I.

II.

Title:

Asian Construction and Development Corporation

v. CA and Monark Equipment Corporation
458 SCRA 750 / G.R. No. 160242
May 17, 2005

Doctrine
Section 11, Rule 6 of the Rules of Court provides:
Sec. 11. Third (fourth, etc.)party complaint. A third (fourth, etc.) party complaint is a
claim that a defending party may, with leave of court, file against a person not a party to
the action, called the third (fourth, etc.) party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponents claim.
The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert
an independent claim against a thirdparty which he, otherwise, would assert in another
action, thus preventing multiplicity of suits. All the rights of the parties concerned would
then be adjudicated in one proceeding. This is a rule of procedure and does not create a
substantial right. Neither does it abridge, enlarge, or nullify the substantial rights of any
litigant.15 This right to file a thirdparty complaint against a thirdparty rests in the
discretion of the trial court.

III.

IV.
V.

Facts

MEC filed a complaint for sum of money with damages against ACDC with the RTC
for equipments leased by it and for purchases of various equipments, which despite
demands, ACDC failed to pay.

ACDC filed a motion to file and admit answer with third-party complaint against
Bechtel Overseas Corp. (third-party defendant). ACDC admitted its indebtness to
MEC but the reason for their non-payment was due to Bechtels failure and refusal to
pay its obligation with ACDC for the leased equipment which was used for its
construction project.

ACDC alleged that Bechtel contracted the services of Asiakonstrukt (third-party

plaintiff) for the construction work at its project using the leased equipment.
Asiakonstrukt complied with its work but Becthel did not pay for its services despite
repeated demands, that Bechtel needs to be impleaded in this case for contribution,
indemnity, subrogation or other reliefs to offset or to pay the amount of money claim
of Monark on the leased equipments.

MEC opposes motion to file a third-party complaint on the ground that ACDC
already admitted its principal obligation to MEC and that these transactions were
independent and the allowance of the complaint would unduly delay the proceedings.

MECs motion for summary judgment: no genuine isssues as to the obligation of

ACDC to MEC, only issue is tha mount of attorneys fees and costs of litigation.

ACDC opposes motion for summary judgment: there is genuine issue on the amount
claimed by MEC and that it had a third-party complaint against Bechtel in connection
with the reliefs sought against it which had to be litigated.

RTC: ACDCs motion for leave to file a thirdparty complaint denied. MECs motion
for summary judgment granted. ACDC to pay MEC P5,071,335.86.

CA on appeal: RTC decision affirmed. MEC prayed for summary judgment, hence
waived its claim for damages. MR denied.

Petition for review on certiorari with SC.

Issues
(1) Whether or not a thirdparty complaint is proper. (NO)
Held

Section 11, Rule 6 of the Rules of Court provides:

Sec. 11. Third (fourth, etc.)party complaint. A third (fourth, etc.) party complaint is a
claim that a defending party may, with leave of court, file against a person not a party to
the action, called the third (fourth, etc.) party defendant, for contribution, indemnity,
subrogation or any other relief, in respect of his opponents claim.
The purpose of Section 11, Rule 6 of the Rules of Court is to permit a defendant to assert
an independent claim against a thirdparty which he, otherwise, would assert in another
action, thus preventing multiplicity of suits. All the rights of the parties concerned would
then be adjudicated in one proceeding. This is a rule of procedure and does not create a
substantial right. Neither does it abridge, enlarge, or nullify the substantial rights of any
litigant. This right to file a thirdparty complaint against a thirdparty rests in the discretion
of the trial court.
The thirdparty complaint is actually independent of, separate and distinct from the
plaintiffs complaint, such that were it not for the rule, it would have to be filed separately
from the original complaint. A prerequisite to the exercise of such right is that some
substantive basis for a thirdparty claim be found to exist, whether the basis be one of
indemnity, subrogation, contribution or other substantive right.
The bringing of a third party defendant is proper if he would be liable to the plaintiff or to
the defendant or both for all or part of the plaintiffs claim against the original defendant,
although the thirdparty defendants liability arises out of another transaction. There must
be a causal connection between the claim of the plaintiff in his complaint and a claim for
contribution, indemnity or other relief of the defendant against the thirdparty defendant.
The thirdparty complaint does not have to show with certainty that there will be recovery
against the thirdparty defendant, and it is sufficient that pleadings show possibility of
recovery.
In this case, the claims of the MEC against the ACDC arose out of the contracts of lease
and sale; such transactions are different and separate from those between Becthel and the
ACDC as thirdparty plaintiff for the construction of the latters project. Controversy is
entirely distinct from each other.
The barefaced fact that the petitioner used the equipment it leased from the respondent in
connection with its project with Becthel does not provide a substantive basis for the filing
of a thirdparty complaint against the latter.
There is no casual connection between MECs claim for rental and balance of purchase
price for equipments and the failure of Bechtel to pay balance to ACDC after completion
of its project.
In ACDCs thirdparty complaint, ACDC allege that Becthel should be ordered to pay the
balance of its account of P456,666.67 so it could pay MEC, however contrary to its plea,
ACDC also sought the dismissal of the MECs complaint, hence the amount it sought to
collect from Becthel would not be remitted to MEC after all.
ACDC admitted liability for the principal claim, RTC did nor ee in rendering judgment on
the pleadings against it. Petition denied for lack of merit.