THIRD DIVISION
[G.R. No. 206191. February 21, 2018.]
GAUDIOSO A. TALAVERA, JR., petitioner,vs. BAM BUILDERS AND SERVICES, INCORPORATED, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedFebruary 21, 2018, which reads as follows: HTcADC
"G.R. No. 206191 (Gaudioso A. Talavera, Jr. v. BAM Builders and Services, Incorporated) — This petition for review 1 under Rule 45 of the Rules of Court seeks to reverse and set aside the November 20, 2012 Decision 2 and March 4, 2013 Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 124175 affirming the Final Award 4 issued by the Construction Industry Arbitration Commission (CIAC).
The Antecedents
In February 2010, Gaudioso A. Talavera, Jr. (petitioner), invited bidders for the construction of a two-storey commercial building with basement parking in Ilagan Isabela, to be called as the Talavera Square Mall (Mall). The building will house the Robinsons Supermarket by way of a lease agreement. 5
A pre-bidding conference was held on February 13, 2010, which was attended by four (4) bidders, including BAM Builders and Services, Inc. (respondent), represented by its President, Bernabe Magsino (Magsino). The pre-bidding conference was followed by a visit to the proposed construction site for inspection.
On February 25, 2010, only respondent submitted its proposal for the supply of labor and materials for a total cost of One Hundred Ten Million Two Hundred Fifteen Thousand Nine Hundred Sixty-Two Pesos and Fifty-Five Centavos (P110,215,962.55). After deciding that respondent would be the one to furnish all the construction materials, petitioner requested another estimate. In compliance, respondent submitted a reduced bid of Sixty Million Six Hundred Thirteen Thousand Three Hundred Four Pesos and Twenty-Five Centavos (P60,613,304.25), which was further lowered to Twenty-Seven Million Eight Hundred Eighty-Four Thousand Seven Hundred Eighty-Three Pesos and Thirty-Five Centavos (P27,884,783.35) for the supply of labor only. This was followed by another request from petitioner to remove the cost of construction equipment as he would be the one to provide the same. On March 2, 2010, respondent submitted its project proposal amounting to Twenty-One Million Pesos (P21,000,000.00). 6
On March 10, 2010, petitioner issued a Notice to Proceed in favor of respondent and the parties subsequently signed and executed a Construction Labor Supply Agreement (CLSA). On March 16, 2010, respondent was given an initial down payment of One Million Pesos (P1,000,000.00) for the construction project. On March 20, 2010, respondent commenced the work with the target completion date of October 20, 2010 or two hundred ten (210) calendar days from the start of the work. 7
Upon the request of respondent, petitioner granted an extension of thirty (30) days or until November 30, 2010, to finish the project. In a meeting held on November 3, 2010, the parties agreed on a supervised payment scheme whereby the actual weekly expenses of respondent including the wages of workers, and some consumables and utilities, would be paid for by petitioner, which amounts would be deducted from respondent's billing. The scheme was later on included as an Addendum 8 to the CLSA. 9
On April 14, 2011, the Mall was opened. Respondent was paid the amount of Sixteen Million Three Hundred Seven Thousand Four Hundred Sixty-Six Pesos and Twenty Centavos (P16,307,466.20), equivalent to 85.06% of the contract price less ten percent (10%) retention fee. It then requested a certificate of completion but petitioner refused to issue it. 10
On January 31, 2011, petitioner sent a letter to respondent stating that he would file a claim against the surety company to enforce the performance and surety bond contracted by respondent with Stronghold Insurance Company (Stronghold) as a guarantee of its faithful compliance with the undertaking under the CLSA. Thereafter, petitioner filed with the Regional Trial Court, Cauayan City (RTC), a case against Stronghold but respondent was not impleaded. 11
Proceeding before the CIAC
On October 7, 2011, respondent filed a complaint against petitioner before the CIAC, alleging that he failed to comply with the terms and conditions of the CLSA, compounded by the obvious bad faith on the part of the latter's Project Engineer Eduardo Pablo (Engineer Pablo). 12
Respondent averred that after it commenced work on March 20, 2010, it discovered that the temporary housing facilities offered by petitioner as the quarters for the workers would be affected by the construction and it would be demolished. It then constructed its own quarters and shouldered the expenses amounting to Forty-Five Thousand One Hundred Seventy-Five Pesos (P45,175.00) but the appropriate change order failed to cover this additional work. 13
Respondent claimed that in order to avoid delay in the excavation work for the perimeter walls, it re-routed the flowing of the creek through the property even if it was neither included in the scope of the agreed works nor reflected in the building plans, which cost an additional expenses in the amount of One Hundred Twenty-Four Thousand Four Hundred Seventy-Five Pesos (P124,475.00). 14 DETACa
Respondent further alleged that during the excavation works for the foundation, the pouring of concrete could not start as the 25mm bottom steel bars were not yet available on the site; also, the backhoe provided by petitioner for the construction was frequently used by him in loading heavy i-beams every time there was a delivery which eventually damaged the said backhoe rendering it useless for construction, and petitioner even deducted the cost of the repair and diesel consumption of the backhoe from its billings. Respondent was allegedly constrained to rent a backhoe, paying a total amount of Seven Hundred Twenty Thousand Pesos (P720,000.00). It also provided a vibratory walk behind compactor amounting to One Hundred Sixty-Five Thousand Pesos (P165,000.00), for the backfilling and compaction of the basement area, a work supposed to be performed by petitioner. With said vibratory walk behind compactor, respondent and its workers were able to prepare some areas for concrete pouring under the supervision of Engineer Pablo. 15
Respondent claimed that after the concrete pouring, Engineer Pablo issued an order stopping all works in the basement, questioned the use of the compactor and insisted that the workers should use a bigger compactor. Respondent reasoned that the backfilling and compaction was not even included in their agreed scope of work prompting petitioner to pull-out the backhoe and the nine-bagger concrete mixer from the construction site without any explanation, which seriously impaired the construction work. 16
Respondent also claimed that petitioner created even more challenges for them because instead of delivering the concrete by batch, he caused the delivery of sand, gravel, and cement to be used for concrete-making and instructed respondent to do the mixing; thus, the latter rented a pay loader, pump crete, water tanker, and 7-cubic meter transit mixer. The work took three (3) days, and during that time, Engineer Pablo supervised the workers. After the area was finished, Engineer Pablo questioned the concrete pouring saying that he needed to lay some pipes underneath, even though the same was not even reflected in the building plans. Respondent contended that obviously, petitioner did not want them to finish the project. 17
Finally, respondent claimed bad faith on the part of petitioner in the implementation of the supervised payment scheme. The construction workers complained, some of them even left, claiming that their salaries were insufficient, and that they were not paid for overtime work. Even the salaries of Engineer Pablo and other workers of petitioner were charged against respondent. Upon completion of the Mall, petitioner and Engineer Pablo refused to sign the certificate of completion claiming that respondent failed to do the plumbing even if it was not included in the agreed scope of work. 18
In his answer, petitioner claimed that there was no stipulation that he would provide housing facilities for the workers, or be liable for the monthly rental of the worker's lodging. He asserted that the re-routing of the creek was an integral component of the scope of works defined in the parties' agreement and that respondent cannot feign ignorance of the existence of the creek because all interested bidders were apprised of the construction site and allowed access for ocular inspection. Petitioner denied the allegation of delay because he complied with his undertaking under the agreement that all materials necessary for the construction project were completely delivered with no delay. 19 He likewise denied the allegation of unreasonable deduction as there was an agreement that all related works for backfilling and compaction shall be for the exclusive account of respondent, including the vibratory work compactor. Petitioner added that it was stipulated in their agreement that the backhoe shall be kept in good working condition.
As to the allegation of his failure to provide construction equipment, petitioner asserted that their agreement was that respondent would provide all the equipment that would be used in the construction site such as backhoe, cement mixer, pay loader, water tanker, transit mixer and others. Petitioner merely lent the backhoe and cement mixer and even paid the labor cost of the installation of the ceiling at the hallway, stairwell and restroom even if it was for the account of respondent as a show of goodwill. 20
Petitioner claimed that respondent was the one guilty of overbilling considering that it billed and received the total amount of Sixteen Million Three Hundred Seven Thousand Four Hundred Sixty-Six Pesos and Twenty Centavos (P16,307,466.20) or eighty-six percent (86%) of the contract price, when its actual accomplishment was only sixty-five percent (65%) of the project. He admitted that he refused to issue a certificate of completion because respondent abandoned the unfinished project. 21
On January 4, 2012, a preliminary conference was held before the CIAC.
The CIAC Ruling
In its Final Award 22 dated March 26, 2012, the CIAC directed petitioner to pay respondent a total amount of Two Million Five Hundred Thirty-Five Thousand Six Hundred Fifteen Pesos (P2,535,615.00), 23 broken down as follows: Two Million Two Hundred Eighteen Thousand Pesos (P2,218,000.00) for the rental of construction equipment, Forty-Five Thousand One Hundred Seventy-Five Pesos (P45,175.00) for the cost of demolition of houses, Seventy-Three Thousand Two Hundred Pesos (P73,200.00) for construction of pylon foundation, and One Hundred Ninety-Nine Thousand Two Hundred Forty Pesos (P199,240.00) for the net cost to install the ceiling at the hallway, stairwell, and restroom. aDSIHc
The CIAC found that petitioner breached his obligations to provide the equipment stated in their agreement and to provide all materials on site, and committed delay in the delivery of some of the construction materials that affected the work progress. The pertinent portions of the Final Award of the CIAC are quoted as follows:
On the basis of the evidence, the Tribunal has no difficulty in holding that respondent — TALAVERA had binding obligations: 1) to provide to Claimant-BAM the equipment listed under "B-Scope of Work for and during the entire period of the construction of the Project; and 2) to provide all materials on site; and that Respondent had indeed breached those dual obligations causing Claimant injury and damages. 24
xxx xxx xxx
Thus, the tribunal holds that Respondent-TALAVERA is at the least wanting in good faith so as to hold him liable for all damages that may reasonably be attributed to Respondent's non-performance of the twin obligations that he had committed to the Complainant as a valuable consideration for the latter's reduction of its bid price. Accordingly, the Tribunal holds that Respondent is liable to pay Claimant the amount of Two Million Two Hundred Eighteen Thousand Pesos (P2,218,000.00). 25
xxx xxx xxx
The use of the existing houses as barracks for Claimant's workers was among the several inducements offered by Respondent for Claimant to reduce its final bid. When Claimant subsequently found out that those houses could not be used as intended, a breach of contract took place. The cost incurred for such demolition was substantiated in Exhibit C-29, in the total amount of Forty Five Thousand One Hundred Seventy Five Pesos (P45,175.00). 26
xxx xxx xxx
It is not disputed that Claimant had performed, at least in part, the additional works of ceiling installation through Robert Gueco. The arrangement between them, however, is not a sub-contract in the technical meaning of the term but a private agreement to assist the contractor to work outside the structural scope of Claimant's contract. The fact that respondent had made payments directly to Gueco did not make the arrangement a sub-contract. There is nothing to indicate that conclusion even from Respondent's own documentary evidence. 27
The Tribunal agrees with the Claimant that indeed the ceiling is not part of its structural scope of the work provided in the Project Proposal dated March 2, 2010 (Exhibit "C-25") that the "supply of labor is in the construction of structural commercial building." The effect of Claimant's private arrangement, however, would negate or at least minimize Claimant's claim on the issue. 28
xxx xxx xxx
It is accordingly the holding of this Arbitral Tribunal to grant Claimant's claims on this cost (P450,000.00) but minus what has been paid directly to Gueco (P250,760.00) or a net amount of P199,240.00 in favour of the Claimant. 29
xxx xxx xxx
The Pylon Structure is certainly NOT part of the building. The design is that it is for advertisement of tenants in the mall with a Main Signage and 9 other signages that will be hung from the structure. Even the plans and specifications place the scope of work for building this Pylon structure under structural work in building the mall itself. 30
It is accordingly the holding of this Arbitral Tribunal to grant this claim of the Claimant for the additional work of constructing the Pylon in the amount of P73,200.00. 31
Aggrieved, petitioner filed a petition for review 32 before the CA.
The CA Ruling
In its decision dated November 20, 2012, the CA denied the petition for lack of merit. It affirmed the findings of the CIAC that the initial bid price of respondent was One Hundred Ten Million Two Hundred Fifteen Thousand Nine Hundred Sixty-Two Pesos and Fifty-Five Centavos (P110,215,962.55) for the supply of labor and materials for the construction project was ultimately reduced to Twenty-One Million Pesos (P21,000,000.00) as the final bid price as it was agreed that respondent would supply labor only and some specific consumable materials such as form works, welding electrodes, nails and power extension cords, while petitioner shall supply the construction materials and equipment for the project. 33
Anent the issue of reimbursement for the cost of demolition of the workers' housing facility, the CA held that the CIAC correctly awarded the same in favour of respondent. Contrary to petitioner's assertion, the issue was included in No. 4, Part IV of the parties Terms of Reference under additional works performed by respondent. 34 The pertinent portion of the CA decision is hereby quoted as follows:
Verily, this Court finds no sufficient justification to deviate from the findings of the CIAC Arbitral Tribunal that petitioner undertook to supply the materials, as well, as, the specified equipment for use of private respondent for the entire duration of the construction. He must thus be held liable to private respondent for the equipment which the latter was constrained to rent for failure of petitioner to provide the same during construction, such as bagger mixer, equipment used for cement pouring, vibratory walk behind compactor and backhoe in the total amount of Two Million Two Hundred Eighteen Thousand Pesos (P2,218,000.00). 35
WHEREFORE, premises considered, the instant petition for Review is hereby DENIED.
SO ORDERED. 36
Petitioner filed a motion for reconsideration but it was denied by the CA in its Resolution dated March 4, 2013.
Hence, this present petition anchored on the following:
Issues
A. Whether the CLS Agreement contains all the stipulations of the contracting parties particularly the agreement as to who shall supply the construction equipment, which stipulation have the force of law between them and must be complied with in good faith;
B. Whether the agreement as to who shall supply all the equipment in the Construction project was clearly stipulated in the CLS Agreement as to bar any other oral evidence to the contrary; and
C. Whether the amount of Php2,218,000.00 as award for rental of equipment is supported by substantial evidence on record. 37
The Court's Ruling
The petition is bereft of merit. ETHIDa
The Court reiterates the rule that factual findings of construction arbitrators are final and conclusive and not reviewable by this Court on appeal, except when petitioner proves affirmatively that: (1) the award was procured by corruption, fraud or other undue means; (2) there was evident partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; (4) one or more of the arbitrators were disqualified to act as such under section nine of Republic Act No. 876 and wilfully refrained from disclosing such disqualifications or of any other misbehavior by which the rights of any party have been materially prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award upon the subject matter submitted to them was not made. 38 In the present case, the Court finds no compelling reason to disturb the factual findings of the CIAC.
The issues raised by petitioner are factual, revolving as they do on the entitlement of respondent to the awards granted and computed by CIAC and affirmed by the CA. Significantly, jurisprudence teaches that mathematical computations as well as the propriety of the arbitral awards are factual determinations. 39 A re-examination of the factual findings is outside the province of a petition for review on certiorari. Accordingly, the Court finds no justifiable reason to reverse the findings of the CIAC and the CA.
As correctly held by the CA, the initial bid price was One Hundred Ten Million Two Hundred Fifteen Thousand Nine Hundred Sixty-Two Pesos and Fifty-Five Centavos (P110,215,962.55). This was finally reduced to Twenty One Million Pesos (P21,000,000.00) because the cost of materials and equipment was excluded. With the said final bid price, it was clearly agreed by the parties that respondent shall supply labor only and some specific consumable materials such as form works, welding electrodes, nails and power extension cords, and petitioner shall supply construction materials and equipment. 40
Also, as pointed out by the CIAC and the CA, the original project proposal 41 signed by the parties contained handwritten insertions intended to modify the same with respect to scope of work to be performed by respondent and reduced the terms of payment. The Project Proposal 42 indicates that respondent offered to furnish all labor only, to wit:
In accordance with the invitation to BID for the construction of three-storey commercial bldg. subject to specifications and other construction documents as prepared by your consultant N PLAS DE LEON, the undersigned proposed to furnish all labor only in the amount of twenty one million pesos (Php21,000,000) only. 43 (emphasis and underlining supplied)
The final project proposal also became the basis for the CLSA between the parties. The title of the agreement itself reveals that the parties agreed for respondent to supply labor only for the construction project. Consequently, the Court agrees with the ruling of the CA in awarding the amount of rental for the equipment.
Petitioner bound himself to provide the backhoe for the use of respondent in the construction project. The backhoe provided by petitioner, however, was damaged due to cause not attributable to the acts of respondent. It was undisputed that petitioner was the one who frequently used the backhoe in loading and unloading construction materials to and from the site resulting in its damage eventually rendering it useless for the construction project. As indicated in the CLSA, to wit:
If any of the above-mentioned equipment gets lost or damaged due to causes attributable to BAM, or his representatives, the repair/replacement cost shall be for the account of BAM. 44 (emphasis and underlining supplied)
Verily, petitioner should reimburse the amount of Ninety Thousand Pesos (P90,000.00) for the cost of the repair of the backhoe that was deducted from respondent's billings. Further, the fact that the backhoe was pulled-out without any explanation, leaving respondent with no choice but to rent its own backhoe, renders petitioner liable to pay the amount of rent in the amount of Seven Hundred Twenty Thousand Pesos (P720,000.00).
The amount of One Hundred Sixty-Three Thousand Pesos (P163,000.00) for the rental of bagger-mixer, and One Million Eight Hundred Thousand Pesos (P1,800,000.00) for rentals of pay loader, pump crete, water tanker and a seven (7)-unit — seven (7) cubic meter transit mixer, is likewise sustained. Respondent was constrained to rent these equipment, for the mixing of the cement, for failure of petitioner to comply with his obligation. In fact, instead of complying with his obligation, he even created more challenges for respondent when delivering concrete by batch that caused the delivery of sand, gravel and cement to be used for making the concrete three kilometres away from the project site and told respondent to do the mixing of the cement and be responsible for its delivery to the site. Thus, respondent incurred, not only additional expenditures but delay in the completion of the project.
The computation of the amount of rental of the equipment must also be sustained. The Court finds no reason to doubt, much less disturb, the findings of the CIAC and the CA on the matter. "Also, considering that the computations of the awards of the CIAC are unquestionably factual issues that have been discussed and ruled upon by the CIAC and affirmed by the Court of Appeals, the Court shall not depart from such findings. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals." 45
Lastly, the assessment decreed in the CIAC ruling against petitioner for interest at 6% per annum reckoned from the date of CIAC's decision and at 12% per annum upon its finality, has to be sustained. For, in the final analysis, petitioner is deemed to have defaulted in its obligation to pay respondent the amount representing the rent legally due it. 46 cSEDTC
WHEREFORE, the petition is DENIED. The November 20, 2012 Decision and March 4, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124175 are hereby AFFIRMED in toto.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 5-41, Vol. I.
2. Penned by Associate Justice Ramon R. Garcia with Associate Justices Amelita G. Tolentino and Danton Q. Bueser, concurring; id. at 43-60, Vol. I.
3.Id. at 72-73, Vol. I.
4.Id. at 703-748, Vol. II.
5.Id. at 44-45, Vol. I.
6.Id. at 45, Vol. I.
7.Id. at 45-46, Vol. I.
8.Id. at 620-621, Vol. II.
9.Id. at 46, Vol. I.
10.Id.
11.Id. at 46-47, Vol. I.
12.Id. at 47, Vol. I.
13.Id.
14.Id. at 47-48, Vol. I.
15.Id. at 48, Vol. I.
16.Id. at 49, Vol. I.
17.Id. at 49, Vol. I.
18.Id. at 50, Vol. I.
19.Id.
20.Id. at 51, Vol. I.
21.Id.
22.Id. at 703-748, Vol. II.
23.Id. at 747, Vol. II.
24.Id. at 729, Vol. II.
25.Id. at 731, Vol. II.
26.Id. at 732, Vol. II.
27.Id. at 741, Vol. II.
28.Id.
29.Id. at 742, Vol. II.
30.Id. at 743, Vol. II.
31.Id.
32.Id. at 749-772, Vol. II.
33.Id. at 57, Vol. I.
34.Id. at 59, Vol. I.
35.Id. at 58, Vol. I.
36.Id. at 60, Vol. I.
37.Id. at 21, Vol. I.
38.CE Construction Corp. v. Araneta Center, Inc., G.R. No. 192725, August 9, 2017.
39.National Transmission Corp. v. Alphaomega Integrated Corp., 740 Phil. 87, 97 (2014).
40.Id. at 57, Vol. I.
41.Id. at 555-556, Vol. I.
42.Id. at 76-82, Vol. I.
43.Id. at 555, Vol. I.
44.Id. at 77, Vol. I.
45.Megaworld Globus Asia, Inc. v. DSM Construction and Development Corp., 468 Phil. 305, 327-328 (2004).
46.R-II Builders, Inc. v. Construction Industry Arbitration Commission, 511 Phil. 523, 535 (2005).