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Indispensable Parties in Garnishment Case

1) Fort Bonifacio Development Corporation (petitioner) had a contract with Maxco to undertake construction work, but later terminated the contract and accused Maxco of delays. 2) Maxco assigned its retention money receivables from the contract to Valentin Fong (respondent) to settle an unrelated debt. Respondent demanded payment from petitioner, who said the amount was not yet due. 3) Respondent filed a collection case against petitioner and Maxco. Petitioner argued the other judgment creditors of Maxco were indispensable parties that were not impleaded. The court ruled the other creditors' rights were distinct and would not be affected, so they were not indispensable parties.

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62 views2 pages

Indispensable Parties in Garnishment Case

1) Fort Bonifacio Development Corporation (petitioner) had a contract with Maxco to undertake construction work, but later terminated the contract and accused Maxco of delays. 2) Maxco assigned its retention money receivables from the contract to Valentin Fong (respondent) to settle an unrelated debt. Respondent demanded payment from petitioner, who said the amount was not yet due. 3) Respondent filed a collection case against petitioner and Maxco. Petitioner argued the other judgment creditors of Maxco were indispensable parties that were not impleaded. The court ruled the other creditors' rights were distinct and would not be affected, so they were not indispensable parties.

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FORT BONIFACIO DEVELOPMENT CORPORATION, petitioner

Versus
HON.  EDWIN D. SORONGON, and VALENTIN FONG,
respondents
G.R. No. 176709, May 8, 2009
PONENTE: DANTE O. TINGA
Associate Justice

FACTS:

On July 2000, Petitioner entered into a trade contract with


Maxco wherein Maxco would undertake the structural and partial
architectural package of the BRCP 1. Later petitioner accused
Maxco of delay in completion of its work and on August 24, 2004
sent the latter a notice of termination. Petitioner also instructed
Maxco to perform remedial measures prior to the contract
expiration pursuant to Clause 23.1 of the contract.

Subsequently, Maxco was sued by its creditors including


respondent for debts unrelated to BRCP 1. In order to settle the
collection suit, on February 28, 2005, Maxco assigned its
receivables representing its retention money from the BRCP 1 in
the amount of one million five hundred seventy seven thousand
one hundred fifteen pesos and ninety centavos (P1,577,115.90).
On April 18, 2005, respondent wrote to petitioner, informing the
latter of Maxco’s assignment in his favor and asking the latter to
confirm the validity of Maxco’s receivables. Petitioner replied,
informing the respondent that Maxco did have receivables,
however these were not due and demandable until January of next
year, moreover the amount had to be ascertained and liquidated.

A subsequent exchange of correspondence failed to settle


the matter. Specifically, on January 31, 2006, petitioner through
counsel, wrote to respondent informing the latter that there is no
more amount due to Maxco from petitioner after the rectification of
defect as well as the satisfaction of notices of garnishment dated
July 30, 2004 and January 26, 2006. On February 13, 2006,
respondent filed a complaint for a sum of money against petitioner
and Maxco in the Regional Trial Court of Mandaluyong City.
Respondent claimed that there were sufficient residual amounts to
pay the receivables of Maxco at the time he served notice of the
assignment. The subsequent notices of garnishment should not
adversely affect the receivables assigned to him. The retention
money was over due in January 2006 and despite demand,
petitioner did not pay the amount subject of the deed of
assignment. Petitioner however, paid out the retention money to
other garnishing creditors of Maxco to the detriment of respondent. 

ISSUE:

Whether or not the defendants are indispensable parties.

RULING:

The final error raised by petitioner that the other judgment


creditors as well as the trial court that issued the writ of
garnishment  and CIAC should have been impleaded as
defendants in the case as they were indispensable parties is
likewise weak. Section 7, Rule 3 of the Revised Rules of Court
provides for the compulsory joinder of indispensable parties without
whom no final determination can be had of an action. 

An indispensable party is defined as one who has such an


interest in the controversy or subject matter that a final adjudication
cannot be made, in his absence, without injuring or affecting that
interest. The other judgment creditors are entitled to the fruits of
the final judgments rendered in their favor. Their rights are distinct
from the rights acquired by the respondent over the portion of the
retention money assigned to the latter by Maxco. Their interests
are in no way affected by any judgment to be rendered in this
case. 

WHEREFORE, premises considered, the instant Petition is


denied.  The Decision dated November 30, 2006 and the
Resolution dated February 19, 2007 of the Court of Appeals in CA-
G.R. SP No. 96532 are hereby Affirmed.
 

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