Hydro Resources Contractors Corp. v. National Irrigation Administration
REITERATIONFacts
The Antecedents: Hydro Resources Contractors Corporation (Hydro) was awarded a contract by the National Irrigation Administration (NIA) for the Magat River Multi-Purpose Project. Amendments to the contract allowed Hydro to directly avail of the foreign currency component for equipment and materials. During project execution, the peso depreciated against the US dollar. NIA charged interest in dollars based on the prevailing exchange rate when Hydro's availments exceeded payments, but deducted from Hydro's foreign currency component at a fixed rate. Upon project completion, a reconciliation showed Hydro was entitled to a foreign exchange differential of US$1,353,771.79. NIA refused to honor this claim. Procedural History: Hydro filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC). NIA questioned CIAC's jurisdiction, but its petition for certiorari and prohibition was dismissed by the Court of Appeals (CA) and later by the Supreme Court (SC). Meanwhile, CIAC rendered a decision in favor of Hydro. NIA appealed to the CA, which reversed the CIAC decision, ruling that Hydro's claim had prescribed, that the fixed exchange rate should apply, and that the claim was contrary to R.A. No. 529. Hydro's motion for reconsideration was denied. The Petition: Hydro filed a petition for review on certiorari with the Supreme Court, challenging the CA's decision.
Issue(s)
Whether Hydro's claim for foreign exchange differential had prescribed. Whether the exchange rate for the differential should be based on a fixed rate or the prevailing rate. Whether Hydro's claim is contrary to R.A. No. 529. Whether NIA engaged in forum-shopping. Whether the Certification of Non-Forum-Shopping signed by counsel is valid.
Ruling
The Supreme Court granted the petition, reversed the Court of Appeals' decision, and reinstated the Construction Industry Arbitration Commission's decision in favor of Hydro Resources Contractors Corporation.
Ratio Decidendi
On the issue of prescription: The Supreme Court disagreed with the Court of Appeals, finding that Hydro's claim had not prescribed. The Court clarified that NIA's final denial of Hydro's claim was on January 6, 1987, and Hydro sent its letter manifesting its desire to submit the dispute to arbitration on February 18, 1987, which was within the 30-day prescriptive period under Section 25 of the Contract's General Conditions. Furthermore, the Court reasoned that the 30-day limitation in GC-25 was intended for disputes arising during project construction, not for controversies occurring after completion, as the rationale for avoiding delays no longer applied. The Court also noted that the Joint Computation prepared by Hydro and NIA in April 1983, signed by NIA Administrator Cesar L. Tech, constituted a written acknowledgment of the debt under Article 1155 of the Civil Code, interrupting any prescriptive period. The Court rejected the CA's finding that Tech's act was ultra vires, emphasizing the Administrator's authority and NIA's prior dealings with him, and invoking the principle of estoppel against NIA for having clothed the Administrator with apparent authority. On the computation at a fixed rate of exchange and the applicable exchange rate: The Supreme Court ruled that NIA was estopped from insisting on a fixed rate of exchange. The Court noted that NIA itself charged Hydro interest in dollars computed at the prevailing exchange rate when Hydro's availments exceeded payments. This inconsistent stance, where NIA adopted and discarded positions to suit its convenience, barred it from adopting an inconsistent position that would cause loss to Hydro. The principle of estoppel, enshrined in Article 1431 of the Civil Code, prevents a party from falsifying its own declarations, acts, or omissions upon which another party has relied. NIA could not hide behind a contractual stipulation that it had continuously violated. On the applicability of R.A. No. 529: The Supreme Court held that even if R.A. No. 529 were applicable, the Court of Appeals erred in denying Hydro's claim. The Court explained that the contract was an internationally tendered contract funded by the International Bank for Reconstruction and Development (IBRD), which exempts it from R.A. No. 529 under its amended provisions. However, even assuming R.A. No. 529 applied, the Court clarified that the law only voids the stipulation requiring payment in foreign currency, not the obligation to pay. The obligation would be discharged in Philippine Pesos at the prevailing exchange rate at the time of payment, as held in previous cases like Republic Resources and Development Corporation v. Court of Appeals. Therefore, the claim for foreign currency differential should not be disallowed but converted to Philippine Pesos. On the issue of forum-shopping: The Supreme Court found NIA guilty of forum-shopping. The Court defined forum-shopping as the act of availing oneself of several judicial remedies in different courts, simultaneously or successively, based on the same transaction and issues, either pending or already resolved. The Court applied the test of identity of parties, rights or causes of action, and reliefs sought. It pointed out that NIA had previously filed CA-G.R. SP No. 37180 and G.R. No. 129169, raising practically the same issues and seeking the same relief: to nullify the CIAC proceedings. The filing of CA-G.R. SP No. 44527, which raised issues already passed upon in the prior cases, constituted clear forum-shopping, warranting outright dismissal. On the validity of the Certification of Non-Forum-Shopping: The Supreme Court held that the Certification of Non-Forum-Shopping signed by NIA's counsel was defective and constituted a valid cause for dismissal. Citing Mariveles Shipyard Corp. v. Court of Appeals, the Court reiterated that the certification must be executed by the plaintiff or principal, as they know best whether a similar petition has been filed. Counsel can only sign if specifically authorized. Since the certification was signed only by counsel without such specific authorization, it was invalid.
Main Doctrine
The Supreme Court reinstated the CIAC decision, ruling that Hydro Resources Contractors Corporation's claim for foreign exchange differential had not prescribed, that the prevailing exchange rate should apply, and that NIA was estopped from invoking the fixed rate. The Court also found NIA guilty of forum-shopping.