DSM CONSTRUCTION AND DEVELOPMENT CORPORATION

VERSUSMEGAWORLD GLOBUS ASIA, INC.

(CIAC CASE NO. 22-2000)

A CASE STUDY ON CONSTRUCTION CONTRACTS

CARMEL B. SABADO

Issue of Accomplishment Level In resolving this issue, the Arbitral Tribunal relied on the

computation of Davis Langdon & Seah (DLS),the project’s independent surveyor, which found the level of accomplishment as of February 14, 2000, to be 95.56%. DLS’s computation:

Issues of Delay and Liquidated Damages

The tribunal explained that the delay incurred by other trade contractors also resulted in the delay of the work of DSM Construction.

Section 5.3 (1)52 of the Interim Agreement Section 5.3 (2)54 of the Interim Agreement

CLAIMANT’S [DSM’s] CLAIM Award

Outstanding balance on 3 main contracts

P7,129,825.19 7,129,825.19

Pursuant to 21 February 2000 Memorandum

12,820,000.00 11,820,000.00

Variation Works 26,208,639.00 6,686,675.55

Labor Escalation 1,282,151.32 413,041.52

Preliminaries/Loss and Expense

35,603,192.82 29,380,902.35

Earned Retention Money

14,700,000.00 14,700,000.00

Subtotal 97,743,808.33 70,130,444.61

6% Interest for 6 months

2,932,314.25 2,103,913.34

Attorney’s Fees 250,000.00 0.00

Total Claimant’s Claim/Award

P100,926,122.58 72,234,357.95

RESPONDENT’S [MEGAWORLD’s] CLAIM Award

Loss of Profit P31,680,000.00 0.00

Liquidated Damages 32,844,003.36 0.00

Take over Works 19,320,543.71 0.00

Rectification Works 26,243,431.43 9,197,863.55

Administration Expenses 4,334,772.01 0.00

6% Interest for 6 months

6,865,365.03 275,935.91

Attorney’s Fees 2,000,000.00 0.00

Cost of Arbitration 1,000,000.00 0.00

Total Respondent Counterclaims/Award

P124,288,115.54 9,473,799.46

Total Net Award to Claimant

P62,760,558.49

Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals.

Megaworld file a Petition for Review under Rule 43 of the Rules of Civil Procedure

the Court of Appeals proceeded to review the decision of the Arbitral Tribunal and found the same to be amply supported by evidence.

On February 14, 2002, the Court of Appeals dismissed Megaworld's petition:

Still unsatisfied, Megaworld filed a Petition for Review on Certiorari before the Supreme Court.

July 12, 2002- Supreme Court a TRO upon Megaworld’s filing petition in G.R. No. 153310

March 2, 2004- Supreme Court promulgated it’s decision Affirming the decision of the CA Lifting the TRO

August 12, 2004- Supreme Court issued an entry of Judgment

November 3, 2004- CIAC issued an Order. giving the parties ten (10) working days within which to agree on the satisfaction of the arbitral award, otherwise a writ of execution will be issued.

November 22, 2004- the CIAC issued an alias writ of execution

January 25, 2005- Megaworld filed a Petition with the Court of Appeals to restrain the scheduled execution sale and to nullify the orders of the CIAC issued pursuant thereto. claimed that the sheriffs exceeded their authority when they

included in the notice of execution sale five condominium units fully paid for by its buyers.

that the inclusion of three additional units in the levy on execution was excessive, thereby rendering the same void

February 21, 2005 - Court of Appeals issued a Resolution restraining the implementation of the alias writ, as well as the holding of the auction sale for a period of sixty days

from notice thereof April 22, 2005- The Court of Appeals rendered a Decision

granting Megaworld’s petition and declaring the CIAC’s assailed order null and void. Three days before the expiration of the TRO.

April 27, 2005- SC issued a Resolution directing the parties to maintain the status quo effective 22 April 2005, the date of the expiration of the TRO issued by the Court of Appeals and continuing until further orders from this Court.

DSM asserts that CA committed a patently unlawful act amounting to lack or excess of jurisdiction when it: entertained a petition which was obviously dilatory and amounted

to an obstruction of justice restrained the CIAC without any valid ground

Rule 1, Section 6 of the Rules of Court provides that the Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding. We have at times relaxed procedural rules in the interest of substantial justice and in so doing, we have pronounced that:

whether the alias writ should have been expressly qualified in limiting the execution to just six condominium units

whether the alias writ conformed to the requirement under Section 8(e), Rule 39 of the Rules of Civil Procedure that the specific amount due must be stated

whether the 6% interest as specified in the alias writ should be applied on a per annum basis, or on a flat rate. The Court shall also resolve whether the Makati City RTC sheriffs acted correctly in levying the 10 condominium units, pursuant to such writ of execution.

We reiterate the questioned portion of the alias writ of execution:

Section 8(e), Rule 39 of the Revised Rules of Civil Procedure: In all cases, the writ of execution shall specifically state the amount of the interest, costs, damages, rents or profits due as of the date of the issuance of the writ, aside from the principal obligation under the judgment. For this purpose, the motion for execution shall specify the amounts of the foregoing reliefs sought by the movant. If the objection hinges on the fact that the exact mathematical

computation did not appear in the alias writ itself, respondent could easily have moved that said computation be incorporated by the CIAC thereon. Such perceived deficiency is certainly not sufficient to justify recourse to a special civil action for certiorari to have the alias writ declared null and void in its entirety.

As to the controversy on the application of the 6% rate of interest, the proper forum for clarifying the same is the CIAC, not the Court of Appeals. After all, the CIAC imposed said rate so it puzzles this Court why respondent did not seek enlightenment therefrom when it filed its Motion for Clarification relative to the purported six-unit limit. Be that as it may, this Court herein notes that nowhere in any of its jurisprudence had a legal rate of interest been imposed as a flat rate rather than on a per annum basis.

CA clearly had no authority to take cognizance of the petition filed by respondent. By acting on the petition rather than dismissing the case outright, it committed grave abuse of discretion amounting to lack of jurisdiction.

The Court has noted the various dilatory tactics employed by lawyers to resist the execution of judgments which had already attained finality. In fact, the Court has been all too willing to discipline counsels who engage in such behavior, either through penalization for contempt or referral for administrative investigation with the Integrated Bar of the Philippines.

Lawyers must be reminded that in their zeal to protect the interests of their clients, they must not overreach their commitment to the extent of frustrating the ends of justice. The Court does not regard with favor lawyers who try to delay the execution of cases which are already final and executory.

The Resolution dated 21 February 2005 and the Decision of the Court of Appeals dated 19 April 2005 are VOIDED and SET ASIDE

The Construction Industry Arbitration Commission is ordered to proceed with the execution of its Decision dated 19 October 2001 in CIAC Case No. 22-2000.