G.R. No. 199705 - Republic vs. Roguza Development Corporation

The Rosario-Pugo-Baguio Road Rehabilitation Project – Contract Package I was awarded to Roguza Development Corporation (RDC) by the Department of Public Works and Highways (DPWH).
The project involved constructing a 2.10‑kilometer diversion road with a contract duration of 12 months.

DPWH issued the Notice to Proceed (“NTP”) on May 15, 1997, prompting RDC to mobilize manpower, equipment, and other resources.
RDC began actual construction on May 24, 1997; work was suspended on June 4, 1997 due to DPWH’s failure to secure the required Environmental Clearance Certificate and settle right of way issues.
Suspension lasted for almost 32 months until February 8, 2001, when DPWH issued the Resume Order; the project was eventually completed on September 6, 2001.

RDC claimed payment for the idle time of equipment and other expenses incurred during the suspension period.
The claim was based on provisions under Clause 42.2 in relation to Clause 54.1 of the Conditions of Contract (FIDIC) and included an equipment rental component initially computed using rates provided by the Association of Carriers and Equipment Lessors, Inc. (ACEL).
RDC originally claimed an amount of P93,782,093.64.

DPWH set up an Ad Hoc Committee to evaluate RDC’s claim.
The Committee recommended payment of a substantially reduced amount of P26,142,577.09, conditioning this on RDC waiving its right to claim the balance or any damages, basing the calculations on the lower “bare rental rates” from RDC’s unit price estimate rather than the higher ACEL rates.
RDC, allegedly under financial distress, executed a Letter Waiver acknowledging the reduced settlement.

RDC, dissatisfied with DPWH’s actions, filed a Complaint with the Construction Industry Arbitration Commission (CIAC) demanding additional compensation (later computed as an idle time based award of P50,179,577.00, with a balance payable of P22,409,500.00).
CIAC rendered its Arbitral Award, which:

Granted a reduced compensation amount in favor of RDC;
Held the Letter Waiver “inefficacious” based on evidence of financial distress;
Computed the idle time for specific equipment (noting that only four bulldozers were involved despite RDC’s claim for more).

RDC subsequently filed motions for reconsideration (First CIAC MR and Second CIAC MR), which were denied by the CIAC, with the motions issued by orders signed solely by CIAC Chairman Alfredo Tadiar, not accompanied by the signatures of the other members.

DPWH filed a petition for review with the CA (DPWH’s CA Petition) under Rule 43, seeking reversal of the CIAC Award.
Concurrently, RDC filed its own CA Petition, challenging:

The timeliness and validity of its motion for reconsideration, arguing that it had been filed within a permissible period;
The improperly signed CIAC Orders (since they were not signed by all three arbitral tribunal members);
The appropriateness of applying the lower bare rental rates instead of the ACEL rates and the limitation to four bulldozers.

Despite the existence of two separate CA petitions involving identical issues and parties, each party advanced its own procedural course.
RDC’s counsel did not disclose the pendency of DPWH’s CA Petition (filed by the CA 7th Division) when filing RDC’s CA Petition.

On October 29, 2010, DPWH’s CA Petition was granted by the CA 7th Division, affirming the CIAC Award on balance and effectively resolving the substantive dispute.
RDC’s CA Petition was later granted by the CA Special Seventeenth Division on April 26, 2011, directing DPWH to pay additional compensation of P61,748,346.00 and setting aside the First and Second CIAC Orders due to the lack of proper signatures.
DPWH filed a motion for reconsideration, denied by the Former Special Seventeenth Division on December 14, 2011.
Amidst these conflicting decisions, issues of res judicata and the failure of RDC’s counsel to disclose the earlier pending case came to the fore, prompting the petition for review.

Whether the CA Special Seventeenth Division erred in directing DPWH to pay RDC an additional compensation amount of P61,748,346.00, essentially representing the difference between RDC’s original claim and the reduced amount accepted under the Letter Waiver.

Whether the principles of res judicata preclude RDC from pursuing additional compensation given that a final decision had already been rendered by the CA 7th Division in an earlier, parallel proceeding.

Whether the CIAC motions for reconsideration (First and Second CIAC MRs) were validly filed and should have been given effect, especially when considering the timeliness and nature (a “mathematical correction” of the Arbitral Award) of such motions.

Whether the alleged financial distress of RDC, which led to its execution of the Letter Waiver, can amount to the presence of undue influence sufficient to invalidate the waiver.

Whether RDC was given a full and fair opportunity to litigate the pertinent issues in both CA proceedings, particularly in light of the non-disclosure by its counsel of the pendency of the CA 7th Division case.