Adr Report

THIRD DIVISION
G.R. No. 200401, January 17, 2018
METRO RAIL TRANSIT DEVELOPMENT CORPORATION, Petitioner, v. GAMMON

PHILIPPINES, INC., Respondent.
DECISION
LEONEN, J.:
This resolves a Petition for Review on Certiorari1 assailing the Court of Appeals October
14, 2011 Decision2 and January 25, 2012 Resolution3 in CA-GR. SP No. 98569. The
assailed Decision affirmed the Construction Industry Arbitration Commission (CIAC)
Decision,4 which awarded Gammon Philippines, Inc. (Gammon) its monetary claims for
lost profits and reimbursements for engineering services, design work, and site de-
watering and clean up, due to breach of contract.5 The assailed Resolution denied Metro
Rail Transit Development Corporation's (MRT) Motion for Reconsideration.6
This case involves MRT's MRT-3 North Triangle Description Project (Project), covering
54 hectares of land, out of which 16 hectares were allotted for a commercial center.
Half of the commercial center would be used for a podium structure (Podium), which
was meant to provide the structure for the Project's Leasable Retail Development and
to serve as the maintenance depot of the rail transit system.7
Parsons Interpro JV (Parsons) was the Management Team authorized to oversee the
construction’s execution.8
On April 30, 1997, Gammon received from Parsons an invitation to bid for the complete
concrete works of the Podium. The scope of the work involved supplying the necessary
materials, labor, plants, tools, equipment, facilities, supervision, and services for the
construction of Level 1 to Level 4 of the Podium. 9
On May 30, 1997, Gammon submitted three (3) separate bids and several clarifications
on certain provisions of the Instruction to Bidders and the General Conditions of
Contract.10
Gammon won the bid. On August 27, 1997, Parsons issued a Letter of Award and
Notice to Proceed (First Notice to Proceed) to Gammon.11 It was accompanied by the
formal contract documents. The First Notice to Proceed stated:
We are pleased to inform [you] that you have been awarded the work on the
construction of the Podium Structure for the MRT-3 EDSA-North Triangle Development
Project. The formal contract document, which is the product of a series of discussions
and negotiation[,] is herewith attached for your signature.
The Work includes the furnishing of labor, supervision, materials, plant, equipment and
other facilities and appurtenances necessary to perform all the works in accordance
with contract document, approved drawings, specifications and your over-all Breakdown
of Lump Sum Bid (marked Exhibit ''A") amounting to ONE BILLION FOUR HUNDRED
ONE MILLION SIX HUNDRED SEVENTY[-]TWO THOUSAND NINETY[-] FIVE PESOS
(P1,401,672,095.00). It is understood that due to the existing squatters in the Area,
the work shall be divided in two (2) separate geographical areas designated as Phase I
and Phase II - but shall be treated as one contract and still totaling to
P1,401,672,095.00. Further, this award is predicated on the commitments contained in
the attached comfort letter (marked Exhibit "B") issued by Gammon Construction
Limited, your associate company overseas and receipt of the duly signed letter from the
Chief Executive of Gammon Construction Limited that is expected within seven days
from the date hereof.
....
You may, therefore, proceed with the work at Phase I starting seven (7) days from
receipt of this Notice or from the time that Site is dewatered and cleaned up, whichever
is the later. It is further understood that Gammon agrees to continue Phase II at the
price stated above and the starting time thereof will depend on the completion by
others of the footings in time to allow construction of the superstructure in accordance
with Gammon's Tender Programme dated 13 August 1997.
....
Please signify your concurrence by signing the appropriate space below and in the
accompanying contract documents and return to Parsons-Interpro the originals. We will
send to you a complete set of documents as soon as it is signed by the Owner.12
In a Letter dated September 2, 1997 (First Letter), Gammon signed and returned the
First Notice to Proceed without the contract documents.13 The First Letter stated:
MRT 3 North Triangle Development

Superstructure Contract
Letter of Award/Notice to Proceed
We return herewith the original copy of the above[-]mentioned letter which we have
countersigned dated 28 August '97. (Please note that Mr. Salagdo's signature is
missing).
The contract documentation submitted under cover of your letter is being reviewed
now, and should be signed and returned to you tomorrow. The Letter of Comfort has
now been signed by the Chief Executive of Gammon Construction Ltd., and is being
returned this week.
We confirm that we mobilised resources to site on Friday, 29 August '97 to pump out
floodwater. Cleaning up of mud and debris will follow on this week.
During this mobilisation phase, our Site Manager is Mr. Ferdinand Fabro who we
introduced to you during the Preconstruction meeting last Thursday, 28 August '97.
We enclose herewith a copy of our Mobilisation Programme dated 1 September '97 (4 x

A3 sheets) which includes Design activities, Mobilisation activities, initial Construction
activities, key plant and formwork items.
Our Design Team have now relocated to our office in Makati, and are continuing with
preparation of shop drawings of all slabs.
We will submit a project organisation chart shortly but in the meantime, we confirm
that the following senior [Gammon Philippines, Inc.] staff are now allocated to the
project:
....
As soon as layout of temporary facilities has been agreed with you, establishment will
commence in the very limited space allocated ...
We have today received ... drawings marked "For Construction", and unless we hear
from you to the contrary, we will proceed to procure materials for, plan and construct
walls and columns based on these drawings. However, please note that the 3 sheets of
construction notes have not been issued. We therefore request issue of these drawings.
In addition, there are fifteen 'Requests for Information' (RFIs) which were forwarded to
you yesterday - these cover queries which affect both design of slabs and construction
of walls, columns and beams. In particular, we urgently need instructions to clarify the
reinforcement specification generally, and connectors/splicing of column reinforcement.
Finally, our Performance Bond and Advance Payment Bond are being prepared now - we
hope to submit these by end of this week.14
In a Letter dated September 3, 1997 (Second Letter), Gammon transmitted to Parsons

a signed Letter of Comfort to guarantee its obligations in the Project.15
However, in a Letter dated September 8, 1997, MRT wrote Gammon that it would need
one (1) or two (2) weeks before it could issue the latter the Formal Notice to Proceed:16
Re: Contract for LRT3 North Triangle Podium Structure
Gentlemen:
Due to current developments in the Philippines' foreign exchange rate and the
concomitant soaring interest rates, Metro Rail Transit Development Corp. (MRTDC) will
need a week or two to estimate the possible effects and repercussions on the above[-
]mentioned project before MRTDC, through the Chairman of the Board, will issue the
formal Notice to proceed to your company. When these possible effects and
repercussions are analysed and decided upon by our Board, hopefully within the week,
we shall notify you at once.17
On September 9, 1997, Gammon transmitted the contract documents to Parsons.18
In a facsimile transmission sent on the same day, Parsons directed Gammon "to hold
any further mobilization activities."19
In a Letter dated September 10, 1997, Gammon stated:
''A NOTICE OF AWARD & NOTICE TO PROCEED addressed to Gammon Philippines Inc.
(GPI) was issued by your Project Managers, Parsons Interpro JV dated 27th August
1997 and has been signed, accepted and an original returned to them by our authorised
people, therefore a contract exists between MTRDC and GPI.
The formal contract document has been issued to us for final review and has been
signed and returned to your Project Managers.
In accordance with the NOA & NTP Gammon Construction Ltd. have provided you with
the required letter of guarantee in respect of fulfillment by GCL of GPI's obligations
under the Contract in the event of GPI's insolvency.
By the [Notice of Award] & [Notice to Proceed] [Gammon] were (sic) required to
proceed with the work starting seven days from receipt of that Notice and it was agreed
we would commence dewatering of the flooded site and clean up immediately, under a
Change Order, and that the construction period would run from the date of achieving
the clean up of the site. It was anticipated that these clean up works would take 11
days.
We are therefore bound by these commitments."20
On September 11, 1997, Gammon sent Parsons a facsimile to confirm if all

requirements in the contract documents were temporarily suspended pending the
clarification of the scope and programming of the Project.21
In a facsimile transmission dated September 12, 1997, Parsons confirmed "the

temporary suspension of all [the] requirements under the contract except the re-design
of the project floor slabs and the site de-watering and clean up."22
Thereafter, MRT decided to downscale the Podium's construction and to proceed with
the Project's conceptual redesign.23
Upon Parson's request order, Gammon studied and discussed with MRT the best option
to phase the work.24
On November 7, 1997, Gammon presented to MRT the sequencing and phasing of the
work.25
MRT decided to adopt Gammon's reccomendation to construct the Podium up to Level 2

only. 26
Due to these revisions on the scope of work, MRT also decided to re design the Level 2
slab, which it perceived would be exposed to more load stresses from prolonged
exposure to elements and the weight of heavy construction equipment. MRT asked
Gammon to re-design.27
On February 18, 1998, Parsons issued Gammon a Notice of Award and Notice to
Proceed (Second Notice to Proceed) for the engineering services based on the
redesigned plan.28 The Second Notice to Proceed stated:
This Notice to Proceed is for the work to be rolled-in into a Lump Sum Contract. In the
event that this contract will not be finalized in the near future, any and all expenses
that are necessary and directly incurred by you in connection therewith shall be
reimbursed based on actual cost plus a negotiated fee.29
Gammon signed the Second Notice to Proceed on March 11, 1998 with qualification:
The Contractor refers to the Notice of Award and Notice to Proceed dated 27 August
1997, and understands that this Notice to Proceed effectively lifts the suspension of
work notified in MRTDC letter dated 8 September 1997, in respect of the design
activities only for all of the Level 2 slab and that part of the Level 3 slab over the Depot
Maintenance Shop and office area . . . ; and that the existing Notice of Award dated 27
August 1997 is still valid.30
On March 3, 1998, Gammon submitted to Parsons a Revised Lump Sum Price Proposal
of P1,044,055,102.0031 for the construction of the Podium up to Level 2, including the
design of the floor slab at Level 2.32 At this time, Gammon had already started its
engineering services pursuant to the Second Notice to Proceed.33
In its Letter dated March 6, 1998, Gammon sent Parsons a breakdown of the Revised
Extra Contract Expenses it allegedly incurred in connection with the works' suspension
amounting to P17,241,505.16. 34
In its Letter dated March 11, 1998, Gammon notified Parsons of its revised Breakdown
of Lump Sum Price worth P1,062,986,607.00.35
On April 2, 1998, MRT issued in favor of Gammon another Notice of Award and Notice
to Proceed (Third Notice to Proceed).36
In its Letter dated April 8, 1998, Gammon acknowledged receipt of the Third Notice to
Proceed and requested clarification of certain items.37
On April 22, 1998, Parsons wrote Gammon, stating that "since the building ha[d] been
revised . . . structural changes [would] be needed and quantities may change."38
On April 29, 1998, Gammon wrote Parsons, confirming its readiness to start
mobilization and requesting clarification of "urgent issues requiring resolution."39
In its Letter dated May 7, 1998, Parsons informed Gammon that MRT was temporarily
rescinding the Third Notice to Proceed, noting that it remained unaccepted by
Gammon.40
On June 11, 1998, Gammon received from Parsons the Contract for the Construction
and Development of the Superstructure, MRT-3 North Triangle - Amended Notice to
Proceed dated June 10, 1998 (Fourth Notice to Proceed).41
The terms of the Fourth Notice to Proceed were different from those of the First and the
Third Notices to Proceed. The Fourth Notice to Proceed also expressly cancelled the First
and Third Notices to Proceed.42
On June 19, 1998, Gammon qualifiedly accepted the Fourth Notice to Proceed.43
MRT treated Gammon's qualified acceptance as a new offer. In a Letter dated June 22,
1998, MRT rejected Gammon's qualified acceptance and informed Gammon that the
contract would be awarded instead to Filsystems if Gammon would not accept the
Fourth Notice to Proceed within five (5) days.44
In a Letter dated July 8, 1998, Gammon wrote MRT, acknowledging the latter's intent
to grant the Fourth Notice to Proceed to another party despite having granted the First
Notice to Proceed to Gammon. Thus, it notified MRT of its claims for reimbursement for
costs, losses, charges, damages, and expenses it had incurred due to the rapid
mobilization program in response to MRT's additional work instructions, suspension
order, ongoing discussions, and the consequences of its award to another party.45
In a Letter dated July 15, 1998, MRT expressed its disagreement with Gammon and its
amenability to discussing claims for reimbursement.46
In a Letter dated July 23, 1998, Gammon notified Parsons of its claim for payment of all
costs, damages, and expenses due to MRT's suspension order and the consequences of
its award of the contract to another party.47
In a Letter dated August 7, 1998, MRT informed Gammon that it was willing to
reimburse Gammon for its cost in participating in the bid amounting to about 5% of
Gammon's total claim of more or less P121,000,000.00.48
In a Letter dated August 11, 1998, Gammon replied that MRT's offer was not enough to
cover the expenses it had incurred for the Project and that it was willing to send MRT
additional information necessary for the evaluation of its claims.49
In a Letter dated August 24, 1998, Parsons requested Gammon for additional
supporting documents to its claims.50
Gammon wrote several communications to MRT to follow up on its evaluation request.51
On July 1, 1999, Gammon filed a Notice of Claim before CIAC against MRT.52
On August 18, 1999, CIAC issued an Order directing MRT to file its Answer and submit
the names of its nominees to the Arbitral Tribunal.53
MRT filed a Motion to Dismiss, arguing that CIAC had no jurisdiction to arbitrate the
dispute. This Motion was denied and this matter was elevated to this
Court.54 In Gammon v. Metro Rail Transit Development Corporation,55 this Court held
that CIAC had jurisdiction over the case.56
Thus, on October 19, 2006, MRT filed its Answer with Compulsory
Counterclaim,57 paragraph 77 of which read:
77. To begin with, MRTDC is willing to pay GAMMON the total amount of P5,493,639.27
representing the sum of P4,821,261.91 and P672,377.36, which comprise GAMMON's
claim for cost of the engineering and design services and site de-watering and clean-up
works, respectively.58
On November 2, 2006, the Arbital Tribunal was formed. On December 11, 2006, a
preliminary conference was set to finalize the Terms of Reference, which would regulate
the conduct of the proceedings. The parties agreed that they would simultaneously
submit their witnesses' affidavits on January 19, 2007.59
On March 27, 2007, CIAC ruled:60
WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary

claims of Claimant as follows:
P4,821,261.9 for Engineering services design work
672,377.36 for site de-watering and clean up
P5,493,639.27 Total claim under issue #1
P53,149,330.35 as a reasonable estimate of the profit it had lost by reason

of Respondent's breach of contract in awarding the construction to a
different contractor.
P58,642,969.62 - TOTAL DUE THE CLAIMANT
SO ORDERED.61
MRT assailed the CIAC Decision before the Court of Appeals. However, the Court of
Appeals affirmed the CIAC Decision:
WHEREFORE, premises considered, the instant petition IS DENIED. The assailed order
of the CIAC dated March 8, 2007 is AFFIRMED.62
Thus, MRT filed the instant Petition for Review.63 It argues that Gammon was not
entitled to CIAC's award considering that there is no perfected contract between MRT
and Gammon64 and that Gammon's claim for lost profits was based only on an
unsubstantiated and self-serving assertion of its employee.65Additionally, it contends
that the claim for reimbursements for engineering services, design work, site de-
watering, and clean-up was not supported by official receipts. It also avers that it is not
estopped from contradicting its alleged judicial admission of liability for reimbursements
in the amount of P5,493,639.27,66 and further states that it is entitled to attorney's
fees.67
Gammon filed its Comment,68 insisting that there is a perfected contract between
them.69 It argues that this Court determined the perfection of the contract in Gammon
v. Metro Rail Transit Development Corporation,70 and thus, the doctrine of the law of
the case applies. 71 Gammon asserts that its claim for lost profits was sufficiently
substantiated72 and that it has proven its entitlement to the reimbursements.73 It avers
that damages may be proved not only by official receipts, but also through other
documentary evidence, such as invoices and debit notes.74
Gammon further claims that MRT is bound by its implied admission of its liability for the
reimbursements in its Answer with Compulsory Counterclaim. It points out that MRT
mentioned the exact amount it was willing to pay and that it did not state that it would
pay only the proved amount.75 It argues that MRT is raising factual issues and that
CIAC's factual findings on the existence of the contract and the amount of damages
ought to be respected.76
In its Reply,77 MRT argues that the doctrine of the law of the case does not apply as the
issue in Gammonwas CIAC's jurisdiction and not the existence of the contract.78 It
reiterates that no contract was perfected because MRT withdrew its offer to Gammon
before Gammon returned the contract documents.79 Thus, Gammon's acceptance only
came after the offer had been withdrawn and nothing that could have been accepted
remained.80
MRT reasons that the loss of profits was not proven with a reasonable degree of
certainty because Gammon's witness is not an expert witness.81 Moreover, it
emphasizes that the finding in National Housing Authority v. First Limited Construction
Corporation82 of 10% profit as the standard practice in the construction industry is
merely obiter dictum, and thus, cannot operate as a precedent for construction-related
cases.83
MRT further claims that invoices and debit memos are not sufficient proof of payment to
entitle Gammon to reimbursements because an invoice is a mere detailed statement of
the items and their prices and charges, while a debit memo is only an advice to the
receiver of an outstanding debt.84
MRT avers that the alleged admission in its Answer with Compulsory Counterclaim
should be construed as extending only to those "supported by official receipts."85 It
reiterates that "[j]udicial admissions cannot supplant the requirements of law ... that
actual or compensatory damages ... must be duly proven."86Moreover, MRT asserts that
its offer to pay is not an admission of liability but only "an attempt to settle the issue
and avoid litigation." 87 It argues that the exact amount of P5,493,639.27 was
mentioned in the Answer with Compulsory Counterclaim as it was the amount claimed
by Gammon, which MRT offered to pay, if proven.88
It further asserts that the findings of CIAC and of the Court of Appeals are all contrary
to evidence on record or are premised on speculation, surmises, and conjectures, and
thus, are serious errors of law properly re-examinable by this Court.89
For this Court's resolution are the following issues:
First, whether or not there is a perfected contract between petitioner Metro Rail Transit
Development Corporation and respondent Gammon Philippines, Inc.;
Second, whether the doctrine of the law of the case in Gammon v. Metro Rail Transit
Development Corporation90 applies;
Third, whether or not petitioner Metro Rail Transit Development Corporation is bound
by its allegation in its Answer with Compulsory Counterclaim that it was "willing to pay
GAMMON the total amount of P5,493,639.27 representing the sum of P4,821,261.91
and P672,377.36, which comprise GAMMON's claim for cost of the engineering and
design services and site de-watering and clean-up works, respectively";91 and
Finally, whether or not respondent Gammon Philippines, Inc.'s claims for actual
damages, reimbursement of amounts, and lost profits were sufficiently proven.
This Court denies the Petition.
CIAC was created under Executive Order No. 100892 to establish an arbitral machinery
that will settle expeditiously problems arising from, or connected with, contracts in the
construction industry.93
Its jurisdiction includes construction disputes between or among parties to an

arbitration agreement, or those who are otherwise bound by the latter, directly or by
reference.94 Thus, any project owner, contractor, subcontractor, fabricator, or project
manager of a construction project who is bound by an arbitration agreement in a
construction contract is under CIAC's jurisdiction in case of any dispute.95
CIAC is a quasi-judicial body exercising quasi-judicial powers.
A quasi-judicial agency is a government body, not part of the judiciary or the legislative
branch, which adjudicates disputes and creates rules which affect private parties'
rights.96 It is created by an enabling statute, and thus, its existence continues beyond
the resolution of a dispute and is independent from the will of the parties. Its powers
are limited to those expressly granted or necessarily implied in the enabling law.97
Quasi-judicial or administrative adjudicatory power has been defined as the power: "(1)
to hear and determine questions of fact to which legislative policy is to apply, and (2) to
decide in accordance with the standards laid down by the law itself in enforcing and
administering the same law."98
Arbitration under a quasi-judicial body is similar to commercial arbitration in that its

factual findings are generally accorded respect and finality.
However, commercial arbitration is conducted by ad-hoc bodies created by stipulation

of parties for the purpose of settling disputes concerning their private or proprietary
interests. In general, the findings in commercial arbitration are respected to uphold the
autonomy of arbitral awards.99
On the other hand, quasi-judicial agencies were created for a speedier resolution of
controversies on matters of state interest that require specialized knowledge and
expertise.100
CIAC exercises quasi-judicial powers over arbitration disputes concerning construction

contracts. Thus, its findings are accorded respect because it comes with the
presumption that CIAC is technically proficient in efficiently and speedily resolving
conflicts in the construction industry.
Thus, under the Construction Industry Arbitration Law, arbitral awards are binding and
shall be final and unappealable, except on pure questions of law:
Section 19. Finality of Awards. — The arbitral award shall be binding upon the parties.
It shall be final and inappealable except on questions of law which shall be appealable
to the Supreme Court.
Initially, CIAC decisions are appealable only to this Court. However, when the Rules of
Court were enacted, appeals from CIAC decisions became appealable to the Court of
Appeals under Rule 43:101
Section 1. Scope. — This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are the Civil Service Commission, Central Board of Assessment
Appeals, Securities and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators authorized by law.
Section 2. Cases Not Covered. — This Rule shall not apply to judgments or final orders
issued under the Labor Code of the Philippines.
While Rule 43 petitions may pertain to questions of fact, questions of law, or both
questions of law and fact, it has been established that factual findings of CIAC may not
be reviewed on appeal.102 In CE Construction v. Araneta,103 this Court explained that
appeals from CIAC may only raise questions of law:
This is not to say that factual findings of CIAC arbitral tribunals may now be assailed
before the Court of Appeals. Section 3's statement "whether the appeal involves
questions of fact, of law, or mixed questions of fact and law" merely recognizes
variances in the disparate modes of appeal that Rule 43 standardizes: that there were
those that enabled questions of fact, there were those that enabled questions of law,
and there were those that enabled mixed questions fact and law. Rule 43 emphasizes
that though there may have been variances, all appeals under its scope are to be
brought before the Court of Appeals. However, in keeping with the Construction
Industry Arbitration Law, any appeal from CIAC Arbitral Tribunals must remain limited
to questions of law.
Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc. explained the wisdom
underlying the limitation of appeals to pure questions of law:
Section 19 makes it crystal clear that questions of fact cannot be raised in proceedings
before the Supreme Court — which is not a trier of facts — in respect of an arbitral
award rendered under the aegis of the CIAC. Consideration of the animating purpose of
voluntary arbitration in general, and arbitration under the aegis of the CIAC in
particular, requires us to apply rigorously the above principle embodied in Section 19
that the Arbitral Tribunal's findings of fact shall be final and unappealable.
Voluntary arbitration involves the reference of a dispute to an impartial body, the

members of which are chosen by the parties themselves, which parties freely consent in
advance to abide by the arbitral award issued after proceedings where both parties had
the opportunity to be heard. The basic objective is to provide a speedy and inexpensive
method of settling disputes by allowing the parties to avoid the formalities, delay,
expense and aggravation which commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of courts. [The Construction Industry
Arbitration Law] created an arbitration facility to which the construction industry in the
Philippines can have recourse. The [Construction Industry Arbitration Law] was enacted
to encourage the early and expeditious settlement of disputes in the construction
industry, a public policy the implementation of which is necessary and important for the
realization of national development goals.
Consistent with this restrictive approach, this Court is duty-bound to be extremely

watchful and to ensure that an appeal does not become an ingenious means for
undermining the integrity of arbitration or for conveniently setting aside the conclusions
arbitral processes make. An appeal is not an artifice for the parties to undermine the
process they voluntarily elected to engage in. To prevent this Court from being a party
to such perversion, this Court's primordial inclination must be to uphold the factual
findings of arbitral tribunals:
Aware of the objective of voluntary arbitration in the labor field, in the construction
industry, and in any other area for that matter, the Court will not assist one or the
other or even both parties in any effort to subvert or defeat that objective for their
private purposes. The Court will not review the factual findings of an arbitral tribunal
upon the artful allegation that such body had "misapprehended the facts" and will not
pass upon issues which are, at bottom, issues of fact, no matter how cleverly disguised
they might be as "legal questions." The parties here had recourse to arbitration and
chose the arbitrators themselves; they must have had confidence in such arbitrators.
The Court will not, therefore, permit the parties to relitigate before it the issues of facts
previously presented and argued before the Arbitral Tribunal, save only where a very
clear showing is made that, in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to constitute a grave abuse
of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be
factual conclusions of the Tribunal which resulted in deprivation of one or the other
party of a fair opportunity to present its position before the Arbitral Tribunal, and an
award obtained through fraud or the corruption of arbitrators. Any other, more relaxed,
rule would result in setting at naught the basic objective of a voluntary arbitration and
would reduce arbitration to a largely inutile institution.
Thus, even as exceptions to the highly restrictive nature of appeals may be

contemplated, these exceptions are only on the narrowest of grounds. Factual findings
of CIAC arbitral tribunals may be revisited not merely because arbitral tribunals may
have erred, not even on the already exceptional grounds traditionally available in Rule
45 Petitions. Rather, factual findings may be reviewed only in cases where the CIAC
arbitral tribunals conducted their affairs in a haphazard, immodest manner that the
most basic integrity of the arbitral process was imperiled.104 (Emphasis in the original,
citations omitted)
Thus, CIAC's factual findings on construction disputes are final, conclusive, and not
reviewable by this Court on appeal. The only exceptions are when:
(1) [T]he award was procured by corruption, fraud or other undue means; (2) there
was evident partiality or corruption of the arbitrators or of any of them; (3) the
arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient
cause shown, or in refusing to hear evidence pertinent and material to the controversy;
(4) one or more of the arbitrators were disqualified to act as such under section nine of
Republic Act No. 876 and willfully refrained from disclosing such disqualifications or of
any other misbehavior by which the rights of any party have been materially
prejudiced; or (5) the arbitrators exceeded their powers, or so imperfectly executed
them, that a mutual, final and definite award upon the subject matter submitted to
them was not made.105 (Citation omitted)
Necessarily, before petitioner may raise any question of fact, it must prove that the
above circumstances exist in the case at bar.
This Court rules that there is a perfected contract between MRT and Gammon.
MRT argues that there was no perfected contract between the parties as Gammon only
accepted MRT's offer after MRT had already revoked it.106 MRT claims that it withdrew
its offer to Gammon in its September 8, 1997 Letter, when it suspended the Project to
review the foreign exchange rates and interest rates.107 It emphasizes that while
Gammon had already then returned the First Notice to Proceed, it did not return the
contract documents until September 12, 1997.108 By then, MRT had already withdrawn
the First Notice to Proceed, and the parties were already renegotiating the contract's
cause and object.109
On the other hand, Gammon maintains that there was a perfected contract between the
parties. It insists that MRT did not withdraw or modify its offer before Gammon signed
and returned the First Notice to Proceed and the contract documents. It claims that the
contract was not cancelled and was only temporarily and partially suspended, and this
did not affect its perfection. 110
The Court of Appeals affirmed CIAC 's finding that the contract was perfected when the
contract documents were returned to MRT on September 9, 1997. It found that the
contract was merely suspended and not terminated when MRT was studying the effects
of the foreign exchange rates and interests on the Project.111 Moreover, it noted that
MRT found it necessary to expressly cancel the First Notice to Proceed, implying that a
contract was perfected.112
This Court rules that there is a perfected contract between the parties. Article 1305 of
the Civil Code states:
Article 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
Article 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated but
also to all the consequences which, according to their nature, may be in keeping with
good faith, usage and law.
The requisites of a valid contract are provided for in Article 1318 of the Civil Code:
(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
A contract is perfected when both parties have consented to the object and cause of the
contract. There is consent when the offer of one party is absolutely accepted by the
other party.113 The acceptance of the other party may be express or
implied.114 However, the offering party may impose the time, place, and manner of
acceptance by the other party, and the other party must comply.115
Thus, there are three (3) stages in a contract: negotiation, perfection, and
consummation.
Negotiation refers to the time the parties signify interest in the contract up until the
time the parties agree on its terms and conditions. The perfection of the contract occurs
when there is a meeting of the minds of the parties such that there is a concurrence of
offer and acceptance, and all the essential elements of the contract—consent, object
and cause—are present. The consummation of the contract covers the period when the
parties perform their obligations in the contract until it is finished or extinguished.116
To determine when the contract was perfected, the acceptance of the offer must be
unqualified, unconditional, and made known to the offeror.117 Before knowing of the
acceptance, the offeror may withdraw the offer.118 Moreover, if the offeror imposes the
manner of acceptance to be done by the offerree, the offerree must accept it in that
manner for the contract to be binding.119 If the offeree accepts the offer in a different
manner, it is not effective, but constitutes a counter-offer, which the offeror may accept
or reject.120 Thus, in Malbarosa v. Court of Appeals:121
Under Article 1319 of the New Civil Code, the consent by a party is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the contract. An offer may be reached at any time until it is accepted. An
offer that is not accepted does not give rise to a consent. The contract does not come
into existence. To produce a contract, there must be acceptance of the offer which may
be express or implied but must not qualify the terms of the offer. The acceptance must
be absolute, unconditional and without variance of any sort from the offer.
The acceptance of an offer must be made known to the offeror. Unless the offeror
knows of the acceptance, there is no meeting of the minds of the parties, no real
concurrence of offer and acceptance. The offeror may withdraw its offer and revoke the
same before acceptance thereof by the offeree. The contract is perfected only from the
time an acceptance of an offer is made known to the offeror. If an offeror prescribes
the exclusive manner in which acceptance of his offer shall be indicated by the offeree,
an acceptance of the offer in the manner prescribed will bind the offeror. On the other
hand, an attempt on the part of the offeree to accept the offer in a different manner
does not bind the offeror as the absence of the meeting of the minds on the altered
type of acceptance. An offer made inter praesentesmust be accepted immediately. If
the parties intended that there should be an express acceptance, the contract will be
perfected only upon knowledge by the offeror of the express acceptance by the offeree
of the offer. An acceptance which is not made in the manner prescribed by the offeror is
not effective but constitutes a counter-offer which the offeror may accept or reject. The
contract is not perfected if the offeror revokes or withdraws its offer and the revocation
or withdrawal of the offeror is the first to reach the offeree. The acceptance by the
offeree of the offer after knowledge of the revocation or withdrawal of the offer is
inefficacious. The termination of the contract when the negotiations of the parties
terminate and the offer and acceptance concur, is largely a question of fact to be
determined by the trial court.122 (Citations omitted)
In bidding contracts, this Court has ruled that the award of the contract to the bidder is
an acceptance of the bidder's offer. Its effect is to perfect a contract between the bidder
and the contractor upon notice of the award to the bidder.123 Thus, in Valencia v.
Rehabilitation Finance Corp.:124
With respect to the first argument, it is worthy of notice that the proposal submitted by
petitioner consisted of several items, among which are: (a) one for P389,980, for the
"complete construction of the office building" in question, ... ; (b) another for P358,480,
for the "complete construction of the office building only", . .. ; (c) a third one for
P18,900, for the "electrical installations only", . . . ; and (d) a fourth item for P12,600,
for the "plumbing installations only" ...
Each one of these items was complete in itself, and, as such, it was distinct, separate
and independent from the other items. The award in favor of petitioner herein, implied,
therefore, neither a modification of his offer nor a partial acceptance thereof It was an
unqualified acceptance of the fourth item of his bid, which item constituted a complete
offer or proposal on the part of petitioner herein. The effect of said acceptance was to
perfect a contract, upon notice of the award to petitioner herein.125 (Emphasis supplied)
Likewise, in Central Bank of the Philippines v. Court of Appeals:126
As We see it then, contrary to the contention of the Bank, the provision it is citing may
not be considered as determinative of the perfection of the contract here in question.
Said provision only means that as regards the violation of any particular term or
condition to be contained in the formal contract, the corresponding action therefor
cannot arise until after the writing has been fully executed. Thus, after the Proposal of
respondent was accepted by the Bank thru its telegram and letter both dated December
10, 1965 and respondent in turn accepted the award by its letter of December 15,
1965, both parties became bound to proceed with the subsequent steps needed to
formalize and consummate their agreement. Failure on the part of either of them to do
so, entitles the other to compensation for the resulting damages. To such effect was the
ruling of this Court in Valencia vs. RFC 103 Phil. 444. We held therein that the award of
a contract to a bidder constitutes an acceptance of said bidder's proposal and that "the
effect of said acceptance was to perfect a contract, upon notice of the award to (the
bidder)" . .. We further held therein that the bidder's "failure to (sign the corresponding
contract) did not relieve him of the obligation arising from the unqualified acceptance of
his offer. Much less did it affect the existence of a contract between him and
respondent" . . .
It is neither just nor equitable that Valencia should be construed to have sanctioned a
one-sided view of the perfection of contracts in the sense that the acceptance of a bid
by a duly authorized official of a government-owned corporation, financially and
otherwise autonomous both from the National Government and the Bureau of Public
Works, insofar as its construction contracts are concerned, binds only the bidder and
not the corporation until the formal execution of the corresponding written
contract.127 (Emphasis supplied)
Thus, the award of a contract to a bidder perfects the contract. 128 Failure to sign the
physical contract does not affect the contract's existence or the obligations arising from
it. 129
Applying this principle to the case at bar, this Court finds that there is a perfected
contract between the parties. MRT has already awarded the contract to Gammon, and
Gammon's acceptance of the award was communicated to MRT before MRT rescinded
the contract.
The Invitation to Bid issued to Gammon stated that MRT "will select the Bidder that
[MRT] judges to be the most suitable, most qualified, most responsible and responsive,
and with the most attractive Price and will enter into earnest negotiations to finalize
and execute the Contract."130
On May 30, 1997, Gammon tendered its bids.131
In a Letter dated July 14, 1997, Gammon submitted another offer to MRT in response
to the latter's invitation to submit a final offer considering the fluctuation in foreign
exchange rates and an odd-and-even vehicle restriction plan.132
Parsons thereafter issued the First Notice to Proceed,133 which stated:
We are pleased to inform [you] that you have been awarded the work on the
construction of the Podium Structure for the MRT-3 EDSA North Triangle Development
Project. The formal contract document, which is the product of a series of discussions
and negotiation is herewith attached for your signature.
The Work includes the furnishing of labor, supervision, materials, plant, equipment and
other facilities and appurtenances necessary to perform all the works in accordance
with contract document, approved drawings, specifications and your over-all Breakdown
of Lump Sum Bid (marked Exhibit "A") amounting to ONE BILLION FOUR HUNDRED
ONE MILLION SIX HUNDRED SEVENTY[-]TWO THOUSAND NINETY[-]FIVE PESOS
(P1,401,672,095.00). It is understood that due to the existing squatters in the Area,
the work shall be dvided in two (2) separate geographical areas designated as Phase I
and Phase II - but shall be treated as one contract and still totalling to
P1,401,672,095.00. Further, this award is predicated on the commitments contained in
the attached comfort letter (marked Exhibit "B'') issued by Gammon Construction
Limited, your associate company overseas and receipt of the duly signed letter from the
Chief Executive of Gammon Construction Limited that is expected within seven days
from the date hereof.
....
You may, therefore, proceed with the work at Phase I starting seven (7) days from
receipt of this Notice or from the time that Site is dewatered and cleaned up, whichever
is later. It is further understood that Gammon agrees to continue Phase II at the price
stated above and the starting time thereof will depend on the completion by others of
the footings in time to allow construction of the superstructure in accordance with
Gammon's Tender Programme dated 13 August 1997.
....
Please signify your concurrence by signing the appropriate space below and in the
accompanying contract documents and return to Parsons-Interpro the originals. We will
send to you a complete set of documents as soon as it is signed by the
Owner.134(Emphasis supplied)
In its First Letter, Gammon signed and returned the First Notice to Proceed to signify its
consent to its prestations.135
In its Second Letter, Gammon transmitted to Parsons the signed Letter of Comfort to
guarantee its obligations in the Project.136
On September 9, 1997, Gammon returned to Parsons the contract documents.137
MRT argues that the return of the contract documents occurred after it had already
revoked its offer, i.e., after it sent its September 8, 1997 Letter, which stated:
Re: Contract for LRT3 North Triangle Podium Structure

Gentlemen:
formal Notice to proceed to your company. When these possible effects and
However, MRT had already accepted the offered bid of Gammon and had made known
to Gammon its acceptance when it awarded the contract and issued it the First Notice
to Proceed on August 27, 1997.
The First Notice to Proceed clearly laid out the object and the cause of the contract. In
exchange for P1,401,672,095.00, Gammon was to furnish "labor, supervision,
materials, plant, equipment and other facilities and appurtenances necessary to
perform all the works in accordance with [its bid]."139
This acceptance is also manifested in the First Notice to Proceed when it authorized
Gammon to proceed with the work seven (7) days from its receipt or from the time the
site is de-watered and cleaned up.
Thus, Gammon's receipt of the First Notice to Proceed constitutes the acceptance that is
necessary to perfect the contract.
The First Notice to Proceed stated that the award "is predicated on the commitments
contained in the ... comfort letter ... issued by Gammon Construction Limited,"
Gammon's associate company overseas.140 It also required that Gammon signify its
concurrence by signing and returning the First Notice to Proceed and the accompanying
contract documents. 141
Assuming that this constitutes a counter-offer from MRT, this Court rules that Gammon
sufficiently complied with these requirements such that the perfection of the contract
cannot be affected. Gammon returned the signed First Notice to Proceed on September
2, 1997. It transmitted to Parsons the signed Letter of Comfort to guarantee its
obligations in the Project on September 3, 1997.142 The signed contract documents
were returned on September 9, 1997.143
Gammon manifested its unqualified acceptance of the First Notice to Proceed on

September 2, 1997 in its First Letter:
MRT 3 North Triangle Development

Superstructure Contract
Letter of Award/Notice to Proceed
We return herewith the original copy of the above mentioned letter which we have
countersigned dated 28 August '97. (Please note that Mr. Salagdo 's signature is
missing).
The contract documentation submitted under cover of your letter is being reviewed
now, and should be signed and returned to you tomorrow. The Letter of Comfort has
now been signed by the Chief Executive of Gammon Construction Ltd., and is being
returned this week.
We confirm that we mobilised resources to site on Friday, 29 August '97 to pump out
floodwater. Cleaning up of mud and debris will follow on this week.
During this mobilisation phase, our Site Manager is Mr. Ferdinand Fabro who we
introduced to you during the Preconstruction Meeting last Thursday, 28 August '97.
We enclose herewith a copy of our Mobilisation programme dated 1 September '97 (4 x
A3 sheets) which includes Design activities, Mobilisation activities, initial Construction
activities, key plant and formwork items.
Our Design Team have now relocated to our office in Makati, and are continuing with
preparation of shop drawings of all slabs.
We will submit a project organisation chart shortly but in the meantime, we confirm
that the following senior [Gammon Philippines, Inc.] staff are now allocated to the
project:
....
As soon as layout of temporary facilities has been agreed with you, establishment will
commence in the very limited space allocated ...
We have today received ... drawings marked "For Construction", and unless we hear
from you to the contrary, we will proceed to procure materials for, plan and construct
walls and columns based on these drawings. However, please note that the 3 sheets of
construction notes have not been issued. We therefore request issue of these drawings.
In addition, there are fifteen 'Requests for Information' (RFIs) which were forwarded to
you yesterday these cover queries which affect both design of slabs and construction of
walls, columns and beams. In particular, we urgently need instructions to clarify the
reinforcement specification generally, and connectors/splicing of column reinforcement.
Finally, our Performance Bond and Advance Payment Bond are being prepared now - we
hope to submit these by the end of the week.144
This First Letter shows that Gammon fully consented to the contents and accepted the
prestations of the First Notice to Proceed. Gammon's acceptance is also manifested in
its undertakings to mobilize resources, to prepare the Performance and Advance
Payment Bonds, and to procure materials necessary for the Project. All that remained
was the formality of returning the contract documents and the Letter of Comfort, which
eventually was complied with by Gammon. Thus, there is already mutual consent on
the object of the contract and its consideration, and an absolute acceptance of the
offer.
In any case, this Court has ruled that the meeting of the minds need not always be put
in writing, and the fact that the documents have not yet been signed or notarized does
not mean that the contract has not been perfected.145 A binding contract may exist
even if the signatures have not yet been affixed because acceptance may be express or
implied.146
Thus, the parties have become bound to consummate the contract such that the failure
by one party to comply with its obligations under the contract entitles the other party to
damages. Clearly, Gammon was expected to comply with the award when it signified its
concurrence. Thus, it is not just or equitable for the perfection of the contract to be one
(1)-sided such that the contract only binds Gammon but not MRT just because the
contract documents were not yet returned before MRT suspended the contract.147
Moreover, this Court rules that MRT did not revoke its offer when it temporarily
suspended the First Notice to Proceed.
MRT's September 8, 1997 Letter stated, thus:
formal Notice to Proceed to your company. When these possible effects and
Thereafter, Parsons directed Gammon to hold any further mobilization activities in a

facsimile transmission dated September 9, 1997. 149
On September 11, 1997, Gammon sent Parsons a facsimile to confirm if all

requirements in the contract documents were temporarily suspended pending the
clarification of the scope and programming of the Project.150
In a facsimile transmission dated September 12, 1997, Parsons confirmed "the

temporary suspension of all the requirements under the contract except the re-design
of the project floor slabs and the site de watering and clean up":151
With reference to your fax of September 11, 1997 this will confirm the temporary
suspension of all requirements under the terms of the contract until such time as
clarification of scope has been received from the owner. The only exception to this
suspension is the re-design of the project[']s floor slabs and the site de-watering and
clean up.152 (Emphasis supplied)
The wording of these communications indicates that the contract is still binding though
on hold. Gammon was informed that the contract was temporarily suspended. When a
contract is suspended temporarily, it provisionally ceases to be operative until the
occurrence of a condition or situation that warrants the lifting of the suspension of the
contract.153
It is different from a cancellation of a contract which terminates the contract such that
it does not become operative again.
The usage of the words "temporary suspension" is clear. It is a settled rule that when
the words in a contract are clear and leave no doubt on the parties' intentions, the
literal meaning shall control.154 Thus, the above communications cannot be interpreted
to mean that the contract has been cancelled or rescinded.
This is bolstered by MRT's express cancellation of the contract on June 10, 1998 in its
Fourth Notice to Proceed:
This notice formally cancels documents referred to as Notice of Award, Notice to

Proceed issued on August 27, 1997, which was received by [Gammon Philippines, Inc.]
on August 28, 1997 and April 2, 1998, which was received by [Gammon Philippines,
Inc.] on April 8, 1998.155
It can be implied that prior to the Fourth Notice to Proceed, the First and Third Notices
to Proceed were not cancelled and were still valid and subsisting.
Furthermore, MRT's Second Notice to Proceed issued on February 18, 1998 for
engineering services based on the redesigned plan was signed by Gammon on March
11, 1998 with a qualification:156
The Contractor refers to the 'Notice of Award' and 'Notice to Proceed' dated 27 August
1997, and understands that this 'Notice to Proceed' effectively lifts the suspension of
work notified in Metro Rail Transit Development Corporation letter dated 8 September
1997, in respect of the design activities only for all of the Level 2 slab and that part of
the Level 3 slab over the Depot Maintenance Shop and office area . . . ; and that the
existing 'Notice of Award' dated 27 August 1997 is still valid.157 (Emphasis supplied)
MRT did not contest Gammon's notice of receipt of the First Notice to Proceed,
expressing that it was still valid and was not cancelled.
Additionally, when the parties were discussing the change of plans, MRT did not
mention that no contract was executed between them. Instead, it sought to modify its
terms and conditions. Thus, Gammon was made to believe that the First Notice to
Proceed was in force and effect, albeit temporarily suspended.
Given these circumstances, it cannot be said that no contract was perfected between
the parties.
II
The parties argue on the application of Gammon v. Metro Rail Transit Development
Corporation158 on the contract's perfection.
MRT claims that this Court's ruling in Gammon did not determine that a contract was
perfected as to warrant the application of the doctrine of the law of the case.159 It
argues that the issue in Gammon was CIAC's jurisdiction over the Notice of Claim, not
the existence of the contract.160 MRT insists that the ruling was limited only to the
preliminary question of whether or not there is an arbitration agreement between the
parties to give CIAC jurisdiction over the dispute.161 It was a preliminary finding
supported by limited evidence and not the result of an actual trial.162
However, Gammon claims that Gammon already determined that there is a perfected
contract, and thus, the doctrine of the law of the case applies. It insists that without the
perfected contract, which contains the provision for arbitration, CIAC would not have
acquired jurisdiction over the case. This is shown in that the existence of a contract
between the parties was not an issue submitted by the parties in the arbitration
proceedings. Thus, CIAC could not have ruled on it.163
The Court of Appeals affirmed that there was a perfected contract because MRT alleged
in Gammon that the contract was novated or abandoned. It found that this was an
implied admission that the contract was perfected considering that there was nothing to
novate or abandon if there had been no perfected contract. The perfection of the
contract was further confirmed by this Court's ruling in Gammon that the contract was
merely modified.164
In Gammon v. Metro Rail Transit Development Corporation,165 this Court held:
Although there is considerable disagreement concerning the foregoing facts, specifically

whether Gammon undertook certain works on the Project and whether a re-bidding for
the downgraded podium structure was indeed conducted, the Court does not need to
make its own factual findings before it can resolve the main question of whether the
CIAC's jurisdiction was properly invoked. The resolution of this question necessarily
involves a two-pronged analysis, first, of the requisites for invoking the jurisdiction of
the CIAC, and second, of the scope of arbitrable issues covered by CIAC's jurisdiction.
EO 1008 expressly vests in the CIAC 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 . . .
....
In this case, the parties submitted themselves to the jurisdiction of the CIAC by virtue
of the arbitration clause in the [General Conditions of Contract], which provides:
....
MRTDC, however, contends that the contract between the parties was novated by
subsequent [Notices of Award]/[Notices to Proceed] which changed the design of the
podium structure and reduced the contract price.
We do not agree. Novation is defined as the extinguishment of an obligation by the
substitution or change of the obligation by a subsequent one which terminates the first,
either by changing the object or principal conditions; substituting the person of the
debtor; or subrogating a third person in the rights of the creditor. In order tha[t] an
obligation may be extinguished by another which substitutes the same, it is imperative
that it be so declared in unequivocal terms, or that the old and the new obligations be
on every point incompatible with each other.
Novation cannot be presumed. The animus novandi, whether partial or total, must
appear by the express agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken. Further, novation may either be extinctive or modificatory.
It is extinctive when an old obligation is terminated by the creation of a new one that
takes the place of the former. It is merely modificatory when the old obligation subsists
to the extent that it remains compatible with the amendatory agreement.
We have carefully gone over the records of this case and are convinced that the
redesign of the podium structure and the reduction in the contract price merely
modified the contract. These modifications were even anticipated by the [General
Conditions of Contract] as it expressly states that changes may be made on the works
without invalidating the contract, thus:
....
By these terms, the parties evidently agreed that should changes need to be made on
the Project plans, such changes shall not annul or extinguish the contract. Thus, it can
fairly be concluded that the revisions in the design of the Project and the reduction of
the contract price were intended to merely modify the agreement and not to supplant
the same.
Parenthetically, while the [Notices of Award]/[Notices to Proceed] adverted to the

execution of a formal contract for the Project, no such formal contract appears to have
been executed. Instead, the [Notices of Award]/[Notices to Proceed] issued by MRTDC
in favor of Gammon denominated the agreement as "Contract No. 4.251.001 for the
Construction and Development of the Superstructure MRT 3 North Triangle'' and
consistently referred to the [General Conditions of Contract] as one of the controlling
documents with regard to the transaction.
In fact, as mentioned by the CIAC in its assailed Order dated August 18, 1999, the
[Notice of Award]/[Notice to Proceed] dated June 10, 1998 makes reference to the
[General Conditions of Contract]. The June 10, 1998 [Notice of Award]/[Notice to
Proceed] states:
A formal contract for the Work is in process and will be available for signature as soon
as possible. Pending the execution of the contract, the General conditions, and the
Drawings and Specifications included with the Bid Documents (as originally issued and
only as applicable to the current scope of work), all of which are incorporated herein by
this reference, shall apply in this Notice ...
A similar reference to the [General Conditions of Contract] appears in the April 2, 1998
[Notice of Award]/[Notice to Proceed]. Thus, even granting that, as the Court of
Appeals ruled, the August 27, 1997 [Notice of Award]/[Notice to Proceed] had been
novated by the April 2, 1998 [Notice of Award]/[Notice to Proceed] and that, in turn,
the latter was rescinded by MRTDC, the arbitration clause in the [General Conditions of
Contract] remained in force.
At any rate, the termination of the contract prior to a demand for arbitration will
generally have no effect on such demand, provided that the dispute in question either
arose out of the terms of the contract or arose when a broad contractual arbitration
clause was still in effect. The Court of Appeals, therefore, erred in ruling that there
must be a subsisting contract before the jurisdiction of the CIAC may properly be
invoked. The jurisdiction of the CIAC is not over the contract but the disputes which
arose therefrom, or are connected thereto, whether such disputes arose before or after
the completion of the contract, or after the abandonment or breach thereof.
It may even be added that issues regarding the rescission or termination of a

construction contract are themselves considered arbitrable issues under Sec. 2, Art. IV
of the Rules of Procedure Governing Construction Arbitration, the Rules which were in
force at the time the present controversy arose. . . .
This brings us to the question of whether the dispute in this case falls within the scope
of the arbitration clause.
....
The arbitration clause in the [General Conditions of Contract] submits to the jurisdiction
of the CIAC all disputes, claims or questions subject to arbitration under the contract.
The language employed in the arbitration clause is such as to indicate the intent to
include all controversies that may arise from the agreement as determined by the CIAC
Rules. It is broad enough to encompass all issues save only those which EO 1008 itself
excludes, i.e., employer-employee relationship issues. Under these Rules, the amount
of damages and penalties is a general category of arbitrable issues under which
Gammon's claims may fall.166 (Emphasis supplied, citations omitted)
This Court rules that the doctrine of the law of the case applies in this case.
There is a distinction between the agreement to arbitrate and the contract which may
be the subject matter of the dispute between the parties. While the agreement to
arbitrate may be in the same subject matter contract, it is a separate agreement in
itself.
Under the Construction Industry Arbitration Law, CIAC acquires jurisdiction when the
parties agree to submit the matter to voluntary arbitration.
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 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)
In Ormoc Sugarcane Planters' Association, Inc. v. Court of Appeals,167 this Court

discussed that "an agreement to arbitrate is a contract" in itself:
Except where a compulsory arbitration is provided by statute, the first step toward the
settlement of a difference by arbitration is the entry by the parties into a valid
agreement to arbitrate. An agreement to arbitrate is a contract, the relation of the
parties is contractual, and the rights and liabilities of the parties are controlled by the
law of contracts. In an agreement for arbitration, the ordinary elements of a valid
contract must appear, including an agreement to arbitrate some specific thing, and an
agreement to abide by the award, either in express language or by implication.
(Citation omitted)
Thus, in Gammon v. Metro Rail Transit Development Corporation,168 this Court ruled
that CIAC does nothave jurisdiction over construction contracts. Rather, it has
jurisdiction over the dispute arising from or connected to construction contracts, such
that it still acquires jurisdiction even if the contract has been breached, abandoned,
terminated, or rescinded.169
On the basis of this ruling, this Court concluded that CIAC has jurisdiction over the
dispute between MRT and Gammon. Their contract need not be valid or in force before
CIAC may arbitrate the matter, so long as there is an agreement to arbitrate.
Thus, the agreement to arbitrate is separate from the construction contract entered into
by parties.
Nonetheless, the doctrine of the law of the case applies in the case at bar.
While Gammon did not expressly state that the contract was perfected, it concluded
that both the construction contract and the arbitration contract existed between the
parties.
The doctrine of the law of the case applies when in a particular case, an appeal to a
court of last resort has resulted in a determination of a question of law. The determined
issue will be deemed to be the law of the case such that it will govern a case through all
its subsequent stages.170 Thus, after ruling on the legal issue and remanding the case
to a lower court for further proceedings, the determined legal issue can no longer be
passed upon and determined differently in another appeal in the same case.
In Presidential Decree No. 1271 Committee v. De Guzman:171
The doctrine of the "law of the case" provides that questions of law previously
determined by a court will generally govern a case through all its subsequent stages
where "the determination has already been made on a prior appeal to a court of last
resort." In People v. Olarte:
Suffice it to say that our ruling in Case L-13027, rendered on the first appeal,
constitutes the law of the case, and, even if erroneous, it may no longer be disturbed or
modified since it has become final long ago. A subsequent reinterpretation of the law
may be applied to new cases but certainly not to an old one finally and conclusively
determined.
'Law of the case' has been defined as the opinion delivered on a former appeal. More
specifically, it means that whatever is once irrevocably established as the controlling
legal rule of decision between the same parties in the same case continues to be the
law of the case, whether correct on general principles or not, so long as the facts on
which such decision was predicated continue to be the facts of the case before the
court.
As a general rule a decision on a prior appeal of the same case is held to be the law of
the case whether that decision is right or wrong, the remedy of the party being to seek
a rehearing.
....
It is thus clear that posterior changes in the doctrine of this Court [cannot] retroactively
be applied to nullify a prior final ruling in the same proceeding where the prior
adjudication was had, whether the case should be civil or criminal in nature.
If an appellate court has determined a legal issue and has remanded it to the lower
court for further proceedings, another appeal in that same case should no longer
differently determine the legal issue previously passed upon. Similar to res judicata, it
is a refusal to reopen what has already been decided.172 (Citations omitted)
The legal issue determined in Gammon is the jurisdiction of CIAC. However, this
determination was arrived at after this Court found that the parties entered into a
construction contract with an agreement to arbitrate.
This is indicated when Gammon determined that there is no novation of the contract
between MRT and Gammon as to deprive CIAC of jurisdiction. It ruled that there is
merely a modification, not an annulment or extinguishment, of the contract; thus:
We have carefully gone over the records of this case and are convinced that the
redesign of the podium structure and the reduction in the contract price merely
modified the contract. These modifications were even anticipated by the [General
Conditions of Contract] as it expressly states that changes may be made on the works
without invalidating the contract, thus:
....
By these terms, the parties evidently agreed that should changes need to be made on
the Project plans, such changes shall not annul or extinguish the contract. Thus, it can
fairly be concluded that the revisions in the design of the Project and the reduction of
the contract price were intended to merely modify the agreement and not to supplant
the same.173(Emphasis supplied)
While this Court's determination on the perfection of the contract is not categorical and
its finding that the CIAC's jurisdiction is not over the contract but rather over the
disputes that arise from it, the existence of a contract, albeit terminated or rescinded,
is still contemplated:
At any rate, the termination of the contract prior to a demand for arbitration will
generally have no effect on such demand, provided that the dispute in question either
arose out of the terms of the contract or arose when a broad contractual arbitration
clause was still in effect. The Court of Appeals, therefore, erred in ruling that there
must be a subsisting contract before the jurisdiction of the CIAC may properly be
invoked. The jurisdiction of the CIAC is not over the contract but the disputes which
arose therefrom, or are connected thereto, whether such disputes arose before or after
the completion of the contract, or after the abandonment or breach thereof.
It may even be added that issues regarding the rescission or termination of a

construction contract are themselves considered arbitrable issues under Sec. 2, Art. IV
of the Rules of Procedure Governing Construction Arbitration, the Rules which were in
force at the time the present controversy arose. . . . 174 (Emphasis supplied, citations
omitted)
Thus, the doctrine of the law of the case applies. The current appeal can no longer
bring the existence of the contract into issue.
III
MRT seeks to question the award of lost profits and reimbursements in favor of
Gammon.
As to the reimbursement award for engineering services, design work, site de-watering,
and clean-up, CIAC awarded the reimbursement claims on account of MRT's allegation
in paragraph 77 of its Answer with Compulsory Counterclaim, thus:
77. To begin with, MRTDC is willing to pay GAMMON the total amount of P5,493,639.27
representing the sum of P4,821,261.91 and P672,377.36, which comprise GAMMON's
claim for cost of the engineering and design services and site de-watering and clean-up
works, respectively.175
CIAC ruled that as MRT had already admitted its liability for the claims, it was bound by
this admission.176This finding was also affirmed by the Court of Appeals, which ruled
that there was no showing that the admission was made by palpable mistake. It also
noted that MRT did not amend its Answer.177
MRT argues that while it expressed its willingness to pay Gammon the reimbursements,
it only applies to those supported by official receipts.178 Gammon was allegedly aware
that it had to substantiate its claims, as proven by its inclusion of the reimbursement
amount in the issues to be resolved by CIAC in the Terms of Reference and its
presentation of proof for its claims.179 MRT also insists that its judicial admission is not
conclusive because an answer is a mere statement of fact that the filing party is
expected to prove; it is not evidence.180 The trial court is still given leeway to consider
evidence especially when the parties agreed to submit the issue for the court's
resolution.181
MRT avers that judicial admissions cannot supplant the requirement that actual
damages must be duly proven. It further asserts that an offer to pay is not an
admission of liability under Rule 130, Section 27 of the Rules of Court. The admission
was made only as an attempt to settle the issue and to avoid litigation. It explains that
the exact amount of P5,493,639.27 was mentioned in the Answer with Compulsory
Counterclaim because it was the amount Gammon was claiming and which MRT offered
to pay, if proven.182
On the other hand, Gammon claims that MRT is bound by its allegation in its Answer
with Compulsory Counterclaim. It argues that MRT failed to show that its admission was
made by palpable mistake.183 MRT even mentioned the exact amount it was willing to
pay. It did not state that it would pay only the amount proved or present any evidence
to contradict its admission.184 Gammon asserts that although the amount was included
as an issue in the Terms of Reference, this only meant that MRT can present contrary
evidence without needing to prove that the admissions were made through palpable
mistake.185
This Court rules that MRT is bound by its judicial admission.
Rule 129, Section 4 of the Revised Rules of Court provides:
Section 4. Judicial admissions. An admission, verbal or written, made by a party in the

course of the proceedings in the same case, does not require proof. The admission may
be contradicted only by showing that it was made through palpable mistake or that no
such admission was made.
Judicial admissions may be made by a party in his or her pleadings, during the trial,
through verbal or written manifestations, or in other stages of the judicial
proceeding. 186 They are binding such that no matter how much the party rationalizes
it, the party making the admission cannot contradict himself or herself unless it is
shown that the admission was made through a palpable mistake.187
In this case, MRT alleges that it is willing to pay Gammon the total amount of
P5,493,639.27, which comprises the latter's claim for cost of engineering and design
services, and de-watering and clean-up works.188
MRT's allegation was not qualified. It neither stated that Gammon must first present
proof of its claims for the cost of engineering and design services, and of de-watering
and clean-up works nor amended the Answer with Compulsory Counterclaim to either
correct this allegation or to qualify that Gammon must first present official receipts.
Thus, CIAC correctly held that MRT is bound by this admission and is estopped from
denying its representation.
IV.A
MRT is likewise asserting that the evidence presented by Gammon to prove its
entitlement to actual damages is not sufficient.
Actual damages are provided for under Article 2199 of the Civil Code:
Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Actual damages constitute compensation for sustained measurable losses.189 It must be

proven "with a reasonable degree of certainty, premised upon competent proof or the
best evidence obtainable."190 It is never presumed or based on personal knowledge of
the court.191
In International Container Terminal Services, Inc. v. Chua:192
"Actual damages are compensation for an injury that will put the injured party in the
position where it was before the injury. They pertain to such injuries or losses that are
actually sustained and susceptible of measurement.... Basic is the rule that to
recover actual damages, not only must the amount of loss be capable of proof;
it must also be actually proven with a reasonable degree of certainty, premised
upon competent proof or the best evidence obtainable."
....
This Court has, time and again, emphasized that actual damages cannot be presumed
and courts, in making an award, must point out specific facts which could afford a basis
for measuring whatever compensatory or actual damages are borne. An award of actual
damages is "dependent upon competent proof of the damages suffered and the actual
amount thereof. The award must be based on the evidence presented, not on the
personal knowledge of the court; and certainly not on flimsy, remote, speculative and
unsubstantial proof." 193 (Emphasis in the original, citations omitted)
Although official receipts are the best evidence of payment, this Court has
acknowledged that actual damages may be proved by other forms of documentary
evidence, including invoices.
In MCC Industrial Sales Corporation v. Ssangayong Corporation,194 this Court did not
award actual damages because the claimant failed to substantiate its claims with official
receipts.195
In G.Q. Garments, Inc. v. Miranda,196 this Court held that an allegation of a witness
must be supported by receipts or other documentary proofs to prove the claim of actual
damages.197
In Gonzales v. Camarines Sur II Electric Cooperative, Inc.,198 this Court noted that
petitioners did not back up its claims of actual damages by documentary proof such as
a receipt or an invoice.199
For lost profits, Article 2200 of the Civil Code provides:
Article 2200. Indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain.
This Court has ruled that the award of unrealized profits cannot be based on the sole
testimony of the party claiming it. In Producers Bank of the Philippines v. Court of
Appeals:200
In the case at bar, actual damages in the form of unrealized profits were awarded on
the basis of the sole testimony of private respondent Salvador Chua, to wit:
....
However, other than the testimony of Salvador Chua, private respondents failed to
present documentary evidence which is necessary to substantiate their claim for actual
or compensatory damages. In order to recover this kind of damages, the injured party
must prove his case, thus:
When the existence of a loss is established, absolute certainty as to its amount is not
required. The benefit to be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation, but
the injured party is not to be denied for that reason alone. He must produce the best
evidence of which his case is susceptible and if that evidence warrants the inference
that he has been damaged by the loss of profits which he might with reasonable
certainty have anticipated but for the defendant's wrongful act, he is entitled to
recover. (Cerreno vs. Tan Chuco, 28 Phil. 312 [1914] quoted in Central Bank of the
Philippines vs. Court of Appeals, 63 SCRA 431 [1975])
Applying the foregoing test to the instant case, the Court finds the evidence of private
respondents •insufficient to be considered within the purview of "best evidence." The
bare assertion of private respondent Salvador Chua that he lost an average of
P18,000.00 per month is inadequate if not speculative and should be admitted with
extreme caution especially because it is not supported by independent evidence. Private
respondents could have presented such evidence as reports on the average actual
profits earned by their gasoline business, their financial statements, and other evidence
of profitability which could aid the court in arriving with reasonable certainty at the
amount of profits which private respondents failed to earn. Private respondents did not
even present any instrument or deed evidencing their claim that they have transferred
their right to operate their gasoline station to their relatives. We cannot, therefore,
sustain the award of P18,000.00 a month as unrealized profits commencing from
October 16, 1984 because this amount is not amply justified by the evidence on
record.201
IV.B
As to the reimbursement award for engineering services, design work, site de-watering,
and clean-up, MRT argues that it was not supported by sufficient documentary evidence
as only 2% of the claims have official receipts.202 It argues that invoice, debit notes,
and summaries are not proof of payment. An invoice is a mere detailed statement of
the items, price, and charges of the things invoiced203 while a debit memo is merely an
advice to the receiver of an outstanding debt.204
Gammon nonetheless insists that it was able to prove its entitlement to the
reimbursements.205 It avers that official receipts are not the only documentary evidence
to prove the claim of damages. Invoices and debit notes are allowed. Debit notes do
not require an official receipt as additional documentation.206
The Court of Appeals found that there are sufficient bases for the award of Gammon's
reimbursement claims.207 It ruled that MRT failed to prove that the evidence was
insufficient and that Gammon's computations were erroneous.208 It found that Gammon
provided the best available documentary evidence, through invoices, debit notes, and
official receipts.209
IV.C
MRT likewise questions the award of lost profits in favor of Gammon.
Gammon presented evidence of its claim for lost profits by presenting as witness
Francisco Delos Santos (Delos Santos), the Planning and Estimating Engineer of
Gammon since 1996. He was responsible for the preparation of proposals,
"negotiations, mobilization, and meetings with and among the parties involved in the
Project."210
Delos Santos testified that "the average competitive percentage of profit in the
construction industry, in Gammon's experience, [was] 5% and [that] the Net Cost
Estimate was properly set at P65,194,050.93."211
CIAC granted the award of lost profits based on Delos Santos' testimony.212 The Court
of Appeals affirmed this finding and found that the award for lost profits was not
grounded on pure speculation as "documentary evidence is not absolutely necessary ...
to prove a claim for lost profit."213 It found that Delos Santos was competent to testify
on the matter.214 In any case, it ruled that CIAC shall act without regard to
technicalities or legal forms, in accordance with justice and equity and the merits of the
case.215It also noted CIAC's finding that this Court upheld as reasonable 18% as
expected profit estimate.216
MRT contests this finding and argues that Delos Santos is not an expert witness.217 It
claims that Delos Santos' testimony was not sufficient because there is no proof of his
experience, and his functions consist only of preparing project proposals, negotiations,
mobilization, and meetings with and among the parties in the Project.218 It holds that
Delos Santos' testimony was bare, insufficient, self-serving, and unsubstantiated by
independent evidence, like audited financial statements or other reports on past
projects.219
MRT also avers that the 5% lost profits should not be based on the last net estimate of
the contract cost because it must be based on the contract price agreed upon. It argues
that basing it on the revised scope of work and a greatly increased foreign exchange
rate would unjustly enrich Gammon.220
On the other hand, Gammon insists that its claim for lost profits was sufficiently
substantiated. It asserts that there need not be absolute certainty in its amount to be
able to recover lost profits.221 It argues that "lost profits cannot be denied in a
construction contract on the ground of business uncertainty."222 It also holds that loss
of profits can be proven on the basis of experience and the industry standard by which
it can be calculated, if there is any.223
Gammon asserts that MRT did not refute the 5% amount given by Delos Santos or
quantify how much Gammon is actually entitled to. It notes that MRT presented no
evidence contrary to what was testified and that this Court has accepted. 10% profit as
the standard industry practice in the construction business.224
This Court affirms the findings of CIAC and of the Court of Appeals.
MRT is raising questions of fact. Questions of fact are not proper in a Petition for Review
under Rule 45. This Court can no longer entertain factual issues, unless there are
compelling and cogent reasons, as when the findings were ''drawn from a vacuum or
arbitrarily reached, or are grounded entirely on speculation or conjectures, are
conflicting or are premised on the supposed evidence and contradicted by the evidence
on record or when the inference made is manifestly mistaken or absurd."225
The findings of fact in the case at bar was arrived at by CIAC, a quasi-judicial body, the
jurisdiction of which is confined to construction disputes. "[F]indings 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."226
Moreover, arbitration proceedings are not bound by the technical rules of evidence in
judicial proceedings. Arbitrators are to ascertain the facts in each case by all reasonable
means without regard to technicalities of law or procedure.227
Thus, under Section 13.5 of the CIAC Revised Rules of Procedure Governing
Construction Arbitration:
Section 13.5 Evidence. — The parties may offer such evidence as they desire and shall
produce such additional documents and witnesses as the Arbitral Tribunal may deem
necessary to clear understanding of facts issues for a judicious determination of the
dispute(s). The Arbitral Tribunal shall act according to justice and equity and merits of
the case, without regard to technicalities or legal forms and need not be bound by any
technical rule of evidence. Evidence shall be taken in the presence of the Arbitral
Tribunal and all of the parties, except where any of the parties is absent, or has waived
his right to be present.
13.5.1 Order to produce documentary evidence. Upon motion of either or

both of the parties, or on its own initiative, the Arbitral Tribunal may
direct any person, board, body, tribunal, or government office,
agency or instrumentality, or corporation to produce real or
documentary evidences necessary for the proper adjudication of the
issues.
13.5.2 Order to give testimony. The Arbitral Tribunal may, likewise, direct
any person to give testimony at any proceedings for arbitration.
Thus, the findings of fact of CIAC are binding, respected, and final. They are not
reviewable by this Court, especially when affirmed by the Court of Appeals.228 "A review
of the CIAC's findings of fact would have had the effect of 'setting at naught the basic
objective of a voluntary arbitration and would reduce arbitration to a largely inutile
institution."'229
The only exceptions subject to this rule were laid out in Uniwide Sales Realty and
Resources Corp. v. Titan-Ikeda Construction and Development Corporation:230
As a rule, 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 also finality, especially when affirmed by the
Court of Appeals. In particular, factual findings of construction arbitrators are final and
conclusive and not reviewable by this Court on appeal. This rule, however admits of
certain exceptions.
In David v. Construction Industry and Arbitration Commission, we ruled that, as

exceptions, factual findings of construction arbitrators may be reviewed by this Court
when the petitioner proves affirmatively that: (1) the award was procured by
corruption, fraud or other undue means; (2) there was evident partiality or corruption
of the arbitrators or of any of them; (3) the arbitrators were guilty of misconduct in
refusing to hear evidence pertinent and material to the controversy; (4) one or more of
the arbitrators were disqualified to act as such under Section nine of Republic Act No.
876 and willfully refrained from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been materially prejudiced; or (5)
the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual,
final and definite award upon the subject matter submitted to them was not made.
Other recognized exceptions are as follows: (1) when there is a very clear showing of
grave abuse of discretion resulting in lack or loss of jurisdiction as when a party was
deprived of a fair opportunity to present its position before the Arbitral Tribunal or when
an award is obtained through fraud or the corruption of arbitrators, (2) when the
findings of the Court of Appeals are contrary to those of the CIAC, and (3) when a party
is deprived of administrative due process.231 (Citations omitted)
However, petitioner failed to prove that any of these exceptions are present in the case
at bar. Thus, this Court will no longer disturb CIAC's factual findings, which were
affirmed by the Court of Appeals.
WHEREFORE, the petition is DENIED. The Court of Appeals October 14, 2011 Decision
and January 25, 2012 Resolution in CA-G.R. SP No. 98569 are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo, JJ., concur.

[G.R. No. 141897. September 24, 2001]
METRO CONSTRUCTION, INC., petitioner, vs. CHATHAM PROPERTIES,

INC., respondent.
DECISION
DAVIDE, JR., C.J.:
The core issue in this case is whether under existing law and rules the Court of Appeals
can also review findings of facts of the Construction Industry Arbitration Commission
(CIAC).
Respondent Chatham Properties, Inc. (CHATHAM) and petitioner Metro Construction,

Inc. (MCI) entered into a contract for the construction of a multi-storey building known
as the Chatham House located at the corner of Herrera and Valero Streets, Salcedo
Village, Makati City, Metro Manila. In April 1998, MCI sought to collect from CHATHAM a
sum of money for unpaid progress billings and other charges and instituted a request
for adjudication of its claims with the CIAC. The case was docketed as CIAC Case No.
10-98. The arbitral tribunal was composed of Joven B. Joaquin as Chairman, and Beda
G. Fajardo and Loreto C. Aquino as members.
The preliminary conference before the CIAC started in June 1998 and was concluded a
month after with the signing of the Terms of Reference (TOR) of the Case.[1] The
hearings immediately started with the presentation of MCIs witnesses, namely: Ms. Ma.
Suzette S. Nucum, Chief Accountant; Ms. Isabela Redito, Office Engineer; Mr. John
Romulo, Field Manager; and Dr. John Y. Lai, President.CHATHAMs witnesses were:
Engr. Ruperto Kapunan III, Managing Director of RK Development and Construction
Co., Inc. (RKDCCI), which was the Construction Manager firm hired by CHATHAM to
oversee the construction work of the Chatham House; Engr. Alex Bautista, Area
Manager of RKDCCI; Mr. Avelino M. Mercado, CHATHAMs Project Manager; and Engr.
Jose T. Infante.
In the meantime, the TOR was amended and finalized on 19 August 1998.[2]
The facts, as admitted by the parties before the CIAC and incorporated in the original
TOR, are as follows:
1. On 21 April 1994, the parties formally entered into a xxx contract for the
construction of the Chatham House xxx for the contract price of P50,000,000.00
inclusive of value-added tax, subject to adjustments in accordance with Article 9 of the
contract. Construction of the project, however, commenced on 15 April 1994 upon the
release by CHATHAM of the downpayment.
2. On 12 July 1994, a Supplemental Contract was executed by and between the parties
whereby CHATHAM authorized MCI to procure in behalf of the former materials,
equipment, tools, fixtures, refurbishing, furniture, and accessories necessary for the
completion of the project.
3. Under Section 1.04 of the Supplemental Contract, the total amount of procurement
and transportation cost[s] and expenses which may be reimbursed by MCI from
CHATHAM shall not exceed the amount of P75,000,000.00.
4. In the course of the construction, Change Orders No. 1, 4, 8A, 11, 12 and 13 were
implemented, payment of which were recommended by xxx RKDCCI and approved by
one of CHATHAMs Project Managers, Romulo F. Sugay.
5. On 15 September 1995, CHATHAM through its Project Manager, Romulo F. Sugay,
agreed to give P20,000 per floor for five (5) floors, or a total of P100,000.00
as bonus/incentive pay to MCIs construction workers for the completion of each floor on
schedule. CHATHAM reimbursed MCI the amount of P60,000.00 corresponding to
bonuses advanced to its workers by the latter for the 14th, 16th, and 17th floors.
6. CHATHAMs payments to MCI totaled P104,875,792.37, representing payments for

portions of MCIs progress billings and xxx additional charges.
The parties then stipulated on the following issues, again, as set forth in the TOR:
1. Is MCI entitled to its claims for unpaid progress billings amounting to

P21,062,339.76?
2. Were the approved Change Orders 1, 4, 8a, 11, 12 and 13 fully paid by CHATHAM? If
not, is MCI entitled to its claim for the unpaid balance?
3. Is CHATHAM liable for Change Orders 7a, 7b, 10, 14, 15, 16, 17, 19 and 20?
4. Were the CHB works from the 8th to the 31st floors part of the original contract or in
the nature of extra/additional works? Is CHATHAM liable for the same? If so, how
much?
5. Is MCI entitled to an additional reimbursement of P40,000.00 for bonuses granted to

workers as an incentive for the early completion of each floor?
6. Were the deductions in the amount of P1,393,458.84 made by CHATHAM in MCIs

progress billing reasonable?
7. Is MCIs claim of P1,646,502.00 for labor escalation valid?
8. Is MCI entitled to payment of attendance fee? To what extent and how much?
9. Did MCI fail to complete and/or deliver the project within the approved completion
period? If so, is MCI liable for liquidated damages and how much?
10. Whether or not CHATHAM is entitled to claim x x actual damages? If so, to what
extent and how much?
11. Whether or not CHATHAM is entitled to x x x additional counterclaims as follows:
11.1 Core testing expenses and penalty for concrete strength failure P3,630,587.38
11.2. Expenses to rectify structural steel works for the foundation P1,331,139.74.
11.3. Cost of additional materials (concrete & rebars) supplied by CPI P5,761,457.91
12. Are the parties entitled to their respective claims for attorneys fees and cost of
litigation? If so, how much?[3]
In the resolution of these issues, the CIAC discovered significant data, which were not
evident or explicit in the documents and records but otherwise revealed or elicited
during the hearings, which the CIAC deemed material and relevant to the complete
adjudication of the case. In its decision of 19 October 1998,[4] the CIAC made the
following findings and conclusions:
It was established during the hearing that the contract was awarded to MCI through
negotiation as no bidding was conducted. xxx It was also revealed that two agreements
were entered into, one is labeled Construction Contract for the total fixed amount of
P50,000,000.00 and the other a Supplemental Contract for an amount not to exceed
P75,000,000.00. The latter is supposed to cover the procurement of materials for the
project. The Construction Contract provides for monthly progress billings and payments
based on actual accomplishments of the various phases of work. The Supplemental
Contract provides for reimbursement of [the] total amount of procurement and
transportation costs and expenses, upon MCIs presentation of suppliers
invoices/receipts.
However, from testimonies of witnesses from both parties, it was revealed that the two
distinct manner(s) of payment to MCI was set aside. The earlier attempt by CHATHAM
to prove that MCI was remiss in submitting suppliers invoices and/or receipts in support
of its billings against the Supplemental Contract was in fact later on abandoned when
CHATHAMs witness Mercado admitted that the matter of adherence to the payment
provision of the Supplemental Contract is a non-issue. This was borne out by the fact
that progress billings and payments under both contracts were made on the basis of
percentage of project completion.
Both documentary and testimonial evidence prove that, effectively, the construction
contract and supplemental contract is but one agreement for a lump sum contract
amount of P125,000,000.00.
xxx
There was also the admitted fact that the contract was negotiated and awarded in the
absence of a complete construction plan. In any case, in support of the total contract
amount of P125 MILLION, is a Cost Breakdown (Exh. 17-L), where the estimated
quantities of owner furnished materials (OFM) are indicated. It is however, understood
that these quantities are estimates, based on (an) incomplete set of construction
plans. It is likewise understood that except for the OFM, all the other costs in the Cost
Breakdown form the basis for the lump-sum agreement under the contract, subject to
adjustment only if there are any significant changes in the contract plans.
RKDCCI in its letter to MCI dated 15 Feb. 1995 (Exh. 4), informed MCI that it was
confirming the agreement allegedly accepted by Dr. Lai that the Building Committee will
take over the management of the construction operations (of the project) albeit under
certain conditions. Specifically, the take over was for an interim period and will extend
only after concreting of up to basement level 5 or up to 30 May 1995 whichever is
later. The letter also stated that the Building Committee xxx will be responsible for
management and direction including management of MCI engineers at the site,
sequencing of work, additional labor, additional equipment and management of the
yard and staging area. The letter, however, emphasized that the intent is not a take
over of the contract or take over of the entire work and in fact, it was mentioned that
MCI will still be responsible for earth anchoring and steel fabrication work.
CHATHAM claims that the interim take-over was necessitated by MCIs delay in the
progress of its work, due allegedly to MCIs lack of manpower and equipment. During
the hearings of this case, this claim of MCIs lack of manpower, necessary equipment,
qualified engineers and inefficient construction management was testified to by both
Mr. Mercado [of CHATHAM] and Engr. Kapunan of RKDCCI. CHATHAMs witnesses,
however, testified that in spite of these alleged deficiencies, MCI was nevertheless
allowed to continue to take full control of the operations. When asked why termination
of the contract was not resorted to if truly, MCI was not performing its contracted
obligations, witnesses Mercado and Kapunan cited special relations between the owner
of MCI (Dr. John Lai) and the president of CHATHAM (Mr. Lamberto UnOcampo) as the
reason.
On the other hand, Dr. Lai contends that, as explained in his letter to CHATHAM dated
17 February 1995, (Exh. 4-A) MCIs work was on schedule. During the hearings, Dr. Lai
also insisted that beginning 15 February 1995, MCI was relieved of full control of the
construction operations, that it was relegated to (be) a mere supplier of labor, materials
and equipment, and that the alleged interim takeover actually extended through the
completion of the project. Dr. Lai cited CHATHAMs purchases of materials, fielding labor
force and sub-contracting works allegedly for the project without his knowledge and
consent as proof that CHATHAM had taken full control of the project.
To the above allegation of MCI that CHATHAM went ahead and procured materials,
hired labor and entered into sub-contract agreements with the intention of eventually
charging the costs thereof to MCI, witness Mercado countered, that CHATHAM has the
right to do this under the provisions of Article 27 of the contract, dealing with Recision,
Cancellation, Termination of Contract.
By way of responding to the various counterclaims of CHATHAM, MCI referred to a

letter of [the former] addressed to MCI dated 18 January 1997 (Exhibit E-1) the first
paragraph of which reads as follows:
After evaluating all the documents issued and received from both Chatham Properties
Inc. and Metro Construction, Inc., the Building Committee of Chatham Properties, Inc.
evaluated them. The Building Committee finds the total receivable of Metro
Construction is in the amount of EIGHT MILLION PESOS (P8,000,000.00) only.
When queried by the Tribunal if the said amount already took into account the costs
and expenses (Chatham) claims to have incurred for the account of MCI, Mr. Mercado
answered in the affirmative. When queried further how the amount was arrived at, Mr.
Mercado replied that it was the sum the Building Committee figured it was willing to pay
MCI simply to close the issue.
Mr. Mercado even added that while MCI is not actually entitled to this amount, it was
out of friendship that CHATHAM offered this sum to MCI as final settlement under the
contract.
It is with the above attendant circumstances that this Tribunal will be guided in the
resolution of issues brought before it for adjudication. From what this Tribunal finds as
peculiar circumstances surrounding the contracting and implementation of the
CHATHAM House Project, it arrived at the following fundamental conclusions:
1. That indeed special friendly relations were present between the parties in this case,
although decisions by either party on any particular issue were made not purely on the
basis of such special relations. For example, this Tribunal believes that, contrary to the
allegation of (CHATHAMs) witnesses, the decision not to terminate the contract was not
due to the admitted special relations only, but also due to the greater problems the
project would be faced with by terminating the MCI contract and mobilizing another
contractor.
2. That while there was no official termination of the contract, the manner by which
CHATHAM had taken upon themselves the procurement of materials, the fielding of
labor, the control over MCIs engineers, and the subcontracting of various phases of
work on its own, is considered by this Tribunal as implied termination of the
contract. The idea of allowing MCI to remain on the project in spite of what CHATHAM
claims (to be) MCIs shortcomings, and MCIs agreement to stay on the project under
conditions set by CHATHAM, is believed a matter of mutual benefit to both parties.
3. That CHATHAMs invoking its rights under the provisions of Article 27 of the
construction contract is believed out of place, as it failed to observe the required
antecedent acts before it can exercise its prerogative under the said contract provision.
4. That there is no reason to believe, either party was in any way guilty of bad faith in
acting as it did on certain relevant matters. However, this Tribunal is of the belief that
due perhaps to the eagerness on the part particularly of CHATHAMs representatives to
take such steps it considered necessary to insure completion of the project within the
period desired by CHATHAM, it deviated from some generally accepted procedures in
the construction industry in dealing with MCI. One example was not giving MCI the
opportunity to rectify some of what CHATHAM considered as construction deficiencies
and instead engaging the services of other parties to undertake the corrective works
and later on charging the costs thereof to MCI.
In addition to the above conclusions resulting from what this Tribunal considered
peculiar of circumstances surrounding the implementation of the project that were
revealed during the proceedings of this case, this Tribunal finds the necessity of
establishing a cut-off date with regard to the fiscal liability of one party towards the
other.
Mr. Avelino Mercado of CHATHAM presented a list of what he claims as its Payments to
MCI (Exhibit 7) summarized as follows:
a. Down payment (Paid in two equal trances) P20,000,000.00
b. Cash Advance for Mobilization 800,000.00
c. Payments of Progress Billings up to Billing No. 19 71,081,183.44
d. Other Payments (Mar 1994 to Apr 1996) 5,474,419.67
e. Advances on MCI Payrolls (April 1996 to March 1997) 8,196,755.51
Total P104,752,358.42
The records of this case show that the last progress payment to MCI was in January
1996 representing payment of Progress Billing No. 19 for the period ending 31
December 1995. The percentage of completion claimed then by MCI was 80.02%, the
amount evaluated and eventually paid to MCI was the equivalent of 77.15% work
accomplishment. No further progress payments were made thereafter, other than for
advances to cover MCI payrolls from April 1996 to March 1997 in the amount of
P8,196,755.51 and for various advances and payments of approved change orders in
the amount of P5,474,419.67.
In the meantime, up to Billing No. 23 for the period ending 30 April 1996, MCI billed
CHATHAM a total accomplishment of 95.29%. This billing was however, evaluated by
CHATHAM, and in its letter to MCI dated 27 May 1996 (Exhibit E) it confirmed that MCIs
remaining balance of work stands at P7,374,201.15 as of 23 May 1996. This amount,
percentage-wise, equals roughly 5.88% of the contract amount as testified to by Engr.
Jose Infante. (Exhibit 22-B). Therefore, what was computed as MCIs work
accomplishment as of 23 May 1996 was 94.12% and it is this evaluation which this
Tribunal believes MCI is entitled to as of said date.
Applying this percentage of completion of 94.12% to the P125,000,000.00 contract

amount gives a total accomplishment equivalent to P117,650,000.00 as of 23 May
1996. Add to this amount the sum of P5,353,091.08 representing the total of approved
Change Orders as of 31 December 1995 gives a total MCI accomplishment
of P123,003,091.08, as CHATHAM saw it. Of this amount, CHATHAM admitted having
paid MCI the total sum of P104,752,358.42 only (Exhibit 7) up to March 15, 1997,
leaving a balance of P18,250,732.66. It should be noted that of the total payment of
P104,752,358.42, the sum of P5,750,000.00 was paid after May 1996 so that as of 23
May 1996, CHATHAMs total payment to MCI was P99,002,358.42.
Effectively, therefore, the amount due MCI as of 23 May 1996 amounted to

P24,005,732.66 computed as follows:
Total accomplishment as of 23 May 1996 at 94.12% P117,655,000.00
Add approved change orders 5,353,091.08
Total P123,008,091.08
Less payments up to 23 May 1996 99,002,358.42
Balance due MCI as of 23 May 1996 P24,005,732.66
Of the above balance of P24,005,732.66 as of 23 May 1996, the only payments made
by CHATHAM to MCI is the sum of P5,750,000.00 from June 1996 onwards, allegedly to
cover MCI payrolls. It is of course noted that CHATHAMs suspension of further
payments to MCI was because it had been undertaking on its own, the further
procurement of materials and sub-contracting of various phases of works on the
project.
In consideration of the above facts, this Tribunals conclusion that there was in fact an
implied take over of the project is further confirmed. Furthermore, this Tribunal
additionally concludes that the cut-off date for purposes of delineating the financial
obligations of the parties between them should be 23 May 1996, the date when
CHATHAM evaluated MCIs accomplishment at 94.10% but nevertheless suspended all
further progress payments to MCI.
MCI presented further documentary evidence (Exhibit E-6) the subject of which is
PUNCHLISTING-CIVIL STRUCTURAL. In this particular document which bears the
signatures of representatives of both MCI and RKDCCI, MCI tried to prove that as of 30
August 1996 it had actually attained 99.16% work accomplishment. While it may be
true that as of that date the project had reached 99.16% completion, there is no
incontrovertible evidence showing that MCI was responsible for such
accomplishment. This was in fact actually testified to by Engr. Alex Bautista of RKDCCI,
when he said that it was an evaluation of the projects completion stage, not necessarily
MCIs work accomplishment. This Tribunal therefore stands firm on its conclusion that
MCIs accomplishment is only up to the extent of 94.10%.[5]
With those findings, the CIAC disposed of the specific money claims by either granting
or reducing them. On Issue No. 9, i.e., whether CHATHAM failed to complete and/or
deliver the project within the approved completion period and, if so, whether CHATHAM
is liable for liquidated damages and how much, the CIAC ruled in this wise:
This Tribunal holds that the provision of the contract insofar as the Overall Schedule is
concerned cannot justifiably be applied in the instant case in view of the implied take-
over of the Chatham House project by CHATHAM. Accordingly, this Tribunal finds no
necessity to resolve whether or not MCI complete[d] and/or deliver[ed] the project
within the approved completion period. In fact, Mr. Mercado testified that it was
CHATHAM who ultimately completed the project, with assistance of the construction
managers.
In any case, this Tribunal finds merit in RKDCCIs claim that MCI was in delay in the
concreting milestone and that [it] is liable for liquidated damages therefor. This,
notwithstanding MCIs invoking that Chatham is estopped from claiming liquidated
damages after it failed to deduct the alleged liquidated damages from MCIs progress
billings. This Tribunal holds that such failure to deduct, which CHATHAM claims it did in
order not to hamper progress of work in the project, is an option which [it] may or may
not exercise.
However, this Tribunal finds that CHATHAMs Exh. 11-A where the liquidated damages
on delays in concreting milestone was applied is not consistent with [its] own Exhibit 3-
I. This Tribunal notes that in Exh. 11-A, CHATHAM included a projected delay of 85
days for the Helipad Concreting works, while no such projected delay was included in
Exh. 3-I as it should be.
This Tribunal holds that Exh. 3-I showing a delay of 294 days in concreting milestones
should rightfully be used in computing liquidated damages. Accordingly, this Tribunal
holds that MCI is liable for liquidated damages in the amount of P3,062,498.78 as
follows:
1/4x1/3[(1/10xP125,000,000.00)1%]x294=P3,062,498.78.[6]
The CIAC then decreed:
Accordingly, as presented below, all the amounts due MCI are first listed and added up
and the total payment is deducted therefrom. The admitted total payment figure as
reflected in the Terms of Reference is the amount applied instead of the total reflected
in CHATHAMs Summary of Payments which incidentally reflected a lesser amount. From
the Balance Due MCI the Amounts CPI is Held Entitled To is deducted and the Net
Amount Due MCI is arrived at.
A. AMOUNTS HELD MCI IS ENTITLED TO:
A.1. From the original contract: 94.12% of P125,000,000.00 P117,650,000.00
A.2 Approved Change Orders 5,353,091.08
A.3 Pending Change Orders 1,648,560.46
A.4 CHB Works 1,248,654.71
A.5 Workers Bonus -0-
A.6 Disputed Deductions 909,484.70
A.7 Labor Escalation 1,076,256.00
A.8 Attendance Fee 508,162.73
Total P128,394,209.68
Less: Total payments-Item II-6 of TOR 104,875,792.37
Balance Due MCI P 23,518,417.31
B. AMOUNTS HELD CPI IS ENTITLED TO:
B.1. Liquidated Damages P 3,062,498.78
B.2. Actual Damages 335,994.50
B.3. Penalties 1,778,285.44
B.4 Cash Payments in Behalf of MCI 2,214,715.68
Total Amount Due CPI P 7,391,494.40
C. NET AMOUNT DUE MCI (A minus B) P16,126,922.91
WHEREFORE, judgment is hereby rendered in favor of the Claimant [MCI] directing

Respondent [CHATHAM] to pay Claimant [MCI] the net sum of SIXTEEN MILLION ONE
HUNDRED TWENTY SIX THOUSAND NINE HUNDRED TWENTY TWO & 91/100
(16,126,922.91) PESOS.
SO ORDERED.[7]
Impugning the decision of the CIAC, CHATHAM instituted a petition for review with the
Court of Appeals, which was docketed as CA-G.R. SP No. 49429. In its petition,
CHATHAM alleged that:
The Arbitral Tribunal grossly erred in failing to indicate specific reference to the
evidence presented or to the transcript of stenographic notes in arriving at its
questioned Decision, in violation of the cardinal rule under Section 1, Rule 36 of the
Revised Rules of Civil Procedure that a judgment must state clearly and definitely the
facts and the law on which it is based.
The Tribunals conclusions are grounded entirely on speculations, surmises and

conjectures.
The Arbitral Tribunal grossly erred in failing to consider the evidence presented by
CHATHAM and the testimony of its witnesses.
The Arbitral Tribunal gravely abused its discretion in considering arbitrarily that there
was an implied takeover contrary to the facts and evidence submitted.
The Arbitral Tribunal committed grave error and gross misapprehension of facts in
holding that CHATHAM is not entitled to liquidated damages despite failure of MCI to
meet the over-all schedule of completion.
The Arbitral Tribunal manifestly erred in holding that MCI is entitled to its claim for
unpaid progress billings.
The Arbitral Tribunal committed gross and reversible error in equating the percentage
of MCIs work accomplishment with the entire work in place, despite evidence to the
contrary.
The Arbitral Tribunal gravely erred in making 23 May 1996 as the cut-off date for
purposes of delineating the financial obligations of the parties.
The Arbitral Tribunal erred in denying CHATHAM its claim for actual damages pursuant
to Article 27.8 of the Construction Contract.
The facts set forth in CHATHAMs Answer with Compulsory Counterclaim as well as its
documentary and testamentary evidence were not overturned or controverted by any
contrary evidence.[8]
In its decision of 30 September 1999,[9] the Court of Appeals simplified the assigned
errors into one core issue, namely, the propriety of the CIACs factual findings and
conclusions. In upholding the decision of the CIAC, the Court of Appeals confirmed the
jurisprudential principle that absent any showing of arbitrariness, the CIACs findings as
an administrative agency and quasi-judicial body should not only be accorded great
respect but also given the stamp of finality. However, the Court of Appeals found
exception in the CIACs disquisition of Issue No. 9 on the matter of liquidated damages.
The Court of Appeals disagreed with the CIACs finding that there was an implied
takeover by CHATHAM of the project and that it was unnecessary for the CIAC to rule
on whether MCI completed and/or delivered the project within the approved completion
schedule of the project since CHATHAM failed to observe the antecedent acts required
for the termination of the contract, as set forth in the Construction Agreement.
The Court of Appeals ascertained that the evidence overwhelmingly proved that there
was no takeover by CHATHAM and that MCI exercised complete control, authority and
responsibility over the construction. In support of this conclusion, the appellate court
pointed to the following evidentiary bases:[10]
1. Testimony of CHATHAMs Engr. Kapunan that the interim takeover for the works on
the basement was triggered by lack of manpower and delays as early as February
1995, as evidenced by their assessment[11] and that the interim takeover was only
with respect to the direction or management of the field operations and was limited
only to works on the basement and intended to assist MCI to catch up with the
schedule of completion, since at that time the project was very much delayed;
thereafter, the MCI was back in full control of the project.[12]
2. Testimony of Engr. Bautista that the takeover was only partial and temporary and
limited to the management portion on the basement only and that MCI was always in
control of the project.[13]
3. Testimony of Engr. Infante that MCI personnel were constantly present in the project
and the intervention (not takeover) by CHATHAM was justified to ensure completion of
the project on time.[14]
4. Documentary exhibits evincing the nature and extent of MCIs work during the
takeover period which belied its claims that it was not in control of the project because
of the takeover thus:
Exhibit 4 Letter dated 15 February 1995 of Engr. Kapunan of RKDCCI to John Lai of MCI
stating that the takeover of directions or management of the field operations is interim,
i.e. while the takeover is effective immediately it will extend only after concreting Level
B-1 or approximately until 30 May 1995 which ever is later.
Exhibit 4-A Letter dated 17 February 1995 written by Dr. Lai of MCI to Engr. Kapunan
in response to the latters 15 February 1995 letter stating that [A]lso we were assured
that we will not be responsible for any errors or accidents that may occur during this
INTERIM period, indicating that Dr. Lai was very much aware of the interim period.
Exhibit 4-C - Letter dated 18 February 1995 written by Engr. Ben C. Ruiz of RKDCCI to
Dr. Lai containing the reasons for the takeover.
Exhibit 8A Letter dated 5 September 1995 written by Dr. E.G. Tabujara to Dr. Lai/Romy
Laron (Project Manager of MCI) requesting for an engineer of MCI to accompany the
inspector of RKDCCI to witness batching procedures. By so doing, Dr. E.G. Tabujara
acknowledged that Dr. Lai was in control of the project.
Exhibit 8 Letter dated 4 September 1995 by Engr. Romulo R. Sugay to Dr. Lai offering
an incentive to the workers of MCI to exert (their) best effort for topping off by the end
of December; another clear indication that Dr. Lai was in control of the project.
Exhibit 4-D Letter dated 4 January 1996 indicating that Mr. H.T. Go offered Dr Lai an
incentive of P1,800,000 on the condition that MCI meets the new
schedule/milestones. MCIs acceptance of the incentive offer likewise shows that MCI
was in control of the Project.
Exhibits 3, 3-I, 3-M, 3-N, 3-W-1, 3-X, 3-Y, and 3-Z among others containing reminders
to MCI of its duties and shortcomings, likewise attest to the fact that MCI was in control
(of) and responsible for the Project, although markedly deficient.
Exhibits 5, 5-A, 5-B, 5-C, 5-D, 5-E, 5-F, 5-O, C-7, and E-9 evidencing that MCI
continued to manage other works on the project even during the time of the interim
takeover of the basement works, as seen in the series of communications between
CHATHAM or RKDCCI and MCI within the period beginning February 1995 to 30 May
1995.
5. Respondents Request for Adjudication, Annex G, Records, Folder No. 6 - which

incorporated Change Order No. 12, among others, dated 28 August 1995,
recommended by the RKDCCI and accepted by Dr. Lai, and which request for an
extension of 25 days readily showed that even after 30 May 1995, after the close of the
supposed takeover period, MCI was still the contractor in complete control of the
project for it would not have otherwise accepted the said change order if it (were) no
longer the Contractor of the project due to the termination of the Construction
agreement as of said date on account of the alleged takeover.
6. Exhibits 3-J, 3-M, 3-Q, 3-R, 3-V, 3-W-1, 3-W-2, 5-F, 5-1, 6, 12-II, 12-JJ, 12-MM,
and 12-NN tending to prove that RKDCCI monitored the work from start to finish and
had zealously pointed out to MCI the defects or improper execution of the construction
works, and gave MCI all the opportunity to rectify the construction deficiencies and
complete the works of the project.
The Court of Appeals concluded that the interim takeover was necessitated by
CHATHAMs insistence to meet its own turnover dates with the buyers of the projects
units. Thus, CHATHAM was constrained to hire subcontractors with sufficient manpower
and supervision and incur various expenses to facilitate the completion of the project
and/or assist MCI in making up for its delay.
The Court of Appeals then considered it imperative to determine whether MCI failed to
complete the project on time for which it may be held liable for liquidated damages
based on the delays in the overall schedule of completion pursuant to Art. 13.5 of the
Construction Agreement, to wit:
13.5. Over-All Schedule For not meeting the final completion date of the PROJECT, the
OWNER will deduct from the Contract Sum or amounts due the CONTRACTOR, the
amount equivalent to 1/10 of 1% of the Contract Sum for every calendar day of delay,
provided, however, that the maximum penalty should not exceed 25% of the fee
payable to the CONTRACTOR as stipulated in the Bill of Quantities. Penalties from
concreting milestones shall be deducted from the penalty of Over-All Schedule.[15]
The Court of Appeals disposed of the controversy in this wise:
As is extant from the records, the completion date of the Project under the Construction
Contract or under the revised construction schedule was never met by reason of [MCIs]
lack of manpower, necessary equipment, qualified engineers and inefficient
management of the construction works on the Project. Thus, under the Contract
(Exhibit 1), [MCI] had 780 days, or until 22 January 1996, from starting date, or April
12, 1994, to finish the project. The completion date, however, was not followed and
was revised as early as December 17, 1994, extending the milestone dates up to March
15, 1996 (Exhibits 3-G and 3-H). As of December 25, 1995, the number of days
delayed was already 294 days. Thus, on February 22, 1996, the contract milestones
were again revised, inclusive of 53 days extension, to May 23, 1996 (Exhibits 3-I and
3-O). The May 23, 1996 turnover milestone nor the July 22, 1996 turnover of the whole
project were neither met (Exhibits 3-P, 3-R, 3-S and 3-T but [CHATHAM] was again
constrained to allow [MCI] to continue working on the Project to complete the balance
of the works (Exhibit M). And all throughout the construction of the Project, [CHATHAM]
had to assist [MCI] along the way to expedite the execution and completion of the
Project (Exhibits 3-K and 3-V).
From the foregoing disquisitions, it is clear that [MCI] is liable for liquidated damages,
as per Article 13.5 of the Construction Contract, for its failure to complete the project
within the period stipulated in the Construction Contract and even despite an extension
of 53 days from the original schedule or of the overall schedule of completion. [MCI]
should therefore pay [CHATHAM] the amount of liquidated damages equivalent to
P24,125,000.00 for 193 days of delay in the overall schedule of completion counted
from overall completion date on July 22, 1996 up to the date of completion on February
15, 1997, as stated in the Certificate of Occupancy, computed as follows, to wit:
1/10[1%(P125,000,000.00)] per day x 193 days
=[1/10 (P1,250,000.00)] per day x 193 days
=P125,000.00 per day x 193 days
=P24,125,000.00
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered partially granting
[CHATHAMs] claim for liquidated damages. The Tribunals Decision dated 19 October
1998 is hereby AFFIRMED with the modification on [MCIs] liability for liquidated
damages in the amount of P24,125,000.00. Thus,
A. AMOUNTS [MCI] IS ENTITLED TO:
A.1. From the original contract: 94.12% of P125,000,000.00 P117,650,000.00
A.2 Approved Change Orders 5,353,091.08
A.3 Pending Change Orders 1,648,560.46
A.4 CHB Works 1,248,654.71
A.5 Workers Bonus -0-
A.6 Disputed Deductions 909,484.70
A.7 Labor Escalation 1,076,256.00
A.8 Attendance Fee 508,162.73
Total P128,394,209.68
Less: Total payments-Item ll-6 of TOR 104,875,792.37
Balance Due Respondent P 23,518,417.31
B. AMOUNTS [CHATHAM] IS ENTITLED TO:
B.1. Liquidated Damages P 24,125,000.00
B.2. Actual Damages 335,994.50
B.3. Penalties 1,778,285.44
B.4 Cash Payments in Behalf of MCI 2,214,715.68
Total Amount Due CPI P 28,453,995.62
C. NET AMOUNT DUE [CHATHAM] (B minus A) P 4,935,578.31
Correspondingly, Respondent [MCI] is hereby directed to pay the Petitioner [CHATHAM]

the net sum of FOUR MILLION NINE HUNDRED THIRTY-FIVE THOUSAND FIVE
HUNDRED SEVENTY-EIGHT & 31/100 (P4,935,578.31) PESOS.[16]
MCI promptly filed on 25 October 1999 a motion for reconsideration. In its Resolution of
4 February 2000, the Court of Appeals denied MCIs motion for reconsideration for lack
of merit, as well as CHATHAMs Motion to Lift Garnishment and Levy Pending Appeal,
filed on 13 October 1999, for being premature.[17]
Thus, MCI filed the instant petition for review to challenge the decision of the Court of
Appeals. MCI alleges that the Court of Appeals erred in reviewing and reversing the
CIACs factual findings, that there was an implied takeover by CHATHAM of the project,
and that MCI was not in delay in the overall schedule. In so doing, the Court of Appeals
contravened Section 19 of Executive Order (E.O.) No. 1008,[18] which limits the review
of an Arbitral Award to only questions of law, thus:
Section 19. Finality of Awards The arbitral award shall be binding upon the parties. It
shall be final and inappealable (sic) except on questions of law which shall be
appealable to the Supreme Court.
MCI then asserts that as signatories to the contract, it and CHATHAM complied with this
legal provision when they included as part of their TOR the stipulation that [t]he
decision of the Arbitral Tribunal shall be final and non-appealable except on questions of
law. Accordingly, the binding character of this provision upon the parties is conclusive
and final.
MCI also contends that while it may be argued that recent (1) issuances by the
Supreme Court, specifically, Circular No. 1-91, which eventually became Revised
Administrative Circular No. 1-95; (2) legislation, in particular, Republic Act No. 7902,
which amended Batas Pambansa Blg. 129; and (3) amendments to the Rules on Civil
Procedure, modifying E.O. No. 1008 in the sense that questions of facts, of law, or
mixed questions of facts and law may be the subject of an appeal of the CIACs decision
to the Court of Appeals, it is still E.O. No. 1008 which remains to be the fundamental
and substantive law that endows parties to an arbitral controversy the right to
appeal. Hence, the provisions on appeal of E.O. No. 1008 should be controlling, i.e.,
only questions of law should be entertained. Therefore, the only effect of these rules on
E.O. No. 1008 is the transfer of the appeal forum from the Supreme Court to the Court
of Appeals.
MCI further asserts that, even assuming that the CIACs findings of facts are reviewable
on appeal, the Court of Appeals gravely abused its discretion when it accepted hook,
line and sinker CHATHAMs contention that MCI was in delay, and ignored competent,
clear and substantial evidence that prove the contrary, and that CHATHAM is not
entitled to liquidated damages.
For its part, CHATHAM avers that the evolution on the rules governing appeals from
judgments, decisions, resolutions, orders or awards of the CIAC convincingly discloses
that E.O. No. 1008 has already been superseded. With the power of the Supreme Court
to promulgate rules concerning the protection and enforcement of constitutional rights,
pleadings, practice, and procedure in all courts, its issuances and amendments to the
Rules on Civil Procedure, not to mention R.A. No. 7902, as enacted by Congress,
effectively modified E.O. No. 1008. Accordingly, the judgments, awards, decisions,
resolutions, orders or awards of the CIAC are now appealable to the Court of Appeals
on questions of facts, mixed questions of facts and law, and questions of law, and no
longer with the Supreme Court on exclusively questions of law. Further, the TOR cannot
limit the expanded jurisdiction of the Court of Appeals based on the latest rules. Thus,
the Court of Appeals did not err in reviewing the factual findings of the CIAC.
CHATHAM also contends that, even if the Court of Appeals can only review questions of
law, said court did not err in rendering the questioned decision as the conclusions
therein, drawn as they were from factual determinations, can be considered questions
of law.
Finally, CHATHAM asseverates that the Court of Appeals did not commit grave abuse of
discretion in reversing the CIACs ascertainment on the implied take-over and liquidated
damages.
This Court shall now resolve the primary issue raised in this case.
E.O. No. 1008 vests upon the CIAC 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.[19] By express
provision of Section 19 thereof, the arbitral award of the CIAC is final and
unappealable, except on questions of law, which are appealable to the Supreme Court.
The parties, however, disagree on whether the subsequent Supreme Court issuances on
appellate procedure and R.A. No. 7902 removed from the Supreme Court its appellate
jurisdiction in Section 19 of E.O. No. 1008 and vested the same in the Court of Appeals,
and whether appeals from CIAC awards are no longer confined to questions of law.
On 27 February 1991, this Court issued Circular No. 1-91, which prescribes the Rules
Governing Appeals to the Court of Appeals from Final Orders or Decisions of the Court
of Tax Appeals and Quasi-Judicial Agencies. Pertinent portions thereof read as follows:
1. Scope -- These rules shall apply to appeals from final orders or decisions of the Court
of Tax Appeals. They shall also apply to appeals from final orders or decisions of any
quasi-judicial agency from which an appeal is now allowed by statute to the Court of
Appeals or the Supreme Court. Among these agencies are the Securities and Exchange
Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission,
Secretary of Agrarian Reform and Special Agrarian Courts under R.A. No. 6657,
Government Service Insurance System, Employees Compensation Commission,
Agricultural Inventions Board, Insurance Commission and Philippine Atomic Energy
Commission.
2. Cases not Covered. -- These rules shall not apply to decisions and interlocutory
orders of the National Labor Relations Commission or the Secretary of Labor and
Employment under the Labor Code of the Philippines, the Central Board of Assessment
Appeals, and other quasi-judicial agencies from which no appeal to the courts is
prescribed or allowed by statute.
3. Who may appeal and where to appeal. -- The appeal of a party affected by a final
order, decision, or judgment of the Court of Tax Appeals or a quasi-judicial agency shall
be taken to the Court of Appeals within the period and in the manner herein provided,
whether the appeal involves questions of fact or of law or mixed questions of fact and
law. From final judgments or decisions of the Court of Appeals, the aggrieved party
may appeal by certiorari to the Supreme Court as provided in Rule 45 of the Rules of
Court.
Subsequently, on 23 February 1995, R.A. No. 7902 was enacted. It expanded the
jurisdiction of the Court of Appeals and amended for that purpose Section 9 of B.P. Blg.
129, otherwise known as the Judiciary Reorganization Act of 1980.[20]
Section 9(3) thereof reads:
Section 9. Jurisdiction. -- The Court of Appeals shall exercise:
xxx
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commissions, including the Securities and Exchange Commission, the Social
Security Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in
cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings. x x x
Then this Court issued Administrative Circular No. 1-95,[21] which revised Circular No.
1-91. Relevant portions of the former reads as follows:
1. Scope. --These rules shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of any
quasi-judicial agency from which an appeal is authorized to be taken to the Court of
Appeals or the Supreme Court. Among these agencies are the Securities and Exchange
Commission, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunication Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural Inventions
Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, and Construction Industry Arbitration Commission.
Section 2. Cases Not Covered. These rules shall not apply to judgments or final orders
issued under the Labor Code of the Philippines, Central Board of Assessment Appeals,
and by other quasi-judicial agencies from which no appeal to the court is prescribed or
allowed.
Section 3. Where to Appeal. -- An appeal under these rules may be taken to the Court
of Appeals within the period and in the manner herein provided, whether the appeal
involves questions of fact, of law, or mixed questions of fact and law.
Thereafter, this Court promulgated the 1997 Rules on Civil Procedure. Sections 1, 2 and
3 of Rule 43 thereof provides:
Section 1. Scope. -- This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of the President,
Land Registration Authority, Social Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural Inventions
Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators
authorized by law.
Section 2. Cases Not Covered. This Rule shall not apply to judgments or final orders
issued under the Labor Code of the Philippines.
Section 3. Where to Appeal. -- An appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner herein provided, whether the appeal
involves question of fact, of law, or mixed questions of fact and law.
Through Circular No. 1-91, the Supreme Court intended to establish a uniform
procedure for the review of the final orders or decisions of the Court of Tax Appeals and
other quasi-judicial agencies provided that an appeal therefrom is then allowed under
existing statutes to either the Court of Appeals or the Supreme Court. The Circular
designated the Court of Appeals as the reviewing body to resolve questions of fact or of
law or mixed questions of fact and law.
It is clear that Circular No. 1-91 covers the CIAC. In the first place, it is a quasi-judicial
agency. A quasi-judicial agency or body has been defined as an organ of government
other than a court and other than a legislature, which affects the rights of private
parties through either adjudication or rule-making.[22] The very definition of an
administrative agency includes its being vested with quasi-judicial powers.The ever
increasing variety of powers and functions given to administrative agencies recognizes
the need for the active intervention of administrative agencies in matters calling for
technical knowledge and speed in countless controversies which cannot possibly be
handled by regular courts.[23] The CIACs primary function is that of a quasi-judicial
agency, which is to adjudicate claims and/or determine rights in accordance with
procedures set forth in E.O. No. 1008.
In the second place, the language of Section 1 of Circular No. 1-91 emphasizes the
obvious inclusion of the CIAC even if it is not named in the enumeration of quasi-
judicial agencies. The introductory words [a]mong these agencies are preceding the
enumeration of specific quasi-judicial agencies only highlight the fact that the list is not
exclusive or conclusive. Further, the overture stresses and acknowledges the existence
of other quasi-judicial agencies not included in the enumeration but should be deemed
included. In addition, the CIAC is obviously excluded in the catalogue of cases not
covered by the Circular and mentioned in Section 2 thereof for the reason that at the
time the Circular took effect, E.O. No. 1008 allows appeals to the Supreme Court on
questions of law.
In sum, under Circular No. 1-91, appeals from the arbitral awards of the CIAC may be
brought to the Court of Appeals, and not to the Supreme Court alone. The grounds for
the appeal are likewise broadened to include appeals on questions of facts and appeals
involving mixed questions of fact and law.
The jurisdiction of the Court of Appeals over appeals from final orders or decisions of
the CIAC is further fortified by the amendments to B.P. Blg.129, as introduced by R.A.
No. 7902. With the amendments, the Court of Appeals is vested with appellate
jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional
Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
except those within the appellate jurisdiction of the Supreme Court in accordance with
the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442,
as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948.
While, again, the CIAC was not specifically named in said provision, its inclusion therein
is irrefutable. The CIAC was not expressly covered in the exclusion. Further, it is a
quasi-judicial agency or instrumentality. The decision in Luzon Development Bank v.
Luzon Development Bank Employees[24] sheds light on the matter, thus:
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators
may not strictly be considered as a quasi-judicial agency, board or commission, still
both he and the panel are comprehended within the concept of a quasi-judicial
instrumentality. It may even be stated that it was to meet the very situation presented
by the quasi-judicial functions of the voluntary arbitrators here, as well as the
subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, that the broader term instrumentalities was purposely included
in [Section 9 of B.P. Blg. 129 as amended by R.A. No. 7902].
An instrumentality is anything used as a means or agency. Thus, the terms

governmental agency or instrumentality are synonymous in the sense that either of
them is a means by which a government acts, or by which a certain government act or
function is performed. The word instrumentality, with respect to a state, contemplates
an authority to which the state delegates governmental power for the performance of a
state function.
Any remaining doubt on the procedural mutation of the provisions on appeal in E.O. No.
1008, vis--vis Circular No. 1-91 and R.A. No. 7902, was completely removed with the
issuance by the Supreme Court of Revised Administrative Circular No. 1-95 and the
1997 Rules of Civil Procedure. Both categorically include the CIAC in the enumeration of
quasi-judicial agencies comprehended therein. Section 3 of the former and Section 3,
Rule 43 of the latter, explicitly expand the issues that may be raised in an appeal from
quasi-judicial agencies or instrumentalities to the Court of Appeals within the period
and in the manner therein provided. Indisputably, the review of the CIAC award may
involve either questions of fact, of law, or of fact and law.
In view of all the foregoing, we reject MCIs submission that Circular No. 1-91, B.P. Blg.
129, as amended by R.A. 7902, Revised Administrative Circular 1-95, and Rule 43 of
the 1997 Rules of Civil Procedure failed to efficaciously modify the provision on appeals
in E.O. No. 1008. We further discard MCIs claim that these amendments have the effect
of merely changing the forum for appeal from the Supreme Court to the Court of
Appeals.
There is no controversy on the principle that the right to appeal is statutory. However,
the mode or manner by which this right may be exercised is a question of procedure
which may be altered and modified provided that vested rights are not impaired. The
Supreme Court is bestowed by the Constitution with the power and prerogative, inter
alia, to promulgate rules concerning pleadings, practice and procedure in all courts, as
well as to review rules of procedure of special courts and quasi-judicial bodies, which,
however, shall remain in force until disapproved by the Supreme Court.[25] This power
is constitutionally enshrined to enhance the independence of the Supreme Court.[26]
The right to appeal from judgments, awards, or final orders of the CIAC is granted in
E.O. No. 1008. The procedure for the exercise or application of this right was initially
outlined in E.O. No. 1008.While R. A. No. 7902 and circulars subsequently issued by the
Supreme Court and its amendments to the 1997 Rules on Procedure effectively
modified the manner by which the right to appeal ought to be exercised, nothing in
these changes impaired vested rights. The new rules do not take away the right to
appeal allowed in E.O. No. 1008. They only prescribe a new procedure to enforce the
right. [27] No litigant has a vested right in a particular remedy, which may be changed
by substitution without impairing vested rights; hence, he can have none in rules of
procedure which relate to remedy.[28]
The foregoing discussion renders academic MCIs assertion on the binding effect of its
stipulation with CHATHAM in the TOR that the decision of the CIAC shall be final and
non-appealable except on questions of law. The agreement merely adopted Section 19
of E.O. No. 1008, which, as shown above, had been modified.
The TOR, any contract or agreement of the parties cannot amend, modify, limit, restrict
or circumscribe legal remedies or the jurisdiction of courts. Rules of procedure are
matters of public order and interest and unless the rules themselves so allow, they
cannot be altered, changed or regulated by agreements between or stipulations of the
parties for their singular convenience.[29]
Having resolved the existence of the authority of the Court of Appeals to review the
decisions, awards, or final orders of the CIAC, the Court shall now determine whether
the Court of Appeals erred in rendering the questioned decision of 30 September 1999.
Settled is the general rule that the findings of facts of the Court of Appeals are binding
on us. There are recognized exceptions to the rule, such as when the findings are
contrary to those of the trial court,[30] as in this case. Hence, we have to take a closer
reexamination of this case.
The CIAC is certain that the evidence overwhelmingly tended to prove that the manner
by which CHATHAM took charge in the procurement of materials, fielding of labor,
control of MCI engineers and the subcontracting of various phases of the work,
constituted an implied takeover of the project. The CIAC then concludes that the cut-off
date for delineating the fiscal liabilities of the parties is 23 May 1996 when CHATHAM
evaluated MCIs work accomplishment at 94.12% and then suspended all further
progress payments to MCI. For these reasons, the CIAC found it trifling to determine
whether MCI was in delay based on the Overall Schedule. However, the CIAC
discovered that MCI was in delay for 294 days in the concreting milestone and held the
latter liable for liquidated damages in the amount of P3,062,498.78.
The Court of Appeals made a contrary conclusion and declared that MCI was in delay
for 193 days based on the overall schedule of completion of the project and should
incur liquidated damages in the amount of P24,125,000.00.
It is undisputed that the CIAC and the Court of Appeals found MCI liable for liquidated
damages but on different premises. Based on the CIACs assessment, MCIs
responsibility was anchored on its delay in the concreting milestone, while the Court of
Appeals evaluation concentrated on MCIs delay in completing the project based on
the overall schedule of work. The variance in the evaluation spells a staggering
difference in the party who should ultimately be held liable and the net amount
involved.
A study of the final computation of the net amount due in both the final disquisitions of
the CIAC and the Court of Appeals shows that all the other figures therein are constant,
save for the amount of liquidated damages for which MCI should be accountable. If this
Court concurs with the CIACs conclusions, MCIs responsibility for liquidated damages is,
as already stated, P3,062,498.78. Setting this off against CHATHAMs overall fiscal
accountability would bring the latters total liability to MCI to P16,126,922.91. If the
Court of Appeals is correct, MCI would be held liable for a much higher P24,125,000
liquidated damages. Setting this off against CHATHAMs monetary responsibilities, MCI
would still have to pay CHATHAM P4,935,578.31.
After painstakingly combing through the voluminous records, we affirm the findings of
the CIAC. The evidence taken as a whole or in their totality reveals that there was an
implied takeover by CHATHAM on the completion of the project. The evidence that
appears to accentuate the Court of Appeals decision ironically bolstered the CIACs
conclusion. The testimonies of Engr. Kapunan, Engr. Bautista, Dr. Lai, and the letter of
Engr. Ruiz,[31] acknowledging the temporary takeover by CHATHAM of the project,
underscore the palpable fact that there was indeed a takeover. We confer particular
credit to Dr. Lais testimony that as of 15 February 1995, MCI was relieved of full control
of the construction operations, that it was relegated to a mere supplier of labor,
materials and equipment, and that the alleged interim takeover actually extended
through the completion of the project. Even CHATHAM admits the takeover but
sugarcoated the same with words like interim and charging the costs to MCI. With these
glaring admissions, we can even consider that the takeover was not implied but blatant.
Exhibits 4, 4-A, 4-C, 8A, 8, 4-D, 3, 3-I, 3-M, 3-N, 3-W-1, 3-X, 3-Y, 3-Z, 5,5-A, 5-B, 5-C
5-D, 5-E, 5-F, 5-O, C-7, E-9, etc.,[32] relied upon by the Court of Appeals when
considered by themselves and singly, seemingly and initially evince MCIs control over
the project. However, they eventually lose evidentiary puissance to support the Court of
Appeals conclusion when reckoned against the totality of the evidence that CHATHAM
took charge of the completion of the project, particularly, the fact that CHATHAM
suspended all progress billing payments to MCI. The continued presence and
participation of MCI in the project was, as found by the CIAC, a matter of mutual
benefit to and convenience of the parties.
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the assailed 30 September 1999

decision of the Court of Appeals in CA-G.R. SP No. 49429 is hereby PARTIALLY
MODIFIED by setting aside the order directing Metro Construction, Inc. to pay Chatham
Properties, Inc. the amount of P4,935,578.31. The arbitral award of the Construction
Industry Arbitration Commission in CIAC Case 10-98, promulgated on 19 October 1998,
directing Chatham Properties, Inc. to pay Metro Construction, Inc. the sum of SIXTEEN
MILLION ONE HUNDRED TWENTY-SIX THOUSAND NINE HUNDRED TWENTY-TWO &
91/100 (P16,126,922.91) PESOS, is accordingly REINSTATED.
No pronouncement as to costs.
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

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THIRD DIVISION

G.R. No. 200401, January 17, 2018

METRO RAIL TRANSIT DEVELOPMENT CORPORATION, Petitioner, v. GAMMON

MRT 3 North Triangle Development

We enclose herewith a copy of our Mobilisation Programme dated 1 September '97 (4 x

In a Letter dated September 3, 1997 (Second Letter), Gammon transmitted to Parsons

Re: Contract for LRT3 North Triangle Podium Structure

On September 9, 1997, Gammon transmitted the contract documents to Parsons.18

In a Letter dated September 10, 1997, Gammon stated:

We are therefore bound by these commitments."20

On September 11, 1997, Gammon sent Parsons a facsimile to confirm if all

In a facsimile transmission dated September 12, 1997, Parsons confirmed "the

MRT decided to adopt Gammon's reccomendation to construct the Podium up to Level 2

Gammon wrote several communications to MRT to follow up on its evaluation request.51

On March 27, 2007, CIAC ruled:60

WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary

P4,821,261.9 for Engineering services design work

672,377.36 for site de-watering and clean up

P5,493,639.27 Total claim under issue #1

P53,149,330.35 as a reasonable estimate of the profit it had lost by reason

P58,642,969.62 - TOTAL DUE THE CLAIMANT

For this Court's resolution are the following issues:

This Court denies the Petition.

Its jurisdiction includes construction disputes between or among parties to an

CIAC is a quasi-judicial body exercising quasi-judicial powers.

Arbitration under a quasi-judicial body is similar to commercial arbitration in that its

However, commercial arbitration is conducted by ad-hoc bodies created by stipulation

CIAC exercises quasi-judicial powers over arbitration disputes concerning construction

Voluntary arbitration involves the reference of a dispute to an impartial body, the

Consistent with this restrictive approach, this Court is duty-bound to be extremely

Thus, even as exceptions to the highly restrictive nature of appeals may be

(1) Consent of the contracting parties;

Likewise, in Central Bank of the Philippines v. Court of Appeals:126

On May 30, 1997, Gammon tendered its bids.131

Parsons thereafter issued the First Notice to Proceed,133 which stated:

On September 9, 1997, Gammon returned to Parsons the contract documents.137

Re: Contract for LRT3 North Triangle Podium Structure

Gammon manifested its unqualified acceptance of the First Notice to Proceed on

MRT 3 North Triangle Development

MRT's September 8, 1997 Letter stated, thus:

Thereafter, Parsons directed Gammon to hold any further mobilization activities in a

On September 11, 1997, Gammon sent Parsons a facsimile to confirm if all

In a facsimile transmission dated September 12, 1997, Parsons confirmed "the

This notice formally cancels documents referred to as Notice of Award, Notice to

In Gammon v. Metro Rail Transit Development Corporation,165 this Court held:

Although there is considerable disagreement concerning the foregoing facts, specifically

Parenthetically, while the [Notices of Award]/[Notices to Proceed] adverted to the

It may even be added that issues regarding the rescission or termination of a

In Ormoc Sugarcane Planters' Association, Inc. v. Court of Appeals,167 this Court

In Presidential Decree No. 1271 Committee v. De Guzman:171

It may even be added that issues regarding the rescission or termination of a

This Court rules that MRT is bound by its judicial admission.

Rule 129, Section 4 of the Revised Rules of Court provides:

Section 4. Judicial admissions. An admission, verbal or written, made by a party in the

Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate

Actual damages constitute compensation for sustained measurable losses.189 It must be

In International Container Terminal Services, Inc. v. Chua:192

For lost profits, Article 2200 of the Civil Code provides:

MRT likewise questions the award of lost profits in favor of Gammon.

13.5.1 Order to produce documentary evidence. Upon motion of either or

As a rule, findings of fact of administrative agencies and quasi-judicial bodies, which

In David v. Construction Industry and Arbitration Commission, we ruled that, as

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo, JJ., concur.

METRO CONSTRUCTION, INC., petitioner, vs. CHATHAM PROPERTIES,