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Timestamp: 2019-04-22 02:26:38+00:00

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HYDRO RESOURCES CONTRACTORS CORPORATION, Petitioner, v. NATIONAL IRRIGATION ADMINISTRATION, Respondent.
Challenged in this Petition for Review on Certiorari under Rule 45 is the Decision of the Court of Appeals1 dated October 29, 2002 and its Resolution dated September 24, 20032 in CA-G.R. SP No. 44527,3 reversing the judgment of the Construction Industry Arbitration Commission (CIAC) dated June 10, 19974 in CIAC Case No. 14-98 in favor of petitioner Hydro Resources Contractors Corporation.
The facts are undisputed and are matters of record.
In a competitive bidding conducted by the National Irrigation Administration (NIA) sometime in August 1978, Hydro Resources Contractors Corporation (Hydro) was awarded Contract MPI-C-25 involving the main civil work of the Magat River Multi-Purpose Project. The contract price for the work was pegged at P1,489,146,473.72 with the peso component thereof amounting to P1,041,884,766.99 and the US$ component valued at $60,657,992.37 at the exchange rate of P7.3735 to the dollar or P447,361,706.73.
On November 6, 1978, the parties signed Amendment No. 16 of the contract whereby NIA agreed to increase the foreign currency allocation for equipment financing from US$28,000,000.00 for the first and second years of the contract to US$38,000,000.00, to be made available in full during the first year of the contract to enable the contractor to purchase the needed equipment and spare parts, as approved by NIA, for the construction of the project. On April 9, 1980, the parties entered into a Memorandum of Agreement7 (MOA) whereby they agreed that Hydro may directly avail of the foreign currency component of the contract for the sole purpose of purchasing necessary spare parts and equipment for the project. This was made in order for the contractor to avoid further delays in the procurement of the said spare parts and equipment.
During the period of the execution of the contract, the foreign exchange value of the peso against the US dollar declined and steadily deteriorated. Whenever Hydro's availment of the foreign currency component exceeded the amount of the foreign currency payable to Hydro for a particular period, NIA charged interest in dollars based on the prevailing exchange rate instead of the fixed exchange rate of P7.3735 to the dollar. Yet when Hydro received payments from NIA in Philippine Pesos, NIA made deductions from Hydro's foreign currency component at the fixed exchange rate of P7.3735 to US$1.00 instead of the prevailing exchange rate.
Upon completion of the project, a final reconciliation of the total entitlement of Hydro to the foreign currency component of the contract was made. The result of this final reconciliation showed that the total entitlement of Hydro to the foreign currency component of the contract exceeded the amount of US dollars required by Hydro to repay the advances made by NIA for its account in the importation of new equipment, spare parts and tools. Hydro then requested a full and final payment due to the underpayment of the foreign exchange portion caused by price escalations and extra work orders. In 1983, NIA and Hydro prepared a joint computation denominated as the "MPI-C-2 Dollar Rate Differential on Foreign Component of Escalation."10 Based on said joint computation, Hydro was still entitled to a foreign exchange differential of US$1,353,771.79 equivalent to P10,898,391.17.
On December 7, 1994, Hydro filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC).14 In the said request, Hydro nominated six (6) arbitrators. The case was docketed as CIAC Case No. 18-94.
NIA filed its Answer with Compulsory Counterclaim15 raising laches, estoppel and lack of jurisdiction by CIAC as its special defenses. NIA also submitted its six (6) nominees to the panel of arbitrators. After appointment of the arbitrators, both parties agreed on the Terms of Reference16 as well as the issues submitted for arbitration.
Thereafter, the Court of Appeals rendered the challenged decision in CA-G.R. SP No. 44527, reversing the judgment of the CIAC on the grounds that: (1) Hydro's claim has prescribed; (2) assuming that Hydro was entitled to its claim, the rate of exchange should be based on a fixed rate; (3) Hydro's claim is contrary to R.A. No. 529;27 (4) NIA's Certification of Non-Forum-Shopping was proper even if the same was signed only by counsel and not by NIA's authorized representative; and (5) NIA did not engage in forum-shopping.
Hydro's Motion for Reconsideration was denied in Resolution of September 24, 2003.
Both parties admit the existence of this provision in the Contract (Petition, p. 4; Comment, p. 16; Rollo, pp. 12 and 131). Apropos, the following matters are clear: (1) any controversy or dispute between the parties arising from the subject contract shall be governed by the provisions of the contract; (2) upon the failure to arrive at a mutual agreement, the contractor shall submit the dispute to the Administrator of NIA for determination; and (3) the decision of the Administrator shall become final and conclusive, unless within thirty (30) calendar days from the date of receipt thereof, the Contractor shall deliver to NIA a written notice addressed to the Administrator that he desires that the dispute be submitted for arbitration.
This refers to your letter dated November 7, 1986 requesting reconsideration on your claim for payment of the Dollar Rate Differential of Price Escalation in Contract No. MPI-C-2.
We have reviewed the relevant facts and issues as presented and the additional points raised in the abovementioned letter in the context of the Contract Documents and we find no strong and valid reason to reverse the earlier decision of NIA's previous management denying your claim. Therefore, we regret that we have to reiterate the earlier official stand of NIA under its letter dated January 7, 1986, that confirms the original recommendation which had earlier been presented in our 4th Indorsement dated February 5, 1985 to your office.
Hydro received the above-mentioned letter on January 27, 1987.30 Pursuant to Section 25 of the Contract's General Conditions (GC-25), Hydro had thirty (30) days from receipt of said denial, or until February 26, 1987, within which to notify NIA of its desire to submit the dispute to arbitration.
On February 18, 1987, Hydro sent a letter31 to NIA, addressed to then NIA Administrator Federico N. Alday, Jr., manifesting its desire to submit the dispute to arbitration. The letter was received by NIA on February 19, 1987, which was within the thirty-day prescriptive period.
In construction contracts, there is invariably a provision for interim settlement of disputes. The right to settle disputes is given to the owner or his representative, either an architect or engineer, designated as "owner's representative," only for the purpose of avoiding delay in the completion of the project. In this particular contract, that right was reserved to the NIA Administrator. The types of disputes contemplated were those which may have otherwise affected the progress of the work. It is very clear that this is the purpose of the limiting periods in this clause that the dispute shall be resolved by the Administrator within 30 days from receipt of a written notice from the Contractor and that the Contractor may submit to arbitration this dispute if it does not agree with the decision of the Administrator, and "Pending decision from arbitration, Contractor shall proceed diligently with the performance of the Contract and in accordance with the decision of the Administrator."
Instead of upholding the CIAC's findings on this point, the Court of Appeals ruled that Cesar L. Tech's act of signing the Joint Computation was an ultra vires act. This again is patent error. It must be noted that the Administrator is the highest officer of the NIA. Furthermore, Hydro has been dealing with NIA through its Administrator in all of its transactions with respect to the contract and subsequently the foreign currency differential claim. The NIA Administrator is empowered by the Contract to grant or deny foreign currency differential claims. It would be preposterous for the NIA Administrator to have the power of granting claims without the authority to verify the computation of such claims. Finally, the records of the case will show that NIA itself never disputed its Administrator's capacity to sign the Joint Computation because it knew that the Administrator, in fact, had such capacity.
ART. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.
d) For the purpose of obviating the introduction of testimonial evidence on the authenticity and due execution of its documentary evidence, NIA even had examined, upon prior request to Hydro, all of the documents which the latter intended to present as evidentiary exhibits for the said arbitration case.
We now come to the issue of whether or not the provisions of R.A. No. 529, otherwise known as an Act To Assure Uniform Value to Philippine Coin And Currency, is applicable to Hydro's claim.
Sec. 1. Every provision contained in, or made with respect to, any domestic obligation to wit, any obligation contracted in the Philippines which provisions purports to give the obligee the right to require payment in gold or in a particular kind of coin or currency other than Philippine currency or in an amount of money of the Philippines measured thereby, be as it is hereby declared against public policy, and null, void, and of no effect, and no such provision shall be contained in, or made with respect to, any obligation hereafter incurred. The above prohibition shall not apply to (a) transactions where the funds involved are the proceeds of loans or investments made directly or indirectly, through bona fide intermediaries or agents, by foreign governments, their agencies and instrumentalities, and international financial and banking institutions so long as the funds are identifiable, as having emanated from the sources enumerated above; (b) transactions affecting high-priority economic projects for agricultural, industrial and power development as may be determined by the National Economic Council which are financed by or through foreign funds; (c) forward exchange transaction entered into between banks or between banks and individuals or juridical persons; (d) import-export and other international banking, financial investment and industrial transactions. With the exception of the cases enumerated in items (a), (b), (c) and (d) in the foregoing provisions, in which bases the terms of the parties' agreement shall apply, every other domestic obligation heretofore or hereafter incurred, whether or not any such provision as to payment is contained therein or made with respect thereto, shall be discharged upon payment in any coin or currency which at the time of payment is legal tender for public and private debts: Provided, That if the obligation was incurred prior to the enactment of this Act and required payment in a particular kind of coin or currency other than Philippine currency, it shall be discharged in Philippine currency measured at the prevailing rates of exchange at the time the obligation was incurred, except in case of a loan made in a foreign currency stipulated to be payable in the same currency in which case the rate of exchange prevailing at the time of the stipulated date of payment shall prevail. All coin and currency, including Central Bank notes, heretofore and hereafter issued and declared by the Government of the Philippines shall be legal tender for all debts, public and private.
The next issue to be resolved is whether or not Hydro's claim should be computed at the fixed rate of exchange.
When the MOA41 and the Supplemental MOA42 were in effect, there were instances when the foreign currency availed of by Hydro exceeded the foreign currency payable to it for that particular Progress Payment. In instances like these, NIA actually charged Hydro interest in foreign currency computed at the prevailing exchange rate and not at the fixed rate. NIA now insists that the exchange rate should be computed according to the fixed rate and not the escalating rate it actually charged Hydro.
Suffice it to state that this flip-flopping stance of NIA of adopting and discarding positions to suit its convenience cannot be countenanced. A person who, by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another.43 Indeed, the application of the principle of estoppel is proper and timely in heading off NIA's efforts at renouncing its previous acts to the prejudice of Hydro which had dealt with it honestly and in good faith.
Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such a belief he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.
Applying the foregoing yardstick to the instant case, it is clear that NIA violated the prohibition against forum-shopping. Besides filing CA-G.R. SP No. 44527 wherein the Court of Appeals' decision is the subject of appeal in this proceeding, NIA previously filed CA-G.R. SP No. 37180 and G.R. No. 129169 which is a special civil action for certiorari . In all three cases, the parties are invariably Hydro and NIA. In all three petitions, NIA raised practically the same issues51 and in all of them, NIA's prayer was the same: to nullify the proceedings commenced at the CIAC.
It must be pointed out in this regard that the first two petitions namely, CA-G.R. SP No. 37180 and G.R. No. 129169 are both original actions. Since NIA failed to file a Petition for Review on Certiorari under Rule 45 of the Rules of Court challenging the decision of the appellate court in CA-G.R. SP No. 37180 dismissing its petition, it opted to file an original action for certiorari under Rule 65 with this Court where the same was docketed as G.R. No. 129169. For its failure to appeal the judgments in CA-G.R. SP No. 37180 and G.R. No. 129169, NIA is necessarily bound by the effects of those decisions. The filing of CA-G.R. SP No. 44527, which raises the issues already passed upon in both cases is a clear case of forum-shopping which merits outright dismissal.
An action by an administrative agency may be set aside by the judicial department only if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.55 In the case at bar, there is no cogent reason to depart from the general rule because the action of the CIAC conforms rather than conflicts with the governing statutes and controlling case law on the matter.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 44527 dated October 29, 2002 and the Resolution dated September 24, 2003 are REVERSED and SET ASIDE. The Decision of the Construction Industry Arbitration Commission dated June 10, 1997 in CIAC Case No. 18-94 is REINSTATED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ.,concur.
3 Entitled National Irrigation Administration v. Hydro Resources Contractors Corporation and Construction Industry Arbitration Commission.
12 Id., pp. 207-231, 245, 252, 257, 264.
27 Entitled An Act to Assure Uniform Value to Philippine Coin and Currency.
32 Id., p. 438; CIAC Decision, p. 16.
34 Rural Bank of Milaor (Camarines Sur) v. Ocfemia, G.R. No. 137686, 8 February 2000, 325 SCRA 99.
35 Yao Ka Sin Trading v. CA, G.R. No. 53820, 15 June 1992, 209 SCRA 763, 783.
36 Sambrano v. CTA, 101 Phil. 1 ; Republic v. Arcache, 119 Phil. 604 ; DBP v. Adil, G.R. No. L-48889, 11 May 1988, 161 SCRA 307.
37 See Articles of Agreement of the International Bank for Reconstruction and Development (Bretton Woods Agreement), 1 PTS 149. The Philippines was an original signatory to this Agreement. The membership of the Philippines to the Bank was authorized by C.A. 699, 20 November 1945. The treaty entered into force on 27 December 1945. It was proclaimed by the President through Proc. No. 27, s. 1945.
38 G.R. No. 33438, 28 October 1991, 203 SCRA 164, 168.
39 G.R. No. 43830, 22 January 1990, 181 SCRA 197, 201.
40 Philippine Airlines v. Court of Appeals, G.R. No. 70491, 11 December 1992.
43 Cruz v. Court of Appeals, G.R. No. 126713, 27 July 1998, 293 SCRA 239, citing 31 C.J.S. 288.
44 Pureza v. Court of Appeals, G.R. No. 122053, 15 May 1998, 290 SCRA 110, 115.
45 See Traders Royal Bank v. Court of Appeals, G.R. NOS. 114299 and 118862, 24 September 1999, 315 SCRA 190.
46 Article 1431, Civil Code.
47 Ayala Corporation v. Ray Burton Development Corporation, G.R. No. 126699, 7 August 1998, 294 SCRA 48, citing Laureano Investment & Development Corporation v. Court of Appeals, G.R. No. 100468, 6 May 1997, 272 SCRA 253.
48 Landcar, Inc. v. Bachelor Express, Inc., et al., G.R. No. 154377, 8 December 2003, 417 SCRA 307, citing Gatmaytan v. Court of Appeals, G.R. No. 123332, 3 February 1997, 267 SCRA 487; Tolentino v. Natanauan, et al., G.R. No. 135441, 20 November 2003, 416 SCRA 273; People v. Sandiganbayan, G.R. No. 149495, 21 August 2003, 409 SCRA 419.
49 Elcee Farms, Inc. v. Semillano, G.R. No. 150286, 17 October 2003, 413 SCRA 669, citing Tantoy, Sr. v. Court of Appeals, G.R. No. 141427, 20 April 2001, 357 SCRA 329, citing Gatmaytan v. Court of Appeals, supra.
50 MR Holdings, Ltd. v. Bajar, G.R. No. 138104, 11 April 2002, 380 SCRA 617, citing Employees' Compensation Commission v. Court of Appeals, G.R. No. 115858, 28 June 1996, 257 SCRA 717.
52 G.R. No. 144134, 11 November 2003, 415 SCRA 573, 583-584.
53 BPI Leasing Corporation v. Court of Appeals, G.R. No. 127624, 18 November 2003, 416 SCRA 4.
54 First Lepanto Ceramics, Inc. v. Court of Appeals, G.R. No. 117680, 9 February 1996, 253 SCRA 552, citing Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary, G.R. No. 79538, 18 October 1990, 190 SCRA 673.
55 Id., citing Sagun v. PHHC, G.R. No. 44738, 22 June 1988, 162 SCRA 411.

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