Public Estates Authority v. Sy
REITERATIONFacts
The Antecedents: The Public Estates Authority (PEA) and Shoemart, Inc. (Shoemart) entered into agreements for the development of Central Business Park-1 Island A (CBP-1A). Shoemart won a public bidding conducted by Philippine National Construction Corporation (PNCC) for a joint venture with PNCC over CBP-1A, bidding P250 million. PEA later scheduled its own bidding, prompting Shoemart to file a case to enjoin PEA. Subsequently, PEA, PNCC, and Shoemart entered into an Agreement on May 12, 1994, and a Joint Venture Agreement (JVA) on August 9, 1994. Under these agreements, PEA agreed to form a joint venture with Shoemart, with Shoemart undertaking land development. PEA was responsible for clearing the area of squatters, with Shoemart advancing funds for relocation, to be repaid by PEA with land at CBP-1A based on the current appraisal value at the time of drawdown. A Deed of Undertaking on June 29, 1995, stipulated that Shoemart would advance P85 million for relocation, to be repaid by PEA with land at CBP-1A based on the current appraisal value of P4,410.00 per square meter, effective for three months. Shoemart advanced the P85 million on June 30, 1995. In 2004, Shoemart identified Block D of CBP-1A as the portion for repayment. PEA's board approved this site. Shoemart assigned its rights to Henry Sy, Jr. (Sy). Sy requested conveyance, but PEA suggested referring the matter to the Commission on Audit (COA) regarding the valuation date. Sy filed a complaint for specific performance, which the trial court granted. The Court of Appeals affirmed the trial court's decision. Procedural History: The Pasig Regional Trial Court (RTC) initially issued a Writ of Preliminary Injunction in Civil Case No. 56609 filed by Shoemart against PEA. Separately, PEA filed an action for reconveyance against Pasay City and PNCC in Civil Case No. 5458-P. Shoemart later filed an action before the Court of Appeals (CA G.R. SP No. 26148) for annulment of judgment in Civil Case No. 5458-P. The Pasig RTC encouraged settlement, leading to the May 12, 1994 Agreement. Sy filed an action for specific performance against PEA on June 29, 2005, after PEA's reluctance to convey the land. The RTC ruled in favor of Sy on February 28, 2008. PEA appealed to the Court of Appeals, which affirmed the RTC's decision on February 27, 2013. PEA's motion for reconsideration was denied on September 6, 2013. PEA then filed a Petition for Certiorari with the Supreme Court. The Petition: PEA filed a Petition for Certiorari with the Supreme Court, assailing the Court of Appeals' Decision and Resolution, alleging grave abuse of discretion. PEA argued that it was legally bound to seek COA's advice on property valuation and that Sy had no cause of action. PEA also contended that the valuation in the Deed of Undertaking was only valid for three months and that the trial court erred in disregarding the COA's role and the time lapse.
Issue(s)
Whether the Public Estates Authority (PEA) availed of the correct remedy in filing a Petition for Certiorari under Rule 65 instead of a Petition for Review under Rule 45. Whether the Court of Appeals gravely abused its discretion in affirming the trial court's decision, specifically concerning the valuation of the land to be conveyed and the necessity of seeking the Commission on Audit's (COA) advice. Whether the valuation of the land for repayment should be based on the appraisal value at the time of drawdown or at the time the respondent Sy identified the specific lot, and whether the three-month validity period of the appraisal value in the Deed of Undertaking was applicable and had expired. Whether the arbitration clause in the Joint Venture Agreement was a mandatory prerequisite to filing a court case.
Ruling
The Supreme Court dismissed the Petition for Certiorari. It held that PEA availed of the wrong remedy, as a Petition for Certiorari under Rule 65 is for errors of jurisdiction or grave abuse of discretion, not errors of judgment, for which an appeal under Rule 45 is the proper recourse. The Court found that PEA failed to establish grave abuse of discretion and that its arguments primarily concerned errors of judgment. Even if the petition were treated as a Rule 45 appeal, the Court found no grave abuse of discretion on the part of the Court of Appeals. The Court affirmed the appellate court's ruling that the valuation of the land should be based on the appraisal at the time of drawdown, as stipulated in the agreements, and that the three-month period in the Deed of Undertaking was complied with. The Court also held that seeking COA's advice was not mandatory and that the arbitration clause was permissive, not a condition precedent.
Ratio Decidendi
On the procedural issue of the correct remedy: The Court reiterated that a petition for certiorari under Rule 65 is an extraordinary remedy exclusively for correcting errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. It is not a substitute for a lost appeal. The Court found that PEA's arguments primarily assailed the Court of Appeals' alleged errors in judgment regarding the interpretation of contracts and the application of law, rather than any jurisdictional defect. PEA failed to explain why an appeal under Rule 45 was inadequate or unavailable. The Court noted that PEA received the Court of Appeals' resolution denying its motion for reconsideration on September 23, 2013, and instead of filing a Rule 45 petition within 15 days, it filed a Rule 65 petition on November 25, 2013, which was also untimely filed. Therefore, the petition was dismissed for availing the wrong remedy. On the substantive issue of land valuation and contractual obligations, and the necessity of COA's advice: The Court affirmed the Court of Appeals' findings that the agreements (Agreement, JVA, and Deed of Undertaking) clearly stipulated that the advance payment made by Shoemart (and later Sy) for squatter relocation would be repaid with land at the current appraisal value at the time of drawdown. The Court emphasized that if the terms of a contract are clear and leave no doubt, the literal meaning of the stipulations shall control, citing Article 1370 of the Civil Code. The Court found that Shoemart's advance payment of P85 million on June 30, 1995, was made within the three-month period stipulated in the Deed of Undertaking, making the appraisal value of P4,410.00 per square meter binding. This value equated to 19,274 square meters, which PEA's board later approved. The Court also noted PEA's own subsequent acts, including a letter from its general manager confirming the P4,410.00 per square meter valuation and the 19,274 square meter equivalent, and the Board Resolution approving the specific lot, as evidence of its acknowledgment of the obligation based on the drawdown valuation. The Court found that PEA's referral of the matter to the Commission on Audit (COA) was stated to be "solely out of prudence" and not a mandatory requirement under the agreements. When PEA sought COA's opinion, the latter declined, stating the matter was sub judice. The Court held that PEA could not use COA's guidance, or lack thereof, to evade its contractual obligations. The agreements did not require PEA to obtain COA's advice before conveying the land. On the valuation of the land for repayment and the three-month limitation: The Court clarified that the three-month period in the Deed of Undertaking referred to the effectiveness of the appraisal value if the advance payment was made within that period. Since Shoemart paid within one day of the Deed's execution, the P4,410.00 per square meter valuation was valid. The Court rejected PEA's argument that the valuation expired after three months, as this would violate the principle of mutuality of contracts and allow PEA to unilaterally control compliance. The Court emphasized that the parties were bound by their agreements and that PEA's subsequent acts confirmed its obligation based on the drawdown valuation. On the arbitration clause: The Court examined Article X, Section 5 of the Joint Venture Agreement, which stated that disputes "may" be submitted for arbitration at the choice of either party. The Court ruled that the use of the word "may" indicated that arbitration was permissive, not obligatory, and not a condition precedent to filing a court case. Furthermore, PEA waived this argument by not raising it in its Answer or Motion to Dismiss before the trial court and by instead seeking COA's guidance. The Court also noted that PEA's belated attempt to invoke arbitration in its Reply was an afterthought.
Main Doctrine
A petition for certiorari under Rule 65 is not a substitute for a lost appeal under Rule 45. Certiorari is only available to correct errors of jurisdiction or grave abuse of discretion, not errors of judgment. Furthermore, parties are bound by the literal terms of their contracts, and the valuation of property for repayment shall be based on the appraisal value at the time of drawdown as stipulated.