Capitol Gets Court Relief Against Disputed Contracts

The Cebu Provincial Government obtained preliminary injunctive relief from complying void contracts entered into by the previous administration.

In its resolution dated March 20, 2015, the Court of Appeals (CA) 19th Division stopped the execution of the final consolidated award issued by Construction Industry Arbitration Commission (CIAC) last November 21, 2014.

The CIAC order directed the Capitol to pay about Php 95 million claims inclusive of interests and other charges to private contractor Duros Development Corporation (DDC).

Provincial Legal Officer Orvi Ortega said the obligation came from the 25 contracts (25 projects) executed by former Governor Gwendolyn Garcia and DDC from 2006 to 2012.

Earlier, Governor Hilario Davide III stated that he will not pay the obligations arising from unauthorized contracts executed prior to his assumption.

The governor’s decision compelled DDC to seek redress to the CIAC, a quasi-judicial body, which exercises jurisdiction over disputed contracts.

CIAC promulgated a final consolidation award last November despite the motions to dismiss filed by the Capitol questioning its jurisdiction.

Thus, the Capitol filed a petition for review with the appellate court. CA issued temporary restraining order (TRO) against the enforcement of CIAC order last January 14, 2015 upon the posting of Capitol’s Php 5 million surety bond.

Ortega said the Capitol questioned the jurisdiction of CIAC over the case. The contracts contained arbitration clauses, which authorized CIAC to settle contract-related disputes.

However, Ortega said the former governor lacked authority from the Sangguniang Panlalawigan to enter into such agreement. Hence, these contracts were void.

Section 22 (c) Republic Act No. 7160, otherwise known as the “Local Government Code of 1991” expressly states that “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.”

In granting the writ of preliminary injunction, the CA felt the need to ascertain “if the CIAC really had jurisdiction to arbitrate the subject claims of respondent.”

“Hence, in order that no irreparable injury may be visited upon petitioner by reason of an implementation of the assailed CIAC Final Consolidated Award, the issuance of a writ of preliminary injunction is in order,” said the CA, through Associate Justice Ma. Luisa C. Quijano-Padilla.

In this case, the TRO granted by CA only lasted for 60 days while injunctive relief will last “until further orders from this Court.”

The parties are given until April 23 to simultaneously submit their memoranda to further strengthen their individual arguments.

www.cebu.gov.ph