UNITED COCONUT PLANTERS BANK VS. INTERMEDIATE APPELLATE COURT United Coconut Planters Bank, petitioner, vs. Hon.

Intermediate Appellate Court and Makati Bel-Air Condominium Developers, Inc., respondents. Ponente: Feliciano Doctrines: (1) A compulsory counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing partys claim. (2) Interpleader is a proper remedy where a bank which had issued a managers check is subjected to opposing claims by persons who respectively claim a right to the funds covered by the managers check. Quick Facts: UCPB issued a managers check as requested by Altuira Investors to pay for Altuira's Bel Air Condo unit. However, before the encashment of the check, but with the check in Bel Airs hands, Altuira and Belair had a disagreement over the size of the condo unit and thus Altuira asked UCPB to hold payment of the check, and UCPB in turn asked BelAir to not encash the check. Nature: Petition to review the decision of the then Intermediate Appellate Court. Date: 20 March 1990 Petitioner: UCPB Respondent: IAC and Bel Air Condo Developers. Facts:
Petitioner UCPB issued a managers check in the amount of Php494,000.00 payable to private respondent Bel-Air, purchased by Altiura Investors, Inc. (Altiura) for part payment of a condominium unit. Altiura gave instructions to UCPB to hold the payment of the check due to a material discrepancy in the area of the condominium unit it sold to it. The unit measured only 124.58m2, less than the 165m2 agreed upon by Altiura and BelAir. Altiura further advised UCPB to hold in abeyance the payment of the check for 15 days so as to give time for Altiura and Bel-Air to resolve the discrepancy issue. UCPB told Bel-Air to likewise hold in abeyance the presentation of the managers check to give way to the amicable settlement but the latter did not agree. UCPB then filed a complaint-in-interpleader against Altiura and Bel-Air to require both buyer and seller to litigate and settle the claims over the funds represented by the check. The Bank also asked the court, and was granted, to deposit the funds of the check into a special account with any reputable bank until the adjudication of the conflicting claims. Bel-Air filed its answer with counter-claim against petitioner Bank for Php5,000,000.00 as damages for allegedly violating its (Banks) guarantee in the managers check when it stopped payment of said check. UCPB then moved to withdraw the complaint and to dismiss the counter-claim against it. It alleged that there was no more conflict between Altiura and Bel-Air as to who was entitled to the funds under the managers check as Bel-Air, in its answer, alleged that it had already cancelled and rescinded the sale of the condominium unit and hence relinquished any of its claim over the funds of the check. Bel-Air then delivered the managers check to the Bank. TC ordered release of funds to Altiura. TC: o motion to withdraw complaint-in-interpleader rendered moot and academic by the order to release Php494,000.00 to Altiura. o later clarified that the counter-claim posed by Bel-Air was dismissed when funds released to Altiura without the formers objection. (clarificatory order) o denied MR of the clarificatory order by Bel-Air. CA: o nullified both clarificatory order and denial of Bel-Airs MR- withdrawal of complaint-in-interpleader and its dismissal as moot and academic did not operate ipso facto to dismiss Bel-Airs counter-claim as the it was based on

a cause of action different from that of the interpleader UCPB: Bel-Airs counter-claim was compulsory in nature and hence was dissolved when the complaint-in-interpleader was withdrawn and dismissed. Bel-Air: counter-claim was not compulsory (hence, not ipso facto dismissed with complaint-in-interpleader withdrawal and dismissal).

Issue: WON Bel-Airs counter-claim was compulsory and hence dissolved upon withdrawal and dismissal of UCPBs complaint-in-interpleader. Held: Yes. Court Resolved to Grant the petition and to reverse and set aside CAs decision. Ratio: Rev. Rules of Court, Rule 9, Sec.4 provides that a compulsory counterclaim is one which arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the opposing partys claim. Interpleader is the proper remedy for the Bank when the check it issued was subjected to the opposing claims of Altiura and Bel-Air. The filing of such remedy was a necessary precaution for the Bank to not make a mistake as to who was entitled to payment. In this case, Bel-Airs counterclaim arose out of or was necessarily connected to UCPBs interpleader. This counterclaim was a claim by private respondent that the Bank refused to honor its undertaking to pay in the managers check in bad faith. The TCs granting of petitioner Banks motion to withdraw the complaint-in-interpleader in effect was a holding that the Bank did not act in bad faith in withholding the payment under the check, as it was based on the cancellation of the sale and return by Bel-Air of the check to UCPB. Thus, UCPB cannot be held liable under BelAirs counterclaim. Bel-Air was not a holder in due course1 of the check as it was aware of the at least partial failure of consideration when it failed to deliver less than the 165m2 condominium unit and when it was informed by both Altiura and UCPB of the alleged defect in its (Bel-Airs) title over the check or its right to its proceeds.

Fn.3 of the ponencia cites Secs.28 and 52(c) of the Negotiable Instruments Law as regards this term.