[ G.R. Nos. 187552-53, October 15, 2019 ]
SHANGRI-LA PROPERTIES, INC. (NOW KNOWN AS SHANG PROPERTIES, INC.), PETITIONER, V. BF CORPORATION, RESPONDENT.
[G.R. Nos. 187608-09, October 15, 2019]
BF CORPORATION, PETITIONER, V. SHANGRI-LA PROPERTIES, INC. (SLPI), NOW KNOWN AS EDSA PROPERTIES HOLDINGS, INC.; THE PANEL OF VOLUNTARY ARBITRATORS (ENGR. ELISEO I. EVANGELISTA, MS. ALICIA TIONGSON, AND ATTY. MARIO EUGENIO V. LIM), ALFREDO C. RAMOS, RUFO B. COLAYCO, ANTONIO B. OLBES, GERARDO O. LANUZA, JR., MAXIMO G. LICAUCO III, AND BENJAMIN C. RAMOS, RESPONDENTS.
D E C I S I O N
As a rule, the factual findings of the arbitrators of the Construction Industry Arbitration Commission (CIAC), being final and conclusive, are not reviewable by this Court on appeal. But the rule admits of several exceptions, such as when the findings of the Court of Appeals (CA) are contrary to those made by the arbitrators.1
Before the Court are the consolidated appeals of Shangri-la Properties, Inc. (SLPI) and BF Corporation (BFC) to separately assail the decision promulgated on August 12, 20082 and the resolution promulgated on April 16, 2009,3 whereby the CA partially modified the award of the Arbitral Tribunal composed of Engr. Eliseo Evangelista, Ms. Alicia Tiongson and Atty. Mario Eugenio Lim (Arbitral Tribunal) in connection with their dispute arising from their construction agreement.
This Court finds no reason to disturb the factual findings of the CIAC arbitrators as affirmed by the CA for being supported by the evidence on record. However, the Court proceeds to review the modifications of the arbitral award made by the CA.
The CA summarized the procedural and factual antecedents, as follows:
The present controversy originated from the agreement of Shangri-la Properties, Inc. (SLPI) and BF Corporation (BFC) for the execution of the builder's work for Phases I and II, and the Car Parking Structure (Carpark) of the EDSA Plaza Project (Project) in Mandaluyong City, embodied in the parties' contract documents. SLPI was the project owner and BFC was the trade contractor. BFC sued SLPI and the members of the latter's board of directors (Alfredo C. Ramos, Rufo B. Colayco, Antonio B. Olbes, Gerardo O. Lanuza Jr., Maximo G. Licauco III and Benjamin C. Ramos) for the collection of P228,630,807.80. The case was docketed as Civil Case No. 63400 in the Regional Trial Court of Pasig City (Branch 157). The proceedings before the trial court was stayed by this court, as affirmed by the Supreme Court, until termination of an arbitration proceeding as required in their contract.
BFC filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC), but the same was eventually dismissed, without prejudice, on the ground that the arbitration between BFC and SLPI must be undertaken in accordance with Republic Act No. 876. Subsequently, the trial court revived the case and directed the parties to proceed with the arbitration proceeding in accordance with R.A. No. 876. Engr. Eliseo Evangelista, Ms. Alicia Tiongson and Atty. Mario Eugenio Lim were tasked to resolve the controversy as members of the Arbitral Tribunal. The issues submitted for the resolution of the Arbitral Tribunal include:
1 Is Plaintiff [BFC] entitled to its claim for damage and repair? If so, how much?
1.1 Is the claim for fire damage and repairs of BF Corporation already settled under the Release and Discharge Agreement (Exhibit C-10) dated 23 May 1991?
1.2 Is the claim for fire damage and repairs of Plaintiff an arbitral issue?
1.3 Was SLPI actually paid the insurance amount?
2 Is Plaintiff entitled to its claim for the following damages?
2.1 Unpaid Progress Billings? If so, how much?
2.2 Unpaid Change Orders? If so, how much?
2.3 Fixed and provisional attendances? If so, how much?
2.4 Damages by nominated sub-contractors? If so, how much?
2.5 Retention money? If so, how much?
2.6 Other damages? If so, how much?
3 Is Plaintiff entitled to its claim for legal interest? If so, how much?
4 Is Defendant SLPI entitled to its counterclaim for liquidated damages under the Construction Agreements (Exhibits C-13 and C-14)?
4.1 Did Plaintiff incur delays in completion of works for such projects?
4.2 Is Plaintiff entitled to time extensions?
5 Is Defendant SLPI entitled to its counterclaim for other damages in the amount of P 4 million plus legal interest?
6 Are the individual defendants entitled to their counterclaims against Plaintiff? If so, how much?
6.1 Are the individual defendants jointly and severally liable with SLPI for the claims of the Plaintiff?
7 Which among the parties is entitled to attorney's fees and if so, how much?
8 Which among the parties shall bear the cost of arbitration?
After weighing the evidence on hand, the Arbitral Tribunal arrived at its assailed decision and made the following award:
WHEREFORE, in light of the foregoing discussions, judgment is hereby rendered awarding the Parties of their various claims as follows:
AWARD To Plaintiff BF Corporation (BFC):
1. Award in issue no. 2.1 for BFC's unpaid progress billing for Contract Bills and Change Orders
......................................................................... P11,709, 468.13
2. Award in issue no. 2.2 for accomplished but unpaid Change Orders
3. Award in issue no. 2.3. for unpaid Fixed and Provisional attendances provided by BFC
4. Award in issue no. 2.4 for damages by SLPI's Nominated sub-contractor
5. Award in issue no. 2.5 for compensatory damages consisting of retention money
6. Award in issue no. 3 for legal interest in the amount of
7. Arbitration Costs
AWARD to Defendant Shangri-La Properties, Inc. (SLPI):
1. Liquidated damages in Issue no. 4.1
2. Other counterclaims in Issue no. 5
3. Arbitration Costs
NET AWARD TO BFC
After offsetting the respective awards to the parties, Defendant Shangri-La Properties, Inc. (SLPI) is hereby ordered by this Tribunal to pay Plaintiff BF Corporation (BFC) a net amount of Thirty Eight Million Five Hundred Eighteen Thousand Four Hundred Ninety Four & 73/100 (P38,518,494.73) Pesos plus legal interest at the rate of Six (6%) Percent per annum beginning from the date of this Decision (July 31 2007) until Decision becomes final and executory, and the rate to be increased to Twelve (12%) Percent per annum from the date the herein Decision becomes final and executory until fully paid.
Ruling of the Arbitral Tribunal
In the ruling of the Arbitral Tribunal,5 the varying claims of both parties were partially upheld, with BFC being awarded P46,905,978.79 and SLPI P8,387,484.06. Offsetting, the Arbitral Tribunal ordered SLPI to pay BFC the final net award of P38,518,494.73 plus legal interest.6
The Arbitral Tribunal discussed each issue, starting with those on the fire damage and repairs. It denied BFC's claims for fire damage and repairs because the agreement only allowed BFC to recover said claims from fire insurance proceeds. It explained that BFC could not recover upon its claim because there was no clear and convincing proof showing that SLPI had actually collected any insurance proceeds arising from the fire.7
As for BFC's claims for unpaid progress billings, the Arbitral Tribunal segregated the claims into two types, namely: of the first type were the billings for the original scope of work under the agreement (contract bills), and of the second were the billings for unpaid variation orders.8 The Arbitral Tribunal ruled that BFC was entitled to the payment of the contract bills for having completed the original scope of work by finishing construction of Phase I, Phase II, and the Carpark of the Project,9 but allowed only P1,745,116.07 for the contract bills due to the absence of SLPI's conformity and in view of the discrepancies in BFC's computation.10 As to the second type, the Arbitral Tribunal concluded that SLPI had given the required written authorization for the performance of the works,11 and alloted P9,513,987.91 to BFC;12 hence, it granted P11,709,468.13 for the unpaid progress billings (inclusive of 4% VAT).13
For the unpaid change orders not included in the progress billings, the Arbitral Tribunal held that there was written authorization from SLPI;14 hence, it granted P6,201,278.50 to BFC for the change orders shown to have SLPI's written authorization.15
The Arbitral Tribunal upheld BFC's claims for fixed and provisional attendances amounting to P4,351,874.23 considering that such claims were provided for under the parties' agreement. 16
The Arbitral Tribunal partially upheld BFC's claim for damages amounting to P381,000.19 caused by SLPI's nominated sub-contractors because the parties had agreed that damages caused by nominated subcontractors would be charged by SLPI to the concerned nominated subcontractor, and thereafter credited by SLPI to BFC.17
As for BFC's claim for retention money, the Arbitral Tribunal awarded P10,422,356.21 because the parties' agreement clearly provided for the release of the retention money. Moreover, SLPI admitted that there was basis for the claim and agreed to return said amount to BFC.18
On the other hand, SLPI was awarded P7,590,000.00 in liquidated damages for the delays incurred in finishing phases I and II of the Project.19 In addition, SLPI was partially awarded on its other counterclaims worth P540,315.10 for costs incurred to correct and/or repair the defective works of BFC.20
Finally, the Arbitral Tribunal ruled that both parties were liable for the arbitration costs divided pro rata. As such, SLPI was ordered to pay P257,168.96 while BFC was ordered to pay P1,457,290.80 representing arbitration costs shared in proportion to their respective awards.21
Decision of the CA
Dissatisfied, SLPI and BFC separately appealed to the CA (respectively docketed as C.A.-G.R. No 100179 and C.A.-G.R. No. 100272).ℒαwρhi৷
On August 12, 2008, the CA promulgated the assailed decision partially granting the consolidated petitions.22
The CA affirmed the Arbitral Tribunal's ruling on the following matters, namely: (1) the denial of BFC's reimbursement for fire damage repairs for failure to prove that SLPI received fire insurance proceeds;23 (2) BFC's award consisting of fixed and provisional attendances;24 (3) BFC's award of compensatory damages consisting of the retention money;25 and (4) SLPI's award of other counterclaims.26
The CA modified the following awards, as follows: (1) increased BFC's award of unpaid progress billings based on the original scope of work; (2) reduced BFC's award of unpaid progress billings on variation orders; (3) reduced BFC's award for the legal interest due on the works on variation orders and the retention money; (4) modified the arbitration costs to be shouldered equally by SLPI and BFC; (5) deleted BFC's award for damages caused by SLPI's nominal sub-contractors; and (6) reduced SLPI's award of liquidated damages.27
The CA disposed thusly:
WHEREFORE, the consolidated petitions are hereby PARTIALLY GRANTED. The 31 July 2007 decision of the Arbitral Tribunal is hereby MODIFIED as follows:
A. Award to BFC:
1. Unpaid progress billings based on the original scope of work in the amount of P24,497,555.91, as increased accordingly;
2. Unpaid progress billing on the works on variation orders in the amount of P325,209.74, as reduced accordingly;
3. Unpaid fixed and provisional attendances in the amount of P4,351,874.23, as awarded by the Arbitral Tribunal;
4. Compensatory damages consisting of the retention money amounting to P10,422,356.21, as awarded by the Arbitral Tribunal
5. Legal interest due on the unpaid progress billings on the works on variation orders and the retention money, in the amount of P9,054,824.31; and
6. Arbitration costs in the amount of P857,229.88, as reduced accordingly.
The award of P,381,000.19 representing damages caused by the other contractors to BFC, is deleted.
B. Award to SLPI:
1. Liquidated damages in the amount of P780,000.00, as reduced accordingly;
2. Other counterclaims in the amount of P540,315.10, as awarded by the Arbitral Tribunal; and
3. Arbitration costs in the amount of P857,229.88, as increased accordingly.
Offsetting the respective awards to BFC and SLPI leaves the amount of Forty Seven Million Three Hundred Thirty One Thousand Five Hundred Five Pesos and Thirty Cents (P47,331,505.30). Shangri-la Properties, Inc. (now known as Shang Properties, Inc.) is directed to pay BF Corporation the amount of P47,331,505.30 plus legal interest at the rate of six percent (6%) per annum from 31 July 2007 (the date of the decision of the Arbitral Tribunal) until the finality of this decision and thereafter, at the rate of twelve percent (12%) per annum, until said amount is fully paid.
The aspects of the decision of the Arbitral Tribunal, not otherwise modified by this decision, are AFFIRMED.
SLPI and BFC both moved for partial reconsideration.
In its resolution of April 16, 2009, the CA partially granted SLPI's motion by reducing BFC's final award upon finding that the unpaid fixed and provisional attendances totalling P4,351,874.23, and the retention money amounting to P10,422,356.21 had already been paid by SLPI with interest on October 22, 2007; and denied BFC's motion for lack of merit,29 ruling thusly:
WHEREFORE, premises considered, the motion for reconsideration of Shangri-la Properties, Inc. is PARTIALLY GRANTED. Our decision in this case dated 12 August 2008 is MODIFIED as follows:
1. The awards for unpaid fixed and provisional attendances amounting of P4,351,874.23 and retention money amounting to P10,422,356.21 in favor of BFC are deleted considering that said awards have been paid by SLPI with interest on 22 October 2007; and
2. Offsetting the respective awards in favor of BFC and SLPI, as modified, leaves the amount of Thirty Two Million Five Hundred Fifty Seven Thousand Two Hundred Seventy Four Pesos and Eighty Six Cents (P32,557,274.86). SLPI is directed to pays BFC the amount of P32,557,274.86 plus legal interest of 6% per annum from 31 July 2007 until the finality of this decision and thereafter, at the rate of 12% per annum, until said amount is fully paid.
BF Corporation's motion for reconsideration is DENIED, for lack of merit.
Hence, both parties now appeal.
BFC submitted for resolution the following issues, thusly:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT DENIED THE CLAIMS OF BFC FOR VARIATION WORKS IT WAS COMPELLED TO PERFORM UPON THE INSTRUCTIONS OF SLPI.
THE COURT OF APPEALS ERRONEOUSLY DISREGARDED THE AGREEMENT BETWEEN BFC AND SLPI AND SUPPLANTED THE SAME WITH ITS OWN TERMS AND CONDITIONS WHEN IT DENIED BFC REIMBURSEMENT FOR DAMAGES DONE TO ITS WORKS BY THE NOMINATED SUB-CONTRACTORS OF SLPI.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT DENIED BFC'S CLAIM FOR FIRE DAMAGE AND REPAIR WORKS.
THE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING WELL-ESTABLISHED JURISPRUDENCE WHEN IT HELD THAT FOR PURPOSES OF COMPUTING INTEREST, THE FIXED AND PROVISIONAL ATTENDANCES AS WELL AS THE UNPAID PROGRESS BILLINGS ON THE ORIGINAL SCOPE OF WORK WERE REASONABLY ASCERTAINABLE ONLY FROM THE DATE OF THE ARBITRAL TRIBUNAL'S DECISION DATED 31 JULY 2007.31
On the other hand, SLPI insisted that:
THE COURT OF APPEALS ERRED IN AWARDING P24,497,555.91 TO BFC FOR "UNPAID PROGRESS BILLINGS BASED ON THE ORIGINAL SCOPE OF WORK" UNDER ISSUE NO. 2.1 DEFINED IN THE TOR (THE ARBITRAL TRIBUNAL AWARDED P1,745,166.07 ONLY)
THE COURT OF APPEALS ERRED IN REDUCING THE AWARD FOR LIQUIDATED DAMAGES IN FAVOR OF SLPI FROM P7,590,000.00 TO P780,000.00 FOR SUCH RULING IS CONTRARY TO EVIDENCE ON RECORD.32
Ruling of the Court
The Court partly grants BFC's appeal, but denies SLPI's petition for review on certiorari for its lack of merit.
Mathematical computations as well as the propriety of arbitral awards are of the nature of factual questions.33 Such questions exist when doubts or differences arise as to the truth or falsity of alleged facts; when there is need for the calibration of the evidence, considering mainly the credibility of witnesses and the existence and the relevancy of specific surrounding circumstances, their relation to each other and to the whole, and the probabilities of the situation.34
The Court cannot delve into factual questions in this appeal by certiorari because Section 1 of Rule 45 of the Rules of Court categorically ordains that the petition for review on certiorari "shall only raise questions of law which must be distinctly set forth." Factual issues require the calibration of evidence but such task cannot be done herein because the Court is not a trier of facts.35 Nonetheless, the rule limiting the appeal by petition for review on certiorari to the consideration and resolution of legal questions admits of several exceptions, such as the following instances, namely: (1) when the factual findings of the CA and the trial court are contradictory;(2) when the findings are grounded entirely on speculation, surmises, or conjectures;(3) when the inference made by the CA from its findings of fact is manifestly mistaken, absurd, or impossible;(4) when there is grave abuse of discretion in the appreciation of facts;(5) when the CA, in making its findings, goes beyond the issues of the case, and such findings are contrary to the admissions of both appellant and appellee;(6) when the judgment of the CA is premised on a misapprehension of facts;(7) when the CA fails to notice certain relevant facts which, if properly considered, will justify a different conclusion;(8) when the findings of fact are themselves conflicting;(9) when the findings of fact are conclusions without citation of the specific evidence on which they are based; and(10) when the findings of fact of the CA are premised on the absence of evidence but such findings are contradicted by the evidence on record.36
Although it is settled that the findings of fact of quasi-judicial bodies that have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect, but also finality, especially when affirmed by the CA, and, in particular reference to this appeal, the factual findings of construction arbitrators are accorded finality and conclusiveness, and should not be reviewable by the Court on appeal,37 one recognized exception occurs when the findings of the CA are contrary to those of the arbitrators.38
Herein, the petitions separately raise issues that call for the calibration of evidence and the mathematical re-computation of the monetary awards. Although such issues are factual in nature, the Court has to embark upon a review in view of the contrary findings by the CA and the Arbitral Tribunal, resulting in the variance of their monetary awards. Such review has now to be made in order to settle once and for all the issues between the parties.
BFC's claim for variation works
According to BFC, the CA erred in reversing the Arbitral Tribunal's findings with respect to the existence of written instructions from SLPI for the performance of variation works.39
In reversing the Arbitral Tribunal, the CA observed that SLPI's letter dated May 9, 1991 could not serve as the written authority issued by SLPI to BFC for the latter to undertake the variation works,40 viz.:
x x x x SLPI, through the subject letter made no instruction to BFC to undertake the works for any variation orders on its own, or without the consent of SLPI. Such interpretation cannot be read from the wordings of the letter. To do so would unnecessarily extend its meaning. The other documents presented by BFC also do not suffice to prove that SLPI gave it the authority to undertake works on the variation orders. Given the foregoing, we are of the considered view that the subject letter cannot satisfy the first requisite of Article 1724. Absent this requisite, BFC cannot validly recover any of the costs it incurred in performing the works for the variation orders.41
We reinstate the Arbitral Tribunal's granting of BFC's claim for variation works.
The Arbitral Tribunal correctly ruled that BFC had complied with the twin requirements imposed by Article 1724 of the Civil Code, which states:
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 landowner, 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; and
(2) The additional price to be paid to the contractor has been determined in writing by both parties.
Article 1724 governs the recovery of costs for any additional work because of a subsequent change in the original plans. The underlying purpose of the provision is to prevent unnecessary litigation for additional costs incurred by reason of additions or changes in the original plan. The provision was undoubtedly adopted to serve as a safeguard or as a substantive condition precedent to recovery.42 As such, added costs can only be allowed upon: (a) the written authority from the developer or project owner ordering or allowing the changes in work; and (b) upon written agreement of the parties on the increase in price or cost due to the change in work or design modification. Compliance with the requisites is a condition precedent for recovery; the absence of one requisite bars the claim for additional costs. Notably, neither the authority for the changes made nor the additional price to be paid therefor may be proved by any evidence other than the written authority and agreement as above-stated.43
According to the Arbitral Tribunal, SLPI gave written instructions to BFC to accommodate all requests for changes and variations, to wit:
x x x It is a matter of record that on May 7, 1991, BFC wrote a letter to SLPI that it will no longer accommodate any change or variation orders but if SLPI will insist, BFC will first let SLPI approve the cost and time before implementation. x x x In response, to such letter, SLPI through its Project Manager Kuno Raymond Ginoni sent a letter to BFC ... dated May 9, 1991 advising it of its obligation to "to accommodate all changes and variation orders during the duration of the contract". The same letter states "that any decision by us (SLPI) or the consultants for changes or variation orders are for project enhancement". To the mind of this Tribunal this satisfies the first requirement of Article 1724 as to the required written instruction of SLPI to perform the change/variation orders for the duration of its contract with BFC.44 x x x
The letter dated May 9, 1991 adverted to by the Arbitral Tribunal pertinently stated as follows:
Please be advised that under the Condition of Contract Clause 11 ... you are obliged to accommodate all changes and variation orders during the duration of the contract.
We are aware of your schedules and difficulties, but we also believe ... that any decision by us or the consultants for changes or variation orders are for the project enhancement.
As such, your cooperation in this matter is very much appreciated.45
The Arbitral Tribunal also considered the specific variation orders that were approved by SLPI, to wit:
The first set of claims under this catergory involve variation orders duly approved and authorized by SLPI in its schedule of variation works paid to BFC (Schedule 3). Notably, these variation orders comply with the twin requirements of Art. 1724 by reason of the fact that SLPI appears to have agreed on the price of BFC for these change orders. Coupled by the written instruction of Project Manager Genoni to approve all variation orders for the enhancement of the EDSA Plaza Project, it behooves SLPI to pay for these works. x x x46
The second set of variation orders under this category involve seventeen (17) claims included under Schedule 5 of payments submitted by SLPI. It is clear from this Schedule 5 that all these claims have not been paid by SLPI. x x x A review of the documents in support of these claims show that they bear the signature and express conformity of either one or more of SLPI's officers more particularly Project Manager Rogelio Lombos, President Colayco, and Quality Surveyor Goy Yong Peng as to the cost of the variation works and/or they are covered by specific plans and drawings prepared by SLPI Architect R. Villarosa. It is therefore in light of these facts that this Tribunal Awards the payment for the variation orders listed under this category.47
The Arbitral Tribunal considered both the letter dated May 9, 1991 and the specific SLPI-approved variation orders as sufficient compliance with the requisites of Article 1724 of the Civil Code. Therein lay the difference between the conflicting results of the Arbitral Tribunal and the CA. In computing the award, the Arbitral Tribunal painstakingly segregated the additional works that were supported by the corresponding SLPI-approved variation orders, and those that were not; and included in the final computation only the approved variation orders but excluded those that did not carry SLPI's approval.48 On the other hand, the CA limited itself to the insufficiency of the letter dated May 9, 1991, and did not consider the SLPIapproved variation orders for the performance of specific additional works.
The Court upholds the Arbitral Tribunal. In our view, the CA wrongly disregarded the specific variation orders that carried the conformity of SLPI, which, when coupled with the letter dated May 9, 1991, satisfied the requisites under Article 1724. Accordingly, the Court reinstates the Arbitral Tribunal's awards in favor of BFC for variation orders included in progress billings amounting to P9,513,987.9149 and for change orders not included in progress billings amounting to P6,201,278.50.50
BFC's claim for damages caused by
the nominated sub-contractors of SLPI
According to BFC, the CA erroneously reversed the findings of the Arbitral Tribunal when it denied reimbursement for the damages caused by nominated sub-contractors.51 The CA ruled that it could not award BFC's claim because the damages had been caused by other contractors, not SLPI; and that SLPI had merely agreed to facilitate collection of the reimbursement for the damages.52
We affirm the deletion of the award of P381,000.19 for the damages caused by nominated sub-contractors, and adopt the CA's following rationalization therefor, as follows:
The Arbitral Tribunal also awarded P381,000.19 in favor of BFC resulting from the damages caused to it by the other contractors of SLPI. SLPI argues that it cannot be held liable for damages caused by its contractors because it did not cause them. It only acts like an agent to facilitate the collection of damages caused by one contractor to another. This time, we agree with SLPI. There is no dispute that the damages were caused by other contractors of SLPI and not SLPI, and the latter only agreed to facilitate the collection of these damages. Nonetheless, we find no evidence on record showing that SLPI actually collected the damages being claimed by BFC. It may be true that it had done so in the past, but that is not proof that it actually collected BFC's claim against its contractors now. Neither can we make such an inference simply because SLPI has the authority to collect the damages. Finding no sufficient proof that SLPI collected BFC's claim for damages against the other contractors, it cannot be validly obliged to pay the same.53
Indeed, it would be wrong and unjust to hold SLPI liable for damages it did not cause. While it was admitted that in previous instances SLPI had acted as an agent in facilitating the collection of claims among the contractors,54 there was no evidence on record to prove that SLPI had actually collected the damages now being claimed by BFC. Without such proof, to hold SLPI liable was factually unfounded.
BFC's claim for fire damage and repair works
The CA agreed with the Arbitral Tribunal's ruling that SLPI was not liable to BFC for the fire damage because BFC adduced no proof showing that SLPI had actually received any fire insurance proceeds.55
Still, BFC insists that it was entitled to the fire insurance proceeds because it had performed substantial repair works for the damages caused by fire.
BFC's insistence is unwarranted.
The Court finds no reason to disturb the factual findings of the Arbitral Tribunal regarding the claim for fire damage and repair, as affirmed by the CA. As already stated, the findings of fact of quasi-judicial bodies like the Arbitral Tribunal which have acquired expertise owing to their jurisdiction being confined to specific matters are generally accorded not only respect, but also finality, especially when affirmed by the CA.56
At any rate, we declare that the rulings on this matter by both the CA and Arbitral Tribunal were duly supported by evidence on record. Based on the records, the parties' contract explicitly provided that damages or losses sustained due to fire would be at the sole risk of BFC; and that BFC would not be entitled to any payment of fire damage repairs except to the proceeds received under an insurance policy, to wit:
... Notwithstanding that the insurance described in this clause will be maintained by the Owner the whole of the site, plant, materials and works are at the sole risk of the Contractor, including any and all liabilities to third parties and damage or loss caused by but not limited to the perils of fire ...
In the event of a claim under the policy being accepted, the Contractor shall, with due diligence, restore work damaged, replace or repair any unfixed materials or goods which have been destroyed or injured, remove or dispose of any debris and proceed with the carrying out and completion of the works ... The Contractor shall not be entitled to any payment in respect of the restoration of work damaged, the replacement and repair of any unfixed materials or goods, and the removal and disposal of debris other tha[n] the monies received under the policy.57
BFC's claim for the re-computation o
f interest on the fixed and provisional
attendances as well as the unpaid progress
billings on the original scope of work
The CA affirmed the Arbitral Tribunal's findings on the fixed and provisional attendances, and the unpaid progress billings based on the original scope of work, to wit:
Here, we agree with the Arbitral Tribunal when it held that the fixed and provisional attendances w[ere] not yet reasonably established at the time the demand was made because there is no showing that SLPI conformed to the amount due; neither is said amount pre-agreed in the contract. We find the same to be true with regard to the unpaid progress billings based on the original scope of work. Thus, said claims remain unliquidated and unknown, until they were definitely ascertained, assessed, and determined by the Arbitral Tribunal and only upon presentation of proof thereon. Accordingly, the legal interest of 6% on these claims shall begin to run from 31 July 2007 or the date of the Arbitral Tribunal's decision.58
BFC argues that the CA and the Arbitral Tribunal erred in so ruling; and contends that the CA mistakenly computed interest on said awards only from the time of the Arbitral Tribunal's decision dated July 31, 2007.59
The contention cannot be upheld. There is no reason to disturb the findings of the CA and Arbitral Tribunal to the effect that said awards could not be reasonably ascertained at the time of demand considering that it was not established that SLPI had given its conformity to the amounts due.
Nonetheless, considering that the CA adjusted the interest award based on the erroneously reduced amount of P325,209.74 for the variation orders,60 the Court deems it necessary to reinstate the interest award of P12,382,710.73 as computed by the Arbitral Tribunal.61
SLPI claims that the CA erred in increasing
the award for unpaid progress billings based
on the original scope of work
In increasing the award for unpaid progress billings based on the original scope of work, the CA held:
The Arbitral Tribunal awarded BFC the amount of P1,745,116.07 based on the value of its present accomplishment without considering the value (sic) its previous work accomplishment. The Arbitral Tribunal reasoned that the billing statements were not approved by SLPI because the same were not confirmed by any Progress Payment Certificates and were not included in the summary of all payments made by SLPI to BFC, a document prepared by SLPI. The Arbitral Tribunal also believed that the manner by which BFC computed its unpaid claims was flawed because of the discrepancies between "the entry on previous net amount of builders work accomplished for the so-called period in which it was last paid by SLPI (P83,566,744.97) based on the Progress Payment certificate No. 10B (Exhibit C-16) ... [and the] net cumulative amout of work paid by SLPI as of the last billing (P70,964,930.00) ...
We do not agree.
The issuance of a Progress Payment Certificate shows the assent of SLPI to the billing statement of BFC but does not show the amount of work actually accomplished by BFC. The fact that no Progress Payment Certificates were issued to confirm the billing statements of BFC does not necessarily mean that the work was not accomplished by BFC. In fact, the Arbitral Tribunal found that BFC completed the construction of project x x x
x x x x
We adopt this finding, as it is supported by evidence on record: 1) SLPI's letter dated 28 April 1992, which manifested that it shall begin conducting the final re-measurement of the Project as soon as its As-Built-Drawings are submitted; 2) SLPI's letter[s] dated 9 October 1991, 18 October 1991, 29 October 1991, 31 October 1991 and 22 November 1991, which confirmed that the punch lists for Level I, II, III and IV and the basement of Phase I and the Carpark ha[ve] been completed and the same may be included in the Practical Completion Certificate; 3) SLPI's letter dated 7 February 1992, which demanded BFC to vacate the carpark citing the completion of the work therein as reason for the demand; 4) the release and discharge of BFC for the execution of the main works done by BFC on the Project. The Arbitral Tribunal even based its award on said documents. Concerning the alluded discrepancy, it is explained by the fact that the total amount billed by BFC was not paid by SLPI. As such, the value of the work accomplished by BFC "to date," which is the sum of the values of the work it accomplished in the previous and present periods, and not the value of work accomplished in the present period only, must be considered in determining the amount of unpaid progress billing.
Taking the foregoing into consideration, we find merit in BFC's contention that the amount of unpaid progress billings due to it is the difference between the total amount representing the work it accomplished as billed "to date" by it in its Progress Billings/Summary of Work Accomplishment, and the amount paid to it by SLPI in the latter's Progress Payment Certificates. x x x
x x x x
Thus, the amount of unpaid progress billing pertaining to the original scope of works that BFC is entitled to receive from SLPI is P24,497,555.91 x x x62
SLPI submits that the CA erred in increasing the award for unpaid progress billings for the original scope of work from P1,745,166.07 to P24,497,555.91;63 that contrary to the CA's findings, there was no competent proof to the effect that the original scope of works claimed by BFC were actually undertaken and completed.64
The Court upholds the CA.
The CA and the Arbitral Tribunal both found that the original scope of work had been completed and performed by BFC. As such, the completion of such work was a fact conclusively established and no longer reviewable on appeal. At any rate, the CA and Arbitral Tribunal's factual findings on the completion of the project were supported by the evidence on record;65 hence, such factual findings by construction arbitrators, when affirmed by the CA, are final and conclusive and not reviewable by this Court on appeal.66
The only remaining question concerned the computation of the award.
On its part, the Arbitral Tribunal allotted P1,745,116.07 because BFC's billings were not confirmed by progress payment certificates, and were not included in the summary of all payments, which were documents prepared and issued by SLPI. Also, there was a flaw in BFC's computation because of the discrepancy between the net amount builders work based on the last Progress Payment Certificate (P83,566,744.97) and the net cumulative amount of work paid based on the last billing. (P70,964,930.00).
On the other hand, the CA observed that the lack of the Progress Payment Certificate issued by SLPI did not in any way prove that BFC did not complete the original scope of work; and that the discrepancy between the amounts stated in the last Progress Payment Certificates and those contained in the last billing was logically explained by the fact that the total amount billed by BFC had not been paid by SLPI.
The Court agrees with the CA that the lack of SLPI-issued Progress Payment Certificates and the absence of BFC's claimed billings in the summary of payments did not negate the fact that BFC had completed the original scope of work. In finding that BFC had completed the original scope of work, the CA duly considered the evidence on record, particularly: (a) SLPI's letter dated April 28, 1992 referring to the final re-measurement of the Project; (b) SLPI's letter dated October 9, 1991, October 18, 1991, October 29, 1991, October 31, 1991 and November 22, 1991, which confirmed that the punch lists for Levels I, II, III and IV and the basement of Phase I and the Carpark had been completed; (c) SLPI's letter dated February 7, 1992 demanding that BFC vacate the Carpark because work had been completed; and (d) the release and discharge of BFC from the execution of the main works done by BFC on the Project.67
In addition, as pointed out by BFC,68 SLPI did not issue any Schedule of Defects to contest the completed works. The Schedule of Defects was expressly provided for and required in the contract. Had SLPI any complaint, or claim for defects or non-completion of any work, or any other concerns vis-a-vis BFC's work, it would have submitted the Schedule of Defects within the period agreed under their contract, which relevantly stipulated as follows:
PRACTICAL COMPLETION AND DEFECTS LIABILITY
(2) Any defects, shrinkages, or other faults which shall appear within the Defects Liability Period stated in the appendix to these Conditions and which are due to materials or workmanship not in accordance with this Contract or to typhoon(s) occurring before Practical Completion of the Works, shall be specified by the Project Manager in a Schedule of Defects which he shall deliver to the Contractor not later than fourteen days after the expiration of the said Defects Liability Period, and within a reasonable time after receipt of such Schedule the defects, shrinkages and other faults therein specified shall be made good by the Contractor and (unless the Project Manager shall otherwise instruct, in which case the Contract Sum shall be adjusted accordingly) entirely at his own cost.69
Accordingly, SLPI was liable to pay BFC for the latter's completed works. As concluded by the Arbitral Tribunal and affirmed by the CA, the completion of the works was conclusively established. Thus, the CA's award for unpaid progress billings for the original scope of work amounting to P24,497,555.91 was correct and is upheld.
SLPI's claim for liquidated damages
incurred due to delays
SLPI posits that the CA erred in reducing the liquidated damages in its favor from P7,590,000.00 to only P780,000.00.70
We consider the CA's reduction of liquidated damages proper and warranted.
The liquidated damages answer for the delays in the completion of the project suffered by SLPI.71 Such damages were stipulated in the parties' contract, to wit:
6. Contract Program. The Trade Contractor undertakes to complete the above-mentioned Scope of Work within the following agreed dates:
6.1. Phase I - As represented by the Trade Contractor in its letter of 28 May 1991 and submitted work program (Ref. No. ACP-059-91), copies of which are hereto attached as Annexes "B" and "B-1", the Trade Contractor shall complete the Scope of Work for Phase I of the Project in accordance with the following schedule:
i) Substantial Completion by 15 September 1991;
ii) Overall completion by 30 September 1991.
6.2. Phase II - As represented by the Trade Contractor in its letter of 28 May 1991 and submitted work programs (Ref. No. ACP-060-91), copies of which are hereto attached as Annexes "C", "C-1" and "C-2", the Trade Contractor shall complete the Scope of Work for Phase II of the Project in accordance with the following schedule:
i) From Basement to Level 4 - Overall completion by 15 September 1991;
ii) Level 5 to Level 8 and overall completion (including Carpark) - By 31 October 1991.
The failure by the Trade contractor to complete the Scope of Work by the above stated substantial completion date of 15 September 1991 for Phase I and overall completion date of 15 September 1991 for Phase II (Basement to Level 4) shall entitle the Owner to impose liquidated damages at the following rates, to be deducted from all monies due the Trade Contractor.
6.3. Phase I (Substantial completion date of 15 September 1991) - ONE HUNDRED THIRTY THOUSAND PESOS (P130,000.00) for each day of delay, counted from 16 September 1991; and
6.4. Phase II ... EIGHTY THOUSAND PESOS (P80,000.00) for each day of delay counted for 1st November 1991.
6.5. Liquidated damages shall be up to a maximum of Five Per Cent (5%) of the total Contract Price.72
On the issue of liquidated damages, the Arbitral Tribunal and the CA separately discussed Phase I and Phase II of the Project. For the Carpark portion, the Arbitral Tribunal noted that the above-quoted provisions of the contract did not include the completion of the Carpark as basis for the imposition of liquidated damages.73 On its part, the CA held that the parties' contract made no mention of any date of completion or penalty for any delay in the completion of the Carpark.74 In view of this, the Court shall only proceed to review the computation for the liquidated damages corresponding to Phase I and Phase II of the Project.
For Phase I, the CA and the Arbitral Tribunal agreed that the completion date was November 13, 1991. The CA affirmed the Arbitral Tribunal's declaration that BFC was entitled to a 53-day extension for Phase I, but corrected the Arbitral Tribunal's error in reckoning the last day of the 53-day extended period for completion of Phase I as November 13, 1991, stating thusly:
The Arbitral Tribunal identified 13 November 1991 as the date of completion of Phase I, supported by the punch lists prepared by SLPI and accomplished by BFC. The period of completing Phase I was extended for a period of 53 days from 15 September 1991. Since BFC and SLPI no longer question this ruling, we shall affirm the same. 53 days from 15 September 1991, however, do not fall on 9 November 1991 but on 7 November 1991. As such, BFC has incurred six (6) days of delay, which is P780,000.00 when translated in pesos.75
The Court concurs with the CA. Fifty three days from September 15, 1991 was November 7, 1991, not November 9, 1991. Consequently, BFC's delay totaled six days for Phase I, which was equal to P780,000.00 in liquidated damages.
For Phase II, the CA likewise affirmed the Arbitral Tribunal's holding that BFC was entitled to the 183-day extension starting from October 31, 1991; hence, the last day for the completion of Phase II was May 1, 1992.76 The CA disagreed with the Arbitral Tribunal on the completion date of Phase II, with the latter fixing the completion date at July 30, 1992, and the former pegging the completion date on April 30, 1992.
The Court considers the CA to be correct, and adopts the explanation of the CA for its reckoning of the completion date for Phase II, viz.:
For Phase II, the Arbitral Tribunal pinpointed no concrete basis when it concluded that 30 July 1992 is the date of its completion. Conversely, BFC convinced us that the date of completion of Phase II, at the most, must be 30 April 1992. As held above, the final re-measurement of the Project, is one of the conclusive proof of the completion of the project. On 28 April 1992, SLPI already required BFC to submit As-Built Drawings in connection with the final re-measurement of the Project. More so, SLPI's payment of P10,000,000.00, the balance of the final settlement for the works done by BFC in the project, was made on 30 April 1992. Since the payment of the foregoing amount is conditioned on the completion of the Project, it is safe to conclude the full completion of the project on said date. The Arbitral Tribunal determined that the period of completing Phase II was extended for 183 days. Again, since this period of extension was not disputed by BFC or SLPI, we shall affirm the same. 183 days from 31 October 1991 falls on 1 May 1992. Consequently, BFC cannot be held liable to pay SLPI liquidated damages because it did not incur any delay in completing Phase II of the Project.77
The CA had sufficient factual basis for its reckoning. It cited the letter dated April 27, 1992 by SLPI's project manager requiring BFC to submit as-built drawings for the purpose of the final re-measurement of the entire project,78 and the parties' agreement (Stipulation 9.3) to the effect that the balance of P10,000,000.00 "shall be paid by the owner to BFC upon the completion by BFC of the new scope of work specified in paragraph 8 hereof."79 As a consequence, the CA correctly stated that BFC had already completed the work on the date the payment was made on April 30, 1992.
Summary of Claims Offsetting
Award to BFC includes the following:
1. Increase in the award for BFC's unpaid progress billings for contract bills and change orders under Issue No. 2.1
2. Reinstate the award for accomplished but unpaid change orders in Issue No. 2.2
3. Reinstate the award for legal interest in Issue No. 3
4. Equal sharing of arbitration costs
......................................................................... P857, 229.88
Award to SLPI includes the following:
1. Affirm the award for liquidated damages in Issue No. 4.1
2. Affirm the award for other counterclaims in Issue No.5
3. Equal sharing of arbitration costs
NET AWARD to BFC
Finally, the imposable interest on the net monetary awards after the finality of this judgment is modified to conform to prevailing jurisprudence,81 which allows the rate of only 6% per annum from the time the awards attain finality until full satisfaction thereof.82 In addition, the principal amount due, plus the interest of 6% per annum, shall further earn interest of 6% per annum until full satisfaction.
WHEREFORE, the Court PARTIALLY GRANTS the petition for review on certiorari in G.R. Nos. 187608-09; DENIES the petition for review on certiorari in G.R. Nos. 187552-53; AFFIRMS the decision promulgated by the Court of Appeals on August 12, 2008 subject to the following MODIFICATION to the effect that Shangri-La Properties, Inc. shall pay to BF Corporation the net amount of P52,635,679.70, plus legal interest of 6% per annum reckoned from July 31, 2007, the date of the Arbitral Tribunal's decision, until this decision becomes final and executory; and, thereafter, the principal amount due, plus the interest of 6% per annum, shall likewise earn interest of 6% per annum until full satisfaction.
Each party shall bear its own costs of suit.
Carpio, Perlas-Bernabe, Leonen, Gesmundo, Hernando, Carandang, Lazaro-Javier, Inting and Zalameda, JJ., concur.
Peralta and A. Reyes, Jr., JJ., see separate concurring opinions.
Carpio and Caguioa, JJ., no part.
J. Reyes, Jr., J., on leave.
NOTICE OF JUDGMENT
Please take notice that on October 15, 2019 a Decision, copy attached herewith, was rendered by the Supreme Court in the above-entitled cases, the original of which was received by this Office on January 6, 2020, at 9:32 a.m.
Very truly yours,
(Sgd.) EDGAR O. ARICHETA
Clerk of Court
1 Uniwide Sales Realty and Resources Corporation v. Titan-Ikeda Construction and Development Corporation, G.R. No. 126619, December 20, 2006, 511 SCRA 335, 345.
2 Rollo (G.R. No. 187608-09), pp. 10-40; penned by Associate Justice Marlene Gonzales-Sison, with the concurrence of Associate Justice Juan Q. Enriquez, Jr., and Associate Justice Isaias P. Dicdican.
3 Id. at 41-45.
4 Id. at 11-14.
5 Id. at 352-558.
6 Id. at 557.
7 Id. at 413-414.
8 Id. at 422.
9 Id. at 427
10 Id. at 428-429.
11 Id. at 433-434.
12 Id. at 443.
14 Id. at. 446.
15 Id. at. 452.
17 Id. at 459-460; 464.
18 Id. at 468.
19 Id. at 497-498.
20 Id. at 500-501; 532-533.
21 Id. at 556.
22 Id. at 10-40.
23 Id. at 30.
24 Id. at 34 & 38.
25 Id. at 36 & 38.
26 Id. at 38.
27 Id. at 37-38.
28 Id. at 38-39.
29 Id. at 45.
31 Id. at 80-82.
32 Id. at 30-31.
33 Hanjin Heavy Industries and Construction Co., Ltd. v. Dynamic Planners and Construction Corp., G.R. No. 169408 & 170144, April 30, 2008, 553 SCRA 541, 558.
34 Id. at 557.
35 DPWH v. Foundation Specialists, Inc., G.R. No. 191591, June 17, 2015, 759 SCRA 138, 149.
36 Hanjin Heavy Industries and Construction Co., Ltd. v. Dynamic Planners and Construction Corp., supra, note 33, at 557-558, citing Fuentes v. Court of Appeals, G.R. No. 109849, February 26, 1997, 268 SCRA 703, 709.
37 Shinryo (Philippines) Company, Inc. v. RRN Incorporated, G.R. No. 172525, October 20, 2010, 634 SCRA 123, 130, citing Ibex International, Inc. v. GSIS, G.R. No. 162095, October 12, 2009, 603 SCRA 306, 314.
38 Id. at 131.
39 Rollo (G.R. No. 187608-09), pp. 84-85.
40 Id. at 25.
41 Id. at 26-27.
42 Powton Conglomerate, Inc. v. Agcolicol, G.R. No. 150978, April 3, 2003,400 SCRA 523, 528-529.
43 The President of the Church of Jesus Christ of Latter Day Saints v. BTL Construction Corporation, G.R. No. 176439 and 176718, January 15, 2014, 713 SCRA 455, 466-467.
44 Rollo (G.R. No. 187608-09), p. 433.
45 Id. at 26.
46 Id. at 435.
47 Id. at 436-437.
48 Id. at 437-438.
49 Id. at 443.
50 Id. at 452.
51 Id. at 132.
52 Id. at 34.
53 Id. at 34-35.
54 Id. at 459.
55 Rollo (G.R. No. 187552-53), pp. 74-75.
56 National Transmission Corporation v. Alphaomega Integrated Corporation, G.R. No. 184295, July 30, 2014, 731 SCRA 299, 310.
57 Rollo (G.R. No. 187552-53), Conditions of Contract, pp. 127-128.
58 Rollo (G.R. No. 187608-09), p. 36.
59 Id. at 149.
60 Rollo (G.R. No. 187552-53), p. 81.
61 Id. at 373.
62 Rollo (G.R. No. 187608-09), pp. 20-23, 68.
63 Rollo (G.R. No. 187552-53), p. 30.
64 Rollo (G.R. No. 187608-09), p. 39.
65 Id. at 66-67.
66 DPWH v. Foundation Specialists, Inc., G.R. No. 191591, June 17, 2015, 759 SCRA 138, 150.
67 Rollo (G.R. No. 187552-53), pp. 66-67.
68 Id. at 581.
69 Id. at 123.
70 Id. at 44.
71 Id. at 77.
72 Id. at 99-100.
73 Id. at 374.
74 Id. at 77.
75 Id. at 77-78.
76 Id. at 78.
77 Id. at 78.
78 Id. at 510.
79 Id. at 96.
80 Sum of the unpaid progress billings for original scope of works (P24,497,555.91) and variation orders (P9,513,987.91), inclusive of 4% VAT (P1,360,461.75).
81 ACS Development & Property Managers, Inc. v. Montaire Realty and Development Corporation, G.R. No. 195552, April 18, 2016; S.C. Megaworld Construction and Development Corporation v. Parada, G.R. No. 183804, September 11, 2013, 705 SCRA 584, 609.
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