[G.R. NOS. 147925-26 : June 8, 2009]
ELPIDIO S. UY, doing business under the name and style EDISON DEVELOPMENT & CONSTRUCTION, Petitioner, v. PUBLIC ESTATES AUTHORITY and the HONORABLE COURT OF APPEALS, Respondents.
D E C I S I O N
Petitioner Elpidio S. Uy (Uy) appeals by certiorari the Joint Decision1 dated September 25, 2000 and the Joint Resolution2 dated April 25, 2001 of the Court of Appeals (CA) in the consolidated cases CA-G.R. SP Nos. 59308 and 59849.
Respondent Public Estates Authority (PEA) was designated as project manager by the Bases Conversion Development Authority (BCDA), primarily tasked to develop its 105-hectare demilitarized lot in Fort Bonifacio, Taguig City into a first-class memorial park to be known as Heritage Park. PEA then engaged the services of Makati Development Corporation (MDC) to undertake the horizontal works on the project; and Uy, doing business under the name and style Edison Development and Construction (EDC), to do the landscaping.
For a contract price of Three Hundred Fifty-Five Million Eighty Thousand One Hundred Forty-One and 15/100 Pesos (
P355,080,141.15), PEA and EDC signed the Landscaping and Construction Agreement3 on November 20, 1996. EDC undertook to complete the landscaping works in four hundred fifty (450) days commencing on the date of receipt of the notice to proceed.
EDC received the notice to proceed on December 3, 1996;4 and three (3) days after, or on December 6, 1996,5 it commenced the mobilization of the equipment and manpower needed for the project. PEA, however, could not deliver any work area to EDC because the horizontal works of MDC were still ongoing. EDC commenced the landscaping works only on January 7, 1997 when PEA finally made an initial delivery of a work area.
PEA continuously incurred delay in the turnover of work areas. Resultantly, the contract period of 450 days was extended to 693 days. PEA also failed to turn over the entire 105-hectare work area due to the presence of squatters. Thus, on March 15, 1999, the PEA Project Management Office (PEA-PMO) issued Change Order No. 2-LC,6 excluding from the contract the 45-square-meter portion of the park occupied by squatters.
In view of the delay in the delivery of work area, EDC claimed additional cost from the PEA-PMO amounting to
P181,338,056.30. Specifically, Uy alleged that he incurred additional rental costs for the equipment, which were kept on standby, and labor costs for the idle manpower. He added that the delay by PEA caused the topsoil at the original supplier to be depleted; thus, he was compelled to obtain the topsoil from a farther source, thereby incurring extra costs. He also claims that he had to mobilize water trucks for the plants and trees which had already been delivered to the site. Furthermore, it became necessary to construct a nursery shade to protect and preserve the young plants and trees prior to actual transplanting to the landscaped area. The PEA-PMO evaluated the EDC's claim and arrived at a lesser amount of P146,484,910.7 The evaluation of PEA-PMO was then referred to the Heritage Park Executive Committee (ExCom) for approval.
On November 12, 1999, the Performance Audit Committee (PAC) reviewed the progress report submitted by the works engineer and noted that the EDC's landscaping works were behind schedule by twenty percent (20%). The PAC considered this delay unreasonable and intolerable, and immediately recommended to BCDA the termination of the landscaping contract.8 The BCDA adopted PAC's recommendation and demanded from PEA the termination of the contract with EDC. In compliance, PEA terminated the agreement on November 29, 1999.
PEA fully paid all the progress billings up to August 26, 1999, but it did not heed EDC's additional claims. Consequently, Uy filed a Complaint9 with the Construction Industry Arbitration Commission (CIAC), docketed as CIAC Case No. 02-2000.
On May 16, 2000, the CIAC rendered a Decision,10 the dispositive portion of which reads:
WHEREFORE, Judgment is hereby rendered in favor of the [Petitioner] Contractor ELPIDIO S. UY and Award is hereby made on its monetary claims as follows:
Respondent PUBLIC ESTATES AUTHORITY is directed to pay the [petitioner] the following amounts:
P19,604,132.06 - - - for the cost of idle time of equipment. 2,275,721.00 - - - for the cost of idled manpower. 6,050,165.05 - - - for the construction of the nursery shade net area. 605,016.50 - - - for attorney's fees.
Interest on the amount of
P6,050,165.05 as cost for the construction of the nursery shade net area shall be paid at the rate of 6% per annum from the date the Complaint was filed on 12 January 2000. Interest on the total amount of P21,879,853.06 for the cost of idled manpower and equipment shall be paid at the same rate of 6% per annum from the date this Decision is promulgated. After finality of this Decision, interest at the rate of 12% per annum shall be paid on the total of these 3 awards amounting to P27,930,018.11 until full payment of the awarded amount shall have been made, "this interim period being deemed to be at that time already a forbearance of credit" (Eastern Shipping Lines, Inc. v. Court of Appeals, et al., 243 SCRA 78 ; Keng Hua Paper Products Co., Inc. v. Court of Appeals, 286 SCRA 257 ; Crismina Garments, Inc. v. Court of Appeals, G.R. No. 128721, March 9, 1999).
Uy received the CIAC decision on June 7, 2000. On June 16, 2000, Uy filed a motion for correction of computation,12 followed by an amended motion for correction of computation,13 on July 21, 2000. The CIAC, however, failed to resolve Uy's motion and amended motion within the 30-day period as provided in its rules, and Uy considered it as denial of the motion.
Hence, on July 24, 2000, Uy filed a Petition for Review 14 with the CA, docketed as CA-G.R. SP No. 59849. Uy's petition was consolidated with CA-G.R. SP No. 59308, the earlier petition filed by PEA, assailing the same CIAC decision.
On August 1, 2000, the CIAC issued an Order15 denying Uy's motion for correction of computation.
On September 25, 2000, the CA rendered the now assailed Joint Decision dismissing both petitions on both technical and substantive grounds. PEA's petition was dismissed because the verification thereof was defective. Uy's petition, on the other hand, was dismissed upon a finding that it was belatedly filed. Further, the CA found no sufficient basis to warrant the reversal of the CIAC ruling, which it held is based on clear provisions of the contract, the evidence on record and relevant law and jurisprudence.
The CA disposed thus:
WHEREFORE, premises considered, the petitions in CA-G.R. SP No. 59308, entitled "Public Estates Authority v. Elpidio S. Uy, doing business under the name and style of Edison [D]evelopment & Construction," and CA-G.R. SP No. 59849, "Elpidio S. Uy, doing business under the name and style of Edison [D]evelopment & Construction v. Public Estates Authority," are both hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit.
Consequently, the Award/Decision issued by the Construction Industry Arbitration Commission on May 16, 2000 in CIAC Case No. 02-2000, entitled "Elpidio S. Uy, doing business under the name and style of Edison [D]evelopment & Construction v. Public Estates Authority," is hereby AFFIRMED in toto.
No pronouncement as to costs.
PEA and Uy filed motions for reconsideration. Subsequently, PEA filed with the CA an Urgent Motion for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction,17 seeking to enjoin the CIAC from proceeding with CIAC Case No. 03-2001, which Uy had subsequently filed. PEA alleged that the case involved claims arising from the same Landscaping and Construction Agreement, subject of the cases pending with the CA.
On April 25, 2001, the CA issued the assailed Joint Resolution, thus:
WHEREFORE, the present Motion/s for Reconsideration in CA-G.R. SP No. 59308 and CA-G.R. SP No. 59849 are hereby both DENIED, for lack of merit.
Accordingly, let an injunction issue permanently enjoining the Construction Industry Arbitration Commission from proceeding with CIAC CASE NO. 03-2001, entitled ELPIDIO S. UY, doing business under the name and style of EDISON DEVELOPMENT &
CONSTRUCTION v. PUBLIC ESTATES AUTHORITY and/or HONORABLE CARLOS P. DOBLE.
PEA and Uy then came to us with their respective petitions for review assailing the CA ruling. PEA's petition was docketed as G.R. NOS. 147933-34, while that of Uy was docketed as G.R. NOS. 147925-26. The petitions, however, were not consolidated.
On December 12, 2001, this Court resolved G.R. NOS. 147933-34 in this wise:
WHEREFORE, in view of the foregoing, the Petition for Review is DENIED. The Motion to Consolidate this petition with G.R. No. 147925-26 is also DENIED.
Thus, what remains for us to resolve is Uy's petition, raising the following issues:
WHETHER OR NOT RESPONDENT COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS IN DISMISSING PETITIONER UY'S PETITION IN CA-G.R. SP NO. 59849 ON THE ALLEGED GROUND OF NON-COMPLIANCE WITH THE REGLEMENTARY PERIOD IN FILING AN APPEAL
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS, IN AFFIRMING THE DECISION OF THE CIAC ARBITRAL TRIBUNAL INSOFAR AS IT DENIED CERTAIN CLAIMS OF PETITIONER UY, HAS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT ENJOINED THE PROCEEDINGS IN CIAC CASE NO. 03-2001 IN ITS JOINT RESOLUTION DATED 25 APRIL 2000, WHICH CASE IS TOTALLY DIFFERENT FROM THE CASE A QUO20
We will deal first with the procedural issue.
Appeals from judgment of the CIAC shall be taken to the CA by filing a Petition for Review within fifteen (15) days from the receipt of the notice of award, judgment, final order or resolution, or from the date of its last publication if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo.21
Admittedly, Uy received the CIAC decision on June 7, 2000; that instead of filing a verified Petition for Review with the CA, Uy filed a motion for correction of computation on June 16, 2000, pursuant to Section 9, Article XV of the Rules of Procedure Governing Construction Arbitration:
Section 9. Motion for Reconsideration. - As a matter of policy, no motion for reconsideration shall be allowed. Any of the parties may, however, file a motion for correction within fifteen (15) days from receipt of the award upon any of the following grounds:
A. An evident miscalculation of figures, a typographical or arithmetical error;
b. An evident mistake in the description of any party, person, date, amount, thing or property referred to in the award.
The filing of the motion for correction shall interrupt the running of the period for appeal.
With the filing of the motion for correction, the running of the period to appeal was effectively interrupted.
CIAC was supposed to resolve the motion for correction of computation within 30 days from the time the comment or opposition thereto was submitted. In Uy's case, no resolution was issued despite the lapse of the 30-day period, and Uy considered it as a denial of his motion. Accordingly, he elevated his case to the CA on July 24, 2000. But not long thereafter, or on August 1, 2000, the CIAC issued an Order22 denying the motion for correction of computation.
Obviously, when Uy filed his Petition for Review with the CA, the period to appeal had not yet lapsed; it was interrupted by the pendency of his motion for computation. There is no basis, therefore, to conclude that the petition was belatedly filed.
The foregoing notwithstanding, inasmuch as the CA resolved the petition on the merits, we now confront the substantive issue - the propriety of the CA's affirmance of the CIAC decision.
Uy cries foul on the award granted by CIAC, and affirmed by the CA. He posits that PEA already admitted its liability, pegged at
P146,484,910.10, in its memorandum dated January 6, 2000. Thus, he faults the CA for awarding a lesser amount.
We meticulously reviewed the records before us and failed to discern any admission of liability on the part of PEA.
The PEA-PMO evaluation dated January 6, 2000,23 where PEA allegedly admitted its liability, reads in full:
M E M O R A N D U M
For : Mr. Jaime R. Millan
Heritage Park Project
Subject: EDC's Various Claim
Landscape Development Works
Revision shall be made on our evaluation dated 28 December 1999 concerning various claims of contractor EDC-Landscape Development Works (Package IV), particularly on the claim on Project Equipment on Standby (item a of the earlier evaluation).
Reference to item 4 of the Terms and Conditions of 1998 ACEL Rate Equipment Guidebook, the CMO inadvertently did not consider are the wages and salaries of standby operator/driver corresponding to the equipment standby being claimed.
Thus, the corresponding gross amount to be incorporated shall be
P4,925,600.00 computed based on the total man-months of each standby equipment being claimed.
A tabulation of the claims is shown hereinbelow:
Nature of Claim EDC Claim Works Engineer Evaluation PMO
a. Project Equipment
P95,740,834.30 67,422,840.40 81,851,396.08 Equipment
4,925,600.00 b. Manpower on Standby 28,165,022.00 2,275,721.00 2,275,721.00 c. Topsoil Add l Hauling
37,780,200.00 37,780,200.00 37,780,200.00 d. Water Truck
19,652,000.00 15,467,800.00 19,652,000.00 Total P181,338,056.30 122,946,561.40 146,484,917.
Further, it is being specified that the PMO maintains the earlier notes of the CMO in its memo of 18 October 1999 and that legal interpretations on each item of claims is likewise enjoined.
Attached are pertinent documents for your review and reference
ROGELIO H. IGNACIO
FLORO C. URCIA
By no stretch of the imagination can we consider this memorandum an admission of liability on the part of PEA. First, nowhere in the memorandum does it say that PEA is admitting its liability. The evaluation contained in the above memorandum is merely a verification of the accuracy of EDC's claims. As a matter of fact, the evaluation is still subject for review by the project manager, whose decision on the matter requires the approval of the Heritage Park ExCom. Second, Messrs. Ignacio and Urcia had no legal authority to make admissions on behalf of PEA. Thus, even assuming that the evaluation contained in the memorandum was in the nature of an admission, the same cannot bind PEA. Third, Uy filed his complaint with the CIAC because PEA did not act on EDC's various claims. This supports our conclusion that PEA never admitted, but on the contrary denied, whatever additional liabilities were claimed by Uy under the landscaping contract.
Neither do we find any admission of liability on the part of PEA during the proceedings before the CIAC. What was admitted by PEA was that PMO evaluated the claim at the lesser amount of
P146,484,910 (Exh. "S").24 The admission of the evaluation made by PEA cannot translate to an admission of liability. There is simply no basis for Uy to claim that PEA had admitted its liability.
This issue disposed of, we now resolve Uy's claims on the basis of the evidence presented.
P95,740,834.30 as the standby equipment cost. CIAC, however, did not agree and granted only P19,604,132.06 as the cost of standby equipment using its so-called equitable method:
[Uy] had mobilized manpower and equipment sufficient to do the landscaping works for the entire 105 hectares. The unilateral reduction in scope of work made by [PEA] thus laid idle the men and equipment of [Uy] in direct proportion to said reduction. In effect, therefore, Uy had on hand manpower and equipment amounting to 42.85% in excess of that necessary to perform the landscaping works for the reduced scope of work. [Uy] thus suffered costs in terms of excess manpower and equipment in proportion to the reduced scope of work.
x x x
The total contract period - original extensions - to complete the landscaping works for the entire 105 hectares is 693 days. The reduction in scope of work 42.85% laid idle his equipment by the same percentage of 42.85[%] or 296.95 days. Since [Uy] calculated his claim for idled equipment on a per month basis, it is necessary to convert this into months. 296.95 days is equivalent of 9.89 months. Multiplied by the rate of
P1,982,217.60 per month of delay, this would translate to P19,604,132.06 as the cost of idle time for equipment by reason of the [delay].25
Upon review of the records before us, we find a need to modify, by increasing, the award for standby equipment cost.
CIAC found that PEA incurred delays in the turnover of work areas:
The first delay was the turn-over of a portion of Area 1 A that was made on 17 April 1997. The start of work on that area was scheduled for March, 1997. There was, therefore, a delay of about one month. The second delay was the turn-over of a portion of Area 2 A that was made on 20 October 1997. The start of work on that area was scheduled for May, 1997. There was, therefore, a delay of about five months. The third delay was the turn-over of a portion of Area 2 B that was made on 05 March 1998. The start of work on that area was scheduled for mid-February 1997. There was, therefore, a delay of more than one (1) year. Altogether,
the several periods of delayed turn-over of work areas total one year and six months or 546 days.26
Surely, on the days that EDC was waiting for the turn over of additional work areas, it was paying rentals for the equipment on standby. Yet, CIAC completely ignored these delays in determining the cost of equipment on standby, reasoning that:
It must be pointed out, however, that the division of the vast area to be landscaped into distinct work areas with different start of work schedules under the PERT-CPM, [Uy] could easily have shifted his equipment from an area where the delivery was delayed to the area where there was an advanced turn-over.27
This is wrong.
Records establish that EDC promptly commenced the landscaping work on every area that was turned over. EDC, in fact, shifted its equipment where there was an advance delivery, if only to minimize the additional expenses incurred by reason of the long delays in the turnover of the other work areas. Thus, in addition to the award of
P19,604,132.06 for cost of idle time for equipment by reason of the reduction of scope of work,
Uy is entitled to the cost of idle time for equipment by reason of the delay incurred in the delivery of work areas.
The period of owner-caused delay was 546 days or 18.2 months. The rate given by the Association of Carriers and Equipment Lessors (ACEL), Inc., and which was also used as basis by CIAC in granting the costs for equipment on standby, was
P1,982,271.60 per month of delay. Considering that PEA was in delay for 564 days or 18.2 months, Uy is entitled to an additional award of P36,076,360.32. Accordingly, he is entitled to an aggregate amount of P55,680,492.38 for the equipment rentals on standby.
As to the awards of
P2,275,721.00, for the cost of idle manpower, and P6,050,165.05, for the construction of the nursery shade net area, we find no reason to disturb the same, as Uy never raised this issue in his petition.
Next, we resolve Uy's claims for costs for additional hauling distance of topsoil and for mobilization of water truck.
The approved hauling cost of topsoil was only
P12.00/kilometer or P120.00 for the 10 kms original source. Uy, however, claims that due to the delay in delivery of work areas, the original source became depleted; hence, he was constrained to haul topsoil from another source located at a much farther distance of 40 kms. Uy insists that the exhaustion of topsoil at the original source was solely attributable to the delay in the turnover of the project site. Thus, he claims from PEA the increased cost of topsoil amounting to P37,780,200.00.
Article 1724 of the Civil Code provides:
ART. 1724. The contractor who undertakes to build a structure or any other work for a stipulated price, in conformity with plans and specifications agreed upon with the land-owner, can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labor or materials, save when there has been a change in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; andcralawlibrary
(2) The additional price to be paid to the contractor has been determined in writing by both parties.
By this article, a written authorization from the owner is required before the contractor can validly recover his claim. The evident purpose of the provision is to avoid litigation for added costs incurred by reason of additions or changes in the original plan. Undoubtedly, it was adopted to serve as a safeguard or a substantive condition precedent to recovery.28
This provision is echoed in the Landscaping Contract, viz.:
CHANGE OF WORK
x x x
9.3. Under no circumstances shall PEA be held liable for the payment of change of work undertaken without the written approval of the PEA General Manager x x x.
x x x
10.3. Under no circumstances shall PEA be held liable for the payment of extra work undertaken without the written approval of the PEA General Manager to perform the said work.29
Admittedly, EDC did not secure the required written approval of PEA's general manager before obtaining the topsoil from a farther source. As pointed out by the CIAC:
There is no change order authorizing payment for the increased cost upon which this claim is based. There is, therefore, no legal right based upon contract (the landscaping agreement or a change order) that would impose such a liability upon [PEA]. In a lump sum contract, as that entered into by the parties, the matter of how the contractor had made [a] computation to arrive at [a] bid that he submits is completely irrelevant. The contract amount of delivered topsoil is
P780.00 per truckload of 5.5 cubic meters sourced from a distance of  km. or 100 [meters]. There is nothing in Exhibit "L" or in the landscaping contract (Exhibit "A") that would indicate an agreement of [PEA] to pay for the increase in hauling cost if the source of topsoil exceeds 10 kilometers. Corollarily, there is also nothing therein to show that [PEA] would also be entitled to decrease said costs by paying less if the distance would have been less than 10 kilometers. Had there been such a counterpart provision, there might have been more arguable claim for [Uy]. Unfortunately, no such provision exists.30
In Powton Conglomerate, Inc. v. Agcolicol,31 we emphasized:
The written consent of the owner to the increased costs sought by the respondent is not a mere formal requisite, but a vital precondition to the validity of a subsequent contract authorizing a higher or additional contract price. Moreover, the safeguards enshrined in the provisions of Article 1724 are not only intended to obviate future misunderstandings but also to give the parties a chance to decide whether to bind one's self to or withdraw from a contract.
By proceeding to obtain topsoil up to a 40-kilometer radius without written approval from the PEA general manager, Uy cannot claim the additional cost he incurred.
Uy further claims
P19,625,000.00 for cost of mobilization of water trucks. He asserts that PEA completely failed to provide the generator sets necessary to undertake the watering and/or irrigation works for the landscaping and construction activities.32
Uy, however, admitted that MDC had already installed a deep well in the project site, and EDC used it in its landscaping and construction activities.33 Under the contract, the operational costs of the deep well and its appurtenant accessories, including the generator sets, shall be borne by EDC:
The CONTRACTOR shall shoulder all cost of electricity, maintenance, repairs, replacement of parts, when needed, and all costs of operation of the deepwell/s, and its appurtenant accessories, i.e. generator sets, etc. (which are already existing at the project site, constructed by another Contractor) while such deepwell/s are being used by CONTRACTOR herein for its landscaping and construction activities. These [deepwells] shall be turned over to PEA by CONTRACTOR in good operating/usable condition as when it was first used by CONTRACTOR.34
Thus, Uy cannot claim additional cost for providing generator sets.
Uy also attempts to justify his claim for cost of mobilization of water trucks by alleging that the water from the deep well provided by MDC and PEA was grossly insufficient to undertake the watering works for the project; hence, he was constrained to mobilize water trucks to save the plants from dying.
Indisputably, Uy mobilized water trucks for the landscaping projects and, certainly, incurred additional costs. But like his claim for additional cost of topsoil, such additional expenses were incurred without prior written approval of PEA's general manager. Thus, he cannot claim payment for such cost from PEA.
As aptly said by the CIAC:
Since [Uy] had presumably intended all along to charge [PEA] for the water truck operating costs, considering the very substantial amount of his claim, the prudence that he presumably has, as an experienced general contractor of the highest triple A category, should have dictated that he negotiate with the [PEA] for a change order or an extra work order before continuing to spend the huge amounts that he claims to have spent. [Uy] did just that in relation to his much smaller claim for the construction of the nursery shade x x x. He, however, made no effort to negotiate with the PEA for a similar change order or extra work order to safeguard his even bigger additional costs to operate the water trucks. No explanation was offered for such a mystifying differential treatment. He cannot, therefore, pass on without any contractual basis, such additional costs to the [PEA].
Neither can we hold PEA liable based on solutio indebiti, the legal maxim that no one should enrich itself at the expense of another. As we explained in Powton Conglomerate, Inc. v. Agcolicol,35
the principle of unjust enrichment cannot be validly invoked by the respondent who, through his own act or omission, took the risk of being denied payment for additional costs by not giving the petitioners prior notice of such costs and/or by not securing their written consent thereto, as required by law and their contract.Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
Uy cannot, therefore, claim from PEA the costs of the additional hauling distance of topsoil, and of the mobilization of water trucks.
Uy also assails the grant of attorney's fees equivalent to 10% of the total amount due. Citing paragraph 24.4 of the Landscaping and Construction Agreement, Uy asserts entitlement to attorney's fees of twenty percent (20%) of the total amount claimed. He ascribes error to the CIAC and the CA for reducing the stipulated attorney's fees from 20% to 10% of the total amount due.
Paragraph 24.4 of the agreement provides:
Should the PEA be constrained to resort to judicial or quasi-judicial relief to enforce or safeguard its rights and interests under this Agreement, the CONTRACTOR if found by the court or [the] quasi-judicial body, as the case [may be], to have been at fault, shall be liable to PEA for attorney's fees in an amount equivalent to twenty percent (20%) of the total [amount] claimed in the complaint, exclusive of [any] damages and costs of suit.36
Clearly, the cited provision cannot support Uy's insistence. Paragraph 24.4 on stipulated attorney's fees is applicable only in complaints filed by PEA against the contractor. The provision is silent on the amount of attorney's fees that can be recovered from PEA.
Besides, even assuming that Paragraph 24.4 is applicable, the amount of attorney's fees may be reduced if found to be iniquitous or unconscionable. Thus:
Articles 1229 and 2227 of the Civil Code empower the courts to reduce the penalty if it is iniquitous or unconscionable. The determination of whether the penalty is iniquitous or unconscionable is addressed to the sound discretion of the court and depends on several factors such as the type, extent, and purpose of the penalty, the nature of the obligation, the mode of breach and its consequences.37
The Court finds Uy's claim for attorney's fees equivalent to 20% of whatever amount is due and payable to be exorbitant. The CIAC and the CA, therefore, correctly awarded 10% of the total amount due and payable as reasonable attorney's fees.
Finally, on the propriety of the writ of injunction.
Uy asserts that the CA acted without or in excess of jurisdiction when it enjoined the proceedings in CIAC Case No. 03-2001, despite the fact that the said case is totally different from the instant case.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave, as when it is exercised arbitrarily or despotically by reason of passion or personal hostility; and such abuse must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.38
The CA granted PEA's prayer for the injunctive writ not without reason. We quote its Joint Resolution, viz.:
[T]here is no question that Elpidio S. Uy's amended complaint is based on the same Landscaping and Construction Agreement, as he himself admits. The claims pertinent thereto had already been arbitrated and passed upon in CIAC CASE NO. 02-2000 and the decision therein was already elevated to Us for review and, in view of Our joint decision in the instant petitions, a reconsideration thereof.Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
Based on the foregoing, We are inclined to grant the prayer of PEA to enjoin the CIAC from further proceeding with CIAC CASE NO. 03-2001, considering that the allegations therein constrain Us to apply the doctrine of litis pendentia, which has for its requisites: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two (2) cases is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. The principle of bar by prior judgment raised by the PEA, i.e., res judicata, finds application only upon a showing of a final judgment as one of its requisites, which is not yet present under the present circumstances.
At this juncture, it bears stressing that the essence of forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. Accordingly, based on Our holding that the final resolution of the instant petitions takes precedence as it is the appropriate vehicle for litigating the issues between the parties, now that the instant petitions before Us have come full circle with this joint resolution and, if the parties herein so choose, may seek further relief to the High Tribunal afterwards. We cannot allow CIAC CASE NO. 03-2001 to proceed because to do so would render inutile the proscriptions against forum shopping which is frowned upon in Our jurisdiction. Hence, the grant of injunctive relief. This must be done, or else a travesty of the efficient administration of justice would lamentably result.39
Indeed, the assailed resolution shows no patent or gross error amounting to grave abuse of discretion. Neither does it show an arbitrary or despotic exercise of power arising from passion or hostility.
At this point, it should be stated that the Court is not convinced by Uy's argument that the claims under CIAC Case No. 03-2001 are different from his claims in CIAC Case No. 02-2000. There is only one cause of action running through Uy's litigious undertakings - his alleged right under the Landscaping and Construction Agreement. Therefore, the landscaping agreement is indispensable in prosecuting his claims in both CIAC Cases Nos. 02-2000 and 03-2001.
As we held in Villanueva v. Court of Appeals:40
A party, by varying the form or action or by bringing forward in a second case additional parties or arguments, cannot escape the effects of the principle of res judicata when the facts remain the same at least where such new parties or matter could have been impleaded or pleaded in the prior action.
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Joint Decision and Joint Resolution of the Court of Appeals in CA-G.R. SP Nos. 59308 and 59849 are AFFIRMED with MODIFICATIONS. Respondent Public Estates Authority is ordered to pay Elpidio S. Uy, doing business under the name and style Edison Development and Construction,
P55,680,492.38 for equipment rentals on standby; P2,275,721.00 for the cost of idle manpower; and P6,050,165.05 for the construction of the nursery shade net area; plus interest at 6% per annum to be computed from the date of the filing of the complaint until finality of this Decision and 12% per annum thereafter until full payment. Respondent PEA is further ordered to pay petitioner Uy 10% of the total award as attorney's fees.
* Additional member in lieu of Associate Justice Minita V. Chico-Nazario per Special Order No. 631 dated April 29, 2009.
** Additional member in lieu of Associate Justice Conchita Carpio Morales per Special Order No. 649 dated May 25, 2009.
1 Penned by Associate Justice Martin S. Villarama, Jr., with Associate Justices Romeo J. Callejo, Sr. (a retired member of this Court) and Juan Q. Enriquez, Jr., concurring; rollo, pp. 101-112.
2 Id. at 114-117.
3 Rollo, pp. 132-154.
4 See Terms of Reference, id. at 252.
5 Rollo, p. 155.
6 Exhibit "E-8," Folder No. # 6, CIAC records.
7 Rollo, p. 337.
8 Annex 3, Respondent's Formal Offer of Evidence, Folder No. # 5, CIAC records.
9 Rollo, pp. 118-131.
10 Id. at 263-318.
11 Id. at 317-318.
12 Id. at 319-332.
13 CIAC Document Folder # 2, Document No. 9.
14 Rollo, pp. 355-401.
15 Id. at 402-404.
16 Id. at 111-112.
17 CA rollo, pp. 532-539.
18 Rollo, p. 117.
19 Public Estates Authority v. Uy, 423 Phil. 407, 419 (2001).
20 Rollo, pp. 781-782.
21 SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the docket fee before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the Petition for Review . No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days. (Rule 43, Revised Rules of Civil Procedure.)
22 Rollo, pp. 402-404.
23 Id. at 545.
24 See Terms of Reference, id. at 253.
25 Rollo, pp. 281-283.
26 Id. at 279-280.
27 Id. at 280.
28 Powton Conglomerate, Inc. v. Agcolicol, 448 Phil. 643, 652 (2003).
29 Rollo, pp. 141-142.
30 Id. at 285.
31 Supra note 28, at 655.
32 Rollo, p. 816.
33 TSN, March 25, 2000, p. 67.
34 Landscaping Agreement, Art. XXII, Sec. 21.11, rollo, p. 150.
35 Supra note 28, at 655-656.
36 Rollo, p. 152.
37 Titan Construction Corporation v. Uni-Field Enterprises, Inc., G.R. No. 153874, March 1, 2007, 517 SCRA 180, 190.
38 Eastern Assurance & Surety Co. v. LTFRB, 459 Phil. 395, 412 (2003).
39 Rollo, pp. 116-117. (Citations omitted.)
40 G.R. No. 110921, January 28, 1998, 285 SCRA 180, 192-193.