Case Digest (G.R. No. 142525)
Facts:
Federal Builders, Inc. v. Daiichi Properties and Development, Inc., G.R. No. 142525, February 13, 2009, the Supreme Court Third Division, Chico‑Nazario, J., writing for the Court.Federal Builders, Inc. (petitioner) was the winning bidder for the construction of Orient Plaza, and on 29 December 1995 entered into a Construction Agreement with Daiichi Properties and Development, Inc. (respondent). The Agreement fixed that Daiichi would supply cement (guaranteed maximum 834,273 bags) and steel bars (guaranteed maximum 9,262,334.45 kg) while Federal would supply labor and other materials for a fixed price of P212,000,000. The contract also reserved to Daiichi the right to revise construction plans and required the contractor to undertake additional, omitted, or altered work as directed.
During construction Daiichi reduced concrete strength from 8,000 to 6,000 psi, prompting revised plans and a corresponding reduction in quantities of cement, steel, other materials, and labor. The parties agreed to reduce the contract price and to separately evaluate the "deductive cost" but disagreed on the correct method to compute that deduction. Daiichi computed the deductive cost by comparing quantities under the original plan to quantities under the revised plan (arriving at P64,602,110.59). Federal computed it by comparing the guaranteed maximums in the Construction Agreement to the revised-plan quantities (arriving at P31,326,810.15). Daiichi engaged Davis Langdo and Seah Philippines, Inc. (DLS), which produced a P68,441,415.58 estimate; Daiichi also made unilateral deductions from amounts due Federal.
Federal filed a petition for arbitration with the Construction Industry Arbitration Commission (CIAC) on 9 November 1998; the parties submitted the dispute to an Arbitral Tribunal. Daiichi moved on 2 June 1999 to commission an independent quantity surveyor to determine actual quantities under the original and revised plans. Federal opposed, arguing that Daiichi already had an independent estimate and that the original plans were never implemented, so the Construction Agreement's guaranteed quantities controlled. The Arbitral Tribunal denied Daiichi's motion in an Order dated 29 June 1999 and denied reconsideration on 13 July 1999.
Daiichi sought relief from the Court of Appeals. In CA‑G.R. SP No. 54122 the Court of Appeals, in a Decision dated 9 November 1999, set aside the Arbitral Tribunal's Orders and directed the tribunal, subject to Section 5, Chapter XV of the Rules of Procedure Governing Construction Arbitration, to commission an independent quantity surveyor to determine the actual q...(Subscriber-Only)
Issues:
- Was the petition properly brought under Rule 65, or should Federal have filed a petition for review under Rule 45?
- Did the Court of Appeals commit grave abuse of discretion in annulling the Arbitral Tribunal's orders and ordering the commissioning of an independent...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)