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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 180245 July 4, 2012

PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Petitioner, vs. TAKENAKA CORPORATION and ASAHIKOSAN CORPORATION, Respondents. DECISIO N PERALTA, J.: This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1 of the Court of Appeals (CA), dated July 27, 2007, and the CA Resolution2 dated October 23, 2007, denying herein petitioner's motion for partial reconsideration, be reversed and set aside. The antecedent facts were accurately narrated in the CA Decision as follows. In 1997, by way of a Concession Agreement, the Philippine Government awarded to petitioner the right to build and operate the NAIA International Passenger Terminal III ("NAIA IPT3"). Petitioner then contracted respondents Takenaka Corporation, and Asahikosan Corporation ("private respondents") to construct and equip NAIA IPT3. Private respondents are both foreign corporations organized under the laws of Japan, but only respondent Takenaka Corporation is licensed to do business in the Philippines through its local branch office. Claiming that petitioner made no further payments after May 2002 despite continued performance of their obligations, private respondents filed two collection suits before the High Court of Justice, Queen's Bench Division, Technology and Construction Court in London, England ("London Court"), docketed as Claim No. HT-04-248 and Claim No. HT-05-269. In both claims, respondent Takenaka Corporation was designated as the First Claimant and respondent Asahikosan Corporation, the Second Claimant. Ruling in favor of private respondents, the London Court issued an Order dated February 18, 2005 in Claim No. HT-04-248 and an Order dated December 2, 1005 in Claim No. HT-05-269, directing that Claim No. HT-04-248

London Court: against PIATCO (to pay)

total amount of US $193M

"1. Judgment be entered for the First Claimant in the sum of 6,602,971.00 United States dollars, together with interest in the sum of 116,825,365.34 Philippine pesos up to and including 18 February 2005. 2. Judgment be entered for the Second Claimant in the sum of 8,224,236.00 United States dollars, together with interest in the sum of 2,947,564.87 United States dollars up to and including 18 February 2005, being a total of 11,171,800.87 United States dollars. 3. Save for the costs of and caused by the amendment of the particulars of claim, which will be the subject of a separate order, the Defendant to pay the First Claimant's and the Second Claimant's costs in the action, to be subject to detailed assessment if not agreed." Claim No. HT-05-269 "1. Judgment be entered for the First Claimant in the sum of 21,688,012.18 United States dollars, together with interest in the sum of 6,052,805.83 United States dollars. 2. Judgment be entered for the Second Claimant in the sum of 30,319,248.36 United States dollars, together with interest in the sum of 5,442,628.26 United States dollars. 3. The Defendant to pay the Claimants' costs in the action, to be subject to detailed assessment if not agreed."

agreed." On March 1, 2006, private respondents filed a Complaint, docketed as Civil Case No. 06-171, before the Regional Trial Court of Makati City, Br. 58, to enforce the aforesaid Orders of the London Court. Petitioner filed a Motion to Dismiss the Complaint on the grounds of: (a) defective verification and certification against forum shopping, because there was no board resolution showing that Mr. Takeshi Kurebayashi was authorized by private respondents to sign the verification and certification of non-forum shopping, and the special powers of attorney executed in favor of Mr. Kurebayashi by the Executive Vice-President and President of respondents Takenaka Corporation and Asahikosan Corporation, respectively, were not only insufficient but also improperly authenticated since the said officers never personally appeared before the notary public, and finally, Mr. Kurebayashi was not competent to guarantee that respondent Asahikosan Corporation has not engaged in forum shopping, not being an employee or member of the said corporation; (b) forum shopping, because the Complaint was allegedly private respondents' third attempt to file the same claim, the first attempt being private respondents' voluntary submission to the jurisdiction of the Pasay Court in Civil Case No. 04-0876, the expropriation case filed by the Republic of the Philippines against herein petitioner, where private respondents manifested that they are not objecting to the taking of the condemned property (NAIA IPT3), provided that they are justly compensated for their claims as unpaid contractors, and the second attempt having been made before the Supreme Court in G.R. No. 166429 where private respondents moved for partial reconsideration (in intervention) of the Supreme Court's decision affirming, with modification, the Pasay Court's Order allowing the full release to herein petitioner of the funds deposited by the Republic of the Philippines for the expropriation of the NAIA IPT3; (c ) payment, novation, abandonment or extinguishment of the claims, inasmuch as private respondents have allegedly entered into a contract with the Philippine government pursuant to which private respondents supposedly received payment of US$10Million from the Philippine government, with the latter committing to deliver more; and (d) non-compliance with a condition precedent, because petitioner failed to resort to arbitration before the Construction Industry Arbitration Commission (CIAC) as allegedly provided by the terms of the parties' agreement. During the hearing of the Motion to Dismiss on April 7, 2006, private respondents asked for time to file their Opposition. Private respondents subsequently filed their Opposition, which was followed by petitioner's Reply, private respondents' Rejoinder and petitioner's Sur-Rejoinder. On May 9, 2006, petitioner filed a Motion to Set its Motion to Dismiss for hearing, to enable it to present evidence on the alleged payment, novation and extinguishment of its obligations to private respondents. Thereafter, petitioner filed a Request for Subpoena Duces Tecum Ad Testificandum to direct Mr. Takeshi Kurebayashi to appear and testify in court, and to bring the alleged General Framework Agreement ("GFA") between private respondents and the Philippine government as represented by the Manila International Airport Authority (MIAA). Petitioner likewise filed a Motion for Production and Inspection of Documents to require private respondents, or any of its officers and representatives, to produce and permit the inspection, copying and photographing of the GFA by petitioner. Private respondents opposed the said Motions and Request, arguing that the Motion to Dismiss need not be heard anew because the ground sought to be proved, i.e., payment, novation or extinguishment of obligation, was based on mere newspaper reports which are hearsay evidence. Private respondents also asserted that Mr. Kurebayashi may not be compelled to testify as an adverse party witness without first being served interrogatories. They further argued that discovery of documents may not be allowed until the answer is filed since the materiality of the document requested cannot be determined until the issues are joined. And assuming for the sake of argument that petitioner could prove the partial payment of US$10Million, the payment would allegedly not extinguish petitioner's total obligation as to result in the dismissal of the action. Petitioner thereafter filed with the trial court, and served upon the President of respondent Takenaka Corporation, Written Interrogatories which, among others, asked if Takenaka entered into a General Framework Agreement with the Philippine government, what its salient features are, and if any amount has been paid to Takenaka by the Philippine government. Private respondents moved to expunge the Written Interrogatories, arguing that written interrogatories cannot be served without leave of court before an Answer has been filed. On June 26, 2006, petitioner filed a Motion for Leave to serve its Written Interrogatories on the President of respondent Takenaka Corporation. That same day, respondent judge issued the first assailed Omnibus Order denying petitioner's Motion to Dismiss, Motion to Set the Motion to Dismiss for hearing, Motion for Production and Inspection of Documents, and Written Interrogatories. Respondent judge held that Mr. Takeshi Kurebayashi was duly authorized to represent both private respondents noting the Special Powers of Attorney attached to the Verification and Certification against Forum Shopping, which were executed by the representative directors of private respondents, and accompanied by Notarial Certificates executed in Tokyo by a Japanese Notary, giving authority to Mr. Kurebayashi to file the Complaint. Respondent judge observed that under Articles 261 and 78 of the Commercial Law of Japan, corporations may act through their representative directors, similar to the Executive Committee under Philippine Corporation Law. Respondent

their representative directors, similar to the Executive Committee under Philippine Corporation Law. Respondent judge held that under the principle of lex loci celebrationis, the validity of the Special Powers of Attorney is determined by the law of the place where they were executed. Respondent judge rejected petitioner's claim of forum shopping, holding that private respondents simply served notice on the Pasay Court and the Supreme Court about their being unpaid contractors. Respondent judge found that private respondents merely prayed that the said Courts hold in abeyance the release of the funds to petitioner until such time they can enforce the London Court Orders by virtue of a final judgment, which neither the Pasay court nor the Supreme Court may render because the case before them was one for expropriation. Respondent judge likewise rejected petitioner's assertion that its obligation has been extinguished by payment or novation. According to respondent judge, petitioner's claim that private respondents had entered into a contract with the Philippine government was based on alleged newspaper articles which are inadmissible in evidence for being hearsay. If at all, said respondent judge, such claim should be raised as an affirmative defense in the Answer and substantiated in a full-blown trial. And assuming private respondents were indeed paid US$10Million under the alleged contract with the Philippine government, the same is but a small portion of the total amount claimed which is around US$198Million, excluding attorney's fees and costs of suit. Anent private respondents' alleged failure to resort to arbitration, respondent judge held that "this ground, which actually assails the jurisdiction of the foreign court," is "a matter of affirmative or special defense" which should be threshed out in a trial. Finally, respondent judge held that the Motion for Production and Inspection of Documents and the Written Interrogatories are modes of discovery that can only be availed of after the Answer has been filed, pursuant to A.M. No. 03-1-09-SC. Dissatisfied with respondent judge's ruling, petitioner moved for reconsideration of the June 26, 2006 Omnibus Order. Noting that petitioner "failed to attach a copy of the alleged General Framework (of) Agreement in its Motion for Reconsideration that will give flesh and blood to its bones of contentions that (private respondents') claim has already been paid, novated or extinguished," respondent judge issued his Order dated September 5, 2006, directing petitioner to submit the alleged GFA within 5 days from notice. Accordingly, petitioner filed a Request for Subpoena Duces Tecum for Alfonso Cusi, General Manager or Records Custodian of MIAA, to bring the GFA, vouchers, receipts and other papers proving MIAA's alleged payments to respondent Takenaka Corporation. On September 22, 2006, respondent judge granted petitioner's request and directed the issuance of the subpoena duces tecum. On September 27, 2006, the MIAA, through the Office of the Solicitor General, filed a Motion to Quash the subpoena duces tecum, without serving a copy of their motion on the parties. The MIAA averred that the subpoena was oppressive and unreasonable for it allegedly violated Section 6, Rule 21, and petitioner allegedly failed to show the relevance of the documents sought to be produced. The MIAA added that "(t)he only objective that (petitioner) has in asking for the GFA is to use against the Government and shift its burden of paying its EPC contractors, Takenaka Corporation and Asahikosan Corporation for the unpaid services rendered before the government expropriated the NAIA Terminal III." The MIAA averred that "(petitioner) is venturing into a 'fishing expedition' to evade its obligations to Takenaka Corporation and Asahikosan Corporation, and shifting the burden to the Government." On October 9, 2006, respondent judge issued the second assailed Order quashing the subpoena duces tecum, because the MIAA was not given ample opportunity to prepare for the submission of the requested document, and because petitioner had to show the relevancy of the said document in the light of MIAA's contention that petitioner is merely shifting the burden to pay its contractors for unpaid services rendered before the expropriation of the NAIA IPT3. Consequently, petitioner moved for reconsideration of the October 9, 2006 Order. On January 15, 2007, respondent judge issued the third assailed Omnibus Order, denying petitioner's motions for reconsideration of the assailed June 26, 2006 Omnibus Order, and October 9, 2006 Order. 3 Petitioner then filed a petition for certiorari, prohibition and mandamus with the CA, alleging that the trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction when it refused to set another hearing for the motion to dismiss, when it denied the Motion to Dismiss and the Motion for Production and Inspection of Documents, and the Written Interrogatories. The CA ruled that since a hearing on the Motion to Dismiss was held on April 7, 2006 and, thereafter, both parties filed an exchange of pleadings, then petitioner had reasonable opportunity to be heard, which was the essence of due process. The CA concluded that the trial court

reasonable opportunity to be heard, which was the essence of due process. The CA concluded that the trial court did not commit grave abuse of discretion in denying petitioner's motion to dismiss and the motion to set said motion for hearing. However, the CA ruled that it was grave abuse of discretion for the trial judge not to grant the motion for production and inspection of documents and written interrogatories, because Section 1, Rule 25, in relation to Section 1, Rule 23 provides that written interrogatories may be served even before the Answer is filed so long as leave of court has been obtained, and Section 1, Rule 27 states that the motion for production of documents or things may be filed while the action is pending, which includes the period before the Answer is filed. With regard to the quashal of the subpoena duces tecum, the CA held that MIAAs Motion to Quash should not have been acted upon by the trial court because it did not contain a Notice of Hearing, making it a mere scrap of paper. Thus, it held that the issuance of the Order dated October 9, 2007 quashing the subject subpoena was done with grave abuse of discretion. On July 27, 2007, the CA rendered the assailed Decision, disposing as follows: WHEREFORE, the petition is GRANTED IN PART. The assailed Order dated October 9, 2006, which quashed the subpoena duces tecum, is hereby SET ASIDE. The assailed Omnibus Order dated June 26, 2006 is SET ASIDE IN PART insofar as it denied petitioner's Motion for Production and Inspection of Documents and Written Interrogatories. The assailed Omnibus Order dated January 15, 2007 is likewise SET ASIDE IN PART insofar as it denied reconsideration of the June 26, 2006 denial of the Motion for Production and Inspection of Documents and Written Interrogatories, and the October 9, 2006 quashal of the subpoena duces tecum. The assailed June 26, 2006 and January 15, 2007 Omnibus Orders are AFFIRMED IN PART insofar as they denied the Motion to Set the Motion to Dismiss for hearing, and the Motion to Dismiss. SO ORDERED.4 Petitioner moved for partial reconsideration of the CA Decision, but the same was denied in a Resolution dated October 23, 2007. Hence, this petition for review on certiorari where petitioner alleges that the CA erred (1) in ruling that the Complaint is not fatally defective despite the fact that only a Special Power of Attorney, and not a Board Resolution was attached to the Verification and Certification Against Forum Shopping; and (2) in depriving petitioner the right to present evidence on its Motion to Dismiss. On the other hand, respondents countered in their Comment that the petition should be dismissed outright because it was filed out of time; it did not include a material portion of the record below, i.e., respondents' Comment to the petition before the CA; and the CA did not err in ruling that Mr. Kurebayashi was duly authorized by respondents to sign the verification/certification of non-forum shopping, because under the laws of Japan, under which laws respondents were incorporated, the board of directors of a Japanese corporation may appoint one or more Representative Directors who shall have the authority to perform all acts within court proceedings and out-of-court acts relating to the business of the corporation, and Mr. Kurebayashi was validly appointed by respondents' Representative Directors to execute the Verification/Certification. The Court finds the petition unmeritorious. At the outset, respondents must be disabused of the belief that the petition was filed late. Petitioner originally had only until December 14, 2007 within which to file action. However, the Court indeed suspended office transactions on December 14, 2007 due to the celebration of the Christmas party so the Court's receiving section was closed. Petitioner, therefore, had until the next working day, or until December 17, 2007, within which to file the petition. As long as the petition was filed on that last day of December 17, 2007, then it is considered to have been filed on time. Records show that the petition was indeed filed on December 17, 2007. Hence, it is of no moment that the Secretary's Certificate attached to the Verification and Certification of Non-Forum Shopping was notarized on December 17, 2007, or later than December 14, 2007. Having resolved the question on the timeliness of the petition, we go on to discuss the main issues in this case. The Court does not see any reason to overturn the CA's finding that there was no grave abuse of discretion on the part of the trial court in denying the Motion to Dismiss and the Motion to Set the Motion to Dismiss for Hearing. The established definition of grave abuse of discretion was reiterated in Ligeralde v. Patalinghug5 in this wise: x x x By grave abuse of discretion is meant such capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. In sum, for the extraordinary writ of certiorari to lie, there must be capricious, arbitrary or whimsical exercise of power.6 (Emphases supplied) In this case, there is no showing of such capricious or whimsical exercise of judgment or arbitrary and despotic

In this case, there is no showing of such capricious or whimsical exercise of judgment or arbitrary and despotic exercise of power committed by the trial court. In fact, records reveal that both parties were given ample opportunity to be heard. A hearing on the Motion to Dismiss was, in fact, held on April 7, 2006. Thereafter, both parties submitted their pleadings setting forth their claims, arguments and supporting evidence. Petitioner points out that at the April 7, 2006 hearing, the parties were only allowed to file their pleadings, and no actual hearing, or presentation of evidence, was conducted. It is an oft-repeated principle that where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of due process.7 Moreover, the issues that petitioner seeks to tackle in the requested hearing on the motion to dismiss, i.e., novation, payment, extinguishment or abandonment of the obligation, are the meat of their defense and would require the presentation of voluminous evidence. Such issues are better threshed out during trial proper. Thus, the trial court was not amiss in ruling that petitioner already had the opportunity to be heard and there was no longer any need to set another hearing on the motion to dismiss. It also appears from the RTC's Orders and the CA's Decision that any and all evidence and argument advanced by both parties were seriously taken into consideration by said lower courts in arriving at their rulings. Such being the case, there could be no grave abuse of discretion committed by the trial court. Lastly, on the issue of the Verification/Certification, the court has the power to give due course to the complaint even with the supposed defect, if special circumstances warrant. Even assuming arguendo, that the form used to show Mr. Kurebayashi's authority to execute the Verification and Certification Against Forum Shopping is defective, petitioner should bear in mind that this Court may relax the application of procedural rules for the greater interest of substantial justice. Thus, in Cua, Jr. v. Tan,8 this Court explained thus: x x x Although the submission of a certificate against forum shopping is deemed obligatory, it is not jurisdictional. Hence, in this case in which such a certification was in fact submitted only, it was defective the Court may still refuse to dismiss and may, instead, give due course to the Petition in light of attendant exceptional circumstances.
1 wp h i 1

xxxx x x x [I]n the interest of substantial justice, the strict application of procedural technicalities should not hinder the speedy disposition of this case on the merits. x x x xxxx x x x Indeed, where, as here, there is a strong showing that a grave miscarriage of justice would result from the strict application of the Rules, the Court will not hesitate to relax the same in the interest of substantial justice. It bears stressing that the rules of procedure are merely tools designed to facilitate the attainment of justice. They were conceived and promulgated to effectively aid the court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial discretion. In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that, on the balance, technicalities take a backseat against substantive rights, and not the other way around. Thus, if the application of the Rules would tend to frustrate rather than promote justice, it is always within the power of the Court to suspend the Rules, or except a particular case from its operation .9 (Emphasis supplied) This case is one of those that deserves a more lenient application of procedural rules, considering that it affects one of the most important public utilities of our country. In Agan, Jr. v. Philippine International Air Terminals Co., Inc.,10 this Court has already stated that these cases involving the construction and operation of the country's premier international airport, has attained transcendental importance.11 Therefore, the Court sees it fit to relax the rules in this case to arrive at a full settlement of the parties' claims and avoid further delay in the administration of justice. IN VIEW OF THE FOREGOING, the petition is DENIED. The Court of Appeal's Decision dated July 27, 2007, and the CA Resolution dated October 23, 2007 in CA-G.R. SP No. 98166 are hereby AFFIRMED. SO ORDERED. DIOSDADO M. PERALTA Associate Justice WE CONCUR: PRESBITERO J. VELASCO, JR. Associate Justice Chairperson JOSE CATRAL MENDOZA Associate Justice BIENVENIDO L. REYES* Associate Justice

ESTELA M. PERLAS-BERNABE Associate Justice AT T EST AT IO N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. PRESBITERO J. VELASCO, JR. Associate Justice Chairperson, Third Division CERT IF ICAT IO N I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Senior Associate Justice (Per Section 12, R.A. 296, The Judiciary Act of 1948, as amended)

Footnotes
* Designated Acting Member in lieu of Associate Justice Roberto A. Abad, per Special Order No. 1244 dated

June 26, 2012.

of this Court) and Sesinando E. Villon, concurring; rollo, pp. 37-72.

Equities, Inc. v. Sandiganbayan, G.R. No. 129434, August 18, 2006, 499 SCRA 308, 317.
8 G.R. Nos. 181455-56 & 182008, December 4, 2009, 607 SCRA 645 9 Id. at 686-687. 10 G.R. Nos. 155001, 155547 & 155661, May 5, 2003, 402 SCRA 612. 11 Id. at 646.

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