Adprom v. Mardc
REITERATIONFacts
The Antecedents: ACS Development & Property Managers, Inc. (ADPROM) and Montaire Realty and Development Corporation (MARDC) entered into a Construction Agreement for the construction of townhouses. The contract was later amended, reducing the units and price. MARDC paid ADPROM for Progress Billings Nos. 1 to 8. For Progress Billing No. 9, ADPROM demanded P1,495,345.24, but the construction manager, Angel Lazaro & Associates (ALA), only approved P94,460.28 due to disputed amounts. ADPROM refused to accept the reduced amount and insisted on full payment before proceeding. Consequently, ADPROM commenced a work stoppage on March 18, 1997. MARDC issued a notice of default on March 20, 1997. Despite meetings and ADPROM's issuance of consolidated billings, ALA still advised MARDC to defer payment as the consolidated billing exceeded ALA's approved amount. MARDC terminated the agreement on June 5, 1997, demanding alleged overpayments after ALA and another firm (TCGI Engineers) assessed ADPROM's work accomplishment at significantly lower percentages. Procedural History: ADPROM filed a case with the Construction Industry Arbitration Commission (CIAC) for sum of money. The CIAC awarded ADPROM unpaid billings, interest on billings, and refund of retention, totaling P4,384,987.03, while dismissing MARDC's counterclaims. MARDC appealed to the Court of Appeals (CA). The CA modified the CIAC decision by deleting the award of interest on unpaid billings and holding ADPROM liable for liquidated damages from March 20, 1997, to September 1, 1997. Both parties filed motions for reconsideration, which were denied by the CA. The Petition: ADPROM filed a Petition for Certiorari with the Supreme Court, assailing the CA's deletion of interest on unpaid billings and its imposition of liquidated damages, arguing grave abuse of discretion.
Issue(s)
Whether ADPROM availed of the proper remedy by filing a petition for certiorari instead of a petition for review. Whether ADPROM is entitled to interest on unpaid billings despite the contractual requirement for ALA's approval. Whether ADPROM is liable for liquidated damages due to unjustified work stoppage.
Ruling
The Supreme Court dismissed the petition. It held that ADPROM availed of the wrong remedy by filing a petition for certiorari instead of a petition for review. Even if treated liberally as a petition for review, the Court found no reversible error in the CA's rulings. The CA correctly deleted the award of interest on unpaid billings because the contract stipulated that MARDC's obligation to pay was contingent upon ALA's approval, which was not obtained for the full amounts demanded. The CA also correctly imposed liquidated damages on ADPROM for its unjustified work stoppage, which was not a sufficient ground to cease work, especially since MARDC had been prompt in payments for earlier billings and the contract provided for amicable settlement of disputes.
Ratio Decidendi
On the Proper Remedy: The Court reiterated that a petition for certiorari under Rule 65 is an independent action based on specific grounds and cannot be used as a substitute for a lost remedy of an ordinary appeal, such as a petition for review under Rule 45. The proper remedy to assail a decision of the Court of Appeals is a petition for review under Rule 45, which is a continuation of the appellate process. ADPROM's resort to certiorari was procedurally infirm, and while the Court may liberally apply the rules, the substantive issues still needed to be addressed. On Entitlement to Interest on Unpaid Billings: The Court affirmed the CA's deletion of interest on unpaid billings. The Construction Agreement explicitly stated that MARDC's obligation to pay progress billings was subject to the prior approval of ALA. Since ALA did not approve the full amounts demanded by ADPROM for Progress Billing No. 9 and the consolidated billings, MARDC did not incur delay in payment that would warrant the imposition of interest. ADPROM's insistence on full payment without ALA's approval, despite ALA's clear grounds for dispute, meant that the condition precedent for MARDC's payment obligation was not met. Therefore, ADPROM could not compel MARDC to pay the disputed amounts nor claim interest thereon. On Liability for Liquidated Damages: The Court upheld the CA's award of liquidated damages against ADPROM. The contract stipulated that ADPROM would pay P39,500.00 per calendar day for every unexcused day of delay. ADPROM's work stoppage, commencing on March 18, 1997, was deemed unjustified. While ADPROM cited unpaid billings as a reason, this was not a sufficient ground to cease work, especially considering the contractual mechanism for dispute resolution and the fact that MARDC had fulfilled its payment obligations for earlier billings. The contract also provided for amicable settlement of disputes, which ADPROM failed to pursue before resorting to work stoppage. This unilateral action by ADPROM constituted an unexcused delay, making it liable for the stipulated liquidated damages as per Article IX of the Construction Agreement.
Main Doctrine
A petition for certiorari under Rule 65 is not a substitute for a petition for review under Rule 45; the proper remedy to assail a decision of the Court of Appeals is a petition for review. Furthermore, a party is not entitled to interest on unpaid billings if the contract requires prior approval of a third party (like a construction manager) for payment, and such approval has not been obtained. Unjustified work stoppage, even in the face of disputed billings, renders the contractor liable for liquidated damages as stipulated in the contract.