EN BANC
G.R. No. L-22578 January 31, 1973
NATIONAL MARKETING CORPORATION, plaintiff-appellee,
vs.
FEDERATION OF UNITED NAMARCO DISTRIBUTORS, INC., defendant-appellant.
Government Corporate Counsel Tomas P. Matic, Jr. and Assistant Government Corporate Counsel Lorenzo R. Mosqueda for plaintiff-appellee.
Gamboa and Gamboa for defendant-appellant.
Separate Opinions
TEEHANKEE, J., concurring:
I concur in the main opinion in effect affirming in toto the appealed judgment sentencing defendant-appellant to pay plaintiff-appellee the sum of P609,014.73 representing the cost of admittedly unpaid merchandise delivered to defendant since January, 1960, with interests, attorney's fees and costs of suit.
The merchandise was delivered by plaintiff Namarco to defendant under the so-called Namarco "trade assistance agreements" whereby Namarco imported the merchandise under its dollar allocation tax-and-duty-free and in turn sold and delivered the same to defendant at procurement cost plus a mere 5% mark-up, for distribution to Namarco retailers for resale supposedly under Namarco-approved prices.
Defendant in turn contracted to pay for the merchandise upon delivery in cash through domestic letters of credit opened through the Philippine National Bank in favor of Namarco.
The mere fact that defendant federation as plaintiff filed suit against Namarco on March 2, 1960 for specific performance, to require Namarco to make delivery of the remainder of the merchandise contracted for in their "trade assistance agreement" and to accept the cash payments proferred therefor by the federation (since Namarco had second thoughts about the legality and validity of its agreement) in no way involved the merchandise worth P609,014.773 already delivered by Namarco and presumably paid for in cash under the domestic letters of credit opened therefor. When it turned out subsequently on May 19, 1960 that the sight drafts drawn by Namarco against the domestic letters of credit opened with the Philippine National Bank for collection of the payments due thereon were not honored, such non-payment was entirely separate from the subject-matter of the federation's first suit against Namarco to compel it to recognize the validity of their agreement and deliver upon cash payment the remainder of the contracted merchandise.
Such non-payment could in no way be deemed a compulsory counterclaim that should have been filed as such by Namarco in the first suit, so as to bar the present action subsequently filed on January 25, 1961 by Namarco as plaintiff this time against the federation as defendant to collect the unpaid price of P609,014.73 justly due Namarco for the merchandise.
This collection suit by Namarco could not be deemed barred by the compulsory counterclaim rule provided in Rule 9, section 4 (formerly Rule 10, section 6) since it was not a compulsory counterclaim that should have been set up as such in the first suit and it was long after Namarco had joined issues therein with the filing of its answer that its sight drafts for collection under the domestic letters of credit opened in its favor were dishonored by the bank. Namarco had every reason to expect that the federation, which was suing it for further deliveries, would honor its just commitments and see to it that the sight drafts drawn against its L/C's would be duly honored and made good.
Namarco had every legal right therefore to institute in January, 1961 this action for collection and payment of the sums justly due it, upon the federation's failing to make payment notwithstanding the lapse of over a year.ℒαwρhi৷
The Rules of Court were never intended to serve as a tool for a party to unjustly enrich itself to the extent of over P1 million (including interests) for merchandise long delivered to it in 1960 practically at procurement cost, which it could not otherwise have procured due to exchange and import control restrictions and which it has not paid for up to now notwithstanding its then having immediately enjoyed the benefits and profits thereof.
The defendant-appellant's stance raises a mere technicality — which, as was long ago held by the Court, when it deserts its proper office as an aid to the administration of justice and becomes its great hindrance and chief enemy, deserves scant consideration from the courts. (Alonso vs. Villamor, 16 Phil. 315).
Hence, even if Namarco's present collection suit could technically be deemed a compulsory counterclaim which should have been filed by it as such in the first suit filed against it by the federation, I would disregard such a technicality and hold nevertheless as a matter of plain and simple justice and equity that Namarco's failure to file such counterclaim should not bar the present action and Namarco's right to judgment against defendant federation for the sums justly due it.
Separate Opinions
BARREDO, J., dissenting:
I was on the verge of expressing my reluctant concurrence in the judgment in this case, when upon further study and deeper reflection, I become more convinced that a reversal rather than an affirmance of the trial court's decision would be more in consonance with the fundamental principles on the prescription of compulsory counterclaims.
As I see it now, the situation confronting the Court in this case is very simple and is far from being unusual. Its solution requires no more than the application of the basic rules on pleadings, without the need of any scholarly discourse which can only serve to confuse concepts and mislead one into error in the application of the proper rule.
Both the claim of the Federation against the Namarco in Civil Case No. 42684 and the claim of the Namarco against the Federation in Civil Case No. 46124 arose from the same contract. The Federation had sued Namarco for the specific performance thereof, seeking the delivery of the balance of the goods which Namarco allegedly agreed to sell to it, but which the former refused to deliver claiming that the contract was illegal, whereas Namarco, in turn, sued the Federation in the present action for the payment of the goods already delivered thereunder, with the particularity, however, that Namarco chose to file this suit against the Federation only when the Federation's case against it was already pending appeal by Namarco in this court. The issue now is whether or not Namarco should have made its claim against the Federation the subject of a counterclaim when the Federation's own claim against it was still pending in the lower court, with the consequence that, not having done so, it should no longer be allowed to maintain the case at bar, pursuant to the rule on prescription of compulsory counterclaims, more specifically, what was Section 6 of Rule 10 of the old rules and is now Section 4 of Rule 9 of the present rules in force since January 1, 1964.1
It appears that when Namarco was informed by the Philippine National Bank on May 19, 1960 that it could not negotiate and effect payment of the sight drafts of the Federation totally worth P611,053.35, corresponding to the goods already received by the Federation since January 29, 1960 and February 20, 1960 and covered by PNB Domestic L/C Nos. 600606 and 600586, respectively, the Federation's action against it (Civil Case No. 42684) for specific performance by the delivery of the balance of the goods stipulated in the contract was still pending in the trial court. In fact, the Federation had already failed to pay notwithstanding Namarco's formal demand made on June 7, 1960, when the decision of the trial court was promulgated on October 15, 1960.
Notwithstanding the lengthy exposition in the main opinion regarding the meaning of the words "transaction" and "occurrence" used in the aforecited provisions, it is very clear to me that, having in mind the objective of the rules in permitting counterclaims and, more particularly, in making some of them compulsory, Namarco's present claim did arise out of or was necessarily connected with the transaction or occurrence that was the subject matter of the Federation's action in Civil Case No. 42684 within the contemplation of the rule on compulsory counterclaims. It is too obvious for equivocation or doubt that the material subject matter of both of said claims were the goods referred to in their contract, while juridically, it was the contract itself. As I have already stated, the Federation sued for their complete delivery, whereas Namarco has sued in the present action for the payment of the part thereof that it had already delivered to the Federation. I consider it beyond dispute that under these circumstances, the claim of Namarco for such payment of the goods it had delivered pursuant to the contract "arose out of" that contract, which is precisely the very same one that was "the subject matter" of the Federation's claim for the delivery of the balance of the goods covered by it.
To believe otherwise is to ignore the fundamental reason behind the rule on counterclaims which is to avoid multiplicity of suits. In the case of permissive counterclaims which are unrelated to the adverse party's claims, I can understand the option given to the defendant to plead them in the same action or not, because it is possible that the defendant may wish to immediately remove the risk of a judgment against him and thus have peace of mind as early as possible, instead of suffering delay in his exoneration by litigating with the plaintiff in regard to his (defendant's) own claims against him, which, of course, will necessarily entail a longer and more complicated proceeding. On the other hand, one can easily see why the claims of the defendant arising out of the same transaction or occurrence are made compulsory in the sense of considering them as completely barred if they are not set up in the same action of the plaintiff. Since the subject matter involved in the defendant's claim is the same one on which the plaintiff has sued him, it becomes a matter of public policy that they should be settled in one proceeding, thus avoiding any duplication of the time, effort and money that would have to be spent in the trial and disposition of more or less the same set of facts and circumstances as well as legal issues, varying only in some details or aspects which can anyway be conveniently and properly determined in the same proceeding. Thus, it is too plain to be overlooked or not to be understood that when, on the hand, a party sues for the complete delivery of goods covered by a contract, and the other party, on the other hand, claims payment for goods it has already delivered under the same contract, the rule should be that both claims should be made in the same action or in one single proceeding, and, as I will explain later, this must be the rule even if the legality or validity of the contract should be put in issue by any of the parties. This to me in synthesis is the situation in the case at bar. Indeed, even if it were necessary to apply the so-called logical-relation test referred to in the main opinion, I would still say that there is definitely such logical relation between the claim at bar of Namarco and the claim of the Federation in Civil Case No. 42684, since that one was for the delivery of goods promised under the contract whereas the other was for the payment of goods delivered under it, so much so that the reliefs in one could in fact be possibly set-off against the reliefs in the other.
It was the element of time herein involved that somehow induced me at the beginning to be inclined, albeit reluctantly to sustain Namarco's position in this appeal. As I have explained above, at the precise time that Namarco filed its answer in Civil Case No. 42684, it was not yet certain that the Federation would not pay or that payment of its sight drafts would not be effected by the bank. In other words, from that point of view, Namarco's cause of action had not yet matured then. It is also clear, however, that said cause of action accrued before judgment was rendered by the trial court. Under Section 4 of Rule 10 of the old rules, now Section 9 of Rule 6, a counterclaim which either matured or was acquired by a defendant after serving his answer may be set up in a supplemental pleading later before judgment. Since this may be done or not in the case of counterclaims not arising out of the same transaction or occurrence the question that arises is, must it have to be done in the case of counterclaims that do arise from the same transaction or occurrence, such that if not interposed, they must be deemed barred? Stated differently, the doubt that assailed me in regard to this view of this case is whether or not the fact that a supplemental pleading could in fact have been filed by Namarco before judgment placed its present claim within the contemplation of Section 6 of Rule 10 of the old rules as a claim that should be barred.
In this connection, much as I am inclined towards compelling parties to litigate all their claims against each other in one single proceeding in the interest of a more speedy restoration of normal relations between them, I feel constrained in the absence of any contrary precedent, to yield to the observations noted in footnote 25 of the main opinion to the effect that for a counterclaim, arising out of the same transaction or occurrence that is the subject matter of the plaintiff's claim to be compulsory, under the said Section 6 of Rule 10, it must be existing at the time of the filing of the answer by the defendant, and the fact that Section 4 of the same rule allows the filing of supplemental counterclaims before judgment does not alter the situation.
To make myself clearer, I agree that the Court rule for the present that for a counterclaim to be considered as barred, under the above provisions, the cause of action thereof must have already accrued at the time the answer is filed by the defendant, although I, for one, would prefer supplemental counterclaims, the defendant should just the same be compelled to allege it in such a supplemental pleading in those cases where his claim accrues before trial has began or at the latest, before the defendant has started presenting his evidence. Otherwise stated, my position is that the claim of Namarco in this case did arise out of the same transaction petition or occurrence that was the subject matter of the Federation's anterior action, but inasmuch as, on the hypothesis that the contract were binding, the formers' cause of action could not have been considered as already matured when it filed its answer, there would have been no need for it to file this counterclaim.
The whole trouble with Namarco's pose in this appeal lies, however, in the fact that in its answer to the Federations complaint, it pleaded the defense of illegality or nullity of the contract. From that point of view, it was immaterial to Namarco's recovery of the purchase price of goods it had already delivered under the contract that there was in said contract any term for the payment thereof. As far as Namarco was concerned, those goods had been delivered illegally and should have been immediately returned unless their value had been paid for, (Article 1412 (2), Civil Code) or Namarco was in pari delicto (Article 1411, id). Such being the case, it is quite evident that when Namarco filed its answer to the Federation's action, its cause of action for the recovery of the price of the delivered goods was already existing and could have been the subject of a counterclaim. This means that as of the time Namarco filed its answer contesting the legality or validity of the contract, it was incumbent upon it to then and there seek recovery of whatever it had delivered thereunder. Nothing could be more logical and legally proper, specially when viewed from the angle of diligent protection of public interest, Namarco being a government corporation.
Obviously, the foregoing consideration serves also to refute Namarco's contention that it could not have claimed for the payment now in question because it would have been inconsistent for it to do so. Moreover, in Camara vs. Aguilar, 94 Phil. 527, this Court already held that:
The contention that a counterclaim for expenses incurred in clearing and cultivating the parcel of land and planting coconut and other fruit-bearing trees therein could not have been set up in the former case because that would have been inconsistent with or would have weakened the claim that they were entitled to the parcel of land, is without merit, because "A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one cause of action or defense or in separate causes of action or defense." Hence, the plaintiffs herein and intervenors in the former case could have set up the claim that they were entitled to the parcel of land and alternatively that assuming (hypothetically) they were not entitled to the parcel of land, at least they were entitled as possessors in good faith to the coconut and other fruit-bearing trees planted by them in the parcel of land and their fruits or their value.
IN VIEW OF ALL THE FOREGOING, I vote to reverse the judgment of the lower court, with the result that Namarco's present suit should be dismissed, without costs.
Footnotes
1 The action herein was filed and tried before the Revised Rules of 1964 took effect.
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