THIRD DIVISION

[G.R. No. 206191. February 21, 2018.]

GAUDIOSO A. TALAVERA, JR. , petitioner, vs. BAM BUILDERS AND

SERVICES, INCORPORATED , respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution dated
February 21, 2018 , which reads as follows: HTcADC

"G.R. No. 206191 (Gaudioso A. Talavera, Jr. v. BAM Builders and

Services, Incorporated) — This petition for review 1 under Rule 45 of the Rules of
Court seeks to reverse and set aside the November 20, 2012 Decision 2 and March 4,
2013 Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 124175 a rming the
Final Award 4 issued by the Construction Industry Arbitration Commission (CIAC).

The Antecedents

In February 2010, Gaudioso A. Talavera, Jr. (petitioner), invited bidders for the
construction of a two-storey commercial building with basement parking in Ilagan
Isabela, to be called as the Talavera Square Mall (Mall). The building will house the
Robinsons Supermarket by way of a lease agreement. 5
A pre-bidding conference was held on February 13, 2010, which was attended by
four (4) bidders, including BAM Builders and Services, Inc. (respondent), represented by
its President, Bernabe Magsino (Magsino). The pre-bidding conference was followed
by a visit to the proposed construction site for inspection.
On February 25, 2010, only respondent submitted its proposal for the supply of
labor and materials for a total cost of One Hundred Ten Million Two Hundred Fifteen
Thousand Nine Hundred Sixty-Two Pesos and Fifty-Five Centavos (P110,215,962.55).
After deciding that respondent would be the one to furnish all the construction
materials, petitioner requested another estimate. In compliance, respondent submitted
a reduced bid of Sixty Million Six Hundred Thirteen Thousand Three Hundred Four
Pesos and Twenty-Five Centavos (P60,613,304.25), which was further lowered to
Twenty-Seven Million Eight Hundred Eighty-Four Thousand Seven Hundred Eighty-Three
Pesos and Thirty-Five Centavos (P27,884,783.35) for the supply of labor only. This was
followed by another request from petitioner to remove the cost of construction
equipment as he would be the one to provide the same. On March 2, 2010, respondent
submitted its project proposal amounting to Twenty-One Million Pesos
(P21,000,000.00). 6
On March 10, 2010, petitioner issued a Notice to Proceed in favor of respondent
and the parties subsequently signed and executed a Construction Labor Supply
Agreement (CLSA). On March 16, 2010, respondent was given an initial down payment
of One Million Pesos (P1,000,000.00) for the construction project. On March 20, 2010,
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 respondent commenced the work with the target completion date of October 20, 2010
or two hundred ten (210) calendar days from the start of the work. 7
Upon the request of respondent, petitioner granted an extension of thirty (30)
days or until November 30, 2010, to finish the project. In a meeting held on November 3,
2010, the parties agreed on a supervised payment scheme whereby the actual weekly
expenses of respondent including the wages of workers, and some consumables and
utilities, would be paid for by petitioner, which amounts would be deducted from
respondent's billing. The scheme was later on included as an Addendum 8 to the CLSA.
9

On April 14, 2011, the Mall was opened. Respondent was paid the amount of
Sixteen Million Three Hundred Seven Thousand Four Hundred Sixty-Six Pesos and
Twenty Centavos (P16,307,466.20), equivalent to 85.06% of the contract price less ten
percent (10%) retention fee. It then requested a certi cate of completion but petitioner
refused to issue it. 1 0
On January 31, 2011, petitioner sent a letter to respondent stating that he would
le a claim against the surety company to enforce the performance and surety bond
contracted by respondent with Stronghold Insurance Company (Stronghold) as a
guarantee of its faithful compliance with the undertaking under the CLSA. Thereafter,
petitioner led with the Regional Trial Court, Cauayan City (RTC), a case against
Stronghold but respondent was not impleaded. 1 1
Proceeding before the CIAC

On October 7, 2011, respondent led a complaint against petitioner before the

CIAC, alleging that he failed to comply with the terms and conditions of the CLSA,
compounded by the obvious bad faith on the part of the latter's Project Engineer
Eduardo Pablo (Engineer Pablo). 1 2
Respondent averred that after it commenced work on March 20, 2010, it
discovered that the temporary housing facilities offered by petitioner as the quarters
for the workers would be affected by the construction and it would be demolished. It
then constructed its own quarters and shouldered the expenses amounting to Forty-
Five Thousand One Hundred Seventy-Five Pesos (P45,175.00) but the appropriate
change order failed to cover this additional work. 1 3
Respondent claimed that in order to avoid delay in the excavation work for the
perimeter walls, it re-routed the owing of the creek through the property even if it was
neither included in the scope of the agreed works nor re ected in the building plans,
which cost an additional expenses in the amount of One Hundred Twenty-Four
Thousand Four Hundred Seventy-Five Pesos (P124,475.00). 1 4 DETACa

Respondent further alleged that during the excavation works for the foundation,
the pouring of concrete could not start as the 25mm bottom steel bars were not yet
available on the site; also, the backhoe provided by petitioner for the construction was
frequently used by him in loading heavy i-beams every time there was a delivery which
eventually damaged the said backhoe rendering it useless for construction, and
petitioner even deducted the cost of the repair and diesel consumption of the backhoe
from its billings. Respondent was allegedly constrained to rent a backhoe, paying a
total amount of Seven Hundred Twenty Thousand Pesos (P720,000.00). It also
provided a vibratory walk behind compactor amounting to One Hundred Sixty-Five
Thousand Pesos (P165,000.00), for the back lling and compaction of the basement
area, a work supposed to be performed by petitioner. With said vibratory walk behind
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 compactor, respondent and its workers were able to prepare some areas for concrete
pouring under the supervision of Engineer Pablo. 1 5
Respondent claimed that after the concrete pouring, Engineer Pablo issued an
order stopping all works in the basement, questioned the use of the compactor and
insisted that the workers should use a bigger compactor. Respondent reasoned that
the back lling and compaction was not even included in their agreed scope of work
prompting petitioner to pull-out the backhoe and the nine-bagger concrete mixer from
the construction site without any explanation, which seriously impaired the construction
work. 1 6
Respondent also claimed that petitioner created even more challenges for them
because instead of delivering the concrete by batch, he caused the delivery of sand,
gravel, and cement to be used for concrete-making and instructed respondent to do the
mixing; thus, the latter rented a pay loader, pump crete, water tanker, and 7-cubic meter
transit mixer. The work took three (3) days, and during that time, Engineer Pablo
supervised the workers. After the area was nished, Engineer Pablo questioned the
concrete pouring saying that he needed to lay some pipes underneath, even though the
same was not even re ected in the building plans. Respondent contended that
obviously, petitioner did not want them to finish the project. 1 7
Finally, respondent claimed bad faith on the part of petitioner in the
implementation of the supervised payment scheme. The construction workers
complained, some of them even left, claiming that their salaries were insu cient, and
that they were not paid for overtime work. Even the salaries of Engineer Pablo and
other workers of petitioner were charged against respondent. Upon completion of the
Mall, petitioner and Engineer Pablo refused to sign the certi cate of completion
claiming that respondent failed to do the plumbing even if it was not included in the
agreed scope of work. 1 8
In his answer, petitioner claimed that there was no stipulation that he would
provide housing facilities for the workers, or be liable for the monthly rental of the
worker's lodging. He asserted that the re-routing of the creek was an integral
component of the scope of works de ned in the parties' agreement and that
respondent cannot feign ignorance of the existence of the creek because all interested
bidders were apprised of the construction site and allowed access for ocular
inspection. Petitioner denied the allegation of delay because he complied with his
undertaking under the agreement that all materials necessary for the construction
project were completely delivered with no delay. 1 9 He likewise denied the allegation of
unreasonable deduction as there was an agreement that all related works for
back lling and compaction shall be for the exclusive account of respondent, including
the vibratory work compactor. Petitioner added that it was stipulated in their
agreement that the backhoe shall be kept in good working condition.
As to the allegation of his failure to provide construction equipment, petitioner
asserted that their agreement was that respondent would provide all the equipment
that would be used in the construction site such as backhoe, cement mixer, pay loader,
water tanker, transit mixer and others. Petitioner merely lent the backhoe and cement
mixer and even paid the labor cost of the installation of the ceiling at the hallway,
stairwell and restroom even if it was for the account of respondent as a show of
goodwill. 2 0
Petitioner claimed that respondent was the one guilty of overbilling considering
that it billed and received the total amount of Sixteen Million Three Hundred Seven
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 Thousand Four Hundred Sixty-Six Pesos and Twenty Centavos (P16,307,466.20) or
eighty-six percent (86%) of the contract price, when its actual accomplishment was
only sixty- ve percent (65%) of the project. He admitted that he refused to issue a
certificate of completion because respondent abandoned the unfinished project. 2 1
On January 4, 2012, a preliminary conference was held before the CIAC.
The CIAC Ruling

In its Final Award 2 2 dated March 26, 2012, the CIAC directed petitioner to pay
respondent a total amount of Two Million Five Hundred Thirty-Five Thousand Six
Hundred Fifteen Pesos (P2,535,615.00), 2 3 broken down as follows: Two Million Two
Hundred Eighteen Thousand Pesos (P2,218,000.00) for the rental of construction
equipment, Forty-Five Thousand One Hundred Seventy-Five Pesos (P45,175.00) for the
cost of demolition of houses, Seventy-Three Thousand Two Hundred Pesos
(P73,200.00) for construction of pylon foundation, and One Hundred Ninety-Nine
Thousand Two Hundred Forty Pesos (P199,240.00) for the net cost to install the ceiling
at the hallway, stairwell, and restroom. aDSIHc

The CIAC found that petitioner breached his obligations to provide the
equipment stated in their agreement and to provide all materials on site, and
committed delay in the delivery of some of the construction materials that affected the
work progress. The pertinent portions of the Final Award of the CIAC are quoted as
follows:
On the basis of the evidence, the Tribunal has no difficulty in holding that
respondent — TALAVERA had binding obligations: 1) to provide to Claimant-
BAM the equipment listed under "B-Scope of Work for and during the entire
period of the construction of the Project; and 2) to provide all materials on site;
and that Respondent had indeed breached those dual obligations causing
Claimant injury and damages. 2 4
xxx xxx xxx
Thus, the tribunal holds that Respondent-TALAVERA is at the least
wanting in good faith so as to hold him liable for all damages that may
reasonably be attributed to Respondent's non-performance of the twin
obligations that he had committed to the Complainant as a valuable
consideration for the latter's reduction of its bid price. Accordingly, the Tribunal
holds that Respondent is liable to pay Claimant the amount of Two Million Two
Hundred Eighteen Thousand Pesos (P2,218,000.00). 2 5
xxx xxx xxx
The use of the existing houses as barracks for Claimant's workers was
among the several inducements offered by Respondent for Claimant to reduce
its nal bid. When Claimant subsequently found out that those houses could
not be used as intended, a breach of contract took place. The cost incurred for
such demolition was substantiated in Exhibit C-29, in the total amount of Forty
Five Thousand One Hundred Seventy Five Pesos (P45,175.00). 2 6
xxx xxx xxx
It is not disputed that Claimant had performed, at least in part, the
additional works of ceiling installation through Robert Gueco. The arrangement
between them, however, is not a sub-contract in the technical meaning of the
term but a private agreement to assist the contractor to work outside the
structural scope of Claimant's contract. The fact that respondent had made
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 payments directly to Gueco did not make the arrangement a sub-contract. There
is nothing to indicate that conclusion even from Respondent's own
documentary evidence. 2 7
The Tribunal agrees with the Claimant that indeed the ceiling is not part
of its structural scope of the work provided in the Project Proposal dated March
2, 2010 (Exhibit "C-25") that the "supply of labor is in the construction of
structural commercial building." The effect of Claimant's private arrangement,
however, would negate or at least minimize Claimant's claim on the issue. 2 8
xxx xxx xxx
It is accordingly the holding of this Arbitral Tribunal to grant Claimant's
claims on this cost (P450,000.00) but minus what has been paid directly to
Gueco (P250,760.00) or a net amount of P199,240.00 in favour of the Claimant.
29

xxx xxx xxx

The Pylon Structure is certainly NOT part of the building. The design is
that it is for advertisement of tenants in the mall with a Main Signage and 9
other signages that will be hung from the structure. Even the plans and
speci cations place the scope of work for building this Pylon structure under
structural work in building the mall itself. 3 0
It is accordingly the holding of this Arbitral Tribunal to grant this claim of
the Claimant for the additional work of constructing the Pylon in the amount of
P73,200.00. 3 1
Aggrieved, petitioner filed a petition for review 3 2 before the CA.
The CA Ruling

In its decision dated November 20, 2012, the CA denied the petition for lack of
merit. It a rmed the ndings of the CIAC that the initial bid price of respondent was
One Hundred Ten Million Two Hundred Fifteen Thousand Nine Hundred Sixty-Two
Pesos and Fifty-Five Centavos (P110,215,962.55) for the supply of labor and materials
for the construction project was ultimately reduced to Twenty-One Million Pesos
(P21,000,000.00) as the nal bid price as it was agreed that respondent would supply
labor only and some speci c consumable materials such as form works, welding
electrodes, nails and power extension cords, while petitioner shall supply the
construction materials and equipment for the project. 3 3
Anent the issue of reimbursement for the cost of demolition of the workers'
housing facility, the CA held that the CIAC correctly awarded the same in favour of
respondent. Contrary to petitioner's assertion, the issue was included in No. 4, Part IV
of the parties Terms of Reference under additional works performed by respondent. 3 4
The pertinent portion of the CA decision is hereby quoted as follows:
Verily, this Court nds no su cient justi cation to deviate from the
ndings of the CIAC Arbitral Tribunal that petitioner undertook to supply the
materials, as well, as, the speci ed equipment for use of private respondent for
the entire duration of the construction. He must thus be held liable to private
respondent for the equipment which the latter was constrained to rent for failure
of petitioner to provide the same during construction, such as bagger mixer,
equipment used for cement pouring, vibratory walk behind compactor and
backhoe in the total amount of Two Million Two Hundred Eighteen Thousand
Pesos (P2,218,000.00). 3 5
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 WHEREFORE, premises considered, the instant petition for Review is
hereby DENIED.
SO ORDERED. 3 6
Petitioner led a motion for reconsideration but it was denied by the CA in its
Resolution dated March 4, 2013.
Hence, this present petition anchored on the following:

Issues

A. Whether the CLS Agreement contains all the stipulations of the contracting
parties particularly the agreement as to who shall supply the construction
equipment, which stipulation have the force of law between them and
must be complied with in good faith;
B. Whether the agreement as to who shall supply all the equipment in the
Construction project was clearly stipulated in the CLS Agreement as to bar
any other oral evidence to the contrary; and
C. Whether the amount of Php2,218,000.00 as award for rental of equipment
is supported by substantial evidence on record. 3 7

The Court's Ruling

The petition is bereft of merit. ETHIDa

The Court reiterates the rule that factual ndings of construction arbitrators are
nal and conclusive and not reviewable by this Court on appeal, except when petitioner
proves a rmatively 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 postpone the
hearing upon su cient cause shown, or in refusing to hear evidence pertinent and
material to the controversy; (4) one or more of the arbitrators were disquali ed to act
as such under section nine of Republic Act No. 876 and wilfully refrained from
disclosing such disquali cations 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, nal and de nite award upon the subject
matter submitted to them was not made. 3 8 In the present case, the Court nds no
compelling reason to disturb the factual findings of the CIAC.
The issues raised by petitioner are factual, revolving as they do on the
entitlement of respondent to the awards granted and computed by CIAC and a rmed
by the CA. Signi cantly, jurisprudence teaches that mathematical computations as well
as the propriety of the arbitral awards are factual determinations. 3 9 A re-examination
of the factual ndings is outside the province of a petition for review on certiorari.
Accordingly, the Court nds no justi able reason to reverse the ndings of the CIAC
and the CA.
As correctly held by the CA, the initial bid price was One Hundred Ten Million Two
Hundred Fifteen Thousand Nine Hundred Sixty-Two Pesos and Fifty-Five Centavos
(P110,215,962.55). This was nally reduced to Twenty One Million Pesos
(P21,000,000.00) because the cost of materials and equipment was excluded. With the
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 said nal bid price, it was clearly agreed by the parties that respondent shall supply
labor only and some speci c consumable materials such as form works, welding
electrodes, nails and power extension cords, and petitioner shall supply construction
materials and equipment. 4 0
Also, as pointed out by the CIAC and the CA, the original project proposal 4 1
signed by the parties contained handwritten insertions intended to modify the same
with respect to scope of work to be performed by respondent and reduced the terms
of payment. The Project Proposal 4 2 indicates that respondent offered to furnish all
labor only, to wit:
In accordance with the invitation to BID for the construction of three-
storey commercial bldg. subject to speci cations and other construction
documents as prepared by your consultant N PLAS DE LEON, the undersigned
proposed to furnish all labor only in the amount of twenty one million
pesos (Php21,000,000) only . 4 3 (emphasis and underlining supplied)
The nal project proposal also became the basis for the CLSA between the
parties. The title of the agreement itself reveals that the parties agreed for respondent
to supply labor only for the construction project. Consequently, the Court agrees with
the ruling of the CA in awarding the amount of rental for the equipment.
Petitioner bound himself to provide the backhoe for the use of respondent in the
construction project. The backhoe provided by petitioner, however, was damaged due
to cause not attributable to the acts of respondent. It was undisputed that petitioner
was the one who frequently used the backhoe in loading and unloading construction
materials to and from the site resulting in its damage eventually rendering it useless for
the construction project. As indicated in the CLSA, to wit:
If any of the above-mentioned equipment gets lost or damaged due to
causes attributable to BAM , or his representatives, the repair/replacement
cost shall be for the account of BAM. 4 4 (emphasis and underlining supplied)
Verily, petitioner should reimburse the amount of Ninety Thousand Pesos
(P90,000.00) for the cost of the repair of the backhoe that was deducted from
respondent's billings. Further, the fact that the backhoe was pulled-out without any
explanation, leaving respondent with no choice but to rent its own backhoe, renders
petitioner liable to pay the amount of rent in the amount of Seven Hundred Twenty
Thousand Pesos (P720,000.00).
The amount of One Hundred Sixty-Three Thousand Pesos (P163,000.00) for the
rental of bagger-mixer, and One Million Eight Hundred Thousand Pesos
(P1,800,000.00) for rentals of pay loader, pump crete, water tanker and a seven (7)-unit
— seven (7) cubic meter transit mixer, is likewise sustained. Respondent was
constrained to rent these equipment, for the mixing of the cement, for failure of
petitioner to comply with his obligation. In fact, instead of complying with his
obligation, he even created more challenges for respondent when delivering concrete
by batch that caused the delivery of sand, gravel and cement to be used for making the
concrete three kilometres away from the project site and told respondent to do the
mixing of the cement and be responsible for its delivery to the site. Thus, respondent
incurred, not only additional expenditures but delay in the completion of the project.
The computation of the amount of rental of the equipment must also be
sustained. The Court nds no reason to doubt, much less disturb, the ndings of the
CIAC and the CA on the matter. "Also, considering that the computations of the awards
of the CIAC are unquestionably factual issues that have been discussed and ruled upon
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 by the CIAC and a rmed by the Court of Appeals, the Court shall not depart from such
ndings. Findings of fact of administrative agencies and quasi-judicial bodies, which
have acquired expertise because their jurisdiction is con ned to speci c matters, are
generally accorded not only respect, but finality when affirmed by the Court of Appeals."
45

Lastly, the assessment decreed in the CIAC ruling against petitioner for interest
at 6% per annum reckoned from the date of CIAC's decision and at 12% per annum
upon its nality, has to be sustained. For, in the nal analysis, petitioner is deemed to
have defaulted in its obligation to pay respondent the amount representing the rent
legally due it. 4 6 cSEDTC

WHEREFORE , the petition is DENIED . The November 20, 2012 Decision and
March 4, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124175 are hereby
AFFIRMED in toto .
SO ORDERED."

Very truly yours,

(SGD.) WILFREDO V. LAPITAN

Division Clerk of Court

Footnotes

1. Rollo, pp. 5-41, Vol. I.

2. Penned by Associate Justice Ramon R. Garcia with Associate Justices Amelita G. Tolentino
and Danton Q. Bueser, concurring; id. at 43-60, Vol. I.
3. Id. at 72-73, Vol. I.
4. Id. at 703-748, Vol. II.
5. Id. at 44-45, Vol. I.
6. Id. at 45, Vol. I.

7. Id. at 45-46, Vol. I.

8. Id. at 620-621, Vol. II.
9. Id. at 46, Vol. I.
10. Id.
11. Id. at 46-47, Vol. I.

12. Id. at 47, Vol. I.

13. Id.
14. Id. at 47-48, Vol. I.
15. Id. at 48, Vol. I.

16. Id. at 49, Vol. I.

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 17. Id. at 49, Vol. I.
18. Id. at 50, Vol. I.
19. Id.

20. Id. at 51, Vol. I.

21. Id.
22. Id. at 703-748, Vol. II.
23. Id. at 747, Vol. II.
24. Id. at 729, Vol. II.

25. Id. at 731, Vol. II.

26. Id. at 732, Vol. II.
27. Id. at 741, Vol. II.
28. Id.

29. Id. at 742, Vol. II.

30. Id. at 743, Vol. II.
31. Id.
32. Id. at 749-772, Vol. II.
33. Id. at 57, Vol. I.

34. Id. at 59, Vol. I.

35. Id. at 58, Vol. I.
36. Id. at 60, Vol. I.
37. Id. at 21, Vol. I.
38. CE Construction Corp. v. Araneta Center, Inc., G.R. No. 192725, August 9, 2017.

39. National Transmission Corp. v. Alphaomega Integrated Corp., 740 Phil. 87, 97 (2014).
40. Id. at 57, Vol. I.
41. Id. at 555-556, Vol. I.
42. Id. at 76-82, Vol. I.

43. Id. at 555, Vol. I.

44. Id. at 77, Vol. I.
45. Megaworld Globus Asia, Inc. v. DSM Construction and Development Corp., 468 Phil. 305,
327-328 (2004).
46. R-II Builders, Inc. v. Construction Industry Arbitration Commission, 511 Phil. 523, 535 (2005).

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