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Lafargevs.Continental

Lafargevs.Continental
GRNo.L155173
FACTS:
1. Petitionforreview.
2. 1998,LETTEROFINTENTEXECUTEDBYBOTHPARTIES
1. LAFARGE,inbehalfofLuzonContinentalLandCorporation(LCLC),agreedtopurchasethecementbusiness
ofrespondentContinentalCementCorporation.
2. PartiesenteredintoaSaleandPurchaseAgreement(SPA).
3. LAFARGEawareofCONTINENTALpendingcasewiththeSupremeCourt(Asset Privatization Trust (APT)
v.CourtofAppealsandContinentalCementCorporation)
i. InanticipationoftheliabilitySCmightadjudgeagainstCONTINENTAL,theparties,underClause2

(c)oftheSPA,allegedlyagreedtoretainfromthepurchasepriceaportionofthecontractprice
in the amount of P117,020,846.84 the equivalent of US$2,799,140. This amount was to be
depositedinaninterestbearingaccountintheFirstNationalCityBankofNewYork(Citibank)
forpaymenttoAPT,thepetitionerinAssetPrivatizationTrustV.CA/Continental.
ii. LAFARGE refused to apply the sum to the payment to APT, despite decision in APT vs
CONTINENTAL, in favor of CONTINENTAL and the repeated instructions of
CONTINENTAL.
1. FearfulthatnonpaymenttoAPTwouldresultintheforeclosure,notjustofitsproperties
covered by the SPA with Lafarge but of several other properties as well,
CONTINENTAL filed Complaint with Application for Preliminary Attachment
againstLAFARGE.DocketedasCivilCaseNo.Q0041103,
a. ForLAFARGEtopaytheAPTRetainedAmountreferredtoinClause2(c)
oftheSPA.
b. LAFARGE moved to dismiss the Complaint on the ground that it violated the
prohibitiononforumshopping.
i. CONTINENTALhadallegedlymadethesameclaimitwasraisinginCivilCase
No. Q0041103 in another action, which involved the same parties
and which was filed earlier before the International Chamber of
Commerce.
ii. TrialcourtdeniedLAFARGEsMotiontoDismiss
1. LAFARGEelevatedthemattertoCA.
3. LAFARGE to avoid being in default and without prejudice to the outcome of their appeal, filed Answer and
CompulsoryCounterclaimsadCautelambeforethetrialcourtinCivilCaseNo.Q0041103(issuedforthemtopay
APTRetainedAmount).
1. DeniedtheallegationsintheComplaint.
2. They prayed by way of compulsory counterclaims against CONTINENTAL, its majority stockholder and
president Gregory T. Lim, and its corporate secretary Anthony A. Mariano for the sums of (a) P2,700,000
each as actual damages, (b) P100,000,000 each as exemplary damages, (c) P100,000,000 each as moral
damages,and(d)P5,000,000eachasattorneysfeespluscostsofsuit.
3. PrayedthatbothLimandMarianobeheldjointlyandsolidarilyliablewithCONTINENTAL.
4. On behalf of Lim and Mariano, CONTINENTAL moved to dismiss petitioners compulsory counterclaims on
groundsthatessentiallyconstitutedtheveryissuesforresolutionintheinstantPetition.
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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 dismiss
petitionerscompulsorycounterclaimsonRespondentsLimandMarianosbehalf.
WONRTCgravelyerredinrulingthat(i)petitionerscounterclaimsagainstRespondentsLimandMarianoarenot
compulsory(ii)Sapugayv.CourtofAppealsisinapplicablehereand(iii)petitionersviolatedtheruleonjoinder
ofcausesofaction.
May defendants in civil cases implead in their counterclaims persons who were not parties to the original
complaints?
HELD:
PetitionGRANTEDandtheassailedOrdersREVERSED.ThecourtoforiginisherebyORDERED to take cognizance
ofthecounterclaimspleadedinpetitionersAnswerwithCompulsoryCounterclaimsandtocausetheserviceofsummons
onRespondentsGregoryT.LimandAnthonyA.Mariano.Nocosts.
1. WON RTC gravely erred in ruling that (i) petitioners counterclaims (claim to rebut a previous claim) against
Respondents Lim and Mariano are not compulsory YES, COUNTERCLAIM IS CONSIDERED
COMPULSARY:
1. SEC 6 of Rule 6 of the Rules of Civil Procedure: any claim which a defending party may have against an
opposingparty.
i. Purposeofthisistoavoidamultiplicityofsuitsandtofacilitatethedispositionofthewhole

controversy in a single action, such that the defendants demand may be considered by a
counterclaimratherthanbyanindependentsuit.
ii. LIMITATIONS:
1. Courtshouldhavejurisdictionoverthesubjectmatterofthecounterclaim
2. It could acquire jurisdiction over third parties whose presence is essential for its
consideration.
2. PERMISSIVECOUNTERCLAIM:anindependentclaimthatmaybefiledseparatelyinanothercase.
i. Doesnotariseoutoforisnotnecessarilyconnectedwiththesubjectmatteroftheopposingpartys

claim.
3. COMPULSORYCOUNTERCLAIM:doesnotrequireforitsadjudication(consideration)thepresence of third
partiesofwhomthecourtcannotacquirejurisdiction.
i. Arisesoutoforisnecessarilyconnectedwiththetransactionoroccurrenceconstitutingthesubject

matteroftheopposingpartysclaim
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ii. Shouldbesetupinthesameactionotherwise,theywouldbebarredforever.

4. COMPULSORYORPERMISSIVE?
i. Issuesoffactandlawraisedbytheclaimandbythecounterclaimlargelythesame?
ii. Wouldresjudicata(judgedmattermatterconsideredbythecourtandmaynotbepursuedfurther)

barasubsequentsuitondefendantsclaim,absentthecompulsorycounterclaimrule?
iii. Will substantially the same evidence support or refute plaintiffs claim as well as defendants
counterclaim?
iv. Isthereanylogicalrelationbetweentheclaimandthecounterclaim?
1. YESTOALLfourquestions=COMPULSORY
5. LIMANDMARIANOwerethepersonsresponsibleformakingthebadfaithdecisions:
i. Caused plaintiff to file this baseless suit and to procure an unwarranted writ of attachment,

notwithstandingtheirknowledgethatplaintiffhasnorighttobringitortosecurethewrit.
ii. LIMANDMARIANOARELAFARGESTORTFEASOR(commitsatorttortinfringementof
rightleadingtolegalliability)
1. They should be held jointly and solidarily liable as plaintiffs codefendants to those
compulsory counterclaims pursuant to the Supreme Courts decision in Sapugay v.
Mobil.
iii. Allegations show that LAFARGEs counterclaims for damages were the result of LIM AND
MARIANOsactoffilingtheComplaintandsecuringtheWritofAttachmentinbadfaith.
6. CASE AT HAND: LAFARGEs counterclaim for damages fulfills the necessary requisites of a compulsory
counterclaim.
i. Damagesasaconsequenceoftheactionfiledagainstthem.
ii. Papavs.Banaag:

1. Compensatory, moral and exemplary damages, allegedly suffered by the creditor in

consequence of the debtors action, are also compulsory counterclaim barred by the
dismissal of the debtors action. They cannot be claimed in a subsequent action by the
creditoragainstthedebtor.
2. Asidefromthefactthatpetitionerscounterclaimfordamagescannotbethesubjectof
anindependentaction,itisthesameevidencethatsustainspetitionerscounterclaimthat
willrefuteprivaterespondentsownclaimfordamages.Thisisanadditionalfactorthat
characterizespetitionerscounterclaimascompulsory.
3. Sincethecounterclaimfordamagesiscompulsory,itmustbesetupinthesameaction
otherwise,itwouldbebarredforever.
4. Ifitisfiledconcurrentlywiththemainactionbutinadifferentproceeding,itwouldbe
abatedonthegroundoflitispendentia
5. Iffiledsubsequently,itwouldmeetthesamefateonthegroundofresjudicata.
2. WONRTCgravelyerredinrulingthatSapugayv.CourtofAppealsis inapplicable hereYES. SAPUGAY
VS.CAISAPPLICABLE.
1. InSapugayvs.MOBIL:
i. MOBILfiledbeforethetrialcourtofPasiganactionforreplevinagainstSAPUGAY.
ii. CouplefailedtokeepDealershipAgreement.

1. In their Answer with Counterclaim, SAPUGAY alleged that after incurring expenses in
anticipation of the Dealership Agreement, they requested the plaintiff to allow them to
get gas, but that it had refused. It claimed that they still had to post a surety bond
which,initiallyfixedatP200,000,waslaterraisedtoP700,000.
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2. The spouses exerted all efforts to secure a bond, but the bonding companies required a
copyoftheDealershipAgreement,whichrespondentcontinuedtowithholdfromthem.
3. Later,SAPUGAYdiscoveredthatMOBILhadintendedallalongtoawardthedealership
toIslandAirProductCorporation.
iii. SAPUGAYimpleadedinthecounterclaimMobilPhilippinesanditsmanagerRicardoP.Cardenas
bothjointlyandseverallyliable.
iv. MOBILandCardenasfailedtorespondtotheirAnswertotheCounterclaim,SAPUGAYfileda
Motion to Declare Plaintiff and its Manager Ricardo P. Cardenas in Default on Defendants
Counterclaim.
v. ISSUES:WONCardenas,whowasnotapartytotheoriginalaction,mightneverthelessbeimpleaded
inthecounterclaim.
1. COUNTERCLAIMisdefinedasanyclaimformoneyorotherreliefwhichadefending
partymayhaveagainstanopposingparty.
2. GENERAL RULE: DEFENDANT CANNOT BRING INTO ACTION ANY CLAIMS
AGAINST PERSONS UNDER THIS EXCEPTION: when the presence of parties
otherthanthosetotheoriginalactionisrequiredforthegrantingofcompletereliefin
the determination of a counterclaim or crossclaim, the court shall order them to be
broughtinasdefendants,ifjurisdictionoverthemcanbeobtained.
a. Prerogativeofbringinginnewpartiestotheactionatanystagebeforejudgment
is intended to accord complete relief to all of them in a single action and to
avertaduplicityandevenamultiplicityofsuitsthereby.
2. CASEATHAND:
i. CONTINENTALarguethatnewpartiescannotbeincludedinacounterclaim,exceptwhenno

completereliefcanbehad:CONTINENTALasacorporationwithaseparate[legalpersonality]
hasthejuridicalcapacitytoindemnifypetitionersevenwithoutMessrs.LimandMariano.
1. COURTDISAGREES.
a. Inclusionisduetoallegationsoffraudandbadfaithonthepartofthecorporate
officer or stockholder. These allegations may warrant the piercing of the veil
ofcorporatefiction,sothatthesaidindividualmaynotseekrefugetherein,but
maybeheldindividuallyandpersonallyliableforhisorheractions.
ii. CONTINENTALASSERTSTHATLimandMarianocannotbeheldpersonallyliable[becausetheir
assailedacts]arewithinthepowersgrantedtothembytheproperboardresolutionstherefore,it
is not a personal decision but rather that of the corporation as represented by its board of
directors.
1. Matterofdefensethatshouldbethreshedoutduringthetrialwhetherornotfraudis
extant under the circumstances is an issue that must be established by convincing
evidence.
3. SUABILITYANDLIABILITYNOTTHESAME.
i. WhiletheCourtdoesrulethatthecounterclaimsagainstCONTINENTALpresidentandmanagermay

be properly filed, the determination of whether both can in fact be held jointly and severally
liablewithrespondentcorporationisentirelyanotherissuethatshouldberuleduponbythetrial
court.
4. However,GENERALRULEINRESPONDINGTOCOMPULSORYCLAIM:
i. Defendantneednotfileanyresponsivepleading,answers,adoptingallegationsinthecomplaint,does

notapply.
ii. Newpartyimpleadedbytheplaintiffinacompulsorycounterclaimcannotbeconsideredtohave
automaticallyandunknowinglysubmittedtothejurisdictionofthecourt.
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iii. Courtmayconsiderpossibilitythatnewpartyisunawareofcounterclaimsfiledagainstit.

5. RECORDS SHOW THAT LIM AND MARIANO ARE UNAWARE OF COUNTERCLAIMS FILED
AGAINSTTHEM.THEREFORE,CONTINENTALSMOTIONTODISMISSCANNOTBETREATEDAS
BEINGFILEDINTHEIRBEHALF.
3. WONRTCgravelyerredinrulingthatpetitionersviolatedtheruleonjoinderofcausesofaction.NO.LIM
AND MARIANO ARE REAL PARTIES IN INTEREST TO COMPULSARY COUNTERCLAIM. IT IS
IMPERATIVETHEYBEJOINED.
1. Section6.Permissivejoinderofparties.
i. Allpersonsinwhomoragainstwhomanyrighttoreliefinrespecttoorarisingoutofthesame

transaction or series of transactions is alleged to exist whether jointly, severally, or in the

alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as
defendantsinonecomplaint,whereanyquestionoflaworfactcommontoallsuchplaintiffsor
toallsuchdefendantsmayariseintheactionbutthecourtmaymakesuchordersasmaybejust
to prevent any plaintiff or defendant from being embarrassed or put to expense in connection
withanyproceedingsinwhichhemayhavenointerest.
2. Thisisforpracticalityandconveniencemeanttodiscourageduplicityandmultiplicityofsuits.
3. SEC7ofRule3provides:
i. Compulsory joinder of indispensable parties. Parties in interest without whom no final

determinationcanbehadofanactionshallbejoinedeitherasplaintiffsordefendants.
4. WON RTC gravely erred in refusing to rule that CONTINENTAL has no personality to move to dismiss
petitionerscompulsorycounterclaimsonRespondentsLimandMarianosbehalf.YES.
1. COUNTERCLAIM FOR DAMAGES TO LIM AND MARIANO AND CONTINENTAL ARE JOINT AND
SOLIDARY.
2. Obligationsaregenerallyconsideredjoint,exceptwhenotherwiseexpresslystatedorwhenthelaworthenatureof
theobligationrequiressolidarity.However,obligationsarisingfromtortare,bytheirnature,alwayssolidary.
i. JOINTTORTFEASORS(JOINTOBLIGATION)areallthepersonswhocommand,instigate,

promote,encourage,advise,countenance,cooperatein,aidorabetthecommissionofatort,or
whoapproveofitafteritisdone,ifdonefortheirbenefit.Theyareeachliableasprincipals,to
thesameextentandinthesamemannerasiftheyhadperformedthewrongfulactthemselves.
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,therelationshipbetweentheactiveandthe
passivesubjectsissoclosethateachofthemmustcomplywithordemandthefulfillmentofthe
wholeobligation.
3. CASE AT HAND: LIABILITY SOUGHT AGAINST CONTINENTAL IS FOR SPECIFIC
PERFORMANCE/TORT LIM AND MARIANOS TORT DOES NOT NEGATE THE SOLIDARY
NATUREFORTHETORTUOUSACTSALLEGEDINCOUNTERCLAIMS.
i. DuetoSOLIDARYCHARACTERofobligation,LIMandMARIANOmayavailthemselvesas

regardstopartofthedebtforwhichtheyareresponsible.
ii. THEREFORE,theactofCONTINENTALinfilingamotiontodismissthecounterclaimongrounds
thatpertainonlytoitsindividualcodebtorsisallowed.
iii. HOWEVER, SINCE MOTION TO DISMISS COUNTERCLAIMS SHOW CONTINENTAL
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FILING IN BEHALF OF LIM AND MARIANO, CONTINENTAL CANNOT BE

DECLAREDINDEFAULT.
1. Ifissuesraisedinthecompulsorycounterclaimaresointertwinedwiththeallegationsin
thecomplaint,suchissuesaredeemedautomaticallyjoined.
iv. Counterclaimsthatareonlyfordamagesandattorneysfeesandthatarisefromthefilingofthe
complaintshallbeconsideredasspecialdefensesandneednotbeanswered.
5. CONTINENTALSMOTIONTODISMISSINBEHALFOFLIMANDMARIANONOTALLOWED.
1. Itlackstherequisiteauthoritytodoso.
2. A corporation has a legal personality entirely separate and distinct from that of its officers and cannot act for
andontheirbehalf,withoutbeingsoauthorized.
3. Thus,unlessexpresslyadoptedbyLimandMariano,theMotiontoDismissthecompulsory counterclaim filed
byRespondentCCChasnoforceandeffectastothem.
4. Summons must be served on Respondents Lim and Mariano before the trial court can obtain jurisdiction over
them.

Posted3rdJanuary2013byLeeAnne
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