Aguila vs. Perfect Dimension Corporation

A final and executory minute resolution of the Supreme Court dismissing a petition for review constitutes a judgment on the merits that, under the principle of res judicata by prior judgment, bars a subsequent petition between the same parties involving the same subject matter and causes of action. Where all elements of bar by prior judgment are present—finality of the former judgment, jurisdiction of the court rendering it, adjudication on the merits, and identity of parties, subject matter, and causes of action—the later action cannot proceed.

Comglasco Aguila Glass Corporation engaged Perfect Dimension Corporation to perform architectural, plumbing, sanitary, and electrical works for a residential unit in Discovery Primea, Makati City, evidenced by a Letter of Award dated August 1, 2014 with a contract price of PHP 7,880,000.00. Engr. Mark Lumbay was separately engaged as project manager under an Engagement Letter. The works were delayed; after more than a year, Comglasco terminated Perfect Dimension’s services and hired a replacement contractor. Disputes over liability for delay, defective workmanship, and money claims led to arbitration before the Construction Industry Arbitration Commission.

• The Letter of Award and Engagement: On August 1, 2014, Comglasco issued a Letter of Award to Perfect Dimension Corporation for fit-out works at the subject unit, with a total contract price of PHP 7,880,000.00, completion in 150 calendar days from release of downpayment, and a liquidated damages clause of 1/10 of 1% per day up to a maximum of 10% of the contract sum. Engr. Mark Lumbay had earlier submitted a proposal for project management and quantity survey services; Aguila accepted through an Engagement Letter, with an engagement fee of PHP 100,000.00 and monthly fees of PHP 85,000.00.

• Performance and Delay: A downpayment of PHP 2,000,000.00 was paid on July 31, 2014, setting the completion deadline at December 29, 2014. Actual work commenced only on November 3, 2014 because the building administrator issued the clearance to proceed only then, due to delays in submission of required documents. The Works remained unfinished as of December 29, 2014. In December 2015, Aguila terminated Perfect Dimension’s services and hired Century Project Management & Const. Co. to take over.

• CIAC Findings: The CIAC determined a total delay of 373 days. It apportioned responsibility for the initial 85 days of delay (caused by belated submission of documents to the building administrator): two-thirds (56.67 days) to Aguila et al. for late submission of construction plans, and one-third (28.33 days) to Perfect Dimension and Engr. Guevarra for NBI clearances and the Gantt chart. Of the remaining 288 days, 240 days were excused because Aguila et al. failed to rebut evidence of delay caused by change orders and incomplete deliveries of owner-supplied materials, leaving 48 days attributable. Thus, Perfect Dimension and Engr. Guevarra were held liable for only 76.33 days of delay. The CIAC found insufficient competent evidence of defective works; certifications and photographs were not properly authenticated. No actual damages were proven.

• CIAC Award: The CIAC ordered Perfect Dimension to pay liquidated damages of PHP 601,480.40; denied all other claims of Aguila et al.; granted Perfect Dimension’s counterclaim for unpaid billings of PHP 2,246,605.80; granted Engr. Guevarra moral damages and attorney’s fees; granted Engr. Lumbay’s counterclaims for unpaid professional fees and attorney’s fees; and ordered set-off resulting in net payments by Aguila et al.

• CA Modification: On appeal, the CA found Perfect Dimension and Engr. Guevarra liable for 133 days of delay and awarded liquidated damages of PHP 788,000.00 (the 10% maximum). It gave probative weight to the notarized certifications of Arch. Salamanca, corroborated by photographs, and awarded temperate damages of PHP 3,000,000.00 for defective works because pecuniary loss was shown but the exact amount was not sufficiently proved. Claims for unrealized profits, labor/consultancy costs to finish the works, and moral damages were denied. Attorney’s fees of PHP 200,000.00 and costs of arbitration were granted to Aguila et al. against Perfect Dimension and Engr. Guevarra. Engr. Lumbay’s counterclaims were affirmed. After set-off, Perfect Dimension and Engr. Guevarra were to pay petitioners PHP 2,787,558.86, while petitioners were to pay Engr. Lumbay PHP 650,760.42, both with legal interest.

• Finality of G.R. No. 243145: Perfect Dimension and Engr. Guevarra’s petition in G.R. No. 243145 was denied by minute resolution on January 28, 2019 due to a defective affidavit of service and late filing, with the Court additionally noting the absence of reversible error. The denial became final and executory; an Entry of Judgment was issued.

• Delay and Contract Extension: Petitioners maintained that respondents incurred the full 373 days of delay and that no extension was approved or authorized by them; the supposed extensions were ineffective.

• Liability for Inefficiency and Defective Works: Petitioners argued that respondents were guilty of inefficiency, poor workmanship, and failure to complete the project on time, entitling them to actual damages, indemnification for unrealized profits, and moral damages. They insisted that Perfect Dimension and Engr. Guevarra were not entitled to unpaid billings, nor Engr. Lumbay to his professional fees and attorney’s fees.

• Proof of Actual Damages: Petitioners asserted that the payment certifications and certified list of expenses they submitted were sufficient and competent evidence to prove actual damages, contrary to the findings of the CIAC and CA.

• Approval of Extension and Owner-Caused Delay: Respondents Perfect Dimension and Engr. Guevarra countered that the project owner, through its project manager Engr. Lumbay and by petitioner Aguila’s own participation in coordination meetings, approved the contract extensions and modifications. They argued that delay resulted from petitioner Aguila’s failure to act promptly on change orders and requests, not from their own fault.

• Insufficiency of Evidence on Defective Works and Damages: They contended that the photographs and certification from Arch. Salamanca were not clear and convincing proof of defective works; the CIAC’s original factual findings were more in accord with law. They further argued that the CA gravely erred in awarding temperate damages, attorney’s fees, and costs of arbitration, and in denying their own claims for moral damages and attorney’s fees.

• Procedural and Jurisdictional Objections: Both respondents argued that the petition raised pure questions of fact, which are not reviewable under Rule 45, and that none of the recognized exceptions applied. Engr. Lumbay added that the CA erred in modifying the CIAC’s Final Award, as the scope of judicial review over arbitral awards is limited to the arbitrator’s conduct and the integrity of the process, not to errors of fact or law.

• Contract Extension: Whether a contract extension binds a party who did not approve it.
• Liability for Damages: Whether contractors and project managers are liable for damages for the delays and inefficiencies in the performance of their undertakings.
• Payment Certifications as Evidence: Whether payment certifications and certified list of expenses can be classified as commercial documents and used as evidence to prove damages.

• Contract Extension: The Court did not rule on the merits of this question. The petition was dismissed on the preliminary ground of res judicata by prior judgment, the identical issue having been conclusively settled in the final and executory minute resolution in G.R. No. 243145. The query, moreover, is a question of fact beyond the limited review under Rule 45.

• Liability for Damages: Not reached. The entire petition was barred by res judicata, the prior final judgment having adjudicated the same subject matter and causes of action between the same parties. The Court declined to re-examine the factual findings already deemed sustained.

• Payment Certifications as Evidence: Not resolved on the merits for the same reasons. The res judicata effect of the earlier final disposition foreclosed any re-litigation, and the question was factual in nature, falling outside the scope of a petition for review on certiorari.

• Minute Resolution as a Judgment on the Merits — A minute resolution dismissing a petition for failure to comply with formal and substantive requirements effectively affirms the challenged decision, together with its findings of fact and legal conclusions, and constitutes an actual adjudication on the merits. Such a resolution is a binding precedent for the same parties and issues, though not for other parties or subject matters. Applied here, the minute resolution in G.R. No. 243145 was treated as a final judgment on the merits sustaining the Court of Appeals’ Decision.

• Res Judicata — Bar by Prior Judgment — Under Rule 39, Section 47(b) of the Rules of Court, a final judgment on the merits rendered by a court of competent jurisdiction bars a subsequent action between the same parties involving the same subject matter and cause of action. The requisites are: (1) finality of the former judgment; (2) jurisdiction of the court over the subject matter and the parties; (3) a judgment on the merits; and (4) identity of parties, subject matter, and causes of action. All elements were present: the minute resolution in G.R. No. 243145 was final and executory; the Supreme Court had jurisdiction; the dismissal was an adjudication on the merits; and the parties, the Letter of Award, and the breach-based claims were identical.

• Res Judicata — Conclusiveness of Judgment — Under Rule 39, Section 47(c), where there is identity of parties but not of causes of action, the first judgment is conclusive only on matters actually and directly adjudged. The case reiterates the distinction between bar by prior judgment (absolute bar) and conclusiveness of judgment (issue preclusion).

• Immutability of Judgment — Once a decision becomes final and executory, it becomes immutable and unalterable; the court loses jurisdiction to amend, modify, or alter it, except for clerical errors, nunc pro tunc entries, void judgments, or supervening events that render execution unjust. The final minute resolution in G.R. No. 243145 could no longer be disturbed, and the present petition could not circumvent that finality.

• “When a minute resolution denies or dismisses a petition for failure to comply with formal and substantive requirements, the challenged decision, together with its findings of fact and legal conclusions, are deemed sustained.” — From Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue; used to establish that the minute resolution in G.R. No. 243145 was a disposition on the merits with binding effect.

• “There is ‘bar by prior judgment’ when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action.” — From Spouses Ocampo v. Heirs of Dionisio; applied to find all elements of bar by prior judgment present.

• “[R]es judicata requires that stability be accorded to judgments. Controversies once decided on the merits shall remain in repose for there should be an end to litigation which, without the doctrine, would be endless.” — From Monterona v. Coca-Cola Bottlers Philippines, Inc.; underscored the policy rationale for dismissing the petition.

• Philippine Health Care Providers, Inc. v. Commissioner of Internal Revenue, 616 Phil. 387 (2009) — Established that a minute resolution dismissing a petition constitutes an adjudication on the merits and may operate as res judicata as to the same parties and issues. Applied to hold that the minute resolution in G.R. No. 243145 was a final judgment on the merits.

• Spouses Ocampo v. Heirs of Dionisio, 744 Phil. 716 (2014) — Articulated the distinction between res judicata as bar by prior judgment and as conclusiveness of judgment, and enumerated the requisites of the former. The requisites were found fully satisfied.

• Monterona v. Coca-Cola Bottlers Philippines, Inc., 845 Phil. 556 (2019) — Reiterated the purpose of res judicata to accord stability to judgments and prevent endless litigation. Cited to emphasize the necessity of dismissing the petition.

• Heirs of Arania v. Intestate Estate of Sangalang, 822 Phil. 643 (2017) — Clarified the test for identity of causes of action: whether the same evidence would sustain both actions. The Court found absolute identity of causes of action because both proceedings required the same evidence.

• Republic v. Dagondon, 785 Phil. 210 (2016) — Enunciated the principle of immutability of final judgments. Relied upon to underscore that the final resolution in G.R. No. 243145 could no longer be altered.

• Rule 39, Section 47, Rules of Court — Defines the effect of judgments and final orders, specifically paragraphs (b) and (c), which codify res judicata in the concepts of bar by prior judgment and conclusiveness of judgment. The Court applied paragraph (b) to bar the petition, finding all requisites satisfied.

• Rule 45, Section 2, in relation to Rule 56, Section 5(a), Rules of Court — Governs the reglementary period for filing a petition for review on certiorari. Cited as the basis for the denial of the petition in G.R. No. 243145 due to late filing, which contributed to the finality of that judgment.

Gesmundo, C.J. (Chairperson), and Rosario, J., concurred. Zalameda and Marquez, JJ., were on official business and took no part.