Philippine Supreme Court Jurisprudence


Philippine Supreme Court Jurisprudence > Year 2009 > October 2009 Decisions > G.R. No. 181969 - Romago, Inc. v. Siemens Building Technologies, Inc.:




G.R. No. 181969 - Romago, Inc. v. Siemens Building Technologies, Inc.

PHILIPPINE SUPREME COURT DECISIONS

THIRD DIVISION

[G.R. NO. 181969 : October 2, 2009]

ROMAGO, INC., Petitioner, v. SIEMENS BUILDING TECHNOLOGIES, INC.,*Respondent.

D E C I S I O N

NACHURA, J.:

Romago, Inc. (ROMAGO) appeals by certiorari the October 19, 2007 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 99128 and the February 26, 2008 Resolution2 denying its reconsideration.

On June 11, 1999, petitioner ROMAGO entered into a Consortium Agreement3 with respondent Siemens Building Technologies, Inc. (SBTI). Under the agreement, ROMAGO undertook to jointly bid with SBTI for the Mechanical and Electrical Requirements of the Insular Life Corporate Center (the project) to be constructed at the Corporate City in Alabang. SBTI would provide and supply the equipment requirements and components of the project, while ROMAGO would supply and perform all the technical service requirements of the project.

However, Insular Life Assurance Company, Ltd. (Insular Life), the project owner, was not keen on dealing with a consortium of companies. Ultimately, only ROMAGO bidded and was awarded the Sub-contract for the Building Services-Electrical Package of the project.

On December 3, 1999, ROMAGO entered into an Equipment Supply Sub-Contract Agreement (ESSA)4 with SBTI. For the contract price of P100,000,000.00, SBTI undertook to deliver the needed electrical equipment for the project.

SBTI made deliveries, but ROMAGO failed to pay in full. As of March 2001, ROMAGO's unpaid billings amounted to P6,807,400.92. SBTI demanded payment, but the demand just fell on deaf ears, prompting SBTI to withhold further deliveries of equipment to the jobsite. Consequently, ROMAGO took over all the contractual activities of SBTI.

Later, however, SBTI resumed its deliveries under the ESSA. As of July 25, 2001, it had already delivered 99.81% of all the necessary equipment. ROMAGO, however, refused to pay for the deliveries which, by then, already amounted to P16,937,612.68, unless SBTI compensates ROMAGO for the total expenses it allegedly incurred in taking over SBTI's contractual obligations. Demands to pay were made but were not heeded.

Hence, on June 4, 2003, SBTI filed a Request for Arbitration5 with the Philippine Dispute Resolution Center, Inc. (PDRCI), docketed as PDRCI Case No. 20-2003/SSP.

On July 16, 2003, ROMAGO, through its Vice-President for Operations, Ramon Lorenzo R. Arel, Sr., signed the Agreement to Submit Dispute to Arbitration.6

In its Answer7 filed on May 4, 2004, ROMAGO admitted that the agreed contract price was P67,734,457.27, but averred that it made substantial payments. It further alleged that it had claims against SBTI, which should be deducted from the former's liability. Specifically, ROMAGO claimed the cost of installation of transformer and temporary generator sets amounting to P184,208.15 and P5,040,408.44, respectively. It added that it paid damages amounting to P3,627,226.37 to Insular Life and to some of its tenants when the generator sets supplied by SBTI malfunctioned on May 1, 2001. ROMAGO further claimed payments for the miscellaneous items amounting to P106,694.49, and for liquidated damages of P3,493,223.72 for SBTI's delay in the delivery of the equipment. According to ROMAGO, these items and the P300,000.00 cost of arbitration must be deducted from SBTI's claim, thus, leaving a balance of only P2,127,471.97.

The parties then signed the Terms of Reference (TOR)8 and, later, the Amended Terms of Reference.9 Signatories to the TOR and Amended TOR were SBTI's counsel, Atty. Carla E. Santamaria-Se�a of Siguion Reyna Montecillo & Ongsiako; ROMAGO's counsel, Atty. Melvin L. Villa of Villa Judan & Associates; and Ramon Lorenzo R. Arel, Sr., ROMAGO's authorized representative.

After due proceedings, Arbitrator Beda Fajardo rendered a Decision on February 1, 2005,10 disposing that:

Premises considered, this Arbitrator hereby resolves the various issues in this case as follows:

ISSUE NO. 1

[SBTI] is entitled to its claim for P16,937,612.68 against [ROMAGO] plus legal interest computed from the time that it made its extrajudicial demand on October 21, 2002 up to its filing of the Request for Arbitration.

ISSUE NO. 2

[SBTI] is entitled to recover attorney's fees from [ROMAGO] in the amount of P500,000.00.

ISSUE NO. 3

[SBTI] is entitled to recover its arbitration costs from [ROMAGO] in the sum of P916,300.04.

ISSUE NO. 4

[SBTI] is not liable to [ROMAGO's] counterclaim of P11,241,058.33.

WHEREFORE, judgment is hereby rendered in favor of Siemens Building [Technologies, Inc.] and against Romago, Inc., ordering the latter to pay the former the sum of SIXTEEN MILLION NINE HUNDRED THIRTY SEVEN THOUSAND SIX HUNDRED TWELVE PESOS AND SIXTY EIGHT CENTAVOS (P16,937,612.68), plus legal interest computed from the time that extrajudicial demand was made on October 21, 2002 up to the filing of the Request for Arbitration.

Romago, Inc. is also ordered to pay Siemens Building Technologies, [Inc.] the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00) for attorney's fees and NINE HUNDRED SIXTEEN THOUSAND THREE HUNDRED AND 04/100 (P916,300.04) for the costs of arbitration.

SO ORDERED.11

SBTI, through counsel, was served a copy of the Arbitrator's decision via personal service on February 3, 2005. ROMAGO's counsel, Atty. Villa, was also served copies of the decision through private courier 2GO on February 3, 2005,12 received on the same day; and through registered mail on February 7, 2005,13 received on February 28, 2005.

Meanwhile, on February 16, 2005, SBTI filed a petition for confirmation of the Arbitrator's decision14 with the Regional Trial Court (RTC) of Makati City, docketed as Special Proclamation No. M-6039.

On March 15, 2005, the RTC issued an Order15 directing ROMAGO to file its answer to the petition within fifteen (15) days from receipt of the Order.

On March 30, 2005, ROMAGO, through its collaborating counsel, Atty. Jose A.V. Evangelista, filed an answer,16 praying for the denial of the petition and for the setting aside of the Arbitrator's decision. ROMAGO argued that the Arbitrator displayed partiality in hearing the arbitration case and in rendering the decision. It pointed out that the Arbitrator considered SBTI's claims as gospel truth and granted the same in toto, but denied ROMAGO's counterclaims despite the preponderance of evidence in support of its claim. ROMAGO, thus, contended that SBTI could not ask for the confirmation and execution of the Arbitrator's decision.

After due proceedings, the RTC issued an Order, dated September 5, 2005, declaring the case submitted for decision. Subsequently, on October 10, 2005, Atty. Hernani Barrios entered his appearance as ROMAGO's new counsel,17 after Atty. Evangelista withdrew his appearance.18

On June 22, 2006, the RTC issued an Order19 granting SBTI's petition, viz.:

After a careful consideration of the parties' respective evidence, the Court resolves to GRANT the Petition.

The instant proceeding is simply a petition for the confirmation of the arbitral award rendered by the PDRCI and for the issuance of a writ for its execution, pursuant to section 23 of R.A. No. 876. Thus, the only relevant issues to be resolved are: (1) whether there has been an Arbitral Award rendered by PDRCI in favor of the petitioner; and (2) whether such award has attained finality in the absence of any motion to vacate the same.

There is no dispute with respect to the first issue as the existence of the Decision is admitted by the parties. The only point of contention now is the issue of whether or not the same Decision has attained finality and hence may now be confirmed for purposes of execution. It is clear to the Court that the answer to this core issue should be in the affirmative. [SBTI] has for its legal anchor Section 26 of the Arbitration Law, which states that, "a motion to vacate, modify or correct the award or decision must be made within 30 days after the award is filed or delivered."

[ROMAGO] does not dispute that it did not file any Motion to Vacate the Award made by the PDRCI Arbitrator. It insists however that it met the requirements for the timely filing of such Motion when it alleged the grounds for vacation in its Answer to the herein petition. This is faulty reasoning. As correctly argued by [SBTI], there is a difference between the act of setting forth an affirmative defense and filing a Motion to Vacate within the context of the law on Arbitration. The Arbitration Law requires the losing party to seek vacation of the award by filing a Motion for this purpose within a period of thirty (30) days from service of the Decision. For as a matter of consequence, failure to do so will amount to an unqualified acquiescence to the findings of the Arbitrator, and if he does not, then the award must be confirmed in accordance with section 23 of the law. The Arbitration Law provides that, where an award is vacated, the Court, in its discretion, may direct a new hearing either before the same arbitrator(s) or before a new arbitrator(s) to be chosen in the manner provided in the submission of the contract for the selection of the original arbitrator(s) and any provision limiting the time in which the arbitrator(s) may make a decision shall be deemed applicable to the new arbitration and to commence from the date of the court's order. (Sec. 24 par. (d), R.A. 876).???�r?bl?�


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