Case Digest (G.R. No. L-29419) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Stronghold Insurance Company, Inc. v. Spouses Rune and Lea Stroem (G.R. No. 204689, January 21, 2015; Decision promulgated July 27, 2015), Spouses Rune and Lea Stroem (the “Spouses Stroem”), owners of a residential lot in Valley Golf Subdivision, Antipolo, Rizal, entered into an Owners-Contractor Agreement dated November 15, 1999 with Asis-Leif & Company, Inc. (“Asis-Leif”) for construction of a two-storey house. Pursuant to Article 7 of the agreement, Asis-Leif secured a Performance Bond No. LP/G(13)83056 in the amount of ₱4,500,000.00 from petitioner Stronghold Insurance Company, Inc. (“Stronghold”), naming the Spouses Stroem as beneficiaries. When Asis-Leif failed to complete the project on time, the Spouses Stroem rescinded the agreement, hired an appraiser to determine the work-in-progress percentages, and made repeated demands upon Asis-Leif and Stronghold. With no compliance, the Spouses Stroem filed a complaint for collection of sum of money, damages and attorney’s fe Case Digest (G.R. No. L-29419) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contractual Engagement and Performance Bond
- Spouses Rune and Lea Stroem (OWNERS) entered into an Owner–Contractor Agreement dated November 15, 1999 with Asis-Leif & Company, Inc. (CONTRACTOR) for the construction of a two-storey house at Valley Golf Subdivision, Antipolo, Rizal.
- Pursuant to Article 7 of the Agreement, Asis-Leif secured Performance Bond No. LP/G(13)83056 in the amount of ₱4,500,000.00 from Stronghold Insurance Company, Inc. (SURETY), binding itself and Stronghold jointly and severally to pay the OWNERS should the CONTRACTOR fail to complete the project.
- Default, Rescission, and Appraisal
- Asis-Leif failed to finish the works on time despite repeated demands; the OWNERS rescinded the Agreement and engaged an independent appraiser.
- The Asian Appraisal Company, Inc. reported completion rates of 47.53% for the main building, 65.62% for the garage, and 13.32% for ancillary works (pool, fence, landscaping).
- Judicial Proceedings to Date
- On September 12, 2002, the OWNERS filed a complaint with preliminary attachment against Asis-Leif, Ms. Cynthia Asis-Leif, and Stronghold for breach of contract and sum of money; only Stronghold was served.
- On July 13, 2010, the RTC of Makati rendered judgment ordering Stronghold to pay ₱4,500,000.00 with 6% interest from first demand plus attorney’s fees (₱35,000.00) and costs.
- Both parties appealed; the Court of Appeals on November 20, 2012 affirmed the RTC decision with modification, increasing attorney’s fees to ₱50,000.00.
- Stronghold petitioned the Supreme Court under Rule 45, arguing lack of jurisdiction due to an arbitration clause and exclusive CIAC authority; the OWNERS opposed, contending no privity for arbitration and full bond liability.
Issues:
- Whether the dispute falls within the definition of “arising from or connected with” a construction contract and thus within the exclusive original jurisdiction of the Construction Industry Arbitration Commission (CIAC).
- Whether the Regional Trial Court should have dismissed the case and referred the parties to arbitration under Republic Act No. 876 (as amended by EO 1008) and RA 9285.
- Whether Stronghold is liable under Performance Bond No. LP/G(13)83056:
- Only for additional costs to complete the project or for the full bond amount.
- As an ordinary or corporate surety.
- Whether Stronghold committed forum shopping by failing to disclose the OWNERS’ pending motion for partial reconsideration in the CA.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)