G.R. No. 103585 - National Electrification Administration vs. Court of Appeals

Case Summary (G.R. No. 103585)

Factual Background

On March 8, 1985, CONSAPHIL filed a complaint with the RTC of Quezon City, Branch 98, seeking to collect a sum of money plus damages from ECCO-ASIA under a Sub-Contract Work Agreement. CONSAPHIL impleaded PANELCO and NEA, asserting that PANELCO was the ultimate beneficiary of the construction project and that NEA acted as the manager and holder of funds loaned by PANELCO from foreign sources. CONSAPHIL further alleged that NEA held unreleased ten percent (10%) retention money purportedly held to guarantee payment of all claims against ECCO-ASIA.

On August 22, 1986, the RTC issued a Writ of Preliminary Injunction, enjoining NEA from releasing the 10% retention money and other funds of ECCO-ASIA in the amount of P1.2 million. In a motion dated September 11, 1986, CONSAPHIL asked that NEA be ordered to deposit the P1.2 million with the Philippine National Bank (PNB), Philippine Heart Center for Asia (PHCA) Branch, but the trial court denied the motion in an order dated December 4, 1986. On March 3, 1987, however, the RTC reconsidered and directed the deposit of P1.2 million with the PNB, PHCA Branch.

Thereafter, CONSAPHIL served a Request for Admission dated January 28, 1987, seeking admission of several matters, including that “the retained money belonging to [ECCO-ASIA] held by [NEA] amounts to P1,390,789.40.” NEA responded to a subsequent Request for Admission dated March 6, 1987, and it admitted the quoted allegation.

Trial Court Actions, Deposit, and Approval of Compromise

On August 6, 1990, the trial court dismissed the complaint against PANELCO and NEA. At the same time, it required NEA to surrender to the court the physical and legal custody of the P1.2 million deposit at PNB, PHCA Branch, to be placed under the court’s name. Petitioner later sought reconsideration, invoking the argument that dismissal against NEA automatically lifted the preliminary injunction over its P1.2 million deposit, citing Golez vs. Leonidas. On October 5, 1990, the trial court rendered judgment approving the compromise agreement between the remaining parties, CONSAPHIL and ECCO-ASIA.

Following that approval, on October 17, 1990, the trial court issued a writ of execution against the P1.2 million deposit. On October 24, 1990, NEA filed a Motion to quash Writ of Execution, arguing that the dismissal against NEA automatically lifted the preliminary injunction and that there had been no judicial trial determining that the P1.2 million belonged to ECCO-ASIA. Despite these arguments, the sheriff executed against the P1.2 million deposit.

Appellate and Certiorari Proceedings

On December 3, 1991, NEA filed a civil action for certiorari under Rule 65 before the Court of Appeals. The Court of Appeals dismissed the petition in a decision dated January 14, 1992. NEA then filed the present petition before the Supreme Court, assigning four errors: first, that NEA supposedly had a right of appeal from the RTC’s orders dated August 6, 1990 and May 29, 1991 and should not be barred from certiorari; second, that the trial court’s October 5, 1990 decision approving a compromise agreement should not operate as res judicata against NEA’s Rule 65 petition; third, that NEA had not admitted that the P1.2 million belonged to ECCO-ASIA; and fourth, that the trial court lacked jurisdiction over NEA’s P1.2 million because the preliminary injunction had been automatically lifted upon NEA’s dismissal under Golez vs. Leonidas.

Ruling of the Court of Appeals

The Court of Appeals held that the RTC’s orders ordering NEA to surrender the P1.2 million deposit and the subsequent order denying the motion to quash writ of execution had become final and executory because NEA did not pursue the available appeal. It ruled that the issues could no longer be relitigated and that certiorari under Rule 65 could not be used as a substitute for a lost appeal, citing Mercado vs. CA, Dela Cruz vs. IAC, Balagtas Realty Corporation vs. Romillo, Jr., and Lobete vs. Sundiam, as well as Bell Carpets International Trading Corporation vs. Court of Appeals.

The Court of Appeals also sustained the RTC’s approach that the compromise agreement, once approved by the court, could not be disturbed absent vitiating factors such as fraud or forgery, and it further found that NEA’s allegations and admissions bound it as to the ownership of the retained money deposited with PNB, PHCA Branch.

Issues for the Supreme Court

The Supreme Court framed the core questions around whether NEA’s Rule 65 petition was barred by finality and procedural doctrine for failure to appeal, whether the trial court’s approval of a compromise agreement created res judicata against NEA, whether NEA’s admissions established ownership of the retained money in favor of ECCO-ASIA, and whether the RTC had jurisdiction to proceed against NEA’s deposited funds after NEA’s dismissal, considering NEA’s reliance on Golez vs. Leonidas.

Legal Basis and Reasoning

On the procedural barrier, the Supreme Court agreed with the Court of Appeals that NEA should have timely disputed the RTC’s challenged acts through a timely appeal. The Court noted that once the RTC orders became final and executory—because NEA did not appeal—NEA could not relitigate the issues through another proceeding, even by way of certiorari under Rule 65. The Court emphasized the settled rule that certiorari cannot be used as a substitute for a lost appeal, highlighting that the availability of the right of appeal is antithetical to the availment of certiorari.

On the argument that the RTC’s October 5, 1990 decision approving a compromise agreement should not create res judicata, the Supreme Court ruled that a compromise agreement, once approved by the court, cannot and should not be disturbed except for vices of consent or forgery. It held that NEA failed to show that the compromise agreement entered into by CONSAPHIL and ECCO-ASIA was vitiated by fraud and forgery. The Court treated res judicata as anchored on the principle that parties should not be permitted to litigate the same issue more than once.

On the evidentiary point, the Supreme Court held that NEA’s judicial admission bound it. It underscored that NEA admitted, in response to the request for admission, that the retained money belonging to ECCO-ASIA held by NEA amounted to P1,390,789.40, and that NEA also admitted allegations in its answer to the complaint regarding possession of the 10% retention money restrained to guarantee payment of claims against ECCO-ASIA. The Court referenced Section 4 of Rule 129 of the Rules of Court, which provides that an admission made in the course of proceedings in the same case does not require proof and may be contradicted only by showing palpable mistake or that no such admission was made. In the absence of compelling reasons, the Court treated the admission on ownership as binding on NEA.

Finally, the Supreme Court rejected NEA’s reliance on Golez vs. Leonidas. It reasoned that the cited case pertained to the lifting of a writ

Case Syllabus (G.R. No. 103585)

Parties and Procedural Posture

National Electrification Administration (NEA) filed a petition challenging adverse rulings of the Court of Appeals involving a civil action pending in the Regional Trial Court of Quezon City, Branch 98.
Construction Services of Australia-Philippines, Inc. (CONSAPHIL) sued in the trial court to collect a sum of money plus damages.
Engineering and Construction Corporation of Asia (ECCO-ASIA) was impleaded as the principal adverse party in the trial court.
Pangasinan Electric Cooperative, Inc. (PANELCO) was impleaded as an additional adverse party.
Ernesto L. Sula, Deputy Sheriff of RTC, Branch 98, was involved as the officer executing process against the questioned deposit.
The trial court issued and later modified orders relating to a 10% retention money deposit.
The trial court eventually approved a compromise agreement between CONSAPHIL and ECCO-ASIA.
The Court of Appeals dismissed NEA’s petition for certiorari under Rule 65 filed after the trial court’s rulings became final and executory.
The Supreme Court denied the petition and upheld the Court of Appeals.

Key Factual Allegations

CONSAPHIL filed the trial court complaint on March 8, 1985 seeking payment for accomplished subcontract work.
The dispute arose from a Sub-Contract Work Agreement between CONSAPHIL and ECCO-ASIA.
CONSAPHIL alleged that PANELCO was the “ultimate beneficiary” of the construction project and therefore bound to pay CONSAPHIL.
CONSAPHIL alleged that NEA was the “manager and holder” of funds loaned by PANELCO from foreign sources.
CONSAPHIL further alleged that NEA possessed unreleased 10% retention money due to ECCO-ASIA.
CONSAPHIL claimed the retention money was held “to guarantee payment of all claims” against ECCO-ASIA.
On August 22, 1986, the trial court issued a Writ of Preliminary Injunction enjoining NEA from releasing the 10% retention money and other funds of ECCO-ASIA amounting to P1.2 million.
CONSAPHIL requested that NEA deposit the P1.2 million with the Philippine National Bank (PNB), Philippine Heart Center for Asia (PHCA) Branch, and the trial court initially denied this request on December 4, 1986.
On March 3, 1987, the trial court reconsidered and directed the deposit of P1.2 million with PNB, PHCA Branch.
In a Request for Admission dated January 28, 1987, CONSAPHIL sought admissions from NEA, including an admission that the retained money belonging to ECCO-ASIA held by NEA amounted to P1,390,789.40.
NEA responded on March 6, 1987 and admitted the quoted statement.
On August 6, 1990, the trial court dismissed the complaint against PANELCO and NEA, and required NEA to surrender physical and legal custody of the P1.2 million deposit for placing the same under the court’s name.
NEA sought reconsideration on August 17, 1990, arguing that dismissal against it automatically lifted the preliminary injunction over the deposit.
On October 5, 1990, the trial court approved the compromise agreement between CONSAPHIL and ECCO-ASIA.
On October 17, 1990, a writ of execution was issued against the P1.2 million deposit at PNB, PHCA Branch.
On October 24, 1990, NEA moved to quash the writ of execution, arguing that dismissal against it automatically lifted the preliminary injunction and that no judicial trial had determined the deposit belonged to ECCO-ASIA.
After execution proceeded, on December 3, 1991, NEA filed a civil action for certiorari under Rule 65 with the Court of Appeals.
The Court of Appeals dismissed the petition in a decision dated January 14, 1992.
The Supreme Court reviewed NEA’s four assigned errors.

Issues Raised on Appeal

First issue: Whether the Court of Appeals correctly ruled that NEA had a right of appeal from trial court orders dated August 6, 1990 and May 29, 1991, and that the failure to appeal barred certiorari.
Second issue: Whether the compromise-judgment approved by the trial court on October 5, 1990 had res judicata effect against NEA’s Rule 65 petition.
Third issue: Whether NEA had admitted in the trial court pleadings that the P1.2 million belonged to ECCO-ASIA.
Fourth issue: Whether the trial court had no jurisdiction to proceed against NEA’s P1.2 million deposit because the preliminary injunction was allegedly automatically lifted upon NEA’s dismissal, invoking Golez vs. Leonidas, 107 SCRA 187.

Arguments of NEA

NEA argued that it had no effective recourse after dismissal in the manner asserted, and that the trial court’s challenged actions warranted Rule 65 review.
NEA contended that the Court of Appeals erred in treating NEA’s inaction as a bar to special civil action.
NEA maintained that the trial court’s decision approving the compromise agreement should not bind NEA through res judicata in a certiorari proceeding.
NEA denied that its pleadings amounted to binding proof or admission that the deposit belonged to ECCO-ASIA.
NEA argued that the trial court lacked authority to proceed against the deposit after dismissal, claiming the preliminary injunction was automatically lifted pursuant to Golez vs. Leonidas, 107 SCRA 187.
NEA insisted that there had been no judicia