Digest - Lafarge v Continental

Lafarge Cement Philippines, Luzon Continental Land Corp, Continental Operating Corp and Philip Roseberg v Continental Cement Corporation, Gregory Lim, Anthony Mariano 23 Nov 2004 Panganiban, J. DOCTRINE: A solidary debtor may, in actions filed by the creditor, avail itself of all defenses  which are derived from the nature of the obligation and of those which are personal to him, or  pertain to his own share.  With respect to those which personally belong to the others, he may avail himself thereof only as regards that part of the debt for which the latter are  responsible. FACTS 1. Letter of Intent showed that Lafarge intended to purchase Continental Cement Corp (CCC) and entered into sale and purchase agreement (SPA) 2. CCC had a case pending before the SC against Asset Privatization Trust 3. Parties ALLEGEDLY agreed in the SPA to deposit 117M from the purchase price in an interest-bearing account in First City National Bank in NY that can be used should SC find CCC liable against APT 4. SC found CCC liable against APT, but Lafarge refused to use money from the 117M deposited, prompting CCC to file a case in the RTC demanding that Lafarge pay the retained amount 5. Lafarge claims that there was already a similar case (CASE A) filed by CCC in another court, thus, the second case, (Case B) should be dismissed for forum shopping 6. Lafarge’s motion to dismiss in Case B was denied, and then appealed to the CA 7. In Case A, Lafarge created an answer with counterclaims, denying the allegations of CCC, praying for damages, and holding CCC president Lim and corporate lawyer Mariano jointly and solidarily liable for making baseless claims against Lafarge 8. RTC dismissed Case A (counterclaims against Lim and Mariano not compulsory, ruling in Sapugay alleged by Lafarge not applicable, answer with counterclaim is a violation of due process) 9. Lafarge filed the current petition for review of RTC’s decision in Case A, with CCC moving to dismiss ISSUES and ARGUMENTS 1. WON ruling on compulsory counterclaims valid a. Lafarge: counterclaim is compulsory, necessary for them to seek damages b. CCC: counterclaim violates rules of joinder of action, the original case being petition for specific performance based on contract, and the counterclaim being for damages based on torts of respondents c. Lafarge: Apply Sapugay ruling, allowing the inclusion of corporate officers

d. CCC: Corporate officers should not be included here, CCC having the capacity to indemnify Lafarge on its own 2. WON CCC has personality to move to dismiss counterclaims a. Lafarge: CCC cannot move to dismiss the case with respect to Lim and Mariano RULING 1. Counterclaim valid and compulsory a. Counterclaims are claims which a defending party may have over an opposing party b. Generally allowed to avoid multiple litigations if the court has jurisdiction over the counterclaim and over third persons who may be part of the counterclaim c. Counterclaim may be permissive or compulsory, the former being an action which may be filed in another case d. Compulsory counterclaims have the following requirements: i. Issues of fact and law the same ii. Would res judicata bar the defendant’s claim iii. Same evidence needed for both plaintiff and defendant’s claims iv. Logical connection between claim and counterclaim e. Lafarge’s counterclaim is compulsory, and thus valid in this case because it arose out of their contention that Lim and Mariano made baseless claims against them in bad faith – settling Case A (whether there is basis for making Lafarge pay APT) would settle this matter as well, and if the counterclaim is not raised, res judicata would bar Lafarge from seeking future damages f. Procedural rules relied on by CCC to negate counterclaim were made to avoid multiplicity of suits, which is what Lafarge’s counterclaim attempts g. Sapugay case (see below) applicable: Mariano and Lim are not being impleaded because CCC can’t pay on its own, but because the case arose due to their fraud and bad faith 2. CCC has personality to move to dismiss, but not on behalf of Lim and Mariano a. Lafarge wishes Lim and Mariano to be jointly and solidarily liable with CCC i. Joint = each obligor answers for part of the whole liability ii. Solidary = joint and several = several = each obligor’s actions are so close that each must comply with the fulfillment of the obligation b. Lim and Mariano are solidarily liable with CCC c. A solidary debtor is allowed to avail of the rights available to codebtors, with respect to grounds that pertain only to himself – hence, in general, CCC is allowed to file a motion to dismiss with respect to itself d. However, CCC’s motion to dismiss was not for itself but for Mariano and Lim – this should not be allowed e. CCC’s personality is distinct from that of its officers

REVERSED – RTC ordered to take cognizance of counterclaim and to summon Lim and Mariano CASE CITED IN LENGTH AS APPLICABLE (Sapugay v CA) -

Mobil Philippines entered a dealership agreement with spouses Sapugay to sell gas Spouses incurred debt for pre-operational expenses in anticipation of dealership agreement Mobil required spouses to give bond first before giving them a copy of the dealership agreement, but surety companies required a copy of the dealership agreement Spouses found that Mobil wanted to award the dealership to Air Product Corp Mobil filed claim against spouses for not giving bond, spouses filed counterclaim for damages In counterclaim, spouses impleaded Mobil manager Cardenas Court said impleading new parties in the counterclaim allowed if it will bring complete relief to all pertinent issues