prosecution essentially means an unfounded
criminal action. While the term has been expanded to include unfounded civil suits instituted
just to vex and humiliate the defendant despite the absence of a cause of action or probable
cause,3 in other case the mere act of submitting the case for prosecution does not make one
liable for malicious prosecution.4

Thus, as early as 1918 in the case of U.S. vs. Rubal,5 and I am not aware of any substantial
deviation from the fundamental doctrine therein, malicious prosecution or false accusation
requires that there was a false charge made to an executive or judicial officer whose duty is
to investigate or punish the felony, that there was a final judgment of acquittal or order of
dismissal by the trial court, and there was an order for the prosecution of the person who
made the charge. The requirement that the action finally terminated with an acquittal was
underscored more recently in Lao vs. Court of Appeals, et al.6 and Ponce vs. Legaspi, et al.7

Even without the benefit of precedents, the reason for the requirement that the action was
finally terminated by dismissal or acquittal is obvious. In our legal system, it is only the proper
court that can determine the guilt or innocence of the accused. It is not for the accused to
say that he is being maliciously prosecuted and then file a claim for damages based on his
own evaluation or surmise. In the instant case, that is exactly what herein petitioners have
done. They have filed their counterclaim on the theory that the estafa case against them was
a false and malicious charge although that fact is precisely what the trial court still has to
determine.

Obviously, therefore, petitioners do not yet have a valid, complete and enforceable cause of
action which could constitute the basis and justification for their counterclaim. The
pronouncement of the court an the merits of the estafa case and as to whether it was
maliciously filed is still to come. Absent that conclusive finding and condition precedent for a
claim for damages based on malicious prosecution, the counterclaim of petitioners is without
substantive or procedural support. Elsewise stated, it is premature and should be dismissed.

The misgivings of petitioners that their counterclaim being compulsory in nature would be
waived unless filed in the criminal action do not merit extended discussion. As already
explained, that counterclaim is premature. It was, therefore, not yet in existence at the time
petitioners filed their answer and, in fact, it is still premature and legally inexistent as of now.
Accordingly, even granting that it is conceptually a compulsory counterclaim, even if it was
not filed in the criminal case it would not be considered waived.

The Court has heretofore clarified this matter as follows:

 We find no cogent reason why such uniform and settled construction of Rule
13 of the Federal Rules should not be applied in the interpretation of the
aforesaid sections of Rule 10 of the old Rules of Court. Thus, while Section 6
of Rule 16 of the old Rules defines a compulsory counterclaim as a claim that
"arises out of or is necessarily connected with the transaction or occurrence
that is the subject-matter of the opposing party's claim," Section 3 of the
same rule requires that such counterclaim must be in existence "at the time"
the counter-claimant files his answer.

The counterclaim must be existing at the time of filing the answer, though not
at the commencement of the action, for under Section 3 of the former Rule
10 (now Section 8 of Rule 6), the counterclaim or cross-claim which a party
may aver in his answer must be one which he may have "at the time" against
the opposing party. That phrase can only have reference to the time of the
answer. Certainly a premature counterclaim cannot be set up in the answer. .
..

Thus a party who fails to interpose a counterclaim although arising out of or

is necessarily connected with the transaction or occurrence of the plaintiff's
suit but which did not exist or mature at the time said party files his answer is
not thereby barred from interposing such claim in a future litigation. . . .
(Words in parentheses and emphasis supplied).8

Under the same conditions, therefore, I submit that the trial court can validly dismiss, without
prejudice to refiling the same as the subject of a separate action, a counterclaim where the
lack of a complete cause of action or the absence of the requisite basis therefor is evident.
The same disposition could apply to similar claims, such as those raised in cross-claims or
third-party complaints. Such dismissal should, however, be on motion by the adverse party
since the trial court can sua sponte dismiss a case and, by analogy, a claim raised by an
initiatory pleading only if it has no jurisdiction over the subject matter.9

Nonetheless, there is still the question of the propriety of the filing and the admissibility of
such initiatory pleadings in a criminal action. This is a proposition on which I take a negative
stand, even if the civil aspect of the criminal case is instituted therein. For this reason, I
agree that this matter should be specifically dealt with in the Rules of Court, by amendatory
or suppletory provisions, rather than by resort to general principles drawn from analogies or
implications.

VITUG, J., separate opinion:

When the civil action for the recovery of civil liability arising from the offense charged is not
reserved by the offended party, it is deemed impliedly instituted with the criminal case.1 On
this thesis, the Court, in Javier vs. IAC2 which involved the crime of estafa under B.P. Blg. 22
and where the civil case was not reserved, held that a counterclaim by the accused-
defendant for malicious prosecution, being compulsory in nature, should be filed in the same
criminal action.

Of late, some members of the Court have expressed reservations on the viability
of Javier due to resultant difficulties in its sequential observance. There is an obscurity in the
Rules of Court on how the civil action should proceed hand-in-hand with the criminal case.
The matter of bringing into the criminal case the pertinent rules on civil actions, could prove
to be unwieldy and unmanageable. A number of these problems have appropriately been
pointed out in the ponencia itself.

I join those who call upon the Court to take a second look at Javier. It might, indeed, be best
to maintain what not a few have perceived to be the old rule, i.e., that it is only the civil action
belonging to the private offended party that, if not reserved, is deemed instituted with the
criminal case. The rationale of the provision, I believe, is merely to allow the criminal court, in
case it adjudges the accused to be guilty to likewise award in favor of the offended party,
minus the usual cumbersome procedural technicalities that go with ordinary civil case,
damages arising from the commission of the offense upon the premise that a person
criminally liable is also civilly liable. The rule, in fine, should be confined to the civil liability of
the accused for the offense and not the other way around that would allow the accused to, in
turn, go after the offended party. Substantive law appears to be consistent with this view. For
instance, Article 1288 of the Civil Code disallows compensation, a mode for extinguishing an
obligation, "if one of the debts consists in civil liability arising from a penal offense." The
Court, I might add, has continued to sanction the filing of a civil case for malicious
prosecution by the accused, whether reserved or not, against a complainant even when, as
so held in Javier this action partakes of a "compulsory counterclaim."

Personally, I am convinced that the Javier ruling should be re-examined.

For the above reasons, as well as because of prematurity, I vote to sustain the dismissal of
the counterclaim filed by the accused.

Padilla, J., concurs.

Separate Opinions

REGALADO, J., concurring:

I concur in the result, not only because the majority has adopted my suggestion that the
conjoined civil action be reserved1 for separate determination, but specifically because such
a remedial solution presents a practical and definitive response to two contending concerns
in the court below, and frees the wheels of criminal justice to grind towards the conclusion of
the much-delayed penal proceeding.

Petitioners are reportedly apprehensive that their counterclaim, being compulsory in nature
from their view, may be deemed waived if not duly raised in Criminal Case No. 18826 of the
court a quo since the civil action against which that counterclaim is interposed has been
impliedly instituted therein. On the other hand, as commendably expounded in the main
opinion, the procedural practice, pleadings and contingencies attendant to civil cases may
not only relegate the criminal case to the background but may even deny the accused their
right to speedy trial since either the trial or appellate courts concerned could be enmeshed in
the ramifications arising from the civil case.

Reacting with judicial acuity, the Court notes the seeming hiatus in the law and rules on this
point, directs a study and formulation of a remedial Rule thereon, and orders the criminal
action to proceed sans consideration of the civil aspect which in effect is deconsolidated from
the former and reserved for later adjudication.

I essay this separate opinion, however, as there may be other cases presenting the same
factual features, hence involving the same issues which culminated in the long impasse in
this case; and because the trial courts may either not apply the procedure adopted here
should there be some variances in said cases, or be of the belief that only this Court has the
power to motu proprio order the reservation of the civil aspect considering that its joint
institution with the criminal case is a right granted to the offended party.

Pending the promulgation of the corresponding Rule addressing the situation which called for
the ad hoc resolution thereof in this case, I respectfully submit the following observations
which may be of possible assistance in cases of the same mould as the one at bar.

To my mind, and based on the presentation of this case in the main opinion, the trial court
did not err in granting the prosecution's motion to dismiss the counterclaim and deny
consideration thereof in the criminal proceeding. Its error lay in the grounds it advanced to
justify such disposition. For that matter, the reasons adduced by the private prosecutor in his
motion to expunge the answer with the counterclaim were off-tangent; and, from the
discussion of the ponente, the arguments of petitioners in resisting the dismissal of their
counterclaim, while supposedly proffering a solution, would in turn create another problem.
What seems to have been overlooked, however, are the elemental facts which could create
a cause of action for and thereby be the basis for pleading that counterclaim. Just like a
complaint, a counterclaim must be grounded upon a valid, complete and enforceable cause
of action, failing which it is dismissible on that ground or, a in thereto, for prematurity. That is
why, in some states in the American jurisdiction, a counterclaim is called a counter-
complaint.

The counterclaim involved in the present case is putatively founded upon the alleged
malicious prosecution of herein petitioners by the filing of the estafa charge against them in
the trial court. Since, however, there is now no crime of malicious prosecution per se and
only its civil law concept is maintained,2 the civil action for redress of such grievance, by
reason of its affinity with the criminal case from which it arose, was intended by them to be
adjudicated through a counterclaim filed therein. Their offered justification for such procedure
is that since the estafa case included the civil liability arising therefrom, then the counterclaim
can properly be raised to defeat or diminish the recovery sought by the complainant in that
civil aspect.

However, in the factual milieu of the present case, it would appear that petitioners do not yet
have a cause of action for a civil case of malicious prosecution against private
respondent. Denuncia falsa or malicious prosecution essentially means an unfounded
criminal action. While the term has been expanded to include unfounded civil suits instituted
just to vex and humiliate the defendant despite the absence of a cause of action or probable
cause,3 in other case the mere act of submitting the case for prosecution does not make one
liable for malicious prosecution.4

Thus, as early as 1918 in the case of U.S. vs. Rubal,5 and I am not aware of any substantial
deviation from the fundamental doctrine therein, malicious prosecution or false accusation
requires that there was a false charge made to an executive or judicial officer whose duty is
to investigate or punish the felony, that there was a final judgment of acquittal or order of
dismissal by the trial court, and there was an order for the prosecution of the person who
made the charge. The requirement that the action finally terminated with an acquittal was
underscored more recently in Lao vs. Court of Appeals, et al.6 and Ponce vs. Legaspi, et al.7

Even without the benefit of precedents, the reason for the requirement that the action was
finally terminated by dismissal or acquittal is obvious. In our legal system, it is only the proper
court that can determine the guilt or innocence of the accused. It is not for the accused to
say that he is being maliciously prosecuted and then file a claim for damages based on his
own evaluation or surmise. In the instant case, that is exactly what herein petitioners have
done. They have filed their counterclaim on the theory that the estafa case against them was
a false and malicious charge although that fact is precisely what the trial court still has to
determine.

Obviously, therefore, petitioners do not yet have a valid, complete and enforceable cause of
action which could constitute the basis and justification for their counterclaim. The
pronouncement of the court an the merits of the estafa case and as to whether it was
maliciously filed is still to come. Absent that conclusive finding and condition precedent for a
claim for damages based on malicious prosecution, the counterclaim of petitioners is without
substantive or procedural support. Elsewise stated, it is premature and should be dismissed.

The misgivings of petitioners that their counterclaim being compulsory in nature would be
waived unless filed in the criminal action do not merit extended discussion. As already
explained, that counterclaim is premature. It was, therefore, not yet in existence at the time
petitioners filed their answer and, in fact, it is still premature and legally inexistent as of now.
Accordingly, even granting that it is conceptually a compulsory counterclaim, even if it was
not filed in the criminal case it would not be considered waived.

The Court has heretofore clarified this matter as follows:

We find no cogent reason why such uniform and settled construction of Rule
13 of the Federal Rules should not be applied in the interpretation of the
aforesaid sections of Rule 10 of the old Rules of Court. Thus, while Section 6
of Rule 16 of the old Rules defines a compulsory counterclaim as a claim that
"arises out of or is necessarily connected with the transaction or occurrence
 that is the subject-matter of the opposing party's claim," Section 3 of the
same rule requires that such counterclaim must be in existence "at the time"
the counter-claimant files his answer.

The counterclaim must be existing at the time of filing the answer, though not
at the commencement of the action, for under Section 3 of the former Rule
10 (now Section 8 of Rule 6), the counterclaim or cross-claim which a party
may aver in his answer must be one which he may have "at the time" against
the opposing party. That phrase can only have reference to the time of the
answer. Certainly a premature counterclaim cannot be set up in the answer. .
..

Thus a party who fails to interpose a counterclaim although arising out of or

is necessarily connected with the transaction or occurrence of the plaintiff's
suit but which did not exist or mature at the time said party files his answer is
not thereby barred from interposing such claim in a future litigation. . . .
(Words in parentheses and emphasis supplied).8

Under the same conditions, therefore, I submit that the trial court can validly dismiss, without
prejudice to refiling the same as the subject of a separate action, a counterclaim where the
lack of a complete cause of action or the absence of the requisite basis therefor is evident.
The same disposition could apply to similar claims, such as those raised in cross-claims or
third-party complaints. Such dismissal should, however, be on motion by the adverse party
since the trial court can sua sponte dismiss a case and, by analogy, a claim raised by an
initiatory pleading only if it has no jurisdiction over the subject matter.9

Nonetheless, there is still the question of the propriety of the filing and the admissibility of
such initiatory pleadings in a criminal action. This is a proposition on which I take a negative
stand, even if the civil aspect of the criminal case is instituted therein. For this reason, I
agree that this matter should be specifically dealt with in the Rules of Court, by amendatory
or suppletory provisions, rather than by resort to general principles drawn from analogies or
implications.

VITUG, J., separate opinion:

When the civil action for the recovery of civil liability arising from the offense charged is not
reserved by the offended party, it is deemed impliedly instituted with the criminal case.1 On
this thesis, the Court, in Javier vs. IAC2 which involved the crime of estafa under B.P. Blg. 22
and where the civil case was not reserved, held that a counterclaim by the accused-
defendant for malicious prosecution, being compulsory in nature, should be filed in the same
criminal action.

Of late, some members of the Court have expressed reservations on the viability
of Javier due to resultant difficulties in its sequential observance. There is an obscurity in the
Rules of Court on how the civil action should proceed hand-in-hand with the criminal case.
The matter of bringing into the criminal case the pertinent rules on civil actions, could prove
to be unwieldy and unmanageable. A number of these problems have appropriately been
pointed out in the ponencia itself.

I join those who call upon the Court to take a second look at Javier. It might, indeed, be best
to maintain what not a few have perceived to be the old rule, i.e., that it is only the civil action
belonging to the private offended party that, if not reserved, is deemed instituted with the
criminal case. The rationale of the provision, I believe, is merely to allow the criminal court, in
case it adjudges the accused to be guilty to likewise award in favor of the offended party,
minus the usual cumbersome procedural technicalities that go with ordinary civil case,
damages arising from the commission of the offense upon the premise that a person
criminally liable is also civilly liable. The rule, in fine, should be confined to the civil liability of
the accused for the offense and not the other way around that would allow the accused to, in
turn, go after the offended party. Substantive law appears to be consistent with this view. For
instance, Article 1288 of the Civil Code disallows compensation, a mode for extinguishing an
obligation, "if one of the debts consists in civil liability arising from a penal offense." The
Court, I might add, has continued to sanction the filing of a civil case for malicious
prosecution by the accused, whether reserved or not, against a complainant even when, as
so held in Javier this action partakes of a "compulsory counterclaim."

Personally, I am convinced that the Javier ruling should be re-examined.

For the above reasons, as well as because of prematurity, I vote to sustain the dismissal of
the counterclaim filed by the accused.

Padilla, J., concurs.