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G.R.No.187521
RepublicofthePhilippines
SupremeCourt
Manila
SECONDDIVISION
F.F.CRUZ&CO.,INC.,
G.R.No.187521
Petitioner,
Present:
CARPIO,J.,
Chairperson,
versus
BRION,
PEREZ,
SERENO,and
REYES,JJ.
HRCONSTRUCTIONCORP.,
Respondent.
Promulgated:
March14,2012
xx
DECISION
REYES,J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
[1]
petitionerF.F.Cruz&Co.,Inc.(FFCCI)assailingtheDecision dated February 6, 2009 and
[2]
Resolution dated April 13, 2009 issued by the Court of Appeals (CA) in CAG.R. SP No.
91860.
TheAntecedentFacts
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Sometime in 2004, FFCCI entered into a contract with the Department of Public Works
and Highways (DPWH) for the construction of the Magsaysay Viaduct, known as the Lower
Agusan Development Project. On August 9, 2004, FFCCI, in turn, entered into a Subcontract
[3]
Agreement with HR Construction Corporation (HRCC) for the supply of materials, labor,
equipment,toolsandsupervisionfortheconstructionofaportionofthesaidprojectcalledthe
EastBankLeveeandCutOffChannelinaccordancewiththespecificationsofthemaincontract.
ThesubcontractpriceagreeduponbythepartiesamountedtoP31,293,532.72. Pursuant
totheSubcontractAgreement,HRCCwouldsubmittoFFCCIamonthlyprogressbillingwhich
thelatterwouldthenpay,subjecttostipulateddeductions,within30daysfromreceiptthereof.
The parties agreed that the requests of HRCC for payment should include progress
accomplishment of its completed works as approved by FFCCI. Additionally, they agreed to
conductajointmeasurementofthecompletedworksofHRCCtogetherwiththerepresentative
ofDPWHandconsultantstoarriveatacommonquantity.
Thereafter,HRCCcommencedtheconstructionoftheworkspursuanttotheSubcontract
Agreement.
On September 17, 2004, HRCC submitted to FFCCI its first progress billing in the
amount of P2,029,081.59 covering the construction works it completed from August 16 to
September15,2004.
[4]
However,FFCCIassertedthattheDPWHwasthenabletoevaluatethe
completed works of HRCC only until July 25, 2004. Thus, FFCCI only approved the gross
amountofP423,502.88forpayment.PursuanttotheSubcontractAgreement,FFCCIdeducted
fromthesaidgrossamountP42,350.29forretentionandP7,700.05forexpandedwithholdingtax
leavinganetpaymentintheamountofP373,452.54.ThisamountwaspaidbyFFCCItoHRCC
onDecember3,2004.
[5]
FFCCI and the DPWH then jointly evaluated the completed works of HRCC for the
period of July 26 to September 25, 2004. FFCCI claimed that the gross amount due for the
completed works during the said period was P2,008,837.52. From the said gross amount due,
FFCCIdeductedtherefromP200,883.75forretentionandP36,524.07forexpandedwithholding
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tax leaving amount of P1,771,429.45 as the approved net payment for the said period. FFCCI
paidthisamountonDecember21,2004.
[6]
On October 29, 2004, HRCC submitted to FFCCI its second progress billing in the
amount of P1,587,760.23 covering its completed works from September 18 to 25, 2004.
[7]
FFCCIdidnotpaytheamountstatedinthesecondprogressbilling,claimingthatithadalready
paidHRCCforthecompletedworksfortheperiodstatedtherein.
Onevendate,HRCCsubmitteditsthirdprogressbillingintheamountofP2,569,543.57
foritscompletedworksfromSeptember26toOctober25,2004.
[8]
FFCCIdidnotimmediately
paytheamountstatedinthethirdprogressbilling,claimingthatitstillhadtoevaluatetheworks
accomplishedbyHRCC.
On November 25, 2004, HRCC submitted to FFCCI its fourth progress billing in the
amount of P1,527,112.95 for the works it had completed from October 26 to November 25,
2004.
Subsequently, FFCCI, after it had evaluated the completed works of HRCC from
September 26 to November 25, 2004, approved the payment of the gross amount of
P1,505,570.99toHRCC.FFCCIdeductedtherefromP150,557.10forretentionandP27,374.02
forexpandedwithholdingtaxleavinganetpaymentofP1,327,639.87,whichamountwaspaidto
HRCConMarch11,2005.
[9]
[10]
Meanwhile, HRCC sent FFCCI a letter
dated December 13, 2004 demanding the
paymentofitsprogressbillingsinthetotalamountofP7,340,046.09,plusinterests,withinthree
days from receipt thereof. Subsequently, HRCC completely halted the construction of the
subcontractedprojectaftertakingitsChristmasbreakonDecember18,2004.
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the reduced amount of P4,096,656.53 as of December 15, 2004 plus legal interest (2)
P1,500,000.00asattorneysfees(3)P80,000.00asacceptancefeeandrepresentationexpenses
and(4)costsoflitigation.
In its Answer,
[12]
FFCCI claimed that it no longer has any liability on the Subcontract
AgreementasthethreepaymentsitmadetoHRCC,whichamountedtoP3,472,521.86, already
represented the amount due to the latter in view of the works actually completed by HRCC as
shownbythesurveyitconductedjointlywiththeDPWH.FFCCIfurtherassertedthatthedelay
in the payment processing was primarily attributable to HRCC inasmuch as it presented
unverified work accomplishments contrary to the stipulation in the Subcontract Agreement
regardingrequestsforpayment.
Likewise,FFCCImaintainedthatHRCCfailedtocomplywiththeconditionstatedunder
theSubcontractAgreementforthepaymentofthelattersprogressbillings,i.e.jointmeasurement
ofthecompletedworks,and,hence,itwasjustifiedinnotpayingtheamountstatedinHRCCs
progressbillings.
OnJune16,2005,anArbitralTribunalwascreatedcomposedofEngineerRicardoB.San
Juan, Joven B. Joaquin and Attorney Alfredo F. Tadiar, with the latter being appointed as the
Chairman.
In a Preliminary Conference held on July 5, 2005, the parties defined the issues to be
resolvedintheproceedingsbeforetheCIACasfollows:
1.Whatisthecorrectamountof[HRCCs]unpaidprogressbilling?
2. Did [HRCC] comply with the conditions set forth in subparagraph 4.3 of the Subcontract
Agreementforthesubmission,evaluation/processingandreleaseofpaymentofitsprogressbillings?
3.Did[HRCC]stopworkontheproject?
3.1Ifso,istheworkstoppagejustified?
3.2Ifso,whatwasthepercentageandvalueof[HRCCs]workaccomplishmentatthetimeit
stoppedworkontheproject?
4. Who between the parties should bear the cost of arbitration or in what proportion should it be
[13]
sharedbytheparties?
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Likewise, during the said Preliminary Conference, HRCC further reduced the amount of
overdue obligation it claimed from FFCCI to P2,768,916.66. During the course of the
proceedings before the CIAC, HRCC further reduced the said amount to P2,635,397.77 the
exact difference between the total amount of HRCCs progress billings (P6,107,919.63) and
FFCCIstotalpaymentsinfavorofthelatter(P3,472,521.86).
TheCIACDecision
[14]
OnSeptember6,2005,afterdueproceedings,theCIACrenderedaDecision
infavor
ofHRCC,thedecretalportionofwhichreads:
[P]2,239,452.63asthebalanceofitsunpaidbillingsand
101,161.57asreimbursementofthearbitrationcosts.
[P]2,340,614.20TotalduetheClaimant
Interest on the foregoing amount [P]2,239,452.63 shall be paid at the rate of 6% per annum
fromthedateofthisDecision.AfterfinalityofthisDecision,interestattherateof12%perannumshall
bepaidthereonuntilfullpaymentoftheawardedamountshallhavebeenmadexxx.
[15]
SOORDERED.
TheCIACheldthatthepaymentmethodadoptedbyFFCCIisactuallywhatisknownas
thebacktobackpaymentschemewhichwasnotagreeduponundertheSubcontractAgreement.
Assuch,theCIACruledthatFFCCIcouldnotimposeuponHRCCitsvaluationoftheworks
completedbythelatter.TheCIACgavecredencetoHRCCsvaluationofitscompletedworksas
statedinitsprogressbillings.Thus:
Duringthetrial,[FFCCIs]Aganonadmittedthat[HRCCs]accomplishmentsareincludedinits
ownbillingstotheDPWHtogetherwithasubstantialmarkuptocoveroverheadcostsandprofit.He
further admitted that it is only when DPWH approves its (Respondents) billings covering [HRCCs]
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scope of work and pays for them, that [FFCCI] will in turn pay [HRCC] for its billings on the sub
contractedworks.
OnclarificatoryquestioningbytheTribunal,[FFCCI]admittedthatthereisnobacktoback
provision in the subcontract as basis for this sequential payment arrangement and, therefore,
[FFCCIs] imposition thereof by withholding payment to [HRCC] until it is first paid by the project
ownerontheMainContract,clearlyviolatessaidsubcontract.It[is]thisunauthorizedimplementation
ofabacktobackpaymentschemethatisseentobethereasonfor[FFCCIs]nonpaymentofthethird
progressbillings.
ItisaccordinglytheholdingofthisArbitralTribunalthat[FFCCI]isnotjustifiedinwithholding
paymentof[HRCCs]thirdprogressbillingforthisschemethat[HRCC]hasnotagreedtointhesub
contractagreementxxx.
xxx
Thetotalretentionmoneydeductedby[FFCCI]from[HRCCs]threeprogressbillings,amounts
to[P]395,945.14xxx.Theretentionmoneyispartof[HRCCs]progressbillingsandmust,therefore,
becreditedtothisaccount.Thetwoamounts(deductionsandnetpayments)total[P]3,868,467.00xx
x.Thisrepresentsthetotalgrosspaymentsthatshouldbecreditedanddeductedfromthetotalgross
billings to arrive at what has not been paid to the [HRCC]. This results in the amount of
[P]2,239,452.63 ([P]6,107,919.63 [P]3,868,467.00) as the correct balance of [HRCCs] unpaid
[16]
billings.
Further, the CIAC ruled that FFCCI had already waived its right under the Subcontract
AgreementtorequireajointmeasurementofHRCCscompletedworksasaconditionprecedent
tothepaymentofthelattersprogressbillings.Hence:
[FFCCI]admitsthatinallthreeinstanceswhereitpaid[HRCC]foritsprogressbillings,itnever
required compliance with the aforequoted contractual provision of a prior joint quantification. Such
repeatedomissionmayreasonablybeconstruedasawaiverby [FFCCI] of its contractual right to
requirecomplianceofsaidconditionanditisnowtoolateinthedaytosoimposeit.Article6ofthe
Civil Code expressly provides that rights may be waived unless the waiver is contrary to law, public
order,publicpolicy,moralsorgoodcustoms.Thetribunalcannotseeanysuchviolationinthiscase.
xxx
[FFCCIs]omissiontoenforcethecontractuallyrequiredconditionofpayment,hasled[HRCC]
to believe it to be true that indeed [FFCCI] has waived the condition of joint quantification and,
[17]
therefore,[FFCCI]maynotbepermittedtofalsifysuchresultingposition.
Likewise,theCIACheldthatFFCCIsnonpaymentoftheprogressbillingssubmittedby
HRCCgavethelattertherighttorescindtheSubcontractAgreementand,accordingly,HRCCs
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work stoppage was justified. It further opined that, in effect, FFCCI had ratified the right of
HRCC to stop the construction works as it did not file any counterclaim against HRCC for
liquidateddamagesarisingtherefrom.
FFCCIthenfiledapetitionforreviewwithCAassailingtheforegoingdispositionbythe
CIAC.
TheCADecision
[18]
On February 6, 2009, the CA rendered the herein assailed Decision
denying the
petition for review filed by FFCCI.The CA agreed with the CIAC that FFCCI had waived its
right under the Subcontract Agreement to require a joint quantification of HRCCs completed
works.
The CA further held that the amount due to HRCC as claimed by FFCCI could not be
given credence since the same was based on a survey of the completed works conducted
without the participation of HRCC. Likewise, being the main contractor, it ruled that it was the
responsibility of FFCCI to include HRCC in the joint measurement of the completed works.
Furthermore, the CA held that HRCC was justified in stopping its construction works on the
projectasthefailureofFFCCItopayitsprogressbillingsgavetheformertherighttorescindthe
SubcontractAgreement.
[19]
FFCCI sought a reconsideration
of the said February 6, 2009 Decision but it was
[20]
deniedbytheCAinitsResolution
datedApril13,2009.
Issues
Intheinstantpetition,FFCCIsubmitsthefollowingissuesforthisCourtsresolution:
[I.]
xxxFirst,[d]oestheactof[FFCCI]inconductingaverificationsurveyof[HRCCs]billingsin
the latters presence amount to a waiver of the right of [FFCCI] to verify and approve said billings?
What,ifany,isthelegalsignificanceofsaidact?
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[II.]
xxxSecond,[d]oesthepaymentof[FFCCI]to[HRCC]basedontheresultsoftheabove
mentionedverificationsurveyresultintheformerbeingobligedtoacceptwhateveraccomplishmentwas
reportedbythelatter?
[III.]
xxxThird,[d]oesthemerecomparisonofthepaymentsmadeby[FFCCI]withthecontested
progressbillingsof[HRCC]amounttoanadjudicationofthecontroversybetweentheparties?
[IV.]
x x x Fourth, [d]oes the failure of [FFCCI] to interpose a counterclaim against [HRCC] for
liquidateddamagesduetothelattersworkstoppage,amounttoaratificationofsuchworkstoppage?
[V.]
x x x Fifth, [d]id the [CA] disregard or overlook significant and material facts which would
[21]
affecttheresultofthelitigation?
Insum,thecrucialissuesforthisCourtsresolutionare:first,whatistheeffectofFFCCIs
noncompliancewiththestipulationintheSubcontractAgreementrequiringajointquantification
of the works completed by HRCC on the payment of the progress billings submitted by the
latterandsecond,whethertherewasavalidrescissionoftheSubcontractAgreementbyHRCC.
TheCourtsRuling
Thepetitionisnotmeritorious.
ProceduralIssue:
FinalityandConclusivenessoftheCIACsFactualFindings
BeforewedelveintothesubstantialissuesraisedbyFFCCI,weshallfirstaddresstheprocedural
issue raised by HRCC. According to HRCC, the instant petition merely assails the factual
findingsoftheCIACasaffirmedbytheCAand,accordingly,notpropersubjectsofanappeal
under Rule 45 of the Rules of Court. It likewise pointed out that factual findings of the CIAC,
whenaffirmedbytheCA,arefinalandconclusiveuponthisCourt.
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[22]
Executive Order (E.O.) No. 1008
vests upon the CIAC original and exclusive jurisdiction
over disputes arising from, or connected with, contracts entered into by parties involved in
constructioninthePhilippines.UnderSection19ofE.O.No.1008,thearbitralawardofCIAC
"shall be final and inappealable except on questions of law which shall be appealable to the
SupremeCourt."
[23]
[24]
we explained raison d
etrefortheruleonfinalityoftheCIACsarbitralawardinthiswise:
Voluntary arbitration involves the reference of a dispute to an impartial body, the members of
which are chosen by the parties themselves, which parties freely consent in advance to abide by the
arbitralawardissuedafterproceedingswherebothpartieshadtheopportunitytobeheard.Thebasic
objectiveistoprovideaspeedyandinexpensivemethodofsettlingdisputesbyallowingthepartiesto
avoid the formalities, delay, expense and aggravation which commonly accompany ordinary litigation,
especiallylitigationwhichgoesthroughtheentirehierarchyofcourts.ExecutiveOrderNo.1008created
an arbitration facility to which the construction industry in the Philippines can have recourse. The
Executive Order was enacted to encourage the early and expeditious settlement of disputes in the
construction industry, a public policy the implementation of which is necessary and important for the
realizationofnationaldevelopmentgoals.
Awareoftheobjectiveofvoluntaryarbitrationinthelaborfield,intheconstructionindustry,and
inanyotherareaforthatmatter,theCourtwillnotassistoneortheotherorevenbothpartiesinany
efforttosubvertordefeatthatobjectivefortheirprivatepurposes.TheCourtwillnotreviewthefactual
findingsofanarbitraltribunalupontheartfulallegationthatsuchbodyhad"misapprehendedthefacts"
andwillnotpassuponissueswhichare,atbottom,issuesoffact,nomatterhowcleverlydisguisedthey
might be as "legal questions." The parties here had recourse to arbitration and chose the arbitrators
[25]
themselvestheymusthavehadconfidenceinsucharbitrators.xxx
(Citationomitted)
Thus,incasesassailingthearbitralawardrenderedbytheCIAC,thisCourtmayonlypass
uponquestionsoflaw.Factual findings of construction arbitrators are final and conclusive and
notreviewablebythisCourtonappeal.Thisrule,however,admitsofcertainexceptions.
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InSpousesDavidv.ConstructionIndustryandArbitrationCommission,
[26]
welaiddownthe
instanceswhenthisCourtmaypassuponthefactualfindingsoftheCIAC,thus:
We reiterate the rule that factual findings of construction arbitrators are final and conclusive and not
reviewablebythisCourtonappeal,exceptwhenthepetitionerprovesaffirmativelythat:(1)theaward
wasprocuredbycorruption,fraudorotherunduemeans(2)therewasevidentpartialityorcorruption
ofthearbitratorsorofanyofthem(3)thearbitratorswereguiltyofmisconductinrefusingtopostpone
the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the
controversy (4) one or more of the arbitrators were disqualified to act as such under section nine of
Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been materially prejudiced or (5) the arbitrators
exceededtheirpowers,orsoimperfectlyexecutedthem,thatamutual,finalanddefiniteawarduponthe
[27]
subjectmattersubmittedtothemwasnotmade.xxx
(Citationomitted)
Issuesontheproperinterpretationofthetermsofthe
SubcontractAgreementinvolvequestionsoflaw.
A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts.Foraquestiontobeoneoflaw,thesamemustnotinvolveanexaminationoftheprobative
valueoftheevidencepresentedbythelitigantsoranyofthem.Theresolutionoftheissuemust
restsolelyonwhatthelawprovidesonthegivensetofcircumstances.Onceitisclearthatthe
issueinvitesareviewoftheevidencepresented,thequestionposedisoneoffact.
[28]
On the surface, the instant petition appears to merely raise factual questions as it mainly
putsinissuetheappropriateamountthatisduetoHRCC.However,amorethoroughanalysisof
theissuesraisedbyFFCCIwouldshowthatitactuallyassertsquestionsoflaw.
FFCCI primarily seeks from this Court a determination of whether amount claimed by
HRCCinitsprogressbillingmaybeenforcedagainstitintheabsenceofajointmeasurementof
theformerscompletedworks.Otherwisestated,themainquestionadvancedbyFFCCIisthis:in
the absence of the joint measurement agreed upon in the Subcontract Agreement, how will the
completedworksofHRCCbeverifiedandtheamountduethereonbecomputed?
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The determination of the foregoing question entails an interpretation of the terms of the
SubcontractAgreementvisvistherespectiverightsofthepartiesherein.Onthispoint,itshould
bestressedthatwhereaninterpretationofthetrueagreementbetweenthepartiesisinvolvedinan
appeal, the appeal is in effect an inquiry of the law between the parties, its interpretation
necessarilyinvolvesaquestionoflaw.
[29]
Moreover, we are not called upon to examine the probative value of the evidence
presentedbeforetheCIAC.Rather,whatisactuallysoughtfromthisCourtisaninterpretationof
thetermsoftheSubcontractAgreementasitrelatestothedisputebetweentheparties.
FirstSubstantiveIssue:EffectofNoncompliancewiththeJointQuantification
RequirementontheProgressBillingsofHRCC
Basically,theinstantissuecallsforadeterminationastowhichofthepartiesrespectivevaluation
of accomplished works should be given credence. FFCCI claims that its valuation should be
upheldsincethesamewastheresultofameasurementofthecompletedworksconductedbyit
and the DPWH. On the other hand, HRCC maintains that its valuation should be upheld on
account of FFCCIs failure to observe the joint measurement requirement in ascertaining the
extentofitscompletedworks.
In resolving the dispute as to the proper valuation of the works accomplished by HRCC, the
primordialconsiderationshouldbethetermsoftheSubcontractAgreement.Itisbasicthatifthe
termsofacontractareclearandleavenodoubtupontheintentionofthecontractingparties,the
literalmeaningofitsstipulationsshallcontrol.
[30]
InAbadv.GoldloopProperties,Inc.,
[31]
westressedthat:
Acourtspurposeinexaminingacontractistointerprettheintentofthecontractingparties,as
objectivelymanifestedbythem.Theprocessofinterpretingacontractrequiresthecourttomakea
preliminaryinquiryastowhetherthecontractbeforeitisambiguous.Acontractprovisionisambiguous
if it is susceptible of two reasonable alternative interpretations. Where the written terms of the
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contractarenotambiguousandcanonlybereadoneway,thecourtwillinterpretthecontract
asamatteroflaw.Ifthecontractisdeterminedtobeambiguous,thentheinterpretationofthecontract
[32]
islefttothecourt,toresolvetheambiguityinthelightoftheintrinsicevidence.
(Emphasissupplied
andcitationomitted)
Article4oftheSubcontractAgreement,inpart,containedthefollowingstipulations:
ARTICLE4
SUBCONTRACTPRICE
4.1ThetotalSUBCONTRACTPriceshallbeTHIRTYONEMILLION
TWOHUNDREDNINETYTHREETHOUSANDFIVEHUNDREDTHIRTYTWOPESOS
&72/100ONLY([P]31,293,532.72)inclusiveofValueAddedTaxxxx.
xxx
4.3TermsofPayment
FFCCIshallpay[HRCC]withinthirty(30)daysuponreceiptofthe[HRCCs]Monthly
ProgressBillingssubjecttodeductionsduetotenpercent(10%)retention,andanyothersums
thatmaybedueandrecoverablebyFFCCIfrom[HRCC]underthisSUBCONTRACT.Inall
cases, however, two percent (2%) expanded withholding tax on the [HRCCs] income will be
deductedfromthemonthlypayments.
Requests for the payment by the [HRCC] shall include progress accomplishment of
completedworks (unit of work accomplished x unit cost) as approved by [FFCCI]. Cutoff
date of monthly billings shall be every 25th of the month and joint measurement shall be
conductedwiththeDPWHsrepresentative,Consultants,FFCCIand[HRCC]toarriveat
[33]
acommon/agreedquantity.
(Emphasissupplied)
Pursuanttothetermsofpaymentagreeduponbytheparties,FFCCIobligeditselftopay
themonthlyprogressbillingsofHRCCwithin30daysfromreceiptofthesame.Additionally,the
monthlyprogressbillingsofHRCCshouldindicatetheextentoftheworkscompletedbyit,the
samebeingessentialtothevaluationoftheamountthatFFCCIwouldpaytoHRCC.
The parties further agreed that the extent of HRCCs completed works that would be
indicated in the monthly progress billings should be determined through a joint measurement
conductedbyFFCCIandHRCCtogetherwiththerepresentativeofDPWHandtheconsultants.
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It bears stressing that the joint measurement contemplated under the Subcontract Agreement
shouldbeconductedbythepartieshereintogetherwiththerepresentativeoftheDPWHandthe
consultants.Indubitably,FFCCI,beingthemaincontractorofDPWH,hastheresponsibilityto
requesttherepresentativeofDPWHtoconductthesaidjointmeasurement.
On this score, the testimony of Engineer Antonio M. Aganon, Jr., project manager of
FFCCI,duringthereceptionofevidencebeforetheCIACistelling,thus:
MR.J.B.JOAQUIN:
Engr. Aganon, earlier there was a stipulation that in all the four billings, there never was a joint
quantification.
PROF.A.F.TADIAR:
Headmittedthatearlier.Pinabasakosakanya.
ENGR.R.B.SANJUAN:
ThejointquantificationwasdoneonlybetweenthemandDPWH.
xxxx
ENGR.AGANON:
Puwedekopobangiexplainsandalilangporegardinglangpodoonsaquantificationnaiyon?Basically
po as main contractor of DPWH, we are the ones who [are] requesting for joint survey
quantification with the owner, DPWH. Ngayon po, although wala sa papel na nagwitness and
[HRCC]stillthesamepo,nandoondinposiladuringthattime,kayalangho...
MR.J.B.JOAQUIN:
Hindipumirma?
ENGR.AGANON:
[34]
Hindi sila puwede pumirma kasi ho kami po ang contractor ng DPWH hindi sila.
(Emphasis
supplied)
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The CIAC held that FFCCI, on account of its failure to demand the joint measurement of
HRCCscompletedworks,hadeffectivelywaiveditsrighttoaskfortheconductofthesameas
aconditionsinequanontoHRCCssubmissionofitsmonthlyprogressbillings.
Weagree.
[35]
this Court explained the doctrine of waiver in this
wise:
Astowhatrightsandprivilegesmaybewaived,theauthorityissettled:
xxxthedoctrineofwaiverextendstorightsandprivilegesofanycharacter,and,since
thewordwaivercoverseveryconceivableright,itisthegeneralrulethataperson
may waive any matter which affects his property, and any alienable right or
privilege of which he is the owner or which belongs to him or to which he is
legallyentitled,whethersecuredbycontract,conferredwithstatute,orguaranteed
by constitution, provided such rights and privileges rest in the individual, are
intendedforhissolebenefit,donotinfringeontherightsofothers,andfurther
provided the waiver of the right or privilege is not forbidden by law, and does
notcontravenepublicpolicyandtheprincipleisrecognizedthateveryonehasaright
towaive,andagreetowaive,theadvantageofalaworrulemadesolelyforthebenefit
and protection of the individual in his private capacity, if it can be dispensed with and
relinquished without infringing on any public right, and without detriment to the
[36]
communityatlarge.xxx
(Emphasissuppliedandcitationsomitted)
Here,itisundisputedthatthejointmeasurementofHRCCscompletedworkscontemplatedby
the parties in the Subcontract Agreement never materialized. Indeed, HRCC, on separate
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occasions, submitted its monthly progress billings indicating the extent of the works it had
completedsanspriorjointmeasurement.Thus:
ProgressBilling
1stProgressBillingdatedSeptember
[37]
17,2004
2ndProgressBillingdatedOctober
[38]
29,2004
3rdProgressBillingdatedOctober
[39]
29,2004
4thProgressBillingdatedNovember
25,2004
PeriodCovered
Amount
August16toSeptember15,2004
P2,029,081.59
September18to25,2004
P1,587,760.23
September26toOctober25,2004
P2,569,543.57
October26toNovember25,2004
P1,527,112.95
FFCCIdidnotcontestthesaidprogressbillingssubmittedbyHRCCdespitethelackofajoint
measurement of the latters completed works as required under the Subcontract Agreement.
Instead, FFCCI proceeded to conduct its own verification of the works actually completed by
HRCCand,onseparatedates,madethefollowingpaymentstoHRCC:
DateofPayment
[40]
December3,2004
[41]
December21,2004
[42]
March11,2005
PeriodCovered
Amount
April2toJuly25,2004
P373,452.24
July26toSeptember25,2004
P1,771,429.45
September26toNovember25,2004
P1,327,639.87
FFCCIs voluntary payment in favor of HRCC, albeit in amounts substantially different from
thoseclaimedbythelatter,isaglaringindicationthatithadeffectivelywaiveditsrighttodemand
for the joint measurement of the completed works. FFCCIs failure to demand a joint
measurement of HRCCs completed works reasonably justified the inference that it had already
relinquished its right to do so. Indeed, not once did FFCCI insist on the conduct of a joint
measurement to verify the extent of HRCCs completed works despite its receipt of the four
monthlyprogressbillingssubmittedbythelatter.
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In view of FFCCIs waiver of the joint measurement requirement, the CA, essentially
echoing the CIACs disposition, found that FFCCI is obliged to pay the amount claimed by
HRCCinitsmonthlyprogressbillings.TheCAreasonedthus:
Verily, the joint measurement that [FFCCI] claims it conducted without the participation of
[HRCC],towhich[FFCCI]anchorsitsclaimoffullpaymentofitsobligationsto[HRCC],cannotbe
applied,norimposed,on[HRCC].Inotherwords,[HRCC]cannotbemadetoacceptaquantification
of its works when the said quantification was made without its participation. As a consequence,
[FFCCIs] claim of full payment cannot be upheld as this is a result of a quantification that was made
contrarytotheexpressprovisionsoftheSubcontractAgreement.
The Court is aware that by ruling so, [FFCCI] would seem to be placed at a disadvantage
becauseitwouldresultin[FFCCI]havingtopayexactlywhat[HRCC]wasbillingtheformer.If,onthe
other hand, the Court were to rule otherwise[,] then [HRCC] would be the one at a disadvantage
becauseitwouldbemadetoacceptpaymentthatislessthanwhatitwasbilling.
Circumstances considered, however, the Court deems it proper to rule in favor of [HRCC]
becauseoftheexplicitprovisionoftheSubcontractAgreementthatrequirestheparticipationofthelatter
in the joint measurement. If the Court were to rule otherwise, then the Court would, in effect, be
[43]
disregardingtheexplicitagreementofthepartiesintheircontract.
Essentially,thequestionthatshouldberesolvedisthis:InviewofFFCCIswaiverofitsrightto
demandajointmeasurementofHRCCscompletedworks,isFFCCInowbarredfromdisputing
theclaimofHRCCinitsmonthlyprogressbillings?
Weruleintheaffirmative.
Inthefinalanalysis,thejointmeasurementrequirementseekstolimitthedisputebetween
the parties with regard to the valuation of HRCCs completed works. Accordingly, any issue
whichFFCCImayhavewithregardtoHRCCsvaluationoftheworksithadcompletedshould
beraisedandresolvedduringthesaidjointmeasurementinsteadofraisingthesameafterHRCC
hadsubmitteditsmonthlyprogressbillings.Thus,havingrelinquisheditsrighttoaskforajoint
measurement of HRCCs completed works, FFCCI had necessarily waived its right to dispute
HRCCsvaluationoftheworksithadaccomplished.
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SecondSubstantiveIssue:
ValidityofHRCCsRescissionoftheSubcontractAgreement
BoththeCAandtheCIACheldthattheworkstoppageofHRCCwasjustifiedasthesameis
but an exercise of its right to rescind the Subcontract Agreement in view of FFCCIs failure to
paytheformersmonthlyprogressbillings.Further,theCIACstatedthatFFCCIcouldnolonger
assailtheworkstoppageofHRCCasitfailedtofileanycounterclaimagainstHRCCpursuantto
thetermsoftheSubcontractAgreement.
For its part, FFCCI asserted that the work stoppage of HRCC was not justified and, in
any case, its failure to raise a counterclaim against HRCC for liquidated damages before the
CIACdoesnotamounttoaratificationofthelattersworkstoppage.
The determination of the validity of HRCCs work stoppage depends on a determination of the
following: first, whether HRCC has the right to extrajudicially rescind the Subcontract
Agreementandsecond,whetherFFCCIisalreadybarredfromdisputingtheworkstoppageof
HRCC.
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligorsshouldnotcomplywithwhatisincumbentuponhim.
Theinjuredpartymaychoosebetweenthefulfillmentandtherescissionoftheobligation,with
thepaymentofdamagesineithercase.Hemayalsoseekrescission,evenafterhehaschosenfulfillment,
ifthelattershouldbecomeimpossible.
Thecourtshalldecreetherescissionclaimed,unlesstherebejustcauseauthorizingthefixingofa
period.
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Thisisunderstoodtobewithoutprejudicetotherightsofthirdpersonswhohaveacquiredthe
thing,inaccordancewithArticles1385and1388andtheMortgageLaw.
The rescission referred to in this article, more appropriately referred to as resolution is on the
breachoffaithbythedefendantwhichisviolativeofthereciprocitybetweentheparties.
righttorescind,however,maybewaived,expresslyorimpliedly.
[44]
The
[45]
While the right to rescind reciprocal obligations is implied, that is, that such right need not be
expresslyprovidedinthecontract,neverthelessthecontractingpartiesmaywaivethesame.
[46]
Contrary to the respective dispositions of the CIAC and the CA, we find that HRCC had no
right to rescind the Subcontract Agreement in the guise of a work stoppage, the latter having
waivedsuchright.AproposisArticle11.2oftheSubcontractAgreement,whichreads:
11.2EffectsofDisputesandContinuingObligations
Hence, in spite of the existence of dispute or controversy between the parties during the
course of the Subcontract Agreement, HRCC had agreed to continue the performance of its
obligationspursuanttotheSubcontractAgreement.InviewoftheprovisionoftheSubcontract
Agreement quoted above, HRCC is deemed to have effectively waived its right to effect
extrajudicial rescission of its contract with FFCCI. Accordingly, HRCC, in the guise of
rescindingtheSubcontractAgreement,wasnotjustifiedinimplementingaworkstoppage.
Section1,Rule142oftheRulesofCourtprovides:
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Section1.Costsordinarilyfollowresultsofsuit.Unlessotherwiseprovidedintheserules,costs
shallbeallowedtotheprevailingpartyasamatterofcourse,butthecourtshallhavepower,forspecial
reasons,toadjudgethateitherpartyshallpaythecostsofanaction,orthatthesamebedivided,as
maybeequitable.NocostsshallbeallowedagainsttheRepublicofthePhilippinesunlessotherwise
providedbylaw.(Emphasissupplied)
Although, generally, costs are adjudged against the losing party, courts nevertheless have
discretion,forspecialreasons,todecreeotherwise.
Here, considering that the work stoppage of HRCC is not justified, it is only fitting that
both parties should share in the burden of the cost of arbitration equally. HRCC had a valid
reasontoinstitutethecomplaintagainstFFCCIinviewofthelattersfailuretopaythefullamount
of its monthly progress billings. However, we disagree with the CIAC and the CA that only
FFCCIshouldshoulderthearbitrationcosts.Thearbitrationcostsshouldbesharedequallyby
FFCCIandHRCCinviewofthelattersunjustifiedworkstoppage.
SOORDERED.
BIENVENIDOL.REYES
AssociateJustice
WECONCUR:
ANTONIOT.CARPIO
AssociateJustice
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ARTUROD.BRION
JOSEPORTUGALPEREZ
AssociateJustice
AssociateJustice
MARIALOURDESP.A.SERENO
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
casewasassignedtothewriteroftheopinionoftheCourtsDivision.
ANTONIOT.CARPIO
AssociateJustice
Chairperson,SecondDivision
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation,IcertifythattheconclusionsintheaboveDecisionhadbeenreachedinconsultation
beforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.
RENATOC.CORONA
ChiefJustice
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[1]
PennedbyAssociateJusticeRomeoF.Barza,withAssociateJusticesJosefinaGuevaraSalongaandArcangelitaM.RomillaLontok,
concurringrollo,pp.4769.
[2]
Id.at78.
[3]
Id.at8592.
[4]
Id.at93.
[5]
Id.at109.
[6]
Id.at111.
[7]
Id.at94.
[8]
Id.at95.
[9]
Id.at113.
[10]
Id.at96.
[11]
Id.at7984.
[12]
Id.at97105.
[13]
Id.at124.
[14]
Id.at116135.
[15]
Id.at134.
[16]
Id.at127128.
[17]
Id.at130131.
[18]
Supranote1.
[19]
Rollo,pp.7077.
[20]
Supranote2.
[21]
Rollo,pp.2122.
[22]
CreatinganArbitrationMachineryintheConstructionIndustryofthePhilippines,otherwiseknownastheConstructionIndustry
ArbitrationLaw.
[23]
SCCircularNo.191andRevisedAdministrativeCircularNo.195providesthatappealfromthearbitralawardoftheCIACmust
firstbebroughttotheCAonquestionsoffact,lawormixedquestionsoffactandlaw.
[24]
G.R.No.110434,December13,1993,228SCRA397.
[25]
Id.at405.
[26]
479Phil.578(2004).
[27]
Id.at590591.
[28]
Vda.DeFormosov.PhilippineNationalBank,G.R.No.154704,June1,2011.
[29]
SeePhilippineNationalConstructionCorporationv.CourtofAppeals,G.R.No.159417,January25,2007,512SCRA684,695.
[30]
CIVILCODEOFTHEPHILIPPINES,Article1370.
[31]
G.R.No.168108,April13,2007,521SCRA131.
[32]
Id.at144.
[33]
Rollo,p.87.
[34]
Id.at330331.
[35]
G.R.No.79269,June5,1991,198SCRA130.
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[36]
Id.at154.
[37]
Supranote4.
[38]
Supranote7.
[39]
Supranote8.
[40]
Supranote5.
[41]
Supranote6.
[42]
Supranote9.
[43]
Rollo,pp.6566.
[44]
PryceCorp.v.Phil.AmusementandGamingCorp.,497Phil.490,505(2005),citingtheConcurringOpinionofMr.JusticeJ.B.L.
ReyesinUniversalFoodCorp.v.CA,144Phil.1,21(1970).
[45]
Franciscov.DEACConstruction,Inc.,G.R.No.171312,February4,2008,543SCRA644,655.
[46]
Tolentino,COMMENTARIESANDJURISPRUDENCEONTHECIVILCODEOFTHEPHILIPPINES,Vol.IV(1991).
[47]
Rollo,p.91.
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