FIRST DIVISION
G.R. Nos. 193893-94, October 09, 2019
LAND BANK OF THE PHILIPPINES, PETITIONER, v. MEGAWORLD CORPORATION, RESPONDENT.
D E C I S I O N
BERSAMIN, C.J.:
Land Bank of the Philippines (Landbank) appeals to reverse and set aside the consolidated decision promulgated on September 27, 2010 by the Court of Appeals (CA) in C.A.-G.R. SP No. 102116 involving the proper computation of its counterclaim as against the claim of respondent Megaworld Corporation (Megaworld) arising from their contract for the construction of Landbank's corporate headquarters in Malate, Manila.1
Conformably with the TOR, the parties submitted affidavits of their respective witnesses, the lists of exhibits, and offers of documents. They began presenting evidence on October 22, 2007.10X. PRESENTATION OF EVIDENCE
Presentation of testimonial evidence shall be by way of affidavits of witnesses (with all the documentary evidence identified and attached thereto) in lieu of direct testimony, to be submitted to the CIAC Secretariat in two (2) copies, and one copy furnished the opposing party. All affidavits of witnesses shall be submitted simultaneously. All documentary evidence submitted by the parties shall be admitted, leaving to the Arbitral Tribunal the determination of the appropriate weight to be given to such evidence.
SECTION 13.9 Offer of documents. - All documents not offered with the Arbitral Tribunal at the hearing but which are arranged at the hearing subsequently by agreement of the parties to be submitted, shall be filed within five (5) days from the termination of the hearing. All parties shall be afforded an opportunity to examine such documents.Landbank moved for the reconsideration of the denial, insisting that it had substantially complied with Section 13.9. It stated that, firstly, it had repeatedly manifested the intention to submit the additional documents during the formal hearing;13 secondly, Megaworld had not objected to its manifestation;14 thirdly, Megaworld had been given the opportunity to examine the additional documents being submitted because Landbank had personally served copies of the documents upon the latter's counsel on October 30, 2007; fourthly, it had submitted the documents within five days from the formal hearing's termination;15 and, fifthly, some of the additional documents had been identified by its witnesses in the course of their testimonies and admitted by the CIAC.16
Landbank moved to correct the original award.20
Megaworld's Claims Unpaid balance of the original contract P58,807,095.16Approved changed orders under Batch No. 1 708,975.80Approved changed orders under Batch No. 2 8,240,058.00Damages from forced work suspension 2,520,000.00Balance of retention money held by Landbank 7,544,277.07 Subtotal P77,820,406.03Landbank's Counterclaims Items to be deducted from Megaworld's claim: As admitted by Megaworld P1,776,791.50Magnetic door contact and CCTV 2,924,000.00Downgrading of the stainless to a painted steel tank 899,504.00Telephone manholes 36,585.13Works on open trenches at the basement and parking areas 2,017,377.12Rectification works Curtain wall/punched windows and ground floor glass curtain wall 40,975,126.41Slope of parking areas 16,200,000.00Other costs Removal of protruding bars 61,155.00Electrical works for the telephone system 4,717,619.28Waterproofing at the toilet areas 603,050.00Concrete topping at the toilet areas 189,530.00Waterproofing at the 4th floor parking area 420,000.00Subtotal 70,820,738.44Net award due to Megaworld P6,999,667.59
Both parties appealed to the CA.
Megaworld's Claims Unpaid balance of the original contract P58,807,095.16Approved changed orders under Batch No. 1 708,975.80Approved changed orders under Batch No. 2 8,240,058.00Damages from forced work suspension 2,520,000.00Balance of retention money held by Landbank 7,544,277.07 Subtotal P77,820,406.03Landbank's Counterclaims Items to be deducted from Megaworld's claim: As admitted by Megaworld P1,776,791.50Magnetic door contact and CCTV 2,924,000.00Downgrading of the stainless to a painted steel tank 899,504.00Telephone manholes 36,585.13Works on open trenches at the basement and parking areas 2,017,377.12Megaworld's share in Meralco billings 288,000.00Rectification works Curtain wall/punched windows and ground floor glass curtain wall 40,975,126.41Slope of parking areas 16,200,000.00Additional 399,453.66Other costs Removal of protruding bars 61,155.00Electrical works for the telephone system 4,717,619.28Waterproofing at the toilet areas 603,050.00Concrete topping at the toilet areas 189,530.00Waterproofing at the 4th floor parking area 420,000.00Land use and fees in securing location clearance 132,415.72 Subtotal 71,640,606.82Net award due to Megaworld P6,179,798.21
In view of all the foregoing, the Amended Award rendered by the Construction Industry Arbitration Commission (CIAC), as contained in the Order dated January 28, 2008, in CIAC Case No. 23-2007, is hereby MODIFIED in that:In effect, the adjusted computation of the net award was as follows:
(1) The award granted to Land Bank of the Philippines for rectification words on the curtain wall, punched windows and ground floor glass curtain wall is equitably reduced to Php32,293,042.58 from Php40,975,126.41;
(2) The amount of Php16,200,000.00 awarded to Land Bank of the Philippines for rectification works on slopes for parking areas is deleted; and
(3) The amount of Php4,717,619.28 awarded to Land Bank of the Philippines for the cost of electrical works for the telephone system is likewise deleted.
The total award in favor of Land Bank of the Philippines is Php42,040,904.71 (Php71,640,607.82 - [P8,682,083.83 + 16,200,000.00 + 4,717,619.28]).
OFFSETTING the amount awarded in favor of Megaworld Corporation (Php77,820,406.03) as against that awarded in favor of Land Bank of the Philippines (Php42,040,904.71), a NET AMOUNT of Php35,779,501.32 remains in favor of Megaworld Corporation. Legal interest of six percent per annum (6% p.a.) on said sum shall be added thereto from the date of this award. After finality hereof, interest at twelve percent per annum (12% p.a.) shall be added until full payment is made.23
In fine, the CA affirmed the CIAC's amended award subject to the modification of selected disputed items pertaining to Landbank's counterclaim, as follows: (1) by reducing the cost of rectification works pertaining to curtain wall/punched windows and the ground floor glass curtain wall (from P40,975,126.41 in the CIAC's amended award to P32,293,042.58, a decrease of P8,682,083.83); (2) by denying other costs such as electrical works for the telephone system (deleting P4,717,619.28 from the CIAC's amended award); and (3) by denying the cost of rectification works pertaining to the slope of parking areas (deleting P16,200,000.00 from the CIAC's amended award).
Megaworld's Claims Unpaid balance of the original contract P58,807,095.16Approved changed orders under Batch No. 1 708,975.80Approved changed orders under Batch No. 2 8,240,058.00Damages from forced work suspension 2,520,000.00Balance of retention money held by Landbank 7,544,277.07 Subtotal P77,820,406.03Landbank's Counterclaims Items to be deducted from Megaworld's claim: As admitted by Megaworld P1,776,791.50Magnetic door contact and CCTV 2,924,000.00Downgrading of the stainless to a painted steel tank 899,504.00Telephone manholes 36,585.13Works on open trenches at the basement and parking areas 2,017,377.12Megaworld's share in Meralco billings 288,000.00Rectification works Curtain wall/punched windows and ground floor glass curtain wall 32,293,042.58Slope of parking areas Additional 399,453.66Other costs Removal of protruding bars 61,155.00Electrical works for the telephone system -Waterproofing at the toilet areas 603,050.00Concrete topping at the toilet areas 189,530.00Waterproofing at the 4th floor parking area 420,000.00Land use and fees in securing location clearance 132,415.00 Subtotal 42,040,903.99Net award due to Megaworld P35,779,502.42
A.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DELETING THE TOTAL AMOUNT OF P16,200,000.00 REPRESENTING THE CIAC COMPUTED CLAIM FOR RECTIFICATION COSTS FOR THE SLOPE TO DRAIN CONCRETE TOPPING AT PARKING AREAS AND DECK SLAB IN FAVOR OF LAND BANK.B.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT MATERIALLY REDUCED THE CIAC AWARDED CLAIM OF LAND BANK ON THE RECTIFICATION OF THE GLASS CURTAIN WALLS AND IN UPHOLDING THE DENIAL OF THE CLAIM FOR THE FEES OF THE CONSULTANT.C.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT DELETED THE CIAC AWARDED CLAIM OF LAND BANK FOR THE COST OF ELECTRICAL WORK FOR THE TELEPHONE SYSTEM IN THE AMOUNT OF P4,717,619.28.D.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE CIAC RULING AWARDING THE AMOUNT OF PHP58,507,095.16 TO MEGAWORLD AS THE BALANCE OF THE ORIGINAL CONTRACT PRICE DESPITE THE FAILURE ON THE PART OF MEGAWORLD TO ATTAIN 100% COMPLETION.E.
WHETHER OR NOT THE COURT OF APPEALS PROPERLY APPLIED THE LAW ON TEMPERATE DAMAGES ON MEGAWORLD'S CLAIM FOR FORCED SUSPENSION OF WORK IN THE AMOUNT OF PHP2,520,000.00.F.
WHETHER OR NOT THE COURT OF APPEALS PROPERLY APPLIED ARTICLE 1724 OF THE NEW CIVIL CODE ON THE MATTER OF LAND BANK'S CLAIM FOR: a) WATERPROOFING AT BASEMENT FLOORING IN THE AMOUNT OF PHP5,549.847.53; b) ARAD SYSTEM IN THE AMOUNT OF PHP1,587.000.00; c) INSTALLATION COST FOR SPRINKLER HEAD DROPPINGS IN THE AMOUNT OF PHP2,849,309.18; d) STAINLESS STEEL CLADDING IN THE AMOUNT OF PHP468,378.67; e) PORTABLE FIRE EXTINGUISHERS and EXIT LIGHTINGS IN THE AMOUNT OF PHP4,312,000.00 and PHP225.342.00, RESPECTIVELY; and f) REPLACEMENT OF METAL DOORS AND DOOR HARDWARE IN THE AMOUNT OF PHP2,609,538.00.G.
WHETHER OR NOT THE COURT OF APPEALS PROPERLY INTERPRETED THE CONTRACT PARTICULARLY ON THE CONTRACTORS ALL RISK INSURANCE (CARI) COVERAGE WHEN IT DENIED LAND BANK'S CLAIM FOR THE EARTHQUAKE DAMAGE ON WALLS AMOUNTING TO PHP4,753,017.79.
A careful review of the records impels the Court to find no reversible error regarding the CA's modifications of item 1 above.
- Reducing the costs of rectification works pertaining to the curtain walls, etc. from P40,975,126.41 to P32,293,042.58;
- Deleting other costs such as those of the electrical works for the telephone system of P4,717,619.28; and
- Deleting costs of the rectification works pertaining to the slope of the parking areas in the amount of P16,200,000.00.
However, the CIAC did not explain how it had arrived at the rate of P450.00/square meter. It did not identify its source documents or provide any computation for arriving at such rate. As such, the rate became unsupported and unjustified.
Estimated rectification costs per square meter P450.00Parking floor area (square meters) 36,000Cost of rectification works on slope of parking areas P16,200,000.00
Endnotes:
1Rollo, pp. 70-97; penned by Associate Justice Franchito N. Diamante, with Associate Justice Josefina Guevara-Salonga and Associate Justice Mariflor P. Punzalan Castillo concurring.
2 Id. at 187-214.
3 Id. at 71.
4 Id. at 72-73.
5 Id. at 195.
6 Id. at 73.
7 Id. at 144.
8 Id. at 74.
9 Id. at 177-185.
10 Id. at 74.
11 Id. at 362-365.
12 Id. at 74-75.
13 Id. at 383.
14 Id. at 384.
15 Id. at 385.
16 Id. at 385-388.
17 Id. at 397-400.
18 Id. at 409-410.
19 Id. at 168-169.
20 Id. at 411-416.
21 Id. at 418-419.
22 Id. at 170-175.
23 Id. at 95-96.
24 Net increase in the amount due to Megaworld:
CIAC Amended Award CA Decision DifferenceCost of rectification works on curtain wall P40,975,126.41 P32,293,042.58 P8,682,083.83Cost of rectification works on parking area slope 16,200,000.00 - 16,200,000.00Electrical works for the telephone system 4,717,619.28 - 4,717,619.28Net increase of amount payable to Megaworld/by Landbank add: CIAC Amended Award P29,599,703.11Amount payable to Megaworld/by Landbank per CA Decision 6,179,798.21 P35,779,501.32
25 See Werr Corporation International v. Highlands Prime Inc., G.R. No. 187543, February 8, 2017, 817 SCRA 145, 159.
26 Id.
27 Id. at 145, 147; the computation is as follows:
Base amount - Gross rectification expenses P52,928,688.94Less disapproved consultancy service fees (PTCC) 7,400,770.71Subtotal P45,527,918.23Less 10% damages due to fortuitous events 4,552,791.82Cost of rectification works on curtain wall, per CIAC P40,975,126.41
28 Id. at 83.
29 Id. at 83-84.
30 Id. at 242.
31 Id. at 337.
32 Id.
33 Id. at 518.
34 Id. at 86.
35 Id. at 151.
36 Id. at 85.
37 Id. at 81-83.