Supreme Court E-Library
Information At Your Fingertips

  View printer friendly version

558 Phil. 465


[ G.R. NO. 167022, August 31, 2007 ]





For review in these consolidated petitions is the November 23, 2004 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 78218, as well as the Resolutions dated February 4, 2005[2] and September 13, 2005,[3] denying the motions for its reconsideration.

Liberty Commercial Center, Inc. (LICOMCEN) is a corporation engaged in the business of operating shopping malls. In March 1997, the City Government of Legaspi leased its lot in the Central District of Legaspi to LICOMCEN. The Lease Contract was based on the Build-Operate-Transfer Scheme under which LICOMCEN will finance, develop and construct the LCC City Mall (CITIMALL). LICOMCEN engaged E.S. De Castro and Associates (ESCA) as its engineering consultant for the project.

On September 1, 1997, LICOMCEN and Foundation Specialist, Inc. (FSI) signed a Construction Agreement for the bored pile foundation of CITIMALL.[4] Forming part of the agreement were the Bid Documents and the General Conditions of Contract (GCC)[5] prepared by ESCA. A salient provision of the GCC is the authority granted the engineering consultant to suspend the work, wholly or partly. LICOMCEN was also given the right to suspend the work or terminate the contract. Among other caveats, GC-05 provided that questions arising out or in connection with the contract or its breach should be litigated in the courts of Legaspi, except where otherwise stated, or when such question is submitted for settlement through arbitration. GC-61 also provided that disputes arising out of the execution of the work should first be submitted to LICOMCEN for resolution, whose decision shall be final and binding, if not contested within thirty (30) days from receipt. Otherwise, the dispute shall be submitted to the Construction Industry Arbitration Commission (CIAC) for arbitration.

Upon receipt of the notice to proceed, FSI commenced work and undertook to complete it within ninety (90) days, all in accordance with the approved drawing, plans, and specifications.

In the course of the construction, LICOMCEN revised the design for the CITIMALL involving changes in the bored piles and substantial reduction in number and length of the piles. ESCA, thus, informed FSI of the major revision on December 16, 1997[6] and ordered the non-delivery of the steel bars, pending approval of the new design. FSI, however, responded that the steel bars had already been loaded and shipped out of Manila. ESCA then suggested the delivery of 50% of the steel bars to the jobsite and the return of the other 50% to Manila, where storage and security were better.[7]

On January 15, 1998, LICOMCEN sent another letter to FSI ordering all the construction activities suspended, because Albay Accredited Constructions Association (AACA) had contested the award of the Contract of Lease to LICOMCEN and filed criminal complaints with the Office of the Ombudsman for violation of the Anti-Graft and Corrupt Practices Act against LICOMCEN and the City Government of Legaspi. Thus, pending a clear resolution of the case, LICOMCEN decided to suspend all construction activities. It also requested FSI not to unload the steel bars.[8]

On January 17, 1998, the steel bars for the CITIMALL arrived at the Legaspi port, and despite LICOMCEN's previous request, these were unloaded and delivered to the jobsite and some to Tuanzon compound,[9] FSI's batching site. Then, on January 19, 1998, LICOMCEN reiterated its decision to suspend construction, and ordered demobilization of the materials and equipment for the project.[10] Finally, on February 17, 1998, LICOMCEN indefinitely suspended the project, due to the pending cases in the Ombudsman.[11]

FSI demanded payment for its work accomplishments, material costs, and standby off equipment, as well as other expenses amounting to P22,667,026.97,[12] but LICOMCEN took no heed.

On October 12, 1998, the Ombudsman dismissed the cases filed against the City Government and LICOMCEN. The dismissal was affirmed by this Court[13] and attained finality on September 20, 2000.[14] This notwithstanding, LICOMCEN did not lift the suspension of the construction that it previously ordered. It then hired Designtech Consultants and Management System (Designtech) as its new project consultant, which, in turn, invited contractors, including FSI, to bid for the bored piling works for CITIMALL.[15]

FSI reiterated its demand for payment from LICOMCEN, but the latter failed and refused to pay, prompting FSI to file a petition for arbitration with the CIAC, docketed as CIAC Case No. 37-2002.

LICOMCEN denied the claim of FSI, arguing that it lacks factual and legal basis. It also assailed the jurisdiction of the CIAC to take cognizance of the suit, claiming that jurisdiction over the controversy was vested in the regular courts, and that arbitration under the GC-61 of the GCC may only be resorted to if the dispute concerns the execution of works, not if it concerns breach of contract.

During the preliminary conference, the parties agreed to submit the controversy to the Arbitral Tribunal and signed the Terms of Reference (TOR).[16] But on February 4, 2003, LICOMCEN, through a collaborating counsel, filed an Ex Abundati Ad Cautela Omnibus Motion.[17] It reiterated the claim that the arbitration clause in the contract does not cover claims for payment of unrealized profits and damages, and FSI did not comply with the condition precedent for the filing of the suit, thus, the CIAC cannot take cognizance of the suit. LICOMCEN further averred that FSI has no cause of action against it because the claim for material costs has no factual basis and because the contract is clear that FSI cannot claim damages beyond the actual work accomplishments, but only reasonable expenses for the suspension or termination of the contract. LICOMCEN also alleged that the expenses incurred by FSI, if there be any, cannot be considered reasonable, because there was no showing that the materials were ordered and actually delivered to the job site. Finally, it prayed for the suspension of the proceedings, pending the resolution of its omnibus motion.

On February 20, 2003, the CIAC issued an Order[18] denying LICOMCEN's omnibus motion on the ground that it runs counter to the stipulations in the TOR. Trial, thereafter, ensued. FSI and LICOMCEN presented witnesses in support of their respective claims.

After due proceedings, the CIAC rendered a Decision[19] in favor of FSI, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of Claimant FOUNDATION SPECIALIST, INC. and against Respondent LICOMCEN, INCORPORATED, ordering the latter to pay to the former the following amounts:
  1. P14,643,638. 51 representing material costs at site;

  2. P2,957,989.94 representing payment for equipment and labor standby costs;

  3. P5,120,000.00 representing unrealized profit; and

  4. P1,264,404.12 representing the unpaid balance of FSI's billing.
FURTHER, the said Respondent is ordered to solely and exclusively bear the entire cost of arbitration proceedings in the total amount of P474,407.95 as indicated in the TOR, and to reimburse the herein Claimant of any amount thereof which it had advanced and paid pursuant to TOR.

All the above-awarded amounts shall bear interest of 6% per annum from the date of the formal demand on February 3, 1998 (Par. 10, Admitted Facts, TOR) until the date this Decision/Award becomes final and executory and 12% per annum from the date this Decision/Award becomes final and executory until fully paid.

LICOMCEN elevated the CIAC Decision to the CA. It faulted the CIAC for taking cognizance of the case, arguing that it has no jurisdiction over the suit. It also assailed the award and the ruling that the contract had been terminated, allegedly for lack of factual and legal basis.

On November 23, 2004, the CA rendered the assailed Decision, modifying the CIAC Decision, viz.:
WHEREFORE, the foregoing considered, the assailed Decision is hereby MODIFIED to the extent that paragraph 1 of the dispositive portion is amended and accordingly, petitioner is ordered to pay only the amount of P5,694,939.865 representing the material costs at site; and paragraphs 2 and 3 on equipment and labor standby costs and unrealized profit of the same dispositive portion are deleted. The rest is AFFIRMED in all respects. No costs.

Both LICOMCEN and FSI filed motions for partial reconsideration, but these were denied by the CA in its Resolutions dated February 4, 2005[22] and September 13, 2005.[23]

LICOMCEN and FSI reacted with the instant petitions. Considering that the cases involve the same parties, issues and assailed decision, this Court ordered the consolidation of G.R. No. 167022 and G.R. No. 169678 in its Resolution dated November 20, 2006.

LICOMCEN raised the following issues:







FSI, on the other hand, interposes the following:




    First, we resolve the issue of the CIAC's jurisdiction.
LICOMCEN insists that the CIAC had no jurisdiction over the suit. Citing GC-05 and GC-61 of the GCC, it posits that jurisdiction over the dispute rests with the regular courts of Legaspi City.

The argument is misplaced.

The power and authority of a court to hear, try, and decide a case is defined as jurisdiction. Elementary is the distinction between jurisdiction over the subject matter and jurisdiction over the person. The former is conferred by the Constitution or by law, while the latter is acquired by virtue of the party's voluntary submission to the authority of the court through the exercise of its coercive process.[26]

Section 4 of Executive Order (E.O.) No. 1008, or the Construction Industry Arbitration Law, provides:
SECTION 4. Jurisdiction. - The CIAC shall have original and exclusive jurisdiction over disputes arising from, or connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and workmanship; violation of the terms of agreement; interpretation and/or application of contractual provisions; amount of damages and penalties; commencement time and delays; maintenance and defects; payment default of employer or contractor and changes in contract cost.

Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall continue to be covered by the Labor Code of the Philippines. (Emphasis supplied)
Corollarily, Section 1, Article III of the Rules of Procedure Governing Construction Arbitration provides that recourse to the CIAC may be availed of whenever a contract contains a clause for the submission of a future controversy to arbitration, thus:
SECTION 1. Submission to CIAC Jurisdiction. - An arbitration clause in a construction contract or a submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or arbitral body in such contract or submission. When a contract contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC.
Clearly then, the CIAC has original and exclusive jurisdiction over disputes arising from or connected with construction contracts entered into by parties that have agreed to submit their dispute to voluntary arbitration.[27]

The GCC signed by LICOMCEN and FSI had the following arbitral clause:

Should any dispute of any kind arise between the LICOMCEN, INCORPORATED and the Contractor or the Engineer and the Contractor in connection with, or arising out of the execution of the Works, such dispute shall first be referred to and settled by the LICOMCEN, INCORPORATED who shall within a period of thirty (30) days after being formally requested by either party to resolve the dispute, issue a written decision to the Engineer and Contractor.

Such decision shall be final and binding upon the parties and the Contractor shall proceed with the execution of the Works with due diligence notwithstanding any Contractor's objection to the decision of the Engineer. If within a period of thirty (30) days from receipt of the LICOMCEN, INCORPORATED's decision on the dispute, either party does not officially give notice to contest such decision through arbitration, the said decision shall remain final and binding. However, should any party within thirty (30) days from receipt of the LICOMCEN, INCORPORATED's decision contest said decision, the dispute shall be submitted for arbitration under the Construction Industry Arbitration Law, Executive Order 1008. The arbitrators appointed under said rules and regulations shall have full power to open up, revise and review any decision, opinion, direction, certificate or valuation of the LICOMCEN, INCORPORATED. Neither party shall be limited to the evidence or arguments put before the LICOMCEN, INCORPORATED for the purpose of obtaining his said decision. No decision given by the LICOMCEN, INCORPORATED shall disqualify him from being called as a witness and giving evidence in the arbitration. It is understood that the obligations of the LICOMCEN, INCORPORATED, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works.[28]
LICOMCEN theorizes that this arbitration clause cannot vest jurisdiction in the CIAC, because it covers only disputes arising out of or in connection with the execution of works, whether permanent or temporary. It argues that since the claim of FSI was not connected to or did not arise out of the execution of the works as contemplated in GC-61, but is based

on alleged breach of contract, under GC-05 [29] of the GCC, the dispute can only be taken cognizance of by the regular courts. Furthermore, FSI failed to comply with the condition precedent for arbitration. Thus, according to LICOMCEN, the CIAC erred in assuming jurisdiction over the case.

Contrary to what LICOMCEN wants to portray, the CIAC validly acquired jurisdiction over the dispute. Firstly, LICOMCEN submitted itself to the jurisdiction of the CIAC when its president Antonio S. Tan signed the TOR[30] during the preliminary conference. The TOR states:

The parties agree that their differences be settled by an Arbitral Tribunal who were appointed in accordance with the provision of Article V, Section 2 of the CIAC Rules of Procedure Governing Construction Arbitration, as follows:




The case shall be decided in accordance with the Contract of the parties and the Construction Industry Arbitration Law (Executive Order No. 1008) and on the basis of evidence submitted, applicable laws, and industry practices where applicable under the law.[31]
Secondly, we agree with the CA that the suit arose from the execution of works defined in the contract. As it aptly ratiocinated:
[T]he dispute between [FSI] and [LICOMCEN] arose out of or in connection with the execution of works. [LICOMCEN] has gone quite far in interpreting "disputes arising out of or in connection with the execution of work" as separate and distinct from "disputes arising out of or in connection with the contract" citing the various provisions of the Construction Agreement and Bid Documents to preclude CIAC from taking cognizance of the case. To the mind of this Court, such differentiation is immaterial. Article 1374 of the Civil Code on the interpretation of contracts ordains that "the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly." Essentially, while we agree that [FSI's] money claims against [LICOMCEN] arose out of or in connection with the contract, the same necessarily arose from the work it accomplished or sought to accomplish pursuant thereto. Thus, said monetary claims can be categorized as a dispute arising out of or in connection with the execution of work.[32]
Thirdly, FSI complied with the condition precedent provided in GC-61. Record shows that FSI referred the claim to ESCA on February 3, 1998, and then to LICOMCEN on March 3, 1998,[33] but it was disallowed on March 24, 1998.[34] Then, on April 15, 1998, FSI rejected the evaluation of the billings made by ESCA and LICOMCEN and further informed the latter of its intention to turn over the project.[35] FSI exerted efforts to have the claim settled amicably, but no settlement was arrived at. Hence, on March 14, 2001, FSI through counsel made a final demand to pay.[36] LICOMCEN, however, adamantly refused to pay, prompting FSI to file suit with the CIAC. Clearly, FSI substantially complied with the condition precedent laid down in GC-61. Finally, the arbitral clause in the agreement, considering that the requisites for its application are present, is a commitment by the parties to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by it in good faith.[37]

Just as meaningful, the issue of jurisdiction was rendered moot by LICOMCEN's active participation in the proceedings before the CIAC. It is true that LICOMCEN initially assailed the jurisdiction of the CIAC. But when the CIAC asserted its jurisdiction in its February 20, 2003 Order,[38] LICOMCEN did not seek relief from the CIAC ruling. Instead, LICOMCEN took part in the discussion on the merits of the case, even going to the extent of seeking affirmative relief. The active involvement of a party in the proceedings is tantamount to an invocation of, or at least an acquiescence to, the court's jurisdiction. Such participation indicates a willingness to abide by the resolution of the case, and will bar said party from later on impugning the court or body's jurisdiction.[39] The Court will not countenance the effort of any party to subvert or defeat the objective of voluntary arbitration for its own private motives.[40] After submitting itself to arbitration proceedings and actively participating therein, LICOMCEN is estopped from assailing the jurisdiction of the CIAC, merely because the latter rendered an adverse decision.

Having resolved the issue of jurisdiction, we proceed to the merits of the case.

LICOMCEN faults the CIAC and the CA for ruling that the contract had been terminated, insisting that it was merely indefinitely suspended. To bolster its position, LICOMCEN cited GC-41 of the GCC which reads:

x x x x

2. For Convenience of LICOMCEN, INCORPORATED

If any time before completion of work under the Contract it shall be found by the LICOMCEN, INCORPORATED that reasons beyond the control of the parties render it impossible or against the interest of LICOMCEN, INCORPORATED to complete the work, the LICOMCEN, INCORPORATED at any time, by written notice to the Contractor, may discontinue the work and terminate the Contract in whole or in part. Upon issuance of such notice of termination, the Contractor shall discontinue the work in such manner, sequence and at such time as the LICOMCEN, INCORPORATED/Engineer may direct, continuing and doing after said notice only such work and only until such time or times as the LICOMCEN, INCORPORATED/Engineer may direct. x x x [41] (Emphasis supplied)
Unfortunately for LICOMCEN, this provision does not support but enervates its theory of indefinite suspension. The cited provision may be invoked only in cases of termination of contract, as clearly inferred from the phrase "discontinue the work and terminate the contract." And in statutory construction implies conjunction, joinder or union.[42] Thus, by invoking GC-41, LICOMCEN, in effect, admitted that the contract had already been terminated.

The termination of the contract was made obvious and unmistakable when LICOMCEN's new project consultant rebidded the contract for the bored piling works for the CITIMALL.[43] The claim that the rebidding was conducted for purposes of getting cost estimates for a possible new design[44] taxes our credulity. It impresses us as nothing more than a lame attempt of LICOMCEN to avoid liability under the contract. As the CIAC had taken pains to demonstrate:
Suspension of work is ordinarily understood to mean a temporary work stoppage or a cessation of work for the time being. It may be assumed that, at least initially, LCC had a valid reason to suspend the Works on December 16, 1997 pursuant to GC-38 above-quoted. The evidence show, however, that it has not ordered a resumption of work up to the present despite the lapse of more than four years, and despite the dismissal of the case filed with the Office of the Ombudsman which it gave as reason for the suspension in the first place. As such, LCC's suspension of the Works had already lost its essential characteristic of being merely temporary or only for the time being. To still consider it a "suspension" at this point is to do violence to reason and logic.

Perhaps because of this LCC came up with the assertion that what we have is an "indefinite suspension." There is no such term in the Construction Agreement or the Contract Documents. In fact, it is unknown in the construction industry. Construction work may either be suspended or terminated, but never indefinitely suspended. Since it is not sanctioned by practice and not mentioned in the herein Construction Agreement and the Contract Documents, "indefinite suspension" is irregular and invalid. Due to the apparent incongruity of an "indefinite suspension," LCC changed the term to "continued suspension" in its Memorandum. Unfortunately for it, the factual situation remains unchanged. The Works stay suspended for an indefinite period of time.[45]
Accordingly, the CA did not err in affirming the CIAC ruling that the contract had already been terminated.

Neither can LICOMCEN find refuge in the principle of laches to steer clear of liability. It is not just the lapse of time or delay that constitutes laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it. [46]

Indeed, FSI filed its petition for arbitration only on October 8, 2002, or after the lapse of more than four years since the project was "indefinitely suspended." But we agree with the CIAC and the CA that such delay can hardly be considered unreasonable to give rise to the conclusion that FSI already abandoned its claim. On the contrary, the delay was due to the fact that FSI exerted efforts to have the claim settled extra- judicially which LICOMCEN rebuffed. Besides, except for LICOMCEN's allegation that the filing of the suit is already barred by laches, no proof was offered to show that the filing of the suit was iniquitous or unfair to LICOMCEN. We reiterate that, unless reasons of inequitable proportions are adduced, a delay within the prescriptive period is sanctioned by law and is not to be considered delay that would bar relief.[47] In the instant case, FSI filed its claim well within the ten-year prescriptive period provided for in Article 1144 of the Civil Code.[48] Therefore, laches cannot be invoked to bar FSI from instituting this suit.

The doctrine of laches is based upon grounds of public policy which require, for the peace of society, discouraging stale claims. It is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. There is no absolute rule as to what constitutes laches; each case is to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. [49]

We now come to the monetary awards granted to FSI. LICOMCEN avers that the award lacked factual and legal basis. FSI, on the other hand, posits otherwise, and cries foul on the modification made by the CA. It asserts that the CA erred in disregarding the pieces of evidence that it submitted in support of the claim despite the lack of objection and opposition from LICOMCEN. It insists entitlement to the full amount of material costs at site, for equipment and labor standard costs, as well as unrealized profits.

In this connection, we must emphasize the distinction between admissibility of evidence and its probative value. Just because a piece of evidence is not objected to does not ipso facto mean that it conclusively proves the fact in dispute. The admissibility of evidence should not be confused with its probative value. Admissibility refers to the question of whether certain pieces of evidence are to be considered at all, while probative value refers to the question of whether the admitted evidence proves an issue. Thus, a particular item of evidence may be admissible, but its evidentiary weight depends on judicial evaluation within the guidelines provided by the rules of evidence.[50]

We have carefully gone over the records and are satisfied that the findings of the CA are well supported by evidence. As mentioned above, the contract between LICOMCEN and FSI had already been terminated and, in such case, the GCC expressly provides that:

If the Contract is terminated as aforesaid, the Contractor will be paid for all items of work executed, and satisfactorily completed and accepted by the LICOMCEN, INCORPORATED up to the date of termination, at the rates and prices provided for in the contract and in addition:
  1. The cost of partially accomplished items of additional or extra work agreed upon by the LICOMCEN, INCORPORATED and the Contractor.

  2. The cost of materials or goods reasonably ordered for the Permanent or Temporary Works which have been delivered to the Contractor but not yet used and which delivery has been certified by the Engineer.

  3. The reasonable cost of demobilization
For any payment due the Contractor under the above conditions, the LICOMCEN, INCORPORATED, however, shall deduct any outstanding balance due from the Contractor for advances in respect to mobilization and materials, and any other sum the LICOMCEN, INCORPORATED is entitled to be credited.[51]
We agree with the Court of Appeals that the liability of LICOMCEN for the cost of materials on site is only P5,694,939.85. The said award represents the materials reasonably ordered for the project and which were delivered to the job site. FSI cannot demand full payment of the steel bars under Purchase Order No. 6035.[52] As shown by the records, the steel bars were loaded at M/V Alberto only on January 12, 1998[53] and reached Legaspi City on January 16, 1998.[54] But as early as December 16, 1997, LICOMCEN already informed FSI of the major revision of the design and ordered the non-delivery to the jobsite of the 50% of the steel bars. Inexplicably, FSI continued the delivery. Worse, it unloaded all the steel bars and delivered them to the jobsite and some to the Tuanzon batching plant on January 17, 1998,[55] despite LICOMCEN's order not to do so. FSI cannot now claim payment of the cost of all these materials.

LICOMCEN, however, cannot deny liability for 50% of the steel bars because, as mentioned, it ordered their delivery to the jobsite. The steel bars had in fact been delivered to the jobsite and inventoried by Cesar Cortez of ESCA,[56] contrary to LICOMCEN's claim. The payment of these materials is, therefore, in order, pursuant to GC-41:
The Contractor shall receive compensation for reasonable expenses incurred in good faith for the performance of the Contract and for reasonable expenses associated with the termination of the Contract. x x x.[57]
We also uphold the denial of FSI's claim for equipment and labor standard costs, as no convincing evidence was presented to prove it. The list of rented equipment[58] and the list of workers[59] offered by FSI and which were admitted by CIAC, are far from being clear and convincing proof that FSI actually incurred the expenses stated therein.

As aptly said by the CA, FSI should have presented convincing pieces of documentary evidence, such as the lease contract or the receipts of payment issued by the owners of the rented equipment, to establish the claim. As to its claimed labor expenses, the list of employees does not categorically prove that these listed employees were actually employed at the construction site during the suspension. Hence, even assuming that LICOMCEN failed to submit evidence to rebut these lists, they do not ipso facto translate into duly proven facts. FSI still had the burden of proving its cause of action, because it is the one asserting entitlement to an affirmative relief.[60] On this score, FSI failed. The CA, therefore, committed no reversible error in denying the claim.

FSI's claim for unrealized profit has to be rejected too. GC-41 specifically provided that:
x x x The Contractor shall have no claim for anticipated profits on the work thus terminated, nor any other claim, except for work actually performed at the time of complete discontinuance, including any variations authorized by the LICOMCEN, INCORPORATED/Engineer to be done under the section dealing with variation, after the date of said order, and for any claims for variations accruing up to the date of said notice of termination.[61] (Emphasis supplied)
The provision was agreed upon by the parties freely, and significantly, FSI did not question this. It is not for the Court to change the stipulations in the contract when they are not illegal. Article 1306 of the Civil Code provides that the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.[62] Besides, no convincing proof was offered to prove the claim. In light of the foregoing, the CA, therefore, correctly denied the claim for unrealized profit.

Similarly, we agree with the CIAC and the CA that LICOMCEN should bear the cost of arbitration as it adamantly refused to pay FSI's just and valid claim, prompting the latter to institute a petition for arbitration.

In sum, we find no reason to disturb the decision of the CA. It cannot be faulted for denying FSI's motion for reconsideration through a mere Minute Resolution, for as we held in Ortigas and Company Limited Partnership v. Velasco:[63]
The filing of a motion for reconsideration, authorized by Rule 52 of the Rules of Court, does not impose on the Court the obligation to deal individually and specifically with the grounds relied upon therefor, in much the same way that the Court does in its judgment or final order as regards the issues raised and submitted for decision. This would be a useless formality or ritual invariably involving merely a reiteration of the reasons already set forth in the judgment or final order for rejecting the arguments advanced by the movant; and it would be a needless act, too, with respect to issues raised for the first time, these being, x x x deemed waived because not asserted at the first opportunity. It suffices for the Court to deal generally and summarily with the motion for reconsideration, and merely state a legal ground for its denial (Sec. 14, Art. VIII, Constitution); i.e., the motion contains merely a reiteration or rehash of arguments already submitted to and pronounced without merit by the Court in its judgment, or the basic issues have already been passed upon, or the motion discloses no substantial argument or cogent reason to warrant reconsideration or modification of the judgment or final order; or the arguments in the motion are too unsubstantial to require consideration, etc.
WHEREFORE, the herein petitions for review are DENIED, and the assailed Decision and Resolutions of the Court of Appeals are AFFIRMED.


Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ, concur.

[1] Penned by Justice Josefina Guevarra-Salonga, with Associate Justices Conrado M. Vasquez, Jr. and Fernanda Lampas Peralta, concurring; CA rollo, Vol. IV, pp. 1695-1713.

[2] Id. at 1817-1820.

[3] Id. at 2011.

[4] Exhibit "A," CIAC records, Folder II, pp. 419-429.

[5] Exhibits "B-14" to "B-50," id. at 444-480.

[6] TSN, March 10, 2003, pp. 33-34, CIAC records, Folder III, pp. 1058-1059.

[7] Letter dated January 6, 1998, Exhibit "2," CIAC records, Folder II, p. 660.

[8] Letter dated January 15, 1998, Exhibit "3," id. at 662.

[9] TSN, March 10, 2003, pp. 40-43, CIAC records, Folder III, pp. 1065-1068.

[10] Letter dated January 19, 1998, Exhibit "4," CIAC records, Folder II, p. 663.

[11] Letter dated February 17, 1998, Exhibit "6," id. at 669.

[12] Letters dated February 3, 1998 and March 3, 1998, Exhibits "J" and "K," id. at 526, 531-532.

[13] Exhibit "14," id. at 764-765.

[14] Exhibit "15," id. at 766.

[15] Exhibit "I-1," id. at 523.

[16] CIAC records, Folder I, pp. 369-375.

[17] Id. at 379-397.

[18] CIAC records, Folder II, pp. 697-698.

[19] CIAC records, Folder IV, pp. 1448-1462.

[20] Id. at 1462.

[21] CA rollo, Vol. IV, p. 1713.

[22] Id. at 1817-1820.

[23] Id. at 2011.

[24] Memorandum, rollo (G.R. No. 167022 ),Vol. II, pp. 1914-1915.

[25] Memorandum, id. at 2130.

[26] Arnado v. Buban, A.M. No. MTJ-04-1543, May 31, 2004, 430 SCRA 382, 386.

[27] Philrock, Inc. v. Construction Industry Arbitration Commission, 412 Phil 236, 245 (2001).

[28] Exhibit "B-50," CIAC records, Folder II, p. 480.


Any question between the contracting parties that may arise out of or in connection with the Contract or breach thereof shall be litigated in the courts of Legaspi, except where otherwise specifically stated or except when such question is submitted for settlement thru arbitration as provides herein.

[30] CIAC records, Folder I, pp. 369-375.

[31] Id. at 372.

[32] CA rollo, Vol. IV, p. 1702.

[33] Supra note 12.

[34] Exhibit "L," CIAC records, Folder II, p. 543.

[35] Exhibit "L-2," id. at 545.

[36] Exhibit "M," id. at 546.

[37] Reyes v. Balde II, G.R. No. 168384, August 7, 2006, 498 SCRA 186, 194.

[38] CIAC records, Folder II, pp. 697-698.

[39] Meat Packing Corporation of the Philippines v. Sandiganbayan, 411 Phil. 959, 977-978 (2001).

[40] Philrock v. Construction Industry Arbitration Commission, supra note 27, at 246.

[41] Exhibit "B-40," CIAC records, Folder II, p. 470.

[42] Solanda Enterprises v. Court of Appeals, 351 Phil. 194, 206 (1998).

[43] Exhibit "I-1," CIAC records, Folder II, p. 523.

[44] TSN, April 11, 2003, p. 10, CIAC records, Folder III, p. 1369.

[45] CIAC records, Folder IV, p. 1455.

[46] Placewell International Services Corporation v. Camote, G.R. No. 169973, June 26, 2006, 492 SCRA 761, 769.

[47] Agra v. Philippine National Bank, 368 Phil. 829, 844 (1999).

[48] Article 1144. The following actions must be brought within ten years from the time the cause of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
[49] Placewell International Services Corporation v. Camote, supra note 46, at 769.

[50] Heirs of Sabanpan v. Comorposa, 456 Phil. 161, 172 (2003).

[51] Exhibits "B-40" to "B-41," CIAC records, Folder II, pp. 470-471.

[52] Exhibit "Q-2," CIAC records, Folder II, p. 571.

[53] Exhibit "Q-3," id. at 572.

[54] Exhibit "Q-4," id. at 573.

[55] Supra note 8.

[56] Exhibit "R," CIAC records, Folder II, p. 738.

[57] Exhibits "B-14" to "B-50."

[58] Exhibits "K-8" to "K-9," CIAC records, Folder II, pp. 539-540.

[59] Exhibits "K-10" to "K-11," id. at 541-542.

[60] Heirs of Sabanpan v. Comorposa, supra note 50, at 172.

[61] Exhibit "B-40," CIAC records, Folder II, p. 470.

[62] Security Bank & Trust Company v. RTC Makati, 331 Phil. 787, 793-794 (1996).

[63] Ortigas and Company Limited Partnership v. Velasco, 324 Phil. 483, 491-492 (1996).

© Supreme Court E-Library 2012
This website was designed and developed, and is maintained, by the E-Library Technical Staff.