Lafarge Cement Phils vs Continental Cement Corp GR No. 155173

7/11/2015 Lafargevs.Continental|Hobbes'Scribbles

http://lawlbms.blogspot.com/2013/01/lafargevscontinental.html 1/6

3rdJanuary2013

Lafargevs.ContinentalGRNo.L155173

FACTS:1. Petitionforreview.2. 1998,LETTEROFINTENTEXECUTEDBYBOTHPARTIES

1. LAFARGE,inbehalfofLuzonContinentalLandCorporation(LCLC),agreedtopurchasethecementbusinessofrespondentContinentalCementCorporation.

2. PartiesenteredintoaSaleandPurchaseAgreement(SPA).3. LAFARGEawareofCONTINENTALpendingcasewith theSupremeCourt (AssetPrivatizationTrust (APT)

v.CourtofAppealsandContinentalCementCorporation)

i.InanticipationoftheliabilitySCmightadjudgeagainstCONTINENTAL,theparties,underClause2(c)oftheSPA,allegedlyagreedtoretainfromthepurchasepriceaportionofthecontractpricein theamountofP117,020,846.84 theequivalentofUS$2,799,140. Thisamountwas tobedepositedinaninterestbearingaccountintheFirstNationalCityBankofNewYork(Citibank)forpaymenttoAPT,thepetitionerinAssetPrivatizationTrustV.CA/Continental.

ii. LAFARGE refused to apply the sum to the payment toAPT, despite decision inAPT vsCONTINENTAL, in favor of CONTINENTAL and the repeated instructions ofCONTINENTAL.

1.FearfulthatnonpaymenttoAPTwouldresultintheforeclosure,notjustofitspropertiescovered by the SPA with Lafarge but of several other properties as well,CONTINENTAL filed Complaint with Application for Preliminary AttachmentagainstLAFARGE.DocketedasCivilCaseNo.Q0041103,

a.ForLAFARGEtopaytheAPTRetainedAmountreferredtoinClause2(c)oftheSPA.

b.LAFARGEmoved to dismiss theComplaint on the ground that it violated theprohibitiononforumshopping.

i.CONTINENTALhadallegedlymadethesameclaimitwasraisinginCivilCaseNo. Q0041103 in another action, which involved the same partiesand which was filed earlier before the International Chamber ofCommerce.

ii.TrialcourtdeniedLAFARGEsMotiontoDismiss1.LAFARGEelevatedthemattertoCA.

3. LAFARGE to avoid being in default and without prejudice to the outcome of their appeal, filed Answer andCompulsoryCounterclaimsadCautelambeforethetrialcourtinCivilCaseNo.Q0041103(issuedforthemtopayAPTRetainedAmount).1. DeniedtheallegationsintheComplaint.2. They prayed by way of compulsory counterclaims against CONTINENTAL, its majority stockholder and

presidentGregoryT.Lim,and itscorporate secretaryAnthonyA.Mariano for the sumsof (a)P2,700,000each as actual damages, (b) P100,000,000 each as exemplary damages, (c) P100,000,000 each as moraldamages,and(d)P5,000,000eachasattorneysfeespluscostsofsuit.

3. PrayedthatbothLimandMarianobeheldjointlyandsolidarilyliablewithCONTINENTAL.4. OnbehalfofLimandMariano,CONTINENTALmoved todismisspetitionerscompulsorycounterclaims on

groundsthatessentiallyconstitutedtheveryissuesforresolutionintheinstantPetition.

Lafargevs.Continental



4. RTCdismissedLAFARGEcounterclaims:1. CounterclaimsagainstRespondentsLimandMarianowerenotcompulsory.2. RulinginSapugaywasnotapplicable.3. LAFARGEsAnswerwithCounterclaimsviolatedproceduralrulesontheproperjoinderofcausesofaction.

5. LAFARGEMotionforReconsideration:1. RTCadmittedsomeerrorsinOrder,particularlyinitspronouncementthattheircounterclaimhadbeenpleaded

againstLimandMarianoonly.2. However, the RTC clarified that it was dismissing the counterclaim as it impleaded Respondents Lim and

Mariano,evenifitincludedCONTINENTAL.

ISSUE:WON RTC gravely erred in refusing to rule that CONTINENTAL has no personality to move to dismisspetitionerscompulsorycounterclaimsonRespondentsLimandMarianosbehalf.

WONRTCgravelyerredinrulingthat(i)petitionerscounterclaimsagainstRespondentsLimandMarianoarenotcompulsory(ii)Sapugayv.CourtofAppealsisinapplicablehereand(iii)petitionersviolatedtheruleonjoinderofcausesofaction.

May defendants in civil cases implead in their counterclaims persons who were not parties to the originalcomplaints?

HELD:PetitionGRANTEDandtheassailedOrdersREVERSED.Thecourtoforigin isherebyORDERED to takecognizanceofthecounterclaimspleadedinpetitionersAnswerwithCompulsoryCounterclaimsandtocausetheserviceofsummonsonRespondentsGregoryT.LimandAnthonyA.Mariano.Nocosts.

1. WON RTC gravely erred in ruling that (i) petitioners counterclaims (claim to rebut a previous claim) againstRespondents Lim and Mariano are not compulsory YES, COUNTERCLAIM IS CONSIDEREDCOMPULSARY:1. SEC 6 of Rule 6 of the Rules of Civil Procedure: any claimwhich a defending partymay have against an

opposingparty.

i.Purposeof this is toavoidamultiplicityofsuitsand tofacilitate thedispositionof thewholecontroversy in a single action, such that the defendants demand may be considered by acounterclaimratherthanbyanindependentsuit.

ii.LIMITATIONS:1.Courtshouldhavejurisdictionoverthesubjectmatterofthecounterclaim2. It could acquire jurisdiction over third parties whose presence is essential for its

consideration.2. PERMISSIVECOUNTERCLAIM:anindependentclaimthatmaybefiledseparatelyinanothercase.

i.Doesnotariseoutoforisnotnecessarilyconnectedwiththesubjectmatteroftheopposingpartysclaim.

3. COMPULSORYCOUNTERCLAIM:doesnotrequireforitsadjudication(consideration)thepresenceof thirdpartiesofwhomthecourtcannotacquirejurisdiction.

i.Arisesoutoforisnecessarilyconnectedwiththetransactionoroccurrenceconstitutingthesubjectmatteroftheopposingpartysclaim



ii.Shouldbesetupinthesameactionotherwise,theywouldbebarredforever.4. COMPULSORYORPERMISSIVE?

i.Issuesoffactandlawraisedbytheclaimandbythecounterclaimlargelythesame?ii.Wouldresjudicata(judgedmattermatterconsideredbythecourtandmaynotbepursuedfurther)

barasubsequentsuitondefendantsclaim,absentthecompulsorycounterclaimrule?iii.Will substantially thesameevidencesupportor refuteplaintiffsclaimaswellasdefendants

counterclaim?iv.Isthereanylogicalrelationbetweentheclaimandthecounterclaim?

1.YESTOALLfourquestions=COMPULSORY5. LIMANDMARIANOwerethepersonsresponsibleformakingthebadfaithdecisions:

i.Causedplaintiff to file thisbaseless suit and toprocure anunwarrantedwritof attachment,notwithstandingtheirknowledgethatplaintiffhasnorighttobringitortosecurethewrit.

ii.LIMANDMARIANOARELAFARGESTORTFEASOR(commitsatorttortinfringementofrightleadingtolegalliability)

1. They should be held jointly and solidarily liable as plaintiffs codefendants to thosecompulsory counterclaims pursuant to the Supreme Courts decision in Sapugay v.Mobil.

iii.Allegationsshow thatLAFARGEscounterclaims fordamageswere the resultofLIMANDMARIANOsactoffilingtheComplaintandsecuringtheWritofAttachmentinbadfaith.

6. CASE AT HAND: LAFARGEs counterclaim for damages fulfills the necessary requisites of a compulsorycounterclaim.

i.Damagesasaconsequenceoftheactionfiledagainstthem.ii.Papavs.Banaag:

1. Compensatory, moral and exemplary damages, allegedly suffered by the creditor inconsequence of the debtors action, are also compulsory counterclaim barred by thedismissalof thedebtorsaction.Theycannotbeclaimed ina subsequentactionby thecreditoragainstthedebtor.

2.Asidefromthefactthatpetitionerscounterclaimfordamagescannotbethesubjectofanindependentaction,itisthesameevidencethatsustainspetitionerscounterclaimthatwillrefuteprivaterespondentsownclaimfordamages.Thisisanadditionalfactorthatcharacterizespetitionerscounterclaimascompulsory.

3.Sincethecounterclaimfordamagesiscompulsory,itmustbesetupinthesameactionotherwise,itwouldbebarredforever.

4.Ifitisfiledconcurrentlywiththemainactionbutinadifferentproceeding,itwouldbeabatedonthegroundoflitispendentia

5.Iffiledsubsequently,itwouldmeetthesamefateonthegroundofresjudicata.

2. WONRTCgravelyerred inruling thatSapugayv.CourtofAppeals is inapplicablehereYES.SAPUGAYVS.CAISAPPLICABLE.1. InSapugayvs.MOBIL:

i.MOBILfiledbeforethetrialcourtofPasiganactionforreplevinagainstSAPUGAY.ii.CouplefailedtokeepDealershipAgreement.

1.In theirAnswerwithCounterclaim,SAPUGAYalleged thatafter incurringexpenses inanticipationof theDealershipAgreement, theyrequested theplaintiff toallowthemtoget gas, but that it had refused. It claimed that they still had to post a surety bondwhich,initiallyfixedatP200,000,waslaterraisedtoP700,000.



2.The spouses exertedall efforts to secure abond,but thebondingcompanies requiredacopyoftheDealershipAgreement,whichrespondentcontinuedtowithholdfromthem.

3.Later,SAPUGAYdiscoveredthatMOBILhadintendedallalongtoawardthedealershiptoIslandAirProductCorporation.

iii.SAPUGAYimpleadedinthecounterclaimMobilPhilippinesanditsmanagerRicardoP.Cardenasbothjointlyandseverallyliable.

iv.MOBILandCardenasfailedtorespondtotheirAnswertotheCounterclaim,SAPUGAYfiledaMotion to Declare Plaintiff and itsManager Ricardo P. Cardenas in Default on DefendantsCounterclaim.

v.ISSUES:WONCardenas,whowasnotapartytotheoriginalaction,mightneverthelessbeimpleadedinthecounterclaim.

1.COUNTERCLAIMisdefinedasanyclaimformoneyorotherreliefwhichadefendingpartymayhaveagainstanopposingparty.

2.GENERALRULE:DEFENDANTCANNOTBRING INTOACTIONANYCLAIMSAGAINST PERSONS UNDER THIS EXCEPTION: when the presence of partiesother thanthoseto theoriginalactionisrequiredfor thegrantingofcompleterelief inthe determination of a counterclaim or crossclaim, the court shall order them to bebroughtinasdefendants,ifjurisdictionoverthemcanbeobtained.

a.Prerogativeofbringinginnewpartiestotheactionatanystagebeforejudgmentis intended to accord complete relief to all of them in a single action and toavertaduplicityandevenamultiplicityofsuitsthereby.

2. CASEATHAND:

i.CONTINENTALargue thatnewpartiescannotbe includedinacounterclaim,exceptwhennocompletereliefcanbehad:CONTINENTALasacorporationwithaseparate[legalpersonality]hasthejuridicalcapacitytoindemnifypetitionersevenwithoutMessrs.LimandMariano.

1.COURTDISAGREES.a.Inclusionisduetoallegationsoffraudandbadfaithonthepartofthecorporate

officeror stockholder. Theseallegationsmaywarrant thepiercingof theveilofcorporatefiction,sothatthesaidindividualmaynotseekrefugetherein,butmaybeheldindividuallyandpersonallyliableforhisorheractions.

ii.CONTINENTALASSERTSTHATLimandMarianocannotbeheldpersonallyliable[becausetheirassailedacts]arewithinthepowersgrantedtothembytheproperboardresolutionstherefore,itis not a personal decision but rather that of the corporation as represented by its board ofdirectors.

1.Matterofdefensethatshouldbethreshedoutduringthe trialwhetherornotfraudisextant under the circumstances is an issue that must be established by convincingevidence.

3. SUABILITYANDLIABILITYNOTTHESAME.

i.WhiletheCourtdoesrulethatthecounterclaimsagainstCONTINENTALpresidentandmanagermaybe properly filed, the determination of whether both can in fact be held jointly and severallyliablewithrespondentcorporationisentirelyanotherissuethatshouldberuleduponbythetrialcourt.

4. However,GENERALRULEINRESPONDINGTOCOMPULSORYCLAIM:

i.Defendantneednotfileanyresponsivepleading,answers,adoptingallegationsinthecomplaint,doesnotapply.

ii.Newpartyimpleadedbytheplaintiffinacompulsorycounterclaimcannotbeconsideredtohaveautomaticallyandunknowinglysubmittedtothejurisdictionofthecourt.



iii.Courtmayconsiderpossibilitythatnewpartyisunawareofcounterclaimsfiledagainstit.5. RECORDS SHOW THAT LIM AND MARIANO ARE UNAWARE OF COUNTERCLAIMS FILED

AGAINSTTHEM.THEREFORE,CONTINENTALSMOTIONTODISMISSCANNOTBETREATEDASBEINGFILEDINTHEIRBEHALF.

3. WONRTCgravelyerredinrulingthatpetitionersviolatedtheruleonjoinderofcausesofaction.NO.LIMANDMARIANO ARE REAL PARTIES IN INTEREST TO COMPULSARY COUNTERCLAIM. IT ISIMPERATIVETHEYBEJOINED.1. Section6.Permissivejoinderofparties.

i.Allpersonsinwhomoragainstwhomanyrighttoreliefinrespecttoorarisingoutofthesametransaction or series of transactions is alleged to exist whether jointly, severally, or in thealternative,may, except asotherwiseprovided in theseRules, join asplaintiffs or be joined asdefendantsinonecomplaint,whereanyquestionoflaworfactcommontoallsuchplaintiffsortoallsuchdefendantsmayariseintheactionbutthecourtmaymakesuchordersasmaybejustto prevent any plaintiff or defendant from being embarrassed or put to expense in connectionwithanyproceedingsinwhichhemayhavenointerest.

2. Thisisforpracticalityandconveniencemeanttodiscourageduplicityandmultiplicityofsuits.3. SEC7ofRule3provides:

i. Compulsory joinderof indispensable parties. Parties in interestwithoutwhomno finaldeterminationcanbehadofanactionshallbejoinedeitherasplaintiffsordefendants.

4. WON RTC gravely erred in refusing to rule that CONTINENTAL has no personality to move to dismisspetitionerscompulsorycounterclaimsonRespondentsLimandMarianosbehalf.YES.1. COUNTERCLAIMFORDAMAGES TO LIMANDMARIANOANDCONTINENTALARE JOINTAND

SOLIDARY.2. Obligationsaregenerallyconsideredjoint,exceptwhenotherwiseexpresslystatedorwhenthelaworthenatureof

theobligationrequiressolidarity.However,obligationsarisingfromtortare,bytheirnature,alwayssolidary.

i.JOINTTORTFEASORS(JOINTOBLIGATION)areall thepersonswhocommand, instigate,promote,encourage,advise,countenance,cooperatein,aidorabetthecommissionofatort,orwhoapproveofitafteritisdone,ifdonefortheirbenefit.Theyareeachliableasprincipals,tothesameextentandinthesamemannerasiftheyhadperformedthewrongfulactthemselves.

1.Thedamagescannotbeapportionedamongthem,exceptamongthemselves.2. They cannot insist upon an apportionment, for the purpose of each paying an aliquot

part.Theyarejointlyandseverallyliableforthewholeamount.3.Eachobligoranswersonlyforapartofthewholeliability.

ii.SOLIDARYORJOINT/SEVERALOBLIGATION,therelationshipbetweentheactiveandthepassivesubjectsissoclosethateachofthemmustcomplywithordemandthefulfillmentofthewholeobligation.

3. CASE AT HAND: LIABILITY SOUGHT AGAINST CONTINENTAL IS FOR SPECIFICPERFORMANCE/TORT LIM AND MARIANOS TORT DOES NOT NEGATE THE SOLIDARYNATUREFORTHETORTUOUSACTSALLEGEDINCOUNTERCLAIMS.

i.DuetoSOLIDARYCHARACTERofobligation,LIMandMARIANOmayavailthemselvesasregardstopartofthedebtforwhichtheyareresponsible.

ii.THEREFORE,theactofCONTINENTALinfilingamotiontodismissthecounterclaimongroundsthatpertainonlytoitsindividualcodebtorsisallowed.

iii.HOWEVER,SINCEMOTIONTODISMISSCOUNTERCLAIMSSHOWCONTINENTAL



FILING IN BEHALF OF LIM AND MARIANO, CONTINENTAL CANNOT BEDECLAREDINDEFAULT.

1.Ifissuesraisedinthecompulsorycounterclaimaresointertwinedwiththeallegationsinthecomplaint,suchissuesaredeemedautomaticallyjoined.

iv.Counterclaimsthatareonlyfordamagesandattorneysfeesandthatarisefromthefilingofthecomplaintshallbeconsideredasspecialdefensesandneednotbeanswered.

5. CONTINENTALSMOTIONTODISMISSINBEHALFOFLIMANDMARIANONOTALLOWED.1. Itlackstherequisiteauthoritytodoso.2. Acorporationhasa legalpersonalityentirely separateanddistinct from that of its officers and cannot act for

andontheirbehalf,withoutbeingsoauthorized.3. Thus,unlessexpresslyadoptedbyLimandMariano, theMotiontoDismissthecompulsorycounterclaimfiled

byRespondentCCChasnoforceandeffectastothem.4. Summonsmustbe servedonRespondentsLimandMarianobefore the trial court canobtain jurisdiction over

them.

Posted3rdJanuary2013byLeeAnne

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Lafarge Cement Phils vs Continental Cement Corp GR No. 155173