Case Summary (G.R. No. 221624)
Key Dates
Contract Execution: 26 March 1996
Completion of Construction: 27 November 1996
Incorporation of Win Multi-Rich Builders, Inc.: 20 February 1997
Filing of Money-Claim Suit and Attachment: 26 January 2004
Applicable Law
1987 Philippine Constitution (judicial power, access to courts)
Rule 3, Section 2, Rules of Court (Real Party in Interest)
Executive Order No. 1008 (Creation of Construction Industry Arbitration Commission – CIAC)
Republic Act No. 9285 (Alternative Dispute Resolution Act of 2004)
Facts of the Contract
On 26 March 1996, Excellent Quality Apparel, Inc. and Multi-Rich Builders (a sole proprietorship then owned by Mr. Chua) entered into a construction contract for a garment factory at CPEZA, to be completed within 150 calendar days. Article XIX provided for binding arbitration before a three-member Arbitration Committee under Republic Act No. 876.
Incorporation and Standing of Respondent
After project completion, Wilson G. Chua incorporated Win Multi-Rich Builders, Inc. on 20 February 1997. In January 2004, Win sued Excellent Quality for ₱8,634,448.20, claiming unpaid obligations under the contract.
Filing of Suit and Attachment Proceedings
Win obtained a writ of attachment against petitioner’s properties on 10 February 2004, posting a surety bond. Sheriff’s attempted service prompted petitioner to deposit a PCIBank check for the disputed amount as guarantee. Petitioner filed an omnibus motion denying liability and challenging RTC jurisdiction based on the arbitration clause.
Challenges to Jurisdiction and Standing
Petitioner discovered that the contract was originally with a sole proprietorship, not the corporation. It moved to dismiss Win’s suit for lack of legal personality and jurisdiction. RTC denied these motions, and Win secured release of the garnished funds from the court.
Analysis of Real Party in Interest under Rule 3, Section 2
• A sole proprietorship lacks separate juridical personality and cannot sue or be sued in its own name.
• Win admitted that Multi-Rich Builders was a sole proprietorship at contract execution and produced no deed of assignment or evidence of asset/liability transfer.
• Without proof of succession, Win could not stand in the shoes of its predecessor to enforce the receivables.
Arbitration Clause and Exclusive CIAC Jurisdiction
• The contract’s arbitration clause and E.O. 1008 vest original and exclusive jurisdiction in CIAC over construction disputes, regardless of monetary or non-monetary nature.
• Under RA 9285, an RTC must dismiss a constru
Case Syllabus (G.R. No. 221624)
Overview
- Petition under Rule 45 seeking reversal of Court of Appeals Decision and Resolution in CA-G.R. SP No. 84640.
- Court of Appeals had annulled two orders of the RTC, Branch 32, Manila, in Civil Case No. 04-108940.
- Underlying dispute: claim for P8,634,448.20 based on unpaid obligations under a construction contract.
Facts of the Case
- March 26, 1996: Excellent Quality Apparel, Inc. (petitioner) entered into a contract with Multi-Rich Builders (sole proprietorship), represented by Wilson G. Chua, for a garment factory in Cavite PEZA.
- Contract duration: maximum of five months (150 consecutive calendar days).
- Factory construction completed on November 27, 1996.
- February 20, 1997: Win Multi-Rich Builders, Inc. incorporated under the SEC, with Chua as President.
Contractual Agreement and Arbitration Clause
- Contract included an arbitration clause (Article XIX):
- Disputes unresolved by parties submitted to a three-member Arbitration Committee.
- One member chosen by each party; chairman chosen by the two members.
- Committee decision final and binding.
- Arbitration governed by RA 876.
- Costs borne equally by owner and contractor.
Incorporation of Win Multi-Rich and Filing of Complaint
- January 26, 2004: Win filed complaint for P8,634,448.20 against petitioner and Mr. Ying, praying for writ of attachment.
- Allegations: Mr. Ying about to abscond; petitioner about to close.
- Win posted a surety bond; RTC issued writ of attachment on February 10, 2004.
RTC Proceedings: Attachment and Challenges
- February 16, 2004: Sheriff served writ, summons, complaint; petitioner issued check for P8,634,448.20 as guarantee.
- Peti