FIRST DIVISION
[G.R. No. 210085. January 12, 2021.]
PARK AVIN CORPORATION, peititioner,vs.ASEC DEVELOPMENT AND CONSTRUCTION CORPORATION, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJanuary 12, 2021 which reads as follows: HTcADC
"G.R. No. 210085 (Park Avin Corporation, Petitioner v. ASEC Development and Construction Corporation, Respondent.) — In this petition for review on certiorari, 1 Park Avin Corporation (petitioner) assails the Decision 2 dated 08 March 2013 and Resolution 3 dated 15 November 2013 of the Court of Appeals (CA), which affirmed the ruling of the Construction Industry Arbitration Commission (CIAC) ordering petitioner to pay ASEC Development and Construction Corp. (respondent) retention money, attorney's fees, and costs of arbitration.
Antecedents
The undisputed facts, as culled from the assailed decision of the CA, are as follows:
Petitioner Park Avin Corporation ("petitioner" or "Park Avin" for brevity) and respondent ASEC Development and Construction Corporation ("respondent" or "ASEC" for brevity) are corporations organized and existing under Philippine laws.
On January 15, 2004, petitioner and respondent entered into a Letter Agreement and afterwards signed a "Supplement to the Main Package Construction Agreement" ("Supplement Agreement" for brevity). In the Letter Agreement, respondent was to construct VBP Commercial and Residential Building ("The Project" for brevity) located at Lot 16, Block 22, Hernandez St., San Lorenzo Village, Makati City owned by petitioner. Petitioner was to pay respondent for the project, the price of "P80,400,000.00 for the substructure works" stated in the Letter Agreement, and the price of "P11,700,000.00 for the superstructure" stated in the Supplement Agreement.
In accordance with the Letter Agreement and the Supplement Agreement, respondent would be paid by petitioner "on the basis of the [M]onthly [P]rogress [B]illings based on respondent's actual completed and accepted Work, as certified and duly evaluated and approved by Jose Aliling & Associates [petitioner's Construction Manager] less the downpayment recoupment and retention amount." The amount of Retention petitioner was authorized to withhold were as follows:
"2.3 Retention Amount
A retention amount equivalent to ten percent (10%) of each monthly progress payment shall be deducted by PAC from its payments of ASEC progress billings up to a retention fund limit amount equivalent to 5% of the Contract Price."
"Article 4
xxx xxx xxx
4.3 A Retention Amount equivalent to 10% of each progress payment shall further be deducted by the Owner from its payments of the Main Package Contractor's progress billings until 50% of the Main Package Contractor's Work has been completed. After 50% of the Work has been completed, for so long as the Main Package Contractor has not incurred a Slippage of more than 5% based on the Construction Schedule, the Owner shall not make any further retention; but if the Slippage exceeding 5% subsequently occurs, the Owner may at its option further retain an amount equivalent to 10% of the progress payment not yet subject to the Retention Amount; such further retained amount may be returned to the Main Package Contractor only if it successfully recovers from the Slippage prior to the expiration of its Completion Period.
Retention Amount shall be released and paid to Main Package Contractor (the "Release"); provided, that the Release shall take effect only upon Final Completion and Final Acceptance of the scope of works itemized in this Supplemental Agreement; and the following documents have been submitted:
a. Summary of concrete and reinforcing steel bar test results issued by an approved independent testing laboratory; and
b. Foundation and floor framing plans which will serve as key reference plan showing in color code the pouring zone indicating the following:
• Construction joints;
• Date of Concreting; and
• Concrete sample reference number taken from the particular concrete operation.
c. Main Package Contractor's Sworn Statement showing that all taxes due from it and all obligations on materials used and labor employed in connection with this Agreement have been fully paid.
d. Guarantee Bond to answer for faulty and/or defective materials or workmanship in accordance with Agreement and the Contract Conditions.
e. Original, signed and sealed and three sets of prints of 'As-Built' drawings.
f. Final Certificates of Inspection issued by the (sic) such agencies having jurisdiction over the Project for the contract package works, as may be identified by the Construction Manager."
Pursuant to all of these, petitioner made payments on the Progress Billings to the respondents but petitioner failed to pay the remaining balance.
To compel payment from petitioner of the balance, respondent filed a Complaint for Collection of Sum of Money/Specific Performance before Branch 95, Regional Trial Court (RTC) of Quezon City. The RTC dismissed respondent's Complaint. According to the RTC, the parties failed to undergo the arbitration process stated in the parties' Agreement, which Arbitration process fell under the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (CIAC).
On August 18, 2010, counsel for respondent sent a letter to petitioner notifying petitioner of respondent's intention to mediate its pending claim. On September 14, 2010, a conference was conducted between the counsel of the respective parties but no settlement was reached.
Then, respondent filed a claim for arbitration against petitioner before the CIAC. Respondent claimed that it was entitled to collect from petitioner the amount of P6,547,267.30 broken down as follows:
|
TOTAL |
RETENTION |
UNPAID BILLS |
TOTAL |
|
for the substructure and |
P4,020,000.00 |
P712,511.28 |
P4,901,279.09 |
|
for the superstructure |
881,279.09 |
933,472.04 |
1,645,983.30 |
|
TOTAL |
P4,901,279.09 |
P1,645,983.30 |
P6,547,262.30 |
Respondent also claimed for Attorney's Fees of P1,309,452.48 and Legal Interest of P2,357,014.00. CAIHTE
Petitioner filed its Counterclaim against respondent.
During the preliminary conference in CIAC, the parties entered into a "Terms of Reference." They agreed to resolve the following issues:
"1. Whether or not Respondent [petitioner here] is liable to Claimant [respondent here] for the amount of P6,547,262.41 or such other amount representing the unpaid balance of the total contract amount of the VBP Commercial and Residential Building Project.
2. Whether or not Claimant [respondent] completed the Project; This is denied by Respondent [petitioner] because of deficiency/non-submission of the documents proving final completion and acceptance.
3. Whether or not the previous letter dated August 18, 2010 sent by Claimant's [respondent] counsel to Respondent [petitioner] sufficiently complied with the requirements for mediation stated in Article 8.1 of the General Provisions of the Supplement to the Main Package Construction Agreement; Whether or not the present case was prematurely initiated without the requisite mediation.
4. Whether or not Claimant [respondent] is entitled to legal interest.
5. Whether or not Claimant [respondent] is entitled to an award of [A]ttorney's [F]ees.
6. Who between the parties shall bear the cost of arbitration." 4
Ruling of the CIAC
On 2 February 2012, the CIAC issued a notice of award in respondent's favor, to wit:
WHEREFORE, Final award is hereby made and decreed, ordering Respondent, Park Avin Corporation, to pay the Claimant, Asec Development and Construction Corporation, the following amounts:
|
Principal of the claim |
P4,901,279.09 |
|
Attorney's fees |
980,255.82 |
|
Costs of arbitration |
244,204.50 |
all with interest thereon at 6% per annum from date of this Final Award and until fully paid, with all unpaid amounts subjected to 12% interest per annum from the date this Final Award shall have become and executory.
SO ORDERED. 5
The CIAC found sufficient evidence to show respondent faithfully performed the work according to plans and specifications agreed upon by the parties. The retention is part of accomplishments already reviewed, approved, and recommended by Jose A. Aliling (J.A. Aliling), petitioner's construction manager. Respondent did not claim 100% completion of the project but was able to prove substantial completion until it was ordered to stop by the City of Makati due to petitioner's violation of the Deed of Restrictions. Hence, respondent was entitled to receive the retention as part of its approved accomplishments. After more than six (6) years it was effectively prevented from finishing the project. However, the CIAC found no evidence to support the award of the supposed unpaid billings for the substructure and superstructure as there was no certification from J.A. Aliling covering these works. 6
Decision of the CA
The CA, through the assailed Decision dated 08 March 2013, denied petitioner's appeal, and affirmed the award in favor of respondent. 7 It found the proceedings before the CIAC proper since the parties agreed by contract to submit any dispute to that tribunal. The CA also upheld respondent's right to the retention money despite non-completion of the project, which is mainly attributed to petitioner's fault. 8
Petitioner moved for reconsideration, but the CA denied the same in the assailed Resolution 9 dated 15 November 2013.
On 18 March 2014, the representatives of the parties executed a Certificate of Satisfaction of Final Award confirming petitioner's payment of the monetary award, including all interests and incidental expenses to respondent. 10
Issues
In the present petition, the Court is tasked to resolve the following the issues:
a. Whether or not the factual findings of the CIAC, as affirmed by the CA, should be overturned; and
b. Whether or not respondent is entitled to the release of the retention money.
Specifically, petitioner argues that the factual findings of the CA are based on a misapprehension of facts thereby warranting reassessment of material details. Petitioner maintains that the evidence clearly shows that respondent failed to complete the project and has not submitted the documentary requirements agreed upon. As the construction company commissioned to handle the project, respondent cannot claim it has no fault in the design or construction issues that led to the issuance of the Work Stop Order by the City of Makati. Therefore, the retention money should not have been released. Further, it argues that its payment in satisfaction of the final award should not render the present case moot and academic since the same was only made to avoid the sale of the property at public auction. 11
In its Comment, respondent argues it had no choice but to file a case against petitioner since it remains uncertain when the Work Stop Order would be lifted. It could not wait indefinitely for the release of the retention money, which rightfully belongs to it. Respondent insists that it has complied with its part of the contract and had substantially completed the project before the City of Makati ordered the work stoppage due to petitioner's violation. The billings and certifications sent to petitioner were supported by approvals from petitioner's own construction manager, J.A. Aliling. Petitioner cannot now claim there was a deviation or discrepancy in these billings and certifications since the parties' counsels stipulated on the genuineness and due execution of these documents before the CIAC. Lastly, respondent claims the case has been mooted by petitioner's payment of all its obligations as evidenced by the Certificate of Satisfaction of Final Award. 12
Ruling of the Court
The petition lacks merit.
The case has not been mooted
The Court first addresses the issue of mootness raised by respondent.
A case is moot and academic if it "ceases to present a justiciable controversy by virtue of supervening events, so that an adjudication of the case or a declaration on the issue would be of no practical value or use." Thus, courts generally decline jurisdiction over such case or dismiss it on the ground of mootness. 13
Contrary to respondent's argument, however, the present case was rendered moot by petitioner's full satisfaction of the Final Award in favor of respondent. Such payment did not preclude petitioner from seeking redress to overturn the decision against it. Accordingly, where an award is partially or totally reversed on appeal, the CIAC may, on proper motion, issue such order of restitution or reparation of damages as equity and justice may warrant under the circumstances. 14
Nonetheless, the Court finds no satisfactory basis to overturn the assailed CA.
None of the recognized
Petitioner readily admitted in its petition that the issues it raises are mainly factual in nature. Even so, it insists there is a misapprehension of facts leading to the erroneous decisions of the CIAC and the CA. Petitioner maintains that respondent did not complete the project and is therefore not entitled to the release of the retention money. aScITE
Foremost, the propriety of arbitral awards and claims for costs are factual in nature, which are not cognizable by the Court in a petition for review on certiorari under Rule 45. Adherence to this rule is all the more compelling in this case since findings of fact of quasi-judicial bodies, having acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but also finality, especially when affirmed by the CA. In fact, factual findings of construction arbitrators are considered final and conclusive and not reviewable by this Court. 15
There are, however, recognized exceptions to the above rule such as when the petitioner proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or any of them; (3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under Sec. 10 of Republic Act (RA) No. 876 16 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made; (6) there is a very clear showing of grave abuse of discretion resulting in lack or loss of jurisdiction as when a party was deprived of a fair opportunity to present its position before the Arbitral Tribunal; (7) the findings of the Court of Appeals are contrary to those of the CIAC, or (8) a party is deprived of administrative due process. 17
A perusal of the records shows that none of the above circumstances are present in this case. Neither the CIAC nor the CA misapprehended the factual circumstances on which they based their decisions. It bears repeating that the CIAC granted the arbitral award in view of respondent completing 99.76% of the substructure and 84.39% of the superstructure of the project — not because the project was 100% complete. 18
To allow a reassessment of evidence carefully and thoroughly reviewed the CIAC and the CA would negate the objective of Executive Order No. 1008, 19 which created an arbitration body to ensure the prompt and expeditious settlement of disputes in the construction industry.
The release of the retention
Accordingly, there is no reason to disturb the Final Award granted by the CIAC and affirmed by the CA. The award was granted in accordance with the two (2) main principles guiding the arbitral tribunal in accomplishing its tasks: fairness, and effective dispute resolution, or the overarching principle of arbitration as a mechanism relieved of the encumbrances of litigation. 20
In the construction industry, the retention money is a portion of the contract price automatically deducted from the contractor's billings as security for the execution of corrective work. Its release to the construction company is premised on the completion and acceptance of all works by the principal coupled with other terms or requisites agreed upon by the parties. 21
Petitioner's main contention against the release of the retention money lies in the failure of respondent to complete the project. However, as found by the CIAC, the non-completion of the project was the fault of petitioner itself. Considering the lapse of more than enough time from when respondent was left hanging due to no fault of its own, We echo the sentiment of the arbitral tribunal, as affirmed by the CA, that fair play necessitates the release of the retention money to respondent, to wit:
The tribunal treats this issue as one of an unfinished project as a result of an act of government, through a TRO by the HLURB (Annex E-E1 Compliance with Reply to Comment on Draft Decision) and a cease and desist order from the City Engineer's office (Annexes F, G and H Compliance with Reply to Comment on Draft Decision). The STOP WORK ORDER has been in effect for the past 6 years and is still in effect. Since no definite solution is in the horizon, the hold order seems indefinite, an extraordinary situation not of the fault of the Claimant. The violations on the Deed of Restrictions were by Park Avin, not the Claimant.
The Claimain's position as to its stage of completion is taken in consideration. The Claimant never claimed 100% completion. It claimed that the Substructure is 99.76% and the Superstructure only 84.39%. In other words the Claimant is claiming for the release of its retentions and unpaid billings, processing of which were interrupted by the Stop Work Order, because of the indefinite and uncertain period of waiting for the past 6 years.
In normal industry practice, an Owner is supposed to hold on to the Retention money during the one year guaranty period. It can be released upon 100% completion if a guarantee bond valid for one year is provided. However more than six years have elapsed, more than the one year guaranty period covered by a bond. The 6 years elapsed time has put the required retention and one year guaranty bond moot and academic.
Requiring the Claimant to submit requirements for 100% completion is, therefore, irrelevant. Besides, there have been partial compliance by the Claimant on a monthly basis according to witness Tendero. 22 (Emphasis supplied)
Article 1234 of the Civil Code aptly states that "[i]f the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee."
In Spouses Tan v. G.V.T. Engineering Services, 23 the Court affirmed the release of the retention money to the construction company after it was prevented from completing the project without its fault and after it had already substantially fulfilled its obligation in good faith at the time of the project stoppage.
The present case must also be differentiated from Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc.24 where the Court disagreed with the release of the retention money after noting that the construction company failed to submit all the pre-requisite documents. In that case, the construction company was not prevented by external factors from completing the project, and had, in fact, completed the project based on the contract of therein parties. Thus, there was no reason for non-compliance of all the conditions set forth for the release of the retention money. Conversely, it would be unfair to require herein respondent to comply with the all the set conditions for the release of their retention money as the documents enumerated in the contract are premised on 100% completion of the project. HEITAD
In contrast, respondent in the present case could not complete the project due to work stoppage brought about by petitioner's violation of the Deed of Restrictions.
The Court, likewise, sustains the award of attorney's fees and costs of arbitration to respondent. The CIAC's award is pursuant to the contract executed by petitioner and respondent, which provided that the party found liable in a judicial proceeding to shoulder these fees. 25 Besides, petitioner is considered to have waived assailing these matters as it did not raise these as issues in the present appeal.
WHEREFORE, the foregoing premises considered, the petition is hereby DENIED and the Decision dated 08 March 2013 and Resolution dated 15 November 2013 rendered by the Court of Appeals in CA-G.R. SP No. 123432 are AFFIRMED.
SO ORDERED." Caguioa, J., took no part; Delos Santos, J., designated Additional Member per Raffle dated 14 December 2020.
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
by:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 12-72.
2.Id. at 75-92; penned by Associate Justice Michael P. Elbinias, and concurred in by Associate Justices Isaias P. Dicdican and Nina G. Antonio-Valenzuela of the Thirteenth Division, Court of Appeals, Manila.
3.Id. at pp. 95-96.
4.Id. at pp. 75-80.
5.Id. at pp. 148-149.
6.Id. at pp. 140-148.
7.Id. at p. 91.
8.Id. at pp. 81-91.
9.Id. at pp. 95-96.
10.Id. at pp. 407-408.
11.Id. at pp. 37-61.
12.Id. at pp. 399-405.
13.Confederation for Unity, Recognition and Advancement of Government Employees v. Commissioner, Bureau of Internal Revenue, G.R. Nos. 213446 & 213658, 03 July 2018 [Per J. Caguioa].
14. Section 18.7, CIAC Revised Rules of Procedure Governing Construction Arbitration, 22 June 2019.
15.Shinryo (Philippines) Company, Inc. v. RRN, Inc., G.R. No. 172525, 20 October 2010, 648 Phil. 342 (2010) [Per J. Peralta].
16. SECTION 10. Qualifications of Arbitrators. — Any person appointed to serve as an arbitrator must be of legal age, in full-enjoyment of his civil rights and know how to read and write. No person appointed to served as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. No person shall serve as an arbitrator in any proceeding if he has or has had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or has any personal bias, which might prejudice the right of any party to a fair and impartial award.
No party shall select as an arbitrator any person to act as his champion or to advocate his cause.
If, after appointment but before or during hearing, a person appointed to serve as an arbitrator shall discover any circumstances likely to create a presumption of bias, or which he believes might disqualify him as an impartial arbitrator, the arbitrator shall immediately disclose such information to the parties. Thereafter the parties may agree in writing:
(a) to waive the presumptive disqualifying circumstances; or
(b) to declare the office of such arbitrator vacant. Any such vacancy shall be filled in the same manner as the original appointment was made. (The Arbitration Law, Republic Act No. 876, 19 June 1953).
17.Supra at note. 15.
18.Rollo, p. 141.
19. Construction Industry Arbitration Law, Executive Order No. 1008, 04 February 1985.
20.Metro Bottled Water Corp. v. Andrada Construction & Development Corp., Inc., G.R. No. 202430, 06 March 2019 [Per J. Leonen].
21.Empire East Land Holdings, Inc. v. Capitol Industrial Construction Groups, Inc., G.R. No. 168074, 26 September 2008, 588 Phil. 156 (2008) [Per J. Nachura].
22.Rollo, p. 141.
23. G.R. No. 153057, 07 August 2006, 529 Phil. 751 (2006) [Per J. Austria-Martinez].
24.Supra at note 21.
25.Rollo, p. 148.