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THIRD DIVISION

ELPIDIO S. UY, doing business under the

name and style EDISON DEVELOPMENT &

CONSTRUCTION,

Petitioner,

- versus -

PUBLIC ESTATES AUTHORITY and the

HONORABLE COURT OF APPEALS,Respondents.

G.R. Nos. 147925-26

Present:

YNARES-SANTIAGO,J.,

Chairperson,

CORONA,*

VELASCO, JR.,**

NACHURA, and

PERALTA,JJ.

Promulgated:

June 8, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Petitioner Elpidio S. Uy (Uy) appeals by certiorari the Joint

Decision[1]dated September 25, 2000 and the Joint Resolution[2] dated April 25,

2001 of the Court of Appeals (CA) in the consolidated cases CA-G.R. SP Nos.

59308 and 59849.

Respondent Public Estates Authority (PEA) was designated as project

manager by the Bases Conversion Development Authority (BCDA), primarily

tasked to develop its 105-hectare demilitarized lot

in Fort Bonifacio, Taguig City into a first-class memorial park to be known

as Heritage Park. PEA then engaged the services of Makati Development

LynnedelacruzCIVLAWREV1Atty. Legaspi
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Corporation (MDC) to undertake the horizontal works on the project; and Uy,

doing business under the name and style Edison Development and Construction

(EDC), to do the landscaping.

For a contract price of Three Hundred Fifty-Five Million Eighty

Thousand One Hundred Forty-One and 15/100 Pesos (P355,080,141.15), PEA

and EDC signed the Landscaping and Construction Agreement[3] on November

20, 1996. EDC undertook to complete the landscaping works in four hundred

fifty (450) days commencing on the date of receipt of the notice to proceed.

EDC received the notice to proceed on December 3, 1996; [4] and three

(3) days after, or on December 6, 1996,[5] it commenced the mobilization of the

equipment and manpower needed for the project. PEA, however, could not

deliver any work area to EDC because the horizontal works of MDC were still

ongoing. EDC commenced the landscaping works only on January 7, 1997

when PEA finally made an initial delivery of a work area.

PEA continuously incurred delay in the turnover of workareas. Resultantly, the contract period of 450 days was extended to 693

days. PEA also failed to turn over the entire 105-hectare work area due to the

presence of squatters. Thus, on March 15, 1999, the PEA Project Management

Office (PEA-PMO) issued Change Order No. 2-LC,[6]excluding from the

contract the 45-square-meter portion of the park occupied by squatters.

In view of the delay in the delivery of work area, EDC claimed

additional cost from the PEA-PMO amounting to P181,338,056.30. Specifically,

Uy alleged that he incurred additional rental costs for the equipment, which

were kept on standby, and labor costs for the idle manpower. He added that the

delay by PEA caused the topsoil at the original supplier to be depleted; thus, he

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was compelled to obtain the topsoil from a farther source, thereby incurring

extra costs. He also claims that he had to mobilize water trucks for the plants

and trees which had already been delivered to the site. Furthermore, it becamenecessary to construct a nursery shade to protect and preserve the young plants

and trees prior to actual transplanting to the landscaped area. The PEA-PMO

evaluated the EDCs claim and arrived at a lesser amount of P146,484,910.

[7] The evaluation of PEA-PMO was then referred to the Heritage Park

Executive Committee (ExCom) for approval.

On November 12, 1999, the Performance Audit Committee (PAC)

reviewed the progress report submitted by the works engineer and noted that the

EDCs landscaping works were behind schedule by twenty percent (20%). The

PAC considered this delay unreasonable and intolerable, and immediately

recommended to BCDA the termination of the landscaping contract.[8] The

BCDA adopted PACs recommendation and demanded from PEA the

termination of the contract with EDC. In compliance, PEA terminated the

agreement on November 29, 1999.

PEA fully paid all the progress billings up to August 26, 1999, but it

did not heed EDCs additional claims. Consequently, Uy filed a

Complaint[9] with the Construction Industry Arbitration Commission (CIAC),

docketed as CIAC Case No. 02-2000.

On May 16, 2000, the CIAC rendered a Decision, [10]the dispositive

portion of which reads:

WHEREFORE, Judgment is hereby rendered in

favor of the [Petitioner] ContractorELPIDIO S.

UY and Award is hereby made on its monetary claims as

follows:

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Respondent PUBLIC ESTATES AUTHORITY is

directed to pay the [petitioner] the following amounts:

P19,604,132.06 --- for the cost of idle time ofequipment.

2,275,721.00 --- for the cost of idled manpower.

6,050,165.05 --- for the construction of the nursery

shade net

area.

605,016.50 --- for attorneys fees.

Interest on the amount ofP6,050,165.05 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

ofP21,879,853.06 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 of12% 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 (Eastern

Shipping Lines, Inc. v. Court of Appeals, et al., 243 SCRA 78

[1994]; Keng Hua Paper Products Co., Inc. v. Court of

Appeals, 286 SCRA 257 [1998]; Crismina Garments, Inc. v.

Court of Appeals, G.R. No. 128721, March 9, 1999).

SO ORDERED.[11]

Uy received the CIAC decision on June 7, 2000. On

June 16, 2000, Uy filed a motion for correction of

computation,[12] followed by an amended motion for correction

of computation,[13] on July 21, 2000. The CIAC, however,

failed to resolve Uys motion and amended motion within the30-day period as provided in its rules, and Uy considered it as

denial of the motion.

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Hence, on July 24, 2000, Uy filed a petition for review [14]with the CA,

docketed as CA-G.R. SP No. 59849. Uys petition was consolidated with CA-

G.R. SP No. 59308, the earlier petition filed by PEA, assailing the same CIACdecision.

On August 1, 2000, the CIAC issued an Order[15]denying Uys motion

for correction of computation.

On September 25, 2000, the CA rendered the now assailed Joint

Decision dismissing both petitions on both technical and substantive grounds.

PEAs petition was dismissed because the verification thereof was

defective. Uys petition, on the other hand, was dismissed upon a finding that it

was belatedly filed. Further, the CA found no sufficient basis to warrant the

reversal of the CIAC ruling, which it held is based on clear provisions of the

contract, the evidence on record and relevant law and jurisprudence.

The CA disposed thus:

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 [D]evelopment & Construction, and CA-G.R. SP

No. 59849, Elpidio S. Uy, doing business under the name

and style of Edison [D]evelopment & Construction v. Public

Estates Authority, are both hereby DENIED DUE COURSE

and accordingly DISMISSED, for lack of merit.

Consequently, the Award/Decision issued by theConstruction Industry Arbitration Commission on May 16,

2000 in CIAC Case No. 02-2000, entitled Elpidio S. Uy,

doing business under the name and style of Edison

[D]evelopment & Construction v. Public Estates

Authority, is hereby AFFIRMED in toto.

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No pronouncement as to costs.

SO ORDERED.[16]

PEA and Uy filed motions for reconsideration. Subsequently, PEA

filed with the CA an Urgent Motion for Issuance of a Temporary Restraining

Order and/or Writ of Preliminary Injunction,[17]seeking to enjoin the CIAC from

proceeding with CIAC Case No. 03-2001, which Uy had subsequently

filed. PEA alleged that the case involved claims arising from the same

Landscaping and Construction Agreement, subject of the cases pending with the

CA.

On April 25, 2001, the CA issued the assailed Joint Resolution, thus:

WHEREFORE, the present Motion/s for

Reconsideration in CA-G.R. SP No. 59308 and CA-G.R. SP

No. 59849 are hereby both DENIED, for lack of merit.

Accordingly, let an injunction issue permanently

enjoining the Construction Industry Arbitration Commission

from proceeding with CIAC CASE NO. 03-2001,

entitledELPIDIO S. UY, doing business

under the name and style of EDISON DEVELOPMENT &CONSTRUCTION v. PUBLIC ESTATES

AUTHORITY and/or HONORABLE CARLOS P. DOBLE.

SO ORDERED.[18]

PEA and Uy then came to us with their respective petitions for review

assailing the CA ruling. PEAs petition was docketed as G.R. Nos. 147933-34,

while that of Uy was docketed as G.R. Nos. 147925-26. The petitions, however,

were not consolidated.

On December 12, 2001, this Court resolved G.R. Nos. 147933-34 in

this wise:

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WHEREFORE, in view of the foregoing, the petition

for review is DENIED. The Motion to Consolidate this

petition with G.R. No. 147925-26 is also DENIED.

SO ORDERED.[19]

Thus, what remains for us to resolve is Uys petition, raising the

following issues:

I

WHETHER OR NOT RESPONDENT COURT OF

APPEALS HAS DEPARTED FROM THE ACCEPTED AND

USUAL COURSE OF JUDICIAL PROCEEDINGS IN

DISMISSING PETITIONER UYS PETITION IN CA-G.R.

SP NO. 59849 ON THE ALLEGED GROUND OF NON-

COMPLIANCE WITH THE REGLEMENTARY PERIOD IN

FILING AN APPEAL

II

WHETHER OR NOT THE RESPONDENT COURT OF

APPEALS, IN AFFIRMING THE DECISION OF THE CIAC

ARBITRAL TRIBUNAL INSOFAR AS IT DENIED

CERTAIN CLAIMS OF PETITIONER UY, HAS DECIDED

A QUESTION OF SUBSTANCE NOT IN ACCORDANCE

WITH LAW AND THE APPLICABLE DECISIONS OF

THE HONORABLE COURT

III

WHETHER OR NOT THE RESPONDENT COURT OF

APPEALS ACTED WITHOUT OR IN EXCESS OF ITS

JURISDICTION OR WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF

JURISDICTION WHEN IT ENJOINED THE

PROCEEDINGS IN CIAC CASE NO. 03-2001 IN ITS

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JOINT RESOLUTION DATED 25 APRIL 2000, WHICH

CASE IS TOTALLY DIFFERENT FROM THE CASE

A QUO[20]

We will deal first with the procedural issue.

Appeals from judgment of the CIAC shall be taken to the CA by filing

a petition for review within fifteen (15) days from the receipt of the notice of

award, judgment, final order or resolution, or from the date of its last publication

if publication is required by law for its effectivity, or of the denial of petitioners

motion for new trial or reconsideration duly filed in accordance with the

governing law of the court or agency a quo.[21]

Admittedly, Uy received the CIAC decision on June 7, 2000; that

instead of filing a verified petition for review with the CA, Uy filed a motion for

correction of computation on June 16, 2000, pursuant to Section 9, Article XV

of the Rules of Procedure Governing Construction Arbitration:

Section 9. Motion for Reconsideration. As a matter

of policy, no motion for reconsideration shall be

allowed. Any of the parties may, however, file a motion for

correction within fifteen (15) days from receipt of the award

upon any of the following grounds:

a. An evident miscalculation of figures, a

typographical or arithmetical error;

b. An evident mistake in the description of any party,

person, date, amount, thing or property referred to in the

award.

The filing of the motion for correction shall interrupt

the running of the period for appeal.

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With the filing of the motion for correction, the running of the period to appeal

was effectively interrupted.

CIAC was supposed to resolve the motion for correction of

computation within 30 days from the time the comment or opposition thereto

was submitted. In Uys case, no resolution was issued despite the lapse of the

30-day period, and Uy considered it as a denial of his motion. Accordingly, he

elevated his case to the CA on July 24, 2000. But not long thereafter, or on

August 1, 2000, the CIAC issued an Order[22] denying the motion for correction

of computation.

Obviously, when Uy filed his petition for review with the CA, the

period to appeal had not yet lapsed; it was interrupted by the pendency of his

motion for computation. There is no basis, therefore, to conclude that the

petition was belatedly filed.

The foregoing notwithstanding, inasmuch as the CA resolved the

petition on the merits, we now confront the substantive issue the propriety of

the CAs affirmance of the CIAC decision.

Uy cries foul on the award granted by CIAC, and affirmed by the

CA. He posits that PEA already admitted its liability, pegged

at P146,484,910.10, in its memorandum dated January 6, 2000. Thus, he faults

the CA for awarding a lesser amount.

We meticulously reviewed the records before us and failed to discern

any admission of liability on the part of PEA.


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The PEA-PMO evaluation dated January 6, 2000,[23] where PEA allegedly

admitted its liability, reads in full:

MEMORANDUM

For : Mr. Jaime R. Millan

Project Manager

Heritage Park Project

Subject: EDCs Various Claim

Landscape Development Works

Revision shall be made on our evaluation dated 28December 1999 concerning various claims of contractor EDC-

Landscape Development Works (Package IV), particularly on

the claim on Project Equipment on Standby (item a of the

earlier evaluation).

Reference to item 4 of the Terms and Conditions of

1998 ACEL Rate Equipment Guidebook, the CMO

inadvertently did not consider are the wages and salaries of

standby operator/driver corresponding to the equipment

standby being claimed.

Thus, the corresponding gross amount to be

incorporated shall be P4,925,600.00 computed based on the

total man-months of each standby equipment being claimed.

A tabulation of the claims is shown hereinbelow:

Nature of Claim EDC Claim Works

Engineer

Evaluation

PMO

Evaluation

a. Project

Equipment

on Standby

P95,740,834.30

67,422,840.40

81,851,396.08

Equipment

Operator/Drive

r

4,925,600.00


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b. Manpower on

Standby

28,165,022.00 2,275,721.00 2,275,721.00

c. Topsoil Addl

HaulingDistance

37,780,200.00

37,780,200.00

37,780,200.00


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d. Water

Truck

OperatingCost

19,652,000.00

15,467,800.00

19,652,000.00

-----------------------------------------------------------------------------------

-------------------------

Total P181,338,056.30 122,946,561.40 146,484,917.[08]

Further, it is being specified that the PMO maintains

the earlier notes of the CMO in its memo of 18 October 1999

and that legal interpretations on each item of claims is

likewise enjoined.

Attached are pertinent documents for your review and

reference

(Sgd.)

(Sgd.)

ROGELIO H. IGNACIO FLORO

C. URCIA

PMO-B Asst.

Project Manager

By no stretch of the imagination can we consider this memorandum an

admission of liability on the part of PEA. First, nowhere in the memorandum

does it say that PEA is admitting its liability. The evaluation contained in the

above memorandum is merely a verification of the accuracy of EDCs

claims. As a matter of fact, the evaluation is still subject for review by the

project manager, whose decision on the matter requires the approval of the

Heritage Park ExCom. Second, Messrs. Ignacio and Urcia had no legal authorityto make admissions on behalf of PEA. Thus, even assuming that the evaluation

contained in the memorandum was in the nature of an admission, the same

cannot bind PEA. Third, Uy filed his complaint with the CIAC because PEA

did not act on EDCs various claims. This supports our conclusion that PEA


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never admitted, but on the contrary denied, whatever additional liabilities were

claimed by Uy under the landscaping contract.

Neither do we find any admission of liability on the part of PEA during

the proceedings before the CIAC. What was admitted by PEA was thatPMO

evaluated the claim at the lesser amount of P146,484,910 (Exh. S).[24] The

admission of the evaluation made by PEA cannot translate to an admission of

liability. There is simply no basis for Uy to claim that PEA had admitted its

liability.

This issue disposed of, we now resolve Uys claims on the basis of the

evidence presented.

Uy claims P95,740,834.30 as the standby equipment cost. CIAC,

however, did not agree and granted only P19,604,132.06 as the cost of standby

equipment using its so-called equitable method:

[Uy] had mobilized manpower and equipment

sufficient to do the landscaping works for the entire 105

hectares. The unilateral reduction in scope of work made by

[PEA] thus laid idle the men and equipment of [Uy] in direct

proportion to said reduction. In effect, therefore, Uy had on

hand manpower and equipment amounting to 42.85% in

excess of that necessary to perform the landscaping works for

the reduced scope of work. [Uy] thus suffered costs in terms

of excess manpower and equipment in proportion to the

reduced scope of work.

x x x x

The total contract period original extensions to

complete the landscaping works for the entire 105 hectares

is 693 days. The reduction in scope of work42.85% laid idle

his equipment by the same percentage of 42.85[%] or296.95

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days. Since [Uy] calculated his claim for idled equipment on

a per month basis, it is necessary to convert this into

months. 296.95 days is equivalent of 9.89

months. Multiplied by the rate ofP1,982,217.60 per monthof delay, this would translate to P19,604,132.06 as the cost of

idle time for equipment by reason of the [delay].[25]

Upon review of the records before us, we find a need to modify, by

increasing, the award for standby equipment cost.


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CIAC found that PEA incurred delays in the turnover of work areas:

The first delay was the turn-over of a portion of Area 1 A that

was made on 17 April 1997. The start of work on that area

was scheduled for March, 1997. There was, therefore, a delay

of about one month. The second delay was the turn-over of a

portion of Area 2 A that was made on 20 October 1997. The

start of work on that area was scheduled for May, 1997. There

was, therefore, a delay of about five months. The third

delay was the turn-over of a portion of Area 2 B that was

made on 05 March 1998. The start of work on that area was

scheduled for mid-February 1997. There was, therefore,

a delay of more than one (1) year. Altogether,

the several periods of delayed turn-over of work areas totalone year and six months or546 days.[26]

Surely, on the days that EDC was waiting for the turn over of additional work

areas, it was paying rentals for the equipment on standby. Yet, CIAC completely

ignored these delays in determining the cost of equipment on standby, reasoning

that:

It must be pointed out, however, that the division of the

vast area to be landscaped into distinct work areas with

different start of work schedules under the PERT-CPM, [Uy]

could easily have shifted his equipment from an area where

the delivery was delayed to the area where there was an

advanced turn-over.[27]

This is wrong.

Records establish that EDC promptly commenced the landscaping

work on every area that was turned over. EDC, in fact, shifted its equipment

where there was an advance delivery, if only to minimize the additional

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expenses incurred by reason of the long delays in the turnover of the other work

areas. Thus, in addition to the award of P19,604,132.06 for cost of idle time for

equipment by reason of the reduction of scope of work,

Uy is entitled to the cost of idle time for equipment by reason of the delay

incurred in the delivery of work areas.

The period ofowner-causeddelay was 546 days or 18.2 months. The

rate given by the Association of Carriers and Equipment Lessors (ACEL), Inc.,

and which was also used as basis by CIAC in granting the costs for equipment

on standby, was P1,982,271.60 per month of delay. Considering that PEA was

in delay for 564 days or 18.2 months, Uy is entitled to an additional award

of P36,076,360.32. Accordingly, he is entitled to an aggregate amount

of P55,680,492.38 for the equipment rentals on standby.

As to the awards of P2,275,721.00, for the cost of idle manpower,

and P6,050,165.05, for the construction of the nursery shade net area, we find no

reason to disturb the same, as Uy never raised this issue in his petition.

Next, we resolve Uys claims for costs for additional hauling distance

of topsoil and for mobilization of water truck.

The approved hauling cost of topsoil was only P12.00/kilometer

or P120.00 for the 10 kms original source. Uy, however, claims that due to the

delay in delivery of work areas, the original source became depleted; hence, he

was constrained to haul topsoil from another source located at a much farther

distance of 40 kms. Uy insists that the exhaustion of topsoil at the original

source was solely attributable to the delay in the turnover of the project


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site. Thus, he claims from PEA the increased cost of topsoil amounting

to P37,780,200.00.

Article 1724 of the Civil Code provides:

ART. 1724. The contractor who undertakes to build

a structure or any other work for a stipulated price, in

conformity with plans and specifications agreed upon with the

land-owner, can neither withdraw from the contract nor

demand an increase in the price on account of the higher cost

of labor or materials, save when there has been a change in the

plans and specifications, provided:

(1) Such change has been authorized by the proprietor

in writing; and

(2) The additional price to be paid to the contractor has

been determined in writing by both parties.

By this article, a written authorization from the owner is required before the

contractor can validly recover his claim. The evident purpose of the provision isto avoid litigation for added costs incurred by reason of additions or changes in

the original plan. Undoubtedly, it was adopted to serve as a safeguard or a

substantive condition precedent to recovery.[28]

This provision is echoed in the Landscaping Contract, viz.:

ARTICLE IX

CHANGE OF WORK

x x x x

9.3. Under no circumstances shall PEA be

held liable for the payment of change of work undertaken


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without the written approval of the PEA General Manager x x

x.

ARTICLE XEXTRA WORK

x x x x

10.3. Under no circumstances shall PEA be held liable

for the payment of extra work undertaken without the written

approval of the PEA General Manager to perform the said

work.[29]

Admittedly, EDC did not secure the required written approval of PEAs

general manager before obtaining the topsoil from a farther source. As pointed

out by the CIAC:

There is no change order authorizing payment for the

increased cost upon which this claim is based. There is,

therefore, no legal right based upon contract (the landscaping

agreement or a change order) that would impose such a

liability upon [PEA]. In a lump sum contract, as that enteredinto by the parties, the matter of how the contractor had made

[a] computation to arrive at [a] bid that he submits is

completely irrelevant. The contract amount of delivered

topsoil is P780.00 per truckload of 5.5 cubic meters sourced

from a distance of [10] km. or 100 [meters]. There is nothing

in Exhibit L or in the landscaping contract (Exhibit A)

that would indicate an agreement of [PEA] to pay for the

increase in hauling cost if the source of topsoil exceeds 10

kilometers. Corollarily, there is also nothing therein to show

that [PEA] would also be entitled to decrease said costs bypaying less if the distance would have been less than 10

kilometers. Had there been such a counterpart provision, there

might have been more arguable claim for

[Uy]. Unfortunately, no such provision exists.[30]


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InPowton Conglomerate, Inc. v. Agcolicol,[31] we emphasized:

The written consent of the owner to the increased costs sought

by the respondent is not a mere formal requisite, but a vital

precondition to the validity of a subsequent contract

authorizing a higher or additional contract price. Moreover,

the safeguards enshrined in the provisions of Article 1724 are

not only intended to obviate future misunderstandings but also

to give the parties a chance to decide whether to bind ones

self to or withdraw from a contract.

By proceeding to obtain topsoil up to a 40-kilometer radius without writtenapproval from the PEA general manager, Uy cannot claim the additional cost he

incurred.

Uy further claims P19,625,000.00 for cost of mobilization of water trucks. He

asserts that PEA completely failed to provide the generator sets necessary to

undertake the watering and/or irrigation works for the landscaping and

construction activities.[32]

Uy, however, admitted that MDC had already installed a deep well in

the project site, and EDC used it in its landscaping and construction activities.

[33] Under the contract, the operational costs of the deep well and its appurtenant

accessories, including the generator sets, shall be borne by EDC:

The CONTRACTOR shall shoulder all cost of

electricity, maintenance, repairs, replacement of parts, when

needed, and all costs of operation of the deepwell/s, and itsappurtenant accessories, i.e. generator sets, etc. (which are

already existing at the project site, constructed by another

Contractor) while such deepwell/s are being used by

CONTRACTOR herein for its landscaping and construction

activities. These [deepwells] shall be turned over to PEA by

http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn33http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn33http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn34http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn34http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn33http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn34http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn35

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CONTRACTOR in good operating/usable condition as when

it was first used by CONTRACTOR.[34]

Thus, Uy cannot claim additional cost for providing generator sets.

Uy also attempts to justify his claim for cost of mobilization of water

trucks by alleging that the water from the deep well provided by MDC and PEA

was grossly insufficient to undertake the watering works for the project; hence,

he was constrained to mobilize water trucks to save the plants from dying.

Indisputably, Uy mobilized water trucks for the landscaping projects

and, certainly, incurred additional costs. But like his claim for additional cost of

topsoil, such additional expenses were incurred without prior written approval of

PEAs general manager. Thus, he cannot claim payment for such cost from

PEA.

As aptly said by the CIAC:

Since [Uy] had presumably intended all along to charge

[PEA] for the water truck operating costs, considering the very

substantial amount of his claim, the prudence that he

presumably has, as an experienced general contractor of the

highest triple A category, should have dictated that he

negotiate with the [PEA] for a change order or an extra work

order before continuing to spend the huge amounts that he

claims to have spent. [Uy] did just that in relation to his much

smaller claim for the construction of the nursery shade x x x.

He, however, made no effort to negotiate with the PEA for asimilar change order or extra work order to safeguard his even

bigger additional costs to operate the water trucks. No

explanation was offered for such a mystifying differential

treatment. He cannot, therefore, pass on without any

contractual basis, such additional costs to the [PEA].


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Neither can we hold PEA liable based onsolutio indebiti, the legal

maxim that no one should enrich itself at the expense of another. As we

explained inPowton Conglomerate, Inc. v. Agcolicol,[35]

the principle of unjust enrichment cannot be validly invoked

by the respondent who, through his own act or omission, took

the risk of being denied payment for additional costs by not

giving the petitioners prior notice of such costs and/or by not

securing their written consent thereto, as required by law and

their contract.

Uy cannot, therefore, claim from PEA the costs of the additional hauling

distance of topsoil, and of the mobilization of water trucks.

Uy also assails the grant of attorneys fees equivalent to 10% of the total

amount due. Citing paragraph 24.4 of the Landscaping and Construction

Agreement, Uy asserts entitlement to attorneys fees of twenty percent (20%) of

the total amount claimed. He ascribes error to the CIAC and the CA for

reducing the stipulated attorneys fees from 20% to 10% of the total amount due.

Paragraph 24.4 of the agreement provides:

Should the PEA be constrained to resort to judicial or

quasi-judicial relief to enforce or safeguard its rights and

interests under this Agreement, the CONTRACTOR if found

by the court or [the] quasi-judicial body, as the case [may be],

to have been at fault, shall be liable to PEA for attorneys feesin an amount equivalent to twenty percent (20%) of the total

[amount] claimed in the complaint, exclusive of [any]

damages and costs of suit.[36]

http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn37http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn38http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn37http://sc.judiciary.gov.ph/jurisprudence/2009/june2009/147925-26.htm#_ftn38

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Clearly, the cited provision cannot support Uys insistence. Paragraph

24.4 on stipulated attorneys fees is applicable only in complaints filed by PEA

against the contractor. The provision is silent on the amount of attorneys feesthat can be recovered from PEA.

Besides, even assuming that Paragraph 24.4 is applicable, the amount

of attorneys fees may be reduced if found to be iniquitous or unconscionable.

Thus:

Articles 1229 and 2227 of the Civil Code empower

the courts to reduce the penalty if it is iniquitous orunconscionable. The determination of whether the penalty is

iniquitous or unconscionable is addressed to the sound

discretion of the court and depends on several factors such as

the type, extent, and purpose of the penalty, the nature of the

obligation, the mode of breach and its consequences.[37]

The Court finds Uys claim for attorney's fees equivalent to 20% of

whatever amount is due and payable to be exorbitant. The CIAC and the CA,

therefore, correctly awarded 10% of the total amount due and payable as

reasonable attorneys fees.

Finally, on the propriety of the writ of injunction.

Uy asserts that the CA acted without or in excess of jurisdiction when it

enjoined the proceedings in CIAC Case No. 03-2001, despite the fact that the

said case is totally different from the instant case.

By grave abuse of discretion is meant such capricious and whimsical

exercise of judgment equivalent to lack of jurisdiction. Mere abuse of discretion

is not enough. It must be grave, as when it is exercised arbitrarily or despotically


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by reason of passion or personal hostility; and such abuse must be so patent and

so gross as to amount to an evasion of a positive duty or to a virtual refusal to

perform the duty enjoined or to act at all in contemplation of law.[38]

The CA granted PEAs prayer for the injunctive writ not without

reason. We quote its Joint Resolution, viz.:

[T]here is no question that Elpidio S. Uys amended complaint

is based on the sameLandscaping and Construction

Agreement, as he himself admits. The claims pertinent thereto

had already been arbitrated and passed upon in CIAC CASE

NO. 02-2000 and the decision therein was already elevated toUs for review and, in view of Our joint decision in the instant

petitions, a reconsideration thereof.

Based on the foregoing, We are inclined to grant the

prayer of PEA to enjoin the CIAC from further proceeding

with CIAC CASE NO. 03-2001, considering that the

allegations therein constrain Us to apply the doctrine oflitis

pendentia, which has for its requisites: (a) identity of parties,

or at least such parties who represent the same interests in both

actions; (b) identity of rights asserted and relief prayed for, therelief being founded on the same facts; and (c) the identity

with respect to the two preceding particulars in the two (2)

cases is such that any judgment that may be rendered in the

pending case, regardless of which party is successful, would

amount to res judicata in the other case. Forum shopping

exists where the elements oflitis pendentia are present or

where a final judgment in one case will amount to res

judicata in the other. The principle of bar by prior judgment

raised by the PEA, i.e., res judicata, finds application only

upon a showing of a final judgment as one of its requisites,which is not yet present under the present circumstances.

At this juncture, it bears stressing that the essence of

forum shopping is the filing of multiple suits involving the

same parties for the same cause of action, either

simultaneously or successively, for the purpose of obtaining a


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favorable judgment. Accordingly, based on Our holding that

the final resolution of the instant petitions takes precedence as

it is the appropriate vehicle for litigating the issues between

the parties, now that the instant petitions before Us have comefull circle with this joint resolution and, if the parties herein so

choose, may seek further relief to the High Tribunal

afterwards. We cannot allow CIAC CASE NO. 03-2001 to

proceed because to do so would render inutile the

proscriptions against forum shopping which is frowned upon

in Our jurisdiction. Hence, the grant of injunctive relief. This

must be done, or else a travesty of the efficient administration

of justice would lamentably result.[39]

Indeed, the assailed resolution shows no patent or gross error

amounting to grave abuse of discretion. Neither does it show an arbitrary or

despotic exercise of power arising from passion or hostility.

At this point, it should be stated that the Court is not convinced by Uys

argument that the claims under CIAC Case No. 03-2001 are different from his

claims in CIAC Case No. 02-2000. There is only one cause of action running

through Uys litigious undertakings his alleged right under the Landscaping

and Construction Agreement. Therefore, the landscaping agreement is

indispensable in prosecuting his claims in both CIAC Cases Nos. 02-2000 and

03-2001.

As we held in Villanueva v. Court of Appeals:[40]

A party, by varying the form or action or by bringing

forward in a second case additional parties or arguments,

cannot escape the effects of the principle ofres judicata when

the facts remain the same at least where such new parties or

matter could have been impleaded or pleaded in the prior

action.


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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.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

LynnedelacruzCIVLAWREV1

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