Estomo v. Civil Service Commission

GAERLAN, J.:

This Petition for Review on Certiorari1 assails the Decision2 dated August 31, 2018 and the Resolution3 dated July 19, 2019 of the Court of Appeals (CA) in CA-G.R. CV No. 04284-MIN. The CA reversed the Decision4 dated August 8, 2013 of the Regional Trial Court (RTC) of Cagayan De Oro City, Branch 20, in Civil Case No. 98-123. In reversing the RTC Decision, the CA declared that the obligation of respondent Civil Service Commission (CSC) Regional Office No. X (CSC Region X), as represented by the Regional Director, CSC Region X, is deemed extinguished.5 The Facts On April 29, 1997, CSC Region X Director IV Vivencio N. Muego, Jr. sent a Notice/Letter of Award to Engr.

Domingo F. Estomo (Estomo) of Domingo F. Estomo Trading & Construction, the pertinent portion reads: In conformity with Resolution No. 01, s. 1997 of the PBAC, this Office and the amended implementing Rules and Resolutions x x x, the contract for complete construction of the third floor of CSC-X building IS HEREBY AWARDED to your firm in the amount of One Million Four Hnndred Seventy Five Thousand Seven Hundred Eighty Nine Pesos & Seven Centavos (P1,475,789.07), the following requirements to be completed within seven (7) days from receipt of this letter[.]6 On May 6, 1997, CSC Region X and Domingo F. Estomo Trading & Construction, represented by Estomo, executed a Contract For Works.7 Pursuant to the Notice to Commence Work,8 the project works commenced on May 8, 1997. The target date of completion was on October 5, 1997.9 Payments were made on a staggered basis: Date Voucher Number Amount July 14, 1997 2977003 P251,808.46 August 15, 1997 2978001 P287,474.41 September 26, 1997 2979014 P372,824.6310 Estomo wrote several letters to CSC Region X regarding the extra works needed for the complete construction of the third floor of CSC-X building (project).

The letter dated July 7, 1997 was about the additional wall partition, aluminum swing door, one unit septic tank, and the roofings. The extra works for the toilet concrete slabs were mentioned in the Letter dated July 15, 1997,11 the kitchen cabinets on the Letter dated July 18, 1997,12 and the baseboard walling discussed on the Letter dated July 23, 1997.13 On September 5, 1997,14 Estomo claimed that all extra works amounted to P206,008.66, broken down as follows: 1. Additional Wall Partition P17,947.43 2.

Door 3 Aluminum Swing Door P28,473.83 3. Additional One Unit Septic Tank P22,343.37 4. Roofings P10,000.00 5.

Toilet Concrete Slabs P10,026.75 6. Kitchen Cabinets P23,020.23 7. Endwall Roof Flashing P58,937.27 8.

Base Board Walling P35,259.78 TOTAL EXTRA COST P 206,008.6615 On the other hand, the following extra works were denied by Estomo due to financial constraints: (1) pebble finish at the front wall of the building; (2) fire escape; and (3) additional 400 amperes main breaker, including its accessories.16 In the meantime, Estomo invited the CSC inspectorate team to conduct a final inspection of the project on September 26, 1997.17 The CSC building was eventually inaugurated on October 6, 1997.18 On November 24, 1997, Estomo sent anew a demand letter, wherein the total extra works increased to P261,963.82: 1. Wood Partition P17,947.43 2. Door 3 Aluminum Swing Door P28,473.83 3 .

Additional One Unit Septic Tank P22,343.37 4. Roofings P10,000.00 5. Toilet Concrete Slabs P10,026.75 6.

Kitchen Cabinets P23,020.23 7. [Acoustic] Board P14,415.04 8. Endwall Roof Flashing P58,937.27 9.

Base Board Walling P35,259.78 10. Fixed Glass Window Field Office P8,100.10 11. Additional One Set Steel Awning Window - 4 P11,155.25 12.

CHD Walling P16,968.12 13. Painting wood partition P5,305.50 TOTAL EXTRA COST P261,963.8219 (Emphasis supplied) Estomo sent several demand letters to the CSC.

Likewise, he submitted the following documents requested by the CSC in its letter dated December 16, 1997: (1) Inspection Report; (2) Contractor Statement of Work Accomplished; (3) Progress Chart (S-Curve); (4) Statement of Time Elapsed and Percentage of Work Accomplished; (5) Certificate of Acceptance; and (6) Certificate of Project Completion.20 On January 15, 1998, the CSC sent a letter to Estomo advising him to make the necessary rectification or completion of deficiencies as reflected in the Report of the Technical Committee of the City Engineering Office (CEO). According to the Report, some items in the project were defective, and were not in accordance with the specifications given by the CEO.21 On January 24, 1998, Estomo sent a final demand letter for the total amount of P604,278.60, representing the balance from the Contract for Works and the extra works.22 Estomo remained unpaid.

Thus, he filed before the RTC a Complaint23 for Specific Performance, Sum of Money plus Damages against the CSC. In its Answer,24 the CSC admitted the extra works, but denied their completion. The CSC averred that no turnover transpired, and that the keys to the building were delivered by Estomo merely for pre-audit inspection.

The CSC maintained that it is willing to pay Estomo the total amount of P82,000.00 upon completion of the deficiencies and compliance by Estomo of the necessary documents required by the CEO which consists of the following: (1) photocopy of the voucher of preceding billing; (2) Contractor's Affidavit; (3) Certificate of Compliance to Republic Act (R.A.) No. 6685; (4) progress photographs; (5) approved as-built plans; and (6) revised PERT/CPM and prompt rectification of the specific deficiencies enumerated by the CEO Inspectorate Team.25 For its counterclaim, the CSC prayed that Estomo be held liable for the following: (a) P2,500,000.00 for the uncompleted work and for having been deprived of the project; (b) P1,000,000.00 exemplary damages; and (c) liquidated damages equivalent to 15% of the total contract price in the Contract for Works.26 Pre-trial was conducted. Motion for Partial Judgment on the Pleadings Estomo filed a Motion for Partial Judgment on the Pleadings.27 In the said Motion, Estomo averred that the CSC essentially admitted that the Contract for Works has been completed.28 Thus, the only issue left to be resolved is that of the completion and cost of the extra works.

Consequently, Estomo prayed for the payment of P323,314.75, representing the unpaid balance under the Contract for Works.29 In its Order30 dated March 6, 2000, the RTC found that the Motion for Partial Judgment on the Pleadings was not controverted by the CSC, to the effect that liability has been admitted, and that funds are available for its payment. Before payment can be made, Estomo must comply within 10 days the requirements mandated by Presidential Decree (P.D.) No. 1594,31 Government Accounting and Auditing Manual and Commission on Audit (COA) Circulars.32 Trial ensued. On March 5, 2001, the CSC filed a Motion to Tender Payment in Court.

The CSC alleged that Estomo's failure to comply with the above-enumerated documents made it impossible for the CSC to use the subject facilities or project, to the prejudice of the general public. As such, the CSC prayed to be allowed by the RTC to tender payment by way of escrow deposit, and to provisionally use the third floor premises of the CSC Region X Building. Evidenced by Official Receipt No. 1084353 dated March 7, 2001, the CSC tendered payment in Court by way of escrow deposit in the amount of P217,174.46,33 computed as follows: Contract for Works P 1,475,789.07 Previous Payments made by the CSC: July 14, 1997 P 363,296.34 August 15, 1997 P 405,220.45 September 26, 1997 P 480,577.06 Balance for the Contract for Works P 226,695.22 Balance for the extra works P 144,735.98 Total balance (Contract for Works plus extra works) P 371,431.20 Deductions: Tax P 25,998.79 Recoupment Fee P 31,766.36 Retention Fee P 14,471.60 deficiencies P 82,000.00 Net P 217,174.4234 In the meantime, on March 13, 2001, the CSC received a folder containing the documents demanded from Estomo.

Upon perusal of Cagayan de Oro City Engr. Jorie Bingona (City Engr. Bingona), the documents submitted were mutilated, and not properly signed by the concerned parties.

Therefore, City Engr. Bingona requested Estomo and the CSC to determine together and submit a joint evaluation of the following: (1) actual accomplishment on the project; and (2) assessment whether the specifications are in accordance with the Contract for Works.35 In an Order36 dated March 21, 2001, the RTC granted the Motion To Tender Payment in Court filed by the CSC. Meanwhile, Estomo prayed for the release of the full amount tendered by the CSC.

The CSC filed another Motion. For this instance, it requested the RTC to direct Estomo to coordinate with the CEO for the processing and evaluation of the documents required for the final payment of the Contract for Works. Also, the CSC asked that the CEO be ordered to render a report on its evaluation of the documents submitted by Estomo.37 The RTC denied the Motion.

According to the RTC, it has no legal basis to order the CEO to render a report since the latter is not a party to the case.38 As regards the release of the amount tendered by the CSC, the RTC noted that Estomo made the same prayer in his Motion for Partial Judgment on the Pleadings, the resolution of which was held in abeyance subject to Estomo's submission of some documents. This time, the documents were already submitted and marked in evidence, hence, the RTC finally granted Estomo's prayer, and allowed the release of the full amount tendered by the CSC.39 Insistent, the CSC filed a Motion to Dismiss on the ground of lack of jurisdiction. The CSC averred that it is an incorporated government agency, which is immune from suit.

It further alleged that the COA, and not the RTC, has jurisdiction over the subject matter of the claim. The CSC also questioned the release in favor of Estomo the full amount tendered and argued that only the sum of P97,060.19 pertaining to the original Contract for Works must be released.40 The RTC denied the Motion to Dismiss, and ruled that the CSC is estopped from raising the issue of lack of jurisdiction because it has actively taken part in every proceedings of the case since it was filed in 1998. The RTC emphasized that the immunity from suit of the State cannot be invoked to perpetrate an injustice, especially since in this case, the government has already benefited with the completion of the Contract for Works.41 Moreover, the CSC waived its immunity from suit when it filed a counterclaim.42 In the same Order, the RTC found that the full amount of P217,174.46 shall be released in favor of Estomo based on equity and fair play, and the principle of quantum meruit since the project was 95% completed.43 Furthermore, the RTC held that there is no reason left to deny Estomo of the total amount tendered by the CSC.

First, the CSC admitted the completion of the project. Second, the supporting documents were already submitted and marked in evidence. Finally, the interest of the government is more than sufficiently protected when the CSC deducted the 10% retention fee in the amount of P76,851.68, and P82,000.00 for the alleged deficiencies on the Contract for Works.44The dispositive portion of this Order dated February 8, 2002 reads: WHEREFORE , [CSC]'s motion to dismiss is accordingly denied for want of merit.

[O]n the other hand, [Estomo's] prayer for the release of the full amount of P217,174.46 (less the P97,060.19 already released) is hereby granted.

Let the said amount be released to [Estomo] without further need of submission of the original copy of the pertinent receipt/s which are in the possession of defendant CSC, and, of course, without prejudice to further hearing and accounting by the parties with regard to the amount still due, if any, relative to the project subject-matter of this case. SO ORDERED.45 (Emphasis in the original) The CSC filed another Motion for Reconsideration, which was denied by the RTC in its Order dated March 4, 2008.46 Ruling of the RTC Faced with the issue on the outstanding obligation of CSC to Estomo, the RTC mainly took into consideration the fact that the original Contract for Works and the subsequent extra works were already completed and used by the CSC since 1997. As such, it is unjust not to require the CSC to pay its outstanding balance.

The RTC found that the balance from the original Contract for Works is P342,314.78 and the total cost for the extra works is P261,963.82. Thus "the total of [Estomo]'s claim representing the balance of the original and extra works is P604,278.60. Considering that x x x CSC made a tender of payment of P217,174.46 in [the] early year of 2002 which was already turned over to [Estomo] then, the remaining balance at present is in the amount of P387,104.14."47 Hence, in its Decision48 dated August 8, 2013, the RTC disposed as follows: WHEREFORE , premises considered, judgment is hereby rendered in favor of the plaintiff [Estomo] and against the herein defendant [CSC].

Accordingly, defendant CSC is ordered to pay the plaintiff the following: 1. P387,104.14 representing the remaining outstanding obligation with legal interest of 6% per annum from the date of the filing of this case that is on February 20, 1998 and 12% per annum from the date the judgment becomes final and executory until its satisfaction. 2.

P20,000.00 by way of reasonable attorney's fees, and 3. The cost of the suit. SO ORDERED.49 (Emphases in the original) A Motion for Reconsideration was filed by the CSC, but was denied in an Order dated November 4, 2014.50 Undeterred, the CSC filed an appeal before the CA, where it mainly argued that the total amount of extra works and change order is P144,735.98, not P261,963.82, as evidenced by the CSC Resolution No. 97-1101 Re: Additional Work Order on the CSC Third Floor Extension dated November 28, 1997.

The CSC also maintained that Estomo may only claim P371,411.20 from the Contract for Works after the remaining balance has been subjected to several deductions such as value added tax, recoupment fee, retention money and deficiencies. Further, the release of the amount of P217,174.16 by virtue of the RTC Order dated February 8, 2002 fulfilled the obligation of the CSC, consequently absolving the latter from any liability to Estomo. Lastly, the CSC claims liquidated damages in the amount of P217,174.16 in view of Estomo's failure to complete the Contract for Works and extra works on time.51 Ruling of the CA The CA partly granted the appeal filed by the CSC.52 Evaluating Estomo's failure to substantiate his claim for the extra works, the CA noted that: Estomo's demand for the payment of extra works in the amount of P261,963.82 is anchored on the letters dated July 7, 1997, July 15, 1997, July 18, 1997, July 23, 1997, September 5, 1997, September 23, 1997, November 3, 1997 and November 24, 1997 sent by him to the CSC.

However, a perusal of these documents shows that the same were mere letters "requesting" or "suggesting" to the CSC the extra works needed to be done on the project.

In fact, the letters were subject to the approval of the CSC as suggested by the phrases "Your immediate action on this matter is highly appreciated", "For your comments and concurrence", "Please advise the undersigned' and "Your immediate action on this request is highly much appreciated" , among others.

Since these letters were mere requests and there was no showing that the CSC approved the amounts indicated therein by Estomo, they cannot be made as basis for the amounts demanded by him.53 On the other hand, the CSC was able to present Resolution No. 97-1101 dated November 28, 1997. The CA noted that the Resolution was executed on a date later than the letters of Estomo. Also, the said Resolution showed that the total approved amount of extra works and change order is P144,735.98 only.54 As regards the remaining outstanding obligation due on the original Contract for Works, the CA found that the detailed computation of previous payments made by the CSC shows that the remaining balance due to Estomo is P371,431.20.

When subjected to tax, recoupment fee, retention fee, and deficiencies , the net amount is P217,174.42. Meanwhile, Estomo failed to provide sufficient counter-argument as to the impropriety of the deductions, especially that of the deficiencies.55 Moreover, the CA ruled that the obligation of the CSC to Estomo is deemed extinguished in as much as the amount of P217,174.46 paid by the former through escrow deposit was already released in favor of the latter.56 The CA further held that contrary to the RTC Order dated August 8, 2013, Estomo has no right to receive the additional amount of P387,104.14 as it will only constitute unjust enrichment.57 The CA, however, denied the claim for liquidated damages. While the Contract for Works states that the parties agree to pay liquidated damages in case of breach, the CSC did not show when the delay was incurred by Estomo.

Neither did the CSC present the value of the completed portion of the project as verified by the office concerned.58 The decretal portion of the CA decision reads: WHEREFORE , the appeal is hereby PARTLY GRANTED. The Decision dated August 8, 2013 and the Order dated November 4, 2014 of the Regional Trial Court, 10th Judicial Region, Branch 20, Cagayan de Oro City in Civil Case No. 98-123 for "Specific Performance, Sum of Money plus Damages " is REVERSED.

Defendant-appellant Civil Service Commission's obligation to plaintiff-appellee Domingo Estomo is deemed EXTINGUISHED in as much as the money in the amount of P217,174.46 paid by the former through escrow deposit was already released and paid to the latter. SO ORDERED.59 Estomo filed his Motion for Reconsideration, but was eventually denied by the CA in its Resolution60 dated July 19, 2019. Undeterred, Estomo filed the present Petition for Review on Certiorari.

In a Resolution61 dated October 2, 2019, the Court required the CSC to file its Comment. The CSC filed its Comment62 dated January 14, 2020. Estomo thereafter filed his Reply.63 For the proper resolution of the instant case, the following issues must be resolved: (1) whether the case involves a question of fact, beyond the office of a Petition for Review on Certiorari under Rule 45 of the Rules of Court; (2) whether the deductions on the Contract for Works are valid; (3) whether Estomo is entitled to his claim for payment for extra works in the amount of P261,963.82; and (4) whether the retention money shall be released in favor of Estomo.

Ruling of the Court I. Question of Fact As a rule, issues dealing with the sufficiency of evidence and relative weight accorded to it by the lower courts cannot be raised in a Petition for Review on Certiorari under Rule 45. The Court does not review factual questions raised under Rule 45, which must be confined to questions of law. It is also not the function of the Court to analyze nor weigh all over again evidence already considered in the proceedings below.64 Nevertheless, the Court has enumerated several exceptions to this rule.

In Alburo v.

People,65 the Court declared that a review of the factual findings of the lower court is proper when, among other reasons, the findings of the CA are contrary to those of the trial court.66 As applied, a careful re-examination of the evidence on record is necessary to detem1ine whether it was the RTC or the CA that properly appreciated certain relevant facts, such as the previous payments made, the total cost for the extra works approved, the percentage of work actually completed, and the propriety of the deductions and retention fee withheld. There is a need to review the records to confirm whether Estomo, as he claims, is entitled to the balance off>387,102.58 plus legal interest, attorney's fees, and damages. II.

Propriety of the deductions in the original Contract for Works It is argued that the contract price of P1,475,789.07 in the original Contract for Works only covers the "item, description, quantity, unit cost, and total cost"67 of the materials used. The retention fee and the other deductions were, according to Estomo, made by the CSC unilaterally and without basis. The Court does not agree.

The Contract for Works executed by the CSC and Estomo concerns a government infrastructure project, hence, governed by the provisions of Presidential Decree (P.D.) No. 159468 and its implementing rules and regulations (IRR). Accordingly, the Contract for Works expressly states: 7. The Implementing Rules & Regulation of P.D. 1594, as amended, the guidelines regarding contract price adopted and approved by the government, the provision of P.D. 1870, and other laws, decrees and administrative issuance or government contracts, are hereby made part and will be applied in this Contract.

x x x69 Government infrastructure projects are paid on installments called progress payments made upon the request of the contractor once a month or for an accomplishment of at least P1 Million.70 Estomo, as contractor, received a total amount of P912,107.44 from the three progress payments made by the CSC on July 14, 1997, August 15, 1997,and September 26, 1997. As it turns out, the amount received by Estomo from each progress payment is the net amount calculated after deductions for retention money, recoupment, and tax. Below is the break down of the progress payments, as computed by the CSC: Date of Payment Gross Amount Tax Retention Recoupment (Cash Advance) Net Amount Released July 14, 1997 P363,296.34 P19,816.16 P36,329.63 P55,342.09 P251,808.46 August 15, 1997 P405,220.45 P21,881.90 P40,522.05 P55,342.09 P287,474.41 September 26, 1997 P480,577.06 P28,834.62 - P78,917.81 P372,824.6371 TOTAL P1,249,093.85 70,532.68 The Court now proceeds to determine if the foregoing deductions were in accordance with the proper law, rules, and guidelines.

A. Retention Money Retention money is a form of security which seeks to ensure that the work is satisfactorily done, and on schedule. It is withheld by the procuring entity (i.e., the government) from progress payments due to the contractor to guarantee indemnity for uncorrected discovered defects and third-party liabilities in infrastructure projects.72 The 1992 Implementing Rules and Regulations (1992 IRR) of P.D. No. 1594 73 states that progress payments are subject to retention money equivalent to ten percent (10%) of the total amount due to the contractor prior to any deduction:74 CI 6 - RETENTION MONEY 1. Progress payments are subject to retention of ten percent (10%) referred to as the "retention money."

Such retention shall be based on the total amount due to the contractor prior to any deduction and shall be retained from every progress payment until fifty percent (50%) of the value of works, as determined by the Government, are completed. If, after fifty percent (50%) completion, the work is satisfactorily done and on schedule, no additional retention shall be made; otherwise, the ten percent (10%) retention shall be imposed.75 Retention money is allowed only until 50% of the value of works are completed, and beyond this threshold, no additional retention shall be made.76 It is intended to cover uncorrected discovered defects and third party liabilities and the total retention money shall then be due for release upon final acceptance of the works.77 Here, the CSC correctly deducted the 10% retention money from the gross amount of the following progress payments due to Estomo: (1) P36,329.63 from the gross amount of P363,296.34 for the progress payment made on July 14, 1997; and (2) P40,522.05 from the gross amount of P405,220.45 for the progress payment dated August 15, 1997.

A total gross amount of P768,516.79,78 comprising 52.075% of the original contract price, had been paid by the time of the second progress payment on August 15, 1997. In accordance with the 1992 IRR of P.D. No. 1594, no retention money was deducted from the gross amount of P480,577.06 on the progress payment dated September 26, 1997. Thus, the CSC correctly deducted the 10% retention money from the progress payments made until 50% of the value of the works.

B. Advance Payments/Recoupment The 1992 IRR of P.D. No. 1594 allows the government to make advance payments to contractors in an amount equivalent to 15% of the total contract price, subject to recoupment from periodic progress billings submitted by the contractor:79 CI 4 - ADVANCE PAYMENT 1. The Government shall, upon a written request of the contractor which shall be submitted as a contract document, make an advance payment to the contractor in an amount equal to fifteen percent (15%) of the total contract price, to be made in lump sum or at the most two installments according to a schedule specified in the Instructions to Bidders and other relevant Tender Documents. 2.

The advance payment shall be made only upon the submission to and acceptance by the Government of an irrevocable standby letter of credit of equivalent value from a commercial bank or a guarantee payment bond, callable on demand, issued by a surety or insurance company duly licensed by the Office of the Insurance Commissioner and confirmed by the implementing agency. 3. The advance payment shall be repaid by the contractor by deducting 20% from his periodic progress payments, with the first repayment to be made when the contract value of the work executed and materials delivered shall equal or have exceeded twenty percent (20%) of the contract price and further refunds shall be done thereafter at monthly intervals.

THE FIRST WORK ACCOMPLISHMENT EQUIVALENT TO 20% OF THE CONTRACT PRICE SHALL NOT BE SUBJECT TO THE 20% DEDUCTION. Records show that on May 14, 1997 , the CSC made an advance payment to Estomo in the amount of P221,368.35, which is within the 15% limit prescribed by the rules.80 In tum, Estomo partially repaid the advance payment when the following amounts were deducted from the progress payments: Date Recoupment (Cash Advance) July 14, 1997 P 55,342.09 August 15, 1997 P 55,342.09 September 26, 1997 P 78,917.8181 TOTAL P189,601.99 C. Withholding taxes Anent the deductions made by CSC representing withholding taxes, the rates applied by CSC do not appear to conform with the prevailing and applicable tax rates at the time of the Contract for Works. In 1997, when the Contract for Works was done and the three progress payments were made, the applicable law on withholding of value-added tax (VAT) is R.A. No. 8241,82 amending R.A. No. 7716.83 R.A. No. 8241 came into effect on January 1, 1997.84 Pertinently, Section 9 of R.A. No. 7716, as amended by Section 5 of R.A. No. 8241, imposes upon the government or any of its political subdivisions instrumentalities or agencies, including government-owned or -controlled corporations the duty to withhold VAT at the rate of 6% on gross receipts for services rendered by the contractor: Sec. 9.

Section 110(c) of the National Internal Revenue Code, is hereby further amended to read as follows: '(c) Withholding of Creditable Value-Added Tax. - The government or any of its political subdivisions, instrumentalities or agencies, including government-owned or -controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods from sellers and services rendered by contractors which are subject to the value-added tax imposed in Sections 100 and 102 of this Code, deduct and withhold the value-added tax due at the rate of three percent (3%) of the gross payment for the purchase of goods and six percent (6%) on gross receipts for services rendered by contractors on every sale or installment paymentwhich shall be creditable against the value-added tax liability of the seller or contractor : Provided, however, That in the case of government public works contractors, the withholding rate shall be eight and one-half percent (8.5%):Provided, further, That the payment for lease or use of properties or property rights to nonresident owners shall be subject to ten percent (10%) withholding tax at the time of payment.

For this purpose, the payor or person in control of the payment shall be considered as the withholding agent.85 (Emphasis and underscoring supplied) Relatedly, Section 102 of the National Internal Revenue Code (NIRC), as amended86 provides that VAT shall be levied, assessed and collected from the gross receipts derived from the sale or exchange of services, which includes those performed or rendered by construction and service contractors. The tax deductions made by CSC on the three progress payments, are broken down as follows: Date Gross Amount Tax 10% Retention Money July 14, 1997 P363,296.34 P 19,816.16 P36,329.63 August 15, 1997 P405,220.45 P 21,881.90 P40,522 .05 September 26, 1997 P480,577.06 P 28,834.62 - However, the CSC never provided an explanation or breakdown of its computation for the tax deducted from the progress payments. Nevertheless, the formula can be derived by working backwards given the foregoing amounts.

As it appears, the CSC withheld VAT computed at the then-prevailing rate of 6% on the progress payments after the 10% retention money was deducted from the gross amount. In particular, for the August 15, 1997 progress payment, the CSC arrived at the tax deduction of P 21,881.90 with the following formula: Gross Amount P405,220.45 Less: 10% Retention Money P40,522.05 Tax Base used by the CSC P364,698.4 x VAT rate 6%