Hydro Resources Contractors Corporation vs. National Irrigation Administration (484 Phil. 581)
**Facts:**
1. **August 1978:** Hydro Resources Contractors Corporation (HRCC) was awarded Contract MPI-C-2 by the National Irrigation Administration (NIA) for the Magat River Multi-Purpose Project.
– Contract value: P1,489,146,473.72 (P1,041,884,766.99 in Pesos and $60,657,992.37 in USD at an exchange rate of P7.3735 to $1).
2. **November 6, 1978:** Amendment No. 1 signed: NIA increased foreign currency allocation for equipment financing to $38,000,000.00 for the first year.
3. **April 9, 1980:** Memorandum of Agreement (MOA) signed, allowing HRCC direct availment of foreign currency for purchasing necessary equipment and spare parts.
4. **1980:** Supplemental MOA included items like construction materials and permanent works.
5. **1982:** HRCC substantially completed the project, and on February 14, 1984, NIA accepted it.
6. **1984:** Due to currency fluctuations, disputes arose regarding the exchange rate applied by NIA.
7. **April 1983:** HRCC claimed underpayment due to price escalations and presented the “MPI-C-2 Dollar Rate Differential on Foreign Component of Escalation,” showing HRCC was entitled to an additional $1,353,771.79/P10,898,391.17.
8. **August 12, 1983:** HRCC submitted a claim to NIA, which was rejected on January 6, 1987.
9. **December 7, 1994:** HRCC filed for arbitration with CIAC (CIAC Case No. 18-94).
10. **NIA’s Defense:**
– Filed Answer with Counterclaim raising laches, estoppel, lack of CIAC jurisdiction.
– Sought dismissals and pursued legal recourse (CA-G.R. SP No. 37180 and G.R. No. 129169).
11. **June 10, 1997:** CIAC ruled in favor of HRCC.
12. **NIA Appeal:** Filed CA-G.R. SP No. 44527 with the Court of Appeals, resulting in CIAC’s decision being overturned on several grounds.
**Issues:**
1. Did HRCC’s claim prescribe?
2. Is HRCC’s claim contrary to R.A. No. 529?
3. Should the exchange rates be computed at the fixed rate?
4. Was NIA’s Certification of Non-Forum Shopping proper?
**Court’s Decision:**
1. **Prescription:**
– **CA Decision:** HRCC’s claim prescribed as per Section 25 of the contract (30-day period post-administrator denial for arbitration notice).
– **Supreme Court:** Disagreed, noting final denial was on January 6, 1987, and HRCC responded within 30 days. Also, the 30-day period in contracts applies to disputes during construction, not post-completion.
2. **Applicability of R.A. No. 529:**
– **CA Decision:** Applied R.A. No. 529, barring payments in foreign currency.
– **Supreme Court:**
– Exempted the contract as it involved international funding from IBRD.
– Even if applicable, R.A. No. 529 voids the provision of payment foreign currency, not the payment itself.
3. **Fixed Exchange Rate:**
– **Supreme Court:** NIA charged interest at prevailing rates during the contract and now cannot backtrack to fixed rates. Estoppel applies due to NIA’s inconsistency in computation.
4. **Certificate of Non-Forum Shopping:**
– **Supreme Court:** Lawyer must be specifically authorized. Lack of proper authorization made NIA’s certification invalid. NIA had been guilty of forum shopping due to multiple identical lawsuits.
**Doctrine:**
1. **Prescription:**
– Arbitration clauses in contracts generally apply during construction phases to prevent delays, not to post-completion disputes.
2. **R.A. No. 529 Exceptions:**
– Internationally funded contracts are exempt from local currency restrictions.
3. **Estoppel:**
– Consistent stance required. A party is bound by its acts and representations.
4. **Forum Shopping:**
– Filing multiple suits on the same issues constitutes improper conduct and potential case dismissal.
5. **Non-Forum Shopping Certificate:**
– Must be signed by authorized individuals; counsel must have specific authority.
**Class Notes:**
Key elements and concepts:
1. **Prescription:** Definitions and exceptions.
2. **R.A. No. 529 Application:** Contracts funded by international financial institutions are exempt.
3. **Estoppel Principles:** Actions bind parties; avoids inconsistent positions.
4. **Forum Shopping Definition:** Identity of parties, causes of action, and reliefs sought.
5. **Non-Forum Shopping Certification:** Role and requirements for signing authority.
**Historical Background:**
– **Magat River Multi-Purpose Project:** Major infrastructure initiative funded by IBRD.
– **Currency Fluctuations:** Issue pertinent during Marcos era with economic policy impacts.
– **CIAC’s Role:** Seen as an impartial body for construction disputes, its establishment aimed to streamline dispute resolution distinct from regular courts.
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