G.R. Nos.

147933-34            December 12, 2001 stipulated that the completion date for the landscaping job was within 450 days, commencing within
PUBLIC ESTATES AUTHORITY, petitioner, 14 days after receipt by respondent of petitioner's written notice to proceed. Due to delays, the
vs. contracted period was extended to 693 days. Among the causes of the delay was petitioner's
ELPIDIO S. UY, doing business under the name and style EDISON DEVELOPMENT & inability to deliver to respondent 45 hectares of the property for landscaping, because of the
CONSTRUCTION, AND THE COURT OF APPEALS, respondents. existence of squatters and a public cemetery.
YNARES-SANTIAGO, J.:
Respondent instituted with the Construction Industry Arbitration Commission (CIAC) an action,
SUMMARY: The Petitioner Public Estates Authority (PEA) is a government agency which was tasked docketed as CIAC Case No. 02-2000, seeking to collect from petitioner damages arising from its
to develop the Heritage Park. For this purpose, it executed a landscaping and construction agreement delay in the delivery of the entire property for landscaping. Specifically, respondent alleged
with respondent Elpidio Uy who would be in charge of landscaping works. While the job was set for that he incurred additional rental costs for the equipment which were kept on standby and
completion within 450 days, the period was extended to 693 days due to the fault of the PEA in not labor costs for the idle manpower. Likewise, the delay incurred by petitioner caused the topsoil at the
being able to deliver the property for landscaping. original supplier to be depleted, which compelled respondent to obtain the topsoil from a farther
source, thereby incurring added costs. He also claims that he had to mobilize water trucks for the
Thus, Uy filed an arbitration case in the CIAC to collect damages from the PEA. Uy allegedly incurred plants and trees which have already been delivered at the site. Furthermore, it became necessary to
rental costs for the equipment which were kept idle and also incurred labor costs for the idle construct a nursery shade to protect and preserve the young plants and trees prior to actual
manpower. transplanting at the landscaped area.

The CIAC held in favor of Uy. Both PEA and Uy filed petitions for review with the CA to contest the On May 16, 2000, the CIAC rendered a decision, the dispositive portion of which reads:
monetary award of the CIAC. However, the CA dismissed the petition. For the PEA, the petition was
denied due course because of the defective certification of non-forum shopping. It appears that the WHEREFORE, judgment is hereby rendered in favor of the Claimant Contractor
verification and certification of non-forum shopping was signed by its Officer-in-Charge, who did not ELPIDIO S. UY and Award is hereby made on its monetary claim as follows:
appear to have been authorized by PEA to represent it in the case.
Respondent PUBLIC ESTATES AUTHORITY is directed to pay the Claimant the following
Issue: Whether it was proper for the CA to deny the petition for review of the PEA on the ground of a amounts:
defective certificate of non-forum shopping P19,604,132.06 — for the cost of idle time of equipment.
2,275,721.00 — for the cost of idled manpower.
Held: Yes. The SC held that the PEA, being a government owned and controlled corporation, can act
only through its duly authorized representatives. Furthermore, in the absence of an authority from the 6,050,165.05 — for the construction of the nursery shade net area.
board of directors, no person, not even the officers of the corporation, can validly bind the 605,016.50 — for attorney's fees.
corporation. The SC cited the case of Premium Marble Resources, Inc. v. Court of Appeals, where
the Court held: 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
We agree with the finding of public respondent Court of Appeals, that "in the absence of 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,
any board resolution from its board of directors the [sic] authority to act for and in behalf of
interest at the rate of 12% per annum shall be paid on the total of these 3 awards amounting to
the corporation, the present action must necessarily fail. The power of the corporation to P27,930,018.11 until full payment of the awarded amount shall have been made, "this interim period
sue and be sued in any court is lodged with the board of directors that exercises its being deemed to be at that time already a forbearance of credit" (Eastern Shipping Lines Inc. v. Court of
corporate powers. Thus, the issue of authority and the invalidity of plaintiff-appellant's Appeals et al., 243 SCRA 78 [1994]; Keng Hua Paper Products Co., Inc. v. Court of Appeals, 286 SCRA
subscription which is still pending, is a matter that is also addressed, considering the 257 [1998]; Crismina Garments Inc. v. Court of Appeals, G.R. No. 128721, March 9, 1999).
premises, to the sound judgment of the Securities and Exchange Commission."
SO ORDERED.3
Therefore, the CA did not err in finding that, in view of the absence of a board resolution authorizing
petitioner's Officer-in-Charge to represent it in the petition, the verification and certification of non- Both petitioner and respondent filed petitions for review with the Court of Appeals. In CA-G.R.
forum shopping executed by said officer failed to satisfy the requirement of the Rules. SP No. 59308, petitioner contested the monetary awards given by the CIAC. On the other hand,
respondent filed CA-G.R. SP No. 59849, arguing that the CIAC erred in awarding a reduced
The SC cited Sec. 7 of Rule 43 of the ROC: amount for equipment stand-by costs and for denying his claims for additional costs for topsoil
hauling and operating costs of water trucks.
Effect of failure to comply with requirements. — The failure of the petition to comply with
any of the foregoing requirements regarding the payment of the docket and other lawful The two petitions were consolidated. On September 25, 2000, the Court of Appeals rendered the
fees, the deposit for costs, proof of service of the petition, and the contents of and the now assailed Joint Decision, dismissing the petitions, to wit:
documents which should accompany the petition shall be sufficient ground for the dismissal
thereof. WHEREFORE, premises considered, the petitions in CA-G.R. SP No. 59308, entitled "Public Estates
Authority v. Elpidio S. Uy, doing business under the name and style of Edison Development &
Construction," and CA-G.R. SP No. 59849, "Elpidio S. Uy, doing business under the name and style of
THE CASE: This is a petition for review of the Joint Decision dated September 25, 2000 1 and the Edison Development & Construction v. Public Estates Authority," are both hereby DENIED DUE
Joint Resolution dated April 25, 2001 2 of the Court of Appeals in the consolidated cases CA-G.R. SP COURSE and accordingly, DISMISSED, for lack of merit.
Nos. 59308 and 59849.
Consequently, the Award/Decision issued by the Construction Industry Arbitration Commission on May
FACTS: Petitioner Public Estates Authority is the government agency tasked by the Bases 16, 2000 in CIAC Case No. 02-200, entitled "Elpidio S. Uy, doing business under the name and style of
Conversion Development Authority to develop the first-class memorial park known as the Heritage Edison Development & Construction v. Public Estates Authority," is hereby AFFIRMED in toto.
Park, located in Fort Bonifacio, Taguig, Metro Manila. On November 20, 1996, petitioner
No pronouncement as to costs.
executed with respondent Elpidio S. Uy, doing business under the name and style Edison
Development & Construction, a Landscaping and Construction Agreement, whereby respondent SO ORDERED.4
undertook to perform all landscaping works on the 105-hectare Heritage Park. The Agreement
Both parties filed motions for reconsideration. Subsequently, petitioner filed with the Court of
Appeals an Urgent Motion for Issuance of a Temporary Restraining Order and/or Writ of RULING: The petition is without merit. WHEREFORE, in view of the foregoing, the petition for review
Preliminary Injunction, seeking to enjoin the CIAC from proceeding with CIAC Case No. 03-2001, is DENIED. The Motion to Consolidate this petition with G.R. No. 147925-26 is also DENIED. SO
which respondent has filed. Petitioner alleged that the said case involved claims by respondent ORDERED.
arising from the same Landscaping and Construction Agreement, subject of the cases pending with
the Court of Appeals. RATIO:

On April 25, 2001, the Court of Appeals issued the assailed Joint Resolution, thus: DEFECTIVE CERTIFICATE OF NON-FORUM SHOPPING

WHEREFORE, the present Motion/s for Reconsideration in CA-G.R. SP No. 59308 and Petitioner, being a government owned and controlled corporation, can act only through its
CA-G.R. SP No. 59849 are hereby both DENIED, for lack of merit. duly authorized representatives. In the case of Premium Marble Resources, Inc. v. Court of
Appeals,9 which the Court of Appeals cited, we made it clear that in the absence of an authority
Accordingly, let an injunction issue permanently enjoining the Construction Industry from the board of directors, no person, not even the officers of the corporation, can validly
Arbitration Commission from proceeding with CIAC Case No. 03-2001, entitled ELPIDIO S. bind the corporation.10 Thus, we held in that case:
UY, doing business under the name and style of EDISON DEVELOPMENT &
CONSTRUCTION v. PUBLIC ESTATES AUTHORITY and/or HONORABLE CARLOS P. We agree with the finding of public respondent Court of Appeals, that "in the absence of
DOBLE. any board resolution from its board of directors the [sic] authority to act for and in behalf of
the corporation, the present action must necessarily fail. The power of the corporation to
SO ORDERED.5 sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. Thus, the issue of authority and the invalidity of plaintiff-appellant's
Hence, this petition for review, raising the following arguments: subscription which is still pending, is a matter that is also addressed, considering the
premises, to the sound judgment of the Securities and Exchange Commission."11
I THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING DUE COURSE
PETITIONER'S (SIC) PETITION FILED PURSUANT TO RULE 43 OF THE 1997 RULES OF CIVIL Therefore, the Court of Appeals did not err in finding that, in view of the absence of a board
PROCEDURE APPEALING THE ADVERSE DECISION OF THE CIAC A QUO. resolution authorizing petitioner's Officer-in-Charge to represent it in the petition, the verification
II THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE HEREIN
and certification of non-forum shopping executed by said officer failed to satisfy the
PETITIONER'S MOTION FOR RECONSIDERATION ON THE JOINT DECISION PROMULGATED ON requirement of the Rules. In this connection, Rule 43, Section 7, of the 1997 Rules of Civil
SEPTEMBER 25, 2000. Procedure categorically provides:

III THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT ALLOWING THE APPEAL ON Effect of failure to comply with requirements. — The failure of the petition to comply with
THE MERITS TO BE THRESHED OUT PURSUANT TO EXISTING LAWS AND JURISPRUDENCE ALL any of the foregoing requirements regarding the payment of the docket and other lawful
IN INTEREST OF DUE PROCESS. fees, the deposit for costs, proof of service of the petition, and the contents of and the
IV THE HONORABLE COURT OF APPEALS ERRED IN DENYING PETITIONER'S CLAIM FOR
documents which should accompany the petition shall be sufficient ground for the
UNRECOUPED BALANCE IN THE 15% ADVANCE PAYMENT; UNRECOUPED BALANCE ON PRE- dismissal thereof.
PAID MATERIALS, AND OVERPAYMENT BASED ON ACTUAL PAYMENT MADE AS AGAINST
PHYSICAL ACCOMPLISHMENTS. Anent petitioner's contention that its petition had already been given due course, it is well to note that
under the Internal Rules of the Court of Appeals, each case is raffled to a Justice twice — the first
V THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE CIAC DECISION FINDING raffle for completion of records and the second raffle for study and report.12 Hence, there was nothing
RESPONDENT ENTITLED TO ATTORNEY'S FEES IN THE AMOUNT OF P605,096.50 — WHICH IS unusual in the fact that its petition was first raffled to the First Division of the Court of Appeals but was
10% OF THE AMOUNT AWARDED FOR THE CLAIM OF NURSERY SHADE CONSTRUCTION WHILE
DENYING PETITIONER'S COUNTERCLAIM FOR ATTORNEY'S FEES.
later decided by the Seventeenth Division thereof. Petitioner's imputations of irregularity have no
basis whatsoever, and can only be viewed as a desperate attempt to muddle the issue by nit-picking
VI THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT PETITIONER'S on non-essential matters. Likewise, the giving of due course to a petition is not a guarantee that the
OBLIGATION, IF ANY, HAS BEEN EFFECTIVELY EXTINGUISHED. same will be granted on its merits.
MERITS OF THE ARBITRATION AT THE CIAC
VII THE HONORABLE COURT OF APPEALS ERRED IN NOT ORDERING THE RESPONDENT TO
REIMBURSE THE PETITIONER THE AMOUNT OF P345,583.20 THE LATTER PAID TO THE Significantly, the dismissal by the Court of Appeals of the petition was based not only on its fatal
CONSTRUCTION INDUSTRY ARBITRATION COMMISSION.6
procedural defect, but also on its lack of substantive merit; specifically, its failure to show that the
CIAC committed gross abuse of discretion, fraud or error of law, such as to warrant the reversal of its
After respondent filed its comment 7 on August 20, 2001, this Court issued a resolution dated
factual findings.
September 3, 20018 requiring petitioner to file its reply within ten days from notice. Despite service of
the resolution on petitioner and its counsel on October 1, 2001, no reply has been filed with this Court
We have carefully gone over the decision of the CIAC in CIAC Case No. 02-2000, and we have found
to date. Therefore, we dispense with the filing of petitioner's reply and decide this case based on the
that it contains an exhaustive discussion of all claims and counterclaims of respondent and petitioner,
pleadings on record.
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
Petitioner assails the dismissal of its petition by the Court of Appeals based on a
possesses the required expertise in the field of construction arbitration. It is well settled that findings
technicality, i.e., the verification and certification of non-forum shopping was signed by its
of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because
Officer-in-Charge, who did not appear to have been authorized by petitioner to represent it in
their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality
the case. Petitioner moreover argues that in an earlier resolution, the First Division of the
when affirmed by the Court of Appeals.13
Court of Appeals gave due course to its petition. Despite this, it was the Seventeenth Division
of the Court of Appeals which rendered the Joint Decision dismissing its petition.
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.
ISSUE: WON the CA erred in dismissing the petition of PEA by reason of the defective verification
and certification of non-forum shopping
Coming now to petitioner's counterclaims, we find that the CIAC painstakingly sifted through the correctness of the findings of the CIAC, are limited to the arbitral awards granted to respondent
records to discuss these, despite its initial observation that petitioner "absolutely omitted to make any Elpidio S. Uy and to the denial of the counterclaims of petitioner Public Estates Authority. Our
arguments" to substantiate the same. 14 As far as the unrecouped balance on prepaid materials are decision in this case does not affect the other claims of respondent Uy which were not granted by the
concerned, the CIAC found: CIAC in its questioned decision, the merits of which were not submitted to us for determination in the
instant petition.
The Arbitral Tribunal finds the evidence adduced by the Respondents (petitioner herein)
sorely lacking to establish this counterclaim. The affidavit of Mr. Jaime Millan touched on
this matter by merely stating this "additional claim a) Unrecouped balance on prepaid
materials amounting to P45,372,589.85." No further elaboration was made of this bare
statement. The affidavit of Mr. Roigelio A. Cantoria merely states that as Senior
Accountant, it was he who prepared the computation for the recoupment of prepaid
materials and advance payment marked as "Annex "B" of Respondent's
Compliance/Submission dated 16 March 2000. Examination of that single page document
shows that for the 2nd Billing, the amount of P32,695,138.86 was "75% Prepaid" for some
unspecified "Materials on Hand." The rest of the other items were payments for "trees and
shrubs RCP Baluster & Cons. Paver, and GFRC (Baluster)" in various amounts taken from
other billings. The billings themselves have not been introduced in evidence. No testimonial
evidence was also offered to explain how these computations were made, if only to explain
the meaning of those terms above-quoted and why the recoupment of amounts of the
various billings were generally much lower than the payment for materials. As stated at the
outset of the discussion of these additional claims, "it is not the burden of this Tribunal to
dig into the haystack to look for the proverbial needle to support these counterclaims."15

On the other hand, we find that the CIAC correctly deferred determination of the counterclaim for
unrecouped balance on the advance payment. It explained that the amount of this claim is
determined by deducting from respondent's progress billing a proportionate amount equal to the
percentage of work accomplished. However, this could not be done since petitioner terminated the
construction contract. At the time the CIAC rendered its decision, the issue of the validity of the
termination was still pending determination by the Regional Trial Court of Parañaque. Thus, in view of
the non-fulfillment of that "precondition to the grant" of petitioner's counterclaim, the CIAC deferred
resolution of the same.16 In the case at bar, petitioner still failed to show that its termination of the
construction contract was upheld by the court as valid.

Anent petitioner's claim for attorney's fees, suffice it to state that it was represented by the
Government Corporate Counsel in the proceedings before the CIAC. Attorney's fees are in the nature
of actual damages, which must be duly proved. 17 Petitioner failed to show with convincing evidence
that it incurred attorney's fees.

Petitioner further argues that its liability to respondent has been extinguished by novation when it
assigned and turned over all its contracted works at the Heritage Park to the Heritage Park
Management Corporation.18 This, however, can not bind respondent, who was not a party to the
assignment. Moreover, it has not been shown that respondent gave his consent to the turn-over.
Article 1293 of the Civil Code expressly provides:

Novation which consists in substituting a new debtor in the place of the original one, may be made
even without the knowledge or against the will of the latter, but not without the consent of the creditor.
Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237. (emphasis
ours)

Lastly, petitioner argues that respondent should reimburse to it all fees paid to the CIAC by reason of
the case. To be sure, this contention is based on the premise that the suit filed by respondent was
unwarranted and without legal and factual basis. But as shown in the CIAC decision, this was not so.
In fact, respondent was adjudged entitled to the arbitral awards made by the CIAC. These awards
have been sustained by the Court of Appeals, and now by this Court.

It appears that there is a pending motion to consolidate the instant petition with G.R. No. 147925-26,
filed by respondent. Considering, however, that the instant petition has no merit, the motion for
consolidation is rendered also without merit, as there will be no more petition to consolidate with the
said case. Hence, the motion to consolidate filed in this case must be denied.

However, in order not to prejudice the deliberations of the Court's Second Division in G.R. No.
147925-26, it should be stated that the findings made in this case, especially as regards the