G.R. No. 75379. March 31, 1989.
Spouses REYNALDO and ESTELITA JAVIER, petitioners, vs. INTERMEDIATE APPELLATE COURT and LEON S. GUTIERREZ, JR., respondents.

FACTS

Private respondent Leon S. Gutierrez, Jr. was charged with estafa under B.P. Blg. 22 (Bouncing Checks Law) before the Regional Trial Court (RTC) of Makati for issuing a dishonored check to petitioners Reynaldo and Estelita Javier. The petitioners did not expressly reserve the right to file a separate civil action for damages arising from the offense. Subsequently, Gutierrez filed a civil complaint for damages against the petitioners in the RTC of Catarman, Northern Samar. In this complaint, Gutierrez alleged that the petitioners had inveigled him into signing the very check that was the subject of the criminal case, thereby seeking to explain the reason for its issuance.
The petitioners moved to dismiss the civil case in Catarman on grounds of litis pendentia and lack of cause of action, arguing that the civil liability was already impliedly instituted with the criminal action in Makati. The trial court denied their motion. Gutierrez also moved to suspend the criminal proceedings in Makati, claiming a prejudicial question existed due to the pending civil case. The petitioners opposed this. The RTC in Catarman later declared the petitioners in default for not filing an answer, while the RTC in Makati denied the motion to suspend and set the criminal case for hearing. The petitioners elevated the matter to the Intermediate Appellate Court, which sustained the trial court, prompting this petition.

ISSUE

Whether a separate civil action for damages filed by the accused, based on the very same transaction subject of a pending criminal case for violation of B.P. Blg. 22, is proper despite the implied institution of the civil action for recovery of civil liability with the criminal case.

RULING

The Supreme Court reversed the decision of the Intermediate Appellate Court and ordered the dismissal of the civil case in Catarman, Northern Samar. The Court held that under Rule 111, Section 1 of the Rules of Court, when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense is deemed impliedly instituted with it, unless expressly waived or reserved. Since the petitioners did not reserve the separate civil action, their claim for damages was impliedly filed with the criminal case in Makati. Consequently, Gutierrez’s defense to the civil claim—that he was deceived into issuing the check—should have been raised in the Makati court as a compulsory counterclaim.
The Court explained that a counterclaim is compulsory and barred if not set up when it arises out of the same transaction, does not require third parties over whom the court lacks jurisdiction, and the court can adjudicate the claim. All these conditions were present. By filing a separate civil action in a different venue (Catarman, Northern Samar), Gutierrez improperly split a single cause of action and sought to litigate the same matter in two courts. This could lead to multiplicity of suits, delay, and frustration of the criminal proceedings. The Court also noted the questionable choice of venue, as both parties were based in Metro Manila, suggesting an attempt to inconvenience the petitioners. While the improper venue was waived, the equitable principle that courts should not be used for harassment or to circumvent procedural rules justified dismissal. The civil case in Catarman was thus a superfluity and an improper remedy.