G.R. No. 200250, August 06, 2014
UPSI PROPERTY HOLDINGS, INC., Petitioner, v. DIESEL CONSTRUCTION CO., INC., Respondent.
D E C I S I O N
Summary of Awards:cralawlawlibrary
Wherefore, judgment is hereby rendered and the AWARD of monetary claims is made as follows:cralawlawlibrary
CLAIMANT: Description Amount Claimed Award Unpaid Balance of Construction Agreement P3,943,000.00 P3,661,692.60 Additional Labor Costs 1,509,756.00 0.00 Interest 690,942.23 Attorney’s Fees 1,000,000.00 366,169.00 Total P7,143,698.23 P4,027,861.60 RESPONDENT: Description Amount Claimed Award Cost to Complete the Project P1,321,500.92 P 0.00 Liquidated Damages 4,340,000.00 0.00 Attorney’s Fees 900,000.00 0.00 Total P6,561,500.92 0.00 Net Award to Claimant: P4,027,861.60
Claimant, Diesel Construction Corporation, Inc., is hereby awarded the amount of FOUR MILLION TWENTY-SEVEN THOUSAND EIGHT HUNDRED SIXTY-ONE PESOS AND SIXTY CENTAVOS plus legal interest of six percent (6%) per annum on the said amount computed from June 4, 2001 and at the rate of twelve percent (12%) per annum from the date of finality of the decision herein until fully paid.
Respondent is further ordered to pay the full cost of arbitration in the amount of TWO HUNDRED NINETY-EIGHT THOUSAND FOUR HUNDRED SIX PESOS AND THREE CENTAVOS and to reimburse the Claimant of all advances made in this regard.
WHEREFORE, premises considered, the petition is GRANTED and the questioned Decision is MODIFIED in this wise:cralawlawlibrary
a. The claim of petitioner UPSI for liquidated damages is GRANTED to the extent of PESOS: ONE MILLION THREE HUNDRED NINE THOUSAND AND FIVE HUNDRED (P1,309,500.00) representing forty-five (45) days of delay at P29,100 per diem;chanroblesvirtuallawlibrary
b. We hold that respondent [Diesel] substantially complied with the Construction Contract and is therefore entitled to one hundred percent (100%) payment of the contract price. Therefore, the claim of respondent Diesel for an unpaid balance of PESOS: TWO MILLION FOUR HUNDRED FORTY-ONE THOUSAND FOUR HUNDRED EIGHTY-TWO and SIXTY-FOUR centavos (P2,441,482.64), which amount already includes the retention on the additional works or Change Orders, is GRANTED, minus liquidated damages. In sum, petitioner UPSI is held liable to respondent Diesel in the amount of PESOS: ONE MILLION ONE HUNDRED THIRTY-ONE THOUSAND NINE HUNDRED EIGHTY-TWO and sixty four centavos (P1,131,982.64), with legal interest until the same is fully paid;chanroblesvirtuallawlibrary
c. The parties are liable equally for the payment of arbitration costs;chanroblesvirtuallawlibrary
d. All claims for attorney’s fees are DISMISSED; andChanRoblesVirtualawlibrary
e. Since there is still due and owing from UPSI an amount of money in favor of Diesel, respondent FGU is DISCHARGED as surety for Diesel.
Costs de officio.
WHEREFORE, the Motion for Reconsideration of respondent Diesel Construction Co., Inc. is partially GRANTED. The liquidated damages are hereby reduced to P1,146,519.00 (45 days multiplied by P25,478.20 per diem). However, in accordance with the main opinion, We hold that petitioner is liable to respondent Diesel for the total amount of P3,661,692.64, representing the unpaid balance of the contract price plus the ten-percent retention, from which the liquidated damages, must, of course, be deducted. Thus, in sum, as amended, We hold that petitioner is still liable to respondent Diesel in the amount of P2,515,173.64, with legal interest until the same is fully paid.
The main opinion, in all other respects, STANDS.
WHEREFORE, Diesel’s petition is PARTIALLY GRANTED and UPSI’s Petition is DENIED with qualification. The assailed Decision dated April 16, 2002 and Resolution dated August 21, 2002 of the CA are MODIFIED, as follows:cralawlawlibrary
(1) The award for liquidated damages is DELETED; (2) The award to Diesel for the unpaid balance of the contract price of PhP 3,661,692.64 is AFFIRMED; (3) UPSI shall pay the costs of arbitration before the CIAC in the amount of PhP 298,406.03; (4) Diesel is awarded attorney’s fees in the amount of PhP 366,169; and (5) UPSI is awarded damages in the amount of PhP 310,834.01, the same to be deducted from the retention money, if there still be any, and, if necessary, from the amount referred to in item (2) immediately above.
In summary, the aggregate award to Diesel shall be PhP 3,717,027.64. From this amount shall be deducted the award of actual damages of PhP 310,834.01 to UPSI which shall pay the costs of arbitration in the amount of PhP 298,406.03.
FGU is released from liability for the performance bond that it issued in favor of Diesel.
Hence, the issue of legal interest was never raised, nor quibbled about by the petitioner, making it final and binding regardless of what the principal award may turn out to be.
An incisive scrutiny of the portion of the Supreme Court’s Decision stating that, “[The] award to Diesel for the unpaid balance of the contract price of Php3,661,692.64 is AFFIRMED.” only goes to show that such amount represents the balance of the contract price plus the ten-percent retention, from which the liquidated damages must be deducted; the difference or the net amount of which bears legal interest until fully paid as awarded by this Court. Hence, the confirmation by the Supreme Court that the final award should indeed be P3,661,692.64 addressed the question as to what should be the unpaid balance due to the private respondent. Logically, whatever the amount is awarded necessarily bears the legal interest as awarded previously by this Court.
We disagree with petitioner’s contention that the Supreme Court deleted the legal interest by its silence on that matter. If such was its intention, it should have also expressly declared its deletion together with its express mandate to remove the award of liquidated damages to herein petitioner.16
THE COURT OF APPEAL SERIOUSLY ERRED AND DECIDED IN A MANNER NOT IN ACCORDANCE WITH THE LAW AND PREVAILING JURISPRUDENCE WHEN IT RULED THAT:cralawlawlibrary
- CIAC IS ALLEGEDLY CORRECT IN ISSUING THE ASSAILED ORDER SINCE THE ISSUE OF LEGAL INTEREST WAS SUPPOSEDLY NEVER RAISED BY PETITIONER BEFORE THE SUPREME COURT IN ITS EARLIER PETITION, THEREBY CONSIDERING THE MATTER ALLEGEDLY AS ALREADY A SETTLED ISSUE. ON THE CONTRARY, PETITIONER HAS CONSISTENTLY PUT IN ISSUE CIAC’S ERRONEOUS IMPOSITION OF LEGAL INTEREST AS EARLY AS 28 DECEMBER 2001 IN ITS PETITION FOR REVIEW FILED BEFORE THE HONORABLE COURT OF APPEALS.
- IT WAS ALLEGEDLY CORRECT AND PROPER THAT CIAC SUPPOSEDLY CLARIFIED THE PROVISION ON PAYMENT OF INTEREST IN THE WRIT OF EXECUTION IT ISSUED ALLEGEDLY PURSUANT TO THE CONTEXT OF THE FINAL JUDGMENT RENDERED BY THE SUPREME COURT. ON THE CONTRARY, CIAC PURPOSELY CHANGED THE PROVISIONS OF THE SUPREME COURT’S DECISION TO FAVOR RESPONDENT DIESEL.18
x x x. A panoramic view of the case from its inception in the arbitral level to this Court and then to the Supreme Court reveals the context of the decisions rendered by the three (3) tribunals in its totality. The Supreme Court already took into context the previous decisions of public respondent CIAC and this Court which consistently included the payment of legal interest in their dispositive portions. Hence, the Supreme Court merely ruled on the current issues presented by petitioner which did not include legal interest. It is already an act of redundancy for it to repeat what had already been adequately settled and explained by public respondent CIAC and this Court.32
It will be noted that the award made by this Arbitral Tribunal for payment by the Respondent to the Claimant of the P298,406.03 costs of arbitration had been affirmed by the Supreme Court and that the latter decision has attained finality and immutability. Thus, even if there had been any error on the matter (on which this Arbitral Tribunal does not concede), it is much too late in the day to make the corresponding adjustments thereon.34chanrobleslaw
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:cralawlawlibrary
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:chanRoblesvirtualLawlibraryWhen the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.
When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
* Designated Acting Member in lieu of Associate Justice Martin S. Villarama, Jr., no part, per Special Order No. 1691-O, dated May 22, 2014.
** Designated Member per Raffle, dated March 21, 2012, in lieu of Associate Justice Presbitero J. Velasco, Jr., no part, being a ponente in related cases.
1 Penned by Associate Justice Franchito N. Diamante, with Associate Justices Mariflor Punzalan Castillo and Marlene Gonzales-Sison, concurring; rollo, pp. 58-70.
2 Id. at 99-100.
3 Id. at 251-271.
4 Id. at 270-271.
5 Id. at 481-482.
6 Id. at 484-508.
7 Id. at 509-535.
8 Id. at 544.
9 Id. at 714-715.
10 Id. at 717-741.
11 Id. at 743-758.
12 Id. at 759-760.
13 Id. at 791-800.
14 Penned by Associate Justice Martin S. Villarama, Jr., (now member of the Court), with Associate Justices Jose C. Reyes, Jr. and Normandie B. Pizarro, concurring. Id. at 827-841.
15 Id. at 47-55.
16 Id. at 67-68.
17 Id. at 69.
18 Id. at 1011.
19 Id. at 892-919.
20 Id. at 1082-1095.
21 Id. at 1028.
22 Teodoro III v. Atty. Gonzales, A.C. No. 6760, January 30, 2013, 689 SCRA 484.
23 Penned by Associate Justice Mario V. Lopez, with Associate Justices Jose C. Reyes, Jr. and Socorro B. Inting, concurring; rollo, pp. 1097-1104.
24University of the Philippines v. Dizon, G.R. No. 171182, August 23, 2012, 679 SCRA 54, 84.
25Bani Rural Bank Inc. v. De Guzman, G.R. No. 170904, November 13, 2013.
26Rollo, pp. 1013-1014.
27 Id. at 1018.
28 Id. at 1017-1022.
29 Id. at 1093.
31Raymundo v. Galen Realty and Mining Corporation, G.R. No. 191594, October 16, 2013, citing Pastor, Jr. et al. v. CA, et al., 207 Phil. 758, 767 (1983).
32 Rollo, p. 69.
33 Id. at 68.
34 Id. at 53.
35 G.R. No. 189871, August 13, 2013, 703 SCRA 439.
36Raymundo v. Galen Realty and Mining Corporation, G.R. No. 191594, October 16, 2013, citing Tumibay v. Soro, G.R. No. 152016, April 13, 2010, 618 SCRA 169.