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Elpidio S. Uy, doing business under the name
and style EDISON DEVELOPMENT & CONSTRUCTION, Petitioner, |
G.R. No. 157065
Present: |
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- versus - |
QUISUMBING,
J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. |
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honorable Court of Appeals and the HERITAGE PARK
MANAGEMENT CORPORATION (HPMC), Respondents. |
Promulgated: July 11, 2006 |
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QUISUMBING, J.:
This is
a Petition for Review seeking to reverse and set aside the Decision[1]
dated
The
As project owner, the BCDA was tasked
to sell the Heritage Park Investment Certificates to the public and buyers become
certificate holders. The certificate
gives the PNB the absolute legal and beneficial title to
PEA, as project manager, is tasked to
implement and complete the various engineering works and improvements of
On November 20, 1996, PEA and the
petitioner, a single proprietorship doing business under the name and style of
Edison Development and Construction, executed a Landscaping and Construction
Agreement whereby the petitioner undertook to do all the landscaping, including
the construction of a terrasoleum of the Heritage
Park. The Heritage Park Executive
Committee[4] approved
the agreement on
Pursuant to Section 11.01[6]
of the PFTA, in April 1999, the certificate holders of the project organized themselves
into a non-stock, non-profit corporation, the Heritage Park Management
Corporation (HPMC), now the private respondent herein.
In
October 1999, alleging delay in the construction of the projects and huge
discrepancy between the Accomplishment Report and the actual physical
accomplishment of petitioner’s construction firm, the Heritage Park Executive
Committee terminated the two construction contracts namely, the landscaping and
nursery works, and the construction of the terrasoleum.
On
On
On
On the basis of the evidence presented and the findings, judgment is hereby rendered in favor of the Claimant Contractor ELPIDIO S. UY and Award is hereby made on its monetary claims as follows:
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P 2,354,607.40 2,949,767.71 8,197,396.65 16,210,108.28 |
- Progress Billing No. 09 - Progress Billing No. 10 - Performed Work on Change Order No. 1 - Equipment Stand-by Costs |
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6,421,398.50 1,045,532.07 2,211,148.26 489,535.02 3,987,949.39 445,665.15 |
- Manpower Stand-by Costs - Escalation of Contract Price - Unpaid Balance on Materials on Site - Interest on Billing Nos. 9 and 10 - Attorney’s Fees - Reimbursement of Arbitration fees |
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[P 44,313,108.43][9] |
- Total Amount |
Interest at the rate of 6% per annum on the total amount of P39,879,493.89 (Attorney’s fees and reimbursement of arbitration fees exclude) shall be paid from the date this Decision is promulgated until finality of this Decision, after which interest at the rate of 12% per annum shall be paid on the total amount of P39,879,493.89 until full payment of the awarded amount shall have been made.
SO ORDERED.[10]
On
Private respondent HPMC then filed a
petition for Injunction/Prohibition before the Court of Appeals on the ground
that CIAC had no jurisdiction over the subject matter since HPMC was not impleaded as a party thereby depriving it of its right to
be heard.[12] The appellate court ruled in favor of
respondent, as follows
WHEREFORE, premises considered, the Petition is GRANTED and the assailed three (3) rulings of public respondent in CIAC 21-2001 are hereby declared VOID AB INITIO and produces no legal effect insofar as the HPMC’s interests are concerned. No costs.
SO ORDERED.[13]
Petitioner
before us ascribes the following as errors on the part of the appellate court:
I
The Court of Appeals
committed gross reversible error and decided questions of substance in a way
not in accordance with law and the applicable decisions of the honorable court
when it declared void the CIAC Decision dated 18 December 2001, the Amended
Writ of Execution dated 25 March 2002, and the amended notice of garnishment
dated 27 March 2002, on the sole grossly erroneous basis that respondent HPMC
is allegedly a real party-in-interest and an indispensable party in CIAC Case
No. 21-2001 for which reason it should allegedly have been impleaded in said
arbitration case, considering that:
A.
Under the Pool Formation Trust Agreement (PFTA) which
provides for the creation of respondent HPMC, the trusteeship rights conferred
upon it insofar as the heritage funds are concerned were expressly limited by
the PFTA itself which earmarked or allocated said funds to answer for
liabilities under the construction agreements entered into by the PEA, thereby
constituting respondent HPMC as a mere custodian or escrow agent of said funds;
accordingly, respondent HPMC is not a real party-in-interest or indispensable
party to CIAC Case No. 21-2001.
B.
By claiming to be the trustee of the
construction/development fund, respondent HPMC is estopped from asserting its
alleged ownership of said fund.
C.
The construction/development fund was expressly
earmarked to pay for the costs of development of the heritage park, including
arbitral awards; and thus, CIAC acted within its discretion when it issued a writ
of execution directed against the said fund.
II
The Court of Appeals
committed gross and reversible error and decided questions of substance in a
way not in accordance with law and the applicable decisions of the honorable
court when it ruled that respondent HPMC is allegedly a real party-in-interest
or an indispensable party considering that the honorable court has already
conclusively ruled that there was no valid novation of the construction
agreements between petitioner UY and PEA.
In fact, the court of appeals already dismissed a similar petition filed
by respondent HPMC invoking the same groundS as in its petition a quo.
III
The Court of Appeals
committed gross reversible error in granting the extraordinary remedies of
prohibition and injunction to enjoin the execution of the award in CIAC Case
No. 21-2001, considering that:
A.
Respondent HPMC does not have any right, much less a
clear and unmistakable right, which would entitle it to the extraordinary
remedies of prohibition and injunction.
B.
Respondent HPMC miserably failed to establish that it
would suffer any injury, much less grave and irreparable injury, as a result of
the execution of the said award.
C.
Respondent HPMC’s said petition for
injunction/prohibition was fatally defective in both form and substance; and
hence, should have been dismissed.
D.
Respondent HPMC was clearly guilty of forum-shopping
when it filed its petition for injunction/prohibition with the court of appeals
during the pendency of a similar petition with the honorable court (G.R. No.
148133).
IV
The court of appeals
committed gross reversible error when it went beyond the issues of the case and
the allegations in respondent HPMC’s petition by declaring the CIAC Decision
dated
Simply
stated, the issues for our resolution are:
(1) Is HPMC a real party-in-interest or an indispensable party? (2) Does
CIAC have jurisdiction over the dispute?
and (3) Was the grant of the writs of
injunction/prohibition proper?
Petitioner’s contention is that
private respondent HPMC is not a party-in-interest to the case since it is a
mere trustee of the construction and development funds and would not be
directly benefited or injured by the outcome of the case.
Private respondent contends that upon
its incorporation and election of its Board of Trustees, it assumed ownership
of the Heritage Park Project. Further,
since it is a non-stock, non-profit corporation, with the certificate holders
as its members, any claim against the PEA is in reality a claim against all the
parties who pooled and contributed their resources for the project; hence, it
is an indispensable party.[15]
An indispensable party is one whose
interest will be affected by the court’s action in the litigation, and without
whom no final determination of the case can be
had. The party’s interest in the subject
matter of the suit and in the relief sought are so inextricably intertwined
with the other parties’ that his legal presence as a party to the proceeding is
an absolute necessity.[16]
Based on the Construction Agreement,
PEA entered into it in its capacity as Project Manager, pursuant to the
PFTA. According to the provisions of the
PFTA,[17]
upon the formation of the HPMC, the PEA would turn over to the HPMC all the
contracts relating to the
Does CIAC have jurisdiction over the
dispute? Section 4[21]
of Executive Order No. 1008[22]
is pertinent. It provides that the
jurisdiction of the CIAC over the parties is dependent on the agreement and
consent of the parties to the construction contract, to submit their dispute
for arbitration. Absent such consent,
the CIAC cannot validly proceed against a party for lack of jurisdiction.
In this instance, both parties agreed
to submit the dispute for arbitration. However, the CIAC should have dismissed
the same on the ground that the private respondent was not impleaded,
it being an indispensable party to the case.
Indispensable parties must be joined
either as plaintiffs or defendants.[23] Whenever it appears to the court in the
course of a proceeding that an indispensable party has not been joined, it is
the duty of the court to stop the trial and to order the inclusion of such
party.[24] The absence of an indispensable party renders
all subsequent actuations of the court null and void, for want of authority to
act, not only as to the absent parties, but even as to those present.[25]
It has come to the Court’s attention
that from the inception of the case, PEA informed the CIAC that pursuant to the
PFTA and the Deed of Assignment, all its rights and obligations under the
contract have already been assigned to private respondent.[26]
The
responsibility of impleading all the indispensable
parties rests on the plaintiff. The
defendant does not have the right to compel the plaintiff to prosecute the
action against a party if he does not wish to do so, but the plaintiff will
have to suffer the consequences of any error he might commit in exercising his
option.[27]
As to the
third issue -- on the propriety of the writs of injunction/prohibition -- the
matter has been mooted by our disquisitions above, and the issue has become
academic.
WHEREFORE, the petition is DENIED,
without prejudice to the re-filing of the case against the proper party in
interest.
Costs against petitioner.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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ANTONIO T. CARPIO Associate Justice |
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CONCHITA CARPIO MORALES Associate Justice |
DANTE O. TINGA Associate Justice |
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PRESBITERO J. VELASCO,
JR. Associate Justice |
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A T T E S T A T I O N
I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
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ARTEMIO V. PANGANIBAN Chief Justice |
[1] Rollo, pp. 9-20. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Delilah Vidallon-Magtolis, and Regalado E. Maambong concurring.
[2] CIAC records, pp. 757-801.
[3]
[4]
[5] See CA Decision, rollo, p. 12. See also “Whereas Clauses” of the Construction Agreement found in CIAC records, pp. 803-804.
[6] CIAC records, p. 794. Section 11.01. Organization of a non-stock, non-profit corporation. At any time within the three (3) year development period, but not later than sixty (60) days prior to the completion of the Project as estimated by the PEA/Works Engineer, BCDA shall organize or cause to be organized, under the laws of the Republic of the Philippines, a non-stock, non-profit corporation, with the Certificate holders as its members, whose voting rights correspond to the type of lot covered by their Certificates in accordance with Section 9.05 and Section 11.03 of this Agreement.
It is the full intent and understanding of BCDA, PEA, and the Trustee that the non-stock, non-profit corporation shall be organized and registered with the Securities and Exchange Commission. It shall have all the powers and obligations of a non-stock, non-profit corporation. Its Board of Trustees shall have all the rights, powers and duties under Section 11.06 of this Agreement.
x
x x x
[7]
[8] CIAC Case No. 21-2001, entitled Elpidio S. Uy, doing
business under the name and style of
[9] Rollo, p.
199. Stated as 44,341,108.43 in
the CIAC decision (discrepancy of P28,000.00).
[10]
[11] CA rollo, pp. 31-32.
[12]
[13] Rollo, p. 20.
[14]
[15]
[16] Imson v. Court of Appeals, G.R. No. 106436,
[17] CIAC records, p. 796. Section 11.07. Delivery of Documents and the Park. Upon the election of the Board of Trustees, the PNB shall turn over to the Board of Trustee all its functions and responsibilities, and all documents in its custody, including all Heritage Park Accounts, except the General Fund which will go to BCDA. Upon such turn over and upon complete and faithful performance by PNB and PEA of their respective obligations under this Agreement, the respective obligations of PNB and PEA under this Agreement shall be deemed terminated. PEA shall turn over to the Board of Trustees all the documents and equipment it has in its possession relating to the Project and the Park, including the computer hardware and software pertaining to the geographical information system of the Park.
[18]
[19]
[20] Imson v. Court of Appeals, supra.
[21] SECTION 4. Jurisdiction. – The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the disputes arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.
The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amount of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost.
Excluded
from the coverage of this law are disputes arising from employer-employee
relationships which shall continue to be covered by the Labor Code of the
[22] CREATING AN ARBITRATION MACHINERY FOR THE PHILIPPINE CONSTRUCTION INDUSTRY (February 4, 1985).
[23] Rules
of Court, Rule 3, Sec. 7. Compulsory joinder of indispensable
parties. – Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or
defendants.
[24] Lim Tanhu
v. Ramolete, No. L-40098,
[25]
[26] CIAC records, p. 92.
[27] See Bank of