G.R. No. 172525 - Shinryo Company, Inc. vs. RRN, Inc.

Petitioner: Shinryo (Philippines) Company, Inc. – a domestic corporation organized under Philippine laws.
Respondent: RRN Incorporated – also a domestic corporation organized under Philippine laws.

Respondent filed a claim for arbitration before the Construction Industry Arbitration Commission (CIAC) for recovery of an unpaid account totaling P5,275,184.17, plus legal interest of P442,014.73.
Petitioner counterclaimed for alleged overpayment amounting to P2,512,997.96.

The parties executed an Agreement and Conditions of Sub-contract in June 1996 establishing the framework for their commercial relationship.
On June 11, 2002, and June 14, 2002, the parties entered into an additional agreement for the “Supply of Manpower, Tools/Equipment, Consumables for the Electrical Works-Power and Equipment Supply, Bus Duct Installation” covering the Phillip Morris Greenfield Project with purchase orders amounting to a total of P25,000,000.00.
The agreement also contemplated that respondent would perform variation orders related to the project.

Petitioner supplied manpower and other services chargeable against the project under the contractual terms.
Financial difficulties on the part of respondent hindered the completion of the full scope of works.
Petitioner paid respondent a total amount of P26,547,624.76 over the course of the project.

June 25, 2003 – Respondent (through its former counsel) demanded payment of the unpaid balance of P5,275,184.17, while petitioner claimed material back charges amounting to P4,063,633.43.
September 26, 2003 – Respondent acknowledged only P2,371,895.33 as valid material back charges.
October 16, 2003 and January 8, 2004 – Additional correspondence from respondent indicated intentions to settle differences, including equipment rental charges and use of scaffolding.
August 12, 2004 – Petitioner sent a letter denying any unpaid account and noting failed settlement negotiations.

The dispute was submitted to arbitration before the CIAC where the parties agreed on Terms of Reference resolving eight distinct issues (including evaluation of variation cost, equipment rental fee, evaluation of materials supplied, remaining works value, validation of inventoried excess materials, overpayment claim, interest entitlement, and allocation of arbitration costs).
The CIAC rendered an award in favor of respondent, ordering payment of an unpaid account of P3,728,960.54 plus legal interest and designated arbitration costs of P104,333.82.

February 22, 2006 – The Court of Appeals (CA) promulgated a decision affirming the CIAC’s award.
April 26, 2006 – Petitioner’s motion for reconsideration before the CA was denied.

Denying its claim for manlift equipment rental of P511,000.00, despite evidence that respondent used and benefited from the equipment.
Deciding a question of substance not aligned with established law or Supreme Court precedents.
Erroneously affirming the CIAC award on inventoried materials and disregarding evidence that respondent admitted deductions on material supply.
Ignoring the subcontract provision allowing payment of the actual costs incurred by petitioner to complete the remaining works.
Overlooking evidence of actual cost incurred by petitioner in completing the unfinished portion of the works.
Affirming award for interests and arbitration costs in favor of respondent.

The Supreme Court’s decision reaffirmed the finality of the factual findings of the CIAC and upheld the CA’s ruling after considering relevant jurisprudence on the finality of arbitral awards.
The Court emphasized that the issues raised were primarily factual and that a reexamination or recalibration of the evidence is not proper, given the specialized nature of construction arbitration.
The petition was found to lack merit and failed to create sufficient grounds for reversing the established awards.

Whether respondent’s free use of the manlift equipment, which allegedly benefited it, entitled petitioner to claim manlift equipment rental of P511,000.00.
Whether the Court of Appeals erred in rejecting petitioner’s claim for reimbursement based on costs associated with inventoried excess materials.
Whether the CA improperly disregarded the subcontract provision that allowed for payment of the actual costs incurred by petitioner in completing the remaining works once respondent failed to complete the work.
Whether the CA committed reversible error by ignoring evidence of the actual costs incurred by petitioner in finishing the remaining works.
Whether the CA erred in affirming the CIAC’s award on legal interest and arbitration costs in favor of respondent.
Whether the CIAC and the CA exceeded their proper role by engaging in recalibration of factual evidence, which in turn amounted to a re-litigation of the evidentiary record already presented before the arbitral tribunal.