Lafarge Cement Philippines, Inc. vs. Continental Cement Corporation

A defendant may implead persons not parties to the original complaint in a compulsory counterclaim if their presence is required for the granting of complete relief, provided that summons is served upon them to acquire jurisdiction.

Petitioner Lafarge Cement Philippines, Inc. and its affiliates agreed to purchase the cement business of Respondent Continental Cement Corporation (CCC) under a Sale and Purchase Agreement (SPA). To anticipate a potential liability of CCC in a pending Supreme Court case, the parties agreed to retain a portion of the purchase price (P117,020,846.84) in an escrow account for payment to the Asset Privatization Trust (APT). Following the finality of the Supreme Court decision in favor of APT, petitioners refused to apply the retained amount to the payment despite respondent's repeated instructions. Fearing foreclosure of its properties, CCC filed a Complaint with Application for Preliminary Attachment against petitioners to compel the release of the retained amount. Petitioners moved to dismiss on the ground of forum-shopping, which the trial court denied. Pending appeal of the denial, petitioners filed an Answer with Compulsory Counterclaims impleading not only CCC but also its president, Gregory T. Lim, and corporate secretary, Anthony A. Mariano, alleging that the complaint and writ of attachment were procured in bad faith.

• The Sale and Purchase Agreement: On October 21, 1998, Lafarge agreed to purchase CCC's cement business. Under Clause 2(c) of the SPA, the parties retained P117,020,846.84 from the purchase price, depositing it in an interest-bearing account to cover CCC's potential liability in a pending Supreme Court case (APT v. CA).
• Refusal to Pay: After the Supreme Court ruled against CCC, petitioners refused to apply the retained amount to APT despite repeated instructions from CCC.
• The Original Complaint: Fearing foreclosure of its properties due to non-payment to APT, CCC filed a Complaint with Application for Preliminary Attachment against petitioners before the RTC of Quezon City to compel the release of the "APT Retained Amount."
• The Counterclaim: Petitioners filed an Answer with Compulsory Counterclaims ad Cautelam, impleading CCC, its president Gregory T. Lim, and corporate secretary Anthony A. Mariano. Petitioners alleged that Lim and Mariano caused the filing of the baseless complaint and the procurement of the writ of attachment in bad faith, making them co-joint tortfeasors who should be held jointly and solidarily liable for actual, moral, and exemplary damages, as well as attorney's fees.
• The RTC Dismissal: CCC moved to dismiss the counterclaims on behalf of Lim and Mariano, arguing they were not parties to the original complaint and that their acts were corporate. The RTC dismissed the counterclaims against Lim and Mariano, ruling that the counterclaims were not compulsory, Sapugay was inapplicable, and the joinder of causes of action was improper.

• Compulsory Nature of Counterclaims: Petitioners argued that their counterclaims against Lim and Mariano are compulsory because they arise from the same transaction—the filing of the complaint and procurement of the writ of attachment—and require substantially the same evidence.
• Impleading New Parties: Petitioners maintained that under Sapugay v. CA and Section 12, Rule 6 of the Rules of Court, new parties may be impleaded in a compulsory counterclaim when their presence is required for complete relief. They argued that Lim and Mariano are indispensable parties because the allegations of bad faith warrant the piercing of the corporate veil.
• CCC's Lack of Personality: Petitioners contended that CCC has no personality to move to dismiss the counterclaims on behalf of Lim and Mariano because a corporation has a legal personality entirely separate and distinct from its officers.

• Inapplicability of Sapugay: Respondents argued that Sapugay does not apply because Lim and Mariano are not necessary for petitioners to obtain complete relief; CCC, as a corporation with separate legal personality, has the juridical capacity to indemnify petitioners without them.
• Corporate Acts: Respondents asserted that Lim and Mariano cannot be held personally liable because their assailed acts were done within the powers granted by proper board resolutions and were therefore corporate acts.
• Joinder of Causes of Action: Respondents contended that petitioners' counterclaims violated the rule on joinder of causes of action because the original complaint was for specific performance based on a contract, while the counterclaim for damages was based on tort.
• Authority to Move to Dismiss: Respondents maintained that CCC, as a solidary debtor, could move to dismiss the counterclaims on grounds pertaining to its co-debtors.

• Compulsory Counterclaim and Joinder: Whether the counterclaims against Lim and Mariano are compulsory and whether impleading them violates the rules on joinder of causes of action or parties.
• Authority to Move to Dismiss: Whether CCC has the personality to move to dismiss the compulsory counterclaims on behalf of Lim and Mariano.

• Compulsory Counterclaim and Joinder: The counterclaims against Lim and Mariano are compulsory and properly implead them. Using the "compelling test of compulsoriness," the counterclaims arise from the same transaction as the main claim—the filing of the complaint and attachment—and conducting separate trials would result in substantial duplication of time and effort. Under Section 12, Rule 6, new parties may be impleaded if their presence is required for complete relief. Lim and Mariano are indispensable parties because the allegations of bad faith may warrant piercing the corporate veil, making them real parties in interest to the counterclaim. The rules on permissive joinder of causes of action are inapplicable; rather, the compulsory joinder of indispensable parties under Section 7, Rule 3 mandates their inclusion. However, jurisdiction over Lim and Mariano was not automatically acquired; summons must be served upon them pursuant to Section 12, Rule 6, as they cannot be deemed to have submitted to the court's jurisdiction merely by being impleaded in a counterclaim.
• Authority to Move to Dismiss: CCC may invoke defenses personal to its co-debtors under Article 1222 of the Civil Code, as obligations arising from tort are solidary; however, CCC cannot file a motion to dismiss on behalf of Lim and Mariano because it lacks the requisite authority. A corporation has a legal personality entirely separate and distinct from its officers and cannot act for or on their behalf without authorization.

• Compulsory Counterclaim Test — A counterclaim is compulsory when its object arises out of or is necessarily connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. The "compelling test of compulsoriness" characterizes a counterclaim as compulsory if there exists a "logical relationship" between the main claim and the counterclaim—conducting separate trials would entail substantial duplication of time and effort, the claims involve the same factual and legal issues, or the claims are offshoots of the same basic controversy.
• Impleading New Parties in Counterclaims — Under Section 12, Rule 6 of the Rules of Court, when the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained. The inclusion of corporate officers in a counterclaim is sanctioned when allegations of fraud and bad faith warrant the piercing of the veil of corporate fiction.
• Jurisdiction over Impleaded Parties — A new party impleaded in a compulsory counterclaim does not automatically submit to the jurisdiction of the court. The general rule that a defendant in a compulsory counterclaim need not file a responsive pleading does not apply to newly impleaded parties. Jurisdiction over them is acquired only upon service of summons.
• Solidary Debtor's Defenses — Under Article 1222 of the Civil Code, a solidary debtor may, in actions filed by the creditor, avail itself of defenses derived from the nature of the obligation, those personal to it, and those personal to its co-debtors (only as regards the part of the debt for which the latter are responsible). However, a solidary co-debtor cannot file a motion to dismiss on behalf of its co-debtors without authority.

• "The inclusion, therefore, of [a corporate officer] in petitioners' counterclaim is sanctioned by the rules. The prerogative of bringing in new parties to the action at any stage before judgment is intended to accord complete relief to all of them in a single action and to avert a duplicity and even a multiplicity of suits thereby."
• "The inclusion of a corporate officer or stockholder ... is not premised on the assumption that the plaintiff corporation does not have the financial ability to answer for damages, such that it has to share its liability with individual defendants. Rather, such inclusion is based on the allegations of fraud and bad faith on the part of the corporate officer or stockholder."
• "Suability and liability are two distinct matters. While the Court does rule that the counterclaims against Respondent CCC's president and manager may be properly filed, the determination of whether both can in fact be held jointly and severally liable with respondent corporation is entirely another issue that should be ruled upon by the trial court."

• Sapugay v. Court of Appeals, 183 SCRA 464 (1990) — Followed. Established that new parties may be impleaded in a compulsory counterclaim under Section 14 (now Section 12), Rule 6 if their presence is required for complete relief. Distinguished regarding the acquisition of jurisdiction, as the new party in Sapugay had voluntarily submitted to the court's jurisdiction by adopting the complaint as his answer and actively participating, whereas Lim and Mariano did not.
• NAMARCO v. Federation of United Namarco Distributors, 151 Phil. 338 (1973) — Followed. Laid down the four criteria to determine whether a counterclaim is compulsory or permissive: identity of issues, res judicata bar, identity of evidence, and logical relation.
• Tiu Po v. Bautista, 191 Phil. 17 (1981) — Followed. Ruled that a counterclaim for damages resulting from the filing of a malicious and unfounded complaint is compulsory, as it must be pleaded in the same action or be barred forever.
• Worcester v. Ocampo, 22 Phil. 42 (1912) — Followed. Established that obligations arising from tort are by nature solidary, and joint tortfeasors are jointly and severally liable for the whole damage.

• Section 6, Rule 6, Rules of Court — Defines a counterclaim as any claim which a defending party may have against an opposing party. Applied to classify petitioners' claim as a counterclaim.
• Section 7, Rule 6, Rules of Court — Defines a compulsory counterclaim as one that arises out of or is necessarily connected with the subject matter of the opposing party's claim and does not require the presence of third parties of whom the court cannot acquire jurisdiction. Applied to determine the nature of the counterclaims.
• Section 12, Rule 6, Rules of Court — Provides that when the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim, the court shall order them to be brought in as defendants, if jurisdiction over them can be obtained. Applied to sanction the impleading of Lim and Mariano.
• Section 7, Rule 3, Rules of Court — Mandates the compulsory joinder of indispensable parties without whom no final determination can be had. Applied to justify the inclusion of Lim and Mariano, who are real parties in interest to the counterclaim.
• Article 1207, Civil Code — Provides that obligations are generally joint, except when otherwise expressly stated or when the law or nature of the obligation requires solidarity. Applied to characterize the liability in tort as solidary.
• Article 1211, Civil Code — Provides that solidarity may exist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions. Applied to affirm that the solidary nature of liability is not negated by the fact that CCC is sued for specific performance and tort, while Lim and Mariano are sued solely for tort.
• Article 1222, Civil Code — Allows a solidary debtor to invoke defenses derived from the nature of the obligation, personal to it, or pertaining to its own share, and with respect to those personal to co-debtors, only as regards the part of the debt for which the latter are responsible. Applied to allow CCC to raise defenses personal to Lim and Mariano, though not to file a motion to dismiss on their behalf.

Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ.