Case Digest (G.R. No. L-63915) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
On July 26, 1996, the Local Water Utilities Administration (LWUA) entered into a Financial Assistance Contract with the Butuan City Water District (BCWD), granting a loan amounting to PHP 550,915,000.00 to finance the Butuan City Water Supply System Comprehensive Improvement Program. The project was funded through a re-loan from the Japan Bank for International Cooperation (JBIC), and LWUA appointed an acting project manager for oversight. Key provisions of the loan agreement designated LWUA as the "agent" of BCWD with authority to pre-qualify bids, process them, negotiate with the winning bidder, award contracts, release payment, and approve various stages of construction. After competitive bidding in 1997, R.D. Policarpio & Co., Inc. (RDPCI) was awarded the construction contract executed on April 18, 1998, approved by LWUA.Amendments and supplemental agreements followed, with LWUA’s continued approval and issuing notices to proceed. Construction was temporarily suspended in
Case Digest (G.R. No. L-63915) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Local Water Utilities Administration (LWUA) granted a loan to Butuan City Water District (BCWD) to fund the Butuan City Water Supply System Comprehensive Improvement Program (the Project).
- LWUA and BCWD entered into a Financial Assistance Contract on July 26, 1996, with a loan of PHP 550,915,000, where LWUA was authorized as the agent of BCWD to manage various processes related to the Project.
- The Project was financed partly through a re-loan from the Japan Bank for International Cooperation (JBIC).
- LWUA engaged Yoshito Sato as Acting Project Manager.
- Construction Contract and Related Agreements
- After bidding in 1997, the construction contract was awarded to R.D. Policarpio & Co., Inc. (RDPCI), with LWUA issuing the Notice of Award on February 19, 1998.
- BCWD and RDPCI signed the Contract for Construction on April 18, 1998, with LWUA's approval.
- An Amendment to the Construction Contract was made on July 21, 1998, approved by LWUA, who also issued Notice to Proceed.
- The Project was temporarily suspended in February 1999 due to design revisions, confirmed by Sato.
- A Memorandum of Agreement (MOA) was signed by LWUA, BCWD, and RDPCI on July 24, 2001, specifying payment terms.
- A Supplemental Agreement was executed on September 14, 2001, extending completion time and adjusting contract price; LWUA approved and issued Notice to Proceed.
- Dispute and Arbitration Proceedings
- RDPCI claimed completion of work and demanded payment from BCWD and LWUA.
- BCWD did not pay, prompting RDPCI to file a complaint with the Construction Industry Arbitration Commission (CIAC).
- BCWD initially moved to dismiss for lack of jurisdiction but withdrew the motion.
- LWUA failed to answer RDPCI's complaint but responded to BCWD's cross-claim.
- BCWD sought to be dropped as a party, opposed by RDPCI.
- CIAC Ruling
- On April 1, 2011, CIAC awarded RDPCI monetary claims totaling PHP 84,439,378.18, holding LWUA solidarily liable with BCWD.
- CIAC found LWUA acted more than an agent; it was a co-owner actively managing key functions such as contract amendment, payment disbursement, and project acceptance.
- Court of Appeals (CA) Decision and LWUA's Appeal
- CA affirmed CIAC decision on December 17, 2012, dismissing LWUA's petition, emphasizing LWUA's substantial role beyond a mere agent.
- CA noted LWUA's dominant control over contractual approvals and project stages.
- Present Supreme Court Petition
- LWUA filed a Petition for Review on Certiorari questioning its liability and party status in the Construction Contract.
Issues:
- Whether LWUA is a party to the Construction Contract.
- Whether LWUA is solidarily liable with BCWD under the Construction Contract.
- Whether LWUA is liable to pay attorney's fees and costs of arbitration.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)