G.R. No. 163972-77 - Daan vs. Sandiganbayan

Case Summary (G.R. No. 163972-77)

Factual Background

Roguza Development Corporation was awarded the Rosario-Pugo-Baguio Road Rehabilitation Project, Contract Package I, a 2.10-kilometer diversion road with a twelve-month contract period. DPWH issued the Notice to Proceed on May 15, 1997, and RDC commenced construction on May 24, 1997. The project was suspended effective June 4, 1997 due to DPWH’s failure to secure an Environmental Clearance Certificate and to settle right-of-way issues. The suspension extended for approximately thirty-two months until RDC received a Resume Order dated February 8, 2001. RDC completed the project on September 6, 2001.

Claim and Administrative Adjustment

RDC asserted a claim against DPWH for idle time of equipment and related expenses in the amount of P93,782,093.64 pursuant to Clauses 42.2 and 54.1 of the FIDIC Conditions of Contract. The equipment rental component relied on an equipment guidebook published by the Association of Carriers and Equipment Lessors, Inc. (ACEL). DPWH formed an Ad Hoc Committee which recommended payment to RDC in a reduced amount of P26,142,577.09, computed using the lower bare rental rates appearing in RDC’s bid documents rather than the higher ACEL rates. DPWH tendered that reduced amount, and RDC executed a Letter-Waiver dated November 14, 2006, stating that it “waives the right to claim any other amount in relation to this claim, including damages,” although RDC later alleged that it executed the Letter-Waiver under financial duress.

CIAC Proceedings and Arbitral Award

RDC filed a complaint before the CIAC seeking payment of P67,639,576.55 as the balance of its idle time claim. The Arbitral Tribunal rendered an award dated July 17, 2008 directing DPWH to pay RDC P22,409,500.00 with interest at six percent per annum from the date of the award and at twelve percent per annum after finality. The Tribunal found that RDC had established financial distress at the time it accepted the reduced payment and declared the Letter-Waiver inefficacious. The Tribunal further concluded that bare rental rates were the agreed basis and that only four bulldozers had been contracted, resulting in a total validated claim of P50,179,577.00, less payment received, leaving a balance of P22,409,500.00.

Post-Award CIAC Motions

RDC filed a motion for reconsideration of the Arbitral Award (First CIAC MR), which the CIAC denied on December 8, 2008 for having been filed out of time. The First CIAC Order bore only the signature of CIAC Chairman Alfredo Tadiar. RDC filed a second motion for reconsideration of the First CIAC Order (Second CIAC MR), which the CIAC likewise denied by order dated January 26, 2009, again signed solely by Chairman Tadiar.

Parallel Court of Appeals Petitions

DPWH filed a petition for review under Rule 43 before the Court of Appeals challenging the Arbitral Award; that petition was docketed as CA-G.R. SP No. 104920. Independently, RDC filed its own petition for review under Rule 43 before a different division of the Court of Appeals, docketed as CA-G.R. SP No. 107412, assailing the First and Second CIAC Orders and contending, among other points, that its First CIAC MR had been timely filed, that the Arbitral Tribunal erred in applying bare rates instead of ACEL rates, and that it was entitled to compensation for five bulldozers rather than four.

Court of Appeals Dispositions and Conflict

The Court of Appeals, 7th Division, issued a Decision dated October 29, 2010 granting DPWH’s petition and reversing and setting aside the Arbitral Award. RDC’s motion for reconsideration of that 7th Division Decision was denied on July 5, 2011 and became final. Separately, the Court of Appeals, Special Seventeenth Division, issued the assailed Decision dated April 26, 2011 in favor of RDC. The Special 17th Division affirmed the Arbitral Award but modified it to require DPWH to pay RDC P61,748,346.00 as the balance of compensation for idle time, and it set aside the First and Second CIAC Orders for lacking the signatures of two members of the Arbitral Tribunal. The Special 17th Division treated RDC’s First CIAC MR as a motion for correction under Section 17.1 of the CIAC Revised Rules and resolved timeliness in favor of RDC in light of a date discrepancy in service.

Procedural Posture in the Supreme Court

DPWH, through the Office of the Solicitor General, sought relief in the Supreme Court by filing a Petition for Review on Certiorari under Rule 45, Rules of Court. The Supreme Court received pleadings and directed RDC to comment. The Court required RDC’s counsel, Atty. Roehl M. Galandines, to show cause for noncompliance with the Court’s directive to file the comment and later entertained a manifestation and motion to admit the comment.

Issue Presented

The sole issue before the Supreme Court was whether the Court of Appeals, Special Seventeenth Division, erred in directing DPWH to pay RDC additional compensation in the amount of P61,748,346.00, representing the purported difference between RDC’s original claim and the amount RDC had accepted under the Letter-Waiver.

Supreme Court’s Ruling

The Supreme Court held the petition meritorious and granted DPWH’s Petition for Review. The Court observed that the Court of Appeals, 7th Division, had earlier rendered a Decision dated October 29, 2010 granting DPWH’s petition and reversing and setting aside the Arbitral Award; that decision became final on July 30, 2011 after denial of reconsideration. The Supreme Court concluded that the Special 17th Division’s later Decision and its Resolution conflicted with that final 7th Division judgment and could not stand.

Legal Basis and Reasoning

The Court grounded its reversal on the doctrine of res judicata. The Court recited the requisites for res judicata as drawn from precedent: identity of the issue or fact actually litigated and determined in the former suit; identity of the parties or their privies; final judgment on the merits in the former proceedings; and that the party against whom res judicata is asserted had a full and fair opportunity to litigate the issues in the prior proceedings. The Supreme Court found all requisites present between CA-G.R. SP No. 104920 (DPWH’s petition) and CA-G.R. SP No. 107412 (RDC’s petition): the facts, issues and parties were identical; the CA 7th Division had resolved the substantive issues, including the allegation of undue influence under Article 1337 of the New Ci

Case Syllabus (G.R. No. 163972-77)

Parties and Posture

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) filed the present Petition for Review on Certiorari under Rule 45, Rules of Court from the Court of Appeals' judgment in CA-G.R. SP No. 107412.
ROGUZA DEVELOPMENT CORPORATION (RDC) was the respondent in the Petition for Review and the claimant in the underlying CIAC collection case, CIAC Case No. 05-2008.
The Court of Appeals’ Special Seventeenth Division issued the assailed Decision dated April 26, 2011 and the Former Special Seventeenth Division issued the assailed Resolution dated December 14, 2011.
The Supreme Court entertained the present petition after the CA Special 17th Division denied DPWH’s motion for reconsideration and DPWH filed this petition on February 6, 2012.

Facts

RDC was awarded the Rosario-Pugo-Baguio Road Rehabilitation Project, Contract Package I, with a 12-month contract and received the Notice to Proceed on May 15, 1997.
RDC commenced work on May 24, 1997 but work was suspended effective June 4, 1997 due to DPWH’s failure to secure an Environmental Clearance Certificate and to settle right-of-way issues.
The suspension lasted approximately thirty-two months and the project resumed by Resume Order dated February 8, 2001, with final completion by RDC on September 6, 2001.
RDC claimed P93,782,093.64 for idle time of equipment and attendant expenses pursuant to Clause 42.2 in relation to Clause 54.1 of the Conditions of Contract (FIDIC).
An Ad Hoc Committee of DPWH recommended payment of P26,142,577.09 based on lower bare rental rates appearing in the contract and conditioned payment on RDC’s waiver of further claims, which RDC accepted by a Letter dated November 14, 2006 (the Letter-Waiver).
RDC later asserted that it executed the Letter-Waiver under financial distress and made subsequent demands for the balance of its claim, culminating in the CIAC complaint.

CIAC Proceedings

RDC filed a complaint with the Construction Industry Arbitration Commission (CIAC) in CIAC Case No. 05-2008 seeking P67,639,576.55 as the balance of its idle time claim.
The CIAC rendered an Arbitral Award dated July 17, 2008 directing DPWH to pay RDC P22,409,500.00 with interest at six percent per annum from the award and twelve percent per annum after finality.
The Arbitral Tribunal found the Letter-Waiver to be inefficacious because RDC sufficiently established financial distress at the time of acceptance, determined bare rental rates were contractually agreed, and computed total recoverable claim at P50,179,577.00 resulting in the P22,409,500.00 balance.
RDC filed a motion for reconsideration of the Arbitral Award, which the CIAC denied by Order dated December 8, 2008 as filed out of time; that Order bore only the signature of CIAC Chairman Alfredo Tadiar.
RDC filed a second motion for reconsideration of the CIAC denial, which was