THIRD DIVISION
G.R. No. 195552, April 18, 2016
ACS DEVELOPMENT & PROPERTY MANAGERS, INC., Petitioner, v. MONTAIRE REALTY AND DEVELOPMENT CORPORATION, Respondent.
R E S O L U T I O N
REYES, J.:
Before the Court is a Petition for Certiorari1 filed by ACS Development & Property Managers, Inc. (ADPROM) against Mont-Aire2 Realty and Development Corporation (MARDC) to assail the Decision3 dated March 28, 2000 and Resolution4 dated November 9, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 48805, which affirmed with modification the Decision5 dated August 17, 1998 of the Construction Industry Arbitration Commission (CIAC) in CIAC Case No. 32-97.
ADPROM and MARDC were parties to a Construction Agreement6 executed on April 25, 1996, whereby ADPROM, as contractor, was to construct 17 units of MARDC's Villa Fresca Townhomes in Barangay Kaybagal, Tagaytay City. The total consideration for the contract was P39,500,000.00, inclusive of labor, materials, supervision and taxes. ADPROM was to be paid periodically based on monthly progress billings, less 10% retention.7 Angel Lazaro & Associates (ALA) was hired by MARDC as the project's construction manager.8
The parties later amended their Construction Agreement, reducing the number of units to be erected to 11 and the total contract price to P25,500,000.00. On May 2, 1996, ADPROM commenced with the construction of the townhouses.9
MARDC fully satisfied ADPROM'S Progress Billing Nos. 1 to 8 for a total amount of P23,169,183.43. In Progress Billing No. 9 for work performed in February 1997, ADPROM demanded from MARDC the amount of P1,495,345.24.10 ALA, however, approved the payment of only P94,460.28, as it disputed specific amounts in the billing, including cost additives.11 ADPROM refused to allow a reduction in its demanded amount. In a letter12 dated March 14, 1997, it even insisted on MARDC's acceptance of the accomplishments identified in Progress Billing No. 9 before it could proceed further with construction works. Beginning March 18, 1997, when Progress Billing No. 9 remained unpaid, ADPROM decided on a work stoppage.13
The stoppage prompted MARDC to serve upon ADPROM on March 20, 1997 a notice of default.14 After several meetings among the parties and ADPROM's issuance of consolidated Progress Billing Nos. 9 and 1015 intended to supersede the contested Progress Billing No. 9, ALA still advised MARDC to defer the payment of ADPROM's demand.16 ADPROM's consolidated billing of P1,778,682.06 was still greater than ALA's approved amount of P1,468,348.60.17
On June 5, 1997, MARDC decided to terminate the subject Construction Agreement.18 It demanded from ADPROM the return of alleged overpayments amounting to P11,188,539.69, after it determined from ALA that ADPROM's accomplished work constituted only 54.67%. An evaluation by another firm hired by MARDC, TCGI Engineers, also provided that ADPROM'S work accomplishment was only at 46.98%.19 Feeling aggrieved, ADPROM instituted with the CIAC a case for sum of money against MARDC, which in turn filed its own counterclaim against ADPROM.
On August 17, 1998, the CIAC rendered its Decision20 that concluded with the following awards:
chanRoblesvirtualLawlibrary
IX. SUMMARY OF AWARD
The Tribunal therefore makes the summary of award as follows:
A. FOR [ADPROM]
Claims Award 1. Unpaid Billings P1,468,348.60 P1,468,348.602. Interest on Billings 19,755.23 109,824.43* 3. Refund of accumulated 10% retention 2,806,814.00 2,806,814.004. Interest on retention 202,396.71 0.00 Total P4,497,314.54 P4,384,987.03
[*computed at 6% per annum from 19 May 1997 up to 17 August 1998, the date of the promulgation of this award]
B. FOR [MARDC]
1. Refund for overpayment P11,188,539.69 0.002. Interest on overpayment 167,828.10 0.003. Liquidated Damages 6,517,500.00 0.00 Total P17,873,867.79 0.00
C. NET AWARD for CLAIMANT P4,384,987.03
NET AWARD P4,384,987.03
X. AWARD
[MARDC] therefore is ordered to pay [ADPROM] the amount of PESOS FOUR MILLION [THREE] HUNDRED [EIGHTY-FOUR] THOUSAND [NINE] HUNDRED [EIGHTY-SEVEN] AND [03]/100 (P4,384,987.03) within fifteen (15) days from receipt of notice hereof. Interest of twelve percent (12%) per annum shall be charged on said amount or any balance thereof from the time due until fully paid.21
WHEREFORE, premises considered, the assailed Decision of [CIAC] is hereby MODIFIED. It is affirmed in part, insofar as it awards [ADPROM] its unpaid billings and the refund of its retention. The award of interest on the unpaid billings is set aside for lack of merit. Finally, [ADPROM] is hereby held liable to [MARDC] for liquidated damages in the amount of Thirty[-]Nine Thousand Five Hundred Pesos (Php39,500.00) per calendar day, computed from March 20, 1997, the dale ADPROM was served a notice of default for unjustified work stoppage, until September 1, 1997, when [MARDC] contracted another construction corporation, the Ulanday Contractors, Inc., to complete the project.ADPROM filed a motion for reconsideration while MARDC filed a motion for partial reconsideration. Both motions were denied by the CA in its Resolution24 dated November 9, 2010.
SO ORDERED.23ChanRoblesVirtualawlibrary
The proper remedy of a party aggrieved by a decision of the [CA] is a petition for review under Rule 45 which is not similar to a petition for certiorari under Rule 65 of the Rules of Court. As provided in Rule 45 of the Rules of Court, decisions, final orders, or resolutions of the [CA] in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us by filing a petition for review, which would be but a continuation of the appellate process over the original case. A special civil action under Rule 65 is an independent action based on the specific grounds therein provided and, as a general rule, cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45. Accordingly, when a party adopts an improper remedy, his petition may be dismissed outright.27ChanRoblesVirtualawlibraryEven granting that the Court adopts a liberal application of the rules and treats the present petition as a petition for review, there still exists no cogent reason for a reversal of the rulings made by the CA.
Clearly, given its consent to the foregoing conditions, ADPROM could not have compelled MARDC to satisfy the unpaid billings unless and until its progress billings had been approved by ALA. In the same vein, no default could be attributed to MARDC in the absence of such action from ALA. Records indicate that as of May 9, 1997, pending the settlement of the disputed matters between the parties, ALA only recommended payment by MARDC of the reduced amount of P1,468,348.60.31 ADPROM then could neither fault nor penalize MARDC for its deferment of the demanded amounts. On the other hand, in withliolding approval, ALA made clear its grounds for refusing to agree on the full amount of ADPROM's claim.Article III
SCOPE OF OWNER'S RESPONSIBILITY
3.1 [MARDC] shall make payments directly to [ADPROM] based on the latter''s progress billing as approved by [ALA].Article IV x x x x
CONTRACT PRICE AND TERMS OF PAYMENT
4.2 Terms of Payment
x x x x 4.2.3 [MARDC] shall pay [ADPROM] within seven (7) working days from receipt of the progress billing submitted by [ADPROM], duly approved by [ALA]. x x x x 4.2.5 All payments/releases shall be effected strictly in accordance with the "Scope of Works, Cost Breakdown and Weight Percentage for Billing" attached as Annexes A and C and the stipulations herein provided and upon presentment by [ADPROM] of a written certification certifying as to the percentage of completion and accompanied by a certificate attesting to the said percentage of completion and recommending approval by [ALA] for the appropriate payment thereof, subject to the warranties and obligations of [ADPROM].30 (Emphasis ours)
Section 5.1 of Article V referred to in the aforequoted provision provides that the townhouse project shall be completed within 180 calendar days, to be effective from the date of the agreement's execution, MARDC's payment of the required down payment and the issuance of a Notice to Proceed.36 Based on records, the parties agreed on an extension of the period to complete the project until April 30, 1997.37Article IX
LIQUIDATED DAMAGES
9.1. [ADPROM] acknowledges that time is of the essence of this Agreement and that any unexcused day of delay as determined in accordance with [S]ection 5.1 hereof as defined in the general conditions of this Agreement will result in injury or damages to [MARDC], in view of which, the parties have hereto agreed that for every calendar day of unexcused delay in the completion of its Work under this Agreement, [ADPROM] shall pay [MARDC] the sum of Thirty[-]Nine Thousand Five Hundred (P39,500.00) per calendar day as liquidated damages. Said amount is equivalent to 1/10 of 1% of the Total Contract Price. Liquidated damages under this provision may be deducted by [MARDC] from the stipulated Contract Price or any balance thereof, or to any progress billings due [ADPROM].35
Article 2226 of the Civil Code allows the parties to a contract to stipulate on liquidated damages to be paid in case of breach. It is attached to an obligation in order to insure performance and has a double function: (1) to provide for liquidated damages, and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach. As a general rule, contracts constitute the law between the parties, and they are bound by its stipulations. For as long as they are not contrary to law, morals, good customs, public order or public policy, the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient.39 (Citations omitted)Subsequent to the execution of the Construction Agreement, the parties decided to vary the terms of their contract by reducing the project's number of units and the corresponding contract price. There was nonetheless no indication that they resolved to reduce the amount of liquidated damages to be paid by ADPROM in the event of its unexcused delay. The foregoing circumstances also do not affect ADPROM's entitlement to the unpaid billings of P1,468,348.60, after it was established before the CIAC and by the CA that work for such value had been completed by the company.40 MARDC then rightly had to compensate ADPROM for such amount, together with the 10% retention of P2,806,814.00.
Endnotes:
1Rollo, pp. 2-72.
2 Montaire in the Petition for Certiorari.
3 Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices Corona Ibay-Somera and Portia Aliño-Hormachuelos concurring; rollo, pp. 311-317.
4 Penned by Associate Justice Jane Aurora C. Lantion, with Associate Justices Josefina Guevara-Salonga and Japar B. Dimaampao concurring; id. at 319-320.
5 Id. at 80-09.
6 Id. at 105-111.
7 Id. at 107.
8 Id. at 312.
9 Id. at 81.
10 Id. at 261.
11 Id. at 268-269.
12 Id. at 271-272.
13 Id. at 271-275, 312.
14 Id. at 273.
15 Id. at 283.
16 Id. at 284, 312.
17 Id. at 283.
18 Id. at 289.
19 Id. at 312-313.
20 Id. at 80-99.
21 Id. at 98-99.
22 Id. at 311-317.
23 Id. at 317.
24 Id. at 319-320.cralawred
25See Phil. Commercial Int'l. Bank v. CA, 452 Phil. 542, 551 (2003).
26 655 Phil. 25 (2011).cralawred
27 Id. at 44-45.
28Rollo, pp. 315-316.
29 Id. at 99.
30 Id. at 107.
31 Id. at 312.
32 Id. at 279-280.
33 Id. at 284-286.
34 Id. at 109-A.
35 Id. at 109.
36 Id. at 107.
37 Id. at 97, 260.
38 686 Phil. 154 (2012).
39 Id. at 164-165.cralawred
40Rollo, p. 283.
41S.C. Megaworld Construction and Development Corporation v. Parada, G.R. No. 183804, September 11, 2013, 705 SCRA 584, 609.