CASE DIGEST : NATIONAL POWER CORPORATION vs MUNICIPAL GOVERNMENT OF NAVOTAS

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 192300               November 24, 2014

NATIONAL POWER CORPORATION, Petitioner,

vs.

MUNICIPAL GOVERNMENT OF NAVOTAS, SANGGUNIANG BAYAN OF NAVOTAS AND MANUEL T. ENRIQUEZ, in his capacity as Municipal Treasurer of Navotas, Respondents.

FACTS : Petitioner National Power Corporation (NPC) is a government owned and controlled corporation. Respondent Municipal Government of Navotas, is a local government unit, hosting petitioner’s Navotas Power Stations I and II located in the Municipality of Navotas. On the respective dates of November 16, 1988 and June 29, 1992, petitioner entered into a Build-Operate-and-Transfer Project Agreements (BOTs) with Mirant Navotas I Corporation and Mirant Navotas II Corporation. petitioner has the obligation to pay for all taxes, except business taxes, relative to the implementation of the agreements. For the 1st quarter of 2003, petitioner paid respondent Municipality, real property taxes in the amounts of P3,382,715.88 and P4,973,869.83 for the MNC-I and MNC-II power stations, respectively. After the said quarter, petitioner stopped paying the real property taxes, claiming exemption from payment thereon pursuant to Section 234(c) of the Local Government Code (LGC) of 1991. On May 25, 2005, MNC-II received four notices from respondent Municipal Treasurer informing MNC-I and MNC-II of their real property tax delinquencies for the 2nd, 3rd, and 4th quarters of calendar year 2003 and for the calendar years 2004 and 2005. On November 21, 2005, a Warrant of Levy was received from respondent Municipal Treasurer. On December 16, 2005, petitioner filed before the Regional Trial Court (RTC) of Malabon City, a Petition for Declaratory Relief, Annulment of Notice of Delinquency, Warrant of Levy, and Notice of Sale with prayer for the issuance of a Writ of Preliminary Injunction and Temporary Restraining Order (TRO). Petitioner’s application for the issuance of a TRO was denied by the RTC. Respondents proceeded withthe scheduled public auction. Considering that there were no bidders for the purchase of the subject properties, the same were forfeited in favor of respondent Municipality. Petitioner filed an amended petition before the RTC seeking to declare as null and void the public auction. The RTC denied the petition on May 23, 2007. a Petition for Review with application for Temporary Restraining Order and/or Order of Suspension of Collection and Writ of Preliminary Injunctionwas seasonably filed with this Court though registered mail on July 27, 2007 and received on August 2, 2007. In a Decision promulgated on July 18, 2008, the Second Division dismissed the Petition and sustained the RTC’s Decision dated May 23, 2007. Petitioner’s Motion for Reconsideration filed on August 6, 2008 was likewise denied in a Resolution dated January 9, 2009. petitioner filed a petition before the CTA En Banc. In a Decision dated March 1, 2010, the CTA En Banc affirmed the CTA Second Division’s

ISSUE : the issue is whether or not the CTA Second Division has jurisdiction to review the decision of the RTC which concerns a petition for declaratory relief involving real property taxes

HELD: Indeed, the CTA, sitting as Division, has jurisdiction to review by appeal the decisions, rulings and resolutions of the RTC over local tax cases, which includes real property taxes. This is evident from a perusal of the Local Government Code (LGC) which includes the matter of Real Property Taxation under one of its main chapters. We, therefore, disagree with the conclusion of the CTA En Banc that real property taxes have always been treated by our laws separately from local taxes. Based on the foregoing, the general meaning of "local taxes" should be adopted in relation to Paragraph (a)(3) of Section 7 of R.A. 9282, which necessarily includes real property taxes. Second, as correctly pointed out by petitioner, when the legality or validity of the assessment is in question, and not its reasonableness or correctness, appeals to the LBAA, and subsequently to the CBAA, pursuant to Sections 22614 and 22915 of the LGC, are not necessary.

Stated differently, in the event that the taxpayer questions the authority and power of the assessor to impose the assessment, and of the treasurer to collect the real property tax, resort to judicial action may prosper. Although as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a well-settled exception in cases where the controversy does not involve questions of fact but only of law. In the present case, the parties, even during the proceedings in the lower court on 11 April 1994, already agreed "that the issues in the petition are legal", and thus, no evidence was presented in said court., if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench, however, the petitioners are questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase. Accordingly, if the only issue is the legality or validity of the assessment – a question of law – direct recourse to the RTC is warranted. the issue is clearly legal given that it involves an interpretation of the contract between the parties vis-à-vis the applicable laws, i.e.,which entity actually, directly and exclusively uses the subject machineries and equipment. the CT A En Banc erred in dismissing the petition for review en bane, and affirming the CTA Second Division’s position that the RTC has no jurisdiction over the instant case for failure of petitioner to exhaust administrative remedies which resulted in the finality of the assessment

CASE DIGEST : VALERA VS INSERTO

FIRST DIVISION

G.R. No. L-56504 May 7, 1987

POMPILLO VALERA and EUMELIA VALERA CABADO, petitioners,

vs.

HON. JUDGE SANCHO Y. INSERTO, in his capacity as Presiding Judge, Court of First Instance of Iloilo, Branch 1, and MANUEL R. FABIANA, respondents.

Nos. L-59867-68  May 7, 1987

EUMELIA V. CABADO, POMPILLO VALERA and HON. MIDPANTAO L. ADIL, petitioners-appellants,

vs.

MANUEL FABIANA, JOSE GARIN and HON. COURT OF APPEALS (Tenth Division)

FACTS :  the fishpond originally belonged to the Government, and had been given in lease to Rafael Valera in his lifetime. Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his daughter, Teresa Garin; but the sale was fictitious, having been resorted to merely so that she might use the property to provide for her children's support and education, and was subject to the resolutory term that the fishpond should revert to Rafael Valera upon completion of the schooling of Teresa Garin's Children; and with the income generated by the fishpond, the property was eventually purchased from the Government by the Heirs of Teresa Garin, collectively named as such in the Original Certificate of Title issued in their favor.

In the proceedings for the settlement of the intestate estate of the decedent spouses, Rafael Valera and Consolacion Sarrosa 1 — in which Eumelia Cabado and Pompiro Valera had been appointed administrators 2 — the heirs of a deceased daughter of the spouses, Teresa Garin, filed a motion asking that the Administratrix, Cabado, be declared in contempt for her failure to render an accounting of her administration. Cabado replied that no accounting could be submitted unless Jose Garin, Teresa's husband and the movant heirs' father, delivered to the administrator an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to the estate and she in turn moved for the return thereof to the estate, 4 so that it might be partitioned among the decedents' heirs. Jose Garin opposed the plea for the fishpond's return to the estate, asserting that the property was owned by his children and this was why it had never been included in any inventory of the estate

The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs' motion for contempt, as well as Cabado's prayer for the fishpond's return to the estate, as having given rise to a claim for the recovery of an asset of the estate within the purview of Section 6, Rule 87 of the Rules of Court. Thereafter, the Court issued an Order dated September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in question * * to the intestate Estate of the Spouses.

Thereafter, the Court issued an Order dated September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey immediately the fishpond in question * * to the intestate Estate of the Spouses. Judge Adil afterwards granted the administrators' motion for execution of the order pending appeal, and directed the sheriff to enforce the direction for the Garin Heirs to reconvey the fishpond to the estate.

Later however, Fabiana filed a complaint-in-intervention with the Probate Court seeking vindication of his right to the possession of the fishpond, based on a contract of lease between himself, as lessee, and Jose Garin, as lessor

G.R. No. 56504

Fabiana thereupon instituted a separate action for injunction and damages, with application for a preliminary injunction. This was docketed as Civil Case No. 13742 and assigned to Branch I of the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. The estate administrators filed a motion to dismiss the complaint and to dissolve the temporary restraining order, averring that the action was barred by the Probate Court's prior judgment which had exclusive jurisdiction over the issue of the lease, and that the act sought to be restrained had already been accomplished, Fabiana having voluntarily surrendered possession of the fishpond to the sheriff

G.R. Nos. 59867-68

In the meantime, Jose Garin — having filed a motion for reconsideration of the above mentioned order of Judge Adil (declaring the estate to be the owner of the fishpond), in which he asserted that the Probate Court, being of limited jurisdiction, had no competence to decide the ownership of the fishpond,

These two special civil actions were jointly decided by the Court of Appeals. The Court granted the petitions

ISSUE: WON   Probate   Court   had   authority   to   order reconveyance of the fishpond?

HELD : As regards the first issue, settled is the rule that a Court of First Instance (now Regional Trial Court), acting as a Probate Court, exercises but limited jurisdiction, 28 and thus has no power to take cognizance of and determine the issue of title to property claimed by a third person adversely to the decedent, unless the claimant and all the Other parties having legal interest in the property consent, expressly or impliedly, to the submission of the question to the Probate Court for adjudgment, or the interests of third persons are not thereby prejudiced

The facts obtaining in this case, however, do not call for the application of the exception to the rule. As already earlier stressed, it was at all times clear to the Court as well as to the parties that if cognizance was being taken of the question of title over the fishpond, it was not for the purpose of settling the issue definitely and permanently, and writing "finis" thereto, the question being explicitly left for determination "in an ordinary civil action," but merely to determine whether it should or should not be included in the inventory. Parenthetically, in the light of the foregoing principles, the Probate Court could have admitted and taken cognizance of Fabiana's complaint in intervention after obtaining the consent of all interested parties to its assumption of jurisdiction over the question of title to the fishpond, or ascertaining the absence of objection thereto. But it did not. It dismissed the complaint in intervention instead. And all this is now water under the bridge.

Since the determination by the Probate Court of the question of title to the fishpond was merely provisional, not binding on the property with any character of authority, definiteness or permanence, having been made only for purposes of in. conclusion in the inventory and upon evidence adduced at the hearing of a motion, it cannot and should not be subject of execution, as against its possessor who has set up title in himself (or in another) adversely to the decedent, and whose right to possess has not been ventilated and adjudicated in an appropriate action. These considerations assume greater cogency where, as here, the Torrens title to the property is not in the decedents' names but in others, a situation on which this Court has already had occasion to rule Since, too, both the Probate Court and the estate administrators are one in the recognition of the proposition that title to the fishpond could in the premises only be appropriately determined in a separate action, 36 the actual firing of such a separate action should have been anticipated, and should not therefore have come as a surprise, to the latter. And since moreover, implicit in that recognition is also the acknowledge judgment of the superiority of the authority of the court in which the separate action is filed over the issue of title, the estate administrators may not now be heard to complain that in such a separate action, the court should have issued orders necessarily involved in or flowing from the assumption of that jurisdiction.

CASE DIGEST : LUZON SURETY COMPANY, INC vs PASTOR T. QUEBRAR and FRANCISCO KILAYKO

G.R. No. L-40517 January 31, 1984

LUZON SURETY COMPANY, INC., plaintiff-appellee, 
vs.
PASTOR T. QUEBRAR and FRANCISCO KILAYKO, defendants-appellants.

FACTS: On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount of P15,000.00 each, in behalf of the defendant-appellant Pastor T. Quebrar, as administrator in Special Proceedings Nos. 3075 and 3076 of the Court of First Instance of Negros Occidental. In consideration of the suretyship wherein the plaintiff-appellee Luzon Surety Company, Inc. was bound jointly and severally with the defendant appellant Pastor T. Quebrar, the latter, together with Francisco Kilayko, executed two indemnity agreements, where among other things, they agreed jointly and severally to pay the plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance as premium thereof for every 12 months or fraction thereof, this ... or any renewal or substitution thereof is in effect" and to indemnify plaintiff-appellee against any and all damages, losses, costs, stamps taxes, penalties, charges and expenses, whatsoever, including the 15% of the amount involved in any litigation, for attomey's fees

For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants paid P304.50 under each indemnity agreement or a total of P609.00 for premiums and documentary stamps. On June 6, 1957, the Court of First Instance of Negros Occidental approved the amended Project of Partition and Accounts of defendant-appellant (p. 87, ROA; p. 9, rec.).

On May 8, 1962, the plaintiff-appellee demanded from the defendants-appellants the payment of the premiums and documentary stamps from August 9,1955.On October 17, 1962, the defendants-appellants ordered a motion for cancellation and/or reduction of executor's bonds on the ground that "the heirs of these testate estates have already received their respective shares" (pp. 69-70, ROA, p. 9, rec.).

On October 20, 1962, the Court of First Instance of Negros Occidental acting on the motions filed by the defendants-appellants ordered the bonds cancelled. Plaintiff-appellee's demand amounted to P2,436.00 in each case, hence, a total of P4,872.00 for the period of August 9, 1955 to October 20, 1962. The defendants-appellants to pay the said amount of P4,872.00. On January 8, 1963, the plaintiff-appellee filed the case with the Court of First Instance of Manila During the pre-trial the parties presented their documentary evidences and agreed on the ultimate issue

The lower court allowed the plaintiff to recover from the defendants-appellants

Defendants-appellants appealed to the Court of Appeals. On March 20, 1975, the Court of Appeals in a resolution certified the herein case to the supreme court  after finding that this case involves only errors or questions of law.

ISSUE: whether or not the administrator's bonds were in force and effect from and after the year that they were filed and approved by the court up to 1962, when they were cancelled

HELD : The proper determination of the liability of the surety and of the principal on the bond must depend primarily upon the language of the bond itself. The bonds herein were required by Section 1 of Rule 81 of the Rules of Court. While a bond is nonetheless a contract because it is required by statute. The bonds in question herein contain practically the very same conditions in Sec. 1, Rule 81 of the Rules of Court

Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put up a bond for the purpose of indemnifying the creditors, heirs, legatees and the estate. It is conditioned upon the faithful performance of the administrator's trust

Having in mind the purpose and intent of the law, the surety is then liable under the administrator's bond, for as long as the administrator has duties to do as such administrator/executor. Since the liability of the sureties is co-extensive with that of the administrator and embraces the performance of every duty he is called upon to perform in the course of administration

The defendant-appellant Pastor T. Quebrar did not cease as administrator after June 6, 1957, for administration is for the purpose of liquidation of the estate and distribution of the residue among the heirs and legatees. And liquidation means the determination of all the assets of the estate and payment of all the debts and expenses (Flores vs. Flores, 48 Phil. 982). It appears that there were still debts and expenses to be paid after June 6, 1957 The sureties of an administration bond are liable only as a rule, for matters occurring during the term covered by the bond. And the term of a bond does not usually expire until the administration has been closed and terminated in the manner directed by law

With the payment of the premium for the first year, the surety already assumed the risk involved, that is, in case defendant-appellant Pastor T. Quebrar defaults in his administrative duties. The surety became liable under the bond for the faithful administration of the estate by the administrator/executor. Hence, for as long as defendant-appellant Pastor T. Quebrar was administrator of the estates, the bond was held liable and inevitably, the plaintiff-appellee's liability subsists since the liability of the sureties is co-extensive with that of the administrator.

CASE DIGEST : AGLIPAY VS RUIZ

G.R. No. L-45459 March 13, 1937 GREGORIO AGLIPAY, petitioner,  vs. JUAN RUIZ, respondent.

Facts :  In May, 1936, the Director of Posts announced in the dailies of Manila that he would order the issues of postage stamps commemorating the celebration in the City of Manila of the Thirty-third international Eucharistic Congress, organized by the Roman Catholic Church. The petitioner, in the fulfillment of what he considers to be a civic duty, requested Vicente Sotto, Esq., member of the Philippine Bar, to denounce the matter to the President of the Philippines. In spite of the protest of the petitioner's attorney, the respondent publicly announced having sent to the United States the designs of the postage stamps for printing The more important question raised refers to the alleged violation of the Constitution by the respondent in issuing and selling postage stamps commemorative of the Thirty-third International Eucharistic Congress. It is alleged that this action of the respondent is violative of the provisions of section 23, subsection 3, Article VI, of the Constitution of the Philippines, which provides as follows: No public money or property shall ever be appropriated, applied, or used, directly or indirectly, for the use, benefit, or support of any sect, church, denomination, secretarian, institution, or system of religion, or for the use, benefit, or support of any priest, preacher, minister, or other religious teacher or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to the armed forces or to any penal institution, orphanage, or leprosarium. 

ISSUE : WON the stamp is constitutional

 HELD : Act No. 4052 contemplates no religious purpose in view. What it gives the Director of Posts is the discretionary power to determine when the issuance of special postage stamps would be "advantageous to the Government." Of course, the phrase "advantageous to the Government" does not authorize the violation of the Constitution. It does not authorize the appropriation, use or application of public money or property for the use, benefit or support of a particular sect or church. In the present case, however, the issuance of the postage stamps in question by the Director of Posts and the Secretary of Public Works and Communications was not inspired by any sectarian denomination. The stamps were not issue and sold for the benefit of the Roman Catholic Church. Nor were money derived from the sale of the stamps given to that church It appears from the latter of the Director of Posts of June 5, 1936, incorporated on page 2 of the petitioner's complaint, that the only purpose in issuing and selling the stamps was "to advertise the Philippines and attract more tourist to this country." The officials concerned merely, took advantage of an event considered of international importance "to give publicity to the Philippines and its people What is emphasized is not the Eucharistic Congress itself but Manila, the capital of the Philippines, as the seat of that congress. It is obvious that while the issuance and sale of the stamps in question may be said to be inseparably linked with an event of a religious character, the resulting propaganda, if any, received by the Roman Catholic Church, was not the aim and purpose of the Government. We are of the opinion that the Government should not be embarassed in its activities simply because of incidental results, more or less religious in character, if the purpose had in view is one which could legitimately be undertaken by appropriate legislation. The main purpose should not be frustrated by its subordinate to mere incidental results not contemplated But, upon very serious reflection, examination of Act No. 4052, and scrutiny of the attending circumstances, we have come to the conclusion that there has been no constitutional infraction in the case at bar, Act No. 4052 grants the Director of Posts, with the approval of the Secretary of Public Works and Communications, discretion to misuse postage stamps with new designs "as often as may be deemed advantageous to the Government." Even if we were to assume that these officials made use of a poor judgment in issuing and selling the postage stamps in question still, the case of the petitioner would fail to take in weight. Between the exercise of a poor judgment and the unconstitutionality of the step taken, a gap exists which is yet to be filled to justify the court in setting aside the official act assailed as coming within a constitutional inhibition.

CASE DIGEST : CARPIO VS SULU RESOURCES DEVELOPMENT CORPORATION

G.R. No. 148267 August 8, 2002  ARMANDO C. CARPIO, petitioner, vs. SULU RESOURCES DEVELOPMENT CORPORATION, respondent.

FACTS : A petition was filed by respondent Sulu Resources Development Corporation for Mines Production Sharing Agreement (MPSA). Petitioner Armando C. Carpio filed an opposition/adverse claim thereto, alleging, inter alia, that his landholdings in Cupang and Antipolo, Rizal will be covered by respondent’s claim, thus he enjoys a preferential right to explore and extract the quarry resources on his properties.

the Panel of Arbitrators of the Mines and Geo-Sciences Bureau of the DENR rendered a Resolution dated September 26, 1996, upholding petitioner’s opposition/adverse claim.

Respondent appealed the foregoing Resolution to the Mines Adjudication Board. Meanwhile, petitioner filed a motion to dismiss appeal on the ground of respondent’s failure to comply with the requirements of the New Mining Act’s Implementing Rules and Regulations. On June 20, 1997, the Mines Adjudication Board rendered the assailed Order dismissing petitioner’s opposition/adverse claim. Petitioner filed a motion for reconsideration of said Order which was denied by the Board

Petioner appealed to CA. the CA relying in the case of Pearson v. Intermediate Appellate Court ruled that it did not have jurisdiction to review the Decision of the Mines Adjudication Board (MAB). The adjudication of conflicting mining claims is completely administrative in nature.

ISSUE : WON appeals from the Decision or Final Orders of the Mines Adjudication Board should be made directly to the Supreme Court as contended by the respondent and the Court of Appeals, or such appeals be first made to the Court of Appeals as contended by herein petitioner

HELD : Petitioner submits that appeals from the decisions of the MAB should be filed with the CA. the CA ruled and respondent agrees that the settlement of disputes involving rights to mining areas and overlapping or conflicting claim is a purely administrative matter, over which the MAB has appellate jurisdiction. The CA refused to take jurisdiction over the case because, under Section 79 of the Philippine Mining Act of 1995, petitions for review of MAB decisions are to be brought directly to the Supreme Court

In the case at bar, petitioner went to the CA through a Petition for Review on Certiorari under Rule 43, seeking a reversal of the MAB Decision. Given the difference in the reason for and the mode of appeal, it is obvious that Pearson is not applicable here.

In Pearson, what was under review was the ruling of the CFI to take cognizance of the case which had been earlier decided by the MAB, not the MAB Decision itself which was promulgated by the CA under Rule 43. The present petitioner seeks a review of the latter.

Pearson, however, should be understood in the light of other equally relevant jurisprudence. In Fabian v. Desierto, the Court clarified that appeals from judgments and final orders of quasi-judicial agencies are now required to be brought to the CA, under the requirements and conditions set forth in Rule 43. This Rule was adopted precisely to provide a uniform rule of appellate procedure from quasi-judicial agencies

Factual controversies are usually involved in administrative actions; and the CA is prepared to handle such issues because, unlike this Court, it is mandated to rule on questions of fact. In Metro Construction, we observed that not only did the CA have appellate jurisdiction over CIAC decisions and orders, but the review of such decisions included questions of fact and law. At the very least when factual findings of the MAB are challenged or alleged to have been made in grave abuse of discretion as in the present case, the CA may review them, consistent with the constitutional duty of the judiciary.

To summarize, there are sufficient legal footings authorizing a review of the MAB Decision under Rule 43 of the Rules of Court

first Section 79 of RA No. 7942 provides that decisions of the MAB may be reviewed by this Court on a "petition for review by certiorari." This provision is obviously an expansion of the Court’s appellate jurisdiction, an expansion to which this Court has not consented. Indiscriminate enactment of legislation enlarging the appellate jurisdiction of this Court would unnecessarily burden it

Second when the Supreme Court, in the exercise of its rule-making power, transfers to the CA pending cases involving a review of a quasi-judicial body’s decisions, such transfer relates only to procedure; hence, it does not impair the substantive and vested rights of the parties. The aggrieved party’s right to appeal is preserved; what is changed is only the procedure by which the appeal is to be made or decided

Third the Revised Rules of Civil Procedure included Rule 43 to provide a uniform rule on appeals from quasi-judicial agencies.

Fourth  the Court realizes that under Batas Pambansa (BP) Blg. 129 as amended by RA No. 7902 factual controversies are usually involved in decisions of quasi-judicial bodies; and the CA, which is likewise tasked to resolve questions of fact, has more elbow room to resolve them

Fifth he judicial policy of observing the hierarchy of courts dictates that direct resort from administrative agencies to this Court will not be entertained, unless the redress desired cannot be obtained from the appropriate lower tribunals, or unless exceptional and compelling circumstances justify availment of a remedy falling within and calling for the exercise of our primary jurisdiction.

Consistent with these rulings and legal bases, we therefore hold that Section 79 of RA 7942 is likewise to be understood as having been modified by Circular No. 1-91, BP Blg. 129 as amended by RA 7902, Revised Administrative Circular 1-95, and Rule 43 of the Rules of Court. In brief, appeals from decisions of the MAB shall be taken to the CA through petitions for review in accordance with the provisions of Rule 43 of the 1997 Rules of Court.

CASE DIGEST : METRO CONSTRUCTION vs CHATHAM PROPERTIES

G.R. No. 141897  September 24, 2001  METRO CONSTRUCTION, INC., petitioner, vs. CHATHAM PROPERTIES, INC., respondent.

FACTS : Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction, Inc. (MCI) entered into a contract for the construction of a multi-storey building known as the Chatham House. In April 1998, MCI sought to collect from CHATHAM a sum of money for unpaid progress billings and other charges and instituted a request for adjudication of its claims with the CIAC. The preliminary conference before the CIAC started in June 1998 and was concluded a month after with the signing of the Terms of Reference (TOR) of the Case. In the meantime, the TOR was amended and finalized on 19 August 1998. The facts, as admitted by the parties before the CIAC and incorporated in the original TOR, are as follows :

1. On 21 April 1994, the parties formally entered into a contract for the construction of the "Chatham House" . . . for the contract price of price of P50,000,000.00

2. On 12 July 1994, a Supplemental Contract was executed by and between the parties whereby CHATHAM authorized MCI to procure in behalf of the former materials, equipment, etc.

3. Under Section I.04 of the Supplemental Contract, the total amount of procurement and transportation cost[s] and expenses which may be reimbursed by MCI from CHATHAM shall not exceed the amount of P75, 000,000.00.

4. In the course of the construction, Change Orders No. 1, 4, 8A, 11, 12 and 13 were implemented,

5. CHATHAM reimbursed MCI the amount of P60,000.00 corresponding to bonuses advanced to its workers by the latter for the 14th, 16th, and 17th floors.

6. CHATHAM's payments to MCI totaled P104,875,792.37, representing payments for portions of MCI's progress billings and x x x additional charges..

In the resolution of these issues, the CIAC discovered significant data, which were not evident or explicit in the documents and records but otherwise revealed or elicited during the hearings, which the CIAC deemed material and relevant to the complete adjudication of the case

The CIAC disposed of the specific money claims by either granting or reducing them. On Issue No. 9, i.e., whether CHATHAM failed to complete and/or deliver the project within the approved completion period and, if so, whether CHATHAM is liable for liquidated damages and how much.

CIAC rendered JUdgement in favor of the Claimant [MCI] directing Respondent [CHATHAM] to pay Claimant [MCI] the net sum of SIXTEEN MILLION ONE HUNDRED TWENTY SIX THOUSAND NINE HUNDRED TWENTY TWO & 91/100 (16,126,922.91) PESOS. Impugning the decision of the CIAC, CHATHAM instituted a petition for review with the Court of Appeals

In upholding the decision of the CIAC, the Court of Appeals confirmed the jurisprudential principle that absent any showing of arbitrariness, the CIAC's findings as an administrative agency and quasi judicial body should not only be accorded great respect but also given the stamp of finality. However the Court of Appeals found exception in the CIAC's disquisition of Issue No.9 on the matter of liquidated damages.

ISSUE : WON under existing law and rules the Court of Appeals can also review findings of facts of the Construction Industry Arbitration Commission (CIAC)

HELD : EO. No. 1008 vest upon the CIAC original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. By express provision of Section 19 thereof, the arbitral award of the CIAC is final and unappealable, except on questions of law, which are appealable to the Supreme Court.

The parties, however, disagree on whether the subsequent Supreme Court issuances on appellate procedure and R.A. No. 7902 removed from the Supreme Court its appellate jurisdiction in Section 19 of E.O. No. 1008 and vested the same in the Court of Appeals, and whether appeals from CISC awards are no longer confined to questions of law.

Through Circular No. 1-91, the Supreme Court intended to establish a uniform procedure for the review of the final orders or decisions of the Court of Tax Appeals and other quasi judicial. The Circular designated the Court of Appeals as the reviewing body to resolve questions of fact or of law or mixed questions of fact and law.

It is clear that Circular No. 1-91 covers the CIAC. In the first place, it is a quasi judicial agency. In the second place, the language of Section 1 of Circular No. 1-91 emphasizes the obvious inclusion of the CIAC even if it is not named in the enumeration of quasi-judicial agencies. In sum, under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be brought to the Court of Appeals, and not to the Supreme Court alone. The grounds for the appeal are likewise broadened to include appeals on questions of facts and appeals involving mixed questions of fact and law

The jurisdiction of the Court of Appeals over appeals from final orders or decisions of the CIAC is further fortified by the amendments to B.P. Blg. 129, as introduced by RA. No. 7902. With the amendments, the Court of Appeals is vested with appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except "those within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.".  In view of all the foregoing, The Supreme Court rejects MCI's submission that Circular No. 1-91, B.P. Blg. 129, as amended by RA. 7902, Revised Administrative Circular 1-95, and Rule 43 of the 1997 Rules of Civil Procedure failed to efficaciously modify the provision on appeals in E.O. No. 1008.

CASE DIGEST : SPOUSES DAVID vs CONSTRUCTION INDUSTRY AND ARBITRATION COMMISSION (CIAC)

G.R. No. 159795 July 30, 2004  SPOUSES ROBERTO & EVELYN DAVID and COORDINATED GROUP, INC., petitioners, vs. CONSTRUCTION INDUSTRY AND ARBITRATION COMMISSION and SPS. NARCISO & AIDA QUIAMBAO, respondents.

FACTS : Petitioner COORDINATED GROUP, INC. (CGI) is a corporation engaged in the construction business, with petitioner-spouses ROBERTO and EVELYN DAVID as its President and Treasurer, respectively. respondent-spouses NARCISO and AIDA QUIAMBAO engaged the services of petitioner CGI to design and construct a five-storey concrete office/residential building on their land in Tondo, Manila. The Design/Build Contract of the parties provided that:

(a) petitioner CGI shall prepare the working drawings for the construction project;

(b) respondents shall pay petitioner CGI the sum of Seven Million Three Hundred Nine Thousand Eight Hundred Twenty-One and 51/100 Pesos (P7,309,821.51) for the construction of the building,  including the costs of labor, materials and equipment, and Two Hundred Thousand Pesos (P200,000.00) for the cost of the design; and

 (c) the construction of the building shall be completed within nine (9) months after securing the building permit.

The completion of the construction was initially scheduled on or before July 16, 1998 but was extended to November 15, 1998 upon agreement of the parties but petitioners failed to follow the specifications and plans as previously agreed upon. Respondents demanded the correction of the errors but petitioners failed to act on their complaint. Consequently, respondents rescinded the contract on October 31, 1998, after paying 74.84% of the cost of construction

Respondents then engaged the services of another contractor, RRA and Associates, It was found that petitioners revised and deviated from the structural plan of the building without notice to or approval by the respondents.

Respondents filed a case for breach of contract against petitioners before the Regional Trial Court (RTC) of Manila. At the pre-trial conference, the parties agreed to submit the case for arbitration to CIAC. The RTC of Manila then dismissed the case and transmitted its records to the CIAC.

The arbitrator rendered judgment against petitioners. Petitioners appealed to the Court of Appeals which affirmed the arbitrator’s Decision but deleted the award for lost rentals

ISSUE : WON THE FACTUAL FINDINGS OF CIAC ARE FINAL AND CONCLUSIVE AND NOT REVIEWABLE BY THE SUPREME COURT ON APPEAL.

HELD: Executive Order No. 1008 entitled, "Construction Industry Arbitration Law" provided for an arbitration mechanism for the speedy resolution of construction disputes other than by court litigation. It recognized the role of the construction industry in the country’s economic progress as it utilizes a large segment of the labor force and contributes substantially to the gross national product of the country. Thus, E.O. No. 1008 vests on the CIAC original and exclusive jurisdiction over disputes arising from or connected with construction contracts entered into by parties who have agreed to submit their case to voluntary arbitration. Section 19 of E.O. No. 1008 provides that its arbitral award shall be appealable to the Supreme Court only on questions of law.

There is a question of law when the doubt or difference in a given case arises as to what the law is on a certain set of facts, and there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts.

In the case at bar, it is readily apparent that petitioners are raising questions of fact. In their first assigned error, petitioners claim that at the time of rescission, they had completed 80% of the construction work and still have 15 days to finish the project. They likewise insist that they constructed the building in accordance with the contract and any modification on the plan was with the consent of the respondents. The second assigned error likewise involves a question of fact. It is contended that petitioner-spouses David cannot be held jointly and severally liable with petitioner CGI in the payment of the arbitral award as they are merely its corporate officers

Clearly, the case at bar does not raise any genuine issue of law. We reiterate the rule that factual findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal, except 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 of any of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or 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 section nine of Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (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.12 Petitioners failed to show that any of these exceptions applies to the case at bar.