Blue Star Construction and Development Corp. v. National Housing Authority

THIRD DIVISION

[G.R. Nos. 241109-10. September 28, 2022.]

BLUE STAR CONSTRUCTION AND DEVELOPMENT CORPORATION, petitioner, vs. NATIONAL HOUSING AUTHORITY, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution dated September 28, 2022, which reads as follows:

"G.R. Nos. 241109-10 (Blue Star Construction and Development Corporation vs. National Housing Authority). — Repugned in this instant Petition for Review on Certiorari1 are the Consolidated Decision2 dated 26 October 2016 and the Resolution3 dated 15 August 2017 of the Court of Appeals in CA-G.R. SP Nos. 138821 and 138843. The CA reversed and set aside the Final Award 4 dated 12 January 2015 issued by the Construction Industry Arbitration Commission (CIAC) in favor of Blue Star Construction and Development Corporation (petitioner) in CIAC Case No. 13-2014.

ANTECEDENTS

On 7 December 2001, the National Housing Authority (respondent) conducted a bidding for joint venture on manufacture and construction of socialized low-cost housing units using innovative technology on prefabricated materials, building systems and methodology. 5 Petitioner eventually won the bidding and consequently, on 10 April 2002, a Joint Venture Agreement (JVA) 6 was entered into between petitioner and respondent.

Under the JVA, petitioner and respondent agreed to pool their resources to build and produce 50,000 units of cost efficient and durable houses using petitioner's Pueblocillo Building System (PBS) within a period of two years. 7

Moreover, petitioner agreed to manage the construction and manufacturing of the housing units, grant the use of the PBS, transfer for the use of the joint venture certain equipment, and loan Fifteen Million Pesos (P15,000,000.00) to the joint venture as working capital, among others. 8 For its part, respondent undertook to make a capital contribution of Fifteen Million Pesos (P15,000,000.00) within 15 days from the signing of the JVA in exchange for the right to use petitioner's PBS technology and its various construction equipment, as well as a 15,000,000.00-peso working capital loan. 9 In return, respondent was guaranteed a recovery or return of profits in the amount of One Hundred Eighty-Three Million and Six Hundred Thousand Pesos (P183,600,000.00) for the construction of 50,000 townhouse units, payable after the project or after its construction, or in lieu thereof, forty percent (40%) of the net profit of the JVA. 10

Thereafter, petitioner commenced to procure the equipment, materials, manpower and other resources for the said project. On 7 October 2002, it received a letter 11 from respondent, signed by its Officer-in-Charge, Joseph Peter S. Sison, instructing to construct and deliver 500 units of complete and ready-to-use townhouses for the Caluan Housing Project in Laguna, within 365 days. However, the said project was aborted as the project site was subsequently offered for sale.

On 24 March 2003, petitioner submitted to respondent its proposed plans, design and estimate for medium rise buildings in its bid to implement the JVA. Consequently, petitioner wrote to the then-Chairman of the Housing and Urban Development Coordinating Council (HUDCC), requesting that the JVA be implemented for respondent's alleged failure to comply with its obligations under the said agreement. 12 As it happened, the construction of socialized housing units under the JVA never materialized. 13

Subsequently, in an undated Supplemental Joint Venture Agreement, 14 respondent and petitioner agreed to extend the term of the JVA, which was set to expire on 10 April 2004, for another two years, or until 2006.

Four years thereafter, or on 16 August 2010, petitioner wrote to then-Vice President and Chairman of the HUDCC Jejomar C. Binay (VP Binay), requesting the HUDCC to take a look at its PBS and contract with respondent for the construction of 50,000 housing units.15 Pursuant thereto, respondent, through a Memorandum 16 dated 11 January 2011, informed then-VP Binay of the status of the JVA and the requirements needed to be complied with and/or renewed by petitioner. 17

On 4 March 2014, petitioner filed a complaint 18 with the CIAC against respondent for adjudication of its claims through arbitration. In the said complaint, petitioner averred that respondent reneged on its obligation under the JVA for its failure to allow it to finish the construction of the 50,000 housing units. Thus, petitioner prayed for the payment of damages consisting of: (a) unrealized profits in the amount of Three Hundred Six Million Pesos (P306,000,000.00), representing 60% of the expected profit from the JVA; b) foregone design and technology income; c) foregone rental equipment from specialized tools and machines and support equipment; and d) foregone rental income from temporary facilities. 19

In due course, the CIAC rendered its Final Award 20 on 8 January 2015, the fallo of which reads:

WHEREFORE, judgment is rendered and AWARD is made on the monetary claims in favor of Claimant in the following amounts: (a) P275,400,000, as actual damages by way of lost profits, (b) P15,000,000 for foregone income for the use of PBS and equipment, (c) P300,000 as attorney's fees or the total amount of P290,700,000.00 and cost of arbitration which is hereby directed to be paid by the Respondent to the Claimant.

Interest on the foregoing amount at the legal rate of 6% per annum computed from date of this Award shall be paid by Respondents until full payment.

SO ORDERED. 21

Aggrieved, petitioner and respondent separately filed their Petitions for Review 22 before the CA, docketed as CA-G.R. SP No. 138843 and CA-G.R. SP No. 138821, respectively.

On 3 June 2015, the CA issued a Resolution, 23 granting respondent's prayer for the issuance of a temporary restraining order (TRO), effectively enjoining the CIAC from implementing the Final Award and writ of execution. Subsequently, petitioner filed an urgent motion to lift the TRO, but the same was denied in the CA Resolution 24 dated 27 July 2015. Instead, the CA granted respondent's prayer for the issuance of a writ of preliminary injunction.

On 26 October 2016, the CA rendered the now-assailed ConsolidatedDecision, 25 which reversed and set aside the CIAC's Final Award. The dispositive portion thereof reads:

WHEREFORE, premises considered, NHA's Petition for Review in CA-G.R. SP No. 138821 is GRANTED. Accordingly, the Final Award promulgated on 12 January 2015 and the Order dated 20 March 2015 rendered by the CIAC is REVERSED and SET ASIDE, and the Complaint dated 28 February 2014 is hereby DISMISSED.

With the reversal of the assailed Final Award, and the dismissal of the Complaint, Bluestar's Petition for Review in CA-G.R. SP No. 138843 is likewise DENIED.

SO ORDERED. 26

To protect public interest, the CA strictly scrutinized the award by the CIAC, extensively examining the government contract involved in this case, i.e., the JVA. 27 The CA found that petitioner failed to prove its claims with reasonable degree of certainty premised upon competent proof and on the best evidence obtainable. The CA adjudged that petitioner's claims were based on speculation, conjecture or guesswork which the court cannot simply rely on in the determination of the amount of damages. 28

By the same token, petitioner's subsequent bid for reconsideration was denied by the CA through the challenged Resolution. 29

Petitioner failed to file an appeal from the said Resolution. Ensuingly, on 8 September 2017, the CA issued an entry of judgment, 30 stating that the Consolidated Decision rendered on 26 October 2016 had become final and executory.

Crestfallen, petitioner filed a Petition for Review on Certiorari31 before this Court on 22 August 2018, asseverating that it was furnished a copy of the 15 August 2017 Resolution of the CA, which denied its motion for reconsideration, only on 6 August 2018, when its counsel inquired with the court about the status of the case. Hence, petitioner avers that its petition was timely filed on 22 August 2018. Moreover, in the interest of substantial justice, petitioner begs this Court to give due course to its petition considering that the CA decided a question of substance in a manner not in accord with law or with applicable jurisprudence: first, in dismissing petitioner's complaint on the ground that it failed to exhaust the available administrative remedies before filing its complaint with the CIAC; second, in holding that there was no valid demand by petitioner to the respondent for the implementation of the JVA prior to filing its complaint with the CIAC; and third, in ruling that petitioner is not entitled to the award rendered by CIAC by reason of its violation of the JVA.

In its Comment, 32 respondent avouches that there is nothing more to adjudicate in this case as the Consolidated Decision has become final and executory. Avowedly, considering the length of time that has lapsed, petitioner did nothing to assail the entry of judgment issued by the CA. In the same vein, it did not proffer sufficient and convincing proof to support its allegation of not having received the CA Resolution on its Motion for Reconsideration.

Petitioner, meanwhile, avers in its Reply 33 that there is nothing in the CA records that would indicate that a copy of the Resolution dated 15 August 2017 had been duly served upon its counsel, otherwise, it would have been presented to the Court by respondent. Petitioner posits that absent such evidence, the CA erroneously issued the entry of judgment and respondent's reliance thereon is misplaced.

Perceivably, the pivotal issue for the Court's resolution is whether or not the 26 October 2016 Consolidated Decision of the CA which had already attained finality may still be reviewed and modified by this Court.

OUR RULING

The Petition is bereft of merit.

A judgment becomes 'final and executory' by operation of law. Finality becomes a fact when the reglementary period to appeal lapses and no appeal is perfected within such period. As a consequence, no court (not even this Court) can exercise appellate jurisdiction to review a case or modify a decision that has become final. 34

The case of Mercury Drug Corp., et al. vs. Spouses Huang, et al.35 is quite illuminating. The Court articulated therein the rationale for adhering to the doctrine of immutability of final judgment, viz. —

It is a fundamental principle that a judgment that lapses into finality becomes immutable and unalterable. The primary consequence of this principle is that the judgment may no longer be modified or amended by any court in any manner even if the purpose of the modification or amendment is to correct perceived errors of law or fact. This principle known as the doctrine of immutability of judgment is a matter of sound public policy, which rests upon the practical consideration that every litigation must come to an end.

The rationale behind the rule was further explained in Social Security System v. Isip, thus:

The doctrine of immutability and inalterability of a final judgment has a two-fold purpose: (1) to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge of judicial business and (2) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why courts exist. Controversies cannot drag on indefinitely. The rights and obligations of every litigant must not hang in suspense for an indefinite period of time.

To stave off any attempt to disturb final judgments, this Court emphasized that the immutability of final judgments is not a matter of mere technicality, "but of substance and merit." In Peña vs. Government Service Insurance System, 36 the Court demystified thusly —

The rule on finality of decisions, orders or resolutions of a judicial, quasi-judicial or administrative body is "not a question of technicality but of substance and merit," the underlying consideration therefore, being the protection of the substantive rights of the winning party. Nothing is more settled in law than that a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land. 37

Here, it took 11 months from the issuance of the entry of judgment by the CA before petitioner actually filed the instant Petition before this Court. Considering the unreasonable length of time that had lapsed, it ought to have been alerted about the situation since the CA had handed down the denial of its Motion for Reconsideration. It bears to emphasize that the records are bereft of evidence showing that petitioner inquired with the CA, through its counsel, as to the status of its Motion for Reconsideration. Evidently, this smacks of petitioner's insouciance, which this Court cannot commiserate with.

Parenthetically, the CA's issuance of entry of judgment enjoys the presumption that official duty was regularly performed and that it was done in the regular conduct of official business. Said presumption may be rebutted by affirmative evidence of irregularity or failure to perform a duty. 38 Lamentably, petitioner failed to overcome this presumption. Other than its bare allegation of non-receipt of the said CA Resolution, no evidence was submitted by petitioner to justify its belated filing of the instant Petition. In sooth, without contrary proof, the presumption of regularity of official function is upheld and the CA's entry of judgment stands.

It bears to emphasize that the Court finds no compelling circumstance extant in this case as would warrant a departure from the doctrine of immutability of judgments. True, this doctrine admits of exceptions such as the correction of clerical errors or the making of so-called nunc pro tunc entries in which case there is no prejudice to any party, where the judgment is void, or whenever supervening events or circumstances transpire after the decision's finality, making the decision's execution unjust and inequitable. 39 Regrettably, none of the foregoing exceptions obtain in this case.

It is primal that "rules of procedure exist for a purpose, and to disregard such rules in the guise of liberal construction would be to defeat such purpose." Moreover, there are legal implications that result from the lapse of reglementary periods which can sometimes be inescapable. 40 This must place litigants on guard in order not to squander their chances for relief. For "the laws aid the vigilant, not those who slumber on their rights. Vigilantibus sed non dormientibus jura subveniunt." 41

WHEREFORE, the Petition for Review on Certiorari is hereby DENIED. The Consolidated Decision dated 26 October 2016 and the Resolution dated 15 August 2017 of the Court of Appeals in CA-G.R. SP Nos. 138821 and 138843 are AFFIRMED.

SO ORDERED."

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1.Rollo, pp. 3-25.

2.Id. at 26-46. Penned by Associate Justice Rodil V. Zalameda (now a Member of the Court), with the concurrence of Associate Justices Sesinando E. Villon and Pedro B. Corales.

3.Id. at 47-49.

4.Id. at 149-206.

5.Id. at 152.

6.Id. at 49-56.

7.Id. at 50.

8.Id. at 50-51.

9.Id. at 51.

10.Id. at 52.

11.Id. at 57.

12.Id. at 58.

13.Id. at 28.

14.Id. at 61-62.

15. Id. at 63.

16.Id. at 64.

17.Id. at 28-29.

18.Id. at 75-85.

19.Id. at 80-81.

20.Id. at 149-206.

21.Id. at 205-206.

22.Id. at 207-293.

23.Id. at 318-328.

24.Id. at 329-337.

25.Id. at 26-46.

26.Id. at p. 45.

27.Id.

28.Id. at 44.

29.Id. at 294-299.

30.Id. at 366.

31.Id. at 3-25.

32.Id. at 304-314.

33.Id. at 369-374.

34.Torres, et al. vs. Aruego, 818 Phil. 524, 538 (2017) citing PCI Leasing and Finance, Inc. v. Milan, 631 Phil. 257 (2010). Emphasis omitted.

35. 817 Phil. 434, 445-446 (2017).

36. 533 Phil. 670 (2006).

37.Id. at 689-690.

38. See Alcantara vs. Alcantara, 558 Phil. 192, 203-204 (2007).

39.Civil Service Commission vs. Moralde, 838 Phil. 840, 857 (2018).

40.Id.

41. See Ng Ching Ting vs. Philippine Bu.