Narra Integrated Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Narra Integrated Corporation (petitioner) contracted with NC Industrial Trade, Inc. (private respondent) for the supply of manpower and materials for three projects: electrical power distribution system, piping installation for waste water treatment plant equipment, and fabrication, delivery, and installation of catwalk railings and ladder. The total agreed consideration for these projects was P6,513,586.93. Private respondent issued several sales invoices for these undertakings. Petitioner failed to pay a balance of P1,485,776.93, prompting private respondent to send a demand letter. Private respondent subsequently filed a complaint for a sum of money and damages. Procedural History: Petitioner, in its answer, alleged that it hired private respondent as a subcontractor and that payments were subject to progress payments from the project owner, Kyung-Il Philippines, Inc. (Kyung-Il). Petitioner claimed Kyung-Il had not paid due to alleged defects in the work, including those done by private respondent, and that private respondent was aware of this situation and had agreed to allow petitioner to pursue payment from Kyung-Il first. Petitioner filed a third-party complaint against Kyung-Il for indemnity or contribution. The trial court initially dismissed the third-party complaint but later reinstated it. Private respondent filed a motion for summary judgment, arguing that petitioner's answer did not raise genuine issues. The trial court granted the motion and rendered a partial decision in favor of private respondent. The Court of Appeals affirmed the trial court's decision, and the subsequent motion for reconsideration was denied. Petitioner appealed to the Supreme Court. The Petition: Petitioner argued that the Court of Appeals erred in affirming the summary judgment, claiming that its answer raised genuine issues necessitating a trial and that the summary judgment was prematurely rendered without awaiting the outcome of the third-party complaint.
Issue(s)
Whether the issues raised in petitioner's answer were genuine or sham, thus justifying a summary judgment. Whether the pendency of a third-party complaint against the project owner warranted deferring the rendition of a summary judgment in the principal action.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, upholding the validity of the summary judgment. The petition was denied for lack of merit.
Ratio Decidendi
On the issue of genuine issues justifying summary judgment: The Court held that while petitioner's answer appeared to tender issues on its face, these issues were found to be sham or fictitious. Petitioner's defense that its payment to private respondent was contingent on payments from the project owner, Kyung-Il, was deemed an unjustified reason for non-payment. The Court noted that petitioner's own General Manager admitted in an affidavit that the project was fully completed and Kyung-Il had been in operation since May 1992, implying acceptance of the work done by private respondent. The contract provision regarding acceptance by the General Contractor (petitioner) was satisfied by this completion and turnover. Furthermore, the contract provision regarding the project owner's acceptance for the release of retention pay was deemed irrelevant to the principal contract between petitioner and private respondent, as it only concerned the release of retention and required an affidavit from private respondent regarding employee wages, which had been submitted. The Court reiterated that a summary judgment is proper when issues apparently exist but are shown to be sham or not genuine, based on pleadings, admissions, affidavits, and documents. On the issue of the pending third-party complaint: The Court ruled that the pendency of a third-party complaint does not necessarily preclude the rendition of a summary judgment in the principal action. Citing Philippine National Bank vs. Utility Assurance and Surety Co., the Court explained that a third-party complaint is for the purpose of obtaining contribution, indemnity, subrogation, or other relief from a party not originally involved, and it can proceed separately from the main action. In this case, private respondent was not interested in the outcome of the third-party complaint filed by petitioner against Kyung-Il, as the contracts forming the basis of the third-party complaint were solely between petitioner and Kyung-Il, with no mention of private respondent. Therefore, there was no reason for the trial court to defer rendering a summary judgment until the resolution of the third-party complaint.
Main Doctrine
A summary judgment may be rendered even if the answer appears to tender issues, provided that such issues are shown to be sham, fictitious, or not genuine, as supported by affidavits, depositions, or admissions. A pending third-party complaint does not necessarily preclude the rendition of a summary judgment in the principal action.