G.R. No. 179732 SEPTEMBER 13, 2017
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, PETITIONER, VS. CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE, RESPONDENT.

FACTS

The Department of Public Works and Highways (DPWH) entered into a contract with CMC/Monark/Pacific/Hi-Tri Joint Venture for a road improvement project in Zamboanga del Sur. During construction, the Joint Venture’s equipment was damaged by fire and a bombing incident attributed to the Moro Islamic Liberation Front. The Joint Venture incurred financial losses and made demands for payment of the foreign currency component of the contract and additional costs due to the disruptions. Efforts to settle the unpaid amounts, particularly the foreign component of US$358,227.95, were unsuccessful. Subsequently, the parties mutually agreed to terminate the contract. The Joint Venture then filed a complaint with the Construction Industry Arbitration Commission (CIAC) seeking various monetary claims totaling approximately Php 77 million, including the foreign component, equipment losses, additional costs from the bombing, and a price adjustment under Presidential Decree No. 1594.
The CIAC rendered an Award largely in favor of the Joint Venture, ordering DPWH to pay the foreign component, equipment losses, and additional costs due to the bombing and contractual provisions, plus legal interest. However, CIAC denied the claim for price adjustment under P.D. No. 1594. Both parties appealed to the Court of Appeals, which affirmed the CIAC Award with modifications, remanding the case for determination of the exact extension period and the applicable peso conversion rate. The appellate court agreed that P.D. No. 1594 was inapplicable, as the contract was governed by Asian Development Bank procurement guidelines. DPWH elevated the case to the Supreme Court via a Petition for Review.

ISSUE

Whether the Court of Appeals erred in affirming the CIAC Award which granted monetary claims to the Joint Venture.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court emphasized the well-established doctrine that factual findings of quasi-judicial agencies like the CIAC, especially when affirmed by the Court of Appeals, are accorded great respect and finality. This deference is rooted in the CIAC’s recognized technical expertise in construction industry disputes. The Court found no compelling reason to deviate from this principle, as DPWH failed to demonstrate that the CIAC and the Court of Appeals committed any reversible error in their appreciation of the facts and evidence.
On the substantive claims, the Court upheld the awards. It ruled that the foreign currency component was a valid claim as it formed part of the contract price for imported materials and equipment, which DPWH unjustifiably withheld. The equipment losses and additional costs resulting from the bombing were also properly awarded, as these were direct consequences of events that disrupted the project, for which the Joint Venture was not at fault. The Court sustained the denial of the price adjustment under P.D. No. 1594, agreeing that the applicable governing rules were the ADB guidelines incorporated into the contract, not the presidential decree. Finally, the Court affirmed the imposition of legal interest on the monetary awards, consistent with established jurisprudence, from the finality of the judgment until full satisfaction. The remand to CIAC for the specific computations was deemed proper to achieve complete resolution.