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SINGAPORE AIRLINES LIMITED v. CA

FACTS:

Sancho Rayos, an overseas contract worker, had a renewed contract with Arabian American Oil Company (Aramco). As part of Aramco's policy, employees returning to Saudi Arabia are allowed to claim reimbursement for excess baggage. On April 13, 1980, Rayos took a Singapore Airlines (SIA) flight, paying for a 50-kilogram excess baggage. Aramco reimbursed him for the amount. In December 1980, Rayos discovered that he was being investigated for fraudulent claims. SIA manager informed Rayos' wife that their records only showed three kilograms entered as excess baggage. SIA issued the certification on April 8, 1981, after threats of a lawsuit. On April 14, 1981, Aramco gave Rayos his travel documents without a return visa and did not renew his employment contract. The spouses Rayos sued SIA for damages. SIA claimed it was not liable because the tampering was done by its handling agent, Philippine Airlines (PAL). PAL countered that it had no participation in the tampering. The trial court ruled in favor of the plaintiffs and ordered SIA to pay damages. PAL was ordered to reimburse SIA for the amount it paid to the plaintiffs. The Court of Appeals granted PAL's appeal and absolved it from liability. SIA argued that PAL cannot raise the issue for the first time on appeal.

ISSUES:

  1. Whether PAL can raise the defense of no valid claim by the plaintiffs against SIA on appeal.

  2. Whether PAL is entitled to reimbursement from SIA for the judgment in favor of the plaintiffs.

  3. Whether the answer filed by a third-party defendant in a third-party complaint inures to the benefit of the defendant in the main complaint.

RULING:

  1. PAL cannot raise the defense of no valid claim by the plaintiffs against SIA on appeal. PAL had the opportunity to raise this defense in its answer to SIA's third-party complaint, but it chose not to do so. PAL cannot change its theory on appeal and raise an issue that was not raised in the lower court.

  2. The judgment in favor of the plaintiffs and SIA has already gained finality. What remains to be resolved is whether PAL is entitled to reimbursement from SIA, considering that PAL appealed that part of the decision. PAL should have stated in its answer to the third-party complaint everything that it may interpose as a defense, including specific denials of allegations in the main complaint. PAL cannot try to exonerate itself on appeal when it did not raise the defense earlier.

  3. The answer filed by a third-party defendant in a third-party complaint does not inure to the benefit of the defendant in the main complaint. A third-party complaint involves an action separate and distinct from the main complaint. Thus, a third-party defendant who feels aggrieved by some allegations in the main complaint should answer both the third-party complaint and the main complaint separately.

PRINCIPLES:

  • When the court finds favorably on both the principal complaint and the third-party complaint, it renders separate judgments on each. Failure to appeal the judgment as against a party makes the judgment final and executory as to that party.

  • A third-party defendant is allowed to set up in its answer the defenses which the third-party plaintiff has to the principal claim. However, special circumstances may preclude the third-party defendant from benefiting from this principle.

  • The third-party defendant can benefit from a victory by the third-party plaintiff against the principal plaintiff, but this is true only when they have non-contradictory defenses. If the defendant and third-party defendant have no common defense against the principal plaintiff's claim and are even blaming each other, the third-party defendant cannot benefit from the victory.

  • The defense of no valid claim by the plaintiff against the third-party defendant should be raised in the answer if the third-party plaintiff raised it in the main complaint. Waiting to raise the defense on appeal for the first time is not allowed.

  • A third-party complaint involves an action separate and distinct from the main complaint.

  • The answer filed by a third-party defendant in a third-party complaint does not benefit the defendant in the main complaint.

  • The liability of joint tort-feasors is joint and several, and the sharing as between them is pro-rata.