GR 163981; (August, 2005) (Digest)
G.R. No. 163981, August 12, 2005
Construction & Development Corporation of the Philippines (now Philippine National Construction Corporation) vs. Rodolfo M. Cuenca and Malayan Insurance Co., Inc.
FACTS
Malayan Insurance Co., Inc. (MICI) issued a surety bond for Ultra International Trading Corporation (UITC) to guarantee its obligations to Goodyear. To protect itself, MICI required an indemnity agreement executed by UITC, its President Edilberto Cuenca, and its board member Rodolfo Cuenca, binding them jointly and severally. Upon UITC’s default, MICI paid Goodyear and demanded reimbursement from the indemnitors. UITC, a subsidiary of petitioner PNCC, failed to pay fully, prompting MICI to file a complaint.
Rodolfo Cuenca filed a third-party complaint against PNCC, alleging that a PNCC board resolution had assumed all liabilities arising from guarantees made by its officers in affiliated corporations like UITC. The trial court held UITC and PNCC jointly and solidarily liable to MICI, dismissing the complaint against the Cuencas. The Court of Appeals affirmed. PNCC appealed, arguing it cannot be held directly liable to MICI via a third-party complaint.
ISSUE
Whether PNCC can be held directly and solidarily liable to MICI, the original plaintiff, based solely on a third-party complaint filed by a defendant (Rodolfo Cuenca).
RULING
No. The Supreme Court modified the CA decision and absolved PNCC from liability. The legal logic is grounded in procedural rules governing third-party complaints. A third-party complaint is proper only when the third-party defendant may be liable to the defendant for “contribution, indemnity, subrogation, or any other relief” in respect to the plaintiff’s claim. It is not a vehicle for a defendant to implead a party alleged to be directly liable to the plaintiff.
Here, Rodolfo Cuenca’s theory was that PNCC, not he, was directly liable to MICI under its board resolution. This is not a claim for indemnity or contribution from PNCC to Rodolfo should Rodolfo be held liable. Instead, it attempts to substitute PNCC as the primary obligor. The proper procedure for enforcing a direct claim against PNCC would have been for MICI to amend its complaint to include PNCC as a direct defendant, or for PNCC to be independently impleaded. Since MICI did not appeal the dismissal of its case against Rodolfo, and the third-party complaint improperly sought to establish PNCC’s direct liability, PNCC cannot be held liable under this procedural mechanism. The Court emphasized that a third-party defendant cannot be held directly liable to the original plaintiff unless the plaintiff’s claim against the original defendant is first established, which did not occur here as Rodolfo was absolved.