Case Digest (G.R. No. 154885)
Facts:
Diesel Construction Co., Inc. v. UPSI Property Holdings, Inc., G.R. No. 154885 and G.R. No. 154937, March 24, 2008, Supreme Court Second Division, Velasco Jr., J., writing for the Court.On August 26, 1999, Diesel Construction Co., Inc. (Diesel) and UPSI Property Holdings, Inc. (UPSI) executed a Construction Agreement for interior architectural works on the 14th–16th floors of UPSI Building 3 (the Project), with Diesel to be paid by progress billing for a contract price (as amended) of PhP 12,739,099. Diesel posted a performance bond through FGU Insurance Corp. (FGU) in favor of UPSI. The contract set the prosecution start and completion dates (initially August 2, 1999 to November 8, 1999, later moved to August 21 to November 20, 1999) and provided for liquidated damages equal to one‑fifth (1/5) of one (1) percent of the total Project cost per calendar day of unjustifiable delay. Construction manager, architect/interior designer, and quantity surveyor were engaged to oversee progress.
Disputes arose over change orders, delayed supply of materials, manual hauling of materials (due to inability to use hoisting equipment), and other events. UPSI imposed deductions for liquidated damages from Diesel’s progress payments and withheld the 10% retention and the unpaid balance, alleging abandonment. Diesel sent a completion notice (March 16, 2000) which UPSI rejected. Diesel filed for arbitration before the Construction Industry Arbitration Commission (CIAC) seeking the unpaid balance, damages and attorneys’ fees; UPSI counterclaimed for costs to complete the work and for validation of its liquidated damages deductions.
On December 14, 2001 the CIAC (Arbitral Tribunal) rendered an award in favor of Diesel ordering UPSI to pay PhP 4,027,861.60 (PhP 3,661,692.60 unpaid balance; PhP 366,169 attorneys’ fees) and assessed arbitration costs of PhP 298,406.03 against UPSI, while dismissing UPSI’s counterclaim. UPSI appealed to the Court of Appeals (CA) in CA‑G.R. SP No. 68340. On April 16, 2002 the CA modified the CIAC award: it granted UPSI liquidated damages of PhP 1,309,500 (45 days at P29,100/day), held Diesel entitled to P2,441,482.64 for unpaid balance (but netted against liquidated damages to P1,131,982.64), ordered parties to equally share arbitration costs, and dismissed attorneys’ fees. Diesel and UPSI filed motions for reconsideration. By Resolution dated August 21, 2002 the CA partially granted Diesel’s motion (reducing liquidated da...(Pro-only)
Issues:
- May the Court of Appeals review and overturn factual findings of the CIAC Arbitral Tribunal — a highly specialized administrative body — on the ground that such findings are not supported by substantial evidence (including whether the CA may question the arbitral panel’s members’ qualifications)?
- Did the Court of Appeals err in substituting its own factual findings as to delay and liquidated damages for those of the CIAC — specifically, was Diesel in unjustifiable delay and properly liable for liquidated damages?
- Was the Court of Appeals correct to deny UPSI’s claim for additional expenses to complete the Project on the ground that Diesel abandoned the work?
- Was the CIAC award of attorneys’ fees ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)