Case Digest (G.R. No. 244214-15)
Facts:
Republic of the Philippines, represented by the Department of Public Works and Highways v. Sergio C. Pascual, G.R. Nos. 244214-15, March 29, 2023, Supreme Court Third Division, Gaerlan, J., writing for the Court.Petitioner DPWH awarded two infrastructure contracts (September 4, 2008 and March 23, 2010) to respondent Sergio C. Pascual (doing business as SCP Construction) for road works in Bukidnon and Misamis Oriental, with contract prices of ₱95,329,847.68 and ₱24,513,428.59, respectively. Final inspections and Constructors’ Performance Summary Reports in 2012–2013 rated both projects as “poor” and noted numerous defects; the Final Inspection Reports nevertheless recorded the first project as “100% complete with defects and deficiencies.” Regional teams issued re‑inspection reports in July 2013 showing many defects remained unrectified.
On September 5, 2013 the DPWH Regional Director issued Letters of Notice to Terminate both contracts; respondent submitted letters dated September 18, 2013 denying abandonment and asserting ongoing rectification. On October 8, 2013 the Regional Director issued Decisions for Contract Termination for both projects. DPWH later issued Department Order No. 19 (s. 2014) suspending and blacklisting respondent for one year.
Respondent filed a Request for Arbitration with the Construction Industry Arbitration Commission (CIAC) on July 6, 2015 claiming unpaid final billings and damages and invoking an arbitration clause he said was incorporated by operation of law into the contracts. The OSG (for DPWH) moved to dismiss, arguing lack of an agreement to arbitrate, that the claim was time‑barred by a 14‑day provision in the Philippine Bidding Documents on Procurement of Infrastructure Projects (PBDPIP), failure to exhaust administrative remedies, and that the proper remedy was a money claim with the Commission on Audit (COA). CIAC denied the motion to dismiss (Order, Nov. 12, 2015), found an arbitration clause incorporated by reference via the General Conditions of Contract and the IRR of R.A. No. 9184, applied Article 1144 (10‑year prescriptive period) rather than the 14‑day PBDPIP rule, held that both projects were completed (only punch‑list/rectification works remaining), declared the terminations invalid, and awarded respondent ₱12,254,947.70 (Final Award, Apr. 8, 2016).
DPWH petitioned the Court of Appeals (CA) — CA‑G.R. SP Nos. 143721 & 145399 — seeking nullification of CIAC’s orders and award; the CA consolidated the matters. In a Decision dated February 28, 2018, the CA dismissed the certiorari petition, denied the petition for review, and affirmed the CIAC Final Award with modifications: it affirmed respondent’s entitlement to the remaining balance of the first project but only allowed the second project award in th...(Pro-only)
Issues:
- Was there an agreement between the parties to submit disputes to CIAC arbitration?
- Was respondent’s remedy a money claim cognizable first by COA rather than CIAC?
- Was respondent’s Request for Arbitration time‑barred by the 14‑day provision in the Philippine Bidding Documents?
- Did respondent fail to exhaust administrative remedies as a precondition to CIAC arbitration?
- Was respondent entitled to the amounts award...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)