CASE # 15

ELPIDIO S. UY, doing business under the name and style of EDISON
DEVELOPMENT & CONSTRUCTION, Petitioner, v. PUBLIC ESTATES
AUTHORITY ,Respondent.
G.R. Nos. 147925-26 : July 7, 2010

FACTS:
Respondent Public Estates Authority is the government agency tasked by the
Bases Conversion Development Authority to develop the first-class memorial park
known as the Heritage Park, located in Fort Bonifacio, Taguig, Metro Manila. On
November 20, 1996, respondent executed with petitioner Elpidio S. Uy, doing business
under the name and style Edison Development & Construction, a Landscaping and
Construction Agreement, whereby petitioner undertook to perform all landscaping works
on the 105-hectare Heritage Park. The Agreement stipulated that the completion date
for the landscaping job was within 450 days, commencing within 14 days after receipt
by petitioner from respondent of a written notice to proceed. Due to delays, the
contracted period was extended to 693 days. Among the causes of the delay was
respondent inability to deliver to petitioner 45 hectares of the property for landscaping,
because of the existence of squatters and a public cemetery.
Respondent instituted with the Construction Industry Arbitration Commission an
action, docketed as CIAC Case No. 02-2000, seeking to collect from respondent
damages arising from its delay in the delivery of the entire property for landscaping.
Specifically, petitioner alleged that he incurred additional rental costs for the equipment
which were kept on stand-by and labor costs for the idle manpower. Likewise, the delay
incurred by respondent caused the topsoil at the original supplier to be depleted, which
compelled petitioner to obtain the topsoil from a farther source, thereby incurring added
costs. He also claims that he had to mobilize water trucks for the plants and trees which
have already been delivered at the site. Furthermore, it became necessary to construct
a nursery shade to protect and preserve the young plants and trees prior to actual
transplanting at the landscaped area.
On May 16, 2000, the CIAC rendered a decision in favor of the Claimant
Contractor ELPIDIO S. UY and Award is hereby made on its monetary claim as follows:
Respondent PUBLIC ESTATES AUTHORITY is directed to pay the Claimant the
following amounts:
P19,604,132.06 --- for the cost of idle time of equipment; P2,275,721.00 --- for the cost
of idled manpower; P6,050,165.05 --- for the construction of the nursery shade net area;
P605,016.50 --- for attorneys fees.
Interest on the amount of P6,050,165.05 as cost for the construction of the
nursery shade net area shall be paid at the rate of 6% per annum from the date the
Complaint was filed on 12 January 2000. Interest on the total amount of P21,879,853.06
for the cost of idled manpower and equipment shall be paid at the same rate of 6% per
annum from the date this Decision is promulgated. After finality of this Decision, interest
at the rate of 12% per annum shall be paid on the total of these 3 awards amounting to
P27,930,018.11 until full payment of the awarded amount shall have been made, this
interim period being deemed to be at that time already a forbearance of credit.
 Both parties filed motions for reconsideration. Subsequently, respondent filed
with the Court of Appeals an Urgent Motion for Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction, seeking to enjoin the CIAC from proceeding
with CIAC Case No. 03-2001, which petitioner has filed. Respondent alleged that the
said case involved claims by petitioner arising from the same Landscaping and
Construction Agreement, subject of the cases pending with the Court of Appeals.
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Joint
Decision and Joint Resolution of the Court of Appeals in CA-G.R. SP Nos. 59308 and
59849 are AFFIRMED with MODIFICATIONS. Respondent Public Estates Authority is
ordered to pay Elpidio S. Uy, doing business under the name and style Edison
Development and Construction, P55,680,492.38 for equipment rentals on standby;
P2,275,721.00 for the cost of idle manpower; and P6,050,165.05 for the construction of
the nursery shade net area; plus interest at 6% per annum to be computed from the
date of the filing of the complaint until finality of this Decision and 12% per annum
thereafter until full payment. Respondent PEA is further ordered to pay petitioner Uy
10% of the total award as attorneys fees.

ISSUE:
Whether the factual findings and conclusions of the CIAC insofar as the arbitral
award to petitioner is concerned, which the CA and the First Division of this Honorable
Court affirmed, has long become final and executory.

HELD:
- We have carefully gone over the decision of the CIAC in CIAC Case No.
02-2000, and we have found that it contains an exhaustive discussion of all claims and
counterclaims of respondent and petitioner, respectively. More importantly, its findings
are well supported by evidence which are properly referred to in the record. In all, we
have found no ground to disturb the decision of the CIAC, especially since it possesses
the required expertise in the field of construction arbitration. It is well settled that
findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of Appeals.

- Thus, we affirm the factual findings and conclusions of the CIAC as regards the
arbitral awards to respondent. The records clearly show that these are amply supported
by substantial evidence.

- PEA insists that our Decision in this case transgresses the principle of res
judicata. It asserts that the propriety of Uys monetary claims against PEA had already
been considered and passed upon by this Court in G.R. Nos. 147933-34.

- WHEREFORE, Uys Motion for Partial Reconsideration is PARTLY GRANTED.

PEAs Motion for Reconsideration, on the other hand, is DENIED with FINALITY. The
assailed Decision dated June 8, 2009 is AFFIRMED with MODIFICATION as to the
award of standby equipment cost. The case is hereby REMANDED to the Construction
Industry Arbitration Commission solely for the purpose of computing the exact amount
of standby equipment cost pursuant to the formula herein specified. The CIAC is
DIRECTED to compute the award and effect payment thereof within thirty (30) days
from receipt of the records of this case

CASE # 18
CARGILL PHILIPPINES, INC., Petitioner, v. SAN FERNANDO REGALA TRADING,
INC., Respondent
G.R. No. 175404 : January 31, 2011
FACTS:
On June 18, 1998, respondent San Fernando Regala Trading, Inc. filed with the
Regional Trial Court (RTC) of Makati City a Complaint for Rescission of Contract with
Damages against petitioner Cargill Philippines, Inc. In its Complaint, respondent alleged
that it was engaged in buying and selling of molasses and petitioner was one of its
various sources from whom it purchased molasses. Respondent alleged that it entered
into a contract dated July 11, 1996 with petitioner, wherein it was agreed upon that
respondent would purchase from petitioner 12,000 metric tons of Thailand origin cane
blackstrap molasses at the price of US$192 per metric ton
That the delivery of the molasses was to be made in January/February 1997 and
payment was to be made by means of an Irrevocable Letter of Credit payable at sight,
to be opened by September 15, 1996
That sometime prior to September 15, 1996, the parties agreed that instead of
January/February 1997, the delivery would be made in April/May 1997 and that
payment would be by an Irrevocable Letter of Credit payable at sight, to be opened
upon petitioner's advice. Petitioner, as seller, failed to comply with its obligations under
the contract, despite demands from respondent, thus, the latter prayed for rescission of
the contract and payment of damages.
On July 24, 1998, petitioner filed a Motion to Dismiss/Suspend Proceedings and
To Refer Controversy to Voluntary Arbitration, wherein it argued that the alleged contract
between the parties, dated July 11, 1996, was never consummated because respondent
never returned the proposed agreement bearing its written acceptance or conformity nor
did respondent open the Irrevocable Letter of Credit at sight. Petitioner contended that
the controversy between the parties was whether or not the alleged contract between
the parties was legally in existence and the RTC was not the proper forum to ventilate
such issue.

ISSUE:
Whether the CA erred in finding that this case cannot be brought under the
arbitration law for the purpose of suspending the proceedings in the RTC.

HELD:
- We find merit in the petition.
 - Arbitration, as an alternative mode of settling disputes, has long been
recognized and accepted in our jurisdiction. R.A. No. 876 authorizes arbitration of
domestic disputes. Foreign arbitration, as a system of settling commercial disputes of
an international character, is likewise recognized. The enactment of R.A. No. 9285 on
April 2, 2004 further institutionalized the use of alternative dispute resolution systems,
including arbitration, in the settlement of disputes.
A contract is required for arbitration to take place and to be binding. Submission
to arbitration is a contract and a clause in a contract providing that all matters in dispute
between the parties shall be referred to arbitration is a contract. The provision to submit
to arbitration any dispute arising therefrom and the relationship of the parties is part of
the contract and is itself a contract.
The CA ruled that arbitration cannot be ordered in this case, since petitioner
alleged that the contract between the parties did not exist or was invalid and arbitration
is not proper when one of the parties repudiates the existence or validity of the contract.
Thus, said the CA:
Notwithstanding our ruling on the validity and enforceability of the assailed
arbitration clause providing for foreign arbitration, it is our considered opinion that the
case at bench still cannot be brought under the Arbitration Law for the purpose of
suspending the proceedings before the trial court. We note that in its Motion to Dismiss/
Suspend Proceedings, etc, petitioner Cargill alleged, as one of the grounds thereof, that
the alleged contract between the parties do not legally exist or is invalid. As posited by
petitioner, it is their contention that the said contract, bearing the arbitration clause, was
never consummated by the parties. That being the case, it is but proper that such issue
be first resolved by the court through an appropriate trial. The issue involves a question
of fact that the trial court should first resolve.

- Consequently, the petitioner herein cannot claim that the contract was never
consummated and, at the same time, invokes the arbitration clause provided for under
the contract which it alleges to be non-existent or invalid. Petitioner claims that private
respondent's complaint lacks a cause of action due to the absence of any valid contract
between the parties. Apparently, the arbitration clause is being invoked merely as a
fallback position. The petitioner must first adduce evidence in support of its claim that
there is no valid contract between them and should the court a quo find the claim to be
meritorious, the parties may then be spared the rigors and expenses that arbitration in a
foreign land would surely entail.

- In so ruling that the validity of the contract containing the arbitration agreement
does not affect the applicability of the arbitration clause itself, we then applied the
doctrine of separability, thus:
The doctrine of separability, or severability as other writers call it, enunciates that
an arbitration agreement is independent of the main contract. The arbitration agreement
is to be treated as a separate agreement and the arbitration agreement does not
automatically terminate when the contract of which it is a part comes to an end.

The separability of the arbitration agreement is especially significant to the

determination of whether the invalidity of the main contract also nullifies the arbitration
clause. Indeed, the doctrine denotes that the invalidity of the main contract, also
referred to as the "container" contract, does not affect the validity of the arbitration
agreement. Irrespective of the fact that the main contract is invalid, the arbitration
clause/agreement still remains valid and enforceable.
- WHEREFORE, the petition is GRANTED. The Decision dated July 31, 2006
and the Resolution dated November 13, 2006 of the Court of Appeals in CA-G.R. SP
No. 50304 are REVERSED and SET ASIDE. The parties are hereby ORDERED to
SUBMIT themselves to the arbitration of their dispute, pursuant to their July 11, 1996
agreement.
SO ORDERED.

CASE # 21
THE MANILA INSURANCE COMPANY, INC., Petitioner, v. SPOUSES ROBERTO and
AIDA AMURAO, Respondent.
G.R. No. 179628 : January 16, 2013

FACTS:

On March 7, 2000, respondent-spouses Roberto and Aida Amurao entered into a

Construction Contract Agreement (CCA) with Aegean Construction and Development
Corporation (Aegean) for the construction of a six-storey commercial building in Tomas
Morato corner E. Rodriguez Avenue, Quezon City. To guarantee its full and faithful
compliance with the terms and conditions of the CCA, Aegean posted performance
bonds secured by petitioner The Manila Insurance Company, Inc. (petitioner) and Intra
Strata Assurance Corporation (Intra Strata).
On November 15, 2001, due to the failure of Aegean to complete the project,
respondent spouses filed with the Regional Trial Court (RTC) of Quezon City, Branch
217, a Complaint,docketed as Civil Case No. Q-01-45573, against petitioner and Intra
Strata to collect on the performance bonds they issued in the amounts of P2,760,000.00
and P4,440,000.00, respectively.
On May 5, 2006, the RTC denied both motions.23 Petitioner and Intra Strata
separately moved for reconsideration but their motions were denied by the RTC in its
subsequent Order24 dated September 11, 2006.
On June 7, 2007, the CA rendered a Decision dismissing the petition. The CA
ruled that the presence of an arbitration clause in the CCA does not merit a dismissal of
the case because under the CCA, it is only when there are differences in the
interpretation of Article I of the construction agreement that the parties can resort to
arbitration. The CA also found no grave abuse of discretion on the part of the RTC when
it disregarded the fact that the CCA was not yet signed at the time petitioner issued the
performance bond on February 29, 2000.

ISSUE:
 Whether the CA erred when it held that it is only when there are differences in the
interpretation of Article 1 of the Construction Agreement that the parties may resort to
arbitration by the CIAC.

HELD:
- The CIAC has jurisdiction over the case. Section 4 of E.O. No. 1008 provides
that:
SEC. 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 time and delays, maintenance and
defects, payment, default of employer or contractor, and changes in contract cost.
Excluded from the coverage of the law are disputes arising from employer-employee
relationships which shall continue to be covered by the Labor Code of the Philippines.
- Based on the foregoing, in order for the CIAC to acquire jurisdiction two
requisites must concur: "first, the dispute must be somehow connected to a construction
contract; and second, the parties must have agreed to submit the dispute to arbitration
proceedings.
ARTICLE XVII ARBITRATION
17.1 Any dispute arising in the course of the execution and performance of this
Agreement by reason of difference in interpretation of the Contract Documents set forth
in Article I which the OWNER and the CONTRACTOR are unable to resolve amicably
between themselves shall be submitted by either party to a board of arbitrators
composed of Three (3) members chosen as follows: One (1) member shall be chosen
by the CONTRACTOR AND One (1) member shall be chosen by the OWNER. The said
Two (2) members, in turn, shall select a third member acceptable to both of them. The
decision of the Board of Arbitrators shall be rendered within Ten (10) days from the first
meeting of the board, which decision when reached through the affirmative vote of at
least Two (2) members of the board shall be final and binding upon the OWNER and
CONTRACTOR.
17.2 Matters not otherwise provided for in this Contract or by Special Agreement
of the parties shall be governed by the provisions of the Arbitration Law, Executive
Order No. 1008.
- WHEREFORE, the petition is hereby GRANTED. The Decision dated June 7,
2007 and the Resolution dated September 7, 2007 of the Court of Appeals in CA-G.R.
SP No. 96815 are hereby ANNULLED and SET ASIDE. The Presiding Judge of the
Regional Trial Court of Quezon City, Branch 217 1s DIRECTED to dismiss Civil Case
No. Q-01-45573 for lack of jurisdiction.