TALISAY-SILAY MILLING CO., INC. AND J. AMADO ARANETA, PETITIONERS, VS. THE COURT OF INDUSTRIAL RELATIONS AND CENTRAL AZUCARERA OB-DANAO, RESPONDENTS.

Talisay-Silay Milling Co., of which J. Amado Araneta is the president, was,
prior to March 3, 1960, the owner of 2,689 shares of stock, which represent 93
per cent of the paid up capital stock, of the respondent Central Azucarera del
Danao. On that date, it transferred its stockholding to the Philippine National
Bank in exchange for a number of shares of stock of the Bacolod Murcia Milling
Co. and of the Ma-ao Sugar Central which the PNB held in those centrals.

The exchange was part of an agreement signed by Talisay-Silay Milling Co.,
the respondent Central Azucarera del Danao and the Philippine National Bank in
settlement of several cases pending in court between respondent Central
Azucarera del Danao and the PNB. With respect to pending obligations of the
respondent Central Azucarera del Danao, the agreement provided :

“9) That all obligations of Central Azucarera del Danao incurred before the
date of this Agreement but not those incurred by the Bank during the period when
the Central Azucarera del Danao was under the management of the BANK, in favor
of trade creditors for supplies, equipment, full and spare parts outstanding in
the books, of Danao shall be listed and itemized, and only such items as are
approved and acknowledged by the BANK shall be considered as legitimately
incurred and due for payment by Danao;

“This provision, however, shall not apply to Central Azucarera del Danao’s
account with the Philippine National Bank and the Development Bank of the
Philippines (formerly R.F.C.), full responsibility for whichshall remain with
Central Azucarera del Danao;

“10) That any or all obligations purporting to be of Central Azucarera del
Danao but not appearing in the books thereof nor acknowledged as in paragraph 9
above shall be borne and paid for by Talisay-Silay Central and/or Mr. J. Amado
Araneta.

Shortly after the conclusion of this agreement, the Negros Occidental
Federation of Labor and some of its members filed a complaint in the Court of
Industrial Relations, charging the respondent central with unfair labor
practice. They alleged that the individual complainants were employed at the
respondent central but that in September of 1953 they were dismissed for
refusing to join a rival union. The complainants, therefore, asked the court to
order the reinstatement of the dismissed employees “under the same terms and
conditions of employment.”

Respondent central in turn filed a third party complaint against petitioners
on the ground that the unfair labor practices denounced by the union were
allegedly committed at the time when petitioners were in control of the
respondent central and, therefore, were the sole responsibility of the
petitioners. It also averred that in accordance with the provisions of the
agreement as quoted above, the resulting claims for backpay should be made
against the petitioner.

The petitioners questioned the jurisdiction of the court on the ground that
there was no employer-employee relationship between them and the respondent
central. Nevertheless, the court assumed jurisdiction of the third party
complaint and denied petitioners’ motion for reconsideration. Hence, this
petition for certiorari. We gave due course to the petition and granted
injunction in this case on July 24, 1963.

We have indeed held in a number of cases that for the Court of Industrial
Relations to acquire jurisdiction over a case, (1) there must be an
employer-employee relationship between the parties or a claim for reinstatement;
and (2) the controversy must relate to a case certified by the President to the
Court of Industrial Relations as involving national interest, or must have a
bearing on an unfair labor practice charge, or must arise either under the
Eight-Hour Labor Law or under the Minimum Wage Law. (E.g., Compos v. Manila
Railroad Co., G. R. No. L-17905, May 25, 1962; Sy Huan v. Bautista, G. R. No.
L-16115, August 29, 1961) It is not, however, necessary that these requisites
concur in order that a defendant may be able to file a third party complaint in
the Court of Industrial Relations, where the latter court has already acquired
jurisdiction over the main case, for the third party complaint is but a
continuation of the main action, its purpose being merely to seek “contribution,
indemnity, subrogation or any other relief, in respect of his opponent’s claim.”
(Rule 6, sec. 12) The aim is to avoid two actions which should be tried together
to save the time and cost of a reduplication of evidence, to obtain consistent
results from identical or similar evidence, and to do away with the serious
handicap to a defendant of a time difference between a judgment against him and
a judgment in his favor against the third party defendant. (Metzger v. Breeze
Corp., 37 F. Supp. 693, 695 [l94l]; Brandt v. Olson, 179 F. Supp. 363 [l959]

Thus it has been held that “where a [Federal] court has jurisdiction of a
claim and the parties in the principal action, it generally has jurisdiction
also of a suit or proceeding which is a continuation of or incidental and
ancillary to the principal action, even though it might not have jurisdiction of
the ancillary proceeding if it were an independent and original action or
proceeding. The jurisdiction of the ancillary suit or proceeding is referrable
to or dependent upon the jurisdiction of the court over the principal suit or
proceeding.” (United States v. Accord, 209 F2d 709 [1954] Accord, Morrel v.
United Airline Transport Corp., 29 F. Supp. 757 [1939])

Petitioners urge that a rule similar to the rule on counterclaims be adopted.
But a third party complaint cannot be likened to a counterclaim which must be
witnin the jurisdiction of the court trying the main case, because unlike a
third party complaint, a counterclaim is itself a distinct and independent cause
of action. Indeed, the Rules of Court state that a counterclaim “need not
diminish or defeat the recovery sought by the opposing party, but may claim
relief exceeding in amount or different in kind from that sought in the opposing
party’s claim.” (Rule 6, sec. 6) A third party complaint may likewise be likened
to a cross claim under Rule 9, section 5. (City of Boston v. Boston Edison Co.,
260 F2d 872 [1958]) The principle is at once apparent, namely, that where an
action is ancillary to a main action tver which” a court has jurisdiction, no
independent jurisdiction is needed to enable the court to take cognizance of the
ancillary action.

WHEREFORE, the petition is denied and the injunction issued is hereby
dissolved, with costs against petitioners.

Concepcion, C.J., Makalintal,
Bengzon, J. P., Zaldivar, Sanchez and Ruiz Castro, JJ., concur.
Reyes,
J.B.L., J., in the result.
Barrera, J., took no part.
Dizon,
J., reserves his vote.