3Republic of tbe ~bilippines

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SECOND DIVISION

MUNICIPALITY OF CORELLA, G.R. No. 218663

represented by MAYOR JOSE
NICANOR D. TOCMO, Present:
Petitioner,
PERLAS-BERNABE, S.A.J,
Chairperson,
HERNANDO,
ZALAMEDA,
- versus - ROSARIO, and
MARQUEZ, JJ.

Promulgated:
PHILKONSTRAK
DEVELOPMENT CORPORATION
and VITO RAPAL,
Respondents.
x--------------------------------------------------- x

DECISION

HERNANDO, J.:

This petition for review on certiorari 1 under Rule 45 of the Rules of Court
assails the January 30, 2015 Decision2 and June 9, 2015 Resolution3 of the Court
of Appeals (CA) in CA-G.R. SP. No. 06515, affirming in toto the October 27,
2011 Decision4 and November 25, 2011 Order5 of the Construction Industry
Arbitration Commission (CIAC) in CIAC Case No. 19-2011 entitled
"Philkonstrak Development Corp. v. Municipality of Corella, represented by
1
Rollo, pp. 3-60.
2
Id. at 85-96. Penned by Associate Justice Renato C. Francisco and concurred in by Associate Justices Gabriel
T. Ing les and Pamela Ann Abell a Maxino.
3
Id. at 101-102.
4
Id. at 62-84. Penned by Chairman Eduardo R. Ceniza and concun-ed in by Me mbers Tomasito Z. Academia
and Guadalupe 0. Mansueto.
5
Id. at 295-297.
Decision 2 G.R. N o. 2 18663

Hon. Jose Nicanor D. Tocmo and Hon. Vito B. Rapa!, in his personal capacity."
The Municipality of Corella, represented by Mayor Jose Nicanor D. Tocmo
(Tocmo), was ordered to pay Philkonstrak6 Development Corporation
(Philkonstrak) the amount of Pl2,844,650.00.

The Antecedents:

Corella is a municipality located in Bohol. It is represented by its

municipal mayor, Tocmo. 7 On the other hand, Philkonstrak is a corporation duly
organized and existing under Philippine laws. It is a private firm engaged in the
business of design/build construction. 8 Vito Rapal (Rapal) was the former
mayor of Corella. 9 During the pendency of the proceedings, Rapal is the Vice-
Mayor of Corella. 10

Sometime in 2009, Corella conducted a public bidding for the

rehabilitation and improvement of its municipal waterworks system project.
Philkonstrak emerged as the winning bidder. 11

Subsequently, Corella, through then mayor Rapal, entered into a contract

agreement 12 ( contract) with Philkonstrak for the rehabilitation and improvement
of the municipal waterworks system for a total amount of PlS ,997,732.63. 13

Pursuant to the contract, Philkonstrak procured the materials, equipment,

and the labor force for the mobilization of the construction works. During the
course of the project, Philkonstrak submitted progress reports to the municipal
engineer of Corella for coordination and supervision. 14

As of December 2009, Philkonstrak accomplished more than 50% of the

work essential for the project for which Philkonstrak expended the amount of
P8,233,000.00. 15 When Corella, through Tocmo, refused to pay and denied
liability, Philkonstrak was forced to suspend its construction works.16
Consequently, Philkonstrak sent Corella, through Tocmo, a formal demand
letter 17 to pay for the actual expenses incurred by Philkonstrak. Philkonstrak
also sent a demand letter 18 to Rapal.

6 Spelled Philconstrak or Philkonstruct in some parts of the records.

7
Rollo, p. 85.
8
Id.
9
Id. at 86.
io Id.
11 Id.
12
CA rollo, pp.11 3-115 .
13
Id.at 11 3.
14
Rollo, p. 86.
is Id.
16 Id.
17
CA rollo, pp. 101-102.
18
Id. at 103-104.
Decision 3 G.R. N o. 218663

Tocmo, in his reply, 19 denied liability and questioned the validity of the
contract. He averred that Rapal had no authority to enter into such contract
during his term as mayor of Corella. 20

On April 28, 2011, Philkonstrak filed before the CIAC a complaint2 1 for
collection of sum of money against Corella and Rapal, as Rapal was the mayor
at the time the contract was signed and whose signature appeared thereon. The
case was docketed as CIAC Case No. 19-2011.

In its complaint, Philkonstrak claimed, among others, that it had already

undertaken more than 50% of the construction work for the completion of the
project, which caused it to incur the amount of Php 8,233 ,000.00, excluding
other materials that were not yet installed as per the completion report. 22

According to Philkonstrak, Tocmo refused to pay the obligation on behalf

of Corella primarily because of his political differences with Rapal. 23
Philkonstrak averred that it had no knowledge of the underlying issues between
the administrations ofTocmo and Rapal, and that it merely complied faithfully
with the terms of the contract. 24

Philkonstrak prayed for attorney's fees, legal interest, exemplary

damages, arbitration fees, and other expenses. 25

On August 1, 2011 , Rapal filed his answer,26 admitting the material

allegations of the complaint and averring that he was authorized to enter into
the contract with Philkonstrak for the rehabilitation/improvement of the
waterworks system of Corella27 in accordance with Municipal Ordinance No.
2010-0228 or "An Ordinance Appropriating the Amount of Twenty-Seven
Million Pesos (Php 27,000,000.00) for the Purchase of the Following Heavy
Equipment: One Unit Brand New Road Grader, One Unit Reconditioned Road
Roller, and Rehabilitation/Improvement on the Existing Waterworks System
of the [Local Government Unit]."29

On August 19, 2011, Corella filed its answer,30 denying the material
allegations of the complaint. It asserted that the contract is not binding because
Municipal Ordinance No. 2010-02 was in violation of Article 107(g) of the

19
Id. at 105 .
20
Rollo, p. 86.
21
CA rollo, pp. I3- I 9 .
22
ld.atl 3-l6.
23
Id. at 15.
24
Id.at 16.
25 Id. at 17.
26
Id. at 292-303.
27
Rollo, p. 87.
28
C A rollo, p. 263 .
29 Id.
30
Id. at 260-26 2.
Decision 4 G.R. No. 218663

Implementing Rules and Regulations (IRR) of Republic Act No. (RA) 71603 1
otherwise known as the "Local Government Code of 1991."

Furthermore, Corella contended that Rapal was in bad faith since he knew
that the municipal ordinance was defective and ineffective; thus, he was not
legally authorized to enter into a contract with Philkonstrak for lack of a valid
municipal ordinance. 32

Ruling of the
Construction Industry
Arbitration Commission:

On October 27, 2011, the CIAC issued a Decision33 finding the contract
between Philkonstrak and Corella to be valid. Thus, Corella, through its present
mayor, Tocmo, breached the contract when he refused to honor the obligation.
The CIAC ordered Corella to pay Philkonstrak the total amount of
P12,844,650.00, which includes claims for unpaid billings, delivered but
uninstalled materials, and accrued interest. The CIAC exonerated Rapal from
any liability arising from the repudiation of the contract on the principle of res
inter alias acta. The dispositive portion of the CIAC Decision reads:

WHEREFORE, the Tribunal hereby decides and awards in full and final
disposition of this arbitration, as follows:

(a) Respondent Municipality of Corella, Bohol is hereby ordered to pay

[Philkonstrak] its (i) claim in the amount of Php 8,233,000.00, representing the
value of work done and material supplied for the rehabilitation and improvement
of the waterworks system of respondent Municipality and (ii) the claim in the
amount of Php 4,000,000.00 representing the value of materials needed for the
rehabilitation and improvement of the waterworks system of Respondent
Municipality which [Philkonstrak] had purchased and delivered but were not
installed due to the repudiation of the Contract by Respondent Municipality of
Corella.

(b) Respondent Municipality of Corella is hereby ordered to pay

[Philkonstrak] the amount of Php 611,650.00 representing accrued legal interest;
provided that if the principal amounts decreed in paragraph (a) above are not fully
paid after the award shall have become final and executory, the said principal
amounts shall earn interest at the legal rate of 12% per annum computed from the
date this award shall become final and executory and until whole amount is fully
paid.

(c) [Philkonstrak's] claims for attorney fees and exemplary damages are
denied.

31 Entitled " AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991 ." Approved on October I 0,
1991.
32
Rollo, p. 88.
33 Id. at 62-84.
Decision 5 G.R. No. 218663

(d) [Philkonstrak] shall pay two-third (2/3) and Respondent Municipality

of Corella shall pay one-third (1/3) of the cost of arbitration which shall include
the following:

Total [Philkonstrak's] [Municipality

Arbitration Share (75%) of Corella's]
Fee Share (25%)
(i) Filing Fee P22,346.79 Pl6,782.59 PS,564.20
(ii) Administrative Fee 23,666.79 17,750.09 5,916.70
(iii) Arbitrators' Fees 287,118.82 215,339.12 71,779.70
(iv) Arbitration Dev't Fund 17,844.65 13,383.49 4,461.16
P350,977.05 P263,255.29 P87,721.76

(e) All other requests for relief not granted or disposed of here are hereby denied.

Summary of Award

Nature of Claim Amount Claimed Amount Awarded

[Philkonstrak' s] claim for P8,233,000.00 P8,233,000.00
ununpaid billings for work
done and material supplied
[Philkonstrak' s] claim for P4,000,000.00 P4,000,000.00
material purchased and
delivered but not installed
[Philkonstrak' s] claim for P611,650.00 P611,650.00
accrued interest
[Philkonstrak' s] claim for P2,500,000.00 none
attorney's fees
[Philkonstrak' s] claim for P2,500,000.00 none
exemplary damages
Total Pl 7,844,650.00 P12,844,650.00

Further, [Municipality of Corella] shall reimburse the amount advanced by

[Philkonstrak] in the amount of eighty-seven thousand seven hundred twenty-one
pesos and 76/100 (P87,721.76) representing one third of the total arbitration
fees. 34

Aggrieved, Corella filed a motion for correction of final award 35 dated

November 21, 2011, claiming that the award of P4,000,000.00 for the
uninstalled materials should be deleted because it is inconsistent and
contradictory to the quantum meruit principle applied by the CIAC.

On November 25, 2011 , the CIAC issued an Order3 6 which ruled that
Corella's motion for correction of final award actually partook of a motion for
reconsideration because it sought to change the CIAC ruling; that such motion
for reconsideration of the substantive merits of the dispute is not allowed under

34
Id. at 83-84.
35
CA rollo, pp. 345-346.
36
Id. at 295-297.
Decision 6 G.R. No. 218663

the CIAC Revised Rules of Procedure Governing Construction Arbitration

(CIAC Rules); and that the same is denied for lack of merit. 37

On January 19, 2012, the CIAC issued another Order, 38 granting

Philkonstrak's motion for execution of judgment and issuance of writ of
execution39 dated December 2, 2011. The CIAC held that its October 27, 2011
Decision had become final and executory. 40

On December 26, 2011, Corella appealed41 to the CA through a petition

for review42 under Rule 43 with prayer for the issuance of a temporary
restraining order and/or preliminary injunction for stay of execution43 the
October 27, 2011 CIAC Decision.

Ruling of the Court of Appeals:

In its Decision44 dated January 30, 2015, the CA dismissed Corella's

petition for review, finding no cogent reason to reverse and set aside the
October 27, 2011 CIAC Decision ordering Corella to pay Philkonstrak the
amount of Pl2,844,650.00. The dispositive portion of the CA Decision reads:

WHEREFORE, the Petition is DISMISSED. The CIAC's Decision dated

October 27, 2011 and its Order dated November 25, 2011 are AFFIRMED in
toto.

SO ORDERED. 45

The CA denied Corella's motion for reconsideration in its Resolution46

dated June 9, 2015, finding no new, valid, and justifiable ground or reason that
would compel it to alter or reverse its ruling.

Thus, this petition for review on certiorari. 47

Issues

Corella seeks relief in its petition for review on certiorari on the following
questions of law, to wit:

37 Id.
38
Rollo, pp. 300-302.
39
CA rollo, pp. 347-350.
40
Id. at 349.
41
Id. at 3-11.
42 Id.
43 Id.
44
Rollo, pp. 85-96.
45
Id. at 95.
46
Id. at 101-102.
47
Id. at 3-60.

7v
Decision 7 G.R. No. 218663

1. Can a mayor enter into a contract with a corporation without prior

authorization from the sangguniang bayan as required by [RA] 7160 and [RA]
9184?

2. Can a mayor enter into a contract with a corporation without the proper
appropriation of public funds as required by the 1987 Constitution as reflected in
Presidential Decree 1445 and Executive Order 292?

3. Will a [Department of Interior and Local Government] Circular prevail

over the EN BANC Decision of the Supreme Court in Quisumbing, et al. v.
Garcia, et al. docketed as G.R. No. 175527 dated December 8, 2008?

4. Can a final and executory decision of a quasi-judicial agency (CIAC) still

be subject to judicial review?48

Summarizing all four questions, the main issue in the case at bar is this:
whether or not the CA is correct in affirming the Decision of the CIAC which
found that the contract between Philkonstrak and Corella was valid, and which
ordered Corella to pay Philkonstrak the amount of P12,844,650.00 for breach
of the same.

Our Ruling

The petition is granted in part. The contract between Philkonstrak and

Corella is not valid and binding. However, Corella is obliged to pay
Philkonstrak on the basis of the principle of quantum meruit.

No separate sangguniang bayan

authorization is necessary when
the appropriation ordinance is
sufficient in detail.

Corella, through Tocmo, alleged that then Mayor Rapal failed to secure
proper authorization from the sangguniang bayan of Corella before entering
into the contract with Philkonstrak,49 citing the following laws and provisions
as bases:

First, Section 22(c) of the Local Government Code and Article 107(g) of
its Implementing Rules and Regulations (IRR), to wit:

SECTION 22. Corporate Powers.

xxxx

48
Id. at 3.
49
Id. at 14.
Decision 8 G.R. No. 218663

(c) Unless otherwise provided in this Code, no contract may be entered into
by the local chief executive in behalf of the local government unit without prior
authorization by the sanggunian concerned. A legible copy of such contract
shall be posted at a conspicuous place in the provincial capitol or the city,
municipal or barangay hall.

xxxx

ARTICLE 107. Ordinances and Resolutions. - The following rules shall

govern the enactment of ordinances and resolutions:

xxxx

(g) No ordinance or resolution passed by the sanggunian in a regular or

special session duly called for the purpose shall be valid unless approved by a
majority of the members present, there being a quorum. Any ordinance or
resolution authorizing or directing the payment of money or creating
liability, shall require the affirmative vote of a majority of all the sanggunian
members for its passage. (Emphasis supplied)

Second, RA 9184 50 or the "Government Procurement Reform Act,"

specifically the last paragraph of Section 37, to wit:

SECTION 37. Notice and Execution ofAward. - xx x

xxxx

The Procuring Entity shall issue the Notice to Proceed to the winning bidder not
later than seven (7) calendar days from the date of the approval of the contract
by the appropriate authority. All notices called for by the terms of the contract
shall be effective only at the time ofreceipt thereof by the contractor. (Emphasis
supplied)

Tocmo asserts that before then Mayor Rapal entered into the contract on
behalf of Corella with Philkonstrak, two requirements were necessary to be
met: 51 ( 1) prior authorization from the sangguniang bayan of Corella, in
accordance with Section 22(c) of the Local Government Code and Section 3 7
of the Government Procurement Act; and (2) the appropriation ordinance or
resolution authorizing or directing the payment of money or creating a
liability, 52 in accordance with Article 107(g) of the IRR of the Local
Government Code.

50 Entitled " AN ACT PROVIDING FOR THE MODERNIZATION, STANDARDIZATION AND REGULATION OF THE
PROCUREMENT A CTIVITIES OF THE GOVERNMENT AND FOR OTHER PURPOSES." Approved on January I 0,
2003.
51
Ro/lo,pp.15-18.
52
Id. at 18-25.
Decision 9 G.R. No. 218663

Tocmo posits that the two documents or requirements are separate and
distinct from each other. 53 As to the first requirement of prior authorization from
the sangguniang bayan, Tocmo alleged that:

18. The contract merely describes the contracting parties as the "Municipality of
Corella" and "Philkonstrak Development Corporation" and signed by
Respondent Vito B. Rapa! and Jesse J. Ang. Nowhere is there any showing that
the contract contains the "prior authorization of the sanggunian concerned." No
ordinance authorizing respondent Rapal to enter into a contract was made
an integral part of the contract. The contract besides being 149 pages long
does not contain any prior authorization ordinance. Page two of the
contract, which outlines the contract documents, does not include an
ordinance authorizing respondent Rapal to enter into a contract with
Philkonstrak. 54 (Emphasis supplied)

The Court disagrees. It must be emphasized that such issue is not novel.

In the landmark case of Quisumbing v. Garcia 55 (Quisumbing) the Court

delineated when a sangguniang bayan authorization is still necessary to
accompany the appropriation ordinance and when it is not. Depending on the
circumstances of the case, if the project is provided for in sufficient detail in
the appropriation ordinance, meaning the transactions, bonds, contracts,
documents, and other obligations the mayor would enter into in behalf of the
municipality, among others, are enumerated, then no separate authorization is
necessary. On the other hand, if the project is merely couched in general and
generic terms, then a separate approval by the sangguniang bayan in
accordance with the law is required.

The recent case of Verceles, Jr. v. Commission on Audit56 (Verceles) citing

Quisumbing, elaborated on this issue, thus:

Explained simply, the [Local Government Code] requires the local chief
executive to secure prior authorization from the sanggunian before he can enter
into contracts on behalf of the LOU. A separate prior authorization is no longer
required if the specific projects are covered by appropriations of the LOU. The
appropriation ordinance passed by the sanggunian is the local chief
executive's authority to enter into a contract implementing the project.

As required in Quisumbing, the local chief executive must inquire if the

provisions in the appropriation ordinance specifically covers the expense to be
incurred or the contract to be entered into.

If the project or program is identified in the appropriation ordinance

in sufficient detail, then there is no more need to obtain a separate or
additional authority from the sanggunian. In such case, the project and the
cost are already identified and approved by the sanggunian through the
appropriation ordinance. To require the local chief executive to secure another

53
Id.at 15- 16.
54 Id.
55
593 Phil. 655-677 (2008).
56
794 Phil. 629-661 (20 16).
Decision 10 G.R. No. 218663

authorization for a project that has been specifically identified and approved by
the sanggunian is antithetical to a responsive local government envisioned in the
Constitution and in the [Local Government Code]. 57 (Emphasis supplied)

As the Verceles case explained, "sufficient authority" in an appropriation

ordinance simply means specifically and expressly setting aside an amount of
money for a certain project or program. 58

In the case at bar, the Court finds that there is no need for a separate
authorization from the sangguniang bayan as the appropriation ordinance,
Municipal Ordinance No. 2010-02, identified the project or program in
sufficient detail, and not just in general or generic terms. The one-paged
appropriation ordinance specifically and expressly set aside an amount of
money, P27,000,000.00, for certain projects, including the purchase of specific
heavy equipment and rehabilitation/improvement of the existing waterworks
system of the municipality. Municipal Ordinance No. 2010-02, having
sufficiently covered the project and the cost in detail, need not be accompanied
by a prior sangguniang bayan authorization any longer.

An appropriation ordinance
requires the affirmative vote of a
majority of all the sanggunian
members.

Article 107(g) of the IRR of the Local Government Code provides the
general rule that no ordinance or resolution shall be passed by the sanggunian
without prior approval of a majority of all the members present. The
exception to the general rule is that for ordinances or resolutions authorizing or
directing the payment of money or creating a liability, what is needed is the
affirmative vote of a majority of all the sanggunian members, whether
present or not. Simply, the quorum in the general rule depends on the number
of the sanggunian members present while the quorum in the exception depends
on the total number of sanggunian members voted into office.

In the case at bar, Corella asserts that Municipal Ordinance No. 2010-02,
the appropriation ordinance in question, directs and authorizes the payment of
money; thus, requires a majority vote of all the members of the sangguniang
bayan, not only of the members present. Thus, since the sangguniang bayan of
Corella is composed of a total of 11 members, the majority vote of six is
required in order for municipal ordinance no. 2010-02 to be valid and binding.
However, the municipal ordinance only obtained five affirmative votes, based
on the quorum on the sanggunian members present at that time, which was
eight members. Thus, Tocmo contends that Municipal Ordinance No. 2010-02
is null and void. Consequently, the contract between Corella and Philkonstrak
is null and void too.

57
Id. at 645-646.
58
See id.
Decision 11 G.R. No. 218663

The CIAC and the CA ruled otherwise. Both tribunals noted that upon
the disapproval 59 of Municipal Ordinance No. 2010-02 by the sangguniang
panlalawigan of Bohol for not meeting the required majority number, then
Mayor Rapal elevated the matter to the Department of Interior and Local
Government (DILG). The Regional Director of the DILG issued an Opinion,60
the pertinent portion of which was cited by both the CIAC and CA in their
Decisions, to wit:

Hence, for all intents and purposes, the legislative process has been
completed, and that the subject ordinance [Municipal Ordinance No. 2010-
02] is now accorded with the presumption of validity. Moreover, it might
interest you to know that DILG Central Office had the occasion to opine, under
DILG Opinion No. 103 S 2001 dated December 18, 2001 , that the Local
Government Code of 1991 does not expressly prescribe for a specific voting
requirement for the passage of an appropriation ordinance. Hence, the
general rule on the passage of an ordinance should be made to apply. The
pertinent provision on the matter is Article 107 (g) of the Rules and Regulations
Implementing R.A. 7160 x x x.61 (Emphasis supplied)

Both the CIAC and the CA applied the opinion of the Regional Director of
the DILG to their Decisions, noting that Tocmo, the present Mayor, did not take
any steps to question the validity of the Opinion, thus, it had become final and
binding on the concerned parties.

The Court disagrees with the CIAC and the CA.

The long-standing principle of contemporaneous construction is applicable

in the case at bar. The Court has repeatedly stressed that the principle of
contemporaneous construction of a statute by the executive officers of the
government, whose duty is to execute it, is entitled to great respect, and should
ordinarily control. 62 However, the exception is that the construction may be
disregarded by competent authorities or judicial courts when it is clearly
erroneous, when strong reason to the contrary exists, or when the court has
previously given the statute a different interpretation. 63

In this case, the DILG Opinion was given as a contemporaneous

administrative construction of the term "appropriation ordinance" and "that the
Local Government Code does not expressly prescribe for a specific voting
requirement for the passage of the same." 64 However, the Court finds the
construction of the DILG clearly erroneous.

59 CA rollo, pp. 595-599.

60
Id. at 465-466.
61 Rollo, pp. 68-69 and 94-95 .
62 Philippine Duplicators, Inc. v. National l abor Relations Commission and Philippine Duplicators
Employees Union-Tupas, 298 Phil. 552, 562 ( 1993).
63 See Adasa v. Abalos, 545 Phil. 168 (2007).
64
Rollo, pp. 68-69.
Decision 12 G.R. No. 218663

The term "appropriation," as defined under Section 306, Title V of the

Local Government Code "refers to an authorization made by ordinance,
directing the payment of goods and services from local government funds
under specified conditions or for specific purposes."

Juxtaposing this definition with the exception in Article 107(g) of the IRR
of the Local Government Code, that "any ordinance x x x authorizing or
directing the payment of money x x x, shall require the affirmative vote of a
majority of all the sanggunian members," it is express and clear that an
"appropriation ordinance" is one such ordinance contemplated in the exception.

The definition of the term "appropriation" in the Local Government Code

is clear: [i]t is an authorization made by an ordinance that directs the payment
of money. The exception to the general rule of the prescribed voting
requirement in the IRR of the Local Government Code is clear: an ordinance
that directs or authorizes the payment of money needs a quorum of all the
sanggunian members, not only of those sanggunian members present.

The Court, thus, holds that the DILG Opinion is erroneous, and the CIAC
and CA wrongfully applied the same to their Decisions.

The CIAC Decision is not

anymore subject to judicial
review.

The CIAC and the CA both ruled that the October 27, 2011 CIAC Decision
had already become final and executory on the ground that Corella's motion for
correction of final award, which was actually a motion for reconsideration, was
a prohibited pleading under Section 17.265 of the CIAC Rules, thus, did not stop
the running of the reglementary period for appeal. The CA ruled that:

Since the motion for correction did not fall under any of the grounds
provided by the CIAC's Rules, it is considered a motion for reconsideration and
a prohibited pleading. It did not interrupt the running of the fifteen (15) days
period for petitioner to file its petition to this Court. Consequently, after the lapse
of the fifteen (15) days from November 10, 20 11 or on November 25, 2011 , the
CIAC's decision has already become final and executory because petitioner
failed to file its petition for review within the period provided by law. The CIAC
was correct to issue on January 19, 2012 an Order, declaring that the Final Award
has become final and executory.

Settled is the rule that a judgment that has become final and executory is
immutable and unalterable. The judgment may no longer be modified in any
respect, even if the modification is meant to correct what is perceived to be

65
Section 17.2 reads:
SECTION 17.2. Motion/or Reconsideration or New Trial. - A motion for reconsideration
or new trial shall be considered a prohibited pleading.
Decision 13 G.R. No. 218663

an erroneous conclusion of fact or law, and regardless of whether the

modification is attempted to be made by the court rendering it or by the
highest court of the land. While there are recognized exceptions - e.g., the
correction of clerical errors, the so-called nunc pro tune entries which cause no
prejudice to any party, void judgments, and whenever circumstances transpire
after the finality of the decision rendering its execution unjust and inequitable -
none of these exceptions apply to the present case. 66 (Emphasis supplied)

The Court agrees. As aptly pointed out by Senior Associate Justice Estela
M . Perlas-Bernabe during the deliberations of this case, a CIAC Final Award,
equivalent to a trial court final decision as opposed to a partial award or
decision, is still susceptible to judicial review. However, when availing of
judicial reliefs against a CIAC Final Award, one must still abide by the
procedural framework set therefor, such as the periods of appeal and prohibited
motions. If the said party fails to comply, he or she is equally bound by the
finality of judgment principle.

The recent case of Department of Labor and Employment v. Kentex

Manufacturing Corporation, 67 citing Mocorro, Jr. v. Ramirez,68 explains the
primacy of the finality of judgment principle, to wit:

A definitive final judgment, however erroneous, is no longer subject to change

or revision.

A decision that has acquired finality becomes immutable and unalterable.

This quality of immutability precludes the modification of a final judgment, even
if the modification is meant to correct erroneous conclusions of fact and law. And
this postulate holds true whether the modification is made by the court that
rendered it or by the highest court in the land. The orderly administration of
justice requires that, at the risk of occasional errors, the judgments/resolutions of
a court must reach a point of finality set by the law. The noble purpose is to write
finis to dispute once and for all. This is a fundamental principle in our justice
system, without which there would be no end to litigations. Utmost respect and
adherence to this principle must always be maintained by those who exercise the
power of adjudication. Any act, which violates such principle, must immediately
be struck down. Indeed, the principle of conclusiveness of prior adjudication is
not confined in its operation to the judgments of what are ordinarily known as
courts, but extends to all bodies upon which judicial powers had been conferred. 69

The CA nor this Court may not anymore step in to modify or correct a
quasi-judicial agency's decision that has already been deemed final and
executory. If this were so, then there would be no end to litigation stemming
from the CIAC, which is against the expeditious nature of such proceedings and
hence, against the public policy underlying arbitration.

66
Rollo, p. 93.
67
G.R. No. 233781, July 8, 20 19.
68 582 Phil. 357, 366-367 (2008).
69 Department of Labor and Employement v. Kentex Manufacturing Corporation, supra.
Decision 14 G.R. No. 218663

Here, records show that the CIAC Decision rendered in favor of

Philkonstrak had already attained finality since Corella's Motion for Correction
of Final Award did not toll the period to appeal given that it did not raise the
accepted grounds stated in Section 17.1 of the CIAC Rules therefor. The Motion
for Correction only questioned the final award based on the quantum meruit
principle, and thus, was properly considered by the CIAC as a motion for
reconsideration, a prohibited pleading.

Under the CIAC Rules, a party aggrieved by a final award may contest the
same by filing either a motion for correction or a petition for review under Rule
43 of the Rules of Court, both within fifteen (15) days from receipt thereof. 70
However, if a motion for correction is filed and said motion is not based on the
exclusive grounds enumerated under Section 17 .1, such filing will not interrupt
the running of the period to appeal. 71 Consequently, if the period to appeal has
lapsed, a final arbitral award shall be considered as executory. 72 The pertinent
provisions of the CIAC Rules read:

RULE17
Post- Award Proceedings

SECTION 17.1 Motion for Correction of Final Award - Any of the parties may
file a motion for correction of the Final Award within fifteen (15) days from
receipt thereof upon any of the following grounds:
a. an evident miscalculation of figures, a typographical or arithmetical
error;
b. an evident mistake in the description of any party, person, date,
amount, thing or property referred to in the award;
c. where the arbitrators have awarded upon a matter not submitted to
them, not affecting the merits of the decision upon the matter
submitted;
d. where the arbitrators have failed or omitted to resolve certain issue/s
formulated by the parties in the Terms of Reference (TOR) and
submitted to them for resolution; and
e. where the award is imperfect in a matter of fom1 not affecting the
merits of the controversy.

xxxx

17.1.2 A motion for correction upon grounds other than those mentioned in this
section shall not interrupt the running of the period for appeal.

xxxx

RULE 18
Execution of Final A ward

SECTION 18.1 Execution of Award. - A final arbitral award shall become

executory upon the lapse of fifteen (15) days from receipt thereof by the parties.

70
Sec. 18.2.
71
Sec. 17.1.2.
72 Sec. 18.1.
Decision 15 G.R. No. 218663

SECTION 18.2 Petition for Review. - A petition for review from a final award
may be taken by any of the parties within fifteen (15) days from receipt thereof
in accordance with the provisions of Rule 43 of the Rules of Court.

xxxx

SECTION 18.5 Execution/Enforcement of Awards. - As soon as a decision,

order or final award has become executory, the Arbitral Tribunal (or the surviving
remaining member/s), shall, motu proprio or on motion of the prevailing party
issue a writ of execution requiring any sheriff or proper officer to execute said
decision, order or final award. If there are no remaining/surviving appointed
arbitrator/s, the Commission shall issue the writ prayed for.

xxxx

Since Corella's Motion was not based on any of the enumerated grounds
under Section 17.2, the fifteen- ( 15) day period to file a petition for review
before the CA was not suspended. As Corella received the CIAC Decision on
November 10, 2011, 73 it had until November 25, 2011 to file its petition for
review. Thus, when Corella filed its Rule 43 petition before the CA on
December 26, 2011, the same was already filed out oftime and hence, executory
and immutable.

Notably, a decision that has acquired finality becomes immutable and

unalterable, and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusions of fact and law, whether
it be made by the court that rendered it or by the Highest Court of the land. 74
This principle of conclusiveness of prior adjudications is not confined in its
operation to the judgments of courts, but extends as well to those of all other
tribunals exercising adjudicatory powers. 75 While this principle recognizes
certain exceptions as enumerated in the CA Decision above, none are present in
this case.

Thus, considering that the CIAC Decision had already attained finality,
the CIAC Decision, as affirmed by the CA, should not be disturbed.

The principle of quantum meruit

is applicable in this case.

Quantum meruit literally means "as much as he deserves. " 76 This legal
principle, a principle predicated on equity, states that a person may recover a
reasonable value of the thing he delivered or the service he rendered. It is a

73
Rollo, p. 93.
74 Aguinaldo /Vv. People, G.R. No. 226615, January 13, 2021 , citing Uyv. Del Castillo, 8 14 Phil. 61, 74-75
(20 17).
75 See Taisei Shimuzu Joint Venture v. Commission on Audit, G.R. No. 238671, June 2, 2020, citing Argel v.
Singson, 757 Phil. 228, 236-237(20 15).
76 Geronimo v. Commission on Audit, G.R. No. 224 163, December 4, 2018.
Decision 16 G.R. No. 218663

device to prevent undue enrichment based on the equitable postulate that it is

unjust for a person to retain a benefit without paying for it. 77

The Court has held in the past that recovery on the basis of quantum meruit
is allowed despite the invalidity or absence of a written contract between a
contractor and a government agency. The absence or invalidity of required
documents would not necessarily preclude the contractor from receiving
payment for the services he or she has rendered for the government. 78

Thus, in the case at bar, despite the invalidity of Municipal Ordinance No.
2010-02, which in turn rendered the contract between Corella and Philkonstrak,
invalid, the latter is still entitled to receive payment for the services it rendered
for the local government of Corella. Corella cannot be unjustly enriched and
allowed to retain the benefits of the services rendered by Philkonstrak without
properly paying for it.

Philkonstrak sufficiently established its right to be compensated on the

basis of quantum meruit. As gleaned from the records of the case, the Court
finds that Philkonstrak entered into the contract in good faith and for the good
interest of Corella, notwithstanding the allegation of Corella that Philkonstrak
"conspired, if not, even was the brains behind all these irregularities" 79 with
then Mayor Rapal "in an effort to do away with public policy." 80 However, such
allegation was not proven to be true by either the CIAC or the CA.

To deny Philkonstrak compensation for more than 50% of the services it

already rendered, services which clearly benefited Corella, would be the height
of injustice, which cannot be countenanced by this Court. This is especially true
since the use of the road grader, the reconditioned road roller, and the
rehabilitation/improvement on the existing waterworks system benefited the
government and people of Corella. It is but just that Philkonstrak be
compensated for the services it rendered.

WHEREFORE, the petition is GRANTED IN PART. The Contract

Agreement between the Municipality of Corella and Philkonstrak Development
Corporation is declared NULL and VOID. The January 30, 2015 Decision and
June 9, 2015 Resolution of the Court of Appeals in CA-G.R. SP. No. 06515
Court are REVERSED and SET ASIDE. Based on the principle of quantum
meruit, the Court hereby renders judgment as follows:

(a) The Municipality of Corella is hereby ordered to pay Philkonstrak

Development Corporation:

11 Id.
78 Id.
79
Rollo, p. 39.
80 Id .
Decision 17 G.R. No. 218663

(i) The amount of ?8,233,000.00, representing the value of work

done and materials supplied for the rehabilitation and
improvement of the waterworks system of the Municipality of
Corella;

(ii) The amount of ?4,000,000.00 representing the value of

materials needed for the rehabilitation and improvement of the
waterworks system of the Municipality of Corella which
Philkonstrak Development Corporation had purchased and
delivered but were not installed due to the repudiation of the
Contract Agreement by the Municipality of Corella.

(b) The Municipality of Corella is hereby ordered to pay Philkonstrak

accrued legal interest from the time the CIAC Decision became final on October
27, 2011, at the rate of 12% per annum, until June 30, 2013. From July 1, 2013
until full payment of the amount is made, the accrued legal interest shall be 6%
per annum. 81 The total of the foregoing amount shall earn interest at the rate of
six percent (6%) per annum from finality of the Decision until full payment.

( c) Philkonstrak Development Corporation shall pay two-thirds (2/3),

and the Municipality of Corella shall pay one-third (1/3), of the cost of
arbitration, in accordance with the Terms of Reference82 agreed upon by the
parties which provides that:

[The] cost of arbitration which includes the filing, administrative,

arbitrators' fees and charges for Arbitration Development Fund,
including all incidental expenses, shall be on pro rata basis (or other
modes of sharing), subject to the determination of the Arbitral
Tribunal which of the parties shall eventually shoulder such cost or
the mode of sharing thereof. 83

The mode of sharing as determined by the Construction Industry

Arbitration Commission is affirmed by this Court, which is as follows:

Total Philkonstrak's Municipality of

Arbitration Fee Share (75%) Corella's Share
(25%)
(i) Filing Fee P22,346.79 PI6,782.59 PS ,564.20
(ii) Administrative Fee 23,666.79 17,750.09 5,916.70
(iii) Arbitrators' Fees 287, 118.82 215,339.12 7 1,779.70
(iv) Arbitration Dev't Fund 17,844.65 13,383.49 4,461.16
P350,977 .05 P263,255.29 P87,721.76

Thus, the Municipality of Corella shall reimburse the amount advanced

by Philkonstrak Development Corporation in the amount of ?87,721.76,
representing one-third of the total arbitration fees.
81
Nacar v. Gallery Frames, 716 Phil. 267, 282-283(201 3).
82
Rollo, p. 82.
sJ Id.
Decision 18 G.R. No. 218663

SO ORDERED.

WE CONCUR:

ESTELA M. ~~ERNABE
Senior Associate Justice
Chairperson

EDA RICA~ROSARIO
Ass\te Justice

'
&w~
J~~SP.MARQUEZ
~::::i.ate Justice
Decision 19 G.R. No. 218663

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

ESTELA ~~BERNABE
Senior Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

G.GESMUNDO