Case Digest (G.R. No. 96161)
Facts:
In BF Corporation v. Court of Appeals and Shangri-La Properties, Inc., the petitioner BF Corporation entered into a First Agreement with respondent Shangri-La Properties, Inc. (SPI) to construct the main structure of the EDSA Plaza Project in Mandaluyong City. After delays attributed by SPI as “serious and substantial,” and by BF Corporation to a fire on November 30, 1990, the parties renegotiated and on May 30, 1991 executed an Agreement for the Execution of Builder’s Work, covering work from May 1, 1991 until completion. SPI alleged that BF Corporation abandoned the project, while BF Corporation insisted it complied until the fire. A dispute arose over delays, damages and unpaid balances. On July 14, 1993, BF Corporation filed a collection complaint in the Pasig RTC against SPI and its directors. SPI moved to suspend proceedings, invoking an arbitration clause in the Conditions of Contract, annexed to the Articles of Agreement dated November 15, 1991 but unsigned by SPI’s reprCase Digest (G.R. No. 96161)
Facts:
- Parties and Initial Agreements
- BF Corporation (contractor) and Shangri-La Properties, Inc. (SPI, owner) entered into a First Agreement for the construction of the main structure of the EDSA Plaza Project, a shopping mall complex in Mandaluyong City.
- On November 30, 1990, a fire damaged Phase I of the project. To address the damage and extend work, the parties negotiated a revised contract.
- May 30, 1991 Agreement for Builder’s Work
- The parties executed a written “Agreement for the Execution of Builder’s Work for the EDSA Plaza Project,” covering work from May 1, 1991 until completion.
- The Agreement provided for progress billing, final payment provisions, liquidated damages for delay (P 80,000/day up to 5% of contract price), and—by reference to the “Conditions of Contract”—an arbitration clause for disputes.
- Emergence of Dispute and Trial Court Proceedings
- SPI alleged BF incurred serious delays and abandoned the project; BF claimed faithful performance post-fire.
- July 12, 1993: Parties’ representatives met in conference to settle liabilities—no agreement reached.
- July 14, 1993: BF filed a collection complaint (RTC Pasig) for unpaid balance (~P 110,883,101.52) against SPI and its board members.
- August 3–4, 1993: SPI moved to suspend proceedings, invoking arbitration clause; attached contract documents (Articles of Agreement and Conditions of Contract).
- BF opposed, denying the existence of any arbitration clause; RTC denied the motion to suspend, finding the clause not duly signed or binding and, in any event, invoked too late.
- Appellate Proceedings
- SPI sought certiorari under Rule 65 before the Court of Appeals (CA).
- CA granted the petition, held the arbitration clause validly incorporated and timely invoked (demand made Aug. 13, 1993), annulled RTC orders, and stayed proceedings.
- BF elevated to the Supreme Court by petition for review on certiorari.
Issues:
- Does the May 30, 1991 contract embody a valid and binding arbitration clause?
- If so, was SPI’s invocation of arbitration timely under the contract’s “reasonable time” requirement?
- Was resort to certiorari proper to review the RTC’s denial of the motion to stay proceedings, or should SPI have appealed?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)