Civil Procedure•Law School Notes•Remedial Law

Lafarge Cement Phil, Inc. vs. Continental Cement Corp

August 22, 2021 by RedTint No Comments

G.R. No. 155173. November 23, 2004

FACTS

  • Petitioner Lafarge Cement Philippines  agreed to purchase the cement business of Respondent Continental Cement Corporation (CCC). Both parties entered into a Sale and Purchase Agreement (SPA). At the time of the foregoing transactions, petitioners were well aware that CCC had a case pending with the Supreme Court (Asset Privatization Trust (APT) v. Court of Appeals and Continental Cement Corporation).
  • Under Clause 2 (c) of the SPA, the parties allegedly agreed to retain from the purchase price a portion of the contract price in anticipation of the liability related to the pending case of CCC. However, upon the finality of the decision, Lafarge refused to apply the sum to the payment to APT.
  • CCC filed before the Regional Trial Court a “Complaint with Application for Preliminary Attachment” against petitioners. (Civil Case No. Q-00-41103)
  • Petitioners moved to dismiss the Complaint on the ground that it violated the prohibition on forum-shopping. Respondent CCC had allegedly made the same claim it was raising in Civil Case No. Q-00-41103 in another action, which involved the same parties and which was filed earlier before the International Chamber of Commerce.  The RTC denied the motion to dismiss. 
  • Petitioners answered and denied the allegations in the Complaint. They prayed — by way of compulsory counterclaims against Respondent CCC, 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) P5,000,000 each as attorney’s fees plus costs of suit. Petitioners alleged that CCC, through Lim and Mariano, had filed the “baseless” Complaint in Civil Case No. Q-00-41103 and procured the Writ of Attachment in bad faith. 
  • The Regional Trial Court of Quezon City (Branch 80) dismissed petitioners’ counterclaims for several reasons, among which were the following: a) the counterclaims against Respondents Lim and Mariano were not compulsory; 

ISSUE

Whether or not the RTC gravely erred in ruling that (i) petitioners’ counterclaims against Respondents Lim and Mariano are not compulsory; 

HELD

  • YES. The “compelling test of compulsoriness” characterizes a counterclaim as compulsory if there should exist a “logical relationship” between the main claim and the counterclaim. There exists such a relationship when conducting separate trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the same basic controversy between the parties. 

The recovery of petitioners’ counterclaims is contingent upon the case filed by respondents; thus, conducting separate trials thereon will result in a substantial duplication of the time and effort of the court and the parties. Since the counterclaim for damages is compulsory, it must be set up in the same action; otherwise, it would be barred forever. If it is filed concurrently with the main action but in a different proceeding, it would be abated on the ground of litis pendentia; if filed subsequently, it would meet the same fate on the ground of res judicata.

DISPOSITIVE PORTION 

WHEREFORE, the Petition is GRANTED and the assailed Orders REVERSED. The court of origin is hereby ORDERED to take cognizance of the counterclaims pleaded in petitioners’ Answer with Compulsory Counterclaims and to cause the service of summons on Respondents Gregory T. Lim and Anthony A. Mariano. No costs.

DOCTRINE

The “compelling test of compulsoriness” characterizes a counterclaim as compulsory if there should exist a “logical relationship” between the main claim and the counterclaim.

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