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EUROPEAN RESOURCES AND TECHNOLOGIES, INC.

and - For waste collected within the CSEZ, the German


DELFIN J. WENCESLAO, petitioners, Consortium may impose a "tipping fee" per ton of
vs. waste collected from locators and residents of the
INGENIEUBURO BIRKHAHN + NOLTE, CSEZ, which fees shall be subject to the schedule
Ingeniurgesellschaft mbh and HEERS & BROCKSTEDT agreed upon by the parties and specified in the
GMBH & CO., respondents. E C I S I O N Contract for Services.
- For its operations outside of the CSEZ, the German
YNARES-SANTIAGO, J.: Consortium shall pay CDC US$1.50 per ton of non-
hazardous solid waste collected.3
FACTS - The CDC shall guarantee that nineteen thousand
eighteen hundred (19,800) tons per year of solid
waste volume shall be collected from inside and
European Resources and Technologies Inc. outside the CSEZ.4
(hereinafter "ERTI"), a corporation organized and existing - The contract has a term of twenty-five (25)
under the laws of the Republic of the Philippines, is joined years,5 during which time the German Consortium
by Delfin J. Wenceslao as petitioner in this case. shall operate the waste management center on a
day-to-day basis.6
Ingenieuburo Birkhan + Nolte Ingiurgesellschaft mbh
and Heers & Brockstedt Gmbh & Co. are German
corporations who are respondents in this case and shall be Article VIII, Section 7 of the Contract for Services provides
collectively referred to as the "German Consortium". that the German Consortium shall undertake to organize a
local corporation as its representative for this project.
The German Consortium tendered and submitted its bid to
the Clark Development Corporation ("CDC") to construct, On April 18, 2000, the German Consortium entered into a
operate and manage the Integrated Waste Management Joint Venture with D.M. Wenceslao and Associates, Inc.
Center at the Clark Special Economic Zone ("CSEZ"). ("DMWAI") and Ma. Elena B. Villarama (doing business
as LBV and Associates), embodied in a Memorandum of
CDC accepted the German Consortiums bid and awarded Understanding7 ("MOU") signed by the parties.
the contract to it.
- Under the MOU, the parties agreed to jointly form a
On October 6, 1999, CDC and the German Consortium local corporation to which the German Consortium
executed the Contract for Services2 which embodies the shall assign its rights under the Contract for Services.
terms and conditions of their agreement. - Pursuant to this agreement, petitioner European
- The Contract for Services provides that the German Resources and Technologies, Inc. was
Consortium shall be empowered to enter into a incorporated.
contract or agreement for the use of the integrated
waste management center by corporations, local The parties likewise agreed to prepare and finalize a
government units, entities, and persons not only Shareholders Agreement within one (1) month from the
within the CSEZ but also outside. execution of the MOU, which shall provide that the German

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Consortium shall own fifteen percent (15%) of the equity in (b) the parties failed to prepare and finalize the
the joint venture corporation, DMWAI shall own seventy Shareholders Agreement pursuant to the provision of the
percent (70%) and LBV&A shall own fifteen percent (15%). MOU;

In the event that the parties fail to execute the (c) there is no more factual or legal basis for the joint
Shareholders Agreement, the MOU shall be considered null venture to continue; and
and void.8
(d) with the termination of the MOU, the MOA is also
On August 1, 2000, without the Shareholders Agreement deemed terminated or extinguished.
having been executed, the German Consortium and
petitioner ERTI entered into a Memorandum of Agreement Attached to the letter was a copy of the letter of the
(MOA)9 whereby the German Consortium ceded its rights CDC,13 stating that the German Consortiums assignment of
and obligations under the Contract for Services in favor of an eighty-five percent (85%) majority interest to another
ERTI and assigned unto ERTI, among others, "its license from party violated its representation to undertake both the
CDC to engage in the business of providing environmental financial and technical aspects of the project.
services needed in the CSEZ in connection with the waste
management within the CSEZ and other areas."10 The dilution of the Consortiums interest in ERTI is a
substantial modification of the Consortiums representations
Likewise, the parties agreed that should there be a which were used as bases for the award of the project to it.
disagreement between or among them relative to the
interpretation or implementation of the MOA and the On February 20, 2001, petitioner ERTI, through counsel, sent
collateral documents including but not limited to the a letter to CDC requesting for the reconsideration of its
Contract for Services between the German Consortium and disapproval of the agreement between ERTI and the German
CDC, the dispute shall be referred to a panel of arbitrators. 11 Consortium.

On December 11, 2000, ERTI received a letter from BN Before CDC could act upon petitioner ERTIs letter, the
Consultants Philippines, Inc., signed by Mr. Holger Holst for German Consortium filed a complaint for injunction
and on behalf of the German Consortium,12 stating that the against herein petitioners before the Regional Trial Court of
German Consortiums contract with DMWAI, LBV&A and ERTI Angeles City, Branch 61, docketed as Civil Case No. 10049.
has been terminated or extinguished on the following
grounds:
- The German Consortium claimed that petitioner
ERTIs continued misrepresentation as to their right
(a) the CDC did not give its approval to the Consortiums to accept solid wastes from third parties for
request for the approval of the assignment or transfer by processing at the waste management center will
the German Consortium in favor of ERTI of its rights and cause irreparable damage to the Consortium and its
interests under the Contract for Services; exclusive right to operate the waste management
center at the CSEZ.

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- Moreover, petitioner ERTIs acts destroy the Meanwhile, on February 11, 2002, the temporary restraining
Consortiums credibility and undermine customer order issued was lifted in view of respondents failure to file
confidence in it. Hence, the German Consortium sufficient bond.16
prayed that a writ of temporary restraining order be
issued against petitioner ERTI and, after hearing, a On September 6, 2002, all proceedings in Civil Case No.
writ of preliminary injunction be likewise issued 10049 were suspended until the petition for certiorari
ordering petitioner ERTI to cease and desist from pending before the Court of Appeals shall have been
misrepresenting to third parties or the public that it resolved.17
has any right or interest in the waste management
center at CSEZ.14 On May 15, 2003, the Court of Appeals dismissed the
petition for certiorari. Petitioners Motion for Reconsideration
Petitioners filed their Opposition to the application for was denied in a Resolution dated August 25, 2003.
preliminary injunction on February 7, 2001.
ISSUE That the dispute is covered by the arbitration clause
The following day, February 8, 2001, petitioners sent in the memorandum of agreement.
respondents, through Mr. Holger Holst, a letter demanding
that the parties proceed to arbitration in accordance with HELD The petition is partly meritorious.
Section 17 of the MOA.
For the same reason, petitioners assertion that the instant
- At the hearings on the application for injunction, case should be referred to arbitration pursuant to the
petitioners objected to the presentation of evidence provision of the MOA is untenable.
on the ground that the trial court had no jurisdiction
over the case since the German Consortium was
composed of foreign corporations doing business in We have ruled in several cases that arbitration agreements
the country without a license. are valid, binding, enforceable and not contrary to public
- Moreover, the MOA between the parties provides that policy such that when there obtains a written provision for
the dispute should be referred to arbitration. arbitration which is not complied with, the trial court should
suspend the proceedings and order the parties to proceed to
arbitration in accordance with the terms of their
The trial court overruled the objection and proceeded with agreement.25 In the case at bar, the MOA between petitioner
the hearing. On June 28, 2001, the trial court issued an ERTI and respondent German Consortium provided:
Order granting the writ of preliminary
injunction.15 Petitioners filed a motion for reconsideration,
which was denied in a Resolution dated November 21, 2001. 17. Should there be a disagreement between or
among the Parties relative to the interpretation or
implementation of this Agreement and the collateral
On January 17, 2002, petitioners filed a petition for certiorari documents including but not limited to the Contract
and prohibition under Rule 65 of the Rules of Court before for Services between GERMAN CONSORTIUM and
the Court of Appeals, assailing the trial courts Orders dated CDC and the Parties cannot resolve the same by
June 28, 2001 and November 21, 2001. themselves, the same shall be endorsed to a panel of

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arbitrators which shall be convened in accordance
with the process ordained under the Arbitration Law
of the Republic of the Philippines.26

Indeed, to brush aside a contractual agreement calling for


arbitration in case of disagreement between parties would
be a step backward.27 But there are exceptions to this rule.
Even if there is an arbitration clause, there are instances
when referral to arbitration does not appear to be the most
prudent action. The object of arbitration is to allow the
expeditious determination of a dispute. Clearly, the issue
before us could not be speedily and efficiently resolved in its
entirety if we allow simultaneous arbitration proceedings
and trial, or suspension of trial pending arbitration. 28

As discussed earlier, the dispute between respondent


German Consortium and petitioners involves the disapproval
by the CDC of the assignment by the German Consortium of
its rights under the Contract for Services to petitioner ERTI.
Admittedly, the arbitration clause is contained in the MOA to
which only the German Consortium and petitioner ERTI were
parties. Even if the case is brought before an arbitration
panel, the decision will not be binding upon CDC who is a
non-party to the arbitration agreement. What is more, the
arbitration panel will not be able to completely dispose of all
the issues of this case without including CDC in its
proceedings. Accordingly, the interest of justice would only
be served if the trial court hears and adjudicates the case in
a single and complete proceeding.

WHEREFORE, the decision of the Court of Appeals in CA-


G.R. SP No. 68923 dated May 15, 2003 is REVERSED and
SET ASIDE. The Orders of the trial court dated June 28, 2001
and November 21, 2001 are ANNULLED and SET ASIDE and
Civil Case No. 10049 is DISMISSED for lack of legal capacity
of respondents to institute the action. Costs against
respondents.

SO ORDERED.

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SECOND DIVISION ______________

[G.R. No. 148318. November 22, 2004] P108,493,966.3


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NATIONAL POWER CORPORATION, petitioner, vs. HON.
ROSE MARIE ALONZO-LEGASTO, as Presiding Appended with the Contract is the contract price schedule
Judge, RTC of Quezon City, Branch 99, JOSE which was submitted by the respondent FUCC during the
MARTINEZ, Deputy Sheriff, RTC of Quezon City, bidding. The price for grading excavation was P76.00 per
CARMELO V. SISON, Chairman, Arbitration cubic meter.
Board, and FIRST UNITED CONSTRUCTORS
CORPORATION, respondents. Construction activities commenced in August 1992.

DECISION In the latter part of September 1992 and after excavating


5.0 meters above the plant elevation, FUCC requested NPC
TINGA, J.: that it be allowed to blast to the design grade of 495 meters
above sea level as its dozers and rippers could no longer
FACTS excavate. It further requested that it be paid P1,346.00 per
cubic meter similar to the rate of NPCs project in Palinpinon.
On April 14, 1992, NPC and FUCC entered into a contract
for the construction of power facilities (civil works) Schedule While blasting commenced on October 6, 1992, NPC and
1 1x20 MW Bacon-Manito II Modular Geothermal Power Plant FUCC were discussing the propriety of an extra work order
(Cawayan area) and Schedule 1A 1x20 MW Bacon-Manito II and if such is in order, at what price should FUCC be paid.
Modular Geothermal Power Plant (Botong area) in Bacon,
Sorsogon (BACMAN II). Sometime in March 1993, NPC Vice President for
Engineering Construction, Hector Campos, created a
The total contract price for the two schedules task force to review FUCCs blasting works.
is P108,493,966.30, broken down as follows:
- The technical task force recommended that FUCC be
SCHEDULE paid P458.07 per cubic meter as such being the price
agreed upon by FUCC.
1 Cawayan area P52,081,421.00
The matter was further referred to the Department of Public
1A Botong area P56,412,545.30 [W]orks and Highways (DPWH), which in a letter dated May

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19, 1993, recommended the price range of P500.00 (c) Payment of liquidated damages due to the
to P600.00 per cubic meter as reasonable. standby of electromechanical contractor;

It further opined that the price of P983.75 per cubic meter (d) Loss of guaranteed protection (warranties) of all
proposed by Lauro R. Umali, Project Manager of BACMAN II delivered plant equipment and accessories as
was high. A copy of the DPWH letter is attached as Annex C, Mitsubishi Corporation, electromechanical
FUCCs Exhibit EEE-Arbitration. contractor, will not be liable after six months of
delivery.
In a letter dated June 28, 1993, FUCC formally informed NPC
that it is accepting the proposed price of P458.07 per cubic To prevent NPC from taking over the project, on March 28,
meter. A copy of the said letter is attached as Annex D, 1994, FUCC filed an action for Specific Performance and
FUCCs Exhibit L Arbitration. Damages with Preliminary Injunction and Temporary
Restraining Order before Branch 99, Regional Trial
In the meantime, by March 1993, the works in Botong area Court, Quezon City.
were in considerable delay. By May 1993, civil works in
Botong were kept at a minimum until on November 1, 1993, Under paragraph 19 of its Complaint, FUCC admitted that it
the entire operation in the area completely ceased and agreed to pay the price of P458.07 per cubic meter.
FUCC abandoned the project.
On April 5, 1994, Judge de Guzman issued a temporary
Several written and verbal warnings were given by NPC to restraining order and on April 21, 1994, the trial court
FUCC. On March 14, 1994, NPCs Board of Directors passed resolved to grant the application for issuance of a writ of
Resolution No. 94-63 approving the recommendation of preliminary injunction.
President Francisco L. Viray to take over the contract.
President Virays recommendation to take over the project On July 7, 1994, NPC filed a Petition for Certiorari with Prayer
was compelled by the need to stave-off huge pecuniary and for Temporary Restraining Order and Preliminary Injunction
non-monetary losses, namely: before the First Division of the Court of Appeals asserting
that no injunction may issue against any government
(a) Generation loss estimated to be projects pursuant to Presidential Decree 1818.
at P26,546,400/month;
On July 8, 1994, the Court of Appeals through then
(b) Payment of steam penalties to PNOC-EDC the Associate Justice Bernardo Pardo issued a temporary
amount estimated to be restraining order and on October 20, 1994, the said court
at P10,206,048.00/month; rendered a Decision granting NPCs Petition for Certiorari and

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setting aside the lower courts Order dated April 21, 1994 accounts which could not be reconciled among the issues to
be arbitrated as hereunder provided;
and the Writ of Preliminary Injunction dated May 5, 1994.

2. Plaintiff accepts and acknowledges that Defendant shall have


However, notwithstanding the dissolution by the Court of the right to proceed with the works by re-bidding or
Appeals of the said injunction, on July 15, 1995, FUCC filed a negotiating the project immediately upon the signing of
Complaint before the Office of the Ombudsman against herein Compromise Agreement;
several NPC employees for alleged violation of Republic Act
No. 3019, otherwise known as the Anti-Graft and Corrupt 3. This Compromise Agreement shall serve as the Supplemental
Agreement for payment of plaintiffs blasting works at the
Practices Act. Together with the complaint was an Urgent Botong site;
Ex-Parte Motion for the issuance of a cease and [d]esist
[o]rder to restrain NPC and other NPC officials involved in 4. Upon approval of this Compromise Agreement by the Court or
the BACMAN II project from canceling and/or from taking Plaintiffs receipt of payment of this undisputed unpaid
over FUCCs contract for civil works of said project. billings from Defendant whichever comes first, the parties
shall immediately file a Joint Manifestation and Motion for the
withdrawal of the following Plaintiffs petition from the
Then on November 16, 1994, FUCC filed before the Supreme Supreme Court, Plaintiffs Complaint from the National
Court a Petition for Review assailing the Decision of the Ombudsman, the Complaint and Amended Complaint from
Court of [A]ppeals dated October 20, 1994. In its Comment, the RTC, Br. 99 of Quezon City;

NPC raised the issue that FUCC resorted to forum shopping


5. Upon final resolution of the Arbitration, as hereunder
as it applied for a cease and desist order before the National
prescribed, the parties shall immediately execute the proper
Ombudsman despite the dissolution of the injunction by the documents mutually terminating Plaintiffs contract for the
Court of Appeals. civil works of the BACMAN II Project (Contract No. Sp90DLM-
918 (I & A);
Pending the petition filed by FUCC before the Supreme
6. Such mutual termination of Plaintiffs contract shall have the
Court, on April 20, 1995 the NPC and FUCC entered into a
following effects and/or consequences: (a) the construction
Compromise Agreement. works of Plaintiff at the Kawayan and Bolong sites, at its
present stage of completion, shall be accepted and/or
Under the Compromise Agreement, the parties agreed on deemed to have been accepted by defendant; (b) Plaintiff
shall have no more obligation to Defendant in respect of the
the following:
BACMAN II Project except as provided in clause (e) below; (c)
Defendant shall release all retention moneys of plaintiff
1. Defendant shall process and pay the undisputed unpaid within a maximum period of thirty (30) days from the date of
billings of Plaintiff in connection with the entire project fifteen final Resolution of the Arbitration; (d) no retention money
(15) days after a reconciliation of accounts by both Plaintiff shall thenceforth be withheld by Defendant in its payment to
and Defendant or thirty (30) days from the date of approval Plaintiff under this Compromise Agreement, and (e) Plaintiff
of this Compromise Agreement by the Court whichever shall put up a one-year guaranty bond for its completed civil
comes first. Both parties agree to submit and include those works at the Kawayan site, retroactive to the date of actual
use of the plant by defendant;

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7. Plaintiffs blasting works claims and other unresolved claims, 7.5 The parties agree that the Decision of the
as well as the claims of damages of both parties shall be Arbitration Board shall be final and executory;
settled through a two stage process to wit:
7.6 By virtue of this Compromise Agreement, except as
STAGE 1 herein provided, the parties shall mutually waive,
forgo and dismiss all of their other claims and/or
7.1 Plaintiff and Defendant shall execute and sign this counterclaim in this case. Plaintiff and defendant
Compromise Agreement which they will submit for warrant that after approval by the Court of this
approval by this Court. Under this Compromise Compromise Agreement neither party shall file
Agreement both parties agree that: Criminal or Administrative cases or suits against
each other or its Board or member of its officials on
grounds arising from the case.
xxx xxx

STAGE 2
The Compromise Agreement was subsequently approved by
the Court on May 24, 1995.
7.1 The parties shall submit for arbitration to settle: (a)
the price of blasting, (b) both parties claims for The case was subsequently referred by the parties to the
damages, delays, interests, and (c) all other arbitration board pursuant to their Compromise Agreement.
unresolved claims of both parties, including the
On December 9, 1999 the Arbitration Board rendered its
exact volume of blasted rocks;
ruling the dispositive portion of which states:
7.2 The arbitration shall be through a three-member
commission to be appointed by the Honorable WHEREFORE, claimant is hereby declared entitled to an
Court. Each party shall nominate one member. The award of P118,681,328.28 as just compensation for blasting
Chairman of the Arbitration Board shall be [a]
works, plus ten percent (10%) thereof for attorneys fees and
person mutually acceptable to both parties,
preferably from the academe; expenses of litigation.

7.3 The parties shall likewise agree upon the terms Considering that payment in the total amount
under which the arbitrable issues shall be referred of P36,550,000.00 had previously been made, respondent is
to the Arbitration Board. The terms of reference
hereby ordered to pay claimant the remaining sum
shall form part of the Compromise Agreement and
shall be submitted by the parties to the Honorable of P82,131,328.28 for attorneys fees and expenses of
Court within a period of seven (7) days from the litigation.
signing of the Compromise Agreement;

Pursuant to the Compromise Agreement approved by this


7.4 The Arbitration Board shall have a non-extendible
Honorable Court, the parties have agreed that the decision
period of three (3) months within which to
complete the arbitration process and submit its of the Arbitration Board shall be final and executory.
Decision to the Honorable Court;

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SO ORDERED. For one, what the price agreed to be submitted for
arbitration are pure issues of fact (i.e., the price of blasting;
On December 10, 1999 plaintiff FUCC filed a Motion for both parties claims for damages, delay, interests and all
Execution while defendant NPC filed a Motion to Vacate other unresolved claims of both parties, including the exact
Award by the Arbitration Board on December 20, 1999. volume of blasted rocks). Also, the manner by which the
Arbitration Board was formed and the terms under which the
On May 22, 2000 Presiding Judge Rose Marie Alonzo Legasto arbitrable issues were referred to said Board are specified in
issued an order the dispositive portion of which states: the agreement. Clearly, the parties had left to the
Arbitration Board the final adjudication of their remaining
WHEREFORE, the Arbitration Award issued by the Arbitration claims and waived their right to question said Decision of
Board is hereby APPROVED and the Motion for Execution the Board. Hence, they agreed in clear and unequivocal
filed by plaintiff hereby GRANTED. The Motion to Vacate terms in the Compromise Agreement that said Decision
Award filed by defendant is hereby DENIED for lack of merit. would be immediately final and executory. Plaintiff relied
upon this stipulation in complying with its various
Accordingly, let a writ of execution be issued to enforce the obligations under the agreement. To allow defendant to now
Arbitration Award. go back on its word and start questioning the Decision
would be grossly unfair considering that the latter was also
SO ORDERED.[5] (Bracketed words supplied) a party to the Compromise Agreement entered into part of
which dealt with the creation of the Arbitration Board.[6]
NPC went to the Court of Appeals on the lone issue of
whether respondent judge acted with grave abuse of The appellate court likewise held that petitioner failed
discretion in issuing the Order dated May 22, 2000 and to present evidence to prove its claim of bias and partiality
directing the issuance of a Writ of Execution. on the part of the Chairman of the Arbitration Board, Mr.
Carmelo V. Sison (Mr. Sison).
In its assailed Decision, the appellate court declared
that the court a quo did not commit grave abuse of Further, the Court of Appeals found that blasting is not
discretion considering that the Arbitration Board acted part of the unit price for grading and structural excavation
pursuant to its powers under the Compromise Agreement provided for in the contract for the BACMAN II Project, and
and that its award has factual and legal bases. that there was no perfected contract between the parties for
an extra work order for blasting. Nonetheless, since FUCC
The Court of Appeals gave primacy to the court- relied on the representation of petitioners officials that the
approved Compromise Agreement entered into by the extra work order would be submitted to its Board of
parties and concluded that they intended the decision of the Directors for approval and that the blasting works would be
arbitration panel to be final and executory. Said the court: paid, the Court of Appeals ruled that FUCC is entitled to just

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compensation on grounds of equity and promissory settlement in the court of arbitration
estoppel. proceedings.

Anent the issue of just compensation, the appellate 3. The Chairman of the Arbitration Board committed
court took into account the estimate prepared by a certain serious irregularity in hastily convening the
Mr. Lauro R. Umali (Mr. Umali), Project Manager of the Board in two days, which thereafter released its
BACMAN II Project, which itemized the various costs involved report.
in blasting works and came up with P1,310.82 per cubic
meter, consisting of the direct cost for drilling, blasting 4. The Arbitration Board Committed manifest
excavation, stockpiling and hauling, and a 30% mark up for injustice prejudicial to petitioner based on the
overhead, contractors tax and contingencies. This estimate following:
was later changed to P983.75 per cubic meter to which
FUCC agreed. The Court of Appeals, however, held that just a. It rendered an award based on equity
compensation should cover only the direct costs plus 10% despite the mandatory provision of the
for overhead expenses. Thus, it declared that the amount law.
of P763.00[7] per cubic meter is sufficient. Since the total
volume of blasted rocks as computed by Dr. Benjamin b. The Boards decision to justify that equity
Buensuceso, Jr.[8] of the U.P. College of Engineering is applies herein despite the fact that FUCC
97,032.16 cubic meters, FUCC is entitled to the amount never submitted its own actual costs
of P74,035,503.50 as just compensation. for blasting and PHESCO, INC., the
succeeding contractor, did not employ
Although the Court of Appeals adjudged FUCC entitled blasting but used ordinary excavation
to interest,[9] the dispositive portion of the method at P75.59 per cubic meter which is
assailed Decision[10] did not provide for the payment of approximately the same unit price of
interest. Moreover, the award of attorneys fees was deleted plaintiff (FUCC).
as there was no legal and factual ground for its imposition.
c. It gravely erred when the Board claimed
ISSUE that an award of just compensation must
be given to respondent FUCC for what it
1. The Chairman of the Arbitration Board showed has actually spent and yet instead of using
extreme bias in prejudging the case. as basis P458.07 which is the price agreed
upon by FUCC, it chose an estimate made
2. The Chairman of the Arbitration Board greatly by an NPC employee.
exceeded his powers when he mediated for

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d. It gravely erred when it relied heavily on implementing rules which specifically require the approval of
the purported letter of NPC Project the extra work by authorized officials before an extra work
Manager Lauro R. Umali, when the same order may be issued in favor of the contractor. Thus, it
has not been identified nor were the should not be held liable for the claim. If at all, only the
handwritten entries in Annex ii established erring officials should be held liable. Further, FUCC did not
to be made by him. present evidence to prove the actual expenses it incurred
for the blasting works. What the Arbitration Board relied
5. The Arbitration Board gravely erred in computing upon was the memorandum of Mr. Umali which was neither
interest at 12% and from the time of plaintiffs identified or authenticated during the arbitration
extrajudicial claim despite the fact that herein proceedings nor marked as evidence for FUCC. Moreover,
case is an action for specific performance and the figures indicated in Mr. Umalis memorandum were
not for payment of loan or forbearance of allegedly mere estimates and were recommendatory at
money, and despite the fact that it has resolved most.
that there was no perfected contract and there
was no bad faith on the part of defendant. Petitioner likewise claims that its succeeding contractor,
Phesco, Inc. (Phesco), was able to excavate the same rock
6. On June 25, 2000, NPC discovered the Sub- formation without blasting.
Contract Agreement of FUCC with a unit
price of only P430/per cubic meter. Finally, it asserts that the award of P763.00 per cubic
[11]
[Emphasis in the original] meter has no factual and legal basis as the sub-contract
between FUCC and its blasting sub-contractor, Dynamic
Specifically, petitioner asserts that Mr. Sison exhibited Blasting Specialists of the Philippines (Dynamic), was
bias and prejudgment when he exhorted it to pay FUCC for only P430.00 per cubic meter.
the blasting works after concluding that the latter was
allowed to blast. Moreover, Mr. Sison allegedly attempted to In its Comment[13] dated October 15, 2001, FUCC points
mediate the conflict between the parties in violation of out that petitioners arguments are exactly the same as the
Section 20,[12] paragraph 2 of Republic Act No. 876 (R.A. 876) ones it raised before the Arbitration Board, the trial court
otherwise known as the Arbitration Law. Petitioner also and the Court of Appeals. Moreover, in the Compromise
questions the abrupt manner by which the decision of the Agreement between the parties, petitioner committed to
Arbitration Board was released. abide by the decision of the Arbitration Board. It should not
now be allowed to question the decision.
Petitioner avers that FUCCs claim for blasting works was
not approved by authorized officials in accordance with FUCC likewise notes that Atty. Jose G. Samonte (Atty.
Presidential Decree No. 1594 (P.D. 1594) and its Samonte), one of the members of the Arbitration Board, was

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nominated by petitioner itself. If there was any irregularity in or as to the facts. Courts are generally without power to
its proceedings such as the bias and prejudgment petitioner amend or overrule merely because of disagreement with
imputes upon Mr. Sison, Atty. Samonte would have matters of law or facts determined by the arbitrators. They
complained. As it is, Atty. Samonte concurred in the decision will not review the findings of law and fact contained in an
of the Arbitration Board and dissented only as to the award award, and will not undertake to substitute their judgment
of attorneys fees. for that of the arbitrators. A contrary rule would make an
arbitration award the commencement, not the end, of
As regards the issue of interest, FUCC claims that the litigation. Errors of law and fact, or an erroneous decision on
case involves forbearance of money and not a claim for matters submitted to the judgment of the arbitrators, are
damages for breach of an obligation in which case interest insufficient to invalidate an award fairly and honestly made.
on the amount of damages awarded may be imposed at the Judicial review of an arbitration award is, thus, more limited
rate of six percent (6%) per annum. than judicial review of a trial.[17]

Finally, FUCC asserts that its sub-contract agreement However, an arbitration award is not absolute and
with Dynamic is not newly-discovered evidence. Petitioners without exceptions. Where the conditions described in
lawyers allegedly had a copy of the sub-contract in their Articles 2038, 2039 and 2040 of the Civil Code [18] applicable
possession. In any event, the unit price of P430.00 per cubic to both compromises and arbitrations are obtaining, the
meter appearing in the sub-contract represents only a arbitrators award may be annulled or rescinded.
[19]
fraction of the costs incurred by FUCC for the blasting works. Additionally, judicial review of an arbitration award is
warranted when the complaining party has presented proof
Petitioner filed a Reply[14] dated March 18, 2002 of the existence of any of the grounds for vacating,
reiterating its earlier submissions. modifying or correcting an award outlined under Sections 24
and 25 of R.A. 876, viz:
The parties in the present case mutually agreed to
submit to arbitration the settlement of the price of blasting, Section 24. Grounds for vacating an award. In any of the following cases,
the court must make an order vacating the award upon the petition of any
the parties claims for damages, delay and interests and all party to the controversy when such party proves affirmatively that in the
other unresolved claims including the exact volume of arbitration proceedings:
blasted rocks.[15] They further mutually agreed that the
decision of the Arbitration Board shall be final and (a) The award was procured by corruption, fraud, or other undue
immediately executory.[16] means; or

(b) That there was evident partiality or corruption in the


A stipulation submitting an ongoing dispute to
arbitrators or any of them; or
arbitration is valid. As a rule, the arbitrators award cannot
be set aside for mere errors of judgment either as to the law

12
(c) That the arbitrators were guilty of misconduct in refusing to (b) Where the arbitrators have awarded upon a matter not
postpone the hearing upon sufficient cause shown, or in submitted to them, not affecting the merits of the decision
refusing to hear evidence pertinent and material to the upon the matter submitted; or
controversy; that one or more of the arbitrators was
disqualified to act as such under section nine hereof, and (c) Where the award is imperfect in a matter of form not
willfully refrained from disclosing such disqualifications or of affecting the merits of the controversy, and if it had been a
any other misbehavior by which the rights of any party have commissioners report, the defect could have been amended
been materially prejudiced; or or disregarded by the court.

(d) That the arbitrators exceeded their powers, or so imperfectly


The order may modify and correct the award so as to effect
executed them, that a mutual, final and definite award upon
the subject matter submitted to them was not made. the intent thereof and promote justice between the parties.

When an award is vacated, the court, in its discretion, may In this case, petitioner does not specify which of the
direct a new hearing either before the same arbitrators or foregoing grounds it relies upon for judicial review. Petitioner
before a new arbitrator or arbitrators to be chosen in the avers that if and when the factual circumstances referred to
manner provided in the submission or contract for the in the provisions aforementioned are present, judicial review
selection of the original arbitrator or arbitrators, and any of the award is warranted. [20] From its presentation of issues,
provision limiting the time in which the arbitrators may however, it appears that the alleged evident partiality of Mr.
make a decision shall be deemed applicable to the new Sison is singled out as a ground to vacate the boards
arbitration to commence from the date of the courts order. decision.

Where the court vacates an award, costs not exceeding fifty We note, however, that the Court of Appeals found that
pesos and disbursements may be awarded to the prevailing petitioner did not present any proof to back up its claim of
party and the payment thereof may be enforced in like evident partiality on the part of Mr. Sison. Its averments to
manner as the payment of costs upon the motion in an the effect that Mr. Sison was biased and had prejudged the
action. case do not suffice to establish evident partiality. Neither
does the fact that a party was disadvantaged by the
Section 25. Grounds for modifying or correcting an award. In any one of the decision of the arbitration committee prove evident
following cases, the court must make an order modifying or correcting the partiality.[21]
award, upon the application of any party to the controversy which was
arbitrated:
According to the appellate court, [p]etitioner was never
(a) Where there was an evident miscalculation of figures, or an
deprived of the right to present evidence nor was there any
evident mistake in the description of any person, thing or showing that the Board showed signs of any bias in favor of
property referred to in the award; or FUCC. As correctly found by the trial court, this Court cannot
find its way to support petitioners contention that there was
evident partiality in the assailed Award of the Arbitrator in

13
favor of the respondent because the conclusion of the CI 1 - Variation Orders - Change Order/Extra Work
Board, which the Court found to be well-founded, is fully Order/Supplemental Agreement
supported by substantial evidence.[22]
4. An Extra Work Order may be issued by the
There is no reason to depart from this conclusion. implementing official to cover the introduction
of new work items after the same has been
However, we take exception to the arbitrators found to strictly comply with Section CI-1-1
determination that based on promissory estoppel per se or and approved by the appropriate official if the
alone, FUCC is entitled to just compensation for blasting amount of the Extra Work Order is within the
works for the reasons discussed hereunder. limits of the former's authority to approve
original contracts and under the following
Section 9 of P.D. No. 1594, entitled Prescribing Policies, conditions:
Guidelines, Rules and Regulations for Government
Infrastructure Contracts, provides: a. Where there are additional works needed and
necessary for the completion, improvement or
SECTION 9. Change Order and Extra Work Order.A change protection of the project which were not included as
order or extra work order may be issued only for works items of work in the original contract.
necessary for the completion of the project and, therefore,
shall be within the general scope of the contract as bid[ded] b. Where there are subsurface or latent physical
and awarded. All change orders and extra work orders shall conditions at the site differing materially from those
be subject to the approval of the Minister of Public Works, indicated in the contract.
Transportation and Communications, the Minister of Public
Highways, or the Minister of Energy, as the case may be. c. Where there are duly unknown physical conditions
at the site of an unusual nature differing materially
The pertinent portions of the Implementing Rules and from those ordinarily encountered and generally
Regulations of P.D. 1594 provide: recognized as inherent in the work or character
provided for in the contract.
CI - Contract Implementation:
d. Where there are duly approved construction
These Provisions Refer to Activities During Project drawings or any instruction issued by the
Construction, i.e., After Contract Award Until implementing office/agency during the term of
Completion, Except as May Otherwise be contract which involve extra cost.
Specifically Referred to Provisions Under Section II.
IB - Instructions to Bidders.

14
6. A separate Supplemental Agreement may be plans therefore, his computations as to the
entered into for all Change Orders and Extra quantities of the additional works involved per item
Work Orders if the aggregate amount exceeds indicating the specific stations where such works are
25% of the escalated original contract price. needed, the date of his inspections and
All change orders/extra work orders beyond investigations thereon, and the log book thereof,
100% of the escalated original contract cost and a detailed estimate of the unit cost of such
shall be subject to public bidding except items of work, together with his justifications for the
where the works involved are inseparable need of such Change Order, Extra Work Order or
from the original scope of the project in which Supplemental Agreement, and shall submit the
case negotiation with the incumbent same to the Regional Director of
contractor may be allowed, subject to office/agency/corporation concerned.
approval by the appropriate authorities.
b. The Regional Director concerned, upon receipt of
7. Any Variation Order (Change Order, Extra Work the proposed Change Order, Extra Work Order or
Order or Supplemental Agreement) shall be subject Supplemental Agreement shall immediately instruct
to the escalation formula used to adjust the original the technical staff of the Region to conduct an on-
contract price less the cost of mobilization. In the-spot investigation to verify the need for the work
claiming for any Variation Order, the contractor to be prosecuted. A report of such verification shall
shall, within seven (7) calendar days after such work be submitted directly to the Regional Director
has been commenced or after the circumstances concerned.
leading to such condition(s) leading to the extra
cost, and within 28 calendar days deliver a written c. The Regional Director concerned after being
communication giving full and detailed particulars of satisfied that such Change Order, Extra Work Order
any extra cost in order that it may be investigated at or Supplemental Agreement is justified and
that time. Failure to provide either of such notices in necessary, shall review the estimated quantities and
the time stipulated shall constitute a waiver by the prices and forward the proposal with the supporting
contractor for any claim. The preparation and documentation to the head of
submission of Change Orders, Extra Work Orders or office/agency/corporation for consideration.
Supplemental Agreements are as follows:
d. If, after review of the plans, quantities and
a. If the Project Engineer believes that a Change estimated unit cost of the items of work involved,
Order, Extra Work Order or Supplemental Agreement the proper office/agency/corporation committee
should be issued, he shall prepare the proposed empowered to review and evaluate Change Orders,
Order or Supplemental Agreement accompanied Extra Work Orders or Supplemental Agreements
with the notices submitted by the contractor, the recommends approval thereof, the head of

15
office/agency/corporation, believing the Change point where the cumulative increase in value of work
Order, Extra Work Order or Supplemental Agreement on the project which has not yet been duly fully
to be in order, shall approve the same. The limits of approved does not exceed five percent (5%) of the
approving authority for any individual, and the adjusted original contract price, or P500,000
aggregate of, Change Orders, Extra Work Orders or whichever is less; provided, further, that
Supplemental Agreements for any project of the immediately after the start of work, the
head of office/agency/corporation shall not be corresponding Change/Extra Work Order shall be
greater than those granted for an original project. prepared and submitted for approval in accordance
with the above rules herein set. Payments for works
CI 3 - Conditions under which Contractor is to Start satisfactorily accomplished on any Change/Extra
Work under Variation Orders and Receive Payments Work Order may be made only after approval of the
same by the Secretary or his duly authorized
1. Under no circumstances shall a contractor representative.
proceed to commence work under any Change
Order, Extra Work Order or Supplemental b. For a Change/Extra Work Order involving a
Agreement unless it has been approved by the cumulative amount exceeding five percent
Secretary or his duly authorized (5%) of the original contract price or original
representative. Exceptions to the preceding rule adjusted contract price no work thereon may
are the following: be commenced unless said Change/Extra Work
Order has been approved by the Secretary or
a. The Regional Director, or its equivalent position in his duly authorized representative. [Emphasis
agencies/offices/corporations without plantilla supplied]
position for the same, may, subject to the
availability of funds, authorize the immediate start It is petitioners submission, and FUCC does not deny,
of work under any Change or Extra Work Order that the claim for payment of blasting works in Botong alone
under any or all of the following conditions: was approximately P170,000,000.00, a figure which far
exceeds the original contract price of P80,000,000.00 for
(1) In the event of an emergency where the two (2) project sites. Under the foregoing implementing
prosecution of the work is urgent to avoid detriment rules, for an extra work order which exceeds 5% of the
to public service, or damage to life and/or property; original contract price, no blasting work may be commenced
and/or without the approval of the Secretary or his duly authorized
representative. Moreover, the procedure for the preparation
(2) When time is of the essence; provided, however, and approval of the extra work order outlined under
that such approval is valid on work done up to the Contract Implementation (CI) 1(7) above should have been
complied with. Accordingly, petitioners officials should not

16
have authorized the commencement of blasting works nor Civil Engineering Design of respondents Design Department
should FUCC have proceeded with the same. which bidded the project). These officials issued verbal
instructions to the effect: (a) that claimant could
The following events, culled from the decision of the blast the rock formation down to the design grade of
Arbitration Board and the assailed Decision, are made the 495 masl; (b) that said blasting works would be an
bases for the finding of promissory estoppel on the part of extra work order; and (c) that claimant would be paid
petitioner: for said blasting works using the price per cubic
meter for similar blasting works at Palinpinon, or
1. After claimant [respondent herein] encountered what at P1,346.00 per cubic meter.
it claimed to be massive hard rock
formation (Testimony of witness Dumaliang, TSN, 28 4. Claimant sent two (2) confirmatory letters to respondent,
October 1996, pp. 41-42; Testimony of witness Lataquin, 28 both addressed to its President, one dated 30 September
November 1996, pp. 2-3; 20-23; Exh. JJJ and sub- 1992, and sent through Mr. Angelito Senga, Chief Civil
markings) and informed respondent [petitioner Design Thermal, the other dated 02 October 1992, and sent
herein] about it, respondents own geologists went to through Mr. Lauro R. Umali, Project ManagerBacMan II (Exhs.
the Botong site to investigate and confirmed the rock D and E; Testimony of witness Dumaliang, TSN, 28 October
formation and recommended blasting (Cf. Memorandum 1996, pp. 43-49). The identical letters read:
of Mr. Petronilo E. Pana, Acting Manager of the Geoscience
Services Department and the report of the geologists who We wish to confirm your instruction for us to proceed with
conducted the site investigation; Exhs. F and F-1). the blasting of the Botong Plant site to the design grade
pending issuance of the relevant variation order. This is to
2. Claimant asked for clearance to blast the rock formation avoid delay in the implementation of this critical project due
to the design grade (Letter dated 28 September 1992; Exh. to the urgent need to blast rocks on the plant site.
UU). The engineers of respondent at the project site
advised claimant to proceed with its suggested We are confirming further your statement that the said
method of extraction (Order/Instruction given by Mr. blasting works is an extra work order and that we will be
Reuel R. Declaro and Mr. Francis A. Paderna dated 29 paid using the price established in your Palinpinon contract
September 1992; Exh. C). with Phesco.

3. Claimant requested that the intended blasting Thank you for your timely action and we look forward to the
works be confirmed as extra work order by immediate issuance of the extra work order.
responsible officials of respondent directly involved in
the BACMAN II Project (i.e., then BACMAN II Project Manager, We are now mobilizing equipment and manpower for the
Mr. Lauro R. Umali and Mr. Angelito G. Senga, Section Chief, said work and hope to start blasting next week.

17
5. Respondent received the letters but did not reply work order and recommended that it be paid at the
thereto nor countermand the earlier instructions price for similar blasting works at Palinpinon, or
given to claimant to proceed with the blasting at P1,346.00 per cubic meter. Mr. Campos concurred
works. The due execution and authenticity of these letters with the findings and recommendations of Mr.
(Exhs. D-1 and E-1) and the fact of receipt (Exhs. D-2 and E- Magallanes and instructed Mr. Lauro R. Umali, then
2) were duly proved by claimant (Testimony of witness Project Manager of BacMan II, to implement the same
Dumaliang, TSN, 28 October 1996, 43-49). as shown by his instructions scribbled on the
memorandum.
6. In mid-October 1992, three (3) Vice-Presidents of
respondent visited the project site and were 8. Mr. Umali and the project team prepared proposed
informed of claimants blasting activities. While Extra Work Order No. 2 Blasting (Exh. DDD
respondent claims that one of the Vice-Presidents, Memorandum of Mr. Umali to Mr. Campos dated 20
Mr. Rodrigo Falcon, raised objections to claimants January 1993 forwarding proposed Extra Work Order
blasting works as an extra work order, No. 2), recommending a price of P983.75 per cubic
they instructed claimant to speed up the works meter for claimants blasting works. Claimant agreed
because of the power crisis then hounding the to this price (Testimony of witness Dumaliang, 7 November
country. Stipulation no. 24 of the Joint Stipulation of Facts 1996, p. 48).
of the parties which reads: 24. In mid-October 1992, three
(3) Vice-Presidents of respondent, namely: Mr. Hector N. 9. On 19 February 1993, claimant brought the matter of its
Campos, Sr., of Engineering Construction, Mr. C.A. Pastoral unpaid blasting works to the attention of the then NPC
of Engineering Design, and Mr. Rodrigo P. Falcon, visited the Chairman [also Secretary of the Department of Energy then]
project site and were likewise apprised of claimants blasting Delfin L. Lazaro during a meeting with the multi-sectoral
activities. They never complained about the blasting task force monitoring the implementation of power plant
works, much less ordered its cessation. In fact, no projects, who asked then NPC President Pablo B. Malixi what
official of respondent ever ordered that the blasting he was doing about the problem. President Malixi
works be stopped. thereafter convened respondents vice-presidents and
ordered them to quickly document the variation
7. After visiting Botong, Mr. Hector N. Campos, Sr., then Vice order and pay claimant. The vice-president, and
President of Engineering Construction, instructed Mr. specifically Mr. Campos, pledged that the variation
Fernando A. Magallanes then Manager of the Luzon order for claimants blasting works would be
Engineering Projects Department, to evaluate claimants submitted for the approval of the NPC Board during
blasting works and to submit his recommendations on the the first week of March 1993. Claimant thereafter
proper price therefor. In a memorandum dated 17 November sent respondent a letter dated 22 February 1993 (Ex.
1992 (Exh. G and sub-markings), Mr. Magallanes K) to confirm this pledge (Testimony of witness
confirmed that claimants blasting works was an extra Dumaliang, 7 November 1996, pp. 28-30).

18
10. Mr. Campos created a task force (i.e., the Technical Task 13. Claimant thereafter saw Mr. Francisco L. Viray, the
Force on the Study and Review of Extra Work Order No. 2; new NPC President, who proposed that claimant
Exh. FFF) to review claimants blasting works. After several accept the price of P458.07 per cubic meter for its
meetings with the task force, claimant agreed to the blasting works with the balance of its claim to be the
lower price of P458.07 per cubic meter, in exchange subject of arbitration. Claimant accepted the offer
for quick payment (Testimony of witness Dumaliang, 7 and sent the letter dated 28 September 1993 (Exh. O)
November 1996, p. 30). to formalize said acceptance. However, no variation
order was issued and the promised payment never
11. However, no variation order was issued and no came. (Testimony of witness Dumaliang, 7 November 1996,
payment came, although it appears from two (2) p. 58).
radiograms sent by Mr. Campos to Mr. Paderna at the
project site that the variation order was being 14. After some time, claimant met Mr. Viray on 19
processed and that payment to claimant was October 1993 at the project site, and with some NPC
forthcoming (Exhs. AAA and BBB). officers in attendance, particularly Mr. Gilberto A.
Pastoral, Vice-President for Engineering Design, who
12. Respondent asked the Department of Public Works and was instructed by Mr. Viray to prepare the necessary
Highways (DPWH) about the standard prices for blasting in memorandum (i.e., that claimant would be
the projects of the DPWH. The DPWH officially replied to paid P458.07 per cubic meter with the balance of its
respondents query in a letter dated 19 May 1993 but the claim to be the subject of arbitration) for the
task force still failed to seek Board approval for claimants approval of the NPC Board. Claimant formalized what
variation order. The task force eventually recommended that transpired during this meeting in its letter to Mr.
the issue of grading excavation and structural excavation Pastoral dated 22 October 1993 (Exhibit R). But no
and the unit prices therefor be brought into voluntary action was taken by Mr. Pastoral and no variation
arbitration (Testimony of witness Dumaliang, 7 November order was issued by respondent (Testimony of witness
1996, pp. 30-57). Dumaliang, 7 November 1996, pp. 57-58). [23] [Emphasis
supplied and bracketed words]

Promissory estoppel may arise from the making of a


promise, even though without consideration, if it was
intended that the promise should be relied upon and in fact
it was relied upon, and if a refusal to enforce it would be
virtually to sanction the perpetration of fraud or would result
in other injustice.[24] Promissory estoppel presupposes the
existence of a promise on the part of one against whom
estoppel is claimed. The promise must be plain and

19
unambiguous and sufficiently specific so that the court can In this case, petitioners officials exceeded the scope of
understand the obligation assumed and enforce the promise their authority when they authorized FUCC to commence
according to its terms.[25] blasting works without an extra work order properly
approved in accordance with P.D. 1594. Their acts cannot
In the present case, the foregoing events clearly evince bind petitioner unless it has ratified such acts or is estopped
that the promise that the blasting works would be paid was from disclaiming them.[26]
predicated on the approval of the extra work order by
petitioners Board. Even FUCC acknowledged that the However, the Compromise Agreement entered into by
blasting works should be an extra work order and requested the parties, petitioner being represented by its President, Mr.
that the extra work order be confirmed as such and Guido Alfredo A. Delgado, acting pursuant to its Board
approved by the appropriate officials. Notably, even as the Resolution No. 95-54 dated April 3, 1995, is a confirmatory
extra work order allegedly promised to it was not yet act signifying petitioners ratification of all the prior acts of
forthcoming, FUCC commenced blasting. its officers. Significantly, the parties agreed that [t]his
Compromise Agreement shall serve as the Supplemental
The alleged promise to pay was therefore conditional Agreement for the payment of plaintiffs blasting works at
and up to this point, promissory estoppel cannot be the Botong site[27] in accordance with CI 1(6) afore-quoted.
established as the basis of petitioners liability especially in In other words, it is primarily by the force of this
light of P.D. 1594 and its implementing rules of which both Compromise Agreement that the Court is constrained to
parties are presumed to have knowledge. In Mendoza v. declare FUCC entitled to payment for the blasting works it
Court of Appeals, supra, we ruled that [a] cause of action for undertook.
promissory estoppel does not lie where an alleged oral
promise was conditional, so that reliance upon it was not Moreover, since the blasting works were already
reasonable. It does not operate to create liability where it rendered by FUCC and accepted by petitioner and in the
does not otherwise exist. absence of proof that the blasting was done gratuitously, it
is but equitable that petitioner should make compensation
Petitioners argument that it is not bound by the acts of therefor, pursuant to the principle that no one should be
its officials who acted beyond the scope of their authority in permitted to enrich himself at the expense of another.[28]
allowing the blasting works is correct. Petitioner is a
government agency with a juridical personality separate and This brings us to the issue of just compensation.
distinct from the government. It is not a mere agency of the
government but a corporate entity performing proprietary The parties proposed in the terms of reference jointly
functions. It has its own assets and liabilities and exercises submitted to the Arbitration Board that should FUCC be
corporate powers, including the power to enter into all adjudged entitled to just compensation for its blasting
contracts, through its Board of Directors. works, the price therefor should be determined based on the

20
payment for blasting works in similar projects of FUCC and Parenthetically, the point raised by petitioner that its
the amount it paid to its blasting subcontractor. [29] They subsequent contractor, Phesco, did not undertake blasting
agreed further that the price of the blasting at the Botong works in excavating the same rock formation is extraneous
site . . . shall range from Defendants position of P76.00 per and irrelevant. The fact is that petitioner allowed FUCC to
cubic meter as per contract to a maximum of P1,144.00[30] blast and undertook to pay for the blasting works.

Petitioner contends that the Arbitration Board, trial At this point, we hearken to the rule that the findings of
court and the appellate court unduly relied on the the Arbitration Board, affirmed by the trial court and the
memorandum of Mr. Umali which was allegedly not marked Court of Appeals and supported as they are by substantial
as an exhibit. We note, however, that this memorandum evidence, should be accorded not only respect but finality.
actually forms part of the record of the case as Exhibit DDD. [33]
Accordingly, the amount of P763.00 per cubic meter fixed
[31]
Moreover, both the Arbitration Board and the Court of by the Arbitration Board and affirmed by the appellate court
Appeals found that Mr. Umalis proposal is the best evidence as just compensation should stand.
on record as it is supported by detailed cost estimates that
will serve as basis to determine just compensation. As regards the issue of interest, while the appellate
court declared in the body of its Decision that interest which
While the Arbitration Board found that FUCC did not would represent the cost of the money spent be imposed on
present evidence showing the amount it paid to its blasting the money actually spent by claimant for the blasting works,
sub-contractor, it did present testimony to the effect that it [34]
there is no pronouncement as to the payment of interest
incurred other costs and expenses on top of the actual in the dispositive portion of the Decision even as it
blasting cost. Hence, the amount of P430.00 per cubic specifically deleted the award of attorneys fees.
meter indicated in FUCCs Contract of Agreement with
Dynamic is not controlling. Despite its knowledge of the appellate courts omission,
FUCC did not file a motion for reconsideration or appeal from
Moreover, FUCC presented evidence showing that in two its Decision. In failing to do so, FUCC allowed the Decision to
(2) other projects where blasting works were undertaken, become final as to it.
petitioner paid the contractors P1,346 per cubic meter for
blasting and disposal of solid rocks in the Palinpinon project In Edwards v. Arce,[35] we ruled that in a case decided by
and P1,144.51 per cubic meter for rock excavation in the a court, the true judgment of legal effect is that entered by
Hermosa Balintawak project. Besides, while petitioner claims the clerk of said court pursuant to the dispositive part of its
that in a contract with Wilper Construction for the decision. The only portion of the decision that may be the
construction of the Tayabas sub-station, the price agreed for subject of execution is that which is ordained or decreed in
blasting was only P96.13, petitioner itself did not present the dispositive portion. Whatever may be found in the body
evidence in support of this claim.[32] of the decision can only be considered as part of the reasons

21
or conclusions of the court and serve only as guides to However, we do not agree with the Arbitration Board that
determine the ratio decidendi.[36] the interest should be computed at 12%. Since the case
does not involve a loan or forbearance of money, goods or
Even so, the Court allows a judgment which had credit and court judgments thereon, the interest due shall
become final and executory to be clarified when there is an be computed at 6% per annum computed from the time the
ambiguity caused by an omission or mistake in the claim was made in 1992 as determined by the Arbitration
dispositive portion of the decision. [37] In Reinsurance Board and in accordance with Articles 2209 and 1169 of the
Company of the Orient, Inc. v. Court of Appeals,[38] we held: Civil Code. The actual base for the computation of legal
interest shall be on the amount finally adjudged. [40] Further,
In Republic Surety and Insurance Company, Inc. v. when the judgment awarding a sum of money becomes final
Intermediate Appellate Court, the Court applying the above and executory, the rate of legal interest shall be 12% per
doctrine said: annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a
xxx We clarify, in other words, what we did affirm. What is forbearance of credit.[41]
involved here is not what is ordinarily regarded as a clerical
error in the dispositive part of the decision of the Court of WHEREFORE, the petition is GRANTED in part. The
First Instance, which type of error is perhaps best typified by appealed decision is MODIFIED in that the amount
an error in arithmetical computation. At the same time, what of P74,035,503.50 shall earn legal interest of six percent
is involved here is not a correction of an erroneous judgment (6%) from 1992. A twelve percent (12%) interest, in lieu of
or dispositive portion of a judgment. What we believe is six percent (6%), shall be imposed on such amount upon
involved here is in the nature of an inadvertent omission on finality of this decision until the payment thereof.
the part of the Court of First Instance (which should have
been noticed by private respondents counsel who had SO ORDERED.
prepared the complaint), of what might be described as a
logical follow-through of something set forth both in the Puno, (Chairman), Austria-Martinez, Callejo,
body of the decision and in the dispositive portion Sr., and Chico-Nazario, JJ., concur.
thereof: the inevitable follow-through, or translation into,
operational or behavioral terms, of the annulment of the
Deed of Sale with Assumption of Mortgage, from which
petitioners title or claim of title embodied in TCT 133153
flows. (Italics supplied)[39]

In this case, the omission of the award of interest was


obviously inadvertent. Correction is therefore in order.

22
ECOND DIVISION The completion of the construction was initially
scheduled on or before July 16, 1998 but was extended to
[G.R. No. 159795. July 30, 2004] November 15, 1998 upon agreement of the parties. It
appears, however, that petitioners failed to follow the
specifications and plans as previously agreed
upon. Respondents demanded the correction of the errors
SPOUSES ROBERTO & EVELYN DAVID and but petitioners failed to act on their complaint.
COORDINATED GROUP, INC., petitioners, vs. Consequently, respondents rescinded the contract on
CONSTRUCTION INDUSTRY AND ARBITRATION October 31, 1998, after paying 74.84% of the cost of
COMMISSION and SPS. NARCISO & AIDA construction.
QUIAMBAO, respondents.
Respondents then engaged the services of another
DECISION contractor, RRA and Associates, to inspect the project and
PUNO, J.: assess the actual accomplishment of petitioners in the
construction of the building. It was found that petitioners
revised and deviated from the structural plan of the building
This is a petition for review on certiorari under Rule 45
without notice to or approval by the respondents. [1]
of the Revised Rules of Court, assailing the Decision and
Resolution of the Court of Appeals, dated June 30, 2003 and Respondents filed a case for breach of contract against
August 27, 2003, respectively, in CA-G.R. SP No. 72736. petitioners before the Regional Trial Court (RTC) of Manila. At
the pre-trial conference, the parties agreed to submit the
Petitioner COORDINATED GROUP, INC. (CGI) is a
case for arbitration to the CONSTRUCTION INDUSTRY
corporation engaged in the construction business, with
ARBITRATION COMMISSION (CIAC). Respondents filed a
petitioner-spouses ROBERTO and EVELYN DAVID as its
request[2] for arbitration with the CIAC and nominated Atty.
President and Treasurer, respectively.
Custodio O. Parlade as arbitrator. Atty. Parlade was
The records reveal that on October 7, 1997, respondent- appointed by the CIAC as sole arbitrator to resolve the
spouses NARCISO and AIDA QUIAMBAO engaged the dispute. With the agreement of the parties, Atty. Parlade
services of petitioner CGI to design and construct a five- designated Engr. Loreto C. Aquino to assist him in assessing
storey concrete office/residential building on their land in the technical aspect of the case. The RTC of Manila then
Tondo, Manila. The Design/Build Contract of the parties dismissed the case and transmitted its records to the CIAC. [3]
provided that: (a) petitioner CGI shall prepare the working
After conducting hearings and two (2) ocular inspections
drawings for the construction project; (b) respondents shall
of the construction site, the arbitrator rendered judgment
pay petitioner CGI the sum of Seven Million Three Hundred
against petitioners, thus:
Nine Thousand Eight Hundred Twenty-One and 51/100 Pesos
(P7,309,821.51) for the construction of the building, AWARD
including the costs of labor, materials and equipment, and
Two Hundred Thousand Pesos (P200,000.00) for the cost of In summary, award is hereby made in favor of the
the design; and (c) the construction of the building shall be Quiambaos against the Respondents, jointly and severally,
completed within nine (9) months after securing the building as follows:
permit.

23
Lost Rentals - P1,680,000.00 Payments due CGI for 80%
Cost to Complete, Rectification, etc. - 2,281,028.71 work accomplishment - P5,847,857.20
Damages due to erroneous staking - 117,000.00 Cost of materials and
Professional fees for geodetic equipment - 238,372.75
surveys, etc. - 72,500.00 ----
Misc. expenses/ professional ----
fees of engineers - 118,642.50 ----
Bills for water and electricity, PLDT - 15,247.68 ----
Attorneys Fees - 100,000.00 ----
Moral Damages - 250,000.00 Total : P6,086,299
Exemplary Damages - 250,000.00 .95
--------- Deducting this amount of P6,086,229.95 from
-------- P10,159,459.89, the result is a net award in favor the
Claimants of (sic) the amount of P4,073,229.94.
TOTAL P4,884,418.89
WHEREFORE, the Respondents are hereby ordered to pay,
There is likewise an award in favor of the Respondents jointly and severally, the Claimants the amount of
(petitioners herein) and against the Claimants (respondents P4,073,229.94 with interest at 6% per annum from the date
herein) for the value of the materials and equipment left at of the promulgation of this Award, and 12% per annum of
(the) site (in) the amount of P238,372.75. Respondent CGI is the net award, including accrued interest, from the time it
likewise credited with an 80% accomplishment having a becomes final and executory until it is fully paid.
total value of P5,847,857.20.
Each party is hereby directed to pay to the Commission
All other claims and counterclaims are hereby dismissed for P15,000.00 as such partys share in the experts fees paid to
lack of merit. Engr. Loreto C. Aquino.

To recapitulate: Payments already SO ORDERED.[4]


made to CGI -
P5,275,041.00 Petitioners appealed to the Court of Appeals which
Amount awarded affirmed the arbitrators Decision but deleted the award for
above to lost rentals.[5]
Claimants - 4,864,418.8
9 Unsatisfied, petitioners filed this petition for review on
- certiorari, raising the following issues:
-------- I. THERE WAS NO BASIS, IN FACT AND IN LAW, TO ALLOW
-------- RESPONDENTS TO UNILATERALLY RESCIND THE
---- DESIGN/BUILT CONTRACT, AFTER PETITIONERS
Total 10,1 HAVE (SIC) SUBSTANTIALLY PERFORMED THEIR OBLIGATION
59,459.89 UNDER THE SAID CONTRACT.

24
II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING These claims of petitioners are refuted by the evidence
PETITIONERS JOINTLY AND SEVERALLY LIABLE WITH CO- on record. In holding that respondents were justified in
PETITIONER COORDINATED (GROUP, INC.), IN CLEAR rescinding the contract, the Court of Appeals upheld the
VIOLATION OF THE DOCTRINE OF SEPARATE JURIDICAL factual findings of the sole arbitrator, thus:
PERSONALITY.
xxx
We find no merit in the petition.
(A)s the Building was taking shape, they noticed
Executive Order No. 1008 entitled, Construction deviations from the approved plans and
Industry Arbitration Law provided for an arbitration specifications for the Building. Most noticeable were
mechanism for the speedy resolution of construction two (2) concrete columns in the middle of the
disputes other than by court litigation. It recognized the role basement which effectively and permanently
of the construction industry in the countrys economic obstructed the basement for the parking of vehicles x
progress as it utilizes a large segment of the labor force and x x. In addition, three (3) additional concrete columns
contributes substantially to the gross national product of the were constructed from the ground floor to the roof
country.[6] Thus, E.O. No. 1008 vests on the Construction deck x x x which affected the overall dimension of the
Industry Arbitration Commission (CIAC) original and building such as altering the specified beam depths,
exclusive jurisdiction over disputes arising from or passageways and windows. In addition, Mrs. Quiambao
connected with construction contracts entered into by provided a virtual litany of alleged defects, to wit: (a) the
parties who have agreed to submit their case to voluntary Building was not vertically plumbed xxx; (b) provisions for
arbitration. Section 19 of E.O. No. 1008 provides that many architectural members were not provided for, such as,
its arbitral award shall be appealable to the Supreme (i) the recesses for window plant boxes are lacking xxx, (ii)
Court only on questions of law.[7] provisions for precast molding are lacking xxx, (iii) canopies
are also lacking x x x; (c) misaligned walls, ugly
There is a question of law when the doubt or discrepancies and gaps; (d) skewed walls to floors/landings;
difference in a given case arises as to what the law is on a (e) low head clearances and truncated beams x x x; (f)
certain set of facts, and there is a question of fact when narrow and disproportionate stairs xxx one (1) instead of
the doubt arises as to the truth or falsity of the alleged two (2) windows at the fire exit x x x, (g) absence of water-
facts.[8] Thus, for a question to be one of law, it must not proofing along the basement wall x x x and at the roof deck
involve an examination of the probative value of the which caused leaks that damages the mezzanine floor x x
evidence presented by the parties and there must be no x; (h) the use of smaller diagonal steel trusses at the
doubt as to the veracity or falsehood of the facts alleged. [9] penthouse. x x x There were others which were shown
In the case at bar, it is readily apparent during the site inspection such as: (1) L-shaped kitchen
that petitioners are raising questions of fact. In their counters instead of the required U-shaped counters x x
first assigned error, petitioners claim that at the time of x; (2) failure to provide marble tops for the kitchen counters;
rescission, they had completed 80% of the construction (3) installation of single-tub sinks where the plans called for
work and still have 15 days to finish the project. They double-type stainless kitchen sinks x x x; (4) installation of
likewise insist that they constructed the building in much smaller windows than those required; (5) misaligned
accordance with the contract and any modification on the window easements to wall, (6) floors were damaged by roof
plan was with the consent of the respondents. leaks, (6) poor floor finish, misaligned tiles, floors with kapak

25
and disproportionate drawers and cabinets. A more 1. All ceiling cornices shall be installed as per plan
comprehensive list of alleged defects, deviations and specification which is 1 x 4 in size.
complaints of the Quiambaos is found in a report marked
Exhibit C-144. Many of these defects were seen during 2. All baseboards shall be installed as per plan specification
the site inspection and the only defense and which is wood 1 x 4 in size.
comment of CGI was that these were punch-list items
which could have been corrected prior to completion 3. Electrical Meter center and main panel breaker should be
and turn-over of the Building had the Contract not retained to its present location.
been terminated by the Claimants (respondents here). x
x x Thus, x x x (petitioner) CGI argued that: In any
construction work, before a contractor turns-over the 4. Elevation of office, dining and stair lobby of ground floor
project to the owner, punchlisting of defects is done so as to shall be 4 higher than the elevation of parking area (subject
ensure compliance and satisfaction of both the contractor for verification).
and the owner. Punch listing means that the contractor will
list all major and minor defects and rectifies them before 5. All door jambs at C.R. has (sic) to be replaced with
the turnover of the project to the owner. After all defects concrete framing jambs.
had been arranged, the project is now turned over to the
owner. For this particular project, no turn over was made by 6. All ceilings mailers should be 2 x 2 in size.
the contractor to the owner yet. Actually, we were already
pinpointing these defects for punch listing before we were 7. All plywood ceiling that was damaged by rain water shall
terminated illegally. As alleged by the owner, the be replaced.
deficiencies mentioned are stubouts of water closets at
toilets, roofing and framing, doors, cabinets, ceiling and 8. Provide a pipe chase for the enclosure of soil stack pipe
stairs and other were not yet completed and rectified by and water line pipe at the ground floor level between grid
us. In fact we were counting on our project engineer in line 3-4 along the light well area.
charge x x x to do this in as much as this is one of his duties
to do for the company. x x x Confirmatory of this assertion
of CGI that it was willing to undertake the appropriate 9. Front side elevation view shall be follow (sic) as per plan
corrective works (whether or not the items are punch-list specialy (sic) at 4th flr.
items) is Exhibit C-88 which is a letter prepared by CGIs
Windell F. Vizconde, checked by CGIs Gary M. Garcia and 10. One column at basement floor along grid line 2# B has
noted by CGIs Benjie Lipardo, addressed to the Quiambaos to be verified by the structural designer if ever it is safe to
which stated that: removed (sic) the column and what will be their (sic)
recommendation to support the load.
As per our discussion during the last meeting dated Sept.
28, 1998 the following items was (sic) confirmed and 11. Existing doors D-2 and D-3 shall be replaced a (sic) new
clarified. These are described as follows: one.

26
While Mrs. Quiambao appeared not to have given her which could be used by the Quiambaos in the
conformity, this document from CGI is an admission by different floors of the Building, Engr. Roberto J. David
CGI of the deficiencies in the construction of the admitted that these represented a design change
Building which needed to be corrected. which was made and implemented by CGI without the
conformnity of the Claimants. The Contract specifically
It appears that concrete samples taken from the provided in Article II that the CONTRACTOR shall submit to
basement, ground floor, mezzanine and 2 nd floor of the OWNER all designs for the OWNERS approval. This
the Building were subjected to a concrete core test implies necessarily that all changes in the approved design
by Geotesting International, Inc., geotechnical and shall likewise be submitted to the OWNER for approval. This
materials testing engineers. A report dated January 20, change, in my view, is the single most serious breach
1999 x x x showed x x x that (5) samples x x x failed the of the Contract committed by CGI which justified the
test. Sample S2 while it showed a comprehensive strength decision of the Claimants to terminate the Contract. x
of 3147 psi, the corrective strength in psi was below the x x (T)here is no evidence to show that the Quiambaos
specified comprehensive strength of 3000 psi. CGI failed to approved the revision of the structural plans to provide for
produce evidence of similar tests during the construction of the construction of the additional columns. x x x
the Building although it is normal construction practice for
the contractor to provide samples for concrete core tests. x x x Engr. Villasenor defended his structural design as
adequate. He admitted that the revision of the plans
Deformed reinforcing steel bar specimens from the which resulted in the construction of additional
building were subjected to physical tests. These tests columns was in pursuance of the request of Engr.
were conducted at the Materials Testing Laboratory of the David to revise the structural plans to provide for a
Department of Civil Engineering, College of Engineering, significant reduction of the cost of
University of the Philippines. x x x There were 18 samples construction. When Engr. David was asked for the
and x x x 8 failed the test although all of them passed the justification for the revision for the plans, he
cold bend test. x x x CGI submitted Quality Test Certificates confirmed that he wanted to reduce the cost of
issued by Steel Asia certifying to the mechanical test results construction. In any case, whether the cause of
and chemical composition of the steel materials tested x x revision of the plans was the under-design of the
x. However, the samples were provided by the foundation or for reasons of economy, it is CGI which
manufacturer, not by CGI, to Steel Asia, and there is no is at fault. CGI prepared the structural plans and
showing that the materials supplied by the manufacturer to quoted the price for constructing the Building. The
CGI for the Building formed part of the steel materials, part Quiambaos accepted both the plans and the price. If
of which was tested. CGI made a mistake in designing the foundation or in
estimating the cost of construction, it was at fault. It
xxx cannot correct that mistake by revising the plans and
implementing the revisions without informing the
Quiambaos and obtaining their unequivocal approval
Regarding the additional columns at the basement of such changes.
and at the first floor to the roof deck of the Building,
which effectively restricted the use of the basement
as a parking area, and likewise reduced the area

27
In addition, CGI admitted that no relocation survey was outside the property line established a sufficient
made by it prior to the construction of the legal and factual basis for the decision of the
Building. Consequently, a one-meter portion of the Building Quiambaos to terminate the Contract. The fact that
was constructed beyond the property line. In justification, five (5) of nine (9) the (sic) concrete samples
Engr. Barba V. Santos declared that CGI made the layout of subjected to a core test, and eight (8) of eighteen
the proposed structure based on the existing fence. x x x (I)t (18) deformed reinforcing steel bar specifics
is understood that a contractor, in constructing a building, subjected to physical tests failed the tests and the
must first conduct a relocation survey before construction under-design of the cistern was established after the
precisely to avoid the situation which developed here, that Contract was terminated also served to confirm the
the Building was not properly constructed within the owners justified suspicion of the Quiambaos that the Building
property line. x x x This resulted in the under-utilization of was defective or was not constructed according to
the property, small as it is, and the exposure of the approved plans and specifications.[10] (emphases
Quiambaos to substantial damages to the owner of the supplied)
adjoining property encroached upon.
These are technical findings of fact made by expert
A third major contested issue concerned the witnesses and affirmed by the arbitrator. They were also
construction of the cistern. x x x A cistern is an affirmed by the Court of Appeals. We find no reason to
underground tank used to collect water for drinking revise them.
purposes. The contentious points regarding the
construction of the cistern are: first, that the cistern was The second assigned error likewise involves a
designed to accumulate up to 10,000 gallons of question of fact. It is contended that petitioner-spouses
water; as constructed, its capacity was less than the David cannot be held jointly and severally liable with
design capacity.Second, there is no internal partition petitioner CGI in the payment of the arbitral award as they
separating the cistern from the sump pit. x x x are merely its corporate officers.
At first glance, the issue may appear to be a question of
Considering that the cistern is a receptacle for the law as it would call for application of the law on the separate
collection of drinking water, it is incomprehensible liability of a corporation. However, the law can be applied
why the Respondents (herein petitioners), in the only after establishing a factual basis, i.e., whether
design and construction of the cistern, has (sic) not petitioner-spouses as corporate officers were grossly
taken the necessary measures to make certain that negligent in ordering the revisions on the construction plan
the water in the cistern will be free from without the knowledge and consent of the respondent-
contamination. x x x spouses. On this issue, the Court of Appeals again
affirmed the factual findings of the arbitrator, thus:
Thus, granting the arguments of the Respondents (herein
As a general rule, the officers of a corporation are not
petitioners) that the observed defects in the Building could
personally liable for their official acts unless it is shown that
be corrected before turn-over and acceptance of the
they have exceeded their authority. However, the personal
Building if CGI had been allowed to complete its
liability of a corporate director, trustee or officer,
construction, the construction of additional columns,
along with corporation, may so validly attach when
the construction of the Building such that part of it is
he assents to a patently unlawful act of the

28
corporation or for bad faith or gross negligence in Finally, it bears to remind petitioners of this Courts
directing its affairs. ruling in the 1993 case of Hi-Precision Steel Center, Inc.
vs. Lim Kim Steel Builders, Inc. [13] which emphasized the
The following findings of public respondent (CIAC) would rationale for limiting appeal to legal questions in
support its ruling in holding petitioners severally and jointly construction cases resolved through arbitration, thus:
liable with the Corporation: x x x Consideration of the animating purpose of voluntary
arbitration in general, and arbitration under the aegis of the
x x x When asked whether the Building was underdesigned CIAC in particular, requires us to apply rigorously the above
considering the poor quality of the soil, Engr. Villasenor principle embodied in Section 19 that the Arbitral Tribunals
defended his structural design as adequate. He admitted findings of fact shall be final and inappealable (sic).
that the revision of the plans which resulted in the
construction of additional columns was in pursuance Voluntary arbitration involves the reference of a dispute to
of the request of Engr. David to revise the structural an impartial body, the members of which are chosen by the
plans to provide for a significant reduction of the cost parties themselves, which parties freely consent in advance
of construction. When Engr. David was asked for the to abide by the arbitral award issued after proceedings
justification for the revision of the plans, he where both parties had the opportunity to be heard. The
confirmed that he wanted to reduce the cost of basic objective is to provide a speedy and
construction. x x x (emphases supplied)[11] inexpensive method of settling disputes by allowing
the parties to avoid the formalities, delay, expense
Clearly, the case at bar does not raise any genuine and aggravation which commonly accompany
issue of law. We reiterate the rule that factual findings of ordinary litigation, especially litigation which goes
construction arbitrators are final and conclusive and not through the entire hierarchy of courts. Executive Order
reviewable by this Court on appeal, except when the No. 1008 created an arbitration facility to which the
petitioner proves affirmatively that: (1) the award was construction industry in the Philippines can have
procured by corruption, fraud or other undue means; (2) recourse. The Executive Order was enacted to encourage
there was evident partiality or corruption of the arbitrators the early and expeditious settlement of disputes in the
or of any of them; (3) the arbitrators were guilty of construction industry, a public policy the implementation of
misconduct in refusing to postpone the hearing upon which is necessary and important for the realization of the
sufficient cause shown, or in refusing to hear evidence national development goals.
pertinent and material to the controversy; (4) one or more of
the arbitrators were disqualified to act as such under section Aware of the objective of voluntary arbitration in the labor
nine of Republic Act No. 876 and willfully refrained from field, in the construction industry, and in other area for that
disclosing such disqualifications or of any other misbehavior matter, the Court will not assist one or the other or even
by which the rights of any party have been materially both parties in any effort to subvert or defeat that objective
prejudiced; or (5) the arbitrators exceeded their powers, or for their private purposes. The Court will not review the
so imperfectly executed them, that a mutual, final and factual findings of an arbitral tribunal upon the artful
definite award upon the subject matter submitted to them allegation that such body had misapprehended facts and will
was not made.[12]Petitioners failed to show that any of not pass upon issues which are, at bottom, issues of fact, no
these exceptions applies to the case at bar. matter how cleverly disguised they might be as legal

29
questions. The parties here had recourse to arbitration and conclusions of the Tribunal which resulted in deprivation of
chose the arbitrators themselves; they must have had one or the other party of a fair opportunity to present its
confidence in such arbitrators. The Court will not, position before the Arbitral Tribunal, and an award obtained
therefore, permit the parties to relitigate before it through fraud or the corruption of arbitrators. Any other
the issues of facts previously presented and argued more relaxed rule would result in setting at naught the basic
before the Arbitral Tribunal, save only where a clear objective of a voluntary arbitration and would reduce
showing is made that, in reaching its factual arbitration to a largely inutile institution. (emphases
conclusions, the Arbitral Tribunal committed an error supplied)
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

30

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