[Type text]

G.R. No. 187240, October 15, 2014

CARLOS A. LORIA, Petitioner, v. LUDOLFO P. MUÑOZ, JR., Respondent.

DECISION

LEONEN, J.:

No person should unjustly enrich himself or herself at the expense of another.

This is a petition for review on certiorari 1 to set aside the Court of Appeals’ decision2 and
resolution3 in CA-G.R. CV No. 81882.  The Court of Appeals ordered petitioner Carlos A.
Loria to pay respondent Ludolfo P. Muñoz, Jr. P2,000,000.00 in actual damages with 12%
interest per year from the filing of the complaint until full payment.4cralawlawlibrary

The facts of this case are as follows:

Ludolfo P. Muñoz, Jr. (Muñoz) filed a complaint for sum of money and damages with an
application for issuance of a writ of preliminary attachment against Carlos A. Loria (Loria)
with the Regional Trial Court of Legazpi City.5cralawlawlibrary

In his complaint, Muñoz alleged that he has been engaged in construction under the name,
“Ludolfo P. Muñoz, Jr. Construction.”  In August 2000, Loria visited Muñoz in his office in
Doña Maria Subdivision in Daraga, Albay.  He invited Muñoz to advance P2,000,000.00 for a
subcontract of a P50,000,000.00 river-dredging project in Guinobatan.6cralawlawlibrary

Loria represented that he would make arrangements such that Elizaldy Co, owner of
Sunwest Construction and Development Corporation, would turn out to be the lowest bidder
for the project.  Elizaldy Co would pay P8,000,000.00 to ensure the project’s award to
Sunwest.  After the award to Sunwest, Sunwest would subcontract 20% or P10,000,000.00
worth of the project to Muñoz.7cralawlawlibrary

Since Muñoz had known Loria for five years, Muñoz accepted Loria’s
proposal.8cralawlawlibrary

On October 2, 2000, Muñoz requested Allied Bank to release P3,000,000.00 from his joint
account with his business partner, Christopher Co, to a certain Grace delos Santos (delos
Santos).  Loria then obtained the money from delos Santos.9cralawlawlibrary

Four days later, P1,800,000.00 of the P3,000,000.00 was returned to

Muñoz.10cralawlawlibrary

On January 10, 2001, Loria collected Muñoz’s P800,000.00 balance.  After deducting Loria’s
personal loans from Muñoz, Muñoz issued a check to Loria for P481,800.00.  Loria
acknowledged receiving this amount from Muñoz.11cralawlawlibrary

The project to dredge the Masarawag and San Francisco Rivers in Guinobatan was subjected
to public bidding.  The project was awarded to the lowest bidder, Sunwest Construction and
Development Corporation.12cralawlawlibrary

Sunwest allegedly finished dredging the Masarawag and San Francisco Rivers without
subcontracting Muñoz.13   With the project allegedly finished, Muñoz demanded Loria to
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return his P2,000,000.00.  Loria, however, did not return the money.14cralawlawlibrary

Muñoz first charged Loria and Elizaldy Co with estafa.  This criminal case was dismissed by
the Municipal Trial Court of Daraga, Albay for lack of probable cause.15cralawlawlibrary

Muñoz then filed the complaint for sum of money.  The case was raffled to Branch 6 and
presided by Judge Vladimir B. Brusola.16cralawlawlibrary

Loria answered Muñoz’s complaint.  He admitted receiving P481,800.00 from Muñoz but
argued that the complaint did not state a cause of action against him.  According to Loria,
he followed up the project’s approval with the Central Office of the Department of Public
Works and Highways as the parties agreed upon.  He was, therefore, entitled to his
representation expenses.17cralawlawlibrary

Loria also argued that Muñoz was guilty of forum shopping.  Muñoz first filed a criminal
complaint for estafa against him and Elizaldy Co, which complaint the Municipal Trial Court
of Daraga, Albay dismissed.  The subsequently filed complaint for sum of money, allegedly a
complaint to recover the civil aspect of the estafa case, must, therefore, be dismissed as
argued by Loria.18cralawlawlibrary

During pre-trial, the parties agreed to litigate the sole issue of whether Loria is liable to
Muñoz for P2,000,000.00.19cralawlawlibrary

According to the trial court, Muñoz established with preponderant evidence that Loria
received P2,000,000.00 from Muñoz for a subcontract of the river-dredging project.  Since
no part of the project was subcontracted to Muñoz, Loria must return the P2,000,000.00 he
received, or he would be “unduly enriching himself at the expense of
[Muñoz].”20cralawlawlibrary

On the claim of forum shopping, the trial court ruled that Loria’s obligation to return the
P2,000,000.00 did not arise from criminal liability. Muñoz may, therefore, file a civil action
to recover his P2,000,000.00.21cralawlawlibrary

As to the prayer for issuance of a writ of preliminary attachment, the trial court denied the
prayer for lack of sufficient basis.22cralawlawlibrary

Thus, in the decision23 dated January 30, 2004, the trial court ordered Loria to return the
P2,000,000.00 to Muñoz as actual damages with 12% interest from the filing of the
complaint until the amount’s full payment.  The trial court likewise ordered Loria to pay
Muñoz P100,000.00 in attorney’s fees, P25,000.00 in litigation expenses, and P25,000.00 in
exemplary damages with costs against Loria.24cralawlawlibrary

Loria appealed to the Court of Appeals, arguing that Muñoz failed to establish his receipt of
the P2,000,000.00.  Specifically, Muñoz failed to establish that he obtained P3,000,000.00
from a certain Grace delos Santos.  Loria also appealed the award of attorney’s fees,
litigation expenses, and exemplary damages for having no basis in fact and in
law.25cralawlawlibrary

The Court of Appeals sustained the trial court’s factual findings.  In ruling that Loria
received the net amount of P2,000,000.00 from Muñoz, the Court of Appeals referred to
Muñoz’s testimony that he ordered Allied Bank to release P3,000,000.00 from his joint
account with Christopher Co to a certain Grace delos Santos.26   Loria then obtained the
money from delos Santos and confirmed with Muñoz his receipt of the money.27   This
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testimony, according to the appellate court, was supported by Exhibit “C,” a check voucher
the trial court admitted in evidence.  Loria signed this check voucher and acknowledged
receiving P1,200,000.00 on October 2, 2000 and P800,000.00 on January 10, 2001, or a
total of P2,000,000.00.28cralawlawlibrary

Considering that Muñoz did not benefit from paying Loria P2,000,000.00, the appellate court
ruled that Loria must return the money to Muñoz under the principle of unjust
enrichment.29cralawlawlibrary

The appellate court, however, ruled that Muñoz failed to show his right to exemplary
damages and attorney’s fees.30cralawlawlibrary

Thus, in the decision31 dated October 23, 2008, the Court of Appeals affirmed the trial
court’s decision but deleted the award of exemplary damages and attorney’s fees.32   The
appellate court likewise denied Loria’s motion for reconsideration in the resolution33 dated
March 12, 2009.

Loria filed a petition for review on certiorari 34 with this court, arguing that the principle of
unjust enrichment does not apply in this case.  As the trial and appellate courts found,
Muñoz paid Loria P2,000,000.00 for a subcontract of a government project.  The parties’
agreement, therefore, was void for being contrary to law, specifically, the Anti-Graft and
Corrupt Practices Act, the Revised Penal Code, and Section 6 of Presidential Decree No.
1594.  The agreement was likewise contrary to the public policy of public or open
competitive bidding of government contracts.35cralawlawlibrary

Since the parties’ agreement was void, Loria argues that the parties were in pari
delicto, and Muñoz should not be allowed to recover the money he gave under the
contract.36cralawlawlibrary

On the finding that he received a net amount of P2,000,000.00 from Muñoz, Loria maintains
that Muñoz failed to prove his receipt of P3,000,000.00 through a certain Grace delos
Santos.37cralawlawlibrary

In the resolution38 dated June 3, 2009, this court ordered Muñoz to comment on Loria’s
petition.

In his comment,39 Muñoz argues that Loria’s petition raises questions of fact and law that
the trial and appellate courts have already passed upon and resolved in his favor.  He prays
that this court deny Loria’s petition for raising questions of fact.

Loria replied40 to the comment, arguing that he raised only questions of law in his
petition.41   Even assuming that he raised questions of fact, Loria argues that this does not
warrant the automatic dismissal of his petition since the trial and appellate courts allegedly
erred in ruling for Muñoz.42cralawlawlibrary

On October 8, 2010, the parties filed their joint motion to render judgment based on the
compromise agreement.43   In their compromise agreement,44 the parties declared that this
case “was a product of a mere misunderstanding.”45   To amicably settle their dispute, the
parties agreed to waive all their claims, rights, and interests against each
other.46cralawlawlibrary

This court denied the joint motion for lack of merit in the resolution47 dated December 15,
2010.
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The issues for our resolution are the following:chanRoblesvirtualLawlibrary

I. IWhether Loria initially obtained P3,000,000.00 from a certain Grace delos Santos
II. Whether Loria is liable for P2,000,000.00 to Muñoz
III. We rule for Muñoz and deny Loria’s petition for review on certiorari .

Whether Loria initially received

P3,000,000.00 is a question of 
fact not proper in a petition for
review on certiorari 

We first address Loria’s contention that Muñoz failed to prove his initial receipt of
P3,000,000.00.  This is a question of fact the trial and appellate courts have already
resolved.  In a Rule 45 petition, we do not address questions of fact, questions which
require us to rule on “the truth or falsehood of alleged facts.”48   Under Section 1, Rule 45 of
the Rules of Court, we only entertain questions of law — questions as to the applicable law
given a set of facts49 — in a petition for review on certiorari :

Section 1. Filing of petition with Supreme Court.

A party desiring to appeal by certiorari from a judgment or final order or resolution of the

Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever
authorized by law, may file with the Supreme Court a verified petition for review
on certiorari .  The petition shallraise only questions of law which must be distinctly set
forth. (Emphasis supplied)50

We may review questions of fact in a Rule 45 petition:

. . . (1) when the findings are grounded entirely on speculations, surmises, or conjectures;
(2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there
is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts;
(5) when the findings of fact are conflicting; (6) when in making its findings, the same are
contrary to the admissions of both appellant and appellee; (7) the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the petition as well as in
petitioner’s main and reply briefs are not disputed by respondent; and (10) the findings of
fact are premised on the supposed absence of evidence and contradicted by the evidence on
record.51 [Emphases omitted]

Loria failed to convince us why we should make an exception in this case.

During trial, Muñoz testified that he ordered Allied Bank to release P3,000,000.00 from his
joint account with Christopher Co to a certain Grace delos Santos.52   Loria then obtained
the money from delos Santos and confirmed with Muñoz his receipt of the amount.53  
P1,800,000.00 was subsequently returned to Muñoz, leaving a P1,200,000.00 balance with
Loria.  This testimony was supported by Exhibit “C,” the check voucher where Loria
acknowledged receiving P1,200,000.00 from Muñoz.54cralawlawlibrary
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We agree that these pieces of evidence duly prove Loria’s initial receipt of P3,000,000.00. 
We will not disturb this finding.

II

Loria must return Munoz’s P2,000,000.00

under the principle of unjust enrichment

Under Article 22 of the Civil Code of the Philippines, “every person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to
him.”  There is unjust enrichment “when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience.”55cralawlawlibrary

The principle of unjust enrichment has two conditions.  First, a person must have been
benefited without a real or valid basis or justification. Second, the benefit was derived at
another person’s expense or damage.56cralawlawlibrary

In this case, Loria received P2,000,000.00 from Muñoz for a subcontract of a government
project to dredge the Masarawag and San Francisco Rivers in Guinobatan, Albay.  However,
contrary to the parties’ agreement, Muñoz was not subcontracted for the project.
Nevertheless, Loria retained the P2,000,000.00.

Thus, Loria was unjustly enriched.  He retained Muñoz’s money without valid basis or
justification.  Under Article 22 of the Civil Code of the Philippines, Loria must return the
P2,000,000.00 to Muñoz.

Contrary to Loria’s claim, Section 6 of the Presidential Decree No. 1594 does not prevent
Muñoz from recovering his money.

Under Section 6 of the Presidential Decree No. 1594,57 a contractor shall not subcontract a
part or interest in a government infrastructure project without the approval of the relevant
department secretary:chanRoblesvirtualLawlibrary

Section 6. Assignment and Contract. The contractor shall not assign, transfer, pledge,
subcontract or make any other disposition of the contract or any part or interest therein
except with the approval of the Minister of Public Works, Transportation and
Communications, the Minister of Public Highways, or the Minister of Energy, as the case
may be.  Approval of the subcontract shall not relieve the main contractor from any liability
or obligation under his contract with the Government nor shall it create any contractual
relation between the subcontractor and the Government.

A subcontract, therefore, is void only if not approved by the department secretary.

In this case, it is premature to rule on the legality of the parties’ agreement precisely
because the subcontract did not push through.  No actual agreement was proven in
evidence.  The Secretary of Public Works and Highways could have approved the
subcontract, which is allowed under Section 6 of the Presidential Decree No. 1594.

At any rate, even assuming that there was a subcontracting arrangement between Sunwest
Construction and Development Corporation and Muñoz, this court has allowed recovery
under a void subcontract as an exception to the in pari delicto doctrine.
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In Gonzalo v. Tarnate, Jr.,58 the Department of Public Works and Highways (DPWH)

awarded the contract to Dominador Gonzalo to improve the Sadsadan-Maba-ay section of
the Mountain Province Road. Gonzalo then subcontracted the supply of materials and labor
to John Tarnate, Jr. without the approval of the Secretary of Public Works and Highways. 
The parties agreed to a total subcontract fee of 12% of the project’s contract
price.59cralawlawlibrary

Tarnate, Jr. also rented equipment to Gonzalo.  In a deed of assignment, the parties agreed
to a retention fee of 10% of Gonzalo’s total collection from the Department of Public Works
and Highways, or P233,526.13, as rent for the equipment.  They then submitted the deed of
assignment to the Department for approval.60cralawlawlibrary

Subsequently, Tarnate, Jr. learned that Gonzalo filed with the Department of Public Works
and Highways an affidavit to unilaterally cancel the deed of assignment.  Gonzalo also
collected the retention fee from the Department.61cralawlawlibrary

Tarnate, Jr. demanded payment for the rent of the equipment, but Gonzalo ignored his
demand.  He then filed a complaint for sum of money and damages with the Regional Trial
Court of Mountain Province to collect on the 10% retention fee.62cralawlawlibrary

In his defense, Gonzalo argued that the subcontract was void for being contrary to law,
specifically, Section 6 of the Presidential Decree No. 1594.  Since the deed of assignment
“was a mere product of the subcontract,”63 the deed of assignment was likewise void.  With
Tarnate, Jr. “fully aware of the illegality and ineffectuality of the deed of assignment,”64  
Gonzalo contended that Tarnate, Jr. could not collect on the retention fee under the
principle of in pari delicto.65cralawlawlibrary

This court ruled that the subcontract was void for being contrary to law.  Under Section 6 of
the Presidential Decree No. 1594, a contractor shall not subcontract the implementation of a
government infrastructure project without the approval of the relevant department
secretary.66   Since Gonzalo subcontracted the project to Tarnate, Jr. without the approval
of the Secretary of Public Works and Highways, the subcontract was void, including the
deed of assignment, which “sprung from the subcontract.”67cralawlawlibrary

Generally, parties to an illegal contract may not recover what they gave under the
contract.68   Under the doctrine of in pari delicto, “no action arises, in equity or at law, from
an illegal contract[.]  No suit can be maintained for its specific performance, or to recover
the property agreed to be sold or delivered, or the money agreed to be paid, or damages for
its violation[.]”69cralawlawlibrary

Nevertheless, this court allowed Tarnate, Jr. to recover 10% of the retention fee. According
to this court, “the application of the doctrine of in pari delicto is not always rigid.”70   An
exception to the doctrine is “when its application contravenes well-established public
policy.”71   In Gonzalo, this court ruled that “the prevention of unjust enrichment is a
recognized public policy of the State.”72   It is, therefore, an exception to the application of
the in pari delicto doctrine.  This court explained:chanRoblesvirtualLawlibrary

. . . the application of the doctrine of in pari delicto is not always rigid.  An accepted
exception arises when its application contravenes well-established public policy.  In this
jurisdiction, public policy has been defined as “that principle of the law which holds that no
subject or citizen can lawfully do that which has a tendency to be injurious to the public or
against the public good.”
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Unjust enrichment exists, according to Hulst v. PR Builders, Inc., “when a person unjustly

retains a benefit at the loss of another, or when a person retains money or property of
another against the fundamental principles of justice, equity and good conscience.”  The
prevention of unjust enrichment is a recognized public policy of the State, for Article 22 of
the Civil Code explicitly provides that “[e]very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him.”  It is well
to note that Article 22 “is part of the chapter of the Civil Code on Human Relations, the
provisions of which were formulated as basic principles to be observed for the rightful
relationship between human beings and for the stability of the social order; designed to
indicate certain norms that spring from the fountain of good conscience; guides for human
conduct that should run as golden threads through society to the end that law may
approach its supreme ideal which is the sway and dominance of justice.”73 (Citations
omitted)

Given that Tarnate, Jr. performed his obligations under the subcontract and the deed of
assignment, this court ruled that he was entitled to the agreed fee.  According to this court,
Gonzalo “would be unjustly enriched at the expense of Tarnate if the latter was to be barred
from recovering because of the rigid application of the doctrine of in pari
delicto.”74cralawlawlibrary

In this case, both the trial and appellate courts found that Loria received P2,000,000.00
from Muñoz for a subcontract of the river-dredging project.  Loria never denied that he
failed to fulfill his agreement with Muñoz.  Throughout the case’s proceedings, Loria failed to
justify why he has the right to retain Muñoz’s P2,000,000.00.  As the Court of Appeals
ruled, “it was not shown that [Muñoz] benefited from the delivery of the amount of
P2,000,000.00 to [Loria].”75cralawlawlibrary

Loria, therefore, is retaining the P2,000,000.00 without just or legal ground.  This cannot be
done. Under Article 22 of the Civil Code of the Philippines, he must return the
P2,000,000.00 to Muñoz.

This court notes the possible irregularities in these transactions.  At the very least, there
appears to have been an attempt to circumvent our procurement laws.  If petitioner indeed
had the authority of Sunwest Construction and Development Corporation, it is strange that
Loria could have guaranteed a bidding result.  If he did not have any true dealing with
Sunwest Construction, then his is an elaborate scheme to cause financiers to lose their
hard-earned money for nothing.

WHEREFORE, the petition for review on certiorari is DENIED.  The Court of Appeals’

decision and resolution in CA-G.R. CV No. 81882 are AFFIRMED with MODIFICATION as
to interest rate. Petitioner Carlos A. Loria shall pay respondent Ludolfo P. Muñoz, Jr.
P2,000,000.00 in actual damages, with interest of 12% interest per annum from the filing of
the complaint until June 30, 2013, and 6% interest per annum from July 1, 2013 until full
payment.76cralawlawlibrary

Let a copy of this decision be SERVED on the Office of the Ombudsman and the Department
of Justice for their appropriate actions.

SO ORDERED.
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FIRST DIVISION

G.R. Nos. 159561-62 : October 3, 2012

R.V. SANTOS COMPANY, INC., Petitioner, v. BELLE CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

For disposition of the Court is a Petition for Review on Certiorari, assailing the Court of Appeals'
Decision1Ï‚rνll dated March 7, 2003 and Resolution2Ï‚rνll dated August 20, 2003 in the consolidated
cases docketed as CA-G.R. SP Nos. 60217 and 60224. In its Decision dated March 7, 2003, the Court of
Appeals affirmed the July 28, 2000 Decision 3Ï‚rνll in CIAC Case No. 45-99 of the Construction Industry
Arbitration Commission (CIAC), which, among others, (a) ordered RV Santos Company, Inc. (RVSCI) to
refund the amount of P4,940,108.58 to Belle Corporation (Belle), and (b) denied Belles claim for
liquidated damages and RVSCIs counterclaims for unpaid billings and attorneys fees. In the assailed
August 20, 2003 Resolution, the Court of Appeals denied the parties respective motions for
reconsideration of its March 7, 2003 Decision.

The present controversy arose from a Request for Adjudication 4Ï‚rνll filed by Belle with the CIAC on
November 3, 1999. According to the Complaint 5Ï‚rνll attached to said Request, Belle and RVSCI entered
into a Construction Contract on July 14, 1997. As stipulated therein, RVSCI undertook to construct a
detailed underground electrical network for Belles Tagaytay Woodlands Condominium Project located in
Tagaytay City6Ï‚rνll with a project cost that shall not be more than Twenty-Two Million Pesos
(P22,000,000.00), inclusive of all taxes, government fees and the service fee under the
Contract.7Ï‚rνll Likewise under said contract, Belle advanced to RVSCI fifty percent (50%) of the contract
price in the amount of Eleven Million Pesos (P11,000,000.00) 8Ï‚rνll for which RVSCI issued to Belle an
official receipt9Ï‚rνll dated August 8, 1997.

Some time thereafter, RVSCI commenced work on the project. Under Article VII(A) of the Construction
Contract, the project was supposed to be completed and ready for operation within 180 calendar days
from receipt by RVSCI of the notice to commence from Belle, provided that all civil related works
necessary for the execution of the project works were in place. However, the project was allegedly not
completed within the stipulated time frame.

On March 17, 1998, Belles Woodlands General Committee supposedly set April 21, 1998 as the target
date for completion of the Log Home Units in Woodlands. In a Memorandum 10Ï‚rνll dated April 14,
1998, Belle purportedly informed RVSCI of the target date and urged the latter to complete the project
on or before said deadline. Still the project was not completed on April 21, 1998.

Subsequently, in June 1998, Belle placed additional work orders with RVSCI, who in turn made the
following cost estimates for the additional work:

Additional Order No. 1 P3,854,400.00

Installation of 7 units of Load break
[Type text]

switch, 102 units of kw-hrs. meters

and fabrication of 21 sets of Bus ducts
Additional Order No. 2 541,528.54
Supply and installation of one (1) unit
MDP-DTIA
Additional Order No. 3 158,612.00
Various work orders issued to RVSCI ----------------------
P4,554,540.5411ςrνll

Belle admittedly approved RVSCIs cost estimates for Additional Order Nos. 1 and 2 but the former
allegedly did not approve the cost estimate for Additional Order No. 3 which Belle estimated should only
cost P22,442.47. Nonetheless, RVSCI proceeded to implement Additional Order Nos. 1 and 3 while Belle
itself accomplished Additional Order No. 2.

On August 10, 1998, RVSCI submitted its Progress Billing 12Ï‚rνll to Belle, claiming 53.3% accomplishment
of the project, including the work done for Additional Order No. 1, as set forth above. RVSCI claimed
that the value of the work accomplished under the August 10, 1998 Progress Billing was P7,159,216.63
on the main project and P1,768,000.00 on the additional work order. After deducting 50% of the
Progress Billing on the main project, the total amount billed by RVSCI was P5,347,608.03. Purportedly
relying on RVSCIs representations, Belles project engineer recommended approval of the Progress
Billing.

Subsequently, however, Belle reputedly made its own assessment of the work accomplished by RVSCI
and determined that it was only worth P4,676,724.64. Belle supposedly relayed its findings to
RVSCI.13ςrνll

On September 30, 1998, while negotiations were allegedly on-going between the parties regarding the
payment of the Progress Billing, Belle claimed that RVSCI unceremoniously abandoned the project
without prior notice and forced Belle to take over the construction work therein. Belle purportedly sent
a Memorandum14Ï‚rνll dated December 15, 1998 to RVSCI to convey its "extreme disappointment" over
the latters abandonment of the project.

On January 11, 1999, the parties representatives met and during that meeting RVSCI allegedly advised
Belle that it will not return to the site until the outstanding balance due to it is paid. 15ςrνll

Meanwhile, on January 22, 1999, Belle made an additional payment for electrical works to RVSCI in the
amount of P476,503.30. This payment was evidenced by an official receipt 16Ï‚rνll issued by RVSCI. Belle
likewise remitted the amount of P122,491.14 to the Bureau of Internal Revenue representing the
withholding tax due from RVSCI.

In February 1999, Belle engaged the services of an assessor, R.A. Mojica and Partners (R.A. Mojica), to
determine the value of the work done by RVSCI. After it conducted an electrical works audit, R.A. Mojica
reported to Belle that the work accomplished by RVSCI on the main project only amounted to
P4,868,443.59 and not P7,159,216.05 as billed by RVSCI. 17ςrνll
[Type text]

In Belles view, it had overpaid RVSCI, based on the following computation:

Downpayment P11,000,000.00
Withholding Tax Payable 122,491.14
Additional Payment for electrical works
(Billing #01) 476,503.33
===============
P11,598,994.44

LESS:

Actual Value of Work Accomplished 4,868,443.59

Approved Change of Specifications and

Additional Work Orders 1,790,442.70

-------------------
18
NET DUE TO BELLE P 4,940,108.15 ςrνll

RVSCI allegedly refused to return the excess payment despite repeated demands. Thus, relying on the
arbitration clause in the Construction Contract, Belle brought the matter before the CIAC and prayed
that RVSCI be directed to (a) reimburse Belle the amount of P4,940,108.15, and (b) pay Belle the amount
of P2,200,000.00 as liquidated damages. 19ςrνll

By way of defense, RVSCI claimed that its August 10, 1998 Progress Billing was a result of a "bilateral
assessment" by the representatives of both parties and was, in fact, approved/recommended for
payment by Belles representatives. RVSCI complained that Belle segregated the project into two phases
(Phase 1 and Phase 2) with Phase 1 comprising the area already worked on by RVSCI and Phase 2
comprising the "unworked" area. It was Belle which advised RVSCI in a meeting on January 11, 1999 that
the former was suspending Phase 2 of the project due to economic difficulties. RVSCI allegedly made
several demands for payment of its Progress Billing but Belle ignored said demands. Thus, in view of
Belles suspension of the work and the nonpayment of the progress billing, RVSCI was purportedly forced
to stop work on the project, despite being fully prepared to comply with its obligations under the
contract. RVSCI further asserted that it was not notified of, nor made privy to, the audit work conducted
by R.A. Mojica and therefore RVSCI was not bound by such audit. Insisting on the accuracy of its
Progress Billing, RVSCI interposed a counterclaim against Belle for the payment of the amount of
P4,312,170.95, computed thus:

Progress Billing P 7,159,216.05

Remaining MDPs for delivery P 3,598,413.94

[Type text]

Under original contract (11 sets @

P327,128.54)
Approved Change of
Specifications and Additional
Work Order/s (dated August 10, 1998
and September 30, 1998) P 4,554,540.95

Total P 15,312,170.95

Less: Advance Payment P 11,000,000.00

20
Net Due to RVSCI P 4,312,170.95 ςrνll

RVSCI prayed for the dismissal of the Complaint and for the CIAC to order Belle to pay the following
amounts: (a) P4,312,170.95 as balance of RVSCIs progress billing(s), (b) P500,000.00 as moral damages,
and (c) P500,000.00 as attorneys fees and costs of suit. 21ςrνll

At the preliminary conference, the parties agreed on the Terms of Reference for the arbitration of their
respective claims. According to the Terms of Reference, the admitted facts and the issues to be resolved
by the arbitration panel were as follows:

II. ADMITTED FACTS

The parties admit the following:

1. Their respective identity/juridical existence and circumstances.

2. The genuineness and due execution of the Contract (attached as Annex A of the Complaint) for the
construction of a detailed underground electrical network for the Tagaytay Woodlands Condominium
Project in Tagaytay City entered into by the parties on 14 July 1997 for a contract price of
P22,000,000.00.

3. Article IV, Section 4.2 of the Construction Contract which provide (sic) that the "Contractor RVSCI
guarantees and warrants that the total project cost shall not be more than P22,000,000.00, inclusive of
all taxes and government fees and the service fee under the Contract."

4. Sec. 6.2(a), Art. VI of the Construction Contract which provides that: "Owner Belle shall advance to
Contractor an amount equivalent to 50% of the Contract Price or the amount of P11,000,000.00, as
down payment for the construction, upon execution of the Contract, receipt of which is hereby
acknowledged by Contractor. Progress payments to be made by Owner to Contractor, proportionate to
the percentage of accomplishment of the Project, shall be deducted from the balance of the Contract
Price. The same proportion of the down payment shall also be deducted from billing progress
payments."
[Type text]

5. The payment made by Claimant to Respondent in the amount of P11,000,000.00 as acknowledged to

have been received under Official Receipt No. 0706 issued by the latter on 8 August 1997 (attached as
Annex B of the Complaint).

6. The following proposed cost estimate of the Respondent on Claimants additional work orders in June
1998:

Additional Order No. 1 Installation of 7 units of Load break

switch, 102 units of kw-hrs. meters and
fabrication of 21 sets of Bus ducts. P3,854,400.00
Additional Order No. 2 Supply and installation of one (1) unit
MDP-DTIA 541,528.54
Additional Order No. 3 Various work orders issued to RVSCI 158,612.00
--------------------
P4,554,540.54
=============

7. Claimant approved Respondents proposed estimates on Additional Orders Nos. 1 and 2, but disputed
the cost estimate of Additional Order No. 3. Thereafter, Respondent proceeded to implement additional
Orders Nos. 1 and 3.

8. Progress Billing No. 1 (attached as Annex D of the Complaint) which Claimant received on 10 August
1998.

9. On 11 January 1999, the parties representatives met to discuss the reasons for Respondents
failure/refusal to return to the Site. These representatives were Fernando R. Santico, Edgardo F. Villarino
& Rudy P. Aninipot, for the Claimant, and Renato V. Santos & Joey C. Caldeo, for the Respondent.

10. Claimant made additional payment to Respondent for electrical works on 22 January 1999
amounting to P476,503.30 as per Official Receipt No. 0717 issued by Respondent (attached as Annex G
of the Complaint).

11. Existence of Respondents letter to Claimant dated 4 May 1999 re: Underground Electrical Utilities
(attached as Annex A of the Reply).

xxxx

IV. ISSUES TO BE DETERMINED

1. Is Claimant entitled to its claims for overpayment? If so, how much should be returned to the
Claimant?

1.1 How much was the work accomplished by Respondent in the project?
[Type text]

1.2 Whether or not Respondent has manufactured/produced and/or installed 11 sets of Main
Distribution Panels? If so, is Claimant liable and for how much should it be liable to pay Respondent for
their cost/value?

1.3 Whether or not Respondent is entitled to its claim for unpaid billings?

2. Is Claimant entitled to its claim for liquidated damages? If so, how much by way of liquidated
damages should be awarded to it?

2.1 Was Respondent justified in suspending its work?

2.2 Is Respondent justified in declining to return to work?

3. Is Respondent entitled to its counterclaim for attorneys fees? If so, how much is Claimant liable to
Respondent for such claim?22ςrνll

The Terms of Reference further indicated the parties agreement that the presentation of their
testimonial evidence shall be by way of affidavits of witnesses. Hearings were held on March 24 and 28,
2000. Thereafter, the parties submitted their draft Decisions to the arbitral tribunal.

In a Decision dated July 28, 2000, the CIAC found that, under the Construction Contract 23Ï‚rνll and
industry practice, Belle had the right to the true value of the work performed by RVSCI upon
termination. Further, the CIAC ruled that according to the Uniform General Conditions of Contract for
Private Construction (CIAP Document 102), approval of a progress billing is provisional 24Ï‚rνll and is
subject to final review and approval before acceptance of the completed work and prior to final
payment.25Ï‚rνll Hence, Belle was within its rights to make a reevaluation of the work accomplishment
of RVSCI. Finding that Engr. Raladin A. Mojica qualified as an expert witness, the CIAC gave weight to the
results of the re-survey done by R.A. Mojica and held that Belle indeed made an overpayment to RVSCI.
Since the date when RVSCI commenced work on the Project and the supposed completion date cannot
be determined, the CIAC found no basis to award liquidated damages in favor of Belle. The arbitral
tribunal likewise denied RVSCIs counterclaims. Thus, the dispositive portion of the CIAC Decision
reads:chanroblesvirtuallawlibrary

WHEREFORE, award is hereby made as follows:

1. Claimants Belles claim for refund of P4,940,108.58, representing overpayment to the Respondent is
hereby granted. Respondent is, therefore, ordered to pay this amount to Claimant with interest at the
rate of 6% per annum from the date of this Award.

2. Claimants claim for liquidated damages and Respondents counterclaims for an alleged balance due
and unpaid on progress billings and for attorneys fees are denied.

3. Arbitration fees and expenses shall be shared by the parties pro rata on the basis of the amount of
their claims and counterclaims.
[Type text]

4. The amount of P4,940,108.58 found in paragraph 1 of this Award to be due the Claimant plus interest
at 6% per annum shall further earn interest at the rate of 12% per annum from the time this decision
becomes final and executory and the total amount found to be due remains unpaid. 26ςrνll

Both Belle and RVSCI filed petitions for review under Rule 43 of the Rules of Court to assail the foregoing
CIAC Decision with the Court of Appeals, which were docketed as CA-G.R. SP No. 60217 and CA-G.R. SP
No. 60224, respectively. Upon motion by the parties, the cases were consolidated and after due
proceedings, the Court of Appeals issued a Decision dated March 7, 2003, dismissing the petitions and
affirming the CIAC Decision. The separate motions for reconsideration of the parties were likewise
denied by the Court of Appeals in a Resolution dated August 20, 2003.

RVSCI elevated the matter to this Court and questioned the Court of Appeals March 7, 2003 Decision
and August 20, 2003 Resolution through the present petition for review on certiorari under Rule 45. The
grounds relied upon by RVSCI were:

I. THE APPELLATE COURT GRAVELY ERRED IN RULING THAT THE SURVEYORS ELECTRICAL WORK AUDIT
WAS COMPETENT AND MUST BE GIVEN WEIGHT.

II. THE APPELLATE COURT GRAVELY ERRED IN RULING THAT BELLE MAY WITHDRAW ITS APPROVAL OF
THE PROGRESS BILLING PURSUANT TO ARTICLES VI(2)(C) AND XIII(4) OF THE CONTRACT.

III. THE APPELLATE COURT GRAVELY ERRED IN RULING THAT RVSCI IS NOT ENTITLED TO AN AWARD FOR
DAMAGES.27ςrνll

Anent the first ground, RVSCI argued that R.A. Mojicas electrical work audit that was unilaterally
commissioned by Belle was not binding on the former since (a) it was not authorized by the Contract
and was done without the consent or participation of RVSCI; (b) assuming that the Contract allowed
Belle to commission such audit, it was incomplete as it failed to cover the entire work performed by
RVSCI as shown by its Progress Billing and Bill of Quantities, allegedly approved by Belle; and (c) the
audit was tainted by obvious partiality since R.A. Mojica was a regular contractor of Belle and a
competitor of RVSCI.

With respect to the second ground, it is RVSCIs contention that Article VI, Section 6.2(c) of the
Construction Contract merely differentiate acceptance by Belle of RVSCIs work accomplishment from
time to time from Belles final acceptance of work upon completion of the entire project. Also RVSCI
claims that Article XIII, Section 13.4 only allows Belle to determine the true value of the works in cases of
termination of the Contract upon occurrence of any of the events of default enumerated under Article
XIII, Section 13.1 and said provision has no application in instances of justified suspension of works due
to Belles breach of the Contract. In any event, it is RVSCIs view that neither Article VI, Section 6.2(c) nor
Article XIII, Section 13.4 allows Belle to withdraw its previous approval of RVSCIs Progress Billing,
contrary to the rulings of both the CIAC and the Court of Appeals. Assuming without conceding that
Article XIII, Section 13.4 of the Contract applies in this instance, RVSCI believes that the final
determination of the value of the works should be made by (a) both parties or (b) an independent third
party mutually commissioned by them.
[Type text]

As for the last ground, RVSCI asserts that the CIAC and the Court of Appeals erred in denying RVSCIs
claim for damages in view of Belles breach of the Contract by its unjustified refusal or failure to pay the
Progress Billing.

On the other hand, Belle claims that the Petition should be dismissed for raising questions of fact, which
are improper in a petition under Rule 45 of the Rules of Court, without showing that this case fell under
the recognized exceptions under jurisprudence. On the merits of the Petition, Belle argued that it had
the right to determine the true value of work done and nothing in the Contract limited that right.
According to Belle, the CIAC and the Court of Appeals properly relied on Article VI, Section 6.2(c) and
Article XIII, 13.4 of the Contract and on industry practice in upholding Belles right for a re-evaluation of
RVSCIs actual work accomplishment. Thus, the CIAC and the appellate court allegedly were correct in
giving weight to the electrical audit report made by R.A. Mojica. Belle further propounds that the lower
tribunals correctly did not grant RVSCI any award for damages considering that RVSCI did not prove such
damages as it had, in fact, been overpaid. As for RVSCIs claim for the value of materials and equipment
purportedly left at the site, the same was not included in the Terms of Reference and RVSCI was not
allowed by the CIAC to present evidence on the same. Thus, this matter cannot be raised for the first
time on appeal.

After a thorough review of the issues raised by the parties, the Court finds no merit in the Petition.

On the procedural issue:chanroblesvirtuallawlibrary

It must be stressed that in petitions for review under Rule 45 only questions of law may be raised, unless
the petitioner shows that the case falls under the recognized exceptions. In Makati Sports Club, Inc. v.
Cheng,28Ï‚rνll we explained, thus:chanroblesvirtuallawlibrary

At the outset, we note that this recourse is a petition for review on certiorari under Rule 45 of the Rules
of Court. Under Section 1 of the Rule, such a petition shall raise only questions of law which must be
distinctly alleged in the appropriate pleading. In a case involving a question of law, the resolution of the
issue must rest solely on what the law provides for a given set of facts drawn from the evidence
presented. Stated differently, there should be nothing in dispute as to the state of facts; the issue to be
resolved is merely the correctness of the conclusion drawn from the said facts. Once it is clear that the
issue invites a review of the probative value of the evidence presented, the question posed is one of
fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance of
surrounding circumstances and their relation to each other, then the issue is necessarily
factual.29ςrνll(Emphases supplied, citation omitted.)

In cases decided by the CIAC, the above rule finds even more stringent application. As we previously
observed in one case:chanroblesvirtuallawlibrary

Executive Order No. 1008, as amended, provides, in its Section 19, as follows:chanroblesvirtuallawlibrary

"Sec. 19. Finality of Awards. The arbitral award shall be binding upon the parties. It shall be final and
inappealable except on questions of law which shall be appealable to the Supreme Court."

Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings before the
Supreme Court - which is not a trier of facts - in respect of an arbitral award rendered under the aegis of
[Type text]

the CIAC. Consideration of the animating purpose of voluntary arbitration in general, and arbitration
under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in
Section 19 that the Arbitral Tribunals findings of fact shall be final and unappealable.

xxxx

Aware of the objective of voluntary arbitration in the labor field, in the construction industry, and in any
other area for that matter, the Court will not assist one or the other or even both parties in any effort to
subvert or defeat that objective for their private purposes. The Court will not review the factual findings
of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will
not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might
be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators
themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the
parties to relitigate before it the issues of facts previously presented and argued before the Arbitral
Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the
Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse
of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be factual conclusions
of the Tribunal which resulted in deprivation of one or the other party of a fair opportunity to present its
position before the Arbitral Tribunal, and an award obtained through fraud or the corruption of
arbitrators. Any other, more relaxed, rule would result in setting at naught the basic objective of a
voluntary arbitration and would reduce arbitration to a largely inutile institution. 30Ï‚rνll (Emphasis
supplied, citations omitted.)

In another case, we have also held that:chanroblesvirtuallawlibrary

It is settled that findings of fact of quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect, but also finality,
especially when affirmed by the Court of Appeals. In particular, factual findings of construction
arbitrators are final and conclusive and not reviewable by this Court on appeal.

This rule, however, admits of certain exceptions. In Uniwide Sales Realty and Resources Corporation v.
Titan-Ikeda Construction and Development Corporation, we said:chanroblesvirtuallawlibrary

In David v. Construction Industry and Arbitration Commission, we ruled that, as exceptions, factual
findings of construction arbitrators may be reviewed by this Court when the petitioner proves
affirmatively that: (1) the award was procured by corruption, fraud or other undue means;

(2) there was evident partiality or corruption of the arbitrators or any of them; (3) the arbitrators were
guilty of misconduct in refusing to hear evidence pertinent and material to the controversy; (4) one or
more of the arbitrators were disqualified to act as such under Section nine of Republic Act No. 876 and
willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights
of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so
imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted
to them was not made.

Other recognized exceptions are as follows: (1) when there is a very clear showing of grave abuse of
discretion resulting in lack or loss of jurisdiction as when a party was deprived of a fair opportunity to
[Type text]

present its position before the Arbitral Tribunal or when an award is obtained through fraud or the
corruption of arbitrators, (2) when the findings of the Court of Appeals are contrary to those of the CIAC,
and (3) when a party is deprived of administrative due process. 31Ï‚rνll (Citations omitted.)

In the case at bar, petitioner indeed raises factual matters in the present controversy which this Court
may not look into under a petition for review on certiorari. We likewise find that this case is not among
the exceptions to this settled rule. Nevertheless, even if we were to excuse this procedural infirmity of
the petition, we are still not inclined to reverse the lower tribunals findings on the merits of the case.

On the substantive matters:

Whether the third party audit report
commissioned by Belle is admissible and
may be given weight

To recapitulate, petitioner assailed R.A. Mojicas audit report on the following grounds: (a) that there
was no provision in the Construction Contract allowing Belle to unilaterally conduct an audit of
petitioners work; (b) assuming the Contract allows such an audit, it nonetheless failed to include all the
work done by petitioner; and (c) it was tainted by bias and partiality since R.A. Mojica was a regular, long
time contractor of Belle.

On this issue, we uphold the CIAC and the Court of Appeals in their allowance of the third party audit
report done by R.A. Mojica.

First, while there was no provision in the Construction Contract expressly authorizing Belle to secure the
services of a third party auditor to determine the value of the work accomplished by petitioner RVSCI,
there is likewise no provision prohibiting the same. Certainly, RVSCI failed to point to any contractual
stipulation preventing RVSCI to seek expert opinion regarding the value of RVSCIs accomplishment or
the accuracy of the Progress Billing, whether prior or subsequent to the approval of such billing.

Second, the mere fact that the audit was unilateral, or was not participated in by petitioner, did not
render the same objectionable. There is nothing in the Construction Contract which obligates Belle to
inform RVSCI or to secure the latters participation should the former decide to commission an audit of
the work accomplished. On the contrary, in case of termination due to default of the contractor, Article
XIII, Section 13.4 of the Construction Contract explicitly allows Belle to unilaterally evaluate the value of
the work and the only condition is that it be done in good faith. Even assuming arguendo we accept
RVSCIs contentions that it justifiably suspended work and that Article XIII, Section 13.4 merely covers
instances of default and not situations of justified suspension of works, we see no reason why the
procedure for cessation of work due to default cannot be applied to other instances of cessation of
work, particularly in the absence of a contractual provision governing termination or suspension of
works in situations not involving a default.

Verily, the fact that the parties agreed to a unilateral valuation of the work by the owner in the event of
a termination of the contract due to default signifies that the parties, including RVSCI, did not find
anything abhorrent in a one-sided valuation at the time of the execution of the contract. If RVSCI
believed that this was unfair or that its participation should be required in a review or audit of its work,
then it should not have acquiesced to such a provision in the first place and instead insisted on a
stipulation prohibiting a unilateral audit of its work.
[Type text]

Third, bias on the part of a witness cannot be presumed. It is a basic rule that good faith is always
presumed and bad faith must be proved. 32Ï‚rνll In a previous case, we have held that the witness
employment relationship with, or financial dependence on, the party presenting his testimony would
not be sufficient reason to discredit said witness and label his testimony as biased and unworthy of
credence.33Ï‚rνll Analogously, that Belle and R.A. Mojica had a long standing business relationship does
not necessarily mean that the latters report was tainted with irregularity, especially in the absence of
evidence that the audit report was indeed inaccurate or erroneous. It must be emphasized as well that
RVSCI had ample opportunity to cross-examine Engr. Mojica with respect to the particulars of his
companys audit report.

To be sure, RVSCI is not precluded from proffering evidence to rebut the findings of R.A. Mojica.
However, RVSCI did not present or point to documents, invoices, and receipts to show that the amounts
and quantities in the audit report were not correct, nor did RVSCI convincingly substantiate its assertion
that it had completed work in other areas of the project that was not included in said report. RVSCI
merely relied on its own Progress Billing as supposedly signed by Belles representatives. However, it is
that Progress Billing which was later questioned by Belle on the suspicion that the same was bloated and
inaccurate. Thus, Belle had a third party conduct an audit of RVSCIs actual work accomplishment. As the
CIAC noted, there was nothing to prevent RVSCI to secure the services of its own expert witness to
contest the findings of R.A. Mojica and buttress the accuracy of its Progress Billing with supporting
documents other than such billing but RVSCI did not.

Hence, we find no error on the part of the CIAC and the Court of Appeals in relying on the third party
audit report and giving it due weight in the resolution of the present case.

Whether Belles approval of the Progress

Billing is final and binding and may no
longer be withdrawn

After careful consideration of the contentions of the parties, we agree with the CIACs finding, as
affirmed by the Court of Appeals, that the owners approval of progress billing is merely provisional. This
much can be gleaned from Article VI, Section 6.2(c) of the Construction Contract which states that "[t]he
acceptance of work from time to time for the purpose of making progress payment shall not be
considered as final acceptance of the work under the Contract." There can be no other interpretation of
the said provision but that progress billings are but preliminary estimates of the value of the periodic
accomplishments of the contractor. Otherwise, there would be no need to include Article VI, Section
6.2(c) in the Contract since final acceptance of the contractors work would come as a matter of course if
progress billings were, as RVSCI contends, final and binding upon the owner. On the contrary, progress
billings and final acceptance of the work were clearly still subject to review by the owner.

Moreover, we see no reason to disturb the CIAC ruling that the foregoing contractual provision is
consistent with industry practice, as can be deduced from Articles 22.02, 22.04 and 22.09 of CIAP
Document 102 which pertinently state:chanroblesvirtuallawlibrary

22.02 REQUESTS FOR PAYMENT: The Contractor may submit periodically but not more than once each
month a Request for Payment for work done. The Contractor shall furnish the Owner all reasonable
facilities required for obtaining the necessary information relative to the progress and execution of the
Work. x x x.
[Type text]

xxxx

22.04 CONDITIONS RELATIVE TO PAYMENTS: The Owner shall estimate the value of work accomplished
by the Contractor using as basis the schedule stipulated in the Breakdown of Work and Corresponding
Value. Such estimate of the Owner of the amount of work performed shall be taken as the basis for the
compensation to be received by the Contractor. While such preliminary estimates of amount and
quantity shall not be required to be made by strict measurement or with exactness, they must be made
as close as possible to the actual percentage of work accomplishment.

xxxx

22.09 ACCEPTANCE AND FINAL PAYMENT: Whenever the Contractor notifies the Owner that the Work
under the Contract has been completely performed by the Contractor, the Owner shall proceed to verify
the work, shall make the final estimates, certify to the completion of the work, and accept the same.

From the above-quoted provisions, it is readily apparent that, whether in the case of progress billings or
of turn-over of completed work, the owner has the right to verify the contractors actual work
accomplishment prior to payment.

In all, we approve the CIACs pronouncement that "[t]he owner is, therefore, not estopped from
questioning a prior evaluation of the percentage of accomplishment of the contractor and to downgrade
such accomplishment after re-evaluation. It is the right of every owner to re-evaluate or re-measure the
work of its contractor during the progress of the work." 34ςrνll

Whether Belle should be made liable to RVSCI for damages

Anent the third issue, it is apropos to state here that the rationale underlying the owners right to seek
an evaluation of the contractors work is the right to pay only the true value of the work as may be
reasonably determined under the circumstances.

This is consistent with the law against unjust enrichment under Article 22 of the Civil Code which states
that "every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him." Expounding on this provision in a recent case, we have held that "the principle
of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person
who receives the payment has no right to receive it." 35ςrνll

In the case at bar, we uphold the CIACs factual finding that the value of the total work accomplished by
RVSCI on the main project was P4,868,443.59 while the cost of the additional work amounted to
P1,768,000.00 plus P22,442.27, for a total of P6,658,885.86. On the other hand, Belle had made
payments in the total amount of P11,598,994.44. 36Ï‚rνll It is thus undeniable that RVSCI had received
payments from Belle in excess of the value of its work accomplishment. In light of this overpayment, it
seems specious for RVSCI to claim that it has suffered damages from Belles refusal to pay its Progress
Billing, which had been proven to be excessive and inaccurate. Bearing in mind the law and
jurisprudence on unjust enrichment, we hold that RVSCI is indeed liable to return what it had received
beyond the actual value of the work it had done for Belle.
[Type text]

On a related note, this Court cannot grant RVSCIs claim for the value of materials and equipment
allegedly left at the site. As observed by the CIAC, this particular claim was not included in the Terms of
Reference and, hence, could not be litigated upon or proved during the CIAC proceedings.

In conclusion, the CIAC rightly dismissed RVSCI's counterclaims for lack of merit.ςηαοblενιrυαllαÏ
‰lιbrαr

WHEREFORE, the instant petition for review is DENIED. The Decision dated March 7, 2003 and the
Resolution dated August 20, 2003 of the Court 'of Appeals in CA-G.R. SP Nos. 60224 and 60217 are
AFFIRMED.ςrαlαωlιbrαr

SO ORDERED.
[Type text]

G.R. No. 172060 : September 13, 2010

JOSELITO R. PIMENTEL, Petitioner, v. MARIA CHRYSANTINE L. PIMENTEL and

PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review1cralaw assailing the Decision2cralaw of the Court of
Appeals, promulgated on 20 March 2006, in CA-G.R. SP No. 91867.

The Antecedent Facts

The facts are stated in the Court of Appeals' decision:chanroblesvirtuallawlibrar

On 25 October 2004, Maria Chrysantine Pimentel y Lacap (private respondent) filed an

action for frustrated parricide against Joselito R. Pimentel (petitioner), docketed as Criminal
Case No. Q-04-130415, before the Regional Trial Court of Quezon City, which was raffled to
Branch 223 (RTC Quezon City).nad

On 7 February 2005, petitioner received summons to appear before the Regional Trial Court
of Antipolo City, Branch 72 (RTC Antipolo) for the pre-trial and trial of Civil Case No. 04-
7392 (Maria Chrysantine Lorenza L. Pimentel v. Joselito Pimentel) for Declaration of Nullity
of Marriage under Section 36 of the Family Code on the ground of psychological incapacity.

On 11 February 2005, petitioner filed an urgent motion to suspend the proceedings before
the RTC Quezon City on the ground of the existence of a prejudicial question. Petitioner
asserted that since the relationship between the offender and the victim is a key element in
parricide, the outcome of Civil Case No. 04-7392 would have a bearing in the criminal case
filed against him before the RTC Quezon City.

The Decision of the Trial Court

The RTC Quezon City issued an Order dated 13 May 20053cralaw holding that the pendency
of the case before the RTC Antipolo is not a prejudicial question that warrants the
suspension of the criminal case before it. The RTC Quezon City held that the issues in
Criminal Case No. Q-04-130415 are the injuries sustained by respondent and whether the
case could be tried even if the validity of petitioner's marriage with respondent is in
question. The RTC Quezon City ruled:chanroblesvirtuallawlibrar

WHEREFORE, on the basis of the foregoing, the Motion to Suspend Proceedings On the
[Ground] of the Existence of a Prejudicial Question is, for lack of merit, DENIED.

SO ORDERED.4cralaw

Petitioner filed a motion for reconsideration. In its 22 August 2005 Order,5cralaw the RTC
Quezon City denied the motion.
[Type text]

Petitioner filed a petition for certiorari with application for a writ of preliminary injunction

and/or temporary restraining order before the Court of Appeals, assailing the 13 May 2005
and 22 August 2005 Orders of the RTC Quezon City.

The Decision of the Court of Appeals

In its 20 March 2006 Decision, the Court of Appeals dismissed the petition. The Court of
Appeals ruled that in the criminal case for frustrated parricide, the issue is whether the
offender commenced the commission of the crime of parricide directly by overt acts and did
not perform all the acts of execution by reason of some cause or accident other than his
own spontaneous desistance. On the other hand, the issue in the civil action for annulment
of marriage is whether petitioner is psychologically incapacitated to comply with the
essential marital obligations. The Court of Appeals ruled that even if the marriage between
petitioner and respondent would be declared void, it would be immaterial to the criminal
case because prior to the declaration of nullity, the alleged acts constituting the crime of
frustrated parricide had already been committed. The Court of Appeals ruled that all that is
required for the charge of frustrated parricide is that at the time of the commission of the
crime, the marriage is still subsisting.

Petitioner filed a petition for review before this Court assailing the Court of Appeals'
decision.

The Issue

The only issue in this case is whether the resolution of the action for annulment of marriage
is a prejudicial question that warrants the suspension of the criminal case for frustrated
parricide against petitioner.

The Ruling of this Court

The petition has no merit.

Civil Case Must be Instituted

Before the Criminal Case

Section 7, Rule 111 of the 2000 Rules on Criminal

Procedure6cralaw provides:chanroblesvirtuallawlibrar

Section 7. Elements of Prejudicial Question. - cralawThe elements of a prejudicial question

are: (a) the previously instituted civil action involves an issue similar or intimately related to
the issue raised in the subsequent criminal action and (b) the resolution of such issue
determines whether or not the criminal action may proceed.

The rule is clear that the civil action must be instituted first before the filing of the criminal
action. In this case, the Information7cralaw for Frustrated Parricide was dated 30 August
2004. It was raffled to RTC Quezon City on 25 October 2004 as per the stamped date of
receipt on the Information. The RTC Quezon City set Criminal Case No. Q-04-130415 for
pre-trial and trial on 14 February 2005. Petitioner was served summons in Civil Case No.
04-7392 on 7 February 2005.8cralaw Respondent's petition9cralaw in Civil Case No. 04-7392
was dated 4 November 2004 and was filed on 5 November 2004. Clearly, the civil case for
annulment was filed after the filing of the criminal case for frustrated parricide. As such, the
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requirement of Section 7, Rule 111 of the 2000 Rules on Criminal Procedure was not met
since the civil action was filed subsequent to the filing of the criminal action.

Annulment of Marriage is not a Prejudicial Question

in Criminal Case for Parricide

Further, the resolution of the civil action is not a prejudicial question that would warrant the
suspension of the criminal action.

There is a prejudicial question when a civil action and a criminal action are both pending,
and there exists in the civil action an issue which must be preemptively resolved before the
criminal action may proceed because howsoever the issue raised in the civil action is
resolved would be determinative of the guilt or innocence of the accused in the criminal
case.10cralaw A prejudicial question is defined as:chanroblesvirtuallawlibrar

x x x one that arises in a case the resolution of which is a logical antecedent of the issue
involved therein, and the cognizance of which pertains to another tribunal. It is a question
based on a fact distinct and separate from the crime but so intimately connected with it that
it determines the guilt or innocence of the accused, and for it to suspend the criminal
action, it must appear not only that said case involves facts intimately related to those upon
which the criminal prosecution would be based but also that in the resolution of the issue or
issues raised in the civil case, the guilt or innocence of the accused would necessarily be
determined.11cralaw

The relationship between the offender and the victim is a key element in the crime of
parricide,12cralawwhich punishes any person "who shall kill his father, mother, or child,
whether legitimate or illegitimate, or any of his ascendants or descendants, or his
spouse."13cralaw The relationship between the offender and the victim distinguishes the
crime of parricide from murder14cralaw or homicide.15cralawHowever, the issue in the
annulment of marriage is not similar or intimately related to the issue in the criminal case
for parricide. Further, the relationship between the offender and the victim is not
determinative of the guilt or innocence of the accused.

The issue in the civil case for annulment of marriage under Article 36 of the Family Code is
whether petitioner is psychologically incapacitated to comply with the essential marital
obligations. The issue in parricide is whether the accused killed the victim. In this case,
since petitioner was charged with frustrated parricide, the issue is whether he performed all
the acts of execution which would have killed respondent as a consequence but which,
nevertheless, did not produce it by reason of causes independent of petitioner's
will.16cralaw At the time of the commission of the alleged crime, petitioner and respondent
were married. The subsequent dissolution of their marriage, in case the petition in Civil Case
No. 04-7392 is granted, will have no effect on the alleged crime that was committed at the
time of the subsistence of the marriage. In short, even if the marriage between petitioner
and respondent is annulled, petitioner could still be held criminally liable since at the time of
the commission of the alleged crime, he was still married to respondent.

We cannot accept petitioner's reliance on Tenebro v. Court of Appeals17cralaw that "the

judicial declaration of the nullity of a marriage on the ground of psychological incapacity
retroacts to the date of the celebration of the marriage insofar as the vinculum between the
spouses is concerned x x x." First, the issue in Tenebro is the effect of the judicial
declaration of nullity of a second or subsequent marriage on the ground of psychological
incapacity on a criminal liability for bigamy. There was no issue of prejudicial question in
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that case. Second, the Court ruled in Tenebro that "[t]here is x x x a recognition written

into the law itself that such a marriage, although void ab initio, may still produce legal
consequences."18cralaw In fact, the Court declared in that case that "a declaration of the
nullity of the second marriage on the ground of psychological incapacity is of absolutely no
moment insofar as the State's penal laws are concerned."19cralaw

In view of the foregoing, the Court upholds the decision of the Court of Appeals. The trial in
Criminal Case No. Q-04-130415 may proceed as the resolution of the issue in Civil Case No.
04-7392 is not determinative of the guilt or innocence of petitioner in the criminal case.

WHEREFORE, we DENY the petition. We AFFIRM the 20 March 2006 Decision of the Court

of Appeals in CA-G.R. SP No. 91867.

SO ORDERED.
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G.R. Nos. 103501-03 February 17, 1997

LUIS A. TABUENA, petitioner,
vs.
HONORABLE SANDIGANBAYAN, and THE PEOPLE OF THE PHILIPPINES, respondents.

Facts:
Then President Marcos instructed Luis Tabuena over the phone to pay directly to the
president’s office and in cash what the Manila International Airport Authority (MIAA) owes the
Philippine National Construction Corporation (PNCC), pursuant to the 7 January 1985
memorandum of then Minister Trade and Industry Roberto Ongpin. Tabuena agreed. About a
week later, Tabuena received from Mrs. Fe Roa-Gimenez, then private secretary of Marcos, a
Presidential Memorandum dated 8 January 1986 reiterating in black and white such verbal
instruction. In obedience to President Marcos’ verbal instruction and memorandum, Tabuena,
with the help of Gerardo G. Dabao and Adolfo Peralta, caused the release of P55 Million of
MIAA funds by means of three (3) withdrawals. On 10 January 1986, the first withdrawal was
made for P25 Million, following a letter of even date signed by Tabuena and Dabao requesting
the PNB extension office at the MIAA the depository branch of MIAA funds, to issue a
manager’s check for said amount payable to Tabuena. The check was encashed, however, at
the PNB Villamor Branch. Dabao and the cashier of the PNB Villamor branch counted the
money after which, Tabuena took delivery thereof. The P25 Million in cash was delivered on the
same day to the office of Mrs. Gimenez. Mrs. Gimenez did not issue any receipt for the money
received. Similar circumstances surrounded the second withdrawal/encashment and delivery of
another P25 Million, made on 16 January 1986. The third and last withdrawal was made on 31
January 1986 for P5 Million. Peralta was Tabuena’s co-signatory to the letter- request for a
manager’s check for this amount. Peralta accompanied Tabuena to the PNB Villamor branch as
Tabuena requested him to do the counting of the P5 Million. After the counting, the money was
loaded in the trunk of Tabuena’s car. Peralta did not go with Tabuena to deliver the money to
Mrs. Gimenez’ office. It was only upon delivery of the P5 Million that Mrs. Gimenez issued a
receipt for all the amounts she received from Tabuena. The receipt was dated January 30,1986.
Tabuena and Peralta were charged for malversation of funds, while Dabao remained at large.
One of the justices of the Sandiganbayan actively took part in the questioning of a defense
witness and of the accused themselves; the volume of the questions asked were more the
combined questions of the counsels. On 12 October 1990, they were found guilty beyond
reasonable doubt. Tabuena and Peralta filed separate petitions for review, appealing the
Sandiganbayan decision dated 12 October 19990 and the Resolution of 20 December 1991.

 
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Issue:
Whether or not petitioners are guilty of the crime of malversation.

Held:
Luis Tabuena and Adolfo Peralta are acquitted of the crime of malversation. Tabuena acted in
strict compliance with the MARCOS Memorandum. The order emanated from the Office of the
President and bears the signature of the President himself, the highest official of the land. It
carries with it the presumption that it was regularly issued. And on its face, the memorandum is
patently lawful for no law makes the payment of an obligation illegal. This fact, coupled with the
urgent tenor for its execution constrains one to act swiftly without question. Records show that
the Sandiganbayan actively took part in the questioning of a defense witness and of the
accused themselves. The questions of the court were in the nature of cross examinations
characteristic of confrontation, probing and insinuation. Tabuena and Peralta may not have
raised the issue as an error, there is nevertheless no impediment for the court to consider such
matter as additional basis for a reversal since the settled doctrine is that an appeal throws the
whole case open to review, and it becomes the duty of the appellate court to correct such errors
as may be found in the judgment appealed from whether they are made the subject
of assignments of error or not.

Furthermore, as between a mere apprehension of a "dangerous precedent" and an actual

violation of constitutionally enshrined rights, it is definitely the latter that merits our immediate
attention. For the most dangerous precedent arises when we allow ourselves to be carried away
by such fears so that it becomes lawful to sacrifice the rights of an accused to calm the fearful.
In our eagerness to bring to justice the malefactors of the Marcos regime, we must not succumb
to the temptation to commit the greatest injustice of visiting the sins of the wrongdoers upon an
innocent.chanrobles

WHEREFORE, in view of the foregoing, herein petitioners Luis A. Tabuena and Adolfo M.
Peralta are hereby ACQUITTED of the crime of malversation as defined and penalized under
Article 217 of the Revised Penal Code. The Sandiganbayan Decision of October 12, 1990 and
the Resolution dated December 20, 1991 are REVERSED and SET ASIDE.