[G.R. No. 148318.

November 22, 2004]

NATIONAL POWER CORPORATION, petitioner, vs. HON. ROSE ARIE ALON!O"LEGASTO, #$ Pre$%&%'( )*&(e, RTC o+
,*e-o' C%./, 0r#'12 33, )OSE ARTINE!, 4e5*./ S2er%++, RTC o+ ,*e-o' C%./, CARELO 6. SISON, C2#%rm#',
Arb%.r#.%o' 0o#r&, #'& 7IRST 8NITE4 CONSTR8CTORS CORPORATION, respondents.
4 E C I S I O N
TINGA, J.9
National Power Corporation (NPC) filed the instant Petition for Review
[1]
dated July 19, 2001, assailing the Decision
[2]
of the
Court of ppeals dated !ay 2", 2001 whi#h affir$ed with $odifi#ation the Order
[%]
and Writ of Execution
[&]
respe#ti'ely dated !ay
22, 2000 and June 9, 2000 issued (y the )egional *rial Court+ ,n its assailed Decision, the appellate #ourt de#lared respondent
-irst .nited Constru#tors Corporation (-.CC) entitled to /ust #o$pensation for (lasting wor0s it undertoo0 in relation to a #ontra#t
for the #onstru#tion of power fa#ilities it entered into with petitioner+ *he Court of ppeals, howe'er, deleted the award for attorney1s
fees ha'ing found no (asis therefor+
*he fa#ts #ulled fro$ the Decision of the Court of ppeals are undisputed2
3n pril 1&, 1992, NPC and -.CC entered into a #ontra#t for the #onstru#tion of power fa#ilities (#i'il wor0s) 4 5#hedule 1 4 1620
!7 8a#on9!anito ,, !odular :eother$al Power Plant (Cawayan area) and 5#hedule 1 4 1620 !7 8a#on9!anito ,, !odular
:eother$al Power Plant (8otong area) in 8a#on, 5orsogon (8C!N ,,)+ *he total #ontra#t pri#e for the two s#hedules
is P10",&9%,9;;+%0, (ro0en down as follows2
5C<=>.?=
1 4 Cawayan area P@2,0"1,&21+00
1 4 8otong area P@;,&12,@&@+%0
AAAAAAAAAAAAAA
P10",&9%,9;;+%0
ppended with the Contra#t is the #ontra#t pri#e s#hedule whi#h was su($itted (y the respondent -.CC during the (idding+ *he
pri#e for grading e6#a'ation was PB;+00 per #u(i# $eter+
Constru#tion a#ti'ities #o$$en#ed in ugust 1992+ ,n the latter part of 5epte$(er 1992 and after e6#a'ating @+0 $eters a(o'e the
plant ele'ation, -.CC reCuested NPC that it (e allowed to (last to the design grade of &9@ $eters a(o'e sea le'el as its doDers and
rippers #ould no longer e6#a'ate+ ,t further reCuested that it (e paid P1,%&;+00 per #u(i# $eter si$ilar to the rate of NPC1s pro/e#t in
Palinpinon+
7hile (lasting #o$$en#ed on 3#to(er ;, 1992, NPC and -.CC were dis#ussing the propriety of an e6tra wor0 order and if su#h is
in order, at what pri#e should -.CC (e paid+
5o$eti$e in !ar#h 199%, NPC Ei#e President for =ngineering Constru#tion, <e#tor Ca$pos, #reated a tas0 for#e to re'iew -.CC1s
(lasting wor0s+ *he te#hni#al tas0 for#e re#o$$ended that -.CC (e paid P&@"+0B per #u(i# $eter as su#h (eing the pri#e agreed
upon (y -.CC+
*he $atter was further referred to the >epart$ent of Pu(li# [7]or0s and <ighways (>P7<), whi#h in a letter dated !ay 19, 199%,
re#o$$ended the pri#e range of P@00+00 to P;00+00 per #u(i# $eter as reasona(le+ ,t further opined that the pri#e of P9"%+B@ per
#u(i# $eter proposed (y ?auro )+ .$ali, Pro/e#t !anager of 8C!N ,, was high+ #opy of the >P7< letter is atta#hed as nne6
FCG, -.CC1s =6hi(it ===9r(itration+
,n a letter dated June 2", 199%, -.CC for$ally infor$ed NPC that it is a##epting the proposed pri#e of P&@"+0B per #u(i# $eter+
#opy of the said letter is atta#hed as nne6 F>G, -.CC1s =6hi(it ? r(itration+
,n the $eanti$e, (y !ar#h 199%, the wor0s in 8otong area were in #onsidera(le delay+ 8y !ay 199%, #i'il wor0s in 8otong were
0ept at a $ini$u$ until on No'e$(er 1, 199%, the entire operation in the area #o$pletely #eased and -.CC a(andoned the pro/e#t+
5e'eral written and 'er(al warnings were gi'en (y NPC to -.CC+ 3n !ar#h 1&, 199&, NPC1s 8oard of >ire#tors passed )esolution
No+ 9&9;% appro'ing the re#o$$endation of President -ran#is#o ?+ Eiray to ta0e o'er the #ontra#t+ President Eiray1s
re#o$$endation to ta0e o'er the pro/e#t was #o$pelled (y the need to sta'e9off huge pe#uniary and non9$onetary losses, na$ely2
(a) :eneration loss esti$ated to (e at P2;,@&;,&00H$onthI
(() Pay$ent of stea$ penalties to PN3C9=>C the a$ount esti$ated to (e at P10,20;,0&"+00H$onthI
(#) Pay$ent of liCuidated da$ages due to the stand(y of ele#tro$e#hani#al #ontra#torI
(d) ?oss of guaranteed prote#tion (warranties) of all deli'ered plant eCuip$ent and a##essories as !itsu(ishi
Corporation, ele#tro$e#hani#al #ontra#tor, will not (e lia(le after si6 $onths of deli'ery+
*o pre'ent NPC fro$ ta0ing o'er the pro/e#t, on !ar#h 2", 199&, -.CC filed an a#tion for 5pe#ifi# Perfor$an#e and >a$ages with
Preli$inary ,n/un#tion and *e$porary )estraining 3rder (efore 8ran#h 99, )egional *rial Court, JueDon City+
.nder paragraph 19 of its Co$plaint, -.CC ad$itted that it agreed to pay the pri#e of P&@"+0B per #u(i# $eter+
3n pril @, 199&, Judge de :uD$an issued a te$porary restraining order and on pril 21, 199&, the trial #ourt resol'ed to grant the
appli#ation for issuan#e of a writ of preli$inary in/un#tion+
3n July B, 199&, NPC filed a Petition for Certiorari with Prayer for *e$porary )estraining 3rder and Preli$inary ,n/un#tion (efore
the -irst >i'ision of the Court of ppeals asserting that no in/un#tion $ay issue against any go'ern$ent pro/e#ts pursuant to
Presidential >e#ree 1"1"+
3n July ", 199&, the Court of ppeals through then sso#iate Justi#e 8ernardo Pardo issued a te$porary restraining order and on
3#to(er 20, 199&, the said #ourt rendered a >e#ision granting NPC1s Petition forCertiorari and setting aside the lower #ourt1s 3rder
dated pril 21, 199& and the 7rit of Preli$inary ,n/un#tion dated !ay @, 199&+
<owe'er, notwithstanding the dissolution (y the Court of ppeals of the said in/un#tion, on July 1@, 199@, -.CC filed a Co$plaint
(efore the 3ffi#e of the 3$(uds$an against se'eral NPC e$ployees for alleged 'iolation of )epu(li# #t No+ %019, otherwise
0nown as the nti9:raft and Corrupt Pra#ti#es #t+ *ogether with the #o$plaint was an .rgent =69Parte !otion for the issuan#e of a
#ease and [d]esist [o]rder to restrain NPC and other NPC offi#ials in'ol'ed in the 8C!N ,, pro/e#t fro$ #an#eling andHor fro$
ta0ing o'er -.CC1s #ontra#t for #i'il wor0s of said pro/e#t+
*hen on No'e$(er 1;, 199&, -.CC filed (efore the 5upre$e Court a Petition for )e'iew assailing the >e#ision of the Court of
[]ppeals dated 3#to(er 20, 199&+ ,n its Co$$ent, NPC raised the issue that -.CC resorted to foru$ shopping as it applied for a
#ease and desist order (efore the National 3$(uds$an despite the dissolution of the in/un#tion (y the Court of ppeals+
Pending the petition filed (y -.CC (efore the 5upre$e Court, on pril 20, 199@ the NPC and -.CC entered into a Co$pro$ise
gree$ent+
.nder the Co$pro$ise gree$ent, the parties agreed on the following2
1+ >efendant shall pro#ess and pay the undisputed unpaid (illings of Plaintiff in #onne#tion with the entire pro/e#t fifteen
(1@) days after a re#on#iliation of a##ounts (y (oth Plaintiff and >efendant or thirty (%0) days fro$ the date of
appro'al of this Co$pro$ise gree$ent (y the Court whi#he'er #o$es first+ 8oth parties agree to su($it and
in#lude those a##ounts whi#h #ould not (e re#on#iled a$ong the issues to (e ar(itrated as hereunder pro'idedI
2+ Plaintiff a##epts and a#0nowledges that >efendant shall ha'e the right to pro#eed with the wor0s (y re9(idding or
negotiating the pro/e#t i$$ediately upon the signing of herein Co$pro$ise gree$entI
%+ *his Co$pro$ise gree$ent shall ser'e as the 5upple$ental gree$ent for pay$ent of plaintiff1s (lasting wor0s at
the 8otong siteI
&+ .pon appro'al of this Co$pro$ise gree$ent (y the Court or Plaintiff1s re#eipt of pay$ent of this undisputed unpaid
(illings fro$ >efendant whi#he'er #o$es first, the parties shall i$$ediately file a Joint !anifestation and !otion for
the withdrawal of the following Plaintiff1s petition fro$ the 5upre$e Court, Plaintiff1s Co$plaint fro$ the National
3$(uds$an, the Co$plaint and $ended Co$plaint fro$ the )*C, 8r+ 99 of JueDon CityI
@+ .pon final resolution of the r(itration, as hereunder pres#ri(ed, the parties shall i$$ediately e6e#ute the proper
do#u$ents $utually ter$inating Plaintiff1s #ontra#t for the #i'il wor0s of the 8C!N ,, Pro/e#t (Contra#t No+
5p90>?!991" (, K )I
;+ 5u#h $utual ter$ination of Plaintiff1s #ontra#t shall ha'e the following effe#ts andHor #onseCuen#es2 (a) the
#onstru#tion wor0s of Plaintiff at the Lawayan and 8olong sites, at its present stage of #o$pletion, shall (e
a##epted andHor dee$ed to ha'e (een a##epted (y defendantI (() Plaintiff shall ha'e no $ore o(ligation to
>efendant in respe#t of the 8C!N ,, Pro/e#t e6#ept as pro'ided in #lause (e) (elowI (#) >efendant shall release
all retention $oneys of plaintiff within a $a6i$u$ period of thirty (%0) days fro$ the date of final )esolution of the
r(itrationI (d) no retention $oney shall then#eforth (e withheld (y >efendant in its pay$ent to Plaintiff under this
Co$pro$ise gree$ent, and (e) Plaintiff shall put up a one9year guaranty (ond for its #o$pleted #i'il wor0s at the
Lawayan site, retroa#ti'e to the date of a#tual use of the plant (y defendantI
B+ Plaintiff1s (lasting wor0s #lai$s and other unresol'ed #lai$s, as well as the #lai$s of da$ages of (oth parties shall
(e settled through a two stage pro#ess to wit2
5*:= 1
B+1 Plaintiff and >efendant shall e6e#ute and sign this Co$pro$ise gree$ent whi#h they will su($it for
appro'al (y this Court+ .nder this Co$pro$ise gree$ent (oth parties agree that2
666 666
5*:= 2
B+1 *he parties shall su($it for ar(itration to settle2 (a) the pri#e of (lasting, (() (oth parties1 #lai$s for
da$ages, delays, interests, and (#) all other unresol'ed #lai$s of (oth parties, in#luding the e6a#t
'olu$e of (lasted ro#0sI
B+2 *he ar(itration shall (e through a three9$e$(er #o$$ission to (e appointed (y the <onora(le Court+
=a#h party shall no$inate one $e$(er+ *he Chair$an of the r(itration 8oard shall (e [a] person
$utually a##epta(le to (oth parties, prefera(ly fro$ the a#ade$eI
B+% *he parties shall li0ewise agree upon the ter$s under whi#h the ar(itra(le issues shall (e referred to the
r(itration 8oard+ *he ter$s of referen#e shall for$ part of the Co$pro$ise gree$ent and shall (e
su($itted (y the parties to the <onora(le Court within a period of se'en (B) days fro$ the signing of the
Co$pro$ise gree$entI
B+& *he r(itration 8oard shall ha'e a non9e6tendi(le period of three (%) $onths within whi#h to #o$plete the
ar(itration pro#ess and su($it its >e#ision to the <onora(le CourtI
B+@ *he parties agree that the >e#ision of the r(itration 8oard shall (e final and e6e#utoryI
B+; 8y 'irtue of this Co$pro$ise gree$ent, e6#ept as herein pro'ided, the parties shall $utually wai'e,
forgo and dis$iss all of their other #lai$s andHor #ounter#lai$ in this #ase+ Plaintiff and defendant
warrant that after appro'al (y the Court of this Co$pro$ise gree$ent neither party shall file Cri$inal
or d$inistrati'e #ases or suits against ea#h other or its 8oard or $e$(er of its offi#ials on grounds
arising fro$ the #ase+
*he Co$pro$ise gree$ent was su(seCuently appro'ed (y the Court on !ay 2&, 199@+
*he #ase was su(seCuently referred (y the parties to the ar(itration (oard pursuant to their Co$pro$ise gree$ent+ 3n >e#e$(er
9, 1999 the r(itration 8oard rendered its ruling the dispositi'e portion of whi#h states2
7<=)=-3)=, #lai$ant is here(y de#lared entitled to an award of P11",;"1,%2"+2" as /ust #o$pensation for (lasting wor0s, plus
ten per#ent (10M) thereof for attorney1s fees and e6penses of litigation+
Considering that pay$ent in the total a$ount of P%;,@@0,000+00 had pre'iously (een $ade, respondent is here(y ordered to pay
#lai$ant the re$aining su$ of P"2,1%1,%2"+2" for attorney1s fees and e6penses of litigation+
Pursuant to the Co$pro$ise gree$ent appro'ed (y this <onora(le Court, the parties ha'e agreed that the de#ision of the
r(itration 8oard shall (e final and e6e#utory+
53 3)>=)=>+
3n >e#e$(er 10, 1999 plaintiff -.CC filed a !otion for =6e#ution while defendant NPC filed a !otion to Ea#ate ward (y the
r(itration 8oard on >e#e$(er 20, 1999+
3n !ay 22, 2000 Presiding Judge )ose !arie lonDo ?egasto issued an order the dispositi'e portion of whi#h states2
F7<=)=-3)=, the r(itration ward issued (y the r(itration 8oard is here(y PP)3E=> and the !otion for =6e#ution filed (y
plaintiff here(y :)N*=>+ *he !otion to Ea#ate ward filed (y defendant is here(y >=N,=> for la#0 of $erit+
##ordingly, let a writ of e6e#ution (e issued to enfor#e the r(itration ward+
53 3)>=)=>+G
[@]
(8ra#0eted words supplied)
NPC went to the Court of ppeals on the lone issue of whether respondent /udge a#ted with gra'e a(use of dis#retion in
issuing the Order dated !ay 22, 2000 and dire#ting the issuan#e of aWrit of Execution+
,n its assailed Decision, the appellate #ourt de#lared that the #ourt a quo did not #o$$it gra'e a(use of dis#retion #onsidering
that the r(itration 8oard a#ted pursuant to its powers under the Co$pro$ise gree$ent and that its award has fa#tual and legal
(ases+
*he Court of ppeals ga'e pri$a#y to the #ourt9appro'ed Co$pro$ise gree$ent entered into (y the parties and #on#luded
that they intended the de#ision of the ar(itration panel to (e final and e6e#utory+ 5aid the #ourt2
-or one, what the pri#e agreed to (e su($itted for ar(itration are pure issues of fa#t (i.e., the pri#e of (lastingI (oth parties1 #lai$s
for da$ages, delay, interests and all other unresol'ed #lai$s of (oth parties, in#luding the e6a#t 'olu$e of (lasted ro#0s)+ lso, the
$anner (y whi#h the r(itration 8oard was for$ed and the ter$s under whi#h the ar(itra(le issues were referred to said 8oard are
spe#ified in the agree$ent+ Clearly, the parties had left to the r(itration 8oard the final ad/udi#ation of their re$aining #lai$s and
wai'ed their right to Cuestion said >e#ision of the 8oard+ <en#e, they agreed in #lear and uneCui'o#al ter$s in the Co$pro$ise
gree$ent that said >e#ision would (e i$$ediately final and e6e#utory+ Plaintiff relied upon this stipulation in #o$plying with its
'arious o(ligations under the agree$ent+ *o allow defendant to now go (a#0 on its word and start Cuestioning the >e#ision would (e
grossly unfair #onsidering that the latter was also a party to the Co$pro$ise gree$ent entered into part of whi#h dealt with the
#reation of the r(itration 8oard+
[;]
*he appellate #ourt li0ewise held that petitioner failed to present e'iden#e to pro'e its #lai$ of (ias and partiality on the part of
the Chair$an of the r(itration 8oard, !r+ Car$elo E+ 5ison (!r+ 5ison)+
-urther, the Court of ppeals found that (lasting is not part of the unit pri#e for grading and stru#tural e6#a'ation pro'ided for
in the #ontra#t for the 8C!N ,, Pro/e#t, and that there was no perfe#ted #ontra#t (etween the parties for an e6tra wor0 order for
(lasting+ Nonetheless, sin#e -.CC relied on the representation of petitioner1s offi#ials that the e6tra wor0 order would (e su($itted
to its 8oard of >ire#tors for appro'al and that the (lasting wor0s would (e paid, the Court of ppeals ruled that -.CC is entitled to
/ust #o$pensation on grounds of eCuity and pro$issory estoppel+
nent the issue of /ust #o$pensation, the appellate #ourt too0 into a##ount the esti$ate prepared (y a #ertain !r+ ?auro )+
.$ali (!r+ .$ali), Pro/e#t !anager of the 8C!N ,, Pro/e#t, whi#h ite$iDed the 'arious #osts in'ol'ed in (lasting wor0s and #a$e
up with P1,%10+"2 per #u(i# $eter, #onsisting of the dire#t #ost for drilling, (lasting e6#a'ation, sto#0piling and hauling, and a %0M
$ar0 up for o'erhead, #ontra#tor1s ta6 and #ontingen#ies+ *his esti$ate was later #hanged to P9"%+B@ per #u(i# $eter to whi#h
-.CC agreed+ *he Court of ppeals, howe'er, held that /ust #o$pensation should #o'er only the dire#t #osts plus 10M for
o'erhead e6penses+ *hus, it de#lared that the a$ount of PB;%+00
[B]
per #u(i# $eter is suffi#ient+ 5in#e the total 'olu$e of (lasted
ro#0s as #o$puted (y >r+ 8en/a$in 8uensu#eso, Jr+
["]
of the .+P+ College of =ngineering is 9B,0%2+1; #u(i# $eters, -.CC is
entitled to the a$ount of PB&,0%@,@0%+@0 as /ust #o$pensation+
lthough the Court of ppeals ad/udged -.CC entitled to interest,
[9]
the dispositi'e portion of the assailed Decision
[10]
did not
pro'ide for the pay$ent of interest+ !oreo'er, the award of attorney1s fees was deleted as there was no legal and fa#tual ground for
its i$position+
Petitioner, represented (y the 3ffi#e of the 5oli#itor :eneral in the instant Petition, rehashes its su($issions (efore the Court
of ppeals+ ,t #lai$s that the appellate #ourt failed to pass upon the following issues2
1+ *he Chair$an of the r(itration 8oard showed e6tre$e (ias in pre/udging the #ase+
2+ *he Chair$an of the r(itration 8oard greatly e6#eeded his powers when he $ediated for settle$ent in the #ourt of
ar(itration pro#eedings+
%+ *he Chair$an of the r(itration 8oard #o$$itted serious irregularity in hastily #on'ening the 8oard in two days,
whi#h thereafter released its report+
&+ *he r(itration 8oard Co$$itted $anifest in/usti#e pre/udi#ial to petitioner (ased on the following2
a+ ,t rendered an award (ased on eCuity despite the $andatory pro'ision of the law+
(+ *he 8oard1s de#ision to /ustify that eCuity applies herein despite the fa#t that 78CC 'ever $*bm%..e& %.$
o:' #1.*#; 1o$.$ +or b;#$.%'( and P<=5C3, ,NC+, the su##eeding #ontra#tor, did not e$ploy (lasting (ut
used ordinary e6#a'ation $ethod at PB@+@9 per #u(i# $eter whi#h is appro6i$ately the sa$e unit pri#e of
plaintiff (-.CC)+
#+ ,t gra'ely erred when the 8oard #lai$ed that an award of /ust #o$pensation $ust (e gi'en to respondent
-.CC for what it has a#tually spent and yet instead of using as (asis P&@"+0B whi#h is the pri#e agreed
upon (y -.CC, it #hose an esti$ate $ade (y an NPC e$ployee+
d+ ,t gra'ely erred when it relied hea'ily on the purported letter of NPC Pro/e#t !anager ?auro )+ .$ali, when
the sa$e has not (een identified nor were the handwritten entries in nne6 ii esta(lished to (e $ade (y
hi$+
@+ *he r(itration 8oard gra'ely erred in #o$puting interest at 12M and fro$ the ti$e of plaintiff1s e6tra/udi#ial #lai$
despite the fa#t that herein #ase is an a#tion for spe#ifi# perfor$an#e and not for pay$ent of loan or for(earan#e of
$oney, and despite the fa#t that it has resol'ed that there was no perfe#ted #ontra#t and there was no (ad faith on
the part of defendant+
<. O' )*'e 2=, 2000, NPC &%$1overe& .2e S*b"Co'.r#1. A(reeme'. o+ 78CC :%.2 # *'%. 5r%1e o+ o';/ P430>5er
1*b%1 me.er.
[11]
[=$phasis in the original]
5pe#ifi#ally, petitioner asserts that !r+ 5ison e6hi(ited (ias and pre/udg$ent when he e6horted it to pay -.CC for the (lasting
wor0s after #on#luding that the latter was allowed to (last+ !oreo'er, !r+ 5ison allegedly atte$pted to $ediate the #onfli#t (etween
the parties in 'iolation of 5e#tion 20,
[12]
paragraph 2 of )epu(li# #t No+ "B; ()++ "B;) otherwise 0nown as the r(itration ?aw+
Petitioner also Cuestions the a(rupt $anner (y whi#h the de#ision of the r(itration 8oard was released+
Petitioner a'ers that -.CC1s #lai$ for (lasting wor0s was not appro'ed (y authoriDed offi#ials in a##ordan#e with Presidential
>e#ree No+ 1@9& (P+>+ 1@9&) and its i$ple$enting rules whi#h spe#ifi#ally reCuire the appro'al of the e6tra wor0 (y authoriDed
offi#ials (efore an e6tra wor0 order $ay (e issued in fa'or of the #ontra#tor+ *hus, it should not (e held lia(le for the #lai$+ ,f at all,
only the erring offi#ials should (e held lia(le+ -urther, -.CC did not present e'iden#e to pro'e the a#tual e6penses it in#urred for
the (lasting wor0s+ 7hat the r(itration 8oard relied upon was the $e$orandu$ of !r+ .$ali whi#h was neither identified or
authenti#ated during the ar(itration pro#eedings nor $ar0ed as e'iden#e for -.CC+ !oreo'er, the figures indi#ated in !r+ .$ali1s
$e$orandu$ were allegedly $ere esti$ates and were re#o$$endatory at $ost+
Petitioner li0ewise #lai$s that its su##eeding #ontra#tor, Phes#o, ,n#+ (Phes#o), was a(le to e6#a'ate the sa$e ro#0 for$ation
without (lasting+
-inally, it asserts that the award of PB;%+00 per #u(i# $eter has no fa#tual and legal (asis as the su(9#ontra#t (etween -.CC
and its (lasting su(9#ontra#tor, >yna$i# 8lasting 5pe#ialists of the Philippines (>yna$i#), was only P&%0+00 per #u(i# $eter+
,n its Comment
[1%]
dated 3#to(er 1@, 2001, -.CC points out that petitioner1s argu$ents are e6a#tly the sa$e as the ones it
raised (efore the r(itration 8oard, the trial #ourt and the Court of ppeals+ !oreo'er, in the Co$pro$ise gree$ent (etween the
parties, petitioner #o$$itted to a(ide (y the de#ision of the r(itration 8oard+ ,t should not now (e allowed to Cuestion the de#ision+
-.CC li0ewise notes that tty+ Jose :+ 5a$onte (tty+ 5a$onte), one of the $e$(ers of the r(itration 8oard, was no$inated
(y petitioner itself+ ,f there was any irregularity in its pro#eedings su#h as the (ias and pre/udg$ent petitioner i$putes upon !r+
5ison, tty+ 5a$onte would ha'e #o$plained+ s it is, tty+ 5a$onte #on#urred in the de#ision of the r(itration 8oard and
dissented only as to the award of attorney1s fees+
s regards the issue of interest, -.CC #lai$s that the #ase in'ol'es for(earan#e of $oney and not a #lai$ for da$ages for
(rea#h of an o(ligation in whi#h #ase interest on the a$ount of da$ages awarded $ay (e i$posed at the rate of si6 per#ent (;M)
per annu$+
-inally, -.CC asserts that its su(9#ontra#t agree$ent with >yna$i# is not newly9dis#o'ered e'iden#e+ Petitioner1s lawyers
allegedly had a #opy of the su(9#ontra#t in their possession+ ,n any e'ent, the unit pri#e of P&%0+00 per #u(i# $eter appearing in
the su(9#ontra#t represents only a fra#tion of the #osts in#urred (y -.CC for the (lasting wor0s+
Petitioner filed a Reply
[1&]
dated !ar#h 1", 2002 reiterating its earlier su($issions+
*he parties in the present #ase $utually agreed to su($it to ar(itration the settle$ent of the pri#e of (lasting, the parties1
#lai$s for da$ages, delay and interests and all other unresol'ed #lai$s in#luding the e6a#t 'olu$e of (lasted ro#0s+
[1@]
*hey further
$utually agreed that the de#ision of the r(itration 8oard shall (e final and i$$ediately e6e#utory+
[1;]
stipulation su($itting an ongoing dispute to ar(itration is 'alid+ s a rule, the ar(itrator1s award #annot (e set aside for $ere
errors of /udg$ent either as to the law or as to the fa#ts+ Courts are generally without power to a$end or o'errule $erely (e#ause of
disagree$ent with $atters of law or fa#ts deter$ined (y the ar(itrators+ *hey will not re'iew the findings of law and fa#t #ontained in
an award, and will not underta0e to su(stitute their /udg$ent for that of the ar(itrators+ #ontrary rule would $a0e an ar(itration
award the #o$$en#e$ent, not the end, of litigation+ =rrors of law and fa#t, or an erroneous de#ision on $atters su($itted to the
/udg$ent of the ar(itrators, are insuffi#ient to in'alidate an award fairly and honestly $ade+ Judi#ial re'iew of an ar(itration award is,
thus, $ore li$ited than /udi#ial re'iew of a trial+
[1B]
<owe'er, an ar(itration award is not a(solute and without e6#eptions+ 7here the #onditions des#ri(ed in rti#les 20%", 20%9
and 20&0 of the Ci'il Code
[1"]
appli#a(le to (oth #o$pro$ises and ar(itrations are o(taining, the ar(itrators1 award $ay (e annulled
or res#inded+
[19]
dditionally, /udi#ial re'iew of an ar(itration award is warranted when the #o$plaining party has presented proof of
the e6isten#e of any of the grounds for 'a#ating, $odifying or #orre#ting an award outlined under 5e#tions 2& and 2@ of )++
"B;, viz
5e#tion 2&+ :rounds for 'a#ating an award+ N ,n any of the following #ases, the #ourt $ust $a0e an order 'a#ating the award upon
the petition of any party to the #ontro'ersy when su#h party pro'es affir$ati'ely that in the ar(itration pro#eedings2
(a) *he award was pro#ured (y #orruption, fraud, or other undue $eansI or
(() *hat there was e'ident partiality or #orruption in the ar(itrators or any of the$I or
(#) *hat the ar(itrators were guilty of $is#ondu#t in refusing to postpone the hearing upon suffi#ient #ause shown, or in
refusing to hear e'iden#e pertinent and $aterial to the #ontro'ersyI that one or $ore of the ar(itrators was
disCualified to a#t as su#h under se#tion nine hereof, and willfully refrained fro$ dis#losing su#h disCualifi#ations or
of any other $is(eha'ior (y whi#h the rights of any party ha'e (een $aterially pre/udi#edI or
(d) *hat the ar(itrators e6#eeded their powers, or so i$perfe#tly e6e#uted the$, that a $utual, final and definite award
upon the su(/e#t $atter su($itted to the$ was not $ade+
7hen an award is 'a#ated, the #ourt, in its dis#retion, $ay dire#t a new hearing either (efore the sa$e ar(itrators or (efore a new
ar(itrator or ar(itrators to (e #hosen in the $anner pro'ided in the su($ission or #ontra#t for the sele#tion of the original ar(itrator
or ar(itrators, and any pro'ision li$iting the ti$e in whi#h the ar(itrators $ay $a0e a de#ision shall (e dee$ed appli#a(le to the
new ar(itration to #o$$en#e fro$ the date of the #ourt1s order+
7here the #ourt 'a#ates an award, #osts not e6#eeding fifty pesos and dis(urse$ents $ay (e awarded to the pre'ailing party and
the pay$ent thereof $ay (e enfor#ed in li0e $anner as the pay$ent of #osts upon the $otion in an a#tion+
5e#tion 2@+ :rounds for $odifying or #orre#ting an award+ N ,n any one of the following #ases, the #ourt $ust $a0e an order
$odifying or #orre#ting the award, upon the appli#ation of any party to the #ontro'ersy whi#h was ar(itrated2
(a) 7here there was an e'ident $is#al#ulation of figures, or an e'ident $ista0e in the des#ription of any person, thing or
property referred to in the awardI or
(() 7here the ar(itrators ha'e awarded upon a $atter not su($itted to the$, not affe#ting the $erits of the de#ision
upon the $atter su($ittedI or
(#) 7here the award is i$perfe#t in a $atter of for$ not affe#ting the $erits of the #ontro'ersy, and if it had (een a
#o$$issioner1s report, the defe#t #ould ha'e (een a$ended or disregarded (y the #ourt+
*he order $ay $odify and #orre#t the award so as to effe#t the intent thereof and pro$ote /usti#e (etween the parties+
,n this #ase, petitioner does not spe#ify whi#h of the foregoing grounds it relies upon for /udi#ial re'iew+ Petitioner a'ers that
Fif and when the fa#tual #ir#u$stan#es referred to in the pro'isions afore$entioned are present, /udi#ial re'iew of the award is
warranted+G
[20]
-ro$ its presentation of issues, howe'er, it appears that the alleged e'ident partiality of !r+ 5ison is singled out as a
ground to 'a#ate the (oard1s de#ision+
7e note, howe'er, that the Court of ppeals found that petitioner did not present any proof to (a#0 up its #lai$ of e'ident
partiality on the part of !r+ 5ison+ ,ts a'er$ents to the effe#t that !r+ 5ison was (iased and had pre/udged the #ase do not suffi#e to
esta(lish e'ident partiality+ Neither does the fa#t that a party was disad'antaged (y the de#ision of the ar(itration #o$$ittee pro'e
e'ident partiality+
[21]
##ording to the appellate #ourt, F[p]etitioner was ne'er depri'ed of the right to present e'iden#e nor was there any showing
that the 8oard showed signs of any (ias in fa'or of -.CC+ s #orre#tly found (y the trial #ourt, this Court #annot find its way to
support petitioner1s #ontention that there was e'ident partiality in the assailed ward of the r(itrator in fa'or of the respondent
(e#ause the #on#lusion of the 8oard, whi#h the Court found to (e well9founded, is fully supported (y su(stantial e'iden#e+G
[22]
*here is no reason to depart fro$ this #on#lusion+
<owe'er, we ta0e e6#eption to the ar(itrators1 deter$ination that (ased on pro$issory estoppel per se or alone, -.CC is
entitled to /ust #o$pensation for (lasting wor0s for the reasons dis#ussed hereunder+
5e#tion 9 of P+>+ No+ 1@9&, entitled Prescri!in" Policies, #uidelines, Rules and Re"ulations for #overnment $nfrastructure
Contracts, pro'ides2
5=C*,3N 9+ Change 3rder and =6tra 7or0 3rder+N #hange order or e6tra wor0 order $ay (e issued only for wor0s ne#essary for
the #o$pletion of the pro/e#t and, therefore, shall (e within the general s#ope of the #ontra#t as (id[ded] and awarded+ ll #hange
orders and e6tra wor0 orders shall (e su(/e#t to the appro'al of the !inister of Pu(li# 7or0s, *ransportation and Co$$uni#ations,
the !inister of Pu(li# <ighways, or the !inister of =nergy, as the #ase $ay (e+
*he pertinent portions of the ,$ple$enting )ules and )egulations of P+>+ 1@9& pro'ide2
C, 9 Contra#t ,$ple$entation2
*hese Pro'isions )efer to #ti'ities >uring Pro/e#t Constru#tion, i+e+, fter Contra#t ward .ntil Co$pletion, =6#ept as
!ay 3therwise (e 5pe#ifi#ally )eferred to Pro'isions .nder 5e#tion ,,+ ,8 9 ,nstru#tions to 8idders+
C, 1 9 Eariation 3rders 9 Change 3rderH=6tra 7or0 3rderH5upple$ental gree$ent
&+ A' E?.r# Wor@ Or&er m#/ be %$$*e& b/ .2e %m5;eme'.%'( o++%1%#; .o 1over .2e %'.ro&*1.%o' o+ 'e: :or@ %.em$
#+.er .2e $#me 2#$ bee' +o*'& .o $.r%1.;/ 1om5;/ :%.2 Se1.%o' CI"1"1 #'& #55rove& b/ .2e #55ro5r%#.e o++%1%#; %+
.2e #mo*'. o+ .2e E?.r# Wor@ Or&er %$ :%.2%' .2e ;%m%.$ o+ .2e +ormerA$ #*.2or%./ .o #55rove or%(%'#; 1o'.r#1.$
#'& *'&er .2e +o;;o:%'( 1o'&%.%o'$9
a+ 7here there are additional wor0s needed and ne#essary for the #o$pletion, i$pro'e$ent or prote#tion of the pro/e#t
whi#h were not in#luded as ite$s of wor0 in the original #ontra#t+
(+ 7here there are su(surfa#e or latent physi#al #onditions at the site differing $aterially fro$ those indi#ated in the
#ontra#t+
#+ 7here there are duly un0nown physi#al #onditions at the site of an unusual nature differing $aterially fro$ those
ordinarily en#ountered and generally re#ogniDed as inherent in the wor0 or #hara#ter pro'ided for in the #ontra#t+
d+ 7here there are duly appro'ed #onstru#tion drawings or any instru#tion issued (y the i$ple$enting offi#eHagen#y
during the ter$ of #ontra#t whi#h in'ol'e e6tra #ost+
O
;+ A $e5#r#.e S*55;eme'.#; A(reeme'. m#/ be e'.ere& %'.o +or #;; C2#'(e Or&er$ #'& E?.r# Wor@ Or&er$ %+ .2e
#((re(#.e #mo*'. e?1ee&$ 2=B o+ .2e e$1#;#.e& or%(%'#; 1o'.r#1. 5r%1e. A;; 12#'(e or&er$>e?.r# :or@ or&er$
be/o'& 100B o+ .2e e$1#;#.e& or%(%'#; 1o'.r#1. 1o$. $2#;; be $*bCe1. .o 5*b;%1 b%&&%'( e?1e5. :2ere .2e :or@$
%'vo;ve& #re %'$e5#r#b;e +rom .2e or%(%'#; $1o5e o+ .2e 5roCe1. %' :2%12 1#$e 'e(o.%#.%o' :%.2 .2e %'1*mbe'.
1o'.r#1.or m#/ be #;;o:e&, $*bCe1. .o #55rov#; b/ .2e #55ro5r%#.e #*.2or%.%e$.
B+ ny Eariation 3rder (Change 3rder, =6tra 7or0 3rder or 5upple$ental gree$ent) shall (e su(/e#t to the es#alation
for$ula used to ad/ust the original #ontra#t pri#e less the #ost of $o(iliDation+ ,n #lai$ing for any Eariation 3rder, the
#ontra#tor shall, within se'en (B) #alendar days after su#h wor0 has (een #o$$en#ed or after the #ir#u$stan#es leading
to su#h #ondition(s) leading to the e6tra #ost, and within 2" #alendar days deli'er a written #o$$uni#ation gi'ing full and
detailed parti#ulars of any e6tra #ost in order that it $ay (e in'estigated at that ti$e+ -ailure to pro'ide either of su#h
noti#es in the ti$e stipulated shall #onstitute a wai'er (y the #ontra#tor for any #lai$+ *he preparation and su($ission of
Change 3rders, =6tra 7or0 3rders or 5upple$ental gree$ents are as follows2
a+ ,f the Pro/e#t =ngineer (elie'es that a Change 3rder, =6tra 7or0 3rder or 5upple$ental gree$ent should (e
issued, he shall prepare the proposed 3rder or 5upple$ental gree$ent a##o$panied with the noti#es su($itted (y the
#ontra#tor, the plans therefore, his #o$putations as to the Cuantities of the additional wor0s in'ol'ed per ite$ indi#ating
the spe#ifi# stations where su#h wor0s are needed, the date of his inspe#tions and in'estigations thereon, and the log
(oo0 thereof, and a detailed esti$ate of the unit #ost of su#h ite$s of wor0, together with his /ustifi#ations for the need of
su#h Change 3rder, =6tra 7or0 3rder or 5upple$ental gree$ent, and shall su($it the sa$e to the )egional >ire#tor
of offi#eHagen#yH#orporation #on#erned+
(+ *he )egional >ire#tor #on#erned, upon re#eipt of the proposed Change 3rder, =6tra 7or0 3rder or 5upple$ental
gree$ent shall i$$ediately instru#t the te#hni#al staff of the )egion to #ondu#t an on9the9spot in'estigation to 'erify the
need for the wor0 to (e prose#uted+ report of su#h 'erifi#ation shall (e su($itted dire#tly to the )egional >ire#tor
#on#erned+
#+ *he )egional >ire#tor #on#erned after (eing satisfied that su#h Change 3rder, =6tra 7or0 3rder or 5upple$ental
gree$ent is /ustified and ne#essary, shall re'iew the esti$ated Cuantities and pri#es and forward the proposal with the
supporting do#u$entation to the head of offi#eHagen#yH#orporation for #onsideration+
d+ ,f, after re'iew of the plans, Cuantities and esti$ated unit #ost of the ite$s of wor0 in'ol'ed, the proper
offi#eHagen#yH#orporation #o$$ittee e$powered to re'iew and e'aluate Change 3rders, =6tra 7or0 3rders or
5upple$ental gree$ents re#o$$ends appro'al thereof, the head of offi#eHagen#yH#orporation, (elie'ing the Change
3rder, =6tra 7or0 3rder or 5upple$ental gree$ent to (e in order, shall appro'e the sa$e+ *he li$its of appro'ing
authority for any indi'idual, and the aggregate of, Change 3rders, =6tra 7or0 3rders or 5upple$ental gree$ents for
any pro/e#t of the head of offi#eHagen#yH#orporation shall not (e greater than those granted for an original pro/e#t+
C, % 9 Conditions under whi#h Contra#tor is to 5tart 7or0 under Eariation 3rders and )e#ei'e Pay$ents
1+ 8'&er 'o 1%r1*m$.#'1e$ $2#;; # 1o'.r#1.or 5ro1ee& .o 1omme'1e :or@ *'&er #'/ C2#'(e Or&er, E?.r# Wor@
Or&er or S*55;eme'.#; A(reeme'. *';e$$ %. 2#$ bee' #55rove& b/ .2e Se1re.#r/ or 2%$ &*;/ #*.2or%-e&
re5re$e'.#.%ve. =6#eptions to the pre#eding rule are the following2
a+ *he )egional >ire#tor, or its eCui'alent position in agen#iesHoffi#esH#orporations without plantilla position for the
sa$e, $ay, su(/e#t to the a'aila(ility of funds, authoriDe the i$$ediate start of wor0 under any Change or =6tra 7or0
3rder under any or all of the following #onditions2
(1) ,n the e'ent of an e$ergen#y where the prose#ution of the wor0 is urgent to a'oid detri$ent to pu(li# ser'i#e, or
da$age to life andHor propertyI andHor
(2) 7hen ti$e is of the essen#eI pro'ided, howe'er, that su#h appro'al is 'alid on wor0 done up to the point where the
#u$ulati'e in#rease in 'alue of wor0 on the pro/e#t whi#h has not yet (een duly fully appro'ed does not e6#eed fi'e
per#ent (@M) of the ad/usted original #ontra#t pri#e, or P@00,000 whi#he'er is lessI pro'ided, further, that i$$ediately
after the start of wor0, the #orresponding ChangeH=6tra 7or0 3rder shall (e prepared and su($itted for appro'al in
a##ordan#e with the a(o'e rules herein set+ Pay$ents for wor0s satisfa#torily a##o$plished on any ChangeH=6tra 7or0
3rder $ay (e $ade only after appro'al of the sa$e (y the 5e#retary or his duly authoriDed representati'e+
b. 7or # C2#'(e>E?.r# Wor@ Or&er %'vo;v%'( # 1*m*;#.%ve #mo*'. e?1ee&%'( +%ve 5er1e'. D=BE o+ .2e or%(%'#;
1o'.r#1. 5r%1e or or%(%'#; #&C*$.e& 1o'.r#1. 5r%1e 'o :or@ .2ereo' m#/ be 1omme'1e& *';e$$ $#%& C2#'(e>E?.r#
Wor@ Or&er 2#$ bee' #55rove& b/ .2e Se1re.#r/ or 2%$ &*;/ #*.2or%-e& re5re$e'.#.%ve. [=$phasis supplied]
,t is petitioner1s su($ission, and -.CC does not deny, that the #lai$ for pay$ent of (lasting wor0s in 8otong alone was
appro6i$ately P1B0,000,000+00, a figure whi#h far e6#eeds the original #ontra#t pri#e of P"0,000,000+00 for two (2) pro/e#t sites+
.nder the foregoing i$ple$enting rules, for an e6tra wor0 order whi#h e6#eeds @M of the original #ontra#t pri#e, no (lasting wor0
$ay (e #o$$en#ed without the appro'al of the 5e#retary or his duly authoriDed representati'e+ !oreo'er, the pro#edure for the
preparation and appro'al of the e6tra wor0 order outlined under Contra#t ,$ple$entation (C,) 1(B) a(o'e should ha'e (een
#o$plied with+ ##ordingly, petitioner1s offi#ials should not ha'e authoriDed the #o$$en#e$ent of (lasting wor0s nor should -.CC
ha'e pro#eeded with the sa$e+
*he following e'ents, #ulled fro$ the de#ision of the r(itration 8oard and the assailed Decision, are $ade the (ases for the
finding of pro$issory estoppel on the part of petitioner2
1+ A+.er 1;#%m#'. [respondent herein] e'1o*'.ere& :2#. %. 1;#%me& .o be m#$$%ve 2#r& ro1@ +orm#.%o' (*esti$ony of witness
>u$aliang, *5N, 2" 3#to(er 199;, pp+ &19&2I *esti$ony of witness ?ataCuin, 2" No'e$(er 199;, pp+ 29%I 2092%I =6h+ FJJJG and
su(9$ar0ings) #'& %'+orme& re$5o'&e'. [petitioner herein] #bo*. %., re$5o'&e'.F$ o:' (eo;o(%$.$ :e'. .o .2e 0o.o'( $%.e .o
%'ve$.%(#.e #'& 1o'+%rme& .2e ro1@ +orm#.%o' #'& re1omme'&e& b;#$.%'( (Cf+ !e$orandu$ of !r+ Petronilo =+ Pana, #ting
!anager of the :eos#ien#e 5er'i#es >epart$ent and the report of the geologists who #ondu#ted the site in'estigationI =6hs+ F-G
and F-91G)+
2+ Clai$ant as0ed for #learan#e to (last the ro#0 for$ation to the design grade (?etter dated 2" 5epte$(er 1992I =6h+ F..G)+ T2e
e'(%'eer$ o+ re$5o'&e'. #. .2e 5roCe1. $%.e #&v%$e& 1;#%m#'. .o 5ro1ee& :%.2 %.$ $*((e$.e& me.2o& o+
e?.r#1.%o' (3rderH,nstru#tion gi'en (y !r+ )euel )+ >e#laro and !r+ -ran#is + Paderna dated 29 5epte$(er 1992I =6h+ FCG)+
%+ C;#%m#'. reG*e$.e& .2#. .2e %'.e'&e& b;#$.%'( :or@$ be 1o'+%rme& #$ e?.r# :or@ or&er b/ re$5o'$%b;e o++%1%#;$ o+
re$5o'&e'. dire#tly in'ol'ed in the 8C!N ,, Pro/e#t (i+e+, then 8C!N ,, Pro/e#t !anager, !r+ ?auro )+ .$ali and !r+ ngelito
:+ 5enga, 5e#tion Chief, Ci'il =ngineering >esign of respondent1s >esign >epart$ent whi#h (idded the pro/e#t)+ T2e$e o++%1%#;$
%$$*e& verb#; %'$.r*1.%o'$ .o .2e e++e1.9 D#E .2#. 1;#%m#'. 1o*;& b;#$. .2e ro1@ +orm#.%o' &o:' .o .2e &e$%(' (r#&e o+ 43=
m#$;H DbE .2#. $#%& b;#$.%'( :or@$ :o*;& be #' e?.r# :or@ or&erH #'& D1E .2#. 1;#%m#'. :o*;& be 5#%& +or $#%& b;#$.%'( :or@$
*$%'( .2e 5r%1e 5er 1*b%1 me.er +or $%m%;#r b;#$.%'( :or@$ #. P#;%'5%'o', or #. P1,34<.00 5er 1*b%1 me.er.
&+ Clai$ant sent two (2) #onfir$atory letters to respondent, (oth addressed to its President, one dated %0 5epte$(er 1992, and
sent through !r+ ngelito 5enga, Chief Ci'il >esign 4 *her$al, the other dated 02 3#to(er 1992, and sent through !r+ ?auro )+
.$ali, Pro/e#t !anager48a#!an ,, (=6hs+ F>G and F=GI *esti$ony of witness >u$aliang, *5N, 2" 3#to(er 199;, pp+ &%9&9)+ *he
identi#al letters read2
7e wish to #onfir$ your instru#tion for us to pro#eed with the (lasting of the 8otong Plant site to the design grade pending issuan#e
of the rele'ant 'ariation order+ *his is to a'oid delay in the i$ple$entation of this #riti#al pro/e#t due to the urgent need to (last ro#0s
on the plant site+
7e are #onfir$ing further your state$ent that the said (lasting wor0s is an e6tra wor0 order and that we will (e paid using the pri#e
esta(lished in your Palinpinon #ontra#t with Phes#o+
*han0 you for your ti$ely a#tion and we loo0 forward to the i$$ediate issuan#e of the e6tra wor0 order+
7e are now $o(iliDing eCuip$ent and $anpower for the said wor0 and hope to start (lasting ne6t wee0+
@+ Re$5o'&e'. re1e%ve& .2e ;e..er$ b*. &%& 'o. re5;/ .2ere.o 'or 1o*'.erm#'& .2e e#r;%er %'$.r*1.%o'$ (%ve' .o 1;#%m#'. .o
5ro1ee& :%.2 .2e b;#$.%'( :or@$. *he due e6e#ution and authenti#ity of these letters (=6hs+ F>91G and F=91G) and the fa#t of re#eipt
(=6hs+ F>92G and F=92G) were duly pro'ed (y #lai$ant (*esti$ony of witness >u$aliang, *5N, 2" 3#to(er 199;, &%9&9)+
<. ,n $id93#to(er 1992, .2ree D3E 6%1e"Pre$%&e'.$ o+ re$5o'&e'. v%$%.e& .2e 5roCe1. $%.e #'& :ere %'+orme& o+ 1;#%m#'.F$
b;#$.%'( #1.%v%.%e$. W2%;e re$5o'&e'. 1;#%m$ .2#. o'e o+ .2e 6%1e"Pre$%&e'.$, r. Ro&r%(o 7#;1o', r#%$e& obCe1.%o'$ .o
1;#%m#'.F$ b;#$.%'( :or@$ #$ #' e?.r# :or@ or&er, .2e/ %'$.r*1.e& 1;#%m#'. .o $5ee& *5 .2e :or@$ be1#*$e o+ .2e 5o:er
1r%$%$ .2e' 2o*'&%'( .2e 1o*'.r/. 5tipulation no+ 2& of the Joint 5tipulation of -a#ts of the parties whi#h reads2 F2&+ ,n $id9
3#to(er 1992, three (%) Ei#e9Presidents of respondent, na$ely2 !r+ <e#tor N+ Ca$pos, 5r+, of =ngineering Constru#tion, !r+ C++
Pastoral of =ngineering >esign, and !r+ )odrigo P+ -al#on, 'isited the pro/e#t site and were li0ewise apprised of #lai$ant1s (lasting
a#ti'ities+ T2e/ 'ever 1om5;#%'e& #bo*. .2e b;#$.%'( :or@$, m*12 ;e$$ or&ere& %.$ 1e$$#.%o'. I' +#1., 'o o++%1%#; o+
re$5o'&e'. ever or&ere& .2#. .2e b;#$.%'( :or@$ be $.o55e&.I
J. fter 'isiting 8otong, !r+ <e#tor N+ Ca$pos, 5r+, then Ei#e President of =ngineering Constru#tion, instru#ted !r+ -ernando +
!agallanes then !anager of the ?uDon =ngineering Pro/e#ts >epart$ent, to e'aluate #lai$ant1s (lasting wor0s and to su($it his
re#o$$endations on the proper pri#e therefor+ ,n a $e$orandu$ dated 1B No'e$(er 1992 (=6h+ F:G and su(9$ar0ings), r.
#(#;;#'e$ 1o'+%rme& .2#. 1;#%m#'.F$ b;#$.%'( :or@$ :#$ #' e?.r# :or@ or&er #'& re1omme'&e& .2#. %. be 5#%& #. .2e 5r%1e
+or $%m%;#r b;#$.%'( :or@$ #. P#;%'5%'o', or #. P1,34<.00 5er 1*b%1 me.er. r. C#m5o$ 1o'1*rre& :%.2 .2e +%'&%'($ #'&
re1omme'&#.%o'$ o+ r. #(#;;#'e$ #'& %'$.r*1.e& r. L#*ro R. 8m#;%, .2e' ProCe1. #'#(er o+ 0#1#' II, .o %m5;eme'.
.2e $#me #$ $2o:' b/ 2%$ %'$.r*1.%o'$ $1r%bb;e& o' .2e memor#'&*m.
"+ r. 8m#;% #'& .2e 5roCe1. .e#m 5re5#re& 5ro5o$e& E?.r# Wor@ Or&er No. 2 K 0;#$.%'( DE?2. L444I K emor#'&*m o+ r.
8m#;% .o r. C#m5o$ &#.e& 20 )#'*#r/ 1333 +or:#r&%'( 5ro5o$e& E?.r# Wor@ Or&er No. 2E, re1omme'&%'( # 5r%1e o+
P383.J= 5er 1*b%1 me.er +or 1;#%m#'.F$ b;#$.%'( :or@$. C;#%m#'. #(ree& .o .2%$ 5r%1e (*esti$ony of witness >u$aliang, B
No'e$(er 199;, p+ &")+
9+ 3n 19 -e(ruary 199%, #lai$ant (rought the $atter of its unpaid (lasting wor0s to the attention of the then NPC Chair$an [also
5e#retary of the >epart$ent of =nergy then] >elfin ?+ ?aDaro during a $eeting with the $ulti9se#toral tas0 for#e $onitoring the
i$ple$entation of power plant pro/e#ts, who as0ed then NPC President Pa(lo 8+ !ali6i what he was doing a(out the
pro(le$+ Pre$%&e'. #;%?% .2ere#+.er 1o've'e& re$5o'&e'.F$ v%1e"5re$%&e'.$ #'& or&ere& .2em .o G*%1@;/ &o1*me'. .2e
v#r%#.%o' or&er #'& 5#/ 1;#%m#'.. T2e v%1e"5re$%&e'., #'& $5e1%+%1#;;/ r. C#m5o$, 5;e&(e& .2#. .2e v#r%#.%o' or&er +or
1;#%m#'.F$ b;#$.%'( :or@$ :o*;& be $*bm%..e& +or .2e #55rov#; o+ .2e NPC 0o#r& &*r%'( .2e +%r$. :ee@ o+ #r12 1333.
C;#%m#'. .2ere#+.er $e'. re$5o'&e'. # ;e..er &#.e& 22 7ebr*#r/ 1333 DE?. LMIE .o 1o'+%rm .2%$ 5;e&(e (*esti$ony of witness
>u$aliang, B No'e$(er 199;, pp+ 2"9%0)+
10+ !r+ Ca$pos #reated a tas0 for#e (i+e+, the *e#hni#al *as0 -or#e on the 5tudy and )e'iew of =6tra 7or0 3rder No+ 2I =6h+ F---G)
to re'iew #lai$ant1s (lasting wor0s+ A+.er $ever#; mee.%'($ :%.2 .2e .#$@ +or1e, 1;#%m#'. #(ree& .o .2e ;o:er 5r%1e o+ P4=8.0J
5er 1*b%1 me.er, %' e?12#'(e +or G*%1@ 5#/me'. (*esti$ony of witness >u$aliang, B No'e$(er 199;, p+ %0)+
11+ Ho:ever, 'o v#r%#.%o' or&er :#$ %$$*e& #'& 'o 5#/me'. 1#me, #;.2o*(2 %. #55e#r$ +rom .:o D2E r#&%o(r#m$ $e'. b/ r.
C#m5o$ .o r. P#&er'# #. .2e 5roCe1. $%.e .2#. .2e v#r%#.%o' or&er :#$ be%'( 5ro1e$$e& #'& .2#. 5#/me'. .o 1;#%m#'. :#$
+or.21om%'( (=6hs+ FG and F888G)+
12+ )espondent as0ed the >epart$ent of Pu(li# 7or0s and <ighways (>P7<) a(out the standard pri#es for (lasting in the pro/e#ts
of the >P7<+ *he >P7< offi#ially replied to respondent1s Cuery in a letter dated 19 !ay 199% (ut the tas0 for#e still failed to see0
8oard appro'al for #lai$ant1s 'ariation order+ *he tas0 for#e e'entually re#o$$ended that the issue of grading e6#a'ation and
stru#tural e6#a'ation and the unit pri#es therefor (e (rought into 'oluntary ar(itration (*esti$ony of witness >u$aliang, B No'e$(er
199;, pp+ %09@B)+
1%+ C;#%m#'. .2ere#+.er $#: r. 7r#'1%$1o L. 6%r#/, .2e 'e: NPC Pre$%&e'., :2o 5ro5o$e& .2#. 1;#%m#'. #11e5. .2e 5r%1e
o+ P4=8.0J 5er 1*b%1 me.er +or %.$ b;#$.%'( :or@$ :%.2 .2e b#;#'1e o+ %.$ 1;#%m .o be .2e $*bCe1. o+ #rb%.r#.%o'. C;#%m#'.
#11e5.e& .2e o++er #'& $e'. .2e ;e..er &#.e& 28 Se5.ember 1333 DE?2. LOIE .o +orm#;%-e $#%& #11e5.#'1e. Ho:ever, 'o
v#r%#.%o' or&er :#$ %$$*e& #'& .2e 5rom%$e& 5#/me'. 'ever 1#me. (*esti$ony of witness >u$aliang, B No'e$(er 199;, p+ @")+
1&+ A+.er $ome .%me, 1;#%m#'. me. r. 6%r#/ o' 13 O1.ober 1333 #. .2e 5roCe1. $%.e, #'& :%.2 $ome NPC o++%1er$ %'
#..e'&#'1e, 5#r.%1*;#r;/ r. G%;ber.o A. P#$.or#;, 6%1e"Pre$%&e'. +or E'(%'eer%'( 4e$%(', :2o :#$ %'$.r*1.e& b/ r. 6%r#/ .o
5re5#re .2e 'e1e$$#r/ memor#'&*m D%.e., .2#. 1;#%m#'. :o*;& be 5#%& P4=8.0J 5er 1*b%1 me.er :%.2 .2e b#;#'1e o+ %.$ 1;#%m
.o be .2e $*bCe1. o+ #rb%.r#.%o'E +or .2e #55rov#; o+ .2e NPC 0o#r&. C;#%m#'. +orm#;%-e& :2#. .r#'$5%re& &*r%'( .2%$ mee.%'(
%' %.$ ;e..er .o r. P#$.or#; &#.e& 22 O1.ober 1333 DE?2%b%. LRIE. 0*. 'o #1.%o' :#$ .#@e' b/ r. P#$.or#; #'& 'o v#r%#.%o'
or&er :#$ %$$*e& b/ re$5o'&e'. (*esti$ony of witness >u$aliang, B No'e$(er 199;, pp+ @B9@")+
[2%]
[=$phasis supplied and
(ra#0eted words]
Pro$issory estoppel F$ay arise fro$ the $a0ing of a pro$ise, e'en though without #onsideration, if it was intended that the
pro$ise should (e relied upon and in fa#t it was relied upon, and if a refusal to enfor#e it would (e 'irtually to san#tion the
perpetration of fraud or would result in other in/usti#e+G
[2&]
Pro$issory estoppel presupposes the e6isten#e of a pro$ise on the part of
one against who$ estoppel is #lai$ed+ *he pro$ise $ust (e plain and una$(iguous and suffi#iently spe#ifi# so that the #ourt #an
understand the o(ligation assu$ed and enfor#e the pro$ise a##ording to its ter$s+
[2@]
,n the present #ase, the foregoing e'ents #learly e'in#e that the pro$ise that the (lasting wor0s would (e paid was predi#ated
on the appro'al of the e6tra wor0 order (y petitioner1s 8oard+ ='en -.CC a#0nowledged that the (lasting wor0s should (e an e6tra
wor0 order and reCuested that the e6tra wor0 order (e #onfir$ed as su#h and appro'ed (y the appropriate offi#ials+ Nota(ly, e'en
as the e6tra wor0 order allegedly pro$ised to it was not yet forth#o$ing, -.CC #o$$en#ed (lasting+
*he alleged pro$ise to pay was therefore #onditional and up to this point, pro$issory estoppel #annot (e esta(lished as the
(asis of petitioner1s lia(ility espe#ially in light of P+>+ 1@9& and its i$ple$enting rules of whi#h (oth parties are presu$ed to ha'e
0nowledge+ ,n %endoza v. Court of &ppeals, supra, we ruled that F[a] #ause of a#tion for pro$issory estoppel does not lie where an
alleged oral pro$ise was #onditional, so that relian#e upon it was not reasona(le+ ,t does not operate to #reate lia(ility where it does
not otherwise e6ist+G
Petitioner1s argu$ent that it is not (ound (y the a#ts of its offi#ials who a#ted (eyond the s#ope of their authority in allowing
the (lasting wor0s is #orre#t+ Petitioner is a go'ern$ent agen#y with a /uridi#al personality separate and distin#t fro$ the
go'ern$ent+ ,t is not a $ere agen#y of the go'ern$ent (ut a #orporate entity perfor$ing proprietary fun#tions+ ,t has its own assets
and lia(ilities and e6er#ises #orporate powers, in#luding the power to enter into all #ontra#ts, through its 8oard of >ire#tors+
,n this #ase, petitioner1s offi#ials e6#eeded the s#ope of their authority when they authoriDed -.CC to #o$$en#e (lasting
wor0s without an e6tra wor0 order properly appro'ed in a##ordan#e with P+>+ 1@9&+ *heir a#ts #annot (ind petitioner unless it has
ratified su#h a#ts or is estopped fro$ dis#lai$ing the$+
[2;]
<owe'er, the Co$pro$ise gree$ent entered into (y the parties, petitioner (eing represented (y its President, !r+ :uido
lfredo + >elgado, a#ting pursuant to its 8oard )esolution No+ 9@9@& dated pril %, 199@, is a #onfir$atory a#t signifying petitioner1s
ratifi#ation of all the prior a#ts of its offi#ers+ 5ignifi#antly, the parties agreed that F[t]his Co$pro$ise gree$ent shall ser'e as the
5upple$ental gree$ent for the pay$ent of plaintiff1s (lasting wor0s at the 8otong siteG
[2B]
in a##ordan#e with C, 1(;) afore9Cuoted+
,n other words, it is pri$arily (y the for#e of this Co$pro$ise gree$ent that the Court is #onstrained to de#lare -.CC entitled to
pay$ent for the (lasting wor0s it undertoo0+
!oreo'er, sin#e the (lasting wor0s were already rendered (y -.CC and a##epted (y petitioner and in the a(sen#e of proof
that the (lasting was done gratuitously, it is (ut eCuita(le that petitioner should $a0e #o$pensation therefor, pursuant to the
prin#iple that no one should (e per$itted to enri#h hi$self at the e6pense of another+
[2"]
*his (rings us to the issue of /ust #o$pensation+
*he parties proposed in the ter$s of referen#e /ointly su($itted to the r(itration 8oard that should -.CC (e ad/udged
entitled to /ust #o$pensation for its (lasting wor0s, the pri#e therefor should (e deter$ined (ased on the pay$ent for (lasting wor0s
in si$ilar pro/e#ts of -.CC and the a$ount it paid to its (lasting su(#ontra#tor+
[29]
*hey agreed further that Fthe pri#e of the (lasting
at the 8otong site + + + shall range fro$ >efendant1s position of PB;+00 per #u(i# $eter as per #ontra#t to a $a6i$u$
of P1,1&&+00G
[%0]
Petitioner #ontends that the r(itration 8oard, trial #ourt and the appellate #ourt unduly relied on the $e$orandu$ of !r+
.$ali whi#h was allegedly not $ar0ed as an e6hi(it+ 7e note, howe'er, that this $e$orandu$ a#tually for$s part of the re#ord of
the #ase as =6hi(it F>>>+G
[%1]
!oreo'er, (oth the r(itration 8oard and the Court of ppeals found that !r+ .$ali1s proposal is the
(est e'iden#e on re#ord as it is supported (y detailed #ost esti$ates that will ser'e as (asis to deter$ine /ust #o$pensation+
7hile the r(itration 8oard found that -.CC did not present e'iden#e showing the a$ount it paid to its (lasting su(9
#ontra#tor, it did present testi$ony to the effe#t that it in#urred other #osts and e6penses on top of the a#tual (lasting #ost+ <en#e,
the a$ount of P&%0+00 per #u(i# $eter indi#ated in -.CC1s Contra#t of gree$ent with >yna$i# is not #ontrolling+
!oreo'er, -.CC presented e'iden#e showing that in two (2) other pro/e#ts where (lasting wor0s were underta0en, petitioner
paid the #ontra#tors P1,%&; per #u(i# $eter for (lasting and disposal of solid ro#0s in the Palinpinon pro/e#t and P1,1&&+@1 per
#u(i# $eter for ro#0 e6#a'ation in the <er$osa 8alintawa0 pro/e#t+ 8esides, while petitioner #lai$s that in a #ontra#t with 7ilper
Constru#tion for the #onstru#tion of the *aya(as su(9station, the pri#e agreed for (lasting was only P9;+1%, petitioner itself did not
present e'iden#e in support of this #lai$+
[%2]
Parentheti#ally, the point raised (y petitioner that its su(seCuent #ontra#tor, Phes#o, did not underta0e (lasting wor0s in
e6#a'ating the sa$e ro#0 for$ation is e6traneous and irrele'ant+ *he fa#t is that petitioner allowed -.CC to (last and undertoo0 to
pay for the (lasting wor0s+
t this point, we hear0en to the rule that the findings of the r(itration 8oard, affir$ed (y the trial #ourt and the Court of
ppeals and supported as they are (y su(stantial e'iden#e, should (e a##orded not only respe#t (ut finality+
[%%]
##ordingly, the
a$ount of PB;%+00 per #u(i# $eter fi6ed (y the r(itration 8oard and affir$ed (y the appellate #ourt as /ust #o$pensation should
stand+
s regards the issue of interest, while the appellate #ourt de#lared in the (ody of its Decision Fthat interest whi#h would
represent the #ost of the $oney spent (e i$posed on the $oney a#tually spent (y #lai$ant for the (lasting wor0s,G
[%&]
there is no
pronoun#e$ent as to the pay$ent of interest in the dispositi'e portion of the Decision e'en as it spe#ifi#ally deleted the award of
attorney1s fees+
>espite its 0nowledge of the appellate #ourt1s o$ission, -.CC did not file a $otion for re#onsideration or appeal fro$
its Decision. ,n failing to do so, -.CC allowed the Decision to (e#o$e final as to it+
,n Edwards v. &rce,
[%@]
we ruled that in a #ase de#ided (y a #ourt, the true /udg$ent of legal effe#t is that entered (y the #ler0
of said #ourt pursuant to the dispositi'e part of its de#ision+ *he only portion of the de#ision that $ay (e the su(/e#t of e6e#ution is
that whi#h is ordained or de#reed in the dispositi'e portion+ 7hate'er $ay (e found in the (ody of the de#ision #an only (e
#onsidered as part of the reasons or #on#lusions of the #ourt and ser'e only as guides to deter$ine the ratio decidendi.
[%;]
='en so, the Court allows a /udg$ent whi#h had (e#o$e final and e6e#utory to (e #larified when there is an a$(iguity #aused
(y an o$ission or $ista0e in the dispositi'e portion of the de#ision+
[%B]
,n Reinsurance Company of t'e Orient, $nc. v. Court of
&ppeals,
[%"]
we held2
,n Repu!lic (urety and $nsurance Company, $nc. v. $ntermediate &ppellate Court, the Court applying the a(o'e do#trine said2
F666 7e #larify, in other words, what we did affir$+ 7hat is in'ol'ed here is not what is ordinarily regarded as a #leri#al error in the
dispositi'e part of the de#ision of the Court of -irst ,nstan#e, whi#h type of error is perhaps (est typified (y an error in arith$eti#al
#o$putation+ t the sa$e ti$e, what is in'ol'ed here is not a #orre#tion of an erroneous /udg$ent or dispositi'e portion of a
/udg$ent+ 7hat we (elie'e is in'ol'ed here is in the nature of an inadvertent omission on t'e part of t'e Court of )irst
$nstance (whi#h should ha'e (een noti#ed (y pri'ate respondent1s #ounsel who had prepared the #o$plaint), of what $ight (e
des#ri(ed as a logi#al follow*t'rou"' of somet'in" set fort' !ot' in t'e !ody of t'e decision and in t'e dispositive portion
t'ereof the ine'ita(le follow9through, or translation into, operational or (eha'ioral ter$s, of the annul$ent of the >eed of 5ale with
ssu$ption of !ortgage, fro$ whi#h petitioners1 title or #lai$ of title e$(odied in *C* 1%%1@% flows+G (,tali#s supplied)
[%9]
,n this #ase, the o$ission of the award of interest was o('iously inad'ertent+ Corre#tion is therefore in order+ <owe'er, we do
not agree with the r(itration 8oard that the interest should (e #o$puted at 12M+ 5in#e the #ase does not in'ol'e a loan or
for(earan#e of $oney, goods or #redit and #ourt /udg$ents thereon, the interest due shall (e #o$puted at ;M per annu$ #o$puted
fro$ the ti$e the #lai$ was $ade in 1992 as deter$ined (y the r(itration 8oard and in a##ordan#e with rti#les 2209 and 11;9 of
the Ci'il Code+ *he a#tual (ase for the #o$putation of legal interest shall (e on the a$ount finally ad/udged+
[&0]
-urther, when the
/udg$ent awarding a su$ of $oney (e#o$es final and e6e#utory, the rate of legal interest shall (e 12M per annu$ fro$ su#h
finality until its satisfa#tion, this interi$ period (eing dee$ed to (e (y then an eCui'alent to a for(earan#e of #redit+
[&1]
WHERE7ORE, the petition is :)N*=> in part+ *he appealed de#ision is !3>,-,=> in that the a$ount of PB&,0%@,@0%+@0
shall earn legal interest of si6 per#ent (;M) fro$ 1992+ twel'e per#ent (12M) interest, in lieu of si6 per#ent (;M), shall (e i$posed
on su#h a$ount upon finality of this de#ision until the pay$ent thereof+
SO OR4ERE4.