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Timestamp: 2019-04-22 02:46:23+00:00

Document:
G.R. No. 148318 - NATIONAL POWER CORPORATION v. HON. ROSE MARIE ALONZO-LEGASTO, ET AL.
NATIONAL POWER CORPORATION, Petitioner, v. HON. ROSE MARIE ALONZO-LEGASTO, as Presiding Judge, RTC of Quezon City, Branch 99, JOSE MARTINEZ, Deputy Sheriff, RTC of Quezon City, CARMELO V. SISON, Chairman, Arbitration Board, and FIRST UNITED CONSTRUCTORS CORPORATION, Respondents.
National Power Corporation (NPC) filed the instant Petition for Review1 dated July 19, 2001, assailing the Decision2 of the Court of Appeals dated May 28, 2001 which affirmed with modification the Order3 and Writ of Execution4 respectively dated May 22, 2000 and June 9, 2000 issued by the Regional Trial Court. In its assailed Decision, the appellate court declared respondent First United Constructors Corporation (FUCC) entitled to just compensation for blasting works it undertook in relation to a contract for the construction of power facilities it entered into with petitioner. The Court of Appeals, however, deleted the award for attorney's fees having found no basis therefor.
Appended with the Contract is the contract price schedule which was submitted by the respondent FUCC during the bidding. The price for grading excavation was P76.00 per cubic meter.
Construction activities commenced in August 1992. In the latter part of September 1992 and after excavating 5.0 meters above the plant elevation, FUCC requested NPC that it be allowed to blast to the design grade of 495 meters above sea level as its dozers and rippers could no longer excavate. It further requested that it be paid P1,346.00 per cubic meter similar to the rate of NPC's project in Palinpinon.
While blasting commenced on October 6, 1992, NPC and FUCC were discussing the propriety of an extra work order and if such is in order, at what price should FUCC be paid.
Sometime in March 1993, NPC Vice President for Engineering Construction, Hector Campos, created a task force to review FUCC's blasting works. The technical task force recommended that FUCC be paid P458.07 per cubic meter as such being the price agreed upon by FUCC.
The matter was further referred to the Department of Public [W]orks and Highways (DPWH), which in a letter dated May 19, 1993, recommended the price range of P500.00 to P600.00 per cubic meter as reasonable. It further opined that the price of P983.75 per cubic meter proposed by Lauro R. Umali, Project Manager of BACMAN II was high. A copy of the DPWH letter is attached as Annex "C", FUCC's Exhibit EEE-Arbitration.
In a letter dated June 28, 1993, FUCC formally informed NPC that it is accepting the proposed price of P458.07 per cubic meter. A copy of the said letter is attached as Annex "D", FUCC's Exhibit L Arbitration.
In the meantime, by March 1993, the works in Botong area were in considerable delay. By May 1993, civil works in Botong were kept at a minimum until on November 1, 1993, the entire operation in the area completely ceased and FUCC abandoned the project.
(d) Loss of guaranteed protection (warranties) of all delivered plant equipment and accessories as Mitsubishi Corporation, electromechanical contractor, will not be liable after six months of delivery.
To prevent NPC from taking over the project, on March 28, 1994, FUCC filed an action for Specific Performance and Damages with Preliminary Injunction and Temporary Restraining Order before Branch 99, Regional Trial Court, Quezon City.
Under paragraph 19 of its Complaint, FUCC admitted that it agreed to pay the price of P458.07 per cubic meter.
On April 5, 1994, Judge de Guzman issued a temporary restraining order and on April 21, 1994, the trial court resolved to grant the application for issuance of a writ of preliminary injunction.
On July 7, 1994, NPC filed a Petition for Certiorari with Prayer for Temporary Restraining Order and Preliminary Injunction before the First Division of the Court of Appeals asserting that no injunction may issue against any government projects pursuant to Presidential Decree 1818.
On July 8, 1994, the Court of Appeals through then Associate Justice Bernardo Pardo issued a temporary restraining order and on October 20, 1994, the said court rendered a Decision granting NPC's Petition for Certiorari and setting aside the lower court's Order dated April 21, 1994 and the Writ of Preliminary Injunction dated May 5, 1994.
However, notwithstanding the dissolution by the Court of Appeals of the said injunction, on July 15, 1995, FUCC filed a Complaint before the Office of the Ombudsman against several NPC employees for alleged violation of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. Together with the complaint was an Urgent Ex-Parte Motion for the issuance of a cease and [d]esist [o]rder to restrain NPC and other NPC officials involved in the BACMAN II project from canceling and/or from taking over FUCC's contract for civil works of said project.
Then on November 16, 1994, FUCC filed before the Supreme Court a Petition for Review assailing the Decision of the Court of [A]ppeals dated October 20, 1994. In its Comment, NPC raised the issue that FUCC resorted to forum shopping as it applied for a cease and desist order before the National Ombudsman despite the dissolution of the injunction by the Court of Appeals.
Pending the petition filed by FUCC before the Supreme Court, on April 20, 1995 the NPC and FUCC entered into a Compromise Agreement.
7.6 By virtue of this Compromise Agreement, except as herein provided, the parties shall mutually waive, forgo and dismiss all of their other claims and/or counterclaim in this case. Plaintiff and defendant warrant that after approval by the Court of this Compromise Agreement neither party shall file Criminal or Administrative cases or suits against each other or its Board or member of its officials on grounds arising from the case.
The Compromise Agreement was subsequently approved by the Court on May 24, 1995.
WHEREFORE, claimant is hereby declared entitled to an award of P118,681,328.28 as just compensation for blasting works, plus ten percent (10%) thereof for attorney's fees and expenses of litigation.
Considering that payment in the total amount of P36,550,000.00 had previously been made, respondent is hereby ordered to pay claimant the remaining sum of P82,131,328.28 for attorney's fees and expenses of litigation.
Pursuant to the Compromise Agreement approved by this Honorable Court, the parties have agreed that the decision of the Arbitration Board shall be final and executory.
On December 10, 1999 plaintiff FUCC filed a Motion for Execution while defendant NPC filed a Motion to Vacate Award by the Arbitration Board on December 20, 1999.
"WHEREFORE, the Arbitration Award issued by the Arbitration Board is hereby APPROVED and the Motion for Execution filed by plaintiff hereby GRANTED. The Motion to Vacate Award filed by defendant is hereby DENIED for lack of merit.
Accordingly, let a writ of execution be issued to enforce the Arbitration Award.
NPC went to the Court of Appeals on the lone issue of whether respondent judge acted with grave abuse of discretion in issuing the Order dated May 22, 2000 and directing the issuance of a Writ of Execution.
In its assailed Decision, the appellate court declared that the court a quo did not commit grave abuse of discretion considering that the Arbitration Board acted pursuant to its powers under the Compromise Agreement and that its award has factual and legal bases.
The appellate court likewise held that petitioner failed to present evidence to prove its claim of bias and partiality on the part of the Chairman of the Arbitration Board, Mr. Carmelo V. Sison (Mr. Sison).
Further, the Court of Appeals found that blasting is not part of the unit price for grading and structural excavation provided for in the contract for the BACMAN II Project, and that there was no perfected contract between the parties for an extra work order for blasting. Nonetheless, since FUCC relied on the representation of petitioner's officials that the extra work order would be submitted to its Board of Directors for approval and that the blasting works would be paid, the Court of Appeals ruled that FUCC is entitled to just compensation on grounds of equity and promissory estoppel.
Anent the issue of just compensation, the appellate court took into account the estimate prepared by a certain Mr. Lauro R. Umali (Mr. Umali), Project Manager of the BACMAN II Project, which itemized the various costs involved in blasting works and came up with P1,310.82 per cubic meter, consisting of the direct cost for drilling, blasting excavation, stockpiling and hauling, and a 30% mark up for overhead, contractor's tax and contingencies. This estimate was later changed to P983.75 per cubic meter to which FUCC agreed. The Court of Appeals, however, held that just compensation should cover only the direct costs plus 10% for overhead expenses. Thus, it declared that the amount of P763.007 per cubic meter is sufficient. Since the total volume of blasted rocks as computed by Dr. Benjamin Buensuceso, Jr.8 of the U.P. College of Engineering is 97,032.16 cubic meters, FUCC is entitled to the amount of P74,035,503.50 as just compensation.
Although the Court of Appeals adjudged FUCC entitled to interest,9 the dispositive portion of the assailed Decision10 did not provide for the payment of interest. Moreover, the award of attorney's fees was deleted as there was no legal and factual ground for its imposition.
1. The Chairman of the Arbitration Board showed extreme bias in prejudging the case.
2. The Chairman of the Arbitration Board greatly exceeded his powers when he mediated for settlement in the court of arbitration proceedings.
3. The Chairman of the Arbitration Board committed serious irregularity in hastily convening the Board in two days, which thereafter released its report.
A. It rendered an award based on equity despite the mandatory provision of the law.
b. The Board's decision to justify that equity applies herein despite the fact that FUCC never submitted its own actual costs for blasting and PHESCO, INC., the succeeding contractor, did not employ blasting but used ordinary excavation method at P75.59 per cubic meter which is approximately the same unit price of plaintiff (FUCC).
c. It gravely erred when the Board claimed that an award of just compensation must be given to respondent FUCC for what it has actually spent and yet instead of using as basis P458.07 which is the price agreed upon by FUCC, it chose an estimate made by an NPC employee.
d. It gravely erred when it relied heavily on the purported letter of NPC Project Manager Lauro R. Umali, when the same has not been identified nor were the handwritten entries in Annex ii established to be made by him.
5. The Arbitration Board gravely erred in computing interest at 12% and from the time of plaintiff's extrajudicial claim despite the fact that herein case is an action for specific performance and not for payment of loan or forbearance of money, and despite the fact that it has resolved that there was no perfected contract and there was no bad faith on the part of defendant.
Specifically, petitioner asserts that Mr. Sison exhibited bias and prejudgment when he exhorted it to pay FUCC for the blasting works after concluding that the latter was allowed to blast. Moreover, Mr. Sison allegedly attempted to mediate the conflict between the parties in violation of Section 20,12 paragraph 2 of Republic Act No. 876 (R.A. 876) otherwise known as the Arbitration Law. Petitioner also questions the abrupt manner by which the decision of the Arbitration Board was released.
Petitioner avers that FUCC's claim for blasting works was not approved by authorized officials in accordance with Presidential Decree No. 1594 (P.D. 1594) and its implementing rules which specifically require the approval of the extra work by authorized officials before an extra work order may be issued in favor of the contractor. Thus, it should not be held liable for the claim. If at all, only the erring officials should be held liable. Further, FUCC did not present evidence to prove the actual expenses it incurred for the blasting works. What the Arbitration Board relied upon was the memorandum of Mr. Umali which was neither identified or authenticated during the arbitration proceedings nor marked as evidence for FUCC. Moreover, the figures indicated in Mr. Umali's memorandum were allegedly mere estimates and were recommendatory at most.
Petitioner likewise claims that its succeeding contractor, Phesco, Inc. (Phesco), was able to excavate the same rock formation without blasting.
Finally, it asserts that the award of P763.00 per cubic meter has no factual and legal basis as the sub-contract between FUCC and its blasting sub-contractor, Dynamic Blasting Specialists of the Philippines (Dynamic), was only P430.00 per cubic meter.
In its Comment13 dated October 15, 2001, FUCC points out that petitioner's arguments are exactly the same as the ones it raised before the Arbitration Board, the trial court and the Court of Appeals. Moreover, in the Compromise Agreement between the parties, petitioner committed to abide by the decision of the Arbitration Board. It should not now be allowed to question the decision.
FUCC likewise notes that Atty. Jose G. Samonte (Atty. Samonte), one of the members of the Arbitration Board, was nominated by petitioner itself. If there was any irregularity in its proceedings such as the bias and prejudgment petitioner imputes upon Mr. Sison, Atty. Samonte would have complained. As it is, Atty. Samonte concurred in the decision of the Arbitration Board and dissented only as to the award of attorney's fees.
As regards the issue of interest, FUCC claims that the case involves forbearance of money and not a claim for damages for breach of an obligation in which case interest on the amount of damages awarded may be imposed at the rate of six percent (6%) per annum.
Finally, FUCC asserts that its sub-contract agreement with Dynamic is not newly-discovered evidence. Petitioner's lawyers allegedly had a copy of the sub-contract in their possession. In any event, the unit price of P430.00 per cubic meter appearing in the sub-contract represents only a fraction of the costs incurred by FUCC for the blasting works.
Petitioner filed a Reply14 dated March 18, 2002 reiterating its earlier submissions.
When an award is vacated, the court, in its discretion, may direct a new hearing either before the same arbitrators or before a new arbitrator or arbitrators to be chosen in the manner provided in the submission or contract for the selection of the original arbitrator or arbitrators, and any provision limiting the time in which the arbitrators may make a decision shall be deemed applicable to the new arbitration to commence from the date of the court's order.
Where the court vacates an award, costs not exceeding fifty pesos and disbursements may be awarded to the prevailing party and the payment thereof may be enforced in like manner as the payment of costs upon the motion in an action.
(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it had been a commissioner's report, the defect could have been amended or disregarded by the court.
The order may modify and correct the award so as to effect the intent thereof and promote justice between the parties.
In this case, petitioner does not specify which of the foregoing grounds it relies upon for judicial review. Petitioner avers that "if and when the factual circumstances referred to in the provisions aforementioned are present, judicial review of the award is warranted."20 From its presentation of issues, however, it appears that the alleged evident partiality of Mr. Sison is singled out as a ground to vacate the board's decision.
There is no reason to depart from this conclusion.
However, we take exception to the arbitrators' determination that based on promissory estoppel per se or alone, FUCC is entitled to just compensation for blasting works for the reasons discussed hereunder.
SECTION 9. Change Order and Extra Work Order. A change order or extra work order may be issued only for works necessary for the completion of the project and, therefore, shall be within the general scope of the contract as bid[ded] and awarded. All change orders and extra work orders shall be subject to the approval of the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be.
These Provisions Refer to Activities During Project Construction, i.e., After Contract Award Until Completion, Except as May Otherwise be Specifically Referred to Provisions Under Section II. IB - Instructions to Bidders.
A. Where there are additional works needed and necessary for the completion, improvement or protection of the project which were not included as items of work in the original contract.
b. Where there are subsurface or latent physical conditions at the site differing materially from those indicated in the contract.
c. Where there are duly unknown physical conditions at the site of an unusual nature differing materially from those ordinarily encountered and generally recognized as inherent in the work or character provided for in the contract.
d. Where there are duly approved construction drawings or any instruction issued by the implementing office/agency during the term of contract which involve extra cost.
6. A separate Supplemental Agreement may be entered into for all Change Orders and Extra Work Orders if the aggregate amount exceeds 25% of the escalated original contract price. All change orders/extra work orders beyond 100% of the escalated original contract cost shall be subject to public bidding except where the works involved are inseparable from the original scope of the project in which case negotiation with the incumbent contractor may be allowed, subject to approval by the appropriate authorities.
A. If the Project Engineer believes that a Change Order, Extra Work Order or Supplemental Agreement should be issued, he shall prepare the proposed Order or Supplemental Agreement accompanied with the notices submitted by the contractor, the plans therefore, his computations as to the quantities of the additional works involved per item indicating the specific stations where such works are needed, the date of his inspections and investigations thereon, and the log book thereof, and a detailed estimate of the unit cost of such items of work, together with his justifications for the need of such Change Order, Extra Work Order or Supplemental Agreement, and shall submit the same to the Regional Director of office/agency/corporation concerned.
b. The Regional Director concerned, upon receipt of the proposed Change Order, Extra Work Order or Supplemental Agreement shall immediately instruct the technical staff of the Region to conduct an on-the-spot investigation to verify the need for the work to be prosecuted. A report of such verification shall be submitted directly to the Regional Director concerned.
c. The Regional Director concerned after being satisfied that such Change Order, Extra Work Order or Supplemental Agreement is justified and necessary, shall review the estimated quantities and prices and forward the proposal with the supporting documentation to the head of office/agency/corporation for consideration.
d. If, after review of the plans, quantities and estimated unit cost of the items of work involved, the proper office/agency/corporation committee empowered to review and evaluate Change Orders, Extra Work Orders or Supplemental Agreements recommends approval thereof, the head of office/agency/corporation, believing the Change Order, Extra Work Order or Supplemental Agreement to be in order, shall approve the same. The limits of approving authority for any individual, and the aggregate of, Change Orders, Extra Work Orders or Supplemental Agreements for any project of the head of office/agency/corporation shall not be greater than those granted for an original project.
(2) When time is of the essence; provided, however, that such approval is valid on work done up to the point where the cumulative increase in value of work on the project which has not yet been duly fully approved does not exceed five percent (5%) of the adjusted original contract price, or P500,000 whichever is less; provided, further, that immediately after the start of work, the corresponding Change/Extra Work Order shall be prepared and submitted for approval in accordance with the above rules herein set. Payments for works satisfactorily accomplished on any Change/Extra Work Order may be made only after approval of the same by the Secretary or his duly authorized representative.
It is petitioner's submission, and FUCC does not deny, that the claim for payment of blasting works in Botong alone was approximately P170,000,000.00, a figure which far exceeds the original contract price of P80,000,000.00 for two (2) project sites. Under the foregoing implementing rules, for an extra work order which exceeds 5% of the original contract price, no blasting work may be commenced without the approval of the Secretary or his duly authorized representative. Moreover, the procedure for the preparation and approval of the extra work order outlined under Contract Implementation (CI) 1(7) above should have been complied with. Accordingly, petitioner's officials should not have authorized the commencement of blasting works nor should FUCC have proceeded with the same.
1. After claimant [respondent herein] encountered what it claimed to be massive hard rock formation (Testimony of witness Dumaliang, TSN, 28 October 1996, pp. 41-42; Testimony of witness Lataquin, 28 November 1996, pp. 2-3; 20-23; Exh. "JJJ" and sub-markings) and informed respondent [petitioner herein] about it, respondent's own geologists went to the Botong site to investigate and confirmed the rock formation and recommended blasting (Cf. Memorandum of Mr. Petronilo E. Pana, Acting Manager of the Geoscience Services Department and the report of the geologists who conducted the site investigation; Exhs. "F" and "F-1").
2. Claimant asked for clearance to blast the rock formation to the design grade (Letter dated 28 September 1992; Exh. "UU"). The engineers of respondent at the project site advised claimant to proceed with its suggested method of extraction (Order/Instruction given by Mr. Reuel R. Declaro and Mr. Francis A. Paderna dated 29 September 1992; Exh. "C").
3. Claimant requested that the intended blasting works be confirmed as extra work order by responsible officials of respondent directly involved in the BACMAN II Project (i.e., then BACMAN II Project Manager, Mr. Lauro R. Umali and Mr. Angelito G. Senga, Section Chief, Civil Engineering Design of respondent's Design Department which bidded the project). These officials issued verbal instructions to the effect: (a) that claimant could blast the rock formation down to the design grade of 495 masl; (b) that said blasting works would be an extra work order; and (c) that claimant would be paid for said blasting works using the price per cubic meter for similar blasting works at Palinpinon, or at P1,346.00 per cubic meter.
We wish to confirm your instruction for us to proceed with the blasting of the Botong Plant site to the design grade pending issuance of the relevant variation order. This is to avoid delay in the implementation of this critical project due to the urgent need to blast rocks on the plant site.
We are confirming further your statement that the said blasting works is an extra work order and that we will be paid using the price established in your Palinpinon contract with Phesco.
Thank you for your timely action and we look forward to the immediate issuance of the extra work order.
We are now mobilizing equipment and manpower for the said work and hope to start blasting next week.
5. Respondent received the letters but did not reply thereto nor countermand the earlier instructions given to claimant to proceed with the blasting works. The due execution and authenticity of these letters (Exhs. "D-1" and "E-1") and the fact of receipt (Exhs. "D-2" and "E-2") were duly proved by claimant (Testimony of witness Dumaliang, TSN, 28 October 1996, 43-49).
6. In mid-October 1992, three (3) Vice-Presidents of respondent visited the project site and were informed of claimant's blasting activities. While respondent claims that one of the Vice-Presidents, Mr. Rodrigo Falcon, raised objections to claimant's blasting works as an extra work order, they instructed claimant to speed up the works because of the power crisis then hounding the country. Stipulation no. 24 of the Joint Stipulation of Facts of the parties which reads: "24. In mid-October 1992, three (3) Vice-Presidents of respondent, namely: Mr. Hector N. Campos, Sr., of Engineering Construction, Mr. C.A. Pastoral of Engineering Design, and Mr. Rodrigo P. Falcon, visited the project site and were likewise apprised of claimant's blasting activities. They never complained about the blasting works, much less ordered its cessation. In fact, no official of respondent ever ordered that the blasting works be stopped."
7. After visiting Botong, Mr. Hector N. Campos, Sr., then Vice President of Engineering Construction, instructed Mr. Fernando A. Magallanes then Manager of the Luzon Engineering Projects Department, to evaluate claimant's blasting works and to submit his recommendations on the proper price therefor. In a memorandum dated 17 November 1992 (Exh. "G" and sub-markings), Mr. Magallanes confirmed that claimant's blasting works was an extra work order and recommended that it be paid at the price for similar blasting works at Palinpinon, or at P1,346.00 per cubic meter. Mr. Campos concurred with the findings and recommendations of Mr. Magallanes and instructed Mr. Lauro R. Umali, then Project Manager of BacMan II, to implement the same as shown by his instructions scribbled on the memorandum.
8. Mr. Umali and the project team prepared proposed Extra Work Order No. 2 - Blasting (Exh. "DDD" - Memorandum of Mr. Umali to Mr. Campos dated 20 January 1993 forwarding proposed Extra Work Order No. 2), recommending a price of P983.75 per cubic meter for claimant's blasting works. Claimant agreed to this price (Testimony of witness Dumaliang, 7 November 1996, p. 48).
9. On 19 February 1993, claimant brought the matter of its unpaid blasting works to the attention of the then NPC Chairman [also Secretary of the Department of Energy then] Delfin L. Lazaro during a meeting with the multi-sectoral task force monitoring the implementation of power plant projects, who asked then NPC President Pablo B. Malixi what he was doing about the problem. President Malixi thereafter convened respondent's vice-presidents and ordered them to quickly document the variation order and pay claimant. The vice-president, and specifically Mr. Campos, pledged that the variation order for claimant's blasting works would be submitted for the approval of the NPC Board during the first week of March 1993. Claimant thereafter sent respondent a letter dated 22 February 1993 (Ex. "K") to confirm this pledge (Testimony of witness Dumaliang, 7 November 1996, pp. 28-30).
10. Mr. Campos created a task force (i.e., the Technical Task Force on the Study and Review of Extra Work Order No. 2; Exh. "FFF") to review claimant's blasting works. After several meetings with the task force, claimant agreed to the lower price of P458.07 per cubic meter, in exchange for quick payment (Testimony of witness Dumaliang, 7 November 1996, p. 30).
11. However, no variation order was issued and no payment came, although it appears from two (2) radiograms sent by Mr. Campos to Mr. Paderna at the project site that the variation order was being processed and that payment to claimant was forthcoming (Exhs. "AAA" and "BBB").
12. Respondent asked the Department of Public Works and Highways (DPWH) about the standard prices for blasting in the projects of the DPWH. The DPWH officially replied to respondent's query in a letter dated 19 May 1993 but the task force still failed to seek Board approval for claimant's variation order. The task force eventually recommended that the issue of grading excavation and structural excavation and the unit prices therefor be brought into voluntary arbitration (Testimony of witness Dumaliang, 7 November 1996, pp. 30-57).
13. Claimant thereafter saw Mr. Francisco L. Viray, the new NPC President, who proposed that claimant accept the price of P458.07 per cubic meter for its blasting works with the balance of its claim to be the subject of arbitration. Claimant accepted the offer and sent the letter dated 28 September 1993 (Exh. "O") to formalize said acceptance. However, no variation order was issued and the promised payment never came. (Testimony of witness Dumaliang, 7 November 1996, p. 58).
In the present case, the foregoing events clearly evince that the promise that the blasting works would be paid was predicated on the approval of the extra work order by petitioner's Board. Even FUCC acknowledged that the blasting works should be an extra work order and requested that the extra work order be confirmed as such and approved by the appropriate officials. Notably, even as the extra work order allegedly promised to it was not yet forthcoming, FUCC commenced blasting.
The alleged promise to pay was therefore conditional and up to this point, promissory estoppel cannot be established as the basis of petitioner's liability especially in light of P.D. 1594 and its implementing rules of which both parties are presumed to have knowledge. In Mendoza v. Court of Appeals, supra, we ruled that "[a] cause of action for promissory estoppel does not lie where an alleged oral promise was conditional, so that reliance upon it was not reasonable. It does not operate to create liability where it does not otherwise exist."
Petitioner's argument that it is not bound by the acts of its officials who acted beyond the scope of their authority in allowing the blasting works is correct. Petitioner is a government agency with a juridical personality separate and distinct from the government. It is not a mere agency of the government but a corporate entity performing proprietary functions. It has its own assets and liabilities and exercises corporate powers, including the power to enter into all contracts, through its Board of Directors.
However, the Compromise Agreement entered into by the parties, petitioner being represented by its President, Mr. Guido Alfredo A. Delgado, acting pursuant to its Board Resolution No. 95-54 dated April 3, 1995, is a confirmatory act signifying petitioner's ratification of all the prior acts of its officers. Significantly, the parties agreed that "[t]his Compromise Agreement shall serve as the Supplemental Agreement for the payment of plaintiff's blasting works at the Botong site"27 in accordance with CI 1(6) afore-quoted. In other words, it is primarily by the force of this Compromise Agreement that the Court is constrained to declare FUCC entitled to payment for the blasting works it undertook.
This brings us to the issue of just compensation.
Petitioner contends that the Arbitration Board, trial court and the appellate court unduly relied on the memorandum of Mr. Umali which was allegedly not marked as an exhibit. We note, however, that this memorandum actually forms part of the record of the case as Exhibit "DDD."31 Moreover, both the Arbitration Board and the Court of Appeals found that Mr. Umali's proposal is the best evidence on record as it is supported by detailed cost estimates that will serve as basis to determine just compensation.
While the Arbitration Board found that FUCC did not present evidence showing the amount it paid to its blasting sub-contractor, it did present testimony to the effect that it incurred other costs and expenses on top of the actual blasting cost. Hence, the amount of P430.00 per cubic meter indicated in FUCC's Contract of Agreement with Dynamic is not controlling.
Parenthetically, the point raised by petitioner that its subsequent contractor, Phesco, did not undertake blasting works in excavating the same rock formation is extraneous and irrelevant. The fact is that petitioner allowed FUCC to blast and undertook to pay for the blasting works.
At this point, we hearken to the rule that the findings of the Arbitration Board, affirmed by the trial court and the Court of Appeals and supported as they are by substantial evidence, should be accorded not only respect but finality.33 Accordingly, the amount of P763.00 per cubic meter fixed by the Arbitration Board and affirmed by the appellate court as just compensation should stand.
As regards the issue of interest, while the appellate court declared in the body of its Decision "that interest which would represent the cost of the money spent be imposed on the money actually spent by claimant for the blasting works,"34 there is no pronouncement as to the payment of interest in the dispositive portion of the Decision even as it specifically deleted the award of attorney's fees.
Despite its knowledge of the appellate court's omission, FUCC did not file a motion for reconsideration or appeal from its Decision. In failing to do so, FUCC allowed the Decision to become final as to it.
WHEREFORE, the petition is GRANTED in part. The appealed decision is MODIFIED in that the amount of P74,035,503.50 shall earn legal interest of six percent (6%) from 1992. A twelve percent (12%) interest, in lieu of six percent (6%), shall be imposed on such amount upon finality of this decision until the payment thereof.
2 Id. at 58-87; Penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Eloy R. Bello, Jr. and Perlita J. Tria-Tirona.
7 Representing direct costs of P693.65 and 10% mark up for overhead of P69.36.
8 The technical consultant engaged by both parties to compute the volume of blasted rocks.
"WHEREFORE, the petition is hereby DENIED for lack of merit. The order dated May 22, 2000 and Writ of Execution dated June 9, 2000 of Regional Trial Court-National Capital Judicial Region, Branch 99, Quezon City are hereby AFFIRMED with the modification that private respondent is entitled to P74,035,503.50 (i.e. 97,032.16 cubic meters P763.00 per cubit meter) as per computation of Dr. Benjamin Buensuceso, [Jr.] (technical person engaged by both parties for said computation) and the award of attorney's fee is deleted.
11 Supra note 1 at 33-35.
12 Sec. 20. - Form of contents of award.
In the event that the parties to an arbitration have, during the course of such arbitration, settled their dispute, they may request of the arbitrators that such settlement be embodied in an award which shall be signed by the arbitrators. No arbitrator shall act as a mediator in any proceeding in which he is acting as arbitrator; and all negotiation towards settlement of the dispute must take place without the presence of the arbitrators.
13 Supra note 1 at 249-272.
15 Id. at 19; par. 7.1 of the Compromise Agreement; also at Rollo, p. 112.
16 Id. at 20; par. 7.5 of the Compromise Agreement; also at Rollo, p. 112.
17 Asset Privatization Trust v. Court of Appeals, 360 Phil. 768 (1998), citations omitted.
18 Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents is subject to the provisions of Article 1330 of this Code.
However, one of the parties cannot set up a mistake of fact as against the other if the latter, by virtue of the compromise, has withdrawn from a litigation already commenced.
But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties has no right, as shown by the newly-discovered documents.
Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a compromise.
19 Chung Fu Industries (Phils.), Inc. v. Court of Appeals, G.R. No. 96283, February 25, 1992, 206 SCRA 545 (1992).
20 Supra note 1 at 33.
21 Adamson v. Court of Appeals, G.R. No. 106879, May 27, 1994, 232 SCRA 602.
22 Supra note 1 at 74.
23 Id. at 144-148, Arbitration Award; see also Rollo, pp. 79-81, Decision of the Court of Appeals.
24 Mendoza v. Court of Appeals, 412 Phil. 14 (2001), citing Ramos v. Central Bank, 41 SCRA 565 (1971).
26 San Juan Structural and Steel Fabricators, Inc. v. Court of Appeals, 357 Phil. 631 (1998).
27 Supra, note 1 at 107; par. 3, Compromise Agreement.
28 Dominguez v. Court of Appeals, No. L-52715, February 28, 1985, 135 SCRA 98.
29 Supra, note 1 at 22.
30 Id. at 109; par.7.1, Compromise Agreement.
33 National Steel Corporation v. Regional Trial Court of Lanao del Norte, Br. 2, Iligan City, 364 Phil. 240 (1999), citing Chung Fu Industries v. Court of Appeals, 206 SCRA 545, International Container Terminal Services v. National Labor Relations Commission, 256 SCRA 124 and Ang Tibay v. CIR, 69 Phil. 635.
34 Supra, note 1 at 83.
35 98 Phil. 688 (1956).
37 Filipino Legion Corporation v. Court of Appeals, 155 Phil. 616 (1974).
38 G.R. No. 61250, June 3, 1991, 198 SCRA 19.
39 Id. at 29 citing Republic Surety and Insurance Company, Inc. v. Intermediate Appellate Court, 152 SCRA 309 (1987).
40 Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78; Pilipinas Bank v. Court of Appeals, G.R. No. 97873, August 12, 1993, 225 SCRA 268.

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