G.R. No. 85714 . November 29, 1991.
HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner, vs. THE COURT OF APPEALS, THE PROVINCIAL GOVERNMENT OF ISABELA, THE MUNICIPALITY OF RAMON, ISABELA and THE NATIONAL IRRIGATION ADMINISTRATION, respondents.

FACTS

Petitioner Hydro Resources Contractors Corporation (Hydro) entered into a contract with respondent National Irrigation Administration (NIA) to construct the Magat River Multi-Purpose Project in Ramon, Isabela. The Provincial Government of Isabela and the Municipality of Ramon filed a civil case against Hydro for the collection of real property taxes on the properties Hydro constructed and used for the project. The Regional Trial Court (RTC) of Echague, Isabela, in an Order dated August 6, 1983, ruled that Hydro was liable for the realty taxes, but ordered further proceedings to determine the exact amount. The case was subsequently transferred to the RTC of Santiago, Isabela.
In the Santiago RTC, Hydro filed a motion for leave to file a third-party complaint against NIA for reimbursement and a motion to admit an amended answer. The court admitted the third-party complaint. However, in an Order dated May 20, 1985, the Santiago RTC reversed course, declaring the Echague RTC’s August 6, 1983 Order final and executory, dismissing the third-party complaint against NIA, and setting aside its own prior orders that had admitted it. Hydro’s motion for reconsideration was denied. The Court of Appeals affirmed this ruling.

ISSUE

Whether the Court of Appeals erred in affirming the Santiago RTC’s order which declared the Echague RTC’s August 6, 1983 Order final and executory and dismissed the third-party complaint against NIA.

RULING

No, the Court of Appeals did not err. The Supreme Court affirmed the dismissal of the third-party complaint. The legal logic is anchored on the nature and finality of the August 6, 1983 Order. The Echague RTC’s order was a final determination on the issue of Hydro’s liability for the real property taxes. It conclusively adjudicated that Hydro, as the constructor and beneficial user of the improvements, was the taxable entity under Presidential Decree No. 464. The order’s directive for further proceedings was solely for the ministerial act of computing the precise tax amount based on the established liability. Consequently, the order was final for purposes of appeal. Hydro did not appeal this order, allowing it to become final and executory. The subsequent filing of a third-party complaint against NIA in the Santiago RTC was an improper attempt to re-litigate or circumvent the already settled issue of Hydro’s primary tax liability. A third-party complaint is proper only when the third-party defendant may be liable to the defendant for all or part of the plaintiff’s claim. Since Hydro’s tax liability to the local governments was already conclusively established by a final order, a claim for reimbursement from NIA constituted a separate cause of action that did not affect Hydro’s settled obligation to the plaintiffs.