Noell Whessoe, Inc. v. Independent Testing (Stephenson).
However, it averred that it later
Consultants, Inc., G.R. No. 199851, received a letter from Noell Whessoe November 7, 2018 ( Art. 1729) withdrawing its approval for Independent Testing Consultants' continued services. Facts: Independent Testing Consultants' services Independent Testing Consultants is engaged in allegedly failed to satisfy the standards set by the business of conducting non-destructive the OIS and Stephenson. Petrotech further testing on the gas pipes and vessels of its claimed that due to Independent Testing industrial customers. Consultants' poor performance, it incurred additional costs. Thus, it prayed that Sometime in June 1998, Petrotech, a Independent Testing Consultants be ordered to subcontractor of Liquigaz, engaged the services pay the additional costs as actual damages. of Independent Testing Consultants to conduct non-destructive testing on Liquigaz's piping Issue: WON petitioner is solidarily liable with systems and liquefied petroleum gas storage Liquigaz and Petrotech. tanks located in Barangay Alas-Asin, Mariveles, Ruling: Bataan. Independent Testing Consultants conducted the agreed tests. It later billed No. Under Article 1729, respondent Independent Petrotech, on separate invoices, the amounts of Testing Consultants had a cause of action P474,617.22 and P588,848.48 for its services. against Liquigaz and petitioner, even if its However, despite demand, Petrotech refused to contract was only with Petrotech. The Regional pay. Independent Testing Consultants filed a Trial Court and the Court of Appeals, therefore, Complaint for collection of sum of money with did not err in concluding that petitioner was damages against Petrotech, Liquigaz, and Noell solidarily liable with Liquigaz and Petrotech for Whessoe for P1,063,465.70 plus legal interest. It unpaid fees to respondent Independent Testing joined Noell Whessoe as a defendant, alleging Consultants. Article 1729 creates a solidary that it was Liquigaz's contractor that liability between the owner, the contractor, and subcontracted Petrotech the subcontractor. A solidary obligation is "one in which each debtor is liable for the entire In its Answer,Liquigaz argued that Independent obligation, and each creditor is entitled to Testing Consultants had no cause of action demand the whole obligation."[84] Respondent against it since there were no contractual Independent Testing Consultants may demand relations between them and that any contract that payment for all of its unpaid fees from Liquigaz, Independent Testing Consultants had was with petitioner, or Petrotech, even if its contract was its subcontractors.Noell Whessoe, on the other only with the latter. However, Article 1729, hand, denied that it was Liquigaz's contractor while serving as an exception to the general rule and that its basic role was merely to supervise on the privity of contracts, likewise provides for the construction of its gas plants. It argued that an exception to this exception. The contractor is any privity of contract was only with Petrotech. solidarily liable with the owner and Thus, it asserted that Petrotech alone should be subcontractor for any liabilities against a liable to Independent Testing Consultants... or supplier despite the absence of contract between its part, Petrotech alleged that upon Noell the contractor and the supplier, except when the Whessoe's approval, Independent Testing subcontractor has already been fully paid for its Consultants was chosen to conduct the non- services. Here, the Court of Appeals found that destructive testing on Liquigaz's liquefied there was "uncontroverted evidence that petroleum gas storage vessel under the PETROTECH had already been paid for its supervision of OIS, an inspection firm from the services United Kingdom, and of Nick Stephenson Since Whessoe UK and petitioner should be Andrada Construction opposed the claim for considered the same entity for the purposes of lack of legal and factual basis.On September 6, the Mariveles Terminal Expansion Project, 1996, Andrada Construction wrote to Metro Whessoe UK's full payment to Petrotech would Bottled Water contesting E.S. De Castro and serve as a valid defense against petitioner's Associates’ Special Report. The works solidary liability. Thus, petitioner still cannot be performed by Andrada Construction were held solidarily liable with Liquigaz and inspected by Metro Bottled Water and E.S. De Petrotech for any remaining receivables from Castro and Associates. Punch lists were respondent Independent Testing Consultants. prepared to monitor Andrada Construction’s Any remaining obligations to it should be rectifications.[ Andrada Construction sent letters solidarily borne by the owner, Liquigaz, and the to Metro Bottled Water requesting for payment subcontractor, Petrotech. of unpaid work accomplishments amounting to P7,292,721.27. Metro Bottled Water refused to pay.On August 6, 2001, Andrada Construction 2. Metro Bottled Water Corp. v. Andrada filed a Request for Arbitration before the Construction & Development Corp., Inc., Construction Industry Arbitration Commission, G.R. No. 202430, March 6, 2019 (1724) alleging that Metro Bottled Water refused to pay its unpaid work accomplishment amounting to Facts: P7,954,961.10, with interest of P494,297.31. Metro Bottled Water and Andrada Construction Petitioner argues that the Court of Appeals erred entered into a Construction Agreement for the in applying the principle of unjust enrichment, construction of a reinforced concrete considering that Article 1724 of the Civil manufacturing plant in Gateway Business Park, Code provides the requisites for the recovery of General Trias, Cavite for the contract price of the costs of additional work. It contends that P45,570,237.90. The Construction Agreement Article 1724 requires both the written authority covered all materials, labor, equipment, and of the owner allowing the changes and a written tools, including any other works required. The agreement by the parties as to the increase in project was to be completed within 150 calendar costs, neither of which were present in this case. days or by October 10, 1995, to be reckoned Even the Construction Agreement, it asserts, from Andrada Construction’s posting of a requires a written order to the contractor signed Performance Bond to answer for liquidated by the owner, authorizing work changes or damages, costs to complete the project, and third adjustments on the contract price or contract party claims. The Performance Bond was issued period—to which respondent did not comply. by Intra Strata Assurance Corporation (Intra Issue: Whether or not the Construction Industry Strata).On May 10, 1995, Metro Bottled Water Arbitration Commission and the Court of extended the period of completion to November Appeals erred in finding that petitioner Metro 30, 1995 upon Andrada Construction’s request, Bottled Water Corporation was liable to due to the movement of one (1) bay of the plant respondent Andrada Consumption & building, weather conditions, and change Development Corporation, Inc. for unpaid work orders.On November 14, 1995, E.S. De Castro accomplishment. and Associates, Metro Bottled Water’s consultant for the project, recommended the Ruling: forfeiture of the Performance Bond to answer for No. Petitioner contends that the arbitral tribunal the completion and correction of the project, as should first apply Article 1724 when resolving well as liquidated damages for delay.On May 2, the issue of whether respondent should be 1996, Metro Bottled Water filed a claim against compensated for costs incurred in Change Order the Performance Bond issued by Intra Strata. Nos. 39 to 109. Petitioner, however, fails to recognize that there was no need to apply Article Exasperated, CECON served notice upon ACI 1724, since salient points of the provision had that it would avail of arbitration. On January 29, already been embodied in the Construction 2004, it filed with the CIAC its Request for Agreement. It is settled that the contract is the Adjudication. It prayed that a total sum of law between the parties. Without any ambiguity P183,910,176.92 representing adjusted project in Item No. 8 of the Construction Agreement, costs be awarded in its favor. there was no need to resort to other aids in Issue: Whether or not the Court of Appeals interpretation, such as Article 1724 of the Civil correctly held that the CIAC Arbitral Tribunal Code, to resolve the issue. acted beyond its jurisdiction in holding that the 3. CE Construction Corp. v. Araneta price of P1,540,000,000.00 did not bind the Center, Inc., G.R. No. 192725, [August 9, parties as an immutable lump-sum. 2017], 816 PHIL 221-287 (Arts 1715, 1724) Ruling: Facts: No. No extraordinary technical or legal Petitioner CECON was a construction proficiency is required to see that it would be the contractor, which, for more than 25 years, had height of absurdity and injustice to insist on the been doing business with respondent ACI, the payment of an amount the consideration of developer of Araneta Center, Cubao, Quezon which has been reduced to a distant memory. City. ACI's invocation of Article 1724 is useless as the premises for its application are absent. ACI's In June 2002, ACI sent invitations to different position is an invitation for this Court to lend its construction companies, including CECON, for imprimatur to unjust enrichment enabled by the them to bid on a project identified as "Package gradual wilting of what should have been a #4 Structure/Mechanical, Electrical, and reliable contractual relation. Basic decency Plumbing/Finishes (excluding Part A impels this Court to not give in to ACI's Substructure)," a part of its redevelopment plan advances and instead sustain the CIAC Arbitral for Araneta Center Complex. The project would Tribunal's conclusion that the amount due to eventually be the Gateway Mall. As described CECON has become susceptible to reasonable by ACI, "[t]he Project involved the design, adjustment. coordination, construction and completion of all architectural and structural portions of Part B of the Works[;] and the construction of the 4. Loadstar Shipping Co., Inc. v. Malayan architectural and structural portions of Part A of Insurance Co., Inc., G.R. No. 185565 the Works known as Package 4 of the Araneta (Resolution), [April 26, 2017], 809 PHIL 736- Center Redevelopment Project. Despite ACI's 750 (Arts 1732-1735) undertaking, no formal contract documents were delivered to CECON or otherwise executed Facts: between ACI and CECON. With many changes Loadstar International Shipping, Inc. (Loadstar to the project and ACI's delays in delivering Shipping) and Philippine Associated Smelting drawings and specifications, CECON and Refining Corporation (PASAR) entered into increasingly found itself unable to complete the a Contract of Affreightment for domestic bulk project on January 10, 2004. It noted that it had transport of the latter’s copper concentrates to file a total of 15 Requests for Time Extension which were loaded in Cargo Hold Nos. 1 and 2 from June 10, 2003 to December 15, 2003, all of of MV “Bobcat”, a marine vessel owned by which ACI failed to timely act on. Loadstar International Shipping Co., Inc. (Loadstar International) and operated by goods. The right of subrogation stems from Loadstar Shipping under a charter party Article 2207 of the New Civil Code. The rights agreement. The cargo was insured with of a subrogee cannot be superior to the rights Malayan Insurance Company, Inc. (Malayan). possessed by a subrogor. In other words, a subrogee cannot succeed to a right not possessed The vessel’s chief officer on routine inspection by the subrogor. A subrogee in effect steps into found a crack on starboard side of the main deck the shoes of the insured and can recover only if which caused seawater to enter and wet the the insured likewise could have recovered. cargo. Upon inspection, the Elite Adjusters and Consequently, an insurer indemnifies the insured Surveyor, Inc. (Elite Surveyor) confirmed that based on the loss or injury the latter actually samples of copper concentrates from Cargo suffered from. If there is no loss or injury, then Hold No. 2 were contaminated by seawater. there is no obligation on the part of the insurer to PASAR sent a formal notice of claim in the indemnify the insured. Should the insurer pay amount of [P]37,477,361.31 to Loadstar the insured and it turns out that indemnification Shipping. On the basis of the Elite Surveyor’s is not due, or if due, the amount paid is recommendation, Malayan paid PASAR the excessive, the insurer takes the risk of not being amount of [P]32,351,102.32. PASAR signed a able to seek recompense from the alleged subrogation receipt in favor of Malayan. To wrongdoer. This is because the supposed recover the amount paid and in the exercise of subrogor did not possess the right to be its right of subrogation, Malayan demanded indemnified and therefore, no right to collect is reimbursement from Loadstar Shipping, which passed on to the subrogee. refused to comply. Consequently, on September 19, 2001, Malayan instituted with the RTC a As regards the determination of actual damages, complaint for damages. In its complaint, “[i]t is axiomatic that actual damages must be Malayan mainly alleged that as a direct and proved with reasonable degree of certainty and a natural consequence of the unseaworthiness of party is entitled only to such compensation for the vessel, PASAR suffered loss of the cargo. the pecuniary loss that was duly proven. As Loadstar Shipping and Loadstar International Malayan is claiming for actual damages, it bears denied respondent’s allegations and averred that the burden of proof to substantiate its claim. respondent’s payment to PASAR, on the basis of Actual damages are not presumed. The claimant the latter’s fraudulent claim, does not entitle must prove the actual amount of loss with a respondent automatic right of recovery by virtue reasonable degree of certainty premised upon of subrogation. competent proof and on the best evidence obtainable. Specific facts that could afford a basis for measuring whatever compensatory or Issue: actual damages are borne must be pointed out. WON respondent is entitled to the right of Actual damages cannot be anchored on mere recovery by virtue of subrogation against surmises, speculations or conjectures. petitioners, on the basis of PASAR’s claim. It is not disputed that the copper concentrates carried by M/V Bobcat from Poro Point, La Ruling: Union to Isabel, Leyte were indeed contaminated with seawater. The issue lies on Malayan’s claim against the petitioners is based whether such contamination resulted to damage, on subrogation to the rights possessed by and the costs thereof, if any, incurred by the PASAR as consignee of the allegedly damaged insured PASAR. In this case, Malayan, as the insurer of PASAR, neither stated nor proved that abrasions on the abdomen.12 She also suffered the goods are rendered useless or unfit for the multiple rib fractures.13 The immediate cause of purpose intended by PASAR due to death, stated in her Certificate of Death,14 is contamination with seawater. Hence, there is no "Cardio-Pulmonary Arrest Sec. to Vehicular basis for the goods’ rejection under Article 365 Accident." of the Code of Commerce. Clearly, it is Issue: Whether ES Trucking is a common erroneous for Malayan to reimburse PASAR as carrier required by law to observe extraordinary though the latter suffered from total loss of diligence in the carriage of passengers and goods in the absence of proof that PASAR goods. sustained such kind of loss. Ruling: Yes. Article 1732 of the Civil Code defines 5. Heirs of Mendoza v. ES Trucking and common carriers as persons, corporations, firms Forwarders, G.R. No. 243237, February 17, or associations engaged in the business of 2020 (Art 1732) carrying or transporting passengers or goods or Facts: both, by land, water, or air, for compensation, offering their services to the public. In this case, On June 13, 2013, at around noontime, Catalina the Heirs of Catalina established through P. Mendoza (Catalina) was walking along Sta. preponderance of evidence that, at the time of Maria Road after visiting a lotto outlet nearby. the incident, the vehicle was being used as a While she was at the center of the road and truck for hire without securing the necessary attempting to cross its second half, she was franchise from the LTFRB. ES Trucking sideswiped by a 14-wheeler prime mover truck engaged in a truck for hire business, offering at the junction of Gov. Ramos Street and Sta. their vehicles to transport the cargo of its Maria Road in Zamboanga City. The prime customers. Noticeably, Edgardo Ruste admitted mover truck bore body no. 5 and green plate no. that they filed an application to have the vehicle NAO 152, while the trailer attached to it had included in their Certificate of Public yellow plate no. JZA163. The vehicle is Convenience yet their application was never registered under the name of ES Trucking and granted. This is inconsistent with his own claim Forwarders (ES Trucking) with Sumarni Asprer that ES Trucking does not need to register with Ruste as its sole proprietor. At the time of the the LTFRB because it is not a common carrier incident, the vehicle was driven by Clin Timtim but a private company. The fact that they (Timtim), a holder of professional driver's considered applying for the inclusion of the license no. 104-99-069007. vehicle in their Certificate of Public Moments before the incident, Timtim claimed Convenience signifies that they are aware of the that he stopped the vehicle at the crossing lane franchise requirement of the LTFRB. ES as the tricycle in front of the prime mover truck Trucking cannot be excused simply because it is stopped and only began to accelerate once the not registered with the LTFRB and it is a private tricycle started moving. company. ES Trucking cannot be exonerated from liability and benefit from its own violation The two sons of Catalina picked her up from of the laws and rules governing trucks for hire. under the fuel tank of the prime mover truck behind its front left tire and brought her to 6. Federal Express Corporation, v. Ciudad Medical Zamboanga where she was Luwalhati R. Antonino and Eliza Bettina pronounced dead.11 Catalina suffered multiple Ricasa Antonino GR. No. 199455, June 27, abrasions and contusions in the clavicle area, 2018 (1733) lacerated wound on the cheek, and multiple Facts: On December 15, 2003, Luwalhati and of public policy, are bound to observe Eliza were in the Philippines. As the monthly extraordinary diligence in the vigilance over the common charges on the Unit had become due, goods and for the safety of the passengers they decided to send several Citibank checks to transported by them, according to all the Veronica Z. Sison, who was based in New York. circumstances of each case."Extraordinary Citibank checks allegedly amounting to diligence is that extreme measure of care and US$17,726.18 for the payment of monthly caution which persons of unusual prudence and charges and US$11,619.35 for the payment of circumspection use for securing and preserving real estate taxes were sent by Luwalhati through their own property or rights." Consistent with FedEx with Account No. x2546-4948-1 and the mandate of extraordinary diligence, the Civil Tracking No. 8442 4588 4268. The package was Code stipulates that in case of loss or damage to addressed to Sison who was tasked to deliver the goods, common carriers are presumed to be checks payable to Maxwell-Kates, Inc. and to negligent or at fault. Petitioner is unable to the New York County Department of Finance. prove that it exercised extraordinary diligence in Sison allegedly did not receive the package, ensuring delivery of the package to its resulting in the non-payment of Luwalhati and designated consignee. It claims to have made a Eliza's obligations and the foreclosure of the delivery but it even admits that it was not to the Unit. designated consignee. It asserts instead that it was authorized to release the package without Upon learning that the checks were sent on the signature of the designated recipient and that December 15, 2003, Sison contacted FedEx on the neighbor of the consignee, one identified February 9, 2004 to inquire about the non- only as "LGAA 385507," received it This fails delivery. She was informed that the package was to impress. delivered to her neighbor but there was no signed receipt. The assertion that receipt was made by "LGAA 385507" amounts to little, if any, value in On March 14, 2004, Luwalhati and Eliza, proving petitioner's successful discharge of its through their counsel, sent a demand letter to duty. "LGAA 385507" is nothing but an FedEx for payment of damages due to the non- alphanumeric code that outside of petitioner's delivery of the package, but FedEx refused to personnel and internal systems signifies nothing. heed their demand. Hence, on April 5, 2004, This code does not represent a definite, readily they filed their Complaint for damages. identifiable person, contrary to how commonly Issue: Whether or not petitioner Federal Express accepted identifiers, such as numbers attached to Corporation may be held liable for damages on official, public, or professional identifications account of its failure to deliver the checks like social security numbers and professional shipped by respondents Luwalhati R. Antonino license numbers, function. Reliance on this code and Eliza Bettina Ricasa Antonino to the is tantamount to reliance on nothing more than consignee Veronica Sison petitioner's bare, self-serving allegations. Certainly, this cannot satisfy the requisite of Ruling: extraordinary diligence consummated through Yes. Petitioner is liable for this loss. It failed to delivery to none but "the person who has a right ensure that the package was delivered to the to receive" the package. named consignee. The Civil Code mandates 7. Unitrans International Forwarders, common carriers to observe extraordinary Inc. v. Insurance Company of North diligence in caring for the goods they are America, G.R. No. 203865, March 13, 2019 transporting:Article 1733. Common carriers, (Art 1735 in relation to 1733) from the nature of their business and for reasons Facts: foregoing circumstances to exculpate them from liability In Melbourne, Australia, South East Asia Container Line (SEACOL) solicited and Ruling: received shipment of musical instruments from No. A common carrier is presumed to have been shipper Dominant Musical Instrument for negligent if it fails to prove that it exercised transportation to and delivery at the port of extraordinary vigilance over the goods it Manila. The aforesaid shipment was insured transported. When the goods shipped are either with respondent Insurance Company of North lost or arrived in damaged condition, a America (ICNA) against all risk in favor of the presumption arises against the carrier of its consignee, San Miguel Foundation for the failure to observe that diligence, and there need Performing Arts (San Miguel). SEACOL then not be an express finding of negligence to hold it loaded the insured shipment on board M/S liable. To overcome the presumption of Buxcrown for transportation from Melbourne to negligence, the common carrier must establish Singapore. In Singapore, the shipment was by adequate proof that it exercised extraordinary transferred from M/S Buxcrown to M/S Doris diligence over the goods. It must do more than Wullf for final transportation to the port of merely show that some other party could be Manila. responsible for the damage. In the instant case, Upon arrival in Manila, the container van was considering that it is undisputed that the subject discharged from the vessel and was received by goods were severely damaged, the presumption petitioner Unitrans International Forwarders of negligence on the part of the common carrier, (Unitrans), and upon stripping, it was found that i.e., Unitrans, arose. Hence, it had to discharge two of the cartons containing the musical the burden, by way of adequate proof, that it instruments were in a bad condition. Despite exercised extraordinary diligence over the such, Unitrans delivered the subject shipment to goods; it is not enough to show that some other the consignee. After further inspection, it was party might have been responsible for the found out that two units of musical instruments damage. Unitrans failed to discharge this were damaged and could no longer be used for burden. Hence, it cannot escape liability their intended purpose, hence were declared a Hence, extraordinary diligence was not total loss. Despite repeated demands, Unitrans observed. refused to pay the damages sustained. Subsequently, ICNA, as the insurer, paid for and was subrogated the rights to collect from Unitrans. ICNA filed an amended complaint for 8. Keihin-Everett Forwarding Co., Inc. v. collection of sum of money against South East Tokio Marine Malayan Insurance Co., Inc., Asia Container Line (SEACOL) and the G.R. No. 212107, [January 28, 2019]) (1733- unknown owner/charterer of the vessel M/S 1736) Buxcrown, both doing business in the Facts: Philippines through its local ship agent, petitioner Unitrans International Forwarders Honda Trading Phils. Ecozone Corporation (Unitrans); and against the unknown charterer of (Honda Trading) ordered 80 bundles of M/S Doris Wullf, doing business through its Aluminum Alloy Ingots from PT Molten local ship agent respondent TMS Ship Agencies Aluminum Producer Indonesia. Honda Trading (TSA). insured the entire shipment with Tokio Marine & Nichido Fire Insurance Co., Inc. (TMNFIC). Issue: Whether or not Unitrans was able to It also engaged the services of Keihin-Everett to exercise the diligence necessary under the clear and withdraw the cargo from the pier and to transport and deliver the same to its until they are delivered, actually or warehouse in Biñan, Laguna. Meanwhile, constructively, by the carrier to the consignee, or Keihin-Everett had an Accreditation Agreement to the person who has a right to receive them. with Sunfreight Forwarders whereby the latter Hence, at the time Keihin-Everett turned over undertook to render common carrier services for the custody of the cargoes to Sunfreight the former and to transport inland goods within Forwarders for inland transportation, it is still the Philippines. Shipment was released from the required to observe extraordinary diligence in pier by Keihin-Everett and turned over to the vigilance of the goods. Failure to Sunfreight Forwarders for delivery to Honda successfully establish this carries with it the Trading. En route to the latter's warehouse, the presumption of fault or negligence, thus, truck carrying the containers was hijacked and rendering Keihin-Everett liable to Honda the container van with Serial No. TEXU Trading for breach of contract. 389360-5 was reportedly taken away. Honda Trading suffered losses in the total amount of 9. Faj Construction v. Saulog, G.R. No. P2,121,917.04, representing the value of the lost 200759, March 25, 2015 (Art. 1715) 40 bundles of Aluminum Alloy Ingots. Claiming to have paid Honda Trading's insurance claim Facts: for the loss it suffered, Tokio Marine filed a On June 15, 1999, petitioner FAJ Construction complaint for damages against Keihin-Everett. and Development Corporation and respondent Issue: WON Keihin-Everett is liable? Susan M. Saulog entered into an Agreement6 (construction agreement) for the Ruling: construction of a residential building in San Lorenzo Village, Makati City for a contract Yes. Keihin-Everett is liable notwithstanding price of P12,500,000.00. Payment to petitioner that the cargoes were in the possession of contractor shall be on a progress billing basis, Sunfreight Forwarders when they were hijacked. after inspection of the work by respondent. As correctly held by the CA, there was no Construction of the building commenced, and privity of contract between Honda Trading (to respondent made a corresponding total payment whose rights Tokio Marine was subrogated) and to petitioner in the amount of P10,592,194.80. Sunfreight Forwarders. Hence, Keihin-Everett, However, for the October 31 and November 6, as the common carrier, remained responsible to 2000 progress billing statements sent by Honda Trading for the lost cargoes. petitioner in the total amount of P851,601.58, In this light, Keihin-Everett, as a common respondent refused to pay. After performing carrier, is mandated to observe, under Article additional work, petitioner made another request 1733 of the Civil Code, extraordinary diligence for payment, but respondent again refused to in the vigilance over the goods it transports pay, prompting petitioner to terminate the according to all the circumstances of each case. construction contract pursuant to Article 27(b) In the event that the goods are lost, destroyed or of the Uniform General Conditions of Contract deteriorated, it is presumed to have been at fault for Private Construction (or Document 102) of or to have acted negligently, unless it proves that the Construction Industry Authority of the it observed extraordinary diligence. To be sure, Philippines, Department of Trade and Industry.7 under Article 1736 of the Civil Code, a common Petitioner then sent demand letters to respondent carrier's extraordinary responsibility over the on November 24, 2000 and September 28, 2001. shipper's goods lasts from the time these goods In reply, respondent claimed that petitioner’s are unconditionally placed in the possession of, work was defective, and that it should instead be and received by, the carrier for transportation, made liable thereon. Issue: WON Saulog adequately prove her right to pay the penalty for delay after appellee no to actual damages for rectification of appellant’s longer agreed to any further extension. defective work Ruling: Yes. Article 1715 of the Civil Code provides 10. Shangri-La Properties, Inc. v. BF Corp., that the contractor shall execute the work in such G.R. Nos. 187552-53 & 187608-09, October a manner that it has the qualities agreed upon 15, 2019 (Art. 1724) and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Facts: Should the work be not of such quality, the employer may require that the contractor remove The present controversy originated from the the defect or execute another work. If the agreement of Shangri-la Properties, Inc. (SLPI) contractor fails or refuses to comply with this and BF Corporation (BFC) for the execution of obligation, the employer may have the defect the builder's work for Phases I and II, and the removed or another work executed, at the Car Parking Structure (Carpark) of the EDSA contractor’s cost.Evidently, Article 1715 gives Plaza Project (Project) in Mandaluyong City, the employer the options to require the removal embodied in the parties' contract documents. of the work, to rectify the flaws in their work, or SLPI was the project owner and BFC was the to have the work done at the expense of the trade contractor. BFC sued SLPI and the contractor. members of the latter's board of directors (Alfredo C. Ramos, Rufo B. Colayco, Antonio Here, the defective workmanship was amply B. Olbes, Gerardo O. Lanuza Jr., Maximo G. proven by Architect Rhodora Calinawan’s Licauco III and Benjamin C. Ramos) for the testimony and documentary evidence i.e., collection of P228,630,807.80. The case was photographs, receipts, and list of the expenses docketed as Civil Case No. 63400 in the needed to rectify appellant’s poorly crafted Regional Trial Court of Pasig City (Branch 157). work. Hence, We sustain the award of actual The proceedings before the trial court was damages based on these testimonial and stayed by this court, as affirmed by the Supreme documentary evidence. Court, until termination of an arbitration proceeding as required in their contract. Regarding the penalty for delay in the amount of One Million Three Hundred Eighty Seven BFC filed a request for arbitration with the Thousand Five Hundred Pesos (P1,387,500.00), Construction Industry Arbitration Commission the same should also be sustained. A contract is (CIAC), but the same was eventually dismissed, the law between the parties, and they are bound without prejudice, on the ground that the by its stipulations so long as they are not arbitration between BFC and SLPI must be contrary to law, customs, public policy and undertaken in accordance with Republic Act No. public morals. The penalty for delay is agreed 876. Subsequently, the trial court revived the upon by the parties themselves. The fact that case and directed the parties to proceed with the appellant was already delayed in the completion arbitration proceeding in accordance with of the duplex is undisputed. In fact, record R.A. No. 876. Engr. Eliseo Evangelista, Ms. shows that on January 24, 2000, appellee Alicia Tiongson and Atty. Mario Eugenio Lim approved the extension requested by appellant. were tasked to resolve the controversy as This request for extension, by itself, is already members of the Arbitral Tribunal. proof of delay. Thus, at the time appellant abandoned the project, it already incurred delay. Issue: WON the court of appeals gravely erred Verily, it is only proper that appellant be made when it denied the claims of bfc for variation works it was compelled to perform upon the instructions of SLPI. Ruling: Yes. The Court upholds the Arbitral Tribunal. In our view, the. CA wrongly disregarded the specific variation orders that carried the conformity of SLPI, which, when coupled with the letter dated May 9, 1991, satisfied the requisites under Article 1724. Accordingly, the Court reinstates the Arbitral Tribunal's awards in favor of BFC for variation orders included in progress billings amounting to P9,513,987.91 and for change orders not included in progress billings amounting to P6,201,278.50. The Arbitral Tribunal correctly ruled that BFC had complied with the twin requirements imposed by Article 1724 of the Civil Code. Article 1724 governs the recovery of costs for any additional work because of a subsequent change in the original plans. The underlying purpose of the provision is to prevent unnecessary litigation for additional costs incurred by reason of additions or changes in the original plan. The provision was undoubtedly adopted to serve as a safeguard or as a substantive condition precedent to recovery. As such, added costs can only be allowed upon: (a) the written authority from the developer or project owner ordering or allowing the changes in work; and (b) upon written agreement of the parties on the increase in price or cost due to the change in work or design modification. Compliance with the requisites is a condition precedent for recovery; the absence of one requisite bars the claim for additional costs. Notably, neither the authority for the changes made nor the additional price to be paid therefor may be proved by any evidence other than the written authority and agreement as above-stated.