G.R. No. 238671 - Taisei Shimizu Joint Venture vs. Commission on Audit

Case Summary (G.R. No. 238671)

Petitioner, Respondent and Subject Matter

TSJV sought payment of unpaid billings and related monetary claims arising from its contract with DOTr for construction of the New Iloilo Airport. After arbitration before the CIAC resulted in a final and executory award in favor of TSJV, COA partially disapproved payment of the award. TSJV filed a petition for certiorari before the Supreme Court challenging COA’s modification of the arbitral award.

Key Dates and Procedural Posture

Contract agreement: March 15, 2004. CIAC Final Award: December 11, 2014. CIAC Order reducing the award: February 20, 2015. CIAC execution writ and garnishment efforts: 2015. COA Decision No. 2016-395 (partial approval/disapproval): December 21, 2016. COA Resolution denying reconsideration: January 22, 2018. Supreme Court disposition: grant of certiorari and remand for payment of balance (per the decision summarized in the prompt).

Applicable Law and Rules Cited

Constitutional source: Article IX-D (Commission on Audit) of the 1987 Philippine Constitution. Relevant statutes and instruments: Presidential Decree No. 1445 (Government Auditing Code), Executive Order No. 1008 (Construction Industry Arbitration Law establishing CIAC) including Section 19 (finality of awards), Republic Act No. 9184 (Government Procurement Reform Act) Section 61 and its IRR, PD 1594 and EO 40 provisions on price adjustments, COA’s 2009 Revised Rules of Procedure (Sections on general and original jurisdiction), Rules of Court (Rule 142 and related provisions), Civil Code Article 2208(5), and CIAC Revised Rules of Procedure (Section 16.5 on costs).

Factual Antecedents and Claims Filed by TSJV

Upon project completion, TSJV discovered unpaid billings and filed a Request for Arbitration and Complaint with the CIAC (CIAC Case No. 26-2014) asserting eight money claims totaling Php2,316,687,603.03, which included compensation for unforeseen price increases (for imported structural steel and electrical cables), currency conversion loss, interest on delayed payments, adjustments under annexed bid documents, costs due to extension of time, embankment work additional costs, damages for delayed payment of aggregates, and attorney’s fees and litigation expenses.

CIAC Proceedings, Awards and Execution Attempts

The CIAC’s Final Award (Dec. 11, 2014) granted Claims Nos. 1, 3, 4, 5, and 8 in an aggregate amount of Php223,401,870.83 and ordered six percent per annum interest from finality until payment. On DOTr’s motion, the CIAC corrected the award (Feb. 20, 2015) by deleting an input VAT component, reducing the award to Php216,073,986.89. CIAC subsequently issued writs of execution; garnishment notices were sent to several banks, but execution efforts stalled as banks reported lack of DOTr funds and LBP advised that COA approval was required for payment from government funds. TSJV then filed a petition with COA for enforcement and payment.

COA Decision and Grounds for Partial Disapproval

By Decision No. 2016-395 (Dec. 21, 2016), COA approved only Claim No. 4 (Php104,661,421.35) and disallowed Claims Nos. 1, 3, 5, and 8. COA’s reasoning: Claim No. 1 (price escalation) was governed by RA 9184 Section 61 and its IRR and allegedly lacked required NEDA endorsement and head-of-procuring-agency approval for Variation Order No. 5; Claims for interest on delayed payments (No. 3) and compensation for extension-of-time costs (No. 5) had no statutory authorization and would allegedly sanction payment attributable to negligence of government officers; Claim No. 8 (attorney’s fees and litigation costs) violated Rule 142, Sec. 1 of the Rules of Court disallowing costs against the Republic unless provided by law. TSJV’s motion for partial reconsideration was denied (COA Resolution No. 2018-047), with COA reiterating noncompliance with PD 1594 and EO 40 authorizations for price adjustments and sustaining disallowances.

TSJV’s Contentions on Reconsideration

TSJV argued that COA’s action: (a) violated EO No. 1008 Section 19 and the immutability of final and executory arbitral awards; (b) conflicted with COA’s own prior decision in Monolithic Construction (where COA enforced a final and executory money judgment and stated such judgments could no longer be modified); (c) incorrectly applied RA 9184 retroactively; and (d) erred in denying attorney’s fees given Article 2208(5) of the Civil Code and CIAC rules allowing costs in arbitral awards.

COA Chairperson’s Dissenting Position

COA Chairperson Michael G. Aguinaldo dissented, highlighting two categories of money claims COA encounters: (1) original money claims filed with COA (generally limited to liquidated claims readily determinable from accounting records), and (2) money claims arising from final and executory judgments or arbitral awards. He noted jurisprudence (e.g., Uy v. COA) recognizing COA’s quasi-judicial role in original money claims but insisted that COA may not set aside final and executory decisions of other adjudicative bodies.

Issues Framed for Supreme Court Resolution

The Supreme Court framed two principal issues: (I) whether COA has exclusive jurisdiction over money claims due from or owing to the government; and (II) whether COA, in exercising its audit power, may disturb final and executory decisions of courts, tribunals, or other adjudicative bodies.

Supreme Court’s Ruling on COA Jurisdictional Scope

The Court held that COA’s primary jurisdiction over money claims due from or owing to the government is not exclusive. Legislative and jurisprudential materials show other forums (regular courts, specialized tribunals, and arbitral bodies) may validly exercise jurisdiction over money claims against the State. The Court cited Batas Pambansa Blg. 129 (as amended by RA 7691) allocating civil jurisdiction to the first and second level courts, the concurrent supervision of other oversight bodies (e.g., Central Bank vis-à-vis government banks), and prior decisions (e.g., Development Bank of the Philippines v. COA; TIEZA v. Global-V Builders) recognizing CIAC’s jurisdiction over construction disputes when parties submit to arbitration under EO No. 1008. Thus, when CIAC validly acquired jurisdiction and rendered a final award, COA should not displace the adjudicative competence vested in CIAC.

Distinction Between Two Types of Money Claims and Limits of COA Review

The Court adopted the Chairperson’s distinction: (a) original money claims filed with COA — traditionally limited to liquidated claims determinable from accounting records or vouchers; (b) money claims arising from final and executory judgments or arbitral awards — for which COA’s role is confined principally to the execution stage. COA does not possess appellate power to review or modify findings of fact or law resolved by courts or other adjudicative bodies that had jurisdiction and produced final judgments or awards.

Immutability of Final Judgments and COA’s Constrained Role

The Court reaffirmed the doctrine of res judicata and the immutability of final judgments: once a competent tribunal renders a final and executory judgment or award, its factual and legal determinations are conclusive and cannot be altered except by the proper modes (appeal, annulment) or under recognized exceptions (clerical errors, nunc pro tunc entries causing no prejudice, void judgments, or excepti

Case Syllabus (G.R. No. 238671)

Case Details

Citation: 873 Phil. 323; 118 OG No. 10, 2155 (March 7, 2022), En Banc.
G.R. No.: 238671, filed June 02, 2020.
Ponente: Justice Lazaro-Javier, J.
Relief sought: Petition for certiorari under Rule 65 in relation to Rule 64 of the Rules of Court.
Subject matter: Challenge to COA Decision No. 2016-395 (Dec. 21, 2016) and COA Resolution No. 2018-047 (Jan. 22, 2018) in COA C.P. Case No. 2015-622, which partially disapproved payment of a final and executory arbitral award rendered by the Construction Industry Arbitration Commission (CIAC) in favor of petitioner Taisei Shimizu Joint Venture (TSJV).

Parties

Petitioner: Taisei Shimizu Joint Venture (TSJV) — a joint venture comprised of Taisei Corporation and Shimizu Corporation, formed solely for bidding on and executing the New Iloilo Airport Project.
Respondents: Commission on Audit (COA) and Department of Transportation (DOTr), formerly Department of Transportation and Communications (DOTC).
Other actors: Construction Industry Arbitration Commission (CIAC), Office of the Solicitor General (OSG), various banks (PNB, PVB, LBP, DBP), Ex Officio Sheriff, Clerk of Court, Regional Trial Court, Makati City.

Facts and Antecedents

TSJV was the winning contractor for the New Iloilo Airport project; contract with DOTr dated March 15, 2004.
Upon completion and delivery of the project, certain TSJV billings remained unpaid by the DOTr.
TSJV sought collection administratively and ultimately filed a Request for Arbitration and Complaint with CIAC (docketed CIAC Case No. 26-2014) asserting eight monetary claims arising from contract performance and post-completion adjustments.
TSJV’s original aggregate monetary claim (per Terms of Reference) totaled Php 2,316,687,603.03 (including JPY-denominated components and VAT claims).

TSJV’s Claims (as presented to CIAC)

Claim No. 1: Compensation for unforeseen increase in prices of structural steel and electrical cables imported from Japan under Variation Order No. 5 — JPY72,486,598.00 (with portions claimed and VAT and interest indicated).
Claim No. 2: Currency conversion loss — Php 41,909,962.42 (claimed; later denied).
Claim No. 3: Interest on delayed payments — Php 246,888,166.94 (claimed).
Claim No. 4: Adjustment of peso component of Work Items under Annex K — Php 93,447,697.63 (claimed).
Claim No. 5: Compensation for costs due to extension of time (EOT) — Php 81,628,490.11 (claimed).
Claim No. 6: Additional costs from performing embankment works — Php 142,383,393.00 (claimed; later denied).
Claim No. 7: Damages for DOTr’s failure to pay additional costs of aggregates timely — Php 447,040,482.65 (claimed; later denied).
Claim No. 8: Attorney’s fees and litigation expenses — Php 7,225,221.89 and Php 9,916,881.31 for litigation expenses (claimed).

CIAC Proceedings and Awards

Final Award (Dec. 11, 2014): CIAC granted Claims Nos. 1, 3, 4, 5, and 8 in specified amounts and denied Claims Nos. 2, 6, and 7. CIAC directed DOTr to pay the awarded total plus six percent (6%) interest per annum from finality until payment.
- Awarded amounts (Final Award):
  - Claim No. 1 — Php 37,079,858.18
  - Claim No. 3 — Php 68,393,583.40
  - Claim No. 4 — Php 104,661,421.35
  - Claim No. 5 — Php 6,032,437.04
  - Claim No. 8 — Php 7,234,570.86
  - Total awarded: Php 223,401,870.83 (plus 6% p.a. interest from Dec. 11, 2014)
On DOTr’s motion for correction, CIAC Order dated February 20, 2015 reduced Claim No. 3 (citing TSJV’s failure to include input VAT in the Terms of Reference and belated VAT claim in memorandum), thereby amending total:
- Amended total: Php 216,073,986.89 (plus 6% p.a. interest from Dec. 11, 2014).

Attempted Execution of CIAC Award

After finality of the CIAC award, TSJV moved for execution; DOTr opposed arguing the funds sought were public in character.
CIAC Resolution (Apr. 22, 2015) granted execution and directed the ex officio sheriff of RTC Makati City to implement the writ.
Ex Officio Sheriff served demand on DOTr and issued garnishment notices to PNB, PVB, LBP, and DBP.
Banks’ responses:
- DBP, PVB, PNB informed Sheriff they did not hold funds or properties in DOTr’s name.
- LBP advised claimant must first obtain COA approval for payment of the arbitral award.
DOTr advised TSJV to refer the arbitral award to COA as a condition sine qua non for payment.
Following unsuccessful execution attempts, TSJV filed with COA a petition for enforcement and payment of the arbitral award.

COA Proceedings and Rulings

COA Decision No. 2016-395 (Dec. 21, 2016):
- COA approved payment only to the extent of Php 104,661,421.35 (amount corresponding to Claim No. 4), disapproving the remainder of the CIAC award.
- COA invoked its asserted primary jurisdiction over money claims against government agencies and stated it reviewed evidence to find only Claim No. 4 legally supportable.
- Specific COA rationales:
  - Claim No. 1 (price increase of imported materials): COA held Section 61 of RA No. 9184 and its IRR applied; parties allegedly failed to obtain required NEDA approval and procuring agency head approval for Variation Order No. 5; petitioner did not point to any treaty or executive agreement exempting application of RA 9184; COA found no proof that an unforeseen extraordinary cost increase occurred.
  - Claim Nos. 3 and 5 (interest on delayed payments and EOT-related compensation): COA denied payment, reasoning there was no law authorizing payment of interest or extension-of-time costs and that allowance of interest would permit payment arising from alleged negligence of government officers.
  - Claim No. 8 (attorney’s fees and litigation costs): COA disallowed under Section 1, Rule 142 of the Rules of Court that “no costs shall be allowed against the Republic of the Philippines unless otherwise provided by law.”
TSJV received Php 104,661,421.35 as the approved award portion.

TSJV’s Motion for Reconsideration and COA Resolution

TSJV filed a partial motion for reconsideration seeking the remaining Php 111,412,565.54, advancing grounds:
- COA contravened Section 19 of Executive Order No. 1008 (Construction Industry Arbitration Law) and principle of immutability of final and executory judgments.
- COA decision conflicted with COA’s own Decision in Monolithic Construction and Concrete Products, Inc. v. Department of Transportation and Communication, which enforced a final and executory judgment recognizing its immutability.
- RA 9184 cannot be applied retroactively to the contract in question.
- TSJV cited Article 2208(5) of the Civil Code and Section 16.5 of CIAC’s Revised Rules of Procedure to support award of attorney’s fees and costs of litigation.
COA Resolution No. 2018-047 (Jan. 22, 2018):
- COA denied TSJV’s motion for reconsideration, sustaining prior disallowances.
- COA reiterated non-compliance with Section 8 of PD 1594 and Section 33 of EO 40 regarding authorizations/approvals for pr
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