Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164517 June 30, 2008
BF CORPORATION, petitioner,
vs.
MANILA INTERNATIONAL AIRPORT AUTHORITY, respondent.
D E C I S I O N
VELASCO, JR., J.:
In this petition for review under Rule 45, petitioner BF Corporation (BF) assails the Decision of the Court of Appeals (CA) that disallowed BF to re-implead the Manila International Airport Authority (MIAA) as a party-defendant in Civil Case No. 66060 entitled BF Corporation v. Tokyu Construction Co., Ltd., Mitsubishi Corporation, A.M. Oreta & Co., Inc., and Manila International Airport Authority.
Mitsubishi Corporation (Mitsubishi), Tokyu Construction Co., Ltd. (Tokyu), A.M. Oreta & Co., Inc. (Oreta), and BF formed themselves into the MTOB Consortium (Consortium) to participate in the bidding for the construction of the Ninoy Aquino International Airport Terminal II (NAIA II) Project. MIAA awarded the contract to the Consortium, recognizing that the Consortium was a distinct and separate entity from the four member corporations.
Unfortunately, the four members had serious business differences, including the division of the contract price, forcing BF to file on January 10, 1997, with the Regional Trial Court (RTC) in Pasig City, an action for Specific Performance, Rescission, and Damages with application for a Temporary Restraining Order (TRO), docketed as Civil Case No. 66060. BF alleged in its complaint that Tokyu and Mitsubishi invited BF to form a consortium for the NAIA II Project and after the members of the Consortium reached an agreement couched in general terms, for the purpose of prequalification bidding, Tokyu allegedly refused to execute a final consortium agreement; unreasonably demanded that BF reduce its asking prices for its assigned work; engaged the services of other subcontractors to do BF’s portion of the project; and refused to remit to BF its 20% share of the down payment, thereby easing out BF in the project in breach of the Consortium agreement. BF prayed that Tokyu be enjoined from further (1) receiving any payment from MIAA for illegally executing BF’s portion of the work in the project; (2) engaging the services of other subcontractors to do BF’s portion of the project; (3) acting as lead partner of the Consortium; and (4) compelling BF to reduce its prices. BF also prayed that MIAA be enjoined from directly paying Tokyu the collectible compensation vis-à-vis Tokyu’s illegal execution of BF’s portion in the project.1
The RTC served a TRO on Tokyu, the lead partner of the Consortium. During the hearing on the preliminary injunction, MIAA stressed its position that it should not be dragged into the dispute since it was a consortium internal matter. Thereafter, in an amended complaint, BF dropped MIAA as a party-defendant.
When the RTC issued the Order dated January 21, 1997 extending the TRO, Tokyu filed with the CA a Petition for Certiorari and Prohibition with prayer for a writ of preliminary injunction docketed as CA-G.R. SP No. 43133. Tokyu contended that the order violated (1) Presidential Decree No. 1818 prohibiting any court in the Philippines from issuing any restraining order, preliminary injunction, or preliminary mandatory injunction on any case, dispute, or controversy involving an infrastructure project; and (2) Supreme Court Circular No. 68-94 disallowing issuance of TROs in cases involving government infrastructure projects to obviate complaints against indiscriminate issuance of TROs.
On May 15, 1997, the CA dismissed the petition and ordered the trial court to continue hearing the main case. With respect to MIAA’s right to intervene, the CA stressed that MIAA was no longer a party-defendant since it had been dropped from the complaint by BF and, therefore, no relief may be had from MIAA. The CA explained that MIAA had nothing to do with whatever BF alleges were violations of the Consortium agreement by Tokyu because these were intra-consortium matters.2 The CA also said it was convinced that "MIAA had no actual, direct and immediate interest" in CA-G.R. SP No. 43133.
The CA denied the motion for reconsideration and the RTC proceeded with the case subsequently issuing the Order dated July 8, 1997, which ordered Tokyu to: (1) retrieve its deposit in Japan and make it available in the Philippines for the prompt execution of the project; (2) remit to BF its 20% share in the down payment and its share in the subsequent payments made by MIAA; and (3) allow BF to execute its portion of the work in the project by terminating the services of the subcontractors.3
Tokyu filed before the CA a Petition for Certiorari with urgent prayer for a TRO and preliminary injunction docketed as CA-G.R. SP No. 44729. On October 20, 1997, the Special Seventh Division of the CA granted Tokyu’s petition and annulled the RTC’s Order dated July 8, 1997.
On November 26, 1999, when the project was nearing completion, BF filed a second amended complaint. In it, BF pleaded causes of action against Tokyu, Mitsubushi, and Oreta which have all submitted themselves to the jurisdiction of the court, and also MIAA who had possession of money to be paid to Tokyu. BF claimed it was entitled to a proportionate share of the money based on the Consortium agreement. Thus, BF asked that MIAA be re-impleaded as a party-defendant so it could obtain complete relief.4
In an Order dated May 24, 2001, the RTC directed that MIAA be re-impleaded as a party-defendant in Civil Case No. 66060. It said that BF’s earlier move to drop MIAA as a party-defendant should not preclude it from re-impleading MIAA which still has the obligation to pay the remainder of the contract price. The dispositive portion of the order reads:
WHEREFORE, the order of this Court dated February 23, 2001 is hereby reconsidered insofar as it ordered the dismissal of this case as against MIAA which is hereby restored and re-impleaded as a party defendant.
SO ORDERED.
The motion for reconsideration was denied in an Order dated September 13, 2001.5 MIAA appealed to the CA alleging grave abuse of discretion on the part of the RTC when it ordered MIAA to be re-impleaded as a party-defendant. The petition was docketed as CA-G.R. SP No. 67765.
In a Decision dated January 9, 2004,6 the CA granted MIAA’s petition and annulled and set aside the May 24, 2001 and September 13, 2001 Orders in Civil Case No. 66060. The CA said that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it issued the orders. According to the CA, MIAA’s refusal to be a part of the internal squabble among members of the Consortium was not an "act or omission" that gave BF a cause of action. MIAA had not in any way violated any right of BF. The CA commented that an interference by MIAA in the Consortium quarrel could even expose MIAA to a suit by the other members of the Consortium. The CA stressed that MIAA had in fact earlier recognized the Consortium as a distinct and separate personality from its members. As far as MIAA was concerned, the CA concluded that BF was a stranger to the contract between MIAA and the Consortium, and if BF’s interest was its right to a portion of the contract price, its proper recourse was to first secure an assignment of its proportionate rights from the Consortium.
The CA also pointed out that BF was estopped from treating MIAA as a necessary party, because when it dropped MIAA as a party in its amended complaint without stating why it did, BF implicitly admitted that MIAA was not a necessary party.
The CA also ruled that res judicata had set in when the CA denied a reconsideration of the Decision in CA-G.R. SP No. 43133 and said decision was not appealed. Recall that in the said decision, the CA Fourteenth Division stressed that MIAA was no longer a party-defendant since it had been dropped by BF and, therefore, no relief may be had from MIAA; that the case was not a matter in rem but can only give rise to a judgment in personam; that the CA was convinced MIAA had no actual, direct, and immediate interest in the dispute since the dispute was intra-corporate; and that MIAA had nothing to do with BF’s complaint against Tokyu.7 The CA added that since the issue with respect to MIAA was not appealed, the said decision had become final and another case on the same issue had been barred by res judicata.
The CA also noted that when MIAA was allowed to intervene in the aforementioned case, the RTC had acquired jurisdiction over MIAA; thus, there was identity of parties between CA-G.R. SP No. 43133 and CA-G.R. SP No. 67765. According to the CA, although the subject matter of CA-G.R. SP No. 43133 was the propriety of the grant of the TRO enjoining Tokyu from receiving any amount from MIAA and the subject matter in CA-G.R. SP No. 67765 was the propriety in including MIAA as a party-defendant in Civil Case No. 66060, both cases involved the issue of whether or not MIAA was a proper party-defendant in Civil Case No. 66060. Thus, the CA concluded that the elements of res judicata were present.
The motion for reconsideration was denied by the CA; hence, BF filed this petition raising the following as issues:
I.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT BF HAS NO CAUSE OF ACTION AGAINST MIAA AS, IN FACT, BF’S SECOND AMENDED COMPLAINT STATES A CAUSE OF ACTION AGAINST MIAA.
II.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT BF IS ESTOPPED FROM IMPLEADING MIAA IN THE CASE.
III.
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT BF IS BARRED UNDER THE DOCTRINE OF RES JUDICATA FROM IMPLEADING MIAA IN THE MAIN CASE.
The appellate court had correctly granted the petition of MIAA.
In this petition before us, BF would have us believe that it dropped MIAA as a party-defendant in its first amended complaint because its cause of action against MIAA was not yet ripe.8 It said that it re-impleaded MIAA in the second amended complaint because of the impending release of the final payment and the retention money to Tokyu. And if the project were completed and full payment were given to the Consortium, BF could no longer get its supposed share in the payments.
The ultimate facts, as alleged by BF, that are the bases of its cause of action against MIAA, are found on items 2.18 to 2.21 of BF’s second amended complaint, as follows :
2.18 To protect its rights and interests, BF, through counsel, wrote MIAA calling its attention to the contract violations committed by TOKYU in bad faith, and requesting its intervention to see an early end to the dispute. More specifically, BF requested MIAA to:
1. Persuade TOKYU to remit to us our rightful 20% share in the downpayment of the Project;
2. Enjoin TOKYU’s unauthorized and illegally hired subcontractors from executing BF’s portion of the NAIA II project;
3. Directly remit to us our 20% share in the subsequent payments to be made under the construction contract; and
4. Should TOKYU stubbornly refuse to heed any of the above, expel TOKYU from the consortium and let BF, MITSUBISHI and ORETA take over the entire project.
x x x x
2.19 Later, BF, through counsel, wrote TOKYU revoking [its] authority as lead partner to represent BF in dealing with MIAA in connection with the execution of the Project x x x.
2.20 Despite the revocation made by BF and its request for MIAA to resolve the dispute, TOKYU continued to act as the lead partner and has in fact taken its role to the extreme by hiring other subcontractors to do BF’s portion of the work. On the other hand, MIAA has opted to take a nonchalant hands-off policy, choosing to ignore TOKYU’s bullying tactics and iniquitous actions by even awarding the latter with prompt payments of the contract price. Worse, in coddling and protecting TOKYU despite its illegal acts, MIAA has allowed this foreign country to unduly profit from this centerpiece project and stash away the Philippine money it has collected in commercial banks in Japan.
2.21 Further, as a result of MIAA’s inaction, the Project is now complete with TOKYU ready and raring to collect the remainder of the contract price from MIAA, including the 10% retention money being held by MIAA and now ready to be released after the Project had been completed.9 (Emphasis supplied.)
On the bases of these allegations, we can hardly rule that BF has a cause of action against MIAA.
Section 2, Rule 2 of the Rules of Court defines "cause of action" as an act or omission by which one party violates a right of another. It has three elements: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the right of the plaintiff, and (3) a breach of the defendant’s duty.10
A close reading of the aforecited portions of the second amended complaint discloses that the rights of BF that have allegedly been violated are those contained in the Consortium agreement. A scrutiny of the agreement, however, would readily show that there is nothing in it that would constitute acts or omissions of MIAA that violate BF’s rights. Even if BF wrote MIAA and called the latter’s attention to the contract violations of Tokyu and asked MIAA to persuade Tokyu to remit to BF its 20% share in the down payment; enjoin Tokyu from illegally hiring subcontractors to do BF’s part of the project; and expel Tokyu from the Consortium, these facts are insufficient to constitute the bases of BF’s cause of action against MIAA. The test of sufficiency of the facts alleged in the complaint as constituting a cause of action is whether or not admitting the facts alleged; the court could render a valid verdict in accordance with the prayer of the complaint.11 Even if we assume that the facts alleged were true, we still cannot grant any of BF’s prayers against MIAA as we would have no basis to do so in fact and in law.
The best evidence to show whether or not BF has a cause of action against MIAA is the contract/agreement itself. The Agreement12 awarding the NAIA II Project to the Consortium was between MIAA and the Consortium, as contractor, represented by the Consortium’s project manager. BF was not a party to the Agreement. From the very start, MIAA had categorically said it recognized the Consortium as a distinct and separate entity.
The Agreement laid down all the rights and obligations of MIAA to the Consortium and vice-versa, and as aptly pointed out by MIAA, payment to BF was not among them. The Agreement does not say that MIAA shall withhold payment in the event that a dispute arises amongst the members of the Consortium. Neither does the contract require MIAA to mediate in any intra-consortium dispute that may arise within the Consortium. The primary obligation of MIAA is found in Article III of the Agreement which stipulates that "MIAA agrees to pay the CONTRACTOR the Contract Price x x x in the manner prescribed by the Contract." Note that the CONTRACTOR refers to the Consortium not to the individual members of the Consortium. BF by itself is not a party to the Agreement. If MIAA is prevented from making payments to the Consortium, MIAA will be considered in breach of the Agreement. Verily, a preliminary prohibitory injunction, enjoining MIAA from releasing to Tokyu the remainder of the contract price owing to the Consortium or any amount for that matter, including the 10% retention fee now ready for release after the project had been completed, cannot be validly issued. If BF wants its share in what was yet due to the Consortium, BF’s recourse is against the Consortium. It can present to MIAA an assignment of its alleged rights from the Consortium. Impleading MIAA is not the remedy to enable BF to collect its share in the NAIA II Project of the Consortium. In short, MIAA cannot be ordered to be a collecting agent for BF.
To sum up, none of the elements required in Sec. 2, Rule 2 of the Rules of Court that constitute a cause of action are present in this case. BF cannot ask MIAA to persuade Tokyu to remit to BF its 20% share in the down payment; cannot enjoin Tokyu from hiring subcontractors to do BF’s part of the project; and cannot expel Tokyu from the Consortium. MIAA is a stranger to the Consortium agreement among Tokyu, Mitsubishi, Oreta, and BF. Under both the Consortium agreement and the Agreement between MIAA and the Consortium, MIAA has no obligation to have the terms of the Consortium agreement enforced, MIAA not being privy to it. Lastly, BF even admits that the Consortium agreement does not embody any specific agreement between the parties as the agreement amongst them was couched in general terms. In fact, the only clear agreement among the members was that Tokyu is the appointed lead partner.
As to the issue of estoppel, we agree with the CA that BF is now estopped from re-impleading MIAA. While the Rules allow amendments to pleadings by leave of court, in our view, in this case, it would be an affront to the judicial process to first include a party as defendant, then voluntarily drop the party off from the complaint, only to ask that it be re-impleaded. When BF dropped MIAA as defendant in its first amended complaint, it had performed an affirmative act upon which MIAA based its subsequent actions, e.g. payments to Tokyu, on the faith that there was no cause of action against it, and so on. BF cannot now deny that it led MIAA to believe BF had no cause of action against it only to make a complete turn-about and renege on the effects of dropping MIAA as a party-defendant months after, to the prejudice of MIAA. MIAA had all reasons to rely on the CA’s decision that it was no longer a party to the suit. Under the doctrine of estoppel, an admission or representation is conclusive on the person making it and cannot be denied or disproved as against the person relying on it.13 A person, who by deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude, or course of conduct that thereby causes loss or injury to another.14
Finally, we tackle the issue of res judicata. Did the decision in CA-G.R. SP No. 43133 constitute a bar to CA-G.R. SP No. 67765? For res judicata to exist, the following elements must be present: (1) the judgment must be final; (2) the court that rendered judgment must have jurisdiction over the parties and the subject matter; (3) it must be a judgment on the merits; and (4) there must be between the first and second actions identity of parties, subject matter, and cause of action. There is no dispute on the presence of the first three elements enumerated above. However, the same cannot be said regarding the last element. As BF has correctly pointed out, CA-G.R. SP No. 43133 was filed by Tokyu against the trial judge and BF, while CA-G.R. SP No. 67765 was filed by MIAA in which Tokyu is not even a party. It is also apparent that the subject matter in CA-G.R. SP No. 43133 was the propriety of the TRO granted by the RTC, and the subject matter in CA-G.R. SP No. 67765 is the propriety of including MIAA as a party-defendant in Civil Case No. 66060. While it may be true that both cases touched on MIAA as a party-defendant, we are unable to say that the subject matters of CA-G.R. SP No. 43133 and CA-G.R. SP No. 67765 are identical. As to the cause of action, CA-G.R. SP No. 43133 is the off-shoot of the alleged abuse of discretion of the trial judge in issuing the TRO, while CA-G.R. SP No. 67765 is the result of the alleged grave abuse of discretion of the trial court judge in allowing MIAA to be re-impleaded as a party-defendant. Lacking the identity of parties, subject matter, and cause of action, the doctrine of res judicata is inapplicable. This, however, should not detract from the fact that the CA was correct in granting the petition.
WHEREFORE, we DENY this petition and AFFIRM the CA’s Decision dated January 9, 2004 and Resolution dated July 13, 2004 in CA-G.R. SP No. 67765.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson |
CONCHITA CARPIO MORALES
Associate Justice |
DANTE O. TINGA
Associate Justice |
ARTURO D. BRION
Associate Justice |
ATTESTATION
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.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1 Rollo, p. 2.
2 Id. at 186.
3 Id.
4 Id. at 185.
5 Id. at 369.
6 Id. at 10-17. Penned by Associate Justice Sergio L. Pestaño and concurred in by Associate Justices Marina L. Buzon and Jose C. Mendoza.
7 Id. at 186.
8 Id. at 30.
9 Id. at 437-438.
10 Luzon Development Bank v. Conquilla, G.R. No. 163338, September 21, 2005, 470 SCRA 533, 546.
11 Misamis Occidental II Cooperative, Inc. v. David, G.R. No. 129928, August 25, 2005, 468 SCRA 63, 72.
12 Rollo, pp. 113-131.
13 Luzon Development Bank v. Angeles, G.R. No. 150393, July 31, 2006, 497 SCRA 264, 270.
14 Caldo v. Caldo-Atienza, G.R. No. 164453, March 28, 2006, 485 SCRA 504, 511; citing Cruz v. Court of Appeals, 354 Phil. 1036, 1054 (1998).
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