Title
Sunway Builders vs. Commission on Audit
Case
G.R. No. 252986
Decision Date
Sep 20, 2022
Sunway Builders' claim for payment based on a final CIAC award was denied by COA, which overstepped its authority by re-evaluating the case. The Supreme Court ruled COA committed grave abuse of discretion, ordering execution of the award.

Case Summary (G.R. No. 252986)

Petitioner

Sunway Builders filed a petition for review on certiorari to reverse COA Proper Decision No. 2019-082 (March 27, 2019) and a COA resolution (November 25, 2019) that denied its money claim to collect P10,166,654.90, representing unpaid accomplished work, interest, retention, attorney’s fees, cost of arbitration, and statutory interest.

Respondents

The respondents are the Commission on Audit (through the COA Proper) and the Municipality of Carranglan. COA, through its Audit Team Leader (ATL) and Regional Director, recommended denial of the claim; COA Proper adopted those findings and ordered further audit actions, potential forfeiture of performance security, computation of liquidated damages, and referral to the Ombudsman if warranted.

Key Dates

  • Contract execution: 2004 (during Mayor Otic’s term).
  • Work commencement: August 8, 2005.
  • Extended original completion: from August 4, 2008 to September 2008; project remained incomplete.
  • Sangguniang Bayan unilaterally terminated contract: 2011.
  • CIAC Award promulgated: August 25, 2015 (Sunway’s award became final and executory; Writ of Execution dated November 24, 2015).
  • COA Proper Decision denying money claim: March 27, 2019; COA resolution denying reconsideration: November 25, 2019.
  • Supreme Court decision in the present petition: September 20, 2022 (therefore, the 1987 Constitution is the governing constitutional framework).

Applicable Law and Rules

  • 1987 Philippine Constitution (governing constitutional framework).
  • Presidential Decree No. 1445 (COA general jurisdiction provisions quoted in the record).
  • Rule 64, in relation to Rule 65, Rules of Court (certiorari proceedings to assail COA acts).
  • Rule 13 (service and filing) and A.M. No. 19-10-20-SC amendments to the Rules of Court (2019 amendments effective May 1, 2020).
  • 2009 Revised Rules of Procedure of the Commission on Audit (Rule VIII, Section 2 on money claims).
  • CIAC rules and the exclusive jurisdiction conferred by Executive Order No. 1008 (as recognized in precedent).
  • Implementing Rules and Regulations of Republic Act No. 9184 (provisions cited in the COA decision on liquidated damages and forfeiture: Sections 68 and 69.2).
  • Relevant jurisprudence referenced in the decision includes Taisei Shimizu Joint Venture v. Commission on Audit, Tourism Infrastructure and Enterprise Zone Authority v. Global-V Builders Co., and other cases defining COA and CIAC jurisdictional limits.

Antecedents and Underlying Contractual Dispute

Carranglan financed the water-supply project through a loan from the Development Bank of the Philippines. Sunway began work in 2005 but did not complete the project by the extended completion date. The Sangguniang Bayan terminated the contract in 2011. Sunway asserted that it had accomplished 59% of the works and sought payment; after nonpayment by Carranglan under subsequent local administration, Sunway filed an arbitration complaint at the CIAC (CIAC Case No. 02-2015) for unpaid accomplishment and attorney’s fees (totaling P19,819,589.00 as initially claimed).

CIAC Proceedings and Award

CIAC conducted arbitration; Carranglan participated in some pre-hearing steps but its representative failed to appear at the hearing, and the municipality did not cross-examine claimant’s evidence or object to admitted documentary evidence. The CIAC, in an award dated August 25, 2015, partially granted Sunway’s complaint and computed the unpaid accomplishment and other items, rendering a total award of Php8,353,327.17 plus cost of arbitration and interest, and directing reimbursement and interest to accrue as specified. The CIAC determined total project cost as P18,211,760.00 and found percentage of completion as 59%, relying on documents including Sunway’s Statement of Account, Request for Payment No. 5 certified/approved by municipal officials including Mayor Otic, Mayor Otic’s January 13, 2010 letter to DBP requesting payment representing 59% completion, and a Sunway Statement of Work Accomplished verified by a municipal engineer and approved by Mayor Otic. Carranglan did not appeal and the award became final and executory; a Writ of Execution followed.

COA Proceedings and Denial of the Money Claim

Sunway later filed a money claim before the COA Proper to enforce the CIAC award and to collect aggregate amounts reflecting unpaid accomplishment, interest, retention, attorney’s fees, arbitration costs, and statutory interest to date (P10,166,654.90 as computed in the petition). The COA Audit Team Leader concluded the claim lacked legal basis, noting the claimed accomplishments were performed beyond the original contract period and asserting Sunway should have been liable for liquidated damages for delay. The COA Regional Director recommended denial on grounds of project delay, implementation lapses/violations, and nonobservance of contractual terms. COA Proper gave weight to ATL and Regional Director findings, concluded the project was only 36% accomplished (not 59%), found possible overpayments and undocumented payments (AOM 2007-004), and determined the project’s incompletion was attributable to Sunway, warranting forfeiture of performance security and computation of liquidated damages. COA Proper then denied Sunway’s petition for a money claim in toto and directed further audit actions and possible administrative/disciplinary referrals.

Petitioner’s (Sunway’s) Contentions

Sunway argued that COA had no authority to modify or reverse a final and executory CIAC award because CIAC has exclusive and original jurisdiction over construction-contract disputes involving government entities. Sunway asserted that COA committed grave abuse of discretion by disregarding and refusing to enforce the final CIAC award and by re-litigating matters already resolved by the CIAC.

Respondents’ (COA and Municipality) Contentions

COA, through the Office of the Solicitor General, raised procedural defenses (purported failure to attach certain papers and an unsigned explanation regarding service by mail). Substantively, COA maintained jurisdiction over money claims against the government, upheld its audit findings that the municipality had overpaid Sunway, and defended its denial of the money claim.

Issue Presented to the Supreme Court

Whether COA Proper committed grave abuse of discretion in denying Sunway’s money claim and refusing to execute a final and executory CIAC award.

Court’s Procedural Rulings (treatment of petition, attachments, and service)

  • Nomenclature: The Supreme Court treated Sunway’s filing as a petition for certiorari under Rule 64 (in relation to Rule 65) since it was filed within the 30‑day period required under Rule 64.
  • Documentary attachments: The Court applied the Air Philippines guideposts and found that Sunway’s submission of the CIAC award, writ of execution, and the assailed COA Proper decision and resolution sufficiently supported Sunway’s material allegations and were adequate for the petition to proceed. The absence of some referenced documents (contract, certain letters) was not fatal where their contents could be ascertained from the CIAC award and COA decision.
  • Service/formalities: The Court held that Sunway’s failure to sign the explanatory page regarding service by mail did not vitiate the filing, given the 2019 amendments to the Rules of Court (A.M. No. 19-10-20-SC) which removed the old requirement that personal service be prioritized and dispense with the written explanation for alternative modes of service for filings after the amendments took effect.

Jurisdictional Principles: COA vs. CIAC (as applied by the Court)

  • COA’s general jurisdiction to audit and adjudicate money claims against the government is established (PD No. 1445 and COA rules), but it is not exclusive. Specific tribunals with jurisdiction over particular disputes (e.g., CIAC for construction contract disputes) may have original and exclusive jurisdiction when parties validly submit the dispute to them.
  • Where a construction dispute was validly submitted to CIAC, CIAC’s jurisdiction over the controversy (including adjudication and determination of facts and entitlement) takes precedence and is exclusive, to the exclusion of COA, as held in Taisei and related precedents.
  • Once a court or tribunal (here, the CIAC) has validly exercised jurisdiction and rendered a final, executory award, COA lacks appellate power over that award and cannot relitigate or re-examine the merits and evidence already resolved by CIAC. COA is bound by the immutability of final judgments and awards.

Nature and Extent of COA’s Audit Power over Finalized CIAC Awards

  • The COA’s powers become limited when the money claim is based on a final and executory judgment or arbitral award. In such circumstances, COA’s proper role aligns with execution or implementation rather than re-adjudication.
  • COA may perform limited validation functions: verify the finality of the award; determine source(s) of funds from which the award may be satisfied; verify clerical or mathematical accuracy of the award computation; check for prior payments to prevent double payment. These acts are consistent with COA’s duty to safeguard public funds while respecting the finality of adjudicative determinations.
  • COA may not modify, reverse, or relitigate factual findings or legal conclusions already decided by CIAC; doing so constitutes grave abuse of discretion.

Application of Principles to the Present Case

  • The CIAC acquired jurisdiction over the construction dispute and issued a final, executory award finding 59% completion and computing unpaid accomplishment. Carranglan did not appeal and thus the award’s finality is undisputed.
  • COA Proper, however, substantively reexamined the underlying facts (completion percentage, payments made), discredited CIAC’s evidentiary reliance on certain documents for reasons not

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