Solante vs.

COA,

G.R. No. 207348, Aug. 19, 2014

Facts:

On the City of Mandaue and F.F. Cruz and Co., Inc. (F.F. Cruz) entered right into a Contract of
Reclamation wherein F.F. Cruz, in the attention of a defined land-sharing formula thus stipulated, agreed
to undertake, at its very own expense, the reclamation of 180 hectares, greater or less, that submerged
lands from the Cabahug Causeway in that city. There is a commencement and project completion that
are provided in paragraphs 2 and 15 of the Contract that state:

2. COMMENCEMENT. Reclamation shall commence not later than [July 1989]

15. CONTRACT DURATION. The project is estimated to be completed in six years: (3 years for the dredge-
filling and seawall construction and three years for the completion of the infrastructure).

Later developments of the City of Mandaue (MCDP II) required the expansion of the Plaridel
Extension Mandaue Causeway. However, the structures and facilities built by F.F. Cruz stood in the path
of the widening project. As a result, the DPWH and Darza (MCDP II Project Director) entered into an
Agreement to Demolish, Remove and Reconstruct Improvement, where the latter would demolish the
improvements outside of the boundary of the road widening project and, in compensation, F.F. Cruz will
return, receive the total amount of PHP 1,084,836.42.

After, a petitioner issued a disbursement voucher in the same amount (PHP 1,084,836.42)
favoring F.F. Cruz. After that, Darza addressed the letter-complaint inviting attention to several
irregularities regarding the implementation of MCDP II, which was referred to COA, which then issued
Assignment Order No. 2000-063 and ordered an audit of the accounts of MCDP II.

The audit report states the denial of payment to F.F. Cruz for the value of property demolished,
contending that under Section 5 of its MOA with the City of Mandaue. The previous was not the lawful
owner of the properties when COA made the payment, and naming the last, Darza and herein petitioner
liable for the transaction.

Solante then received a Notice of Finality of Decision stating that the COA Decision became final
and executory, a replica of the Resolution served on the parties by mail. Solante has not been able to
receive a copy of the COA Resolution. She came to induce one only after inquiring from the Cebu Central
Post Office. Certification of Delivery stated that the registered post containing said copy was, of course,
not delivered.
Issue:

The controversy rests on the determination of a sole issue: Who is the lawful owner of the
demolished properties Between the City of Mandaue and F.F Cruz?

Ruling:

The petition is meritorious. The COA and its audit team misread the relevant stipulations of the
MOA relating to the provisions on project completion and termination of the reclamation contract.

A reading of the Contract of Reclamation reveals that the six-year period provided for the
completion or termination of the Contract was an estimate and can't be considered a day certain within
the context of Art. 1193 of the Civil Code. The Contract did not make the obligation to finish the
reclamation project demandable or put the obligor in a delay for its inability to finish. Thus, F.F. Cruz can
not be deemed to be on hold.

Even if the allotted six years within which F.F. Cruz was supposed to complete the reclamation
project were considered, it does not mean that F.F. Cruz was in delay. The City of Mandaue never made
a demand to fulfill its obligation under the Contract of reclamation. The records are empty of any
document to deduce that the City of Mandaue exacted from F.F. Cruz the fulfillment of its obligation
under the Contract. The fulfillment of the project is a suspensive condition that has yet to be attained.

The payment of compensation thereof is justified. The disallowance of the cost is without a
factual and legal basis. COA then gravely abused its discretion when it decreed the denial. WHEREFORE,
the moment petition is GRANTED. The assailed decision, Resolution, and notice issued by the COA result
from this reversed and put aside.