THIRD DIVISION
G.R. No. 192659, December 02, 2015
PHILIPPINE RACE HORSE TRAINER'S ASSOCIATION, INC., Petitioner, v. PIEDRAS NEGRAS CONSTRUCTION AND DEVELOPMENT CORPORATION, Respondent.
D E C I S I O N
PERALTA, J.:
The instant petition seeks the review of the Court of Appeals (CA) Decision1 dated March 18, 2010 and its June 22, 2010 Resolution2 in CA-G.R. SP No. 110337. The CA set aside the July 30, 2009 Construction Industry Arbitration Commission (CIAC) Arbitral Tribunal Decision3 ruling in favor of petitioner Philippine Race Horse Trainer's Association, Inc. (PRHTAI). The CIAC held that the third and final contract between PRHTAI and respondent Piedras Negras Construction & Development Corporation (PNCDC) is unenforceable and that there was overpayment in the amount of P14,351,484.41 on the part of PRHTAI.
The factual antecedents of the case are as follows:chanRoblesvirtualLawlibrary
The instant controversy stems from a series of contracts which PRHTAI entered into pursuant to its housing project. On October 3, 2000, PRHTAI, through its president, Rogelio J. Catajan, entered into a contract (first contract) with Fil-Estate Properties, Inc. (Fil-Estate) for the development of the Royal Homes Subdivision Project. It involved the construction of 170 housing units in Fil-Estate's property located in Bulacnin, Lipa City, Batangas, for P67,453,000.00. Fil-Estate then later assigned its rights and obligations under the project to PNCDC, its subcontractor. On October 13, 2004, a contract (second contract) was forged between PRHTAI and PNCDC for P80,324,788.00. On August 23, 2005, PRHTAI and PNCDC signed another contract (third contract) for the construction of the same 170 housing units, but this time for the revised amount of P101,150,000.00. Deducting the advances in the amount of P42,868,048.21, the remaining balance due to PNCDC became P58,281,951.80.
On April 25, 2007, PNCDC issued a Certificate of Completion and Acceptance in favor of PRHTAI. Come January 18, 2008, PNCDC demanded for the payment of the remaining balance. PRHTAI acknowledged its obligation but explained that it was experiencing financial difficulties.
Meanwhile, on April 28, 2008, a new set of directors and officers was elected at PRHTAI. Said new officers requested for copies of the documents relative to the project. Subsequently, they initiated inquiries on the subject housing project with the former officers and employees as well as the lending institutions involved in said project.
Unable to collect the remaining balance, PNCDC filed on March 4, 2009 a request for arbitration/complaint with the CIAC against PRHTAI for the payment of P14,571,618.24.
On August 19, 2009, a Notice of Award was issued, informing the parties that the CIAC Arbitral Tribunal has rendered its Decision dated July 30, 2009. It held that the third contract between PRHTAI and PNCDC is unenforceable and that there was even overpayment on the part of PRHTAI in the amount of P14,351,484.61. The decretal portion of the Award provides:
WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary claims of THE RESPONDENT, PHILIPPINE RACE HORSE TRAINER'S ASSOCIATION, INC. directing the Claimant, PIEDRAS NEGRAS CONSTRUCTION AND DEVELOPMENT CORPORATION, to pay the Respondent the amount of P14,951,484.61 representing the following:On March 18, 2010, however, the CA overturned the CIAC ruling, thus:In addition, Claimant is also directed to reimburse to the Respondent P371,940.07 the amount PRHTAI had already paid to CIAC.
Overpayment in the amount P14,351,484.61Attorney's fees other legal expenses 128,059.93 TOTAL P14,479,544.54
Interest on the foregoing amount of P14,351,484.61 at the legal rate of 6% per annum computed from the date this Award is promulgated. After finality thereof, interest at the rate of 12% per annum shall be paid thereon until full payment of the awarded amount shall have been made, "this interim period being deemed to be at that time already a forbearance of credit." (Eastern Shipping Lines, Inc. v. Court of Appeals, et al. (243 SCRA 78 [1994])
SO ORDERED.4ChanRoblesVirtualawlibrary
WHEREFORE, premises considered, the instant petition is hereby GRANTED, the decision of [the] CIAC is hereby SET ASIDE and a new one is entered as follows:Aggrieved, PRHTAI filed a motion for reconsideration, but the same was denied. Hence, this petition.1) Philippine Race Horse Trainer's Association, Inc. is directed to pay Piedras Negras Construction and Development Corporation the balance of the final contract in the amount of P6,473,727.59 with legal interest of 6% per annum from finality of this decision.SO ORDERED.5ChanRoblesVirtualawlibrary
2) PRHTAI is liable for the payment of arbitration expenses.
The petition is meritorious.I
WHETHER OR NOT THE CIAC HAS JURISDICTION TO PASS UPON THE ENFORCEABILITY OF THE CONTRACT BETWEEN PRHTAI AND PNCDC.II.
WHETHER OR NOT THE THIRD AND FINAL CONTRACT BETWEEN PRHTAI AND PNCDC IS UNENFORCEABLE.III.
WHETHER OR NOT THERE IS OVERPAYMENT ON PRHTAI'S PART.
SEC. 4. Jurisdiction. - The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.The CA sustained the CIAC's computation and determination with respect to the issue of overpayment. The appellate court agreed that there was an extensive discussion of all the claims and counterclaims presented by both PRHTAI and PNCDC. The CIAC's findings were adequately supported by evidence that the CA found no cogent reason to disturb the same. After all, the CIAC possesses the required expertise in the field of construction arbitration. It is settled that findings of fact of quasi-judicial bodies, like the CIAC, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded, not only respect, but also finality. In particular, factual findings of construction arbitrators are final and conclusive and not reviewable by the Court on appeal. Factual findings of construction arbitrators, however, may be reviewed by the Court when the petitioner proves that: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or any of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under Section 9 of Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made. Also considered as an exception is when there is a very clear showing of grave abuse of discretion, when an award is obtained through fraud or the corruption of arbitrators, when a party is deprived of administrative due process, or when the findings of the CA are contrary to those of the CIAC.7
The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship, violation of the terms of agreement, interpretation and/or application of contractual time and delays, maintenance and defects, payment, default of employer or contractor, and changes in contract cost.
Excluded from the coverage of this law arc disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines.
However, the appellate court failed to sufficiently establish as to exactly how said aforementioned documents prove PRHTAI's supposed consent to the third contract. Catajan was never authorized by any PRHTAI Board Resolution to enter into and execute the Construction Contract dated August 23, 2005. The operative clause of the Board Resolution dated September 26, 2000 reads:
a) September 26, 2000 Board Resolution allegedly authorizing Catajan to sign the Memorandum of Agreement;b) Secretary's Certificate dated March 1, 2005 on the September 26, 2000 meeting;c) April 24, 2006 Board Resolution supposedly authorizing Catajan to avail and apply for a loan with the Development Bank of the Philippines amounting to P30 Million to finance the construction of the remaining housing units and other expenses related to the housing project; andd) Minutes of the Meeting of PRHTAI's new board of directors held on May 5, 2008.
Therefore, the Board[,] on its meeting held on September 26, 2000[,] after a series of meetings with the Fil-Estate Properties Corp. and the PAG-IBIG representatives regarding the Housing Benefit of its members, hereby [authorize] Mr. Rogelio J. Catajan, President of the Association, to enter, to act and sign the Memorandum of Agreement in behalf of the Association.11ChanRoblesVirtualawlibrarySaid Board Resolution is indeed an express authorization for Catajan to enter into a contract but only with Fil-Estate, not with PNCDC. Thus, after a week or on October 3, 2000, Catajan indeed signed a Memorandum of Agreement with Fil-Estate. The Resolution cannot possibly be construed as to likewise authorize Catajan to sign a contract with PNCDC. Although it may be argued that the third contract, which was forged more than four (4) years from the date of the Board Resolution supposedly authorizing the same, merely incorporated the first and second contracts involving the same housing project, Catajan still exceeded his authority when it agreed to pay PNCDC an increased contract price in the amount of P101,150,000.00. It must be noted that the first contract dated October 3, 2000 was for P67,453,000.00. Four (4) years later, on October 13, 2004, the second contract was entered into for P80,324,788.00. No justification, however, was shown why on August 23, 2005, or after a span of only less than a year, the costs suddenly ballooned to P101,150,000.00.
It was also approved by the board, to reconstruct the contract of loan with Pag-ibig and Development Bank of the Philippines. Dir. Rogelio J. Catajan reported that the 170 houses turned-over were made by the contractor Piedras Negras Construction, owned by Mr. Francis Maristela.14ChanRoblesVirtualawlibraryIt must be noted that the May 5, 2008 meeting was the very first organizational meeting of PRHTAI's new board of directors after its election on April 28, 2008, or barely seven (7) days later. At the time of said meeting, the new board still had no knowledge of Catajan's unauthorized execution of the third contract.
May 27, 2008However, as can be clearly gleaned from the text of said letter, it contains nothing that would tend to imply that PRHTAI's new board of directors actually acknowledged its indebtedness to PNCDC. At the most, it is a mere request for copies of certain documents and it cannot reasonably be interpreted as a recognition or ratification of said debt. They were merely constrained to make such request because they still had no copies of their own, and said documents were missing from the office files. Moreover, although PRHTAI seemed to have acknowledged its obligation, it was Catajan, the very same person whose authority to represent PRHTAI is being assailed, who accepted the Certificate of Completion and Acceptance which PNCDC issued. To consider Catajan's acceptance of what PNCDC turned over as a valid ratification of his own wrongdoing would certainly be the height of absurdity.
Mr. Francisco Maristela
Piedras Negras Construction & Development Corporation
55 Malumanay St., Teachers Village, [West] Diliman,
Quezon City
Sir:chanRoblesvirtualLawlibrary
The Philippine Race Horse Trainers' Association Incorporated elected a new set of [officers] and [directors]. In its promise to the general membership to institute transparency in operating the association activities, as we go along, we encountered [problems] and found out that some vital information pertain to the records of housing project of member had been lost, in which case, the undersigned respectfully request a copy of the following:chanRoblesvirtualLawlibrary
- Loan and contract agreement, deed of absolute sale of purchased land.
- All check encashment and cash receipt made for payment.
- Transfer Certificate of Titles, (original)
- Development Bank of the Philippines contract and agreement.
- Any other documents that could help and to understand our undertakings and obligations.
The body will take up important (sic) that would pertain to the Financial Status of the association and need those documents to begin with.
Thank you very much.
Respectfully yours,
Pablito L. Guce
President
Endnotes:
* Designated Acting Member in lieu of Associate Justice Francis H. Jardeleza, per Special Order No. 2289 dated November 16, 2015.
** Designated Additional Member in lieu of Associate Justice Bienvenido L. Reyes, per Raffle dated November 11, 2015.
1 Penned by Associate Justice Stephen C. Cruz, with Associate Justices Bienvenido L. Reyes (now a member of this Court), and Celia C. Librea-Leagogo, concurring; rollo, pp. 38-53.
2Id. at 55-57.
3 Penned by Joven R. Joaquin, Alfredo F. Tadiar, and Eliseo I. Evangelista; id. at 227-264.
4Rollo, pp. 261-262. (Emphasis in the original)
5Id. at 52.
6Shinryo (Phils.) Company, Inc. v. RRN Incorporated, 648 Phil. 342 (2010).
7Id. at 350.
8 418 Phil. 176 (2001).
9 468 Phil. 305 (2004).
10Uniwide Sales Realty and Resources Corp. v. Titan-Ikeda Construction & Dev't Corp., 540 Phil. 350 (2006).
11Rollo, p. 237.
12Id. at 243.
13Id. at 238.
14Id. at 22.
15Id. at 24.
16Advance Paper Corporation v. Arma Traders Corporation, G.R. No. 176897, December 11, 2013, 712 SCRA 313, 330.
17People's Aircargo and Warehousing Co., Inc. v. Court of Appeals, 357 Phil. 850, 864 (1998).
18Advance Paper Corporation v. Arma Traders Corporation, supra note 16.
19Safic Alcan & Cie v. Imperial Vegetable Oil Co., Inc., 407 Phil. 884, 899 (2001).
20Advance Paper Corporation v. Arma Traders Corporation, supra note 16, at 332.
21Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 459.