THIRD DIVISION
G.R. No. 220045-48, June 22, 2020
WYETH PHILIPPINES, INC., PETITIONER, V. CONSTRUCTION INDUSTRY ARBITRATION COMMISSION ("CIAC"), CIAC ARBITRATORS VICTOR P. LAZATIN, SALVADOR P. CASTRO, JR. AND MARIO E. VALDERRAMA; SKI CONSTRUCTION GROUP, INC.; AND MAPFRE INSULAR INSURANCE CORPORATION, RESPONDENTS.
D E C I S I O N
LEONEN, J.:
When the award of the Construction Industry Arbitration Commission Arbitral Tribunal becomes the subject of judicial review, courts must defer to its factual findings by reason of its "technical expertise and irreplaceable experience of presiding over the arbitral process."1 A stringent exception would be when the integrity of the arbitral tribunal itself has been jeopardized2 which is not present in this case.
This is a Petition for Review on Certiorari3 filed by petitioner Wyeth Philippines, Inc. assailing the Consolidated Decision/Resolution4 and Resolution5 of the Court of Appeals in CA-G.R. SP Nos. 117924, 117925, 117929 & 125648, which modified the Award6 of the Construction Industry Arbitration Commission Arbitral Tribunal in CIAC Case No. 18-2009.
Petitioner Wyeth Philippines, Inc. (Wyeth) is the project owner of the "Dryer 3 and Wet Process Superstructure Works"7 located at Canlubang Industrial Estate, Bo. Pittland, Cabuyao, Laguna. In 2007, Wyeth invited bidders to submit proposals for its project through its consultant, Jacobs Engineering Singapore Pte. Ltd.8
Respondent SKI Construction Group, Inc. (SKI) submitted its qualified proposal to undertake the project for P242,800,000.00.9
On June 29, 2007, SKI was awarded the bid provided it executes the superstructure works in accordance with a Notice to Proceed issued by Wyeth. The Notice to Proceed conformed to by SKI President and CEO Albert Altura provided for the completion of the project on February 23, 2008, and the possession of the site on June 29, 2007. It also designated Jacob Constructors Singapore Pte. Ltd. as Project Manager.10
After signing the Notice to Proceed, SKI was given an advance payment of P72,840,000.00.11
As required under the Contract, SKI caused respondent Mapfre Insular Insurance Corp. (Mapfre) to issue the following bonds in favor of Wyeth: ChanRoblesVirtualawlibrary
12.1. Surety Bond No. MAIC/G(25) 9995 (the "Payments Bond"), in the amount of P48,560,000.00 under which [SKI], as principal, and Mapfre, as surety, bound themselves unto [Wyeth] to jointly and severally pay claims for all labor and materials used or reasonably required for use in the performance of the Contract.On January 25, 2008, the Project Manager directed the cessation of all construction activities starting from January 26, 2008 until further notice to give SKI ample time to address internal issues regarding its workforce.13
12.2. Surety Bond No. MAIC/G(25) 9994 (the "Advance Payment Bond"), in the amount of P72,840,000.00 under which [SKI], as principal, and Mapfre, as surety, bound themselves unto [Wyeth] to indemnify [Wyeth] for its failure to recoup the Advance Payment granted to [SKI] by [Wyeth] in connection with the Contract.
12.3. Performance Bond No. MAIC/G(13)4104 (the "Performance Bond"), in the amount of P48,560,000.00 under which [SKI], as principal, and Mapfre, as surety, bound themselves unto [Wyeth] to indemnify [Wyeth] for any loss or damage that [it] may suffer as a consequence of [SKI's] failure to perform its obligations and comply with the terms and conditions of the Contract.12
"if in the opinion of the Project Manager... the Contractor fails to proceed regularly and diligently with the Works... then the Project Manager shall give them Notice by registered post or hand delivery specifying the defaults and if the Contractor either shall continue such default for fourteen (14) days after receipt of such notice... then the Owner... may within ten (10) days after such continuance or repetition... terminate the Employment of the Contractor."16SKI claimed they essentially only had three days to complete the project from the time they were informed of their default on January 23, 2008, until the Project Manager suspended all the construction activities starting January 26, 2008, even if they supposedly had until February 6, 2008 to complete it.17
On the other hand, the Arbitral Tribunal found the need to evaluate Wyeth's counterclaims, considering that it far exceed the value of the contract sum of the project in dispute.50 Particularly, it held that Wyeth's claim of payment to various contractors in the amount of P167,588,306.67 is questionable since the total contract sum is P214,944,802.30 and P108,326,018.64 was already paid to SKI, leaving only P106,618,783.70 or 49.60% of the total contract sum.51
(1) Additional overhead expenses from March 2008 to December 2008 (2) Loss of profit for undue termination (3) Loss of profit for deleted items (4) Standby cost of equipment, formworks, crane, Generator set and other materials; and (5) Moral and exemplary damages
WHEREFORE, AWARD is hereby made as follows:On February 18, 2011, Wyeth filed a Petition for Review,62 docketed as CA-G.R. SP No. 117929, before the Court of Appeals, praying for the deletion of the award to SKI of the value of rebars, formworks, safety equipment, and costs of the damaged tower crane and tower crane collar. It also prayed that its net award be increased from P55,119,852.56 to P348,573,877.08. Lastly, it prayed that Mapfre be held solidarily liable with SKI for the entire amount of P348,573,877.08. On the same day, Mapfre filed a separate Petition for Review,63 docketed as CA-G.R. SP No. 117924. On February 21, 2011, SKI filed its Petition for Review,64 docketed as CA G.R. SP No. 117925, before the Court of Appeals.
A. FOR CLAIMANT
1. Rebar PhP12,298,307.682. Formworks 2,787,795.203. Safety Harness 157,500.014. Repair of Damaged Tower Crane 1,172,384.005. Damage Tower Crane Collar 1,890,518.28 Total PhP18,306,505.17
B. FOR RESPONDENT
1. Temperate Damages for the following Claims: PhP24,280,000.00a) Cost incurred for Labor and Materials2. Payment to Various Suppliers PhP6,852,678.71
b) Additional Cost for Labor
c) Additional Site Management
d) Payment to Various Contractors
e) Rectification Work
f) Payment to Other Contractors
3. Unrecouped Down Payment PhP42,293,670.02SUMMARY
COMPUTATION
Claimant PhP18,306,505.17
Respondent
Temperate Damages PhP24,280,000.00
Payment to Various
Suppliers 6,852,678.71
Recoupment of Down Payment PhP42,293,679.02 (PhP73,426,357.73)
------------------------
Due to Respondent PhP 55,119,852.56
=============
This amount of Php55,119,852.56 due to Respondent from Claimant shall earn legal interest from the date of this Award until fully paid.
On the Third Party Complaint, the Arbitral Tribunal awards to Respondent against MAPFRE the maximum amounts as follows: ChanRoblesVirtualawlibrarybut [sic] MAPFRE's liability cannot exceed the net liability of Claimant, its principal, in the amount of Php55,119,852.56. Moreover, on the Cross-Claims against Claimant, MAPFRE is awarded the right of indemnification for any amounts that it may pay to Respondent, with legal interest from the time of Notice of Payment is served on the Claimant, [sic]
1. On the Advance Payment bond - PhP42,293,679.022. On the Payment Bond - 6,852,678.713. On the Performance Bond - 24,280,000.00
SO ORDERED.61
(1) Additional labor cost;It also held that while SKI is entitled to the value of rebars, formworks, and costs of repair, the amount cannot be established with certainty.80 Thus, the Court of Appeals only awarded SKI temperate damages amounting P4,500,000.00 and P157,500.01, for the value of safety harnesses, as the claim was undisputed.81
(2) Additional cost due to change in formworks system;
(3) Additional cost due to additional safety requirements;
(4) Additional cost due to use of cranes with LMI;
(5) Additional overhead expenses from March 2008 to December 2008;
(6) Loss of profit for undue termination;
(7) Loss of profit for deleted items;
(8) Standby cost; and
(9) Moral and exemplary damages.79
(1) Payment of P5,507,726.50 to Precision Ready Mix, P28,985,790.00 to Capitol Steel and P3,844,481.14 to Unitan, considering that SKI agreed to such amounts;However, it held that the following claims were not proven by Wyeth: (1) payment to Tetra Pak of P32,572,301.44; (2) additional project costs in the amount of P101,923,163.14; and (3) payment to Unitan for termination-related cost of P20,767,401.12.84
(2) Payment to Chittick of P2,110,763.67, or to the extent covered by official receipt;
(3) Payment to SMCC of P9,794,372.29, or to the extent covered by official receipt;
(4) Payment to EEI of the total amount of P21,959,311.60, for being supported by official receipt;
(5) Payment to Cape East of P12,301,474.21, or only to the extent covered by official receipt;
(6) Payment to Freyssinet of P477,105.35 or to the extent covered by official receipt;
(7) Payment of P5,357,143.00 to RMD, for being covered by an official receipt;
(8) Payment of P111,607.14 to BCA for being covered by an official receipt; and
(9) Payment of P122,767.86 to T-Shuttle.83
(1) Wyeth's claim against the Payment Bond is not time-barred because it filed its claim within a year from the time of its denial.The Court of Appeals also found it inappropriate to award attorney's fees in favor of either party and held that each party shall bear its own arbitration cost.86
This made Mapfre liable to perform the Payment Bond amounting to P38,337,997.14;
(2) Wyeth's claim against the Advance Payment Bond is not extinguished and it is entitled to the unrecouped downpayment of P42,293,679.02; and
(3) Mapfre is liable under the Performance Bond up to the extent of P48,560,000.00, due to SKI's delay.85
WHEREFORE, this Court hereby disposes and orders that in CA-G.R. SP No. 117924, the Decision promulgated on 22 April 2013 is hereby MODIFIED as will be stated hereunder; in CA-G.R. SP No. 117925, SKI's Petition for Review is PARTLY GRANTED; in CA-G.R. SP No. 117929, Wyeth's Petition for Review is PARTLY GRANTED; and in CA-G.R. SP No. 125648, Wyeth's Petition for Mandamus is DENIED.In an August 3, 2015 Resolution,89 the Court of Appeals denied the respective motions for reconsideration filed by Wyeth and SKI.
Accordingly,
1. Wyeth is ordered to pay SKI the total amount of PhP4,500,000.00 as temperate damages and PhP157,500.01 for the value of the safety harness or a total of PhP4,657,500.01;
2. In addition to the award of unrecouped downpayment in the amount of PhP42,293,670.02, Wyeth is awarded the amount of PhP90,717,632.06 as actual damages. Hence, SKI is ordered to pay Wyeth the total amount of PhP133,011,302.08;
3. The above award to SKI and Wyeth shall earn interest at the rate of 6% per annum computed from the date of the assailed Award until fully paid;
4. Mapfre's liability under the Bonds shall be as follows: under the Advance Payment Bond, PhP42,293,670.02; under the Payment Bond, PhP38,337,997.64 and under the Performance Bond, PhP48,560,000.00. Mapfre is awarded the right of indemnification for any amount it may pay to Wyeth, with interest at the rate of 6% per annum, from time of Notice of Payment is served to SKI until fully paid; and
5. Each party shall bear its own costs.
SO ORDERED.88
Section 4. Jurisdiction. — The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.Cognizant of the competence of the Commission, Republic Act No. 9184 or the Government Procurement Reform Act, affirms its jurisdiction and states that, "disputes that are within the competence of the [Commission] to resolve shall be referred thereto."110 Similarly, Republic Act No. 9285 or the Alternative Dispute Resolution Act of 2004, Section 35 provides that the Commission "shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is 'commercial' pursuant to Section 21 of this Act."111
The jurisdiction of the C1AC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and delays; maintenance and defects; payment, default of employer or contractor and changes in contract cost.
Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines.
SECTION 15. Appointment of Experts. — The services of technical or legal experts may be utilized in the settlement of disputes if requested by any of the parties or by the Arbitral Tribunal. If the request for an expert is done by either or by both of the parties, it is necessary that the appointment of the expert be confirmed by the Arbitral Tribunal.The Commission's authority is expounded in CE Construction Corp. v. Araneta Center, Inc.:115
Whenever the parties request for the services of an expert, they shall equally shoulder the expert's fees and expenses, half of which shall be deposited with the Secretariat before the expert renders service. When only one party makes the request, it shall deposit the whole amount required.
The CIAC does not only serve the interest of speedy dispute resolution, it also facilitates authoritative dispute resolution. Its authority proceeds not only from juridical legitimacy but equally from technical expertise. The creation of a special adjudicatory body for construction disputes presupposes distinctive and nuanced competence on matters that are conceded to be outside the innate expertise of regular courts and adjudicatory bodies concerned with other specialized fields. The CIAC has the state's confidence concerning the entire technical expanse of construction, defined in jurisprudence as "referring to all on-site works on buildings or altering structures, from land clearance through completion including excavation, erection and assembly and installation of components and equipment."116 (Emphasis in the original, citation omitted)
SECTION 19. Finality of Awards. — The arbitral award shall be binding upon the parties. It shall be final and inappealable except on questions of law which shall be appealable to the Supreme Court.In keeping with the Construction Industry Arbitration Law, any appeal from the Commission's arbitral tribunals must remain limited to questions of law. Its rationale is explained in Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc.:118
Section 19 [of Executive Order No. 1008] makes it crystal clear that questions of fact cannot be raised in proceedings before the Supreme Court — which is not a trier of facts — in respect of an arbitral award rendered under the aegis of the CIAC. Consideration of the animating purpose of voluntary arbitration in general, and arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the above principle embodied in Section 19 that the Arbitral Tribunal's findings of fact shall be final and unappealable.The general rule then is that the awards of the Arbitral Tribunal may be appealed only on pure questions of law, and its factual findings should be respected and upheld. Since the Construction Industry Arbitration Law does not provide when an arbitral award may be vacated, we can glean the exceptions from Spouses David v. Construction Industry and Arbitration Commission:120
Voluntary arbitration involves the reference of a dispute to an impartial body, the members of which are chosen by the parties themselves, which parties freely consent in advance to abide by the arbitral award issued after proceedings where both parties had the opportunity to be heard. The basic objective is to provide a speedy and inexpensive method of settling disputes by allowing the parties to avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation, especially litigation which goes through the entire hierarchy of courts. Executive Order No. 1008 created an arbitration facility to which the construction industry in the Philippines can have recourse. The Executive Order was enacted to encourage the early and expeditious settlement of disputes in the construction industry, a public policy the implementation of which is necessary and important for the realization of national development goals.
Aware of the objective of voluntary arbitration in the labor field, in the construction industry, and in any other area for that matter, the Court will not assist one or the other or even both parties in any effort to subvert or defeat that objective for their private purposes. The Court will not review the factual findings of an arbitral tribunal upon the artful allegation that such body had "misapprehended the facts" and will not pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised they might be as ''legal questions." The parties here had recourse to arbitration and chose the arbitrators themselves; they must have had confidence in such arbitrators. The Court will not, therefore, permit the parties to relitigate before it the issues of facts previously presented and argued before the Arbitral Tribunal, save only where a very clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal committed an error so egregious and hurtful to one party as to constitute a grave abuse of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be factual conclusions of the Tribunal which resulted in deprivation of one or the other party of a fair opportunity to present its position before the Arbitral Tribunal, and an award obtained through fraud or the corruption of arbitrators. Any other, more relaxed, rule would result in setting at naught the basic objective of a voluntary arbitration and would reduce arbitration to a largely inutile institution.119 (Citations omitted)
We reiterate the rule that factual findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal, except when the petitioner proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under Section nine of Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made.121 (Citation omitted)Accordingly, there is a need to determine whether the issues raised by petitioner involve questions of law or fact. A question of law arises when there is "doubt. . . as to what the law is on a certain set of facts[,]" while there is a "question of fact when the doubt arises as to the truth or falsity of the alleged facts."122 For a question to be one of law, there must be no doubt as to the veracity or falsehood of the facts alleged, but if it involves an "examination of the probative value of the evidence presented[,]" then the question posed is one of fact.123
(1) Whether it is entitled to execution pending appeal and the writ of mandamus can compel the Commission to execute the award pending appeal;Petitioner further submits that: ChanRoblesVirtualawlibrary
(2) Whether or not the award of temperate damages amounting to P4,500,000.00 in favor of respondent SKI is supported by the evidence on record;
(3) Whether it proved and substantiated its monetary claims entitling it to an additional award of P327,127,827.49, broken down as: ChanRoblesVirtualawlibrary(a) Payment to Tetra Pak Processing System of P32,572,301.44;(4) Whether it is entited to the full amounts of liability of respondent Mapfre under the Advance Payment Bond and the Payment Bond; and
(b) Additional amount of PI 47,818,032.88 for payments to SMCC Philippines, Inc.;
(c) Additional amount of P2,700,486.33 for payments to Chittick Fire & Security Corporation;
(d) Additional project management costs in the amount of P101,923,163.14;
(e) P20,767,401.12 for termination-related costs paid to Unitan Construction and Development Corporation;
(f) Additional amount of P14,403,210.44 for payment to Cape East Philippines, Inc.; and
(g) Additional payment of P6,943,232.14 to Freyssinet Filipinas, Corp.;124
(5) Whether it is entitled to recovery of attorney's fees and costs of arbitration.
(1) The issue concerning its entitlement to a motion for execution pending appeal involves question of law;Except for the first issue, which involves a question of law, the other issues raised by petitioner, as admitted by it, are questions of fact, which necessitates a reexamination of the probative value of the evidence presented by the parties. In asking this Court to go over each claim submitted by the parties to the Arbitral Tribunal, petitioner is asking this Court to pass upon claims which are either clearly factual or require previous determination of factual issues.126 Petitioner therefore attempts to re-litigate before us the detailed factual claims it already made before the Arbitral Tribunal and asserts that its review falls within the exceptions. However, the reasons raised by petitioner are not among the exceptional grounds to review the factual findings of the Arbitral Tribunal.
(2) The other issues raised involve the resolution of conflicting findings of fact by the Arbitral Tribunal and the Court of Appeals;
(3) The Arbitral Tribunal and Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; and
(4) The findings of the Court of Appeals are contradicted by the presence of evidence on record.125
In appraising the CIAC Arbitral Tribunal's awards, it is not the province of the present Rule 45 Petition to supplant this Court's wisdom for the inherent technical competence of and the insights drawn by the CIAC Arbitral Tribunal throughout the protracted proceedings before it. The CIAC Arbitral Tribunal perused each of the parties' voluminous pieces of evidence. Its members personally heard, observed, tested, and propounded questions to each of the witnesses. Having been constituted solely and precisely for the purpose of resolving the dispute between ACI and CECON for 19 months, the CIAC Arbitral Tribunal devoted itself to no other task than resolving that controversy. This Court has the benefit neither of the CIAC Arbitral Tribunal's technical competence nor of its irreplaceable experience of hearing the case, scrutinizing every piece of evidence, and probing the witnesses.Moreover, the parties voluntarily submitted to arbitration any dispute arising from their contract and acknowledged that an Arbitral Tribunal constituted under the Commission has full competence to rule on the dispute presented to it. "An arbitration clause in a construction contract or a submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction[.]"132
True, the inhibition that impels this Court admits of exceptions enabling it to embark on its own factual inquiry. Yet, none of these exceptions, which are all anchored on considerations of the CIAC Arbitral Tribunal's integrity and not merely on mistake, doubt, or conflict, is availing.
This Court finds no basis for casting aspersions on the integrity of the CIAC Arbitral Tribunal. There does not appear to have been an undisclosed disqualification for any of its three (3) members or proof of any prejudicial misdemeanor. There is nothing to sustain an allegation that the parties' voluntarily selected arbitrators were corrupt, fraudulent, manifestly partial, or otherwise abusive. From all indications, it appears that the CIAC Arbitral Tribunal extended every possible opportunity for each of the parties to not only plead their case but also to arrive at a mutually beneficial settlement. This Court has ruled, precisely, that the arbitrators acted in keeping with their lawful competencies. This enabled them to come up with an otherwise definite and reliable award on the controversy before it.
Inventive, hair-splitting recitals of the supposed imperfections in the CIAC Arbitral Tribunal's execution of its tasks will not compel this Court to supplant itself as a fact-finding, technical expert.
ACI's refutations on each of the specific items claimed by CECON and its counterclaims of sums call for the point by point appraisal of work, progress, defects and rectifications, and delays and their causes. They are, in truth, invitations for this Court to engage in its own audit of works and corresponding financial consequences. In the alternative, its refutations insist on the application of rates, schedules, and other stipulations in the same tender documents, copies of which ACI never adduced and the efficacy of which this Court has previously discussed to be, at best, doubtful.
This Court now rectifies the error made by the Court of Appeals. By this rectification, this Court does not open the doors to an inordinate and overzealous display of this Court's authority as a final arbiter.
Without a showing of any of the exceptional circumstances justifying factual review, it is neither this Court's business nor in this Court's competence to pontificate on technical matters. These include things such as fluctuations in prices of materials from 2002 to 2004, the architectural and engineering consequences — with their ensuing financial effects — of shifting from reinforced concrete to structural steel, the feasibility of rectification works for defective installations and fixtures, the viability of a given schedule of rates as against another, the audit of changes for every schematic drawing as revised by construction drawings, the proper mechanism for examining discolored and mismatched tiles, the minutiae of installing G.I. sheets and sealing cracks with epoxy sealants, or even unpaid sums for garbage collection.
The CIAC Arbitral Tribunal acted in keeping with the law, its competence, and the adduced evidence; thus, this Court upholds and reinstates the CIAC Arbitral Tribunal's monetary awards.131 (Citation omitted)
If any dispute or difference shall arise as to:Clause 10.1 of the Conditions of the Contract provides that: ChanRoblesVirtualawlibrary
(1) The interpretation of the Contract Documents, or;
(2) Any dispute on any matter or thing of any nature arising out of or in connection with this Contract between the Owner (or Project Manager on the Owner's behalf) and the Contractor either during the progress or after the completion or abandonment of The Works or after the termination of the employment of the Contractor, it shall be referred to arbitration in accordance with Clause 10 of the Conditions of the Contract.133
Provided always that in case any dispute or difference shall arise between the Owner (or the Project Manager on the Owner's behalf) and the Contractor, either during the progress or after the completion or abandonment of The Works as to the construction of this Contract or as to any matter of whatsoever nature arising thereunder or in connection therewith (including any matter left by this Contract to the discretion of the Project Manager or the withholding by the Project Manager of any certificate to which the Contractor may claim to be entitled or the measurement and valuation mentioned in the these Conditions or the rights and liabilities of the parties under these Conditions), the Owner and the Contractor hereby agree to exert all efforts to settle their differences or dispute amicably. Failing this effort then such dispute or difference shall be referred to arbitration by an Arbitration Tribunal in accordance with the Construction Industry Arbitration Law of the Philippines [Executive Order No. 1008], as amended by the Alternative Dispute Resolution Act of 2004 (R.A. No. 9285), including the Rules of Procedures Governing Construction Arbitration approved and promulgated by the Construction Industry Arbitration Commission (CIAC) and any amendments thereto.134Accordingly, the present dispute is better left to the Commission, a quasi-judicial body with the technical expertise to resolve disputes outside the expertise of regular courts.135cralawred
(1) Payment to Tetra Pak Processing System of P32,572,301.44;Petitioner points out that, aside from the official receipts, it proved payment by unrefuted testimonies of witnesses, parole evidence and tabular summaries.
(2) Additional amount of P147,818,032.88 for payments to SMCC Philippines, Inc.;
(3) Additional amount of P2,700,486.33 for payments to Chittick Fire & Security Corporation;
(4) Additional project management costs in the amount of P101,923,163.14;
(5) P20,767,401.12 for termination-related costs paid to Unitan Construction and Development Corporation;
(6) Additional amount of P14,403,210.44 for payment to Cape East Philippines, Inc.; and
(7) Additional payment of P6,943,232.14 to Freyssinet Filipinas, Corp.138
3.) In the event of the Employment of the Contractor being Terminated as aforesaid and so long as it has not been reinstated and continued, the following shall be the respective rights and duties of the Owner and Contractor: ChanRoblesVirtualawlibraryClause 8.5 of the Conditions of Contract further provides: ChanRoblesVirtualawlibrary1.) The Owner may employ and pay other persons to carry out and complete The Works and they may enter upon The Works and use all temporary buildings, plant, tools, equipment, materials and goods intended for, delivered to and placed on or adjacent to The Works, and may purchase (where they are not already paid for) all materials and goods necessary for the carrying out and completion of The Works.
2.) The Contractor shall [except where the Termination occurs by reason of the Bankruptcy of the Contractor or of the Contractor having a winding up order made or a petition for suspension of payment or the appointment of a Rehabilitation Receiver or Management Committee or (except for the purposes of reconstruction) a resolution for voluntary winding up passed] if so required by the Owner or the Project Manager within fourteen (14) days of the date of Termination, assign to the Owner without payment the benefit of any agreement for the supply of materials or goods and/or for the execution of any work for the purposes of this Contract, but on the terms that a Supplier or Sub-Contractor shall be entitled to make any reasonable objection to any further assignment thereof by the Owner. In any case the Owner may pay any Supplier or Sub-Contractor for any materials or goods delivered or works executed for the purposes of this Contract (whether before or after the date of Termination) in so far as the price thereof has not already been paid by the Contractor. Payments made under this sub-clause may be deducted by the Owner from any sum due or to become due to the Contractor.140 (Emphasis supplied)
5.) The Contractor shall allow or pay to the Owner in the manner hereinafter appearing the amount of any direct loss and/or damage caused to the Owner by the Termination. Until after the Taking Over of The Works, the Owner shall not be bound by any provision of this Contract to make any further payment to the Contractor but upon such Taking Over and the verification within a reasonable time of the accounts, the Project Manager shall certify the amount of expenses properly incurred by the Owner and the amount of any direct loss and/or damage caused to the Owner by the Termination and, if such amounts when added to the monies paid to the Contractor before the date of Termination exceed the total amount which would have been payable on due completion in accordance with this Contract, the difference shall be a debt payable to the Owner by the Contractor; and if the said amounts when added to the said monies be less than the said total amount, the difference shall be a debt payable by the Owner to the Contractor. Provided that in no circumstances shall the Contractor be entitled to be paid more than the value of the work properly executed up to the date of Termination.141 (Emphasis supplied)Considering Clause 8.3.1 of the Conditions of Contract of the parties and the findings of the Arbitral Tribunal and Court of Appeals, respondent SKI is entitled to the value of rebars, formworks, and the costs of repair to the damaged tower crane and tower crane collar. Both the Arbitral Tribunal and the Court of Appeals found it undisputed that: (1) there were rebars and formworks left at the site; and (2) the tower crane and tower crane collar were damaged. The Arbitral Tribunal aptly held that respondent SKI is entitled to the value of rebars since petitioner "agreed to [respondent's] entitlement as evidenced by the signed-off document during their reconciliation meeting."142 It also found valid the claims of respondent SKI for the value of the formworks and the repair of the damaged tower crane and tower crane collar.
5. Subject to the provisions of these Conditions, the Arbitrators shall, without prejudice to the generality of their powers, have power to direct such measurements and/or valuations as may in their opinion be desirable in order to determine the rights of the parties and to ascertain and award any sum which ought to have been the subject of or included in any certificate and to open up, review and revise any certificate, opinion, decision, requirement or Notice and to determine all matters in dispute which shall be submitted to them in the same manner as if no such certificate, opinion, decision, requirement or notice had been given.The contract provides that the award of the Arbitral Tribunal shall be final and binding on the parties, considering that it is granted wide discretion and necessary powers to determine and settle all disputes submitted to it. Aside from the contract itself, two (2) principles guide the Arbitral Tribunal in its task: (1) "the basic matter of fairness[;]" and (2) "the effective dispute resolution or the overarching principle of arbitration as a mechanism relieved of the encumbrances of litigation."147
6. The award of such Arbitrators shall be final and binding on the parties. The decision of the Arbitrators shall be a condition precedent to any right of legal action that either party may have against the other.146 (Emphasis supplied)
Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not [sic], from the nature of the case, be proved with certainty.On the other hand, actual damages are provided for under Article 2199 of the Civil Code: ChanRoblesVirtualawlibrary
Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.Further, "[e]xcept as provided by law or by stipulation, [a claimant] is entitled to an adequate compensation only for pecuniary loss" duly proven.155 Thus, actual damages must be proven "with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable"156 like official receipts and invoices, as explained in Metro Rail Transit Development Corp. v. Gammon Philippines:157
Actual damages constitute compensation for sustained measurable losses. It must be proven "with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable." It is never presumed or based on personal knowledge of the court.In concluding that respondent SKI's claims for the value of rebars, formworks, safety harness equipment, and costs of the repair were validly proven, the Arbitral Tribunal thoroughly examined and considered the evidence presented by the parties. Thus, its evaluation of the evidence and findings of fact must be upheld.
In International Container Terminal Services, Inc. v. Chua: ChanRoblesVirtualawlibrary"Actual damages arc compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. . . . Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable.''Although official receipts are the best evidence of payment, this Court has acknowledged that actual damages may be proved by other forms of documentary evidence, including invoices.
. . . .
This Court has, time and again, emphasized that actual damages cannot be presumed and courts, in making an award, must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne. An award of actual damages is "dependent upon competent proof of the damages suffered and the actual amount thereof. The award must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and unsubstantial proof." (Emphasis in the original, citations omitted)
In MCC Industrial Sales Corporation v. Ssangayong Corporation, this Court did not award actual damages because the claimant failed to substantiate its claims with official receipts.
In G.Q. Garments, Inc. v. Miranda, this Court held that an allegation of a witness must be supported by receipts or other documentary proofs to prove the claim of actual damages.
In Gonzales v. Camarines Sur II Electric Cooperative, Inc., this Court noted that petitioners did not back up its claims of actual damages by documentary proof such as a receipt or an invoice. (Citations omitted)
2. If the Contractor fails to complete The Works by the Date for Completion stated in Appendix A or within any extended time fixed in accordance with these Conditions, then the Contractor shall pay or allow to the Owner a sum calculated at the rate stated in Appendix A as Liquidated Damages for the period during which The Works remain or have remained uncompleted as Certified in writing by the Project Manager. Without prejudice to his other remedies available at law or elsewhere in this Contract, the Owner may deduct such from any monies due or to become due to the Contractor under this Contract.161 (Emphasis supplied)In the Notice to Proceed: ChanRoblesVirtualawlibrary
2.5 Liquidated and Ascertained Damages (L.A.D.) shall be imposed and become payable by the Contractor to the Owner if the Contractor fails to complete The Works by the Completion Date and milestones dates set out in 2.3 and 2.4 above. The L.A.D. for The Works shall be at the rate of one tenth of one percent (1/10 of 1%) of the Contract Sum per day or part thereof[.]162Considering that there is no reason to deviate from the findings of the Arbitral Tribunal based on the contract of the parties, this Court affirms the same.
Decision as to costs of arbitration. — In the case of non-monetary claims or where the parties agreed that the sharing of fees shall be determined by the Arbitral Tribunal, the Final Award shall, in addition to dealing with the merits of the case, fix the costs of the arbitration, and/or decide which of the parties shall bear the cost(s) or in what proportion the cost(s) shall be borne by each of them.Rule 142 of the Rules of Court governing the imposition of costs likewise provides the following: ChanRoblesVirtualawlibrary
Section 1. Costs Ordinarily follow the result of suit. Unless otherwise provided in these rules, costs shall be allowed to the prevailing party as a matter of course, but the court shall have power for special reasons, to adjudge that either party shall pay the cost of an action, or that the same shall be divided, as may be equitable.The Terms of Reference signed by the parties expressly provides that: "[t]he costs of arbitration which include the filing, administrative, arbitrators' fees, and charges for Arbitration Development Fund, including all incidental expenses, shall be on a pro rata basis, subject to the determination of the Arbitral Tribunal which of the parties shall eventually shoulder such costs or the mode of sharing thereof."163 Based on the rules and the contract, the Arbitral Tribunal properly exercised its jurisdiction in holding that petitioner and respondent SKI should equally shoulder the arbitration costs. It likewise properly held that no party may recover attorney's fees from each other.
The 2010 Revised Rules was subsequently amended several times to conform to the Alternative Dispute Resolution law and the international practices and standards, while preserving the spirit and intent of Construction Industry Arbitration Law. Thus, since 2010, the Revised Rules has been amended by CIAC Resolution Nos. 08-2014, 07-2016, 06-2017, 01-2019, 04-2019, and 05-2019. Particularly, Section 18. 5 paragraph 2 has been amended by CIAC Resolution No. 04-2019 to reflect the following: ChanRoblesVirtualawlibraryRULE 18 - EXECUTION OF FINAL AWARD
SECTION 18.1 Execution of Award. — A final arbitral award shall become executory upon the lapse of fifteen (15) days from receipt thereof by the parties.
SECTION 18.2 Petition for review. — A petition for review from a final award may be taken by any of the parties within fifteen (15) days from receipt thereof in accordance with the provisions of Rule 43 of the Rules of Court.
SECTION 18.3 Entry of judgment. — If a petition for review is filed from a final award and a temporary restraining order (TRO) is issued by the appellate court, such award shall become executory only upon the issuance of the entry of judgment of the appellate court, or upon the lapse/lifting of the TRO or lifting of the preliminary injunction.
SECTION 18.4 Effect of petition for review. — The petition for review shall not stay the execution of the final award sought to be reviewed unless the Court of Appeals directs otherwise upon such terms as it deems just.
SECTION 18.5 Execution/enforcement of awards. — As soon as a decision, order or final award has become executory, the Arbitral Tribunal (or the surviving remaining member/s), shall, motu proprio or on motion of the prevailing party issue a writ of execution requiring any sheriff or proper officer to execute said decision, order or final award. If there are no remaining/surviving appointed arbitrator/s, the Commission shall issue the writ prayed for.
Notwithstanding the Commissions disagreement with the substance or merit of the award/decision, if execution is ripe or proper under the CIAC Rules, it shall release the writ of execution issued by the arbitrator/s. Hence, once an award/decision becomes executory, the release of the writ of execution by the Commission is purely ministerial, regardless of whether or not the arbitrator/s considered the comments of the Commission, or any of its members, on points of substance in the award during scrutiny. (Citation omitted, emphasis in the original)
SECTION 18.5 Execution/enforcement of awards. - As soon as a decision, order or final award has become executory, the Arbitral Tribunal (or the surviving remaining member/s), shall, motu proprio or on motion of the prevailing party issue a writ of execution requiring any sheriff or proper officer to execute said decision, order or final award. If there are no remaining/surviving appointed arbitrator/s, the Commission shall issue the writ prayed for.Prior to the 2019 Revised Rules, there has been no clear and categorical statement in the 2010 Revised Rules as to the effect of a pending appeal to a motion of execution filed by the prevailing party. Thus, in its March 6, 2012 Resolution, the Arbitral Tribunal denied the Motion for Writ of Execution filed by petitioner reasoning that: (1) the CIAC Resolution No. 06-2002 or "Policy Guidelines to clarify the Policy Guidelines Regarding Execution of a Final Award During Appeal" expresses the policy against interim execution when both parties appealed from the decision of the arbitrator;170 and (2) the interim execution is allowed only with respect to a party who has accepted the award by not appealing it.
As a general rule, and if no bond to stay exec lit ion is posted, the motion for execution pending appeal filed by the prevailing party may be granted, unless it appealed said award or any portion thereof. If execution is ripe or proper under the CIAC Rules, the Commission shall concur with, and release, the writ of execution issued by the arbitrator/s. Hence, once an award/decision becomes executory, the release of the writ of execution by the Commission is purely ministerial. (Citations omitted, emphasis in the original)
Very truly yours, (SGD) MISAEL DOMINGO C. BATTUNG III Division Clerk of Court |
Endnotes:
1CE Construction Corp. v. Araneta Center, Inc., 816 Phil. 221, 229 (2017) [Per J. Leonen, Second Division].
2 Id.
3Rollo, pp. 123-184.
4 Id. at 15-49. The Decision dated January 23, 2015 was penned by Associate Justice Florito S. Macalino and concurred in by Associate Justices Sesinando E. Villon (Chairperson) and Pedro B. Corales of the Former Fifteenth Division of the Court of Appeals, Manila.
5 Id. at 51-58. The Resolution dated August 3, 2015 was penned by Associate Justice Florito S. Macalino and concurred in by Associate Justices Sesinando E. Villon (Chairperson) and Pedro B. Corales of the Former Fifteenth Division of the Court of Appeals, Manila.
6 Id. at 294-334. The December 23, 2010 award was rendered by the Artbitra Tribunal composed of Victor P. Lazatin (Chairperson) and Salvador P. Castro, Jr. and Mario E. Valderrama, as Members.
7 Id. at 808.
8 Id.
9 Id.
10 Id.
11 Id.
12 Id. at 809.
13 Id. at 305.
14 Id.
15 Id. at 765-767.
16 Id. at 768-769.
17 Id.
18 Id. at 305.
19 Id.
20 Id.
21 Id.
22 Id. at 305.
23 Id. at 810.
24 Id. at 296.
25 Id.
26 The tribunal was composed of Jose F. Mabanta, Mario E. Valderemma, and Victor P. Lazatin (Chairperson).
27Rollo, p. 296.
28 Id.
29 Id. at 748-757.
30 Id. at 801-805.
31 Id. at 297.
32 Id. at 806-818.
33 Id. at 298.
34 Id. at 300.
35 Id. at 301.
36 Id. at 302.
37 Id. at 303.
38 Id. at 294-334.
39 Id. at 20.
40 Id. at 311-312.
41 Id. at 312.
42 Id.
43 Id.
44 Id. at 314.
45 Id. at 319-320.
46 Id. at 317.
47 Id.
48 Id.
49 Id. at 318.
50 Id. at 321.
51 Id. at 322.
52 Id. at 326.
53 Id.
54 Id. at 327.
55 Id. at 323.
56 Id. at 327.
57 Id.
58 Id. at 331.
59 Id.
60 Id.
61 Id. at 332-333.
62 Id. at 2065-2110.
63 Id. at 1966-2002.
64 Id. at 1810-1965.
65 Id. at 2119-2129.
66 Id. at 2036-2041.
67 Id. at 2038.
68 Id. at 2040.
69 Revised Rules of Procedure Governing Construction Arbitration as amended until CIAC Resolution No. 07-2010
70Rollo, p. 2038.
71 Id. at 2042-2043.
72 Id. at 2003-2035.
73 Id. at 2395-2397.
74 Id. at 22.
75 Id. at 15-49.
76 Id. at 28.
77 Id. at 30.
78 Id.
79 Id. at 31-34.
80 Id. at 35.
81 Id.
82 Id. at 41.
83 Id. at 38-41.
84 Id. at
85 Id. at 41-44.
86 Id. at 45.
87 Id. at 46-47.
88 Id. at 47-48.
89 Id. at 51-62.
90 Id. at 2486-2487.
91 Id. at 2501-2522.
92 Id. at 2523-2555.
93 Id. at 2581-2582.
94 Id. at 2597-2603.
95 Id. at 2611-2669.
96 Id. at 2503.
97 Id. at 2503.
98 Id. at 2516.
99 Id. at 2518.
100 Id. at 2526.
101 Id. at 2530.
102 Id. at 2537.
103 Id.
104 Id. at 2547-2549.
105 Id. at 2616.
106 Id. at 2639 and 2641.
107 Id. at 2624-2625.
108 Id. at 2660.
109 Executive Order No. 1008 (1985), sec. 2.
110 Republic Act No. 9184 (2003), sec. 59 provides:
SECTION 59. Arbitration. — Any and all disputes arising from the implementation of a contract covered by this Act shall be submitted to arbitration in the Philippines according to the provisions of Republic Act No. 876, otherwise known as the "Arbitration Law": Provided, however, That, disputes that are within the competence of the Construction Industry Arbitration Commission to resolve shall be referred thereto. The process of arbitration shall be incorporated as a provision in the contract that will be executed pursuant to the provisions of this Act: Provided, That by mutual agreement, the parties may agree in writing to resort to alternative modes of dispute resolution.
111 Rep. Act No. 8285 (2004), sec. 35 provides:
Coverage of the Law. — Construction disputes which fall within the original and exclusive jurisdiction of the Construction Industry Arbitration Commission (the "Commission") shall include those between or among parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties are project owner, contractor, subcontractor, fabricator, project manager, design professional, consultant, quantity surveyor, bondsman or issuer of an insurance policy in a construction project.
The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although the arbitration is "commercial" pursuant to Section 21 of this Act.
112 CIAC Revised Rules of Procedure Governing Construction Arbitration (June 22, 2019), Rule 8, sec. 8.1.
113 Executive Order No. 1008 (1985), sec. 14.
114 CIAC Revised Rules of Procedure Governing Construction Arbitration (June 22, 2019), Rule 8, sec. 8.1.
115 816 Phil. 221, (2017) [Per J. Leonen, Second Division].
116 Id.
117Metro Bottled Water Corp. v. Andrada Construction & Development Corp., Inc., G.R. No. 202430, March 6, 2019, [Per J. Leonen, Third Division].
118 298-A Phil. 361, 361-362 (1993) [Per J. Feliciano, Third Division].
119 Id.
120 479 Phil. 578 (2004) [Per J. Puno, Second Division].
121 Id. at 590-591.
122 Id. at 584.
123 Id.
124Rollo, pp. 38-41.
125 Id. at 141.
126Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc., 298-A Phil. 361 (1993) [Per J. Feliciano, Third Division].
127Metro Bottled Water Corp. v. Andrada Construction & Development Corp., Inc., G.R. No. 202430, March 6, 2019, [Per J. Leonen, Third Division] citing CE Construction Corp. v. Araneta Center, Inc., 816 Phil. 221 (2017), [Per J. Leonen, Second Division].
128 Id.
129 Id.
130 816 Phil. 221 (2017), [Per J. Leonen, Second Division].
131 Id. at 283-284.
132 CIAC Revised Rules of Procedure Governing Construction Arbitration (June 22, 2019), Rule 4, sec. 4.1.
133Rollo, p. 394.
134 Id. at 454.
135Camp John Hay Development Corp. v. Charier Chemical and Coating Corp., G.R. No. 198849, August 7, 2019, [Per J. Leonen, Third Division].
136Department of Public Works and Highways v. CMC/Monark/Pacific/Hi-Trijointventure, 818 Phil. 27 (2017) [Per J. Leonen, Third Division].
137Rollo, pp. 1966-2002.
138 Id. at 38-41.
139Department of Public Works and Highways v. CMC/Monark/Pacific/Hi-Trijointventure, 818 Phil. 27, 70 (2017), [Per J. Leonen, Third Division].
140Rollo, p. 447.
141 Id. at 448.
142 Id. at 319.
143 Id. at 326.
144 Id. at 323.
145 Id. at 327.
146 Id. at 455.
147Tondo Medical Center v. Rante, G.R. No. 230645, July 1, 2019 [Per J. Reyes, J., Second Division].
148Metro Bottled Water Corp. v. Andrada Construction & Development Corp., Inc., G.R. No. 202430, March 6, 2019, , [Per J. Leonen, Third Division].
149 Id
150 Id.
151 Id.
152Department of Public Works and Highways v. CMC/Monark/Pacific/Hi-Trijointventure, 818 Phil. 27, 53-54 (2017), [Per J. Leonen, Third Division].
153Rollo, pp. 326-326.
154 Id. at 228.
155 Id.
156Oceaneering Contractors (PHILS.), INC. v. Barretto, 657 Phil. 607, 617 [Per J. Perez, First Division].
157 G.R. No. 200401, January 17, 2018 [Per J. Leonen, Third Division].
158Filipinas (Pre-Fab Bldg.) Systems. Inc. v. MRT Development Corporation, 563 Phil. 184, 215 (2007) [Per J. Velasco, Second Division].
159 Id.
160 Id
161Rollo, p. 438.
162 Id. at 611.
163 Terms of Reference, Article VIII.
164Rollo, p. 328.
165 Id.
166 Id.
167Department of Public Works and Highways v. CMC/Monark/Pacific/Hi-Trijointventure, 818 Phil. 27, 72 (2017), [Per J. Leonen, Third Division].
168Rollo, p. 2621.
169Metro Rail Transit Development Corp. v. Gammon Philippines, G.R. No. 200401, January 17, 2018 , [Per J. Leonen, Third Division].
170Rollo, p. 2226.
171 Id. at 2227.
172 CIAC Revised Rules of Procedure Governing Construction Arbitration (June 22, 2019), Rule 23, sec. 23.1.chanRoblesvirtualLawlibrary