D.M. Consunji v. Duvaz
REITERATIONFacts
The Antecedents: D.M. Consunji, Inc. (DMCI) and Duvaz Corporation (Duvaz) entered into a construction contract for the substructure of the Alfaro's Peak building. DMCI was also the general contractor for the adjacent condominium building, The Peak. After the completion of the Alfaro's Peak project, DMCI claimed an unpaid balance. Duvaz filed for suspension of payments with the SEC, listing DMCI as a creditor. DMCI filed a petition for annotation of a contractor's lien on Duvaz's property, which was granted by the RTC. Duvaz later withdrew its SEC petition, prompting DMCI to demand payment. Duvaz proposed a payment plan, which DMCI found unacceptable. DMCI then filed a collection suit for PhP 38,765,956.53. Duvaz denied the claim and filed counterclaims alleging serious defects in the construction of both The Peak and Alfaro's Peak projects, seeking damages for rectification works and other costs. Procedural History: DMCI moved for summary judgment, arguing Duvaz's counterclaims had prescribed. The RTC denied the motion, opting for a full-blown trial to determine issues of estoppel and warranty against hidden defects. The CA affirmed the RTC's denial of the motion for summary judgment. The Petition: DMCI filed a petition for certiorari with the Supreme Court, assailing the CA's dismissal of its petition and the RTC's denial of summary judgment, arguing that its principal claim was admitted or settled by res judicata, and that Duvaz's defenses/counterclaims were sham or unsubstantial.
Issue(s)
Whether the RTC and CA committed grave abuse of discretion in denying DMCI's motion for summary judgment. Whether DMCI's principal claim against Duvaz is admitted or settled by res judicata. Whether Duvaz's defenses and counterclaims are sham, fictitious, unsubstantial, or contrived. Whether DMCI is liable for defects, assuming any exist, under the law and contract.
Ruling
The Supreme Court denied the petition, affirming the CA's decision which upheld the RTC's denial of the motion for summary judgment. The Court ruled that genuine issues of fact exist, necessitating a full-blown trial.
Ratio Decidendi
On the propriety of summary judgment: The Court reiterated that summary judgment is proper only when there is no genuine issue as to any material fact, except for the amount of damages, and the moving party is entitled to a judgment as a matter of law. In this case, genuine issues of fact were found to exist. Duvaz's Answer in Civil Case No. 99-1354 contained a specific denial of DMCI's claim, diluting any alleged admissions made in prior proceedings. The Court emphasized that doubts as to the propriety of summary judgment should be resolved in favor of the party against whom it is directed. The existence of compulsory counterclaims, involving a larger amount and premised on alleged consequential damages due to DMCI's mal-execution of construction works, further precluded summary judgment. The Court found that these counterclaims raised factual questions requiring presentation of evidence. The argument that the counterclaims had prescribed was also rejected, as one claim pertained to damages caused by rectification works, distinct from the warranty against hidden defects. On DMCI's principal claim and estoppel: The Court found DMCI's posture on estoppel untenable. Duvaz's Answer specifically denied the amount claimed by DMCI, contrary to DMCI's assertion of admission. The Court noted that the Manifestation in the LRC case, where Duvaz admitted an account with DMCI, limited the admission to a specific amount and did not constitute an absolute admission of liability for the entire claim. The Court also found the contention that the RTC's order in the contractor's lien case (LRC Case No. M-3839) was res judicata to be incredulous, as that case was for annotation of a lien, not a collection suit where defenses and counterclaims are fully ventilated. Furthermore, the Court found no identity of rights asserted or causes of action and relief sought to support res judicata. Duvaz's settlement offer letter was also deemed not a waiver of its right to question the principal amount, especially since it was made "WITHOUT PREJUDICE" and did not specify an exact amount. On Duvaz's counterclaims: The Court found that Duvaz's counterclaims were not sham or contrived, as they were supported by documents and exhibits. The claim that DMCI's poor rectification works damaged Duvaz's property (The Peak) and worsened existing problems like water seepage raised factual issues that required a full-blown trial. The Court clarified that this claim was not based on breach of warranty against hidden defects but on damages caused by DMCI to Duvaz's property during the construction of another project, making the expiration of defects' liability periods immaterial to this specific counterclaim. The conflicting postures on estoppel, prescription, DMCI's liability, and Duvaz's right to damages necessitated a trial on the merits. On DMCI's liability for defects: The Court's finding that Duvaz's counterclaims regarding damages caused by rectification works were not based on breach of warranty against hidden defects implies that the expiration of defects' liability periods is immaterial to this specific counterclaim. However, the Court did not explicitly rule on DMCI's liability for defects, assuming any exist, under the law and contract, as this issue would require a trial on the merits to determine the extent and nature of any defects and DMCI's corresponding liability.
Main Doctrine
Summary judgment is not proper when genuine issues of fact exist, particularly when compulsory counterclaims involve substantial amounts and raise factual disputes requiring presentation of evidence.