The Commission on Audit (COA) has dismissed, due to pending Supreme Court (SC) cases, the petition for money claim filed by MTD Philippines, Inc. which sought the payment by the Calamba City government of P755,006,011.34 for the botched construction of the CALABARZON Regional Government Center in the city in 2012.
"Wherefore, the Petition for Enforcement and Payment of Arbitral Award of MTD Philippines, Inc. against the City Government of Calamba, Laguna, for payment of final arbitral award as just compensation for the CALABARZON Regional Government Center Project in the total amount of P755,006,011.34, plus 6% interest per annum until full payment is hereby dismissed for being premature due to the pending court proceedings between the parties," COA ruled.
It said the pending cases at the SC were filed by both MTD and the Calamba City local government which separately challenged the 2019 ruling of the Court of Appeals (CA).
The issue stemmed from the joint venture agreement (JVA) entered into by MTD and Calamba City on Dec. 21, 2012 for the development of the CALABARZON Regional Government Center, which would house all the regional offices of national line agencies in CALABARZON.
Under the JVA, MTD would construct the Regional Government Center on a three-hectare lot located in Barangay Mapagong, Calamba City. The lot was donated by New Vista Properties, Inc. to Calamba City.
On Dec. 11, 2015, MTD sent a Notice of Default to the city of Calamba citing the latter's "failure to deliver clean possession of the site and direct access to SLEX (South Luzon Expressway)." MTD claimed that such failure "materially affected [its] interest in the project due to lack of lessees."
Calamba City sent a letter dated Jan. 7, 2016 to MTD contesting the Notice of Default and denied that it had the obligation to provide access to SLEX. On Jan. 25, 2016, MTD sent a Notice of Termination to the city of Calamba.
While the Calamba City expressed willingness to explore solutions and requested that the termination be held in abeyance, MTD only cited its termination of the JVA and demanded that the city pay P1,314,806,295.91, which represents costs incurred and liquidated damages.
The case reached the Construction Industry Arbitration Commission (CIAC) on Oct. 6, 2017. On July 16, 2016, the Arbitral Tribunal of the CIAC found the position of MTD to be more convincing and plausible and ruled that Calamba City should pay MTD a total of P755,006,011.34.
Both Calamba City and MTD separately filed petitions of review before the CA. The city prayed for the reversal of the award, while MTD sought partial review of the other items of its money claim, such as the financing cost amounting to P218,192,040.49, cost of capital amounting to P318,205,032.48, administrative cost amounting to P90,045,703.09, operations and maintenance expenses amounting to P25,467,865.51, recovery of value added tax amounting to P163,701,655.56, and arbitration costs, attorney's fees, and litigation expenses.
On July 18, 2019, the CA denied Calamba City's petition as it granted partly the case filed by MTD on the payment of arbitration costs.
Both MTD and Calamba City elevated the issue before the SC in separate petitions filed in May 2021.
Due to the pendency of the SC petitions, COA said the petition filed by MTD before the tax court is "premature" due to the pending court proceedings between the parties.
"While this Commission exercises general jurisdiction over settlement of all debts and claims of any sort due from or owing to the government or any of its subdivision, agencies, and instrumentalities pursuant to Section 26 of Presidential Decree No. 1445, the state's liability must first be settled and determined with finality," COA ruled.
The decision was issued by COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Cafe Pondoc and Mario G. Lipana.