Case Digest (G.R. No. 190187)
Facts:
On October 20, 1989, William Golangco Construction Corporation (WGCC) and Philippine Commercial International Bank (PCIB) executed a contract for the extension of PCIB Tower II, which included the application of a granitite wash-out finish on the building’s exterior walls. PCIB, with the concurrence of its consultant TCGI Engineers, accepted WGCC’s completed work by letter dated June 1, 1992, and WGCC furnished a one-year guarantee bond issued by Malayan Insurance Company, Inc., as required under Article XI of the contract. In 1993, portions of the granitite finish began peeling off. WGCC performed minor repairs, but in 1994 PCIB engaged another contractor, Brains and Brawn Construction and Development Corporation, to redo the entire finish at a cost of ₱11,665,000. PCIB then sought reimbursement through arbitration before the Construction Industry Arbitration Commission (CIAC), alleging defective materials and workmanship. WGCC counterclaimed for material cost adjustment. The CCase Digest (G.R. No. 190187)
Facts:
- Contract Formation and Scope
- On October 20, 1989, William Golangco Construction Corporation (WGCC) and Philippine Commercial International Bank (PCIB) entered into a contract for the extension of PCIB Tower II (fifth to twenty-first floors; later supplemented to include the twenty-third roof deck). The work included applying a granitite wash-out finish on the exterior walls.
- PCIB, with the concurrence of its consultant TCGI Engineers (TCGI), accepted the completed work on June 1, 1992. In compliance with Article XI of the contract, WGCC procured a one-year guarantee bond dated July 1, 1992 from Malayan Insurance Company, Inc.
- Alleged Defects and Proceedings
- In 1993, portions of the granitite wash-out finish began peeling off. WGCC performed minor repairs after PCIB’s request.
- In 1994, PCIB contracted Brains and Brawn Construction and Development Corporation to re-do the entire finish, spending ₱11,665,000, after WGCC declined further work (though it offered to share costs).
- PCIB filed for arbitration with the Construction Industry Arbitration Commission (CIAC) to recover repair expenses, alleging WGCC’s defective materials and workmanship. WGCC counterclaimed ₱5,777,157.84 for material cost adjustments. CIAC found WGCC liable.
- WGCC’s petition for review before the Court of Appeals (CA) was dismissed for lack of merit; its motion for reconsideration was likewise denied. WGCC elevated the case to the Supreme Court via petition for review on certiorari, challenging WGCC’s liability for defects occurring after the one-year defects liability period.
Issues:
- Main Issue
- Whether WGCC is liable for defects in the granitite wash-out finish that became evident after the one-year defects liability period provided in Article XI of the construction contract.
- Subsidiary Issues
- Whether PCIB bore the burden of proof and met the substantial evidence standard to establish the alleged defects.
- Whether other contractual provisions (e.g., Article 62.2) operate to extend WGCC’s liability beyond the one-year period.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)