2 2 1 NPC Vs Legasto Armada

Name: ARMADA, Restine Joy M.
NPC vs Legasto
G.R. NO. 148318 November 22, 2004 Tinga, J.
Facts: NPC and FUCC entered into a contract for the construction of power facilities (civil works). Two
schedules were agreed into: Geothermal Power Plant in Cawayan Area and Geothermal Power Plant in
Botong aArea. 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. NPC 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).
In a letter dated June 28, 1993, FUCC formally informed NPC that it is accepting the proposed price of
P458.07 per cubic meter. 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. Several
written and verbal warnings were given by NPC to FUCC. 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 Regional Trial Court, Quezon City.
NPC and FUCC entered into a compromise agreement, NPC agreed to pay the undisputed unpaid
billings and that the parties shall submit for arbitration to settle: (a) the price of blasting, (b) both
parties’ claims for damages, delays, interests and (c) all other unresolved claims of both parties. The
compromise agreement was subsequently approved. Arbitration board rendered its ruling declaring
claimant is hereby entitled to an award of P118, 681, 328.28 as just compensation for blasting works and
no other work issued for it. The parties have agreed that the decision of the Arbitration Board shall be
final and executory.
FUCC (plaintiff) filed a Motion of Execution while NPC (defendant) filed a Motion to vacate award by
Arbitration Board. Presiding Judge Legasto issued an order approving the Arbitration Award issued
by the Arbitration board and granted the motion for execution filed by FUCC. NPC went to the CA on
the lone issue of whether respondent judge acted with grave abuse of discretion in issuing such order
and directing the issuance of a writ of execution.
CA: 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. It further declared that FUCC is entitled to just compensation on
ground of equity and promissory estoppel
Issue/s: Whether or not FUCC is entitled to the payment of extra work done on the project
Held: No. Court is constrained to declare FUCC entitled to payment for the blasting works it undertook.
FUCC is entitled to the payment of extra work done on the project. The parties in the present case
mutually agreed to submit to arbitration the settlement of the price blasting, the parties’ claims for
damages, delay and interests and all other unresolved claims including the exact volume of blasted
rocks. They further mutually agreed that the decision of the Arbitration Board shall be final and
immediately executory. A stipulation submitting an ongoing dispute to arbitration is valid. Courts are
generally without power to amend or overrule merely because of disagreement with matters of law or
facts determined by the arbitrators.
However, an arbitration award is not absolute and without exceptions. Where the conditions described in Arts.
2038, 2039 and 2040 of the Civil Code applicable to both compromises and arbitrations are obtaining, the
arbitrators’ award may be annulled or rescinded. Additionally, judicial review of an arbitration award is warranted
when the complaining party has presented proof of the existence of any of the grounds for vacating, modifying, or
correcting an award outlines under Sections 24, and 25 of RA 876.
In this case, petitioner does not specify which of the foregoing grounds it relies upon judicial review. We note,
however, that the CA found that petitioner did not present any proof to back up its claim of evident partiality on
the part of Mr. Sison. Its averments to the effect that Mr. Sison was biased and had prejudged the case do not
suffice to establish evident partiality. Neither does the fact that a party was disadvantaged by the decision of the
arbitration committee prove evident partiality.
Promissory estoppel may arise from the making of a promise, even though without consideration, it was intended
that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be
virtually to sanction the perpetration of fraud or would result in other injustice. Promissory estoppel presupposes
the existence of a promise on the part of one against whom estoppel is claimed. The promise must be plain and
unambiguous and sufficiently specific so that the court can understand the obligation assumed and enforce the
promise according to its terms.
In the present case, the foregoing events clearly evince that the promise blasting works would be paid was
predicated on the approval of extra work order by petitioner’s board. Even FUCC acknowledged that the blasting
works should be an extra work and requested that the extra work be confirmed as such and approved by the
appropriate official. Notably, even as 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 the light of PD. 1594 and its implementing rules of
which both parties are presumed to have knowledge. In Mendoza vs CA, 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.”
However, the Compromise Agreement entered into by the parties, petitioner being represent by its President,
acting pursuant to its Board Resolution is confirmatory act signifying petitioner’s ratification of all prior acts of its
officers. Significantly, the parties agreed that “this compromise agreement shall serve as the supplemental
agreement for the payment of plaintiff’s blasting works at the Botong site.” 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.
Moreover, since the blasting works were already rendered by FUCC and accepted by petitioner and in the absence
of proof that the blasting was done gratuitously, it is but equitable that petitioner should make compensation
therefor, pursuant to the principle that no one should be permitted to enrich himself at the expense of another.
Petition GRANTED.

2 2 1 NPC Vs Legasto Armada

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2 2 1 NPC Vs Legasto Armada

Uploaded by

Copyright:

Available Formats

Name: ARMADA, Restine Joy M.

G.R. NO. 148318 November 22, 2004 Tinga, J.

You might also like