Republic of the
SUPREME COURT
THIRD DIVISION
D.M. CONSUNJI, INC., G.R. No. 155174
Petitioner,
Present:
- versus - YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO,
JR.,
NACHURA,
and
PERALTA,
JJ.
DUVAZ CORPORATION,
Respondent. Promulgated:
August
4, 2009
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D E C I S I O N
VELASCO, JR., J.:
The Case
This Petition for Review on
Certiorari under Rule 45 seeks to reverse and set aside the Decision[1]
dated May 28, 2002 of the Court of Appeals (CA) in CA-G.R. No. 67126 entitled D.M. Consunji, Inc. v. Honorable Tranquil P.
Salvador, Jr., presiding judge, Branch 63, Regional Trial Court, Makati City
and DUVAZ Corporation, and its Resolution[2] of
September 12, 2002 denying petitioner’s motion for reconsideration.
The Facts
On
August 30, 1996, petitioner D.M. Consunji, Inc. (DMCI) and respondent Duvaz
Corporation (Duvaz) entered into a contract, denominated as Construction
Contract No. AP-CC-A-0007,[3]
whereby DMCI undertook to construct, for Duvaz, the substructure/foundation of
the Alfaro’s Peak building project located on
Immediately
adjacent to the Alfaro’s Peak site is a condominium building, called the
Peak, which was constructed in 1990-1993, with DMCI as the general
construction contractor. Ownership of the Peak––formerly developed by
RDR Property Holdings, Inc., once a subsidiary of Duvaz––eventually became
vested in the latter.
By virtue of a Certificate of
Completion and Acceptance of Work[4]
Duvaz issued, the foundation project was deemed completed on October 31, 1997
and, as stated in the certificate, the one-year defect liability period would end on October 31, 1998. As DMCI claimed,
at the time of project completion, there was an unpaid balance on the contract
price in the amount of PhP 29,209,735.85.
On December 22, 1997, Duvaz filed
with the Securities and Exchange Commission (SEC) a petition[5]
for the declaration of a state of suspension of payments, docketed as SEC Case
No. 12-97-5850. In the petition in which DMCI was listed as “admitted creditor”
for the amount of PhP 29,209,735.85, Duvaz claimed having more than sufficient
assets to satisfy its debts but cannot answer its maturing obligations as they
fall due. In due time, SEC granted the petition.
To protect its interest, DMCI filed
on January 29, 1998 with the Regional Trial Court (RTC), Branch 66 in
Later,
Duvaz withdrew its petition before the SEC, prompting DMCI to demand from Duvaz
payment of the unpaid balance of the contract price. In one of those
demand-letters,[9] the
amount of PhP 32,422,387.11 appeared as the outstanding unpaid balance.
In
a letter of January 21, 1999[10]
in reply to DMCI’s demand-letter dated January 19, 1999, Duvaz, without indicating any specific
amount representing its supposed indebtedness, proposed to pay DMCI PhP 1 million
a year for at least next three years and larger payments afterwards. DMCI
obviously found the settlement proposal unacceptable, for, on July 22, 1999, it
filed a suit with the RTC in
In
its Answer with Compulsory Counterclaims,[12]
Duvaz specifically denied DMCI’s averment that it owes the latter PhP 38,765,956.53,
as of June 1999. And by way of affirmative defenses to support its
counterclaims, Duvaz alleged serious defects in the construction of the
substructure of both the Alfaro’s Peak and the Peak for which it
prayed that DMCI be ordered to pay PhP 35 million, more or less, for
rectification works; USD 226,600 and PhP 2,015,235 to answer for additional
costs and charges claimed by the project engineer and others, as a result of
rectification-related delays; and attorneys fees, without prejudice to other
quantifiable claims. With respect to the defects adverted to needing
rectification, Duvaz alleged, among others, the following:
(1)
In the course of the substructure construction in 1997 at the Alfaro’s Peak
Project, it was discovered that significant portions of the substructure of the
Peak were encroaching and abutting beyond and into the property line of Alfaro’s
Peak. Rectification works
undertaken by DMCI, as the Peak’s construction contractor, to address
the effects of the protruding substructure of the Peak resulted in the delay of the Alfaro’s Peak Project;
(2)
During the above rectification works, damages were incurred by the substructure
and basement walls of the Peak that
would require further rectification works; and
(3)
The mal-execution of the construction works on the Peak and Alfaro’s
Peak and DMCI’s substandard work practices created, among other things, underground
water seepage problem and rendered necessary a determination of whether the
substructures of the Alfaro’s Peak also encroached into the adjacent
vacant lot.
Thereafter, on September 23, 1999,
DMCI, as plaintiff a quo, moved for summary judgment,[13]
alleging that there is no valid defense to its complaint. As DMCI argued in the
motion, Duvaz’ counterclaims have already prescribed, the construction of the Peak
having been finished in 1993 and the Alfaro’s Peak in 1997; thus, the
respective defects’ liability periods for both projects had already lapsed.
To the above motion, Duvaz interposed
an opposition, appending, as exhibits, documents and photographs bearing on
matters asserted in its defense and counterclaims. An exchange of pleadings then followed.
On May 2, 2000, in Civil Case No.
99-1354, the RTC issued an Order[14]
denying the motion for summary judgment, pertinently stating:
After due consideration of plaintiff’s motion
for summary judgment together with defendant’s opposition thereto and their
respective pleadings that followed, this Court opts for a full-blown trial to
determine the allegations of estoppels and warranty against hidden defects
(relative to the subject construction contract) by plaintiff and defendant,
respectively.
Another
Order dated August 28, 2001[15]
denied DMCI’s motion for reconsideration.
Therefrom,
DMCI went to the CA via a petition for certiorari, docketed as CA-G.R. SP No.
67126, and asked for the nullification of the twin orders of the RTC on the
following stated grounds:
a. Respondent
Judge acted with grave abuse of discretion amounting to lack or in excess of
jurisdiction in refusing to render a summary judgment despite the fact that on
the basis of the pleadings, admissions, exhibits and documents extant on the
records, there is no genuine issue as to any material fact and that petitioner
is entitled to a summary judgment as a matter [of] law x x x.
On May 28, 2002, the CA issued the
assailed decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the present
petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of
merit. Consequently, the assailed Orders dated May 2, 2000 and August 28, 2001
are hereby both AFFIRMED and REITERATED.
With costs against the petitioner.
SO ORDERED.
Subsequently,
on September 12, 2002, the CA issued the assailed resolution denying DMCI’s
motion for reconsideration.
Hence,
DMCI filed this petition.
The Issue
The Honorable [CA] committed serious errors
of law in dismissing the Petition for Certiorari which in effect denied
petitioner’s Motion for Summary Judgment considering that:
I
Petitioner’s principal claim under the complaint is admitted by the respondent or is already a settled issue under the principle of res judicata, and therefore, can no longer be denied or controverted;
II
Respondent’s defenses/counterclaims under the admitted facts and circumstances are sham, fictitious, or patently unsubstantial or speculative and/or were clearly contrived or concocted for purposes of delay only.
III
At any rate, even assuming arguendo that there was a defect in the work done, petitioner is not liable for such defect under the law and contract executed by the parties.
IV
The reasons cited by the Honorable [CA] for
the dismissal of the Petition for Certiorari are untenable for being contrary
to law and jurisprudence.[16]
The Ruling of the Court
The
issue in this case is really whether summary judgment in accordance with the
Rules of Court is proper. We rule in the negative and, thus, deny the instant
petition.
Sections
1 and 3, Rule 35 of the Rules on summary judgment provide:
Section
1. Summary judgment for claimant. – A
party seeking to recover upon a claim, counterclaim, or cross-claim x x x may,
at any time after the pleading in answer thereto has been served, move with
supporting affidavits, depositions or admissions for a summary judgment in his
favor upon all or any part thereof.
Section
3. Motion and proceedings thereon. –
The motion shall be served at least ten (10) days before the time specified for
the hearing. The adverse party may serve opposing affidavits, depositions, or
admissions at least thee (3) days before the hearing. After the hearing, the
judgment sought shall be rendered forthwith if the pleadings, supporting
affidavits, depositions, and admissions on file, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.
In
Solidbank Corp. v. CA,[17] the
Court, explaining when summary judgment may be allowed, wrote:
Summary judgment is a procedural device
resorted to in order to avoid long drawn out litigations and useless delays.
When the pleadings on file show that there are no genuine issues of fact to be
tried, the Rules of Court allows a party to obtain immediate relief by way of
summary judgment. That is, when the facts are not in dispute, the court is
allowed to decide the case summarily by applying the law to the material facts.
Conversely, where the pleadings tender a
genuine issue, summary judgment is not proper. A “genuine issue” is such issue
of fact which [requires] the presentation of evidence as distinguished from a
sham, fictitious, contrived or false claim.
Rule 34, Section 3 of the Rules of Court
provides two (2) requisites for summary judgment to be proper: (1) there must
be no genuine issue as to any material fact, except for the amount of damages;
and (2) the party presenting the motion for summary judgment must be entitled
to a judgment as a matter of law.
Elaborating
on the concept of a “genuine issue,” we held in Asian Construction and Development Corporation v. Philippine Commercial
Industrial Bank,[18]
as follows:
Under the Rules, summary judgment is appropriate when there are no genuine issues of fact which call for the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues, when the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the Rules must ensue as a matter of law. The determinative factor, therefore, in a motion for summary judgment, is the presence or absence of a genuine issue as to any material fact.
A
“genuine issue” is an issue of fact which requires the presentation of evidence
as distinguished from a sham, fictitious, contrived or false claim. When the
facts as pleaded appear uncontested or undisputed, then there is no real or
genuine issue or question as to the facts, and summary judgment is called for. The party who moves for summary judgment has
the burden of demonstrating clearly the absence of any genuine issue of fact
x x x. Trial courts have limited authority to render summary judgments and may
do so only when there is clearly no genuine issue as to any material fact. When
the facts as pleaded by the parties are disputed or contested, proceedings for
summary judgment cannot take the place of trial.
From
the foregoing provisions and pronouncements, it is clear that summary or
accelerated judgment is proper only when, based on the pleadings, depositions,
and admissions on file, and after hearing, it is shown that save as to the
amount of damages, there is no veritable issue regarding any material fact in
the action and the movant is entitled to judgment as a matter of law.
Conversely, where the pleadings tender an issue, that is, an issue of fact the
resolution of which calls for a presentation of evidence, as distinguished from
an issue which is sham or contrived, summary judgment is not proper.
In
this case, we are convinced that genuine issues exist. DMCI anchors its case on
the following premises: Its principal claim against Duvaz is undisputed as the
latter is in fact estopped to deny it. According to DMCI, Duvaz had admitted––and,
hence, can no longer be heard to disclaim––its liability in its Answer in Civil
Case No. 991354 before the RTC; in
the pleadings in SEC Case No. 12-97-5850; in the pleadings in LRC Case No.
M-3839 before the Makati City RTC; and in its reply[19]
to one of DMCI’s demand letters. Pushing
the point further, DMCI states that the order in LRC Case No. M-3839 has the
effect of res judicata.
DMCI’s
posture on estoppel is untenable. Far from containing an admission of
liability, Duvaz’s Answer in Civil Case No. 991354 contained a specific denial
of petitioner’s claim, thus:
4.
[Duvaz] specifically denies the allegations in paragraph 5 of the
complaint to the effect that [Duvaz] owes [DMCI] P38,765,956.53 inclusive of interest as of 15 June 1999, the
truth of the matter being: - (a) that [DMCI’s] charging of interest thereon at
the rate of 2% has no contractual or legal basis whatsoever, and (b) as stated
in the Special and Affirmative Defenses and the Compulsory Counterclaims set
forth below.
As
may be noted, Civil Case No. 99-1354 came after the proceedings in SEC Case No.
12-97-5850, and LRC Case No. M-3839 had finally been terminated. Be that as it
may, the answer in Civil Case No. 99-1354 diluted any admission, if there were
indeed admissions, made in the SEC and LRC cases and, as the CA put it,
“engenders a cloud of doubt as to the certainty of the facts as alleged.” Such
doubt should be resolved against the grant of the motion for summary judgment.[20] To
paraphrase what we said in Tan v. De la Vega,[21]
lower courts, when faced with a motion for summary judgment, should resolve
doubts in favor of the party against whom it is directed, giving such party the
benefit of all favorable inferences.
And
lest it be overlooked, the Manifestation[22] Duvaz
submitted in relation to LRC Case No. M-3839 was not a categorical admission of
absolute liability to DMCI, Duvaz, as it were, limiting itself to saying that
it has an account with DMCI in the amount of PhP 29,209,735.85.
DMCI’s
contention that the Makati City RTC’s order in LRC Case No. M-3839 is, under
the principle of res judicata,
conclusive as between it and Duvaz as regards the contractor’s claim for the
unpaid balance against Duvaz strikes the Court as a bit incredulous. LRC Case
No. M-3839, to stress, was an action to annotate a contractor’s lien, not a
collection suit where the purported debtor is expected to present its defenses
and counterclaims, if there be any, to defeat the suitor’s claim. At any rate,
the order adverted to cannot be accorded the force of res judicata
vis-à-vis the sum-of-money case at bench owing to the lack of identity of
rights asserted or causes of action and identity of relief sought.
Finally, Duvaz’s January 21, 1999 letter-reply
wherein it offered to settle its account with DMCI does not necessarily mean
that Duvaz had waived its right to question the principal amount of its
obligation. For one, the said letter does not contain a specific amount of how
much Duvaz owed DMCI. And for another, the phrase “WITHOUT PREJUDICE” was
written on the letter, suggesting the conditional or tentative nature of the
offer.
At any event, assuming arguendo
that the principal amount of the petitioner’s claim is now beyond question, its
plea for a summary judgment would still not be proper in the light of the
compulsory counterclaims that involve an even larger amount than the claim
stated in the underlying complaint. For perspective, the counterclaims are
premised mainly on consequential damages Duvaz suffered owing to DMCI’s
mal-execution of the construction works on the Peak which adversely
affected the prosecution of the Alfaro’s Peak project, such that
rectification works had to be undertaken, e.g., demolitions of abutments and
re-alignment of protruding/encroaching bars. The rectification process in turn
spawned other serious problems, such as cracks in the basement walls, water
leakage, and flooding of the several portions of the basement,[23]
not to mention the delay in the prosecution of the Alfaro Peak
project.
Ironically, DMCI’s attempt to depict
the counterclaims as sham even in the face of documents and exhibits lending prima facie support to Duvaz’s opposition
to the motion for summary judgment tends to raise more factual questions rather
than prove the absence of the counterclaims.
To be sure, the trial court did not find the counterclaims to be false
or contrived. We, too, are of a similar disposition.
DMCI’s argument that Duvaz’s counterclaims
have already prescribed––the defects’ liability periods for both project having
elapsed, i.e., in October 1998 for Alfaro’s Peak and 1994 for the Peak––does not convince us. Suffice it to
reiterate that one of Duvaz’s claim is: the poor rectification works done by DMCI
to address the abutments of the substructure of the Peak damaged the basement walls of the Peak, resulting in the worsening of the water seepage problem
already existing. In other words, Duvaz appears to seek, by way of
counterclaim, recovery not on the basis of the breach on the warranty against
hidden defects but rather damage caused by DMCI to Duvaz’s property in the
construction of another project. The expiration of the defects’ liability
periods for the two projects is immaterial to this claim of Duvaz.
With the parties’ conflicting
postures on, among others, the issues of estoppel, prescription, and DMCI’s
liability and Duvaz’s corollary right for damages arising from the alleged
mal-execution of the construction works, the only way to ascertain whose
position jibes with facts on the ground is obviously through the presentation
of evidence by the parties in a full blown trial on the merits. This is as it
should be for, as we indicated earlier, any doubt as to the propriety of the
rendition of a summary judgment must be resolved against it.[24]
With the tender of genuine issues before it, the RTC acted properly, and within
its sound discretion, in denying petitioner’s motion for summary judgment.
WHEREFORE, the instant petition is DENIED. The CA’s May 28, 2002 Decision and September 12, 2002 Resolution in
CA-G.R. SP No. 67126 are hereby AFFIRMED.
This case is accordingly REMANDED to
the trial court for trial on the merits.
Costs
against petitioner.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
Associate Justice Associate Justice
DIOSDADO M. PERALTA
Associate Justice
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.
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.
REYNATO
S. PUNO
Chief Justice
[1] Rollo, pp. 46-55. Penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Conchita Carpio Morales (now a member of this Court) and Mariano C. Del Castillo.
[2]
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[17] G.R. No. 120010, October 3, 2002, 390 SCRA 241, 249.
[18] G.R. No. 153827, April 25, 2006, 488 SCRA 192, 203.
[20] Excelsa Industries, Inc. v. Court of Appeals, G.R. No. 105455, August 23, 1995, 247 SCRA 560, 569.
[24] Regalado, Remedial Law Compendium, 399 (9th revised ed.)