Elpidio Uy v CA

Facts of the Case:

Bases Conversion Development Authority (BCDA), Pool Formation Trust Agreement (PFTA), PNB  and Public Estates Authority (PEA) entered into an agreement to implement the Heritage Memorial Park.  BCDA was the Project Owner and tasked to sell Heritage Park Investment Certificates to buyers. As trustee, PNB is given the legal and beneficial title to hold the certificates. The certificate holders organized themselves into a non-stock, non-profit corporation, Heritage Park Management Corp. (HPMC).

            Now, PEA and Uy’s business (Edison Dev’t and Construction) executed a Landscaping and Construction Agreement whereby the business will do all the landscaping and the construction of a terrasoleum. Since there was delay in the construction, the Heritage Park Executive Committee terminated the construction contracts so HPMC assumed all the duties and responsibilities of PEA.

Uy filed a complaint against PEA before the Construction Industry Arbitrary Commission (CIAC) where it sought to recover payments for the construction already done in the project.  The CIAC awarded monetary claims to Uy and a Notice of Garnishment was served on HPMC.

HPMC then filed a petition for Injunction/Prohibition before the CA on the ground that the CIAC had no jurisdiction since HPMC was not impleaded as a party in the case before CIAC. HPMC contended it is an indispensable party since it holds the certificates, any claim against PEA is a claim against all parties who contributed funds to the project.  Uy’s contention is that HPMC is not a party-in-interest since it was only a mere trustee of the funds and would not be directly benefited or injured by the outcome of the case.

Issue:

            Whether or not HPMC is a real party-in-interest or an indispensable party.

Held:

            Indispensable party.  An indispensable party is one whose interest will be affected by court’s action in litigation and without whom there can be no final determination of the case. A party’s interest in the subject matter and in the relief sought are so intertwined that his legal presence as a party to the proceeding is an absolute necessity.

            According to the provisions of PFTA, PEA would turn over to HPMC all the contracts relating to Heritage Park. At the time of the filing of the CIAC case, PEA already assigned its interests to HPMC and therefore, no longer a party-in-interest. HPMC now stands to be benefited/injured in the suit. Since HPMC was not impleaded, there cannot be an effective, complete and equitable resolution of the dispute.

Notes on indispensable parties:

*Does CIAC have jurisdiction? YES. Both parties agree to submit the dispute for arbitration. However, CIAC should’ve dismissed the case on the grounds that HPMC was not impleaded. Indispensable parties must be joined as either plaintiffs or defendants. When they are not joined, it is the duty of the court to stop trial and order its inclusion.

*The responsibility of impleading all the indispensable parties lies on the plaintiff. Defendant has no tight to compel.