COMPULSORY COUNTERCLAIM/CROSS-CLAIM
15 Bayer PH v. CA
September 15, 2000 | Gonzaga-Reyes, J. |
Doctrine:
A counterclaim is compulsory if:
1. It arises out of or is necessarily connected with, the transaction or
occurrence which is the subject matter of opposing party’s claim
2. It does not require for its adjudication the presence of third parties
of whom the court cannot acquire jurisdiction; and
3. Subject to the qualification on the jurisdictional amount with regard
to counterclaims raised in the Regional Trial Courts, the court has
jurisdiction to entertain the claim.
● The “one compelling test of compulsoriness” is the logical
relationship between the claim alleged in the complaint and
that in the counterclaim, that is, where conducting separate trials
of the respective claims of the parties would entail a substantial
duplication of effort and time, as where they involve many of the
same factual and/or legal issues.
● A counterclaim is logically related to the opposing party’s claim
where, as already stated, separate trials of each of their respective
claims would involve a substantial duplication of effort and time
by the parties and the courts.
BAREBONES:
Bayer appointed Bompat as the exclusive distributor of Bayluscide to
government entities. Bompat obtained the chemicals on credit. However, he
failed to pay and so he executed a promissory note to pay the credit. Bayer
delivered to Bompat 4,000 kilos of the chemicals but before Bompat could
sell the chemicals, Bayer took the chemicals and dealt directly with the
buyers. Bompat then failed to pay the credit which prompted Bayer to file a
complaint for a sum of money. Bompat as his counterclaim, alleged that
Bayer breached their contract since they took the chemicals without
revoking the agreement. The Court held that Bompat’s counterclaim is
compulsory since both Bayer and Bompat’s claim arose from the same
distributorship agreement. Their rights and obligations and well as their
liability to each other arose from the same contractual relation.
Facts:
● Bayer PH Inc (Bayer) appointed Casimiro Bompat (Bompat), doing
business as Kaiser Enterprises, as its exclusive distributor of
Bayluscide 70% W.P to government accounts in 1977 for a period
of 1 year which was automatically renewed every year unless
earlier terminated or revoked by either party.
● Bompat obtained from Bayer, on credit, Bayluscide worth
P741,250. Bompat was unable to pay P117,500 so he executed a
promissory note promising to pay it in 12 monthly installments.
He also promised that should he default in any of the installments,
he would pay 14% interest per annum, and compounded monthly
until fully paid, and that in the event of default for any 3 monthly
installments, the whole obligation was accelerated and he would
pay the accelerated principal plus interest.
● Bompat was able to pay, although belatedly, 4 installments and as
of January 31, 1984, he still had a balance of 112,482.13 plus
interes. He failed to pay the same which prompted Bayer to file a
collection suit praying that Bompat pay the balance plus interest.
● Bompat filed his answer admitting his liability but put up special
and affirmative defenses. He alleged that Bayer delivered 4,000
kilos of Bayluscide to Bompat but when Bompat was already in a
position to sell the chemicals to the end-users, specifically
government entities, Bayer, without reason, withdrew the
chemicals leaving Bompat nothing to deliver to the end-users.
That Bayer did this without revoking the distributorship
agreement; and it instead dealt directly with the end-users.
● Bompat also alleged that his appointment as distributor was
merely a ploy to get free storage from Bompat.
● As his counter-claim, Bompat claims that Bayer is guilty of
breach of contract by dealing directly with the end-users and that
their agreement was merely a ploy to get free storage.
● Bayer, in its answer to the counter-claim, merely denied the
allegations.
● TC held that the only issue was W/N Bompat can collect on his
counterclaims against Bayer. It was found that Bompat spent
P100,000 of his own money in promoting the products and that
Bompat had to construct a Bodega to store the chemicals and
protect them. Because of these, and that Bayer did not deny as
well the claims for damages, Bompat was entitled to payment for
damages.
● Both appealed to the CA and the CA affirmed the TC with
modifications. Both filed an MR but both were denied.
Issue:
W/N the CA erred in treating Bompat’s counterclaim as compulsory
in nature which would not require payment of docket fees
(Other issues in notes)
Held:
NO. Bompat’s counter claim was compulsory
● Bayer alleges that Bompat’s counter-claims are permissive in
nature, not compulsory and so he must pay the required docket
fess.
● The SC held that Bompat’s counterclaim is compulsory.
A counterclaim is compulsory if:
4. It arises out of or is necessarily connected with, the transaction or
occurrence which is the subject matter of opposing party’s claim
5. It does not require for its adjudication the presence of third parties
of whom the court cannot acquire jurisdiction; and
6. Subject to the qualification on the jurisdictional amount with regard
to counterclaims raised in the Regional Trial Courts, the court has
jurisdiction to entertain the claim.
● The “one compelling test of compulsoriness” is the logical
relationship between the claim alleged in the complaint and
that in the counterclaim, that is, where conducting separate trials
of the respective claims of the parties would entail a substantial
duplication of effort and time, as where they involve many of the
same factual and/or legal issues.
● A counterclaim is logically related to the opposing party’s claim
where, as already stated, separate trials of each of their respective
claims would involve a substantial duplication of effort and time
by the parties and the courts.
● Bayer’s complaint was for collection of money based on the
promissory note executed by Bompat due to his nonpayment of
the chemicals obtained on credit by virtue of the exclusive
distributorship.
● Bompat’s counterclaims were for storage fees and damages
premised on a violation of the same distributoryship agreement
● Both their claims arose from the same exclusive dsitributorship
agreement and the rights and obligations of the parties as well as
their potential liability came from the same contractual relation.
● Being compulsory in nature, payment of docket fees is not
required and the TC had jurisdiction.
Dispositive
WHEREFORE, the decision of the Court of Appeals is Affirmed with
Modification that the award of P50,000.00 as actual and compensatory
damages in favor of private respondent is DELETED. The judgment under
review is affirmed in all other respects.
SO ORDERED.
Notes
The Awarding of 14% compounded interest to Bayer - Private
respondent’s total outstanding obligation in the amount of P112,482.13
based on the statement of account dated January 31, 1984 prepared by
petitioner, took into account among others, the stipulated 14%
compounded interest; thus, the interest that accrued prior to the date of the
filing of the complaint had been consolidated as of that date with the
capital,the respondent court did not err in computing the 14% compounded
interest from judicial demand, i.e., the date when the complaint was filed,
which was on March 7,1984.
Attorney’s Fees - We also do not find merit in petitioner’s claim that it is
entitled to the award of attorney’s fees. We uphold private respondent’s
contention that petitioner did not raise this as an error on appeal before the
respondent Court despite the fact that there was no award made by the trial
court.
Entitlement of Bompat to recover on his counterclaims - We also
sustain the findings of the respondent court that private respondent is
entitled to recover on his counterclaims for breach of the exclusive
distributorship agreement and storage fees. The respondent court correctly
found that petitioner failed to adduce evidence to refute the material
allegations in the counterclaims as well as the evidence presented in
support thereto. Private respondent had sufficiently established that
petitioner violated the terms of their exclusive distributorship agreement.
The distributorship agreement provides that private respondent is
appointed as exclusive distributor for government account of Bayer
chemical product, namely Bayluscide 70% W.P.