National Power Corporation v. Premier Shipping Lines

CHICO-NAZARIO, J.:

Before Us are Petitions for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by Premier Shipping Lines, Inc. (Premier) and National Power Corporation (NAPOCOR) assailing the Decision1 of the Court of Appeals2 dated 19 July 2007 in CA-G.R. CV No. 73650 which set aside the Decision3 of the Regional Trial Court (RTC) of Cebu City, Branch 11. Premier filed a Motion for Reconsideration which the Court of Appeals denied in a Resolution4 dated 12 September 2007. The factual antecedents of this case are as follows: NAPOCOR is a public corporation duly organized and existing under and by virtue of Republic Act No. 6395, as amended, while Premier is a private corporation engaged in the domestic transport of cargo duly registered and existing under and by virtue of the laws of the Republic of the Philippines.

On 18 June 1996, NAPOCOR conducted a public bidding to procure the services of a contractor that would haul/deliver nine hundred twenty-four (924) wood poles from Bacolod to Masbate, Mindoro, Marinduque and Catanduanes. In a pre-bidding conference, the participants, one of which was Premier, were informed that, if awarded the job, it would provide labor, materials, tools and equipment to carry out the job; that the delivery of the wood poles would be on a door-to-door basis; that the wood poles were already segregated according to size in the port of origin; and, that the bid price was a lot price. Premier won the public bidding with a bid of ₱2,398,000.00.

A Notice of Award5 dated 25 June 1996 signed by Salvador D. Faelnar, OIC - RAFS6 was issued to Premier under Job Order No. ADM-TWSS-96-03-28. On 2 August 1996, NAPOCOR and Premier entered into a contract7 for the said service. Thereafter, a Notice to Proceed8 dated 5 August 1996 signed by Jose C. Troyo, Group Manager-RAFS, was issued to Premier, advising the latter to commence the work to provide labor, materials, tools and equipment, including payments of all taxes, fees, insurance and freight, thru government and private agencies.

On 13 August 1996, Premier received a fax message9from NAPOCOR's Island Grid Project Office in Quezon City requesting some revision of the delivery point due to a change in priority of construction. One of the requested changes was the delivery of wood poles from Bacolod City to San Jose, Mindoro instead of Bacolod City to Calapan, Mindoro. On account thereof, in a letter10 dated 15 August 1996 signed by Benson E. Go, General Manager/President of Premier, Premier asked for the time suspension of the contract.

It informed NAPOCOR that such a revision would entail additional expenses, since the number of ports would increase from four to five, together with the number of days of usage of the vessel. The change would mean additional 70 nautical miles in distance and ten hours of travel time. In a meeting on 19 August 1996, NAPOCOR agreed to pay Premier~~P~~ 65,000.00, representing costs of fuel oil and lube oil, for the change of delivery point from Calapan, Mindoro to San Jose, Mindoro.

In a letter11 dated 20 August 1996 of Jose C. Troyo to Mr. Benson E. Go regarding the amount agreed upon during the aforesaid meeting, the latter gave his conforme by affixing his signature thereto. The changes in the quantities of the wood poles and their delivery locations were contained in a letter dated 20 August 1996 of J.D. de Mesa, Project Manager, Island Grid Project.12 A Supplemental Contract13 involving the aforesaid agreement was entered into by NAPOCOR and Premier on 10 June 1997.

Said Supplemental Contract was incorporated into and made part of the original contract. After threshing out with NAPOCOR the changes in quantity and delivery locations, Premier sent its motor vessel, M/V Arthur II, to Bacolod City in order to load thereon the wood poles for delivery to the different points of destination. The vessel arrived in Bacolod City on 31 August 1996, and Premier's personnel began loading the wood poles on 3 September 1996.

As testified to by Mr. Go, they were surprised to discover that some of the poles at the stockyard at Mansilingan, Bacolod City were already rotten and about to break. This gave them a problem, for it would cause considerable delay in the loading of the poles to the vessel. Without such rotten poles, three to five poles could be lifted at a time and it would take from five to eight days to finish the loading of all the poles; however, with some rotten poles, they could not lift three to five poles at a time.

They had to segregate one by one the serviceable poles from the unserviceable ones. This segregation, according to Mr. Go, was not part of the original and supplemental contracts between NAPOCOR and Premier. They, nevertheless, performed the segregation per instruction given by defendant, acting through its Island Grid Project Manager.

A certification to this effect was issued by J. D. de Mesa.14 After segregating the serviceable from the unserviceable wood poles, Premier loaded to its vessels 879 out of the 924 poles, the difference being the unserviceable ones. Premier took eighteen (18) days to load the poles, allegedly resulting in Premier's incurring an additional cost in the sum of ₱ 964,900.00, broken down as follows15: 1. 1 Prime mover w/ trailer @ ₱1,200.00/hr.

x 10 days = ₱ 96,000.00 2. 1 Trailer @ ₱750.00/hr. x 10 days = 60,000.00 3.

1 Crane @ ₱1,500.00/hr. x 10 days = 120,000.00 4. 1 Crane Operator @ ₱150.00/day x 10 days = 1,500.00 5.

1 Driver (Prime Mover) @ ₱150.00/day x 10 days = 1,500.00 6. 1 Auto Mechanic @ ₱150.00/day x 10 days = 1,500.00 7. 23 Laborers @ ₱120.00/day x 10 days = 27,600.00 8.

1 Supervisor @ ₱250.00/day x 10 days = 2,500.00 9. Meals for 27 persons @ ₱90.00/day/person x 10 days = 24,300.00 10. Vessel @ ₱90,000.00/day x 7 days = 630,000.00