THIRD DIVISION
|
Federal Builders, Inc.,
Petitioner, - versus - Daiichi
ProPerties AND development,
inc., Respondent. |
|
G.R. No. 142525 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CHICO-NAZARIO, VELASCO,*
and PERALTA, JJ. Promulgated: February 13, 2009 |
x- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
CHICO-NAZARIO, J.:
This Petition for Review on Certiorari under Rule 65 of the Rules of
Court assails the Decision[1] of the Court of Appeals dated 9
November 1999 in CA-G.R. SP No. 54122 which set aside the Orders of the
Arbitral Tribunal of the Construction Industry Arbitration Commission denying the
Motion to Commission an Independent Quantity Surveyor of Daiichi Properties and
Development, Inc. (Daiichi), and the Court of Appeals’ Resolution[2]
dated 23 February 2000 denying the motion for reconsideration of the said
decision.
Daiichi invited bidders for the
general construction of its high-rise building project named
On
1.
834,273 bags of cement, as the guaranteed maximum quantity of cement to be
supplied by Daiichi;
2.
9,262,334.45 kilograms of steel bars, as the guaranteed maximum quantity of
steel bars, also to be supplied by Daiichi; and
3. P212,000,000.00
as the fixed price of [Federal’s] labor and other materials.[3]
The Construction Agreement likewise
granted Daiichi the right to revise the construction plans for the project,
thus:
2.10 All variations or departures from the bid plans,
this Contract Agreement and other
related contract and bid documents to the issued construction plans and other
future revisions shall be considered as change order.
x x x
x
8.01. The
CONTRACTOR is obliged to undertake any additional work or extra work or
omission or reduction of work which the OWNER may require.
x x x
x
8.04.
The
OWNER may … at any time during the progress of the work by written
instructions, cause alterations in the original plans and specifications to be
made by way of addition, deletion, or otherwise deviating therefrom; and said
work shall be executed by the CONTRACTOR under the direction of the
Construction Manager in the same manner as if the same had been part of the
original plans and specifications.[4]
In the course of the construction,
Daiichi made some changes by reducing the concrete strength from 8,000 to 6,000
pounds per square inch, which reduction resulted in a decrease in the required
quantities of cement, steel bars, other materials and a diminution of the labor
costs. Pursuant to this, Daiichi issued
revised construction plans. Daiichi and
Federal also agreed to reduce the contract price of the project and to submit a
separate evaluation of the deductive costs arising from the revisions of the
construction plans. While the parties
agreed that due to the reduction in the concrete strength, a corresponding
decrease in the required quantities of cement, steel bars, other materials and
labor must follow, they cannot agree on the method in arriving at the deductive
cost. Daiichi presented its own estimate
of the deductive cost by getting the
difference between the quantities/peso value of steel bars, cement, labor and
materials required under the original plan with the quantities/peso value of
the same items required under the revised plan; thus:
Change in Quantity = Quantity of – Quantity of Materials
Materials
required Required Under Original
Under
Revised Plan. Plan
Using the foregoing methodology,
Daiichi computed the deductive cost at P64,602,110.59.
For its part, Federal insisted on a
different formula to obtain the deductive cost by comparing the quantities/peso value of steel bars, cement, labor and
materials required under the construction agreement (or guaranteed maximum)
with the quantity of materials required under the revised plan, to wit:
Change in Quantity = Guaranteed Maximum –
Quantity of Materials
or
Fixed Quantity of required under Revised
Materials
under the Plan.
Construction
Agreement.
By employing the foregoing formula, Federal
reached the amount of P31,326,810.15 as the deductive costs.
On account of this differing computations
in determining the deductive costs, Daiichi engaged the services of an
independent quantity surveyor, Davis Langdo and Seah Philippines, Inc. (DLS),
to conduct a survey of the deductive costs. DLS came out with its own estimate of the
deductive cost in the amount of P68,441,415.58, which is closer to that
submitted by Daiichi.
Daiichi also made some deductions from
the amount it paid to Federal using the former’s manner of computation.
Feeling aggrieved, Federal filed a
petition for arbitration with the Construction Industry Arbitration Commission
(CIAC) on
The basic issue submitted to the
Arbitral Tribunal appears to be the determination of the correct approach in
order to obtain the deductive costs brought about by the revisions in the
project.
In the course
of the hearing, Daiichi filed on
On
Daiichi filed a motion for
reconsideration, which was also denied by the Arbitral Tribunal in an Order
dated
Unfazed, Daiichi questioned the
orders of the Arbitral Tribunal before the Court of Appeals.
In a Decision dated
WHEREFORE, the instant petition is hereby GRANTED and
the assailed orders dated June 29, 1999 and July 13, 1999 of the respondent
Arbitral Tribunal are hereby NULLIFIED and SET ASIDE. Accordingly, the
respondent Arbitral Tribunal is hereby ordered, subject to the prescription of
Section 5, Chapter XV of the Rules of Procedure Governing Construction
Arbitration, to commission an independent quantity surveyor to determine the
actual quantities of materials required to complete the “
Federal filed a motion for
reconsideration which was denied by the Court of Appeals in a Resolution dated
Hence, this petition.
It bears stressing that this case
must be dismissed outright since Federal chose the wrong remedy in bringing
this case before this Court. Petitioner should have filed a petition for
review under Rule 45 of the 1997 Rules of Civil Procedure instead of a Special
Civil Action for Certiorari under
Rule 65. The proper remedy of a party aggrieved by a decision of the
Court of Appeals is a petition for review under Rule 45, which is not identical
to a Petition for Certiorari under
Rule 65. Under Rule 45, decisions, final orders or resolutions of the
Court of Appeals in any case, i.e.,
regardless of the nature of the action or proceedings involved, may be appealed
to this Court by filing a petition for review, which would be but a
continuation of the appellate process over the original case. On the
other hand, a special civil action under Rule 65 is an independent action based
on the specific grounds therein provided and, as a general rule, cannot be
availed of as a substitute for the lost remedy of an ordinary appeal, including
that to be taken under Rule 45. Accordingly,
when a party adopts an improper remedy, as in this case, such petition may be
dismissed outright.
At any rate, even if we were to ignore the
procedural defects, the instant petition must still be dismissed as the Court
of Appeals did not commit any grave abuse of discretion amounting to want or
excess of jurisdiction in reversing the orders of the Arbitral Tribunal.
In certiorari proceedings under Rule 65 of the Rules of Court, the inquiry is
limited essentially to whether or not the public respondent acted without or in
excess of its jurisdiction or with grave abuse of discretion.[7]
A court, tribunal, board or officer
acts without jurisdiction if it/he does not have the legal power to determine
the case.[8] There is excess of jurisdiction where, being
clothed with the power to determine the case, the tribunal, board or officer
oversteps its/his authority as determined by law. And there is grave abuse of discretion where
the court, tribunal, board or officer acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of its/his judgment as to be said
to be equivalent to lack of jurisdiction.[9]
The Court of Appeals is far from
being abusive in rendering its questioned decision.
The Court of Appeals annulled and set
aside the Arbitral Tribunal’s orders on the ground that said orders completely
failed to give Daiichi the vital piece of information necessary for the
judicious resolution of the case thereby ignoring the letter, spirit, policy
and objective of the Rules of Procedure Governing Construction Arbitration
which require, among other things, that arbitrators must employ all reasonable
means to ascertain facts in each case. To
the mind of the Court of Appeals, the Arbitral Tribunal must exert all its best
efforts to thresh out the matters relevant to the case and to apprise itself of
the evidence that contending parties may present to support their respective
theories. According to the appellate
court, since it is Daiichi’s claim that the deductive cost can only be
established by finding out the quantities of materials required to complete the
project under the original plan and the revised plan, the Arbitral Tribunal
should have allowed the commissioning of an independent expert who would give
an objective information for the tribunal to reach a sensible, if not
well-informed, resolution of the controversy.
We agree with the Court of Appeals.
As mentioned earlier, the crux of the
controversy lies in the formula to arrive at the deductive cost. Daiichi postulates that the deductive cost is ascertained
by getting the difference between the quantities/peso value of steel bars,
cement, labor and materials required under the original plan with the
quantities/peso value of the same items required under the revised plan. Two
reference points must be determined first, i.e.,
the old quantity and the new quantity which are to be matched. To determine the old quantity (quantity of materials required under the old
plan) and the new quantity (quantity
of materials required under the revised plan), it is necessary that a
quantitative survey must first be conducted on these two items. Without such survey, Daiichi asserts, the deductive
cost can never be determined.
Federal, for its part, has a
different formula to obtain the deductive cost by comparing the quantities
required under the construction agreement and those required under the revised
plan.
Obviously Daiichi and Federal disagree
on one item in the formula. Daiichi insists that the old quantity must be
factored in, while Federal contends that in place of the old quantity, the
quantity required under the construction agreement should instead be brought
in. Although in Federal’s formula, the
quantity required under the construction agreement is already established, as
evidenced by the construction agreement contract, what remains unknown,
however, are the items in Daiichi’s formula which are the quantities under the
revised plan and the old plan. By not
allowing Daiichi to commission an independent survey on these unknown items,
the tribunal effectively prevents respondent from presenting evidence for its
cause. Furthermore, this case undeniably
involves highly technical matters within the special training and expertise of
those engaged in the construction industry. Persons specialized in this field,
and are fair-minded, are invaluable sources of needed information that can shed
light on the confusing and contradicting claims asserted by the parties. The Court cites with approval the disquisition
of the Court of Appeals in this regard:
A determination of the quantities of materials required
to complete the project under the original bid plans and the revised plans is
doubtless necessary for the judicious resolution of the underlying dispute
between the parties. Given the tedious
and technical process involved in this undertaking, the participation of an
impartial third person who will provide the Arbitral Tribunal with the
necessary detailed information is, contrary to what the assailed orders imply,
virtually a must. Thus, its refusal to
consider what [Daiichi] aptly describes as “vital” and “unimpeachable” piece of
information constitutes an utter disregard of the spirit, if not the letter, of
the Rules of Procedure Governing Construction Arbitration, Article 1, Section 3
of which exhorts arbitrators to “use every and all reasonable means to ascertain
facts in each case speedily and objectively and without regard to technicalities
of law or procedure.”
Just like any dispenser of justice, the [Arbitral
Tribunal] is bound to seek the truth or what approximates it. It cannot engage
in and rely on speculation, conjecture and guesswork, which, needless to state,
cannot be an acceptable norm for an intelligent judgment. [Daiichi’s] motion to
commission an independent quantity surveyor was an earnest attempt to provide
the [Arbitral Tribunal] with a credible tool to get at the truth, to afford it
with a rational basis to fairly settle clashing interests. x x x.[10]
As to the Arbitral Tribunal’s
ratiocination that the hiring of an independent quantity surveyor can be useful
only if both parties agree to such engagement, the Court of Appeals rightly
impugned said excuse as frail and baseless, viz:
This justification is specious inasmuch as the
designation of an independent quantity surveyor may be made on the basis alone
of the motion of one party. Section 5, Chapter XV of the Rules of Procedure
Governing Construction Arbitration says so:
“Section 5. Appointment of Experts. – The service of
technical or legal experts may be utilized in the settlement of disputes if
requested by one of the parties x x x.”[11]
The Court is in a quandary why the
Arbitral Tribunal refused to grant the motion of Daiichi. The tribunal ignored the effort of a party
whose only desire was to elucidate and give details of the pertinent
information, not necessarily favorable to the latter, particularly those which
can be provided by an independent quantity surveyor. By doing so, the tribunal was being unmindful
of Article 1, Section 3 of the Rules of Procedure Governing Construction
Arbitration, which exhorts the arbitrators to “use every and all reasonable means to ascertain facts in each case
speedily and objectively and without regard to technicalities of law or
procedure.” The information that the
independent surveyor can provide is not at all inconsequential, for it redounds
to the very thesis of Daiichi, i.e.,
that the deductive cost is arrived at by determining the quantities of
materials required to complete the project under the old plan or original bid
and the revised plan. The stubborn refusal
of the Arbitral Tribunal to commission an independent quantity surveyor despite
the clear right of Daiichi to the same was characterized by capriciousness and
arbitrariness amounting to grave abuse of discretion. In the language of the
appellate court:
The error is so egregious as to justify a charge of
grave abuse of discretion. As it were, the Court is at a loss to understand why
a simple motion, containing a reasonable plea not necessarily favorable to [Daiichi],
but envisaged to assist in the judicious resolution of the basic dispute
between the parties, would elicit an unrealistic response from the [Arbitral
Tribunal].[12]
As to Federal’s claim that there is
no necessity to conduct a survey, since Daiichi has already submitted estimates
from an independent quantity surveyor, we find said argument tenuous. The survey initiated by Daiichi cannot be said
to be independent, because it was done through its behest. An independent survey sanctioned by the
Arbitral Tribunal, and not at the prodding of any contending party, is suitable
in this kind of controversy.
Federal contends that the Court of
Appeals encroached on the Arbitral Tribunal’s jurisdiction in finding Daiichi’s
formula more acceptable, thereby pre-empting any decision which the Tribunal
had yet to make.
This is inaccurate. The Court of
Appeals resolved primarily the issue of the grave abuse of discretion committed
by the Arbitral Tribunal in refusing to commission an independent survey of the
original plan and the revised plan. While
the said court may have intimated that the formula of Daiichi was desirable, the
former did so to lay emphasis on its position that the Arbitral Tribunal could not,
without abusing its discretion, blindly preclude Daiichi from presenting
evidence or information to substantiate its theory. This information, to the Court of Appeals’
mind, can only be elicited from the commissioning of an independent quantity
surveyor. A solid testimony attesting to
the fact that the Court of Appeals did not attempt to pre-empt the Arbitral
Tribunal’s disposition of the main case is evidenced by the declaration of the same
court, to wit:
Much has been made by [Federal] of what it views as
the insignificant evidentiary value of a second survey report. In this
regard, suffice it to state that the worth of such document, be it accepted as
evidence, or, to borrow from the Arbitral Tribunal, as procedural device, is
for the Tribunal to decide at the first instance.[13] (Emphasis
supplied.)
Moreover, the tenor of the dispositive
portion of the Court of Appeals’ Decision does not order the Arbitral Tribunal
to adopt the formula of Daiichi in resolving the focal issue of the case. The appellate court simply directed the
tribunal to commission an independent surveyor. Indeed, it is the dispositive
part of the judgment that actually settles and declares the rights and
obligations of the parties, finally, definitively, authoritatively,
notwithstanding the existence of inconsistent statements in the body that may
tend to confuse.[14] It is the dispositive part that controls, for
purposes of execution.[15]
Hence, there is no doubt that the Court of Appeals decided the case within the
ambit of its authority.
In fine, this Court defers to the
findings of the Court of Appeals, there being no cogent reason to veer away from
such.
WHEREFORE,
the Decision of the Court of Appeals dated
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice Associate Justice
DIOSDADO M. PERALTA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
* Associate
Justice Presbitero J. Velasco, Jr. was designated to sit as additional member
replacing Associate Justice Antonio Eduardo B. Nachura per Raffle dated
[1] Penned by Associate Associate Justices Cancio C. Garcia with Bernardo Ll. Salas and Candido V. Rivera, concurring; rollo, pp. 36-47.
[2] Rollo, p. 49.
[3]
[4]
[5]
[6]
[7] People v. Court of Appeals, G.R. No. 144332,
[8] Litton Mills, Inc. v. Galleon Trader, Inc., G.R. No. L-40867,
[9]
[10] Rollo, pp. 45-46.
[11]
[12]
[13]
[14] Espiritu
v. Court of First Instance of
[15]