SAJONAS VS. CA 258 SCRA 79 A word or group of words conveys intentions.

When used truncatedly, its meaning disappears and breeds conflict. Thus, it is written - By thy words shalt thou be justified, and by thy words shalt thou be condemned. (Matthew, 12:37) Construing the new words of a statute separately is the raison detre of this appeal. Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execution from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of the spouses Alfredo Sajonas and Conchita R. Sajonas, who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case. The facts are not disputed, and are hereby reproduced as follows: On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas on installment basis as evidenced by a Contract to Sell dated September 22, 1983. The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017. Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute sale was registered almost a year after, or on August 28, 1985. Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in two years from June 25, 1980. When Uychocde failed to comply with his undertaking in the compromise agreement, defendantappellant Pilares moved for the issuance of a writ of execution to enforce the decision based on the compromise agreement, which the court granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985. On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was annotated at the back of TCT No. 79073 as Entry No. 123283. When the deed of absolute sale dated September 4 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was ssued in the name of the Sajonas couple. The notice of levy on execution annotated by defendant sheriff was carried over to the new title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon City, hence the auction sale of the subject property did not push through as scheduled. On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand, defendantappellant Pilares refused to cause the cancellation of said annotation. In view thereof, plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986.[1] The Sajonases filed their complaint[2] in the Regional Trial Court of Rizal, Branch 71, against Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges: 7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of the defendant, have already transferred, conveyed and assigned all their title, rights and interests to the plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon; 8. That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by the plaintiffs on the corresponding title of the Uychocde spouses; 9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause the cancellation of the said notice of levy but the latter,

without justifiable reason and with the sole purpose of harassing and embarrassing the plaintiffs ignored and refused plaintiffs demand; 10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of the notice of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned counsel, to protect their rights and interests, for which they agreed to pay attorneys fees in the amount of P10,000 and appearance fees of P500 per day in court.[3] Pilares filed his answer with compulsory counterclaim[4] on March 8, 1986, raising special and affirmative defenses, the relevant portions of which are as follows: 10. Plaintiff has no cause of action against herein defendants; 11. Assuming, without however admitting that they filed an adverse claim against the property covered by TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529; 12. The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon City proceeding from a decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto Uychocde, is undoubtedly proper and appropriate because the property is registered in the name of the judgment debtor and is not among those exempted from execution; 13. Assuming without admitting that the property subject matter of this case was in fact sold by the registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and without any legal force and effect because it was done in fraud of a judgment creditor, the defendant Pilares.[5] Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses. The parties appeared at pre-trial proceedings on January 21, 1987,[6]after which, trial on the merits ensued. The trial court rendered its decision on February 15, 1989.[7] It found in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-109417. The court a quo stated, thus: After going over the evidence presented by the parties, the court finds that although the title of the subject matter of the Notice of Levy on Execution was still in the name of the Spouses Uychocde when the same was annotated on the said title, an earlier Affidavit of Adverse Claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uychocdes. It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual notice of an adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not have any legal effect in any respect on account of prior inscription of the adverse claim annotated on the title of the Uychocdes. xxx xxx xxx

On the issue of whether or not plaintiffs are buyers in good faith of the property of the spouses Uychocde even notwithstanding the claim of the defendant that said sale executed by the spouses was made in fraud of creditors, the Court finds that the evidence in this instance is bare of any indication that said plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the same is involved in a litigation between said spouses and the defendant. Good faith is the opposite of fraud and bad faith, and the existence of any bad faith must be established by competent proof.[8] (Cai vs. Henson, 51 Phil 606) xxx xxx xxx

In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant Pilares, as follows: 1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certificate of Title No. N-109417. 2. Ordering said defendant to pay the amount of P5,000 as attorneys fees. 3. Dismissing the Counterclaim interposed by said defendant.

Said defendant is likewise ordered to pay the costs. Dissatisfied, Pilares appealed to the Court of Appeals[9], assigning errors on the part of the lower court. The appellate court reversed the lower courts decision, and upheld the annotation of the levy on execution on the certificate of title, thus: WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this complaint is dismissed. Costs against the plaintiffs-appellees."[10] The Sajonas couple are now before us, on a Petition for Review on Certiorari[11], praying inter alia to set aside the Court of Appeals decision, and to reinstate that of the Regional Trial Court. Private respondent filed his Comment[12] on March 5, 1992, after which, the parties were ordered to file their respective Memoranda. Private respondent complied thereto on April 27, 1994[13], while petitioners were able to submit their Memorandum on September 29, 1992.[14] Petitioner assigns the following as errors of the appellate court, to wit: I THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSISTENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE. II THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS SUBSTANTIAL RIGHT TO DUE PROCESS. Primarily, we are being asked to ascertain who among the parties in suit has a better right over the property in question. The petitioners derive their claim from the right of ownership arising from a perfected contract of absolute sale between them and the registered owners of the property, such right being attested to by the notice of adverse claim[15]annotated on TCT No. N-79073 as early as August 27, 1984. Private respondent on the other hand, claims the right to levy on the property, and have it sold on execution to satisfy his judgment credit, arising from Civil Case No. Q-28850[16] against the Uychocdes, from whose title, petitioners derived their own. Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof. Such notice is registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together with other dates pertinent thereto.[17] The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529.* Noting the changes made in the terminology of the provisions of the law, private respondent interpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its annotation, and does not automatically lose its force afterwards. Private respondent further maintains that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70 of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the payment of their obligation based on a compromise agreement.[18] The respondent appellate court upheld private respondents theory when it ruled: The above stated conclusion of the lower court is based on the premise that the adverse claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the date of registration. However, under the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective only for a period of 30 days from the date of its registration. The provision of this Decree is clear and specific. xxx xxx xxx

It should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496) does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however, now specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the period of effectivity would not have been inserted in the law. Since the adverse claim was annotated On August 27, 1984, it was effective only until September 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985, said adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the existence of the adverse claim on the Uychocdes title is equivalent to registration inasmuch as the adverse claim was already ineffective when the notice of levy on execution was annotated. Thus, the act of defendant sheriff in annotating the notice of levy on execution was proper and justified. The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction.[19] Perforce, the appellate court stated, the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its registration, after which it shall be without force and effect. Continuing, the court further stated; . . . clearly, the issue now has been reduced to one of preference- which should be preferred between the notice of levy on execution and the deed of absolute sale. The Deed of Absolute Sale was executed on September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution was annotated six (6) months prior to the registration of the sale on February 12, 1985. In the case of Landig vs. U.S. Commercial Co., 89 Phil 638 it was held that where a sale is recorded later than an attachment, although the former is of an earlier date, the sale must give way to the attachment on the ground that the act of registration is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court of Appeals (129 SCRA 513). xxx xxx xxx

The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property Registration Decree, which provides as follows: Section 51. Conveyance and other dealings by the registered owner.- An owner of registered land may convey, mortgage, lease, charge, or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned, and in all cases under the Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Italics supplied by the lower court.) Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. A person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title.[20] Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale.[21] While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the system, or any interest therein only take effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule is not absolute. Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated

thereon. One who buys without checking the vendors title takes all the risks and losses consequent to such failure.[22] In PNB vs. Court of Appeals, we held that the subsequent sale of the property to the De Castro spouses cannot prevail over the adverse claim of Perez, which was inscribed on the banks certificate of title on October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right over and above that of Perez. The TCT issued in the spouses names on July, 1959 also carried the said annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid for the property.[23] Then again, in Gardner vs. Court of Appeals, we said that the statement of respondent court in its resolution of reversal that until the validity of an adverse claim is determined judicially, it cannot be considered a flaw in the vendors title contradicts the very object of adverse claims. As stated earlier, the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over the property.[24] The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated? This is a decisive factor in the resolution of this instant case. If the adverse claim was still in effect, then respondents are charged with knowledge of pre-existing interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy attached to the certificate of title. For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land Registration Act reads: Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimants residence, and designate a place at which all notices may be served upon him. The statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion. The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides: Sec. 70 Adverse Claim- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case,

the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Italics ours) In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole.[25] For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated.[26] In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides: The adverse claim shall be effective for a period of thirty days from the date of registration. At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads: After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest. If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act. A statutes clauses and phrases must not be taken separately, but in its relation to the statutes totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction.[27] An eminent authority on the subject matter states the rule candidly: A statute is passed as a whole and not in parts or sections, and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part or section so as to produce a harmonious whole. It is not proper to confine its intention to the one section construed. It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the context.[28] Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony.[29] It should be noted that the law employs the phrase may be cancelled, which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not.[30] To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone

is claiming an interest or the same or a better right than the registered owner thereof.[31] The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following: Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant. Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground. It was held that validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall order the immediate hearing thereof and make the proper adjudication as justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties.[32] In sum, the disputed inscription of adverse claim on the Transfer Certificate of Title No. N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on execution thereto. Consequently, he is charged with knowledge that the property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners. This can be deduced from the pertinent provision of the Rules of Court, to wit: Section 16. Effect of levy on execution as to third persons- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing. (Italics supplied) To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim. As lucidly observed by the trial court in the challenged decision: True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the property in question? Stated in another, did the lapse of the thirty day period automatically nullify the contract to sell between the plaintiffs and the Uychocdes thereby depriving the former of their vested right over the property? It is respectfully submitted that it did not.[33] As to whether or not the petitioners are buyers in good faith of the subject property, the same should be made to rest on the findings of the trial court. As pointedly observed by the appellate court, there is no question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita Sajonas, wife of plaintiff, during cross-examination on April 21, 1988.[34] ATTY. REYES Q - Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the property subject matter of this case, they showed you the owners transfer certificate, is it not? A - Yes, sir. Q - That was shown to you the very first time that this lot was offered to you for sale? A - Yes. Q - After you were shown a copy of the title and after you were informed that they are desirous in selling the same, did you and your husband decide to buy the same? A - No, we did not decide right after seeing the title. Of course, we visited... Q - No, you just answer my question. You did not immediately decide?

A - Yes. Q - When did you finally decide to buy the same? A - After seeing the site and after verifying from the Register of Deeds in Marikina that it is free from encumbrances, that was the time we decided. Q - How soon after you were offered this lot did you verify the exact location and the genuineness of the title, as soon after this was offered to you? A - I think its one week after they were offered.[35] A purchaser in good faith and for value is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.[36] Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another.[37] Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uychocdes in favor of the private respondents, nor of any claim by the latter over the Uychocdes properties or that the same was involved in any litigation between said spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same. Sans such proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not be disturbed. At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens and encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been preserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory.[38] ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989 finding for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-109417 is hereby REINSTATED. The inscription of the notice of levy on execution on TCT No. N-109417 is hereby CANCELLED. Costs against private respondent.

LCC vs FSI

For review in these consolidated petitions is the November 23, 2004 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 78218, as well as the Resolutions dated February 4, 2005[2] and September 13, 2005,[3] denying the motions for its reconsideration.

Liberty Commercial Center, Inc. (LICOMCEN) is a corporation engaged in the business of operating shopping malls. In March 1997, the City Government of Legaspi leased its lot in the Central District of Legaspi to LICOMCEN. The Lease Contract was based on the Build-Operate-Transfer Scheme under which LICOMCEN will finance, develop and construct the LCC City Mall (CITIMALL). LICOMCEN engaged E.S. De Castro and Associates (ESCA) as its engineering consultant for the project.

On September 1, 1997, LICOMCEN and Foundation Specialist, Inc. (FSI) signed a Construction Agreement for the bored pile foundation of CITIMALL.[4] Forming part of the agreement were the Bid Documents and the General Conditions of Contract (GCC)[5] prepared by ESCA. A salient provision of the GCC is the authority granted the engineering consultant to suspend the work, wholly or partly. LICOMCEN was also given the right to suspend the work or terminate the contract. Among other caveats, GC-05

provided that questions arising out or in connection with the contract or its breach should be litigated in the courts of Legaspi, except where otherwise stated, or when such question is submitted for settlement through arbitration. GC-61 also provided that disputes arising out of the execution of the work should first be submitted to LICOMCEN for resolution, whose decision shall be final and binding, if not contested within thirty (30) days from receipt. Otherwise, the dispute shall be submitted to the Construction Industry Arbitration Commission (CIAC) for arbitration.

ordered. It then hired Designtech Consultants and Management System (Designtech) as its new project consultant, which, in turn, invited contractors, including FSI, to bid for the bored piling works for CITIMALL.[15]

FSI reiterated its demand for payment from LICOMCEN, but the latter failed and refused to pay, prompting FSI to file a petition for arbitration with the CIAC, docketed as CIAC Case No. 37-2002.

LICOMCEN denied the claim of FSI, arguing that it lacks factual and legal Upon receipt of the notice to proceed, FSI commenced work and undertook to complete it within ninety (90) days, all in accordance with the approved drawing, plans, and specifications. basis. It also assailed the jurisdiction of the CIAC to take cognizance of the suit, claiming that jurisdiction over the controversy was vested in the regular courts, and that arbitration under the GC-61 of the GCC may only be resorted to if the dispute concerns the execution of works, not if it concerns breach of In the course of the construction, LICOMCEN revised the design for the CITIMALL involving changes in the bored piles and substantial reduction in number and length of the piles. ESCA, thus, informed FSI of the major revision on December 16, 1997 and ordered the non-delivery of the steel bars, pending approval of the new design. FSI, however, responded that the steel bars had already been loaded and shipped out of Manila. ESCA then suggested the delivery of 50% of the steel bars to the jobsite and the return of the other 50% to Manila, where storage and security were better.
[7] [6]

contract.

During the preliminary conference, the parties agreed to submit the controversy to the Arbitral Tribunal and signed the Terms of Reference (TOR).[16] But onFebruary 4, 2003, LICOMCEN, through a collaborating counsel, filed an Ex Abundati Ad Cautela Omnibus Motion.[17] It reiterated the claim that the arbitration clause in the contract does not cover claims for payment of unrealized profits and damages, and FSI did not comply with the condition precedent for the filing of the suit, thus, the CIAC cannot take

On January 15, 1998, LICOMCEN sent another letter to FSI ordering all the construction activities suspended, because Albay Accredited Constructions Association (AACA) had contested the award of the Contract of Lease to LICOMCEN and filed criminal complaints with the Office of the Ombudsman for violation of the Anti-Graft and Corrupt Practices Act against LICOMCEN and the City Government of Legaspi. Thus, pending a clear resolution of the case, LICOMCEN decided to suspend all construction activities. It also requested FSI not to unload the steel bars.[8]

cognizance of the suit. LICOMCEN further averred that FSI has no cause of action against it because the claim for material costs has no factual basis and because the contract is clear that FSI cannot claim damages beyond the actual work accomplishments, but only reasonable expenses for the suspension or termination of the contract. LICOMCEN also alleged that the expenses incurred by FSI, if there be any, cannot be considered reasonable, because there was no showing that the materials were ordered and actually delivered to the job site. Finally, it prayed for the suspension of the proceedings, pending the resolution of its omnibus motion.

On January 17, 1998, the steel bars for the CITIMALL arrived at the Legaspi port, and despite LICOMCENs previous request, these were unloaded and
[9]

On February 20, 2003, the CIAC issued an Order[18] denying LICOMCENs omnibus motion on the ground that it runs counter to the stipulations in the TOR. Trial, thereafter, ensued. FSI and LICOMCEN presented witnesses in support of their respective claims.

delivered

to

the

jobsite

and

some

to

Tuanzon

compound, FSIs batching site. Then, on January 19, 1998, LICOMCEN reiterated its decision to suspend construction, and ordered demobilization of the materials and equipment for the project.
[10]

Finally, on February 17, After due proceedings, the CIAC rendered a Decision[19] in favor of FSI, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of Claimant FOUNDATION SPECIALIST, INC. and against Respondent LICOMCEN, INCORPORATED, ordering the latter to pay to the former the following amounts: 1. P14,643,638. 51 representing material costs at site; 2. P2,957,989.94 representing payment for equipment and labor standby costs; 3. P5,120,000.00 representing unrealized profit; and 4. P1,264,404.12 representing the unpaid balance of FSI's billing.

1998, LICOMCEN indefinitely suspended the project, due to the pending cases in the Ombudsman.[11]

FSI demanded payment for its work accomplishments, material costs, and standby off equipment, as well as other expenses amounting to P22,667,026.97,[12]but LICOMCEN took no heed.

On October 12, 1998, the Ombudsman dismissed the cases filed against the City Government and LICOMCEN. The dismissal was affirmed by this Court[13]and attained finality on September 20, 2000.[14] This notwithstanding, LICOMCEN did not lift the suspension of the construction that it previously

FURTHER, the said Respondent is ordered to solely and exclusively bear the entire cost of arbitration proceedings in the total amount of P474,407.95 as indicated in the TOR, and to reimburse the herein Claimant of any amount thereof which it had advanced and paid pursuant to TOR. All the above-awarded amounts shall bear interest of 6% per annum from the date of the formal demand on February 3, 1998 (Par. 10, Admitted Facts, TOR) until the date this Decision/Award becomes final and executory and 12% per annum from the date this Decision/Award becomes final and executory until fully paid. SO ORDERED.[20]

1. THE COURT OF APPEALS ERRED IN NOT AWARDING TO PETITIONER THE FULL AMOUNT OF MATERIAL COSTS AT THE SITE. 2. THE COURT OF APPEALS ERRED IN DENYING PETITIONER'S CLAIM FOR EQUIPMENT AND LABOR STANDBY COSTS. 3. THE COURT OF APPEALS ERRED IN DENYING PETITIONER'S CLAIM FOR UNREALIZED PROFIT. 4. THE COURT OF APPEALS ERRED IN RENDERING A MERE MINUTE RESOLUTION IN RESOLVING PETITIONER'S MOTION FOR PARTIAL RECONSIDERATION.[25]

LICOMCEN elevated the CIAC Decision to the CA. It faulted the CIAC for taking cognizance of the case, arguing that it has no jurisdiction over the suit. It also assailed the award and the ruling that the contract had been terminated, allegedly for lack of factual and legal basis.

First, we resolve the issue of the CIACs jurisdiction.

LICOMCEN insists that the CIAC had no jurisdiction over the suit. Citing GC-05 and GC-61 of the GCC, it posits that jurisdiction over the dispute rests with the regular courts of Legaspi City.

On November 23, 2004, the CA rendered the assailed Decision, modifying the CIAC Decision, viz.: WHEREFORE, the foregoing considered, the assailed Decision is hereby MODIFIED to the extent that paragraph 1 of the dispositive portion is amended and accordingly, petitioner is ordered to pay only the amount of P5,694,939.865 representing the material costs at site; and paragraphs 2 and 3 on equipment and labor standby costs and unrealized profit of the same dispositive portion are deleted. The rest is AFFIRMED in all respects. No costs. SO ORDERED.[21] The argument is misplaced.

The power and authority of a court to hear, try, and decide a case is defined as jurisdiction. Elementary is the distinction between jurisdiction over the subject matter and jurisdiction over the person. The former is conferred by the Constitution or by law, while the latter is acquired by virtue of the party's voluntary submission to the authority of the court through the exercise of its coercive process.[26]

Both LICOMCEN and FSI filed motions for partial reconsideration, but these were denied by the CA in its Resolutions dated February 4, 2005[22] and September 13, 2005.[23]

Section 4 of Executive Order (E.O.) No. 1008, or the Construction Industry Arbitration Law, provides: 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 provisions; amount of damages and penalties; commencement 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)

LICOMCEN and FSI reacted with the instant petitions. Considering that the cases involve the same parties, issues and assailed decision, this Court ordered the consolidation of G.R. No. 167022 and G.R. No. 169678 in its Resolution dated November 20, 2006.

LICOMCEN raised the following issues: 1. WHETHER OR NOT THE PROJECT WAS MERELY SUSPENDED AND NOT TERMINATED. 2. WHETHER OR NOT THE TRIBUNAL HAD JURISDICTION OVER THE DISPUTE. 3. WHETHER OR NOT FSI IS ENTITLED TO CLAIM ANY AMOUNT OF DAMAGES. 4. WHETHER OR NOT LICOMCEN IS THE PARTY AT FAULT.[24]

Corollarily, Section 1, Article III of the Rules of Procedure Governing Construction Arbitration provides that recourse to the CIAC may be availed of whenever a contract contains a clause for the submission of a future controversy to arbitration, thus:

FSI, on the other hand, interposes the following:

SECTION 1. Submission to CIAC Jurisdiction. An arbitration clause in a construction contract or a submission to arbitration of a construction dispute shall be deemed an agreement to submit an existing or future controversy to CIAC jurisdiction, notwithstanding the reference to a different arbitration institution or arbitral body in such contract or submission. When a contract contains a clause for the submission of a future controversy to arbitration, it is not necessary for the parties to enter into a submission agreement before the claimant may invoke the jurisdiction of CIAC.

Contrary to what LICOMCEN wants to portray, the CIAC validly acquired jurisdiction over the dispute. Firstly, LICOMCEN submitted itself to the jurisdiction of the CIAC when its president Antonio S. Tan signed the TOR[30] during the preliminary conference. The TOR states: V. MODE OF ARBITRATION The parties agree that their differences be settled by an Arbitral Tribunal who were appointed in accordance with the provision of Article V, Section 2 of the CIAC Rules of Procedure Governing Construction Arbitration, as follows: SALVADOR C. CEGUERA Chairman FELISBERTO G.L. REYES Member

Clearly then, the CIAC has 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.
[27]

The GCC signed by LICOMCEN and FSI had the following arbitral clause: GC-61 DISPUTES AND ARBITRATION Should any dispute of any kind arise between the LICOMCEN, INCORPORATED and the Contractor or the Engineer and the Contractor in connection with, or arising out of the execution of the Works, such dispute shall first be referred to and settled by the LICOMCEN, INCORPORATED who shall within a period of thirty (30) days after being formally requested by either party to resolve the dispute, issue a written decision to the Engineer and Contractor. Such decision shall be final and binding upon the parties and the Contractor shall proceed with the execution of the Works with due diligence notwithstanding any Contractors objection to the decision of the Engineer. If within a period of thirty (30) days from receipt of the LICOMCEN, INCORPORATEDs decision on the dispute, either party does not officially give notice to contest such decision through arbitration, the said decision shall remain final and binding. However, should any party within thirty (30) days from receipt of the LICOMCEN, INCORPORATEDs decision contest said decision, the dispute shall be submitted for arbitration under the Construction Industry Arbitration Law, Executive Order 1008. The arbitrators appointed under said rules and regulations shall have full power to open up, revise and review any decision, opinion, direction, certificate or valuation of the LICOMCEN, INCORPORATED. Neither party shall be limited to the evidence or arguments put before the LICOMCEN, INCORPORATED for the purpose of obtaining his said decision. No decision given by the LICOMCEN, INCORPORATED shall disqualify him from being called as a witness and giving evidence in the arbitration. It is understood that the obligations of the LICOMCEN, INCORPORATED, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works.[28] SALVADOR P. CASTRO, JR. Member The case shall be decided in accordance with the Contract of the parties and the Construction Industry Arbitration Law (Executive Order No. 1008) and on the basis of evidence submitted, applicable laws, and industry practices where applicable under the law.[31]

Secondly, we agree with the CA that the suit arose from the execution of works defined in the contract. As it aptly ratiocinated: [T]he dispute between [FSI] and [LICOMCEN] arose out of or in connection with the execution of works. [LICOMCEN] has gone quite far in interpreting disputes arising out of or in connection with the execution of work as separate and distinct from disputes arising out of or in connection with the contract citing the various provisions of the Construction Agreement and Bid Documents to preclude CIAC from taking cognizance of the case. To the mind of this Court, such differentiation is immaterial. Article 1374 of the Civil Code on the interpretation of contracts ordains that the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. Essentially, while we agree that *FSIs+ money claims against *LICOMCEN+ arose out of or in connection with the contract, the same necessarily arose from the work it accomplished or sought to accomplish pursuant thereto. Thus, said monetary claims can be categorized as a dispute arising out of or in connection with the execution of work.[32]

Thirdly, FSI complied with the condition precedent provided in GC61. Record shows that FSI referred the claim to ESCA on February 3, 1998,

LICOMCEN theorizes that this arbitration clause cannot vest jurisdiction in the CIAC, because it covers only disputes arising out of or in connection with the execution of works, whether permanent or temporary. It argues that since the claim of FSI was not connected to or did not arise out of the execution of the works as contemplated in GC-61, but is based on alleged breach of contract, under GC-05[29] of the GCC, the dispute can only be taken cognizance of by the regular courts. Furthermore, FSI failed to comply with the condition precedent for arbitration. Thus, according to LICOMCEN, the CIAC erred in assuming jurisdiction over the case.

and then to LICOMCEN on March 3, 1998,[33] but it was disallowed on March 24, 1998.[34] Then, on April 15, 1998, FSI rejected the evaluation of the billings made by ESCA and LICOMCEN and further informed the latter of its intention to turn over the project.[35] FSI exerted efforts to have the claim settled amicably, but no settlement was arrived at. Hence, on March 14, 2001, FSI through counsel made a final demand to pay.[36] LICOMCEN, however, adamantly refused to pay, prompting FSI to file suit with the CIAC. Clearly, FSI substantially complied with the condition precedent laid down in GC-61. Finally, the arbitral clause in the agreement, considering that the requisites for its application are present, is a commitment by the parties

to submit to arbitration the disputes covered therein. Because that clause is binding, they are expected to abide by it in good faith.[37] The termination of the contract was made obvious and unmistakable when LICOMCENs new project consultant rebidded the contract for the Just as meaningful, the issue of jurisdiction was rendered moot by LICOMCEN's active participation in the proceedings before the CIAC. It is true that LICOMCEN initially assailed the jurisdiction of the CIAC. But when the CIAC asserted its jurisdiction in its February 20, 2003 Order,[38] LICOMCEN did not seek relief from the CIAC ruling. Instead, LICOMCEN took part in the discussion on the merits of the case, even going to the extent of seeking affirmative relief. The active involvement of a party in the proceedings is tantamount to an invocation of, or at least an acquiescence to, the court's jurisdiction. Such participation indicates a willingness to abide by the resolution of the case, and will bar said party from later on impugning the court or body's jurisdiction.[39] The Court will not countenance the effort of any party to subvert or defeat the objective of voluntary arbitration for its own private motives.[40] After submitting itself to arbitration proceedings and actively participating therein, LICOMCEN is estopped from assailing the jurisdiction of the CIAC, merely because the latter rendered an adverse decision. Suspension of work is ordinarily understood to mean a temporary work stoppage or a cessation of work for the time being. It may be assumed that, at least initially, LCC had a valid reason to suspend the Works on December 16, 1997 pursuant to GC-38 above-quoted. The evidence show, however, that it has not ordered a resumption of work up to the present despite the lapse of more than four years, and despite the dismissal of the case filed with the Office of the Ombudsman which it gave as reason for the suspension in the first place. As such, LCCs suspension of the Works had already lost its essential characteristic of being merely temporary or only for the time being. To still consider it a suspension at this point is to do violence to reason and logic. Perhaps because of this LCC came up with the assertion that what we have is an indefinite suspension. There is no such term in the Construction Agreement or the Contract Documents. In fact, it is unknown in the construction industry. Construction work may either be suspended or terminated, but never indefinitely suspended. Since it is not sanctioned by practice and not mentioned in the herein Construction Agreement and the Contract Documents, indefinite suspension is irregular and invalid. Due to the apparent incongruity of an indefinite suspension, LCC changed the term to continued suspension in its Memorandum. Unfortunately for it, the factual situation remains unchanged. The Works stay suspended for an indefinite period of time.[45] bored piling works for the CITIMALL.[43] The claim that the rebidding was conducted for purposes of getting cost estimates for a possible new design[44] taxes our credulity. It impresses us as nothing more than a lame attempt of LICOMCEN to avoid liability under the contract. As the CIAC had taken pains to demonstrate:

Having resolved the issue of jurisdiction, we proceed to the merits of the case.

LICOMCEN faults the CIAC and the CA for ruling that the contract had been terminated, insisting that it was merely indefinitely suspended. To bolster its position, LICOMCEN cited GC-41 of the GCC which reads: GC-41 LICOMCEN, INCORPORATEDS RIGHT SUSPEND WORK OR TERMINATE THE CONTRACT xxxx 2. For Convenience of LICOMCEN, INCORPORATED TO

Accordingly, the CA did not err in affirming the CIAC ruling that the contract had already been terminated.

If any time before completion of work under the Contract it shall be found by the LICOMCEN, INCORPORATED that reasons beyond the control of the parties render it impossible or against the interest of LICOMCEN, INCORPORATED to complete the work, the LICOMCEN, INCORPORATED at any time, by written notice to the Contractor, may discontinue the work and terminate the Contract in whole or in part. Upon issuance of such notice of termination, the Contractor shall discontinue the work in such manner, sequence and at such time as the LICOMCEN, INCORPORATED/Engineer may direct, continuing and doing after said notice only such work and only until such time or times as the LICOMCEN, INCORPORATED/Engineer may direct. x x x[41] (Emphasis supplied)

Neither can LICOMCEN find refuge in the principle of laches to steer clear of liability. It is not just the lapse of time or delay that constitutes laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it. [46]

Indeed, FSI filed its petition for arbitration only on October 8, 2002, or after the lapse of more than four years since the project was

Unfortunately for LICOMCEN, this provision does not support but enervates its theory of indefinite suspension. The cited provision may be invoked only in cases of termination of contract, as clearly inferred from the phrase discontinue the work and terminate the contract. And in statutory construction implies conjunction, joinder or union.[42] Thus, by invoking GC41, LICOMCEN, in effect, admitted that the contract had already been terminated.

indefinitely suspended. But we agree with the CIAC and the CA that such delay can hardly be considered unreasonable to give rise to the conclusion that FSI already abandoned its claim. On the contrary, the delay was due to the fact that FSI exerted efforts to have the claim settled extra-judicially which LICOMCEN rebuffed. Besides, except for LICOMCENs allegation that the filing of the suit is already barred by laches, no proof was offered to show that the filing of the suit was iniquitous or unfair to LICOMCEN. We reiterate

that, unless reasons of inequitable proportions are adduced, a delay within the prescriptive period is sanctioned by law and is not to be considered delay that would bar relief.[47] In the instant case, FSI filed its claim well within the ten-year prescriptive period provided for in Article 1144 of the Civil Code.[48] Therefore, laches cannot be invoked to bar FSI from instituting this suit.

the LICOMCEN, Contractor.

INCORPORATED

and

the

2. The cost of materials or goods reasonably ordered for the Permanent or Temporary Works which have been delivered to the Contractor but not yet used and which delivery has been certified by the Engineer. 3. The reasonable cost of demobilization For any payment due the Contractor under the above conditions, the LICOMCEN, INCORPORATED, however, shall deduct any outstanding balance due from the Contractor for advances in respect to mobilization and materials, and any other sum the LICOMCEN, INCORPORATED is entitled to be credited.[51]

The doctrine of laches is based upon grounds of public policy which require, for the peace of society, discouraging stale claims. It is principally a question of the inequity or unfairness of permitting a right or

We agree with the Court of Appeals that the liability of LICOMCEN for claim to be enforced or asserted. There is no absolute rule as to what constitutes laches; each case is to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice.
[49]

the cost of materials on site is only P5,694,939.85. The said award represents the materials reasonably ordered for the project and which were delivered to the job site. FSI cannot demand full payment of the steel bars under Purchase Order No. 6035.[52] As shown by the records, the steel bars were loaded at M/V Alberto only on January 12, 1998[53] and reached Legaspi City on January 16, 1998.[54] But as early as December 16, 1997, LICOMCEN already informed FSI of the major revision of the design and ordered the non-delivery to the jobsite of the 50% of the steel bars.

We now come to the monetary awards granted to FSI. LICOMCEN avers that the award lacked factual and legal basis. FSI, on the other hand, posits otherwise, and cries foul on the modification made by the CA. It asserts that the CA erred in disregarding the pieces of evidence that it submitted in support of the claim despite the lack of objection and opposition from LICOMCEN. It insists entitlement to the full amount of material costs at site, for equipment and labor standard costs, as well as unrealized profits.

Inexplicably, FSI continued the delivery. Worse, it unloaded all the steel bars and delivered them to the jobsite and some to the Tuanzon batching plant onJanuary 17, 1998,[55] despite LICOMCENs order not to do so. FSI cannot now claim payment of the cost of all these materials.

LICOMCEN, however, cannot deny liability for 50% of the steel bars because, as mentioned, it ordered their delivery to the jobsite. The steel bars had in fact been delivered to the jobsite and inventoried by Cesar Cortez of ESCA,[56] contrary to LICOMCENs claim. The payment of these materials is, therefore, in order, pursuant to GC-41: The Contractor shall receive compensation for reasonable expenses incurred in good faith for the performance of the Contract and for reasonable expenses associated with the termination of the Contract. x x x.[57]

In this connection, we must emphasize the distinction between admissibility of evidence and its probative value. Just because a piece of evidence is not objected to does not ipso facto mean that it conclusively proves the fact in dispute. The admissibility of evidence should not be confused with its probative value. Admissibility refers to the question of whether certain pieces of evidence are to be considered at all, while probative value refers to the question of whether the admitted evidence proves an issue. Thus, a particular item of evidence may be admissible, but its evidentiary weight depends on judicial evaluation within the guidelines provided by the rules of evidence.[50]

We also uphold the denial of FSIs claim for equipment and labor standard costs, as no convincing evidence was presented to prove it. The list of rented equipment[58] and the list of workers[59] offered by FSI and which were admitted by CIAC, are far from being clear and convincing proof that FSI actually incurred the expenses stated therein.

As aptly said by the CA, FSI should have presented convincing pieces of documentary evidence, such as the lease contract or the receipts of

We have carefully gone over the records and are satisfied that the findings of the CA are well supported by evidence. As mentioned above, the contract between LICOMCEN and FSI had already been terminated and, in such case, the GCC expressly provides that: GC-42 PAYMENT FOR TERMINATED CONTRACT If the Contract is terminated as aforesaid, the Contractor will be paid for all items of work executed, and satisfactorily completed and accepted by the LICOMCEN, INCORPORATED up to the date of termination, at the rates and prices provided for in the contract and in addition: 1. The cost of partially accomplished items of additional or extra work agreed upon by

payment issued by the owners of the rented equipment, to establish the claim. As to its claimed labor expenses, the list of employees does not categorically prove that these listed employees were actually employed at the construction site during the suspension. Hence, even assuming that LICOMCEN failed to submit evidence to rebut these lists, they do not ipso facto translate into duly proven facts. FSI still had the burden of proving its cause of action, because it is the one asserting entitlement to an affirmative relief.[60] On this score, FSI failed. The CA, therefore, committed no reversible error in denying the claim.

FSIs claim for unrealized profit has to be rejected too. GC-41 specifically provided that: x x x The Contractor shall have no claim for anticipated profits on the work thus terminated, nor any other claim, except for work actually performed at the time of complete discontinuance, including any variations authorized by the LICOMCEN, INCORPORATED/Engineer to be done under the section dealing with variation, after the date of said order, and for any claims for variations accruing up to the date of said notice of termination.[61] (Emphasis supplied)

The provision was agreed upon by the parties freely, and significantly, FSI did not question this. It is not for the Court to change the stipulations in the contract when they are not illegal. Article 1306 of the Civil Code provides that the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.[62] Besides, no convincing proof was offered to prove the claim. In light of the foregoing, the CA, therefore, correctly denied the claim for unrealized profit.

Similarly, we agree with the CIAC and the CA that LICOMCEN should bear the cost of arbitration as it adamantly refused to pay FSIs just and valid claim, prompting the latter to institute a petition for arbitration.

In sum, we find no reason to disturb the decision of the CA. It cannot be faulted for denying FSIs motion for reconsideration through a mere Minute Resolution, for as we held in Ortigas and Company Limited Partnership v. Velasco:[63] The filing of a motion for reconsideration, authorized by Rule 52 of the Rules of Court, does not impose on the Court the obligation to deal individually and specifically with the grounds relied upon therefor, in much the same way that the Court does in its judgment or final order as regards the issues raised and submitted for decision. This would be a useless formality or ritual invariably involving merely a reiteration of the reasons already set forth in the judgment or final order for rejecting the arguments advanced by the movant; and it would be a needless act, too, with respect to issues raised for the first time, these being, x x x deemed waived because not asserted at the first opportunity. It suffices for the Court to deal generally and summarily with the motion for reconsideration, and merely state a legal ground for its denial (Sec. 14, Art. VIII, Constitution); i.e., the motion contains merely a reiteration or rehash of arguments already submitted to and pronounced without merit by the Court in its judgment, or the basic issues have already been passed upon, or the motion discloses no substantial argument or cogent reason to warrant reconsideration or modification of the judgment or final order; or the arguments in the motion are too unsubstantial to require consideration, etc.

WHEREFORE, the herein petitions for review are DENIED, and the assailed Decision and Resolutions of the Court of Appeals are AFFIRMED.