Case Summary (G.R. No. 235853)
Background of the Case
On March 15, 2002, the DPWH entered into a Consultancy Agreement with a Joint Venture comprising KEI and other firms for the engineering services needed for the Patapat Viaduct and several other roads. This agreement included detailed engineering design, construction supervision, environmental compliance monitoring, and various technical services. The project saw modifications over time, including an expanded scope of work requiring a geological assessment and redesign of the road project.
Changes to Project Design
In 2003, an Engineering Geological and Geohazard Assessment Report (EGGAR) was generated, leading to the creation of an "Overhang Design" that replaced the originally proposed sloping design. Initial work and contracts were awarded to ITD, which submitted the lowest bid for road rehabilitation works. However, subsequent modifications such as widening the road and altering materials caused disputes regarding additional earthwork quantities.
Dispute and Arbital Proceedings
In July 2010, ITD submitted a claim for additional compensation related to overruns from the modified designs and construction methods. KEI contested these claims and submitted a technical evaluation report recommending their denial. Following a failure to resolve the issue amicably, ITD initiated arbitration proceedings with the Construction Industry Arbitration Commission (CIAC).
CIAC Final Award
On January 14, 2014, the CIAC ruled in favor of ITD, awarding it a total of P106,509,724.49 for overrun earthwork quantities linked to the overhang design, road realignment, and additional miscellaneous works. It justified its ruling based on evidence of structural failures attributed to the changes made during the project.
Court of Appeals Ruling
Dissatisfied with the CIAC award, DPWH appealed to the Court of Appeals, asserting error in the findings of the CIAC. However, the CA upheld the CIAC’s decision on November 27, 2017, agreeing that the DPWH had failed to adequately foresee the implications of its alterations in design and did not disclose necessary geological information to ITD, which led to the overrun claims.
Supreme Court Decision
DPWH subsequently filed a Petition for Review under Rule 45, raising numerous arguments regarding alleged grave abuse of discretion on the part of the CA and CIAC. However, the Supreme Court denied the petition, confirming that arbitral awards of the CIAC cannot typically be reviewed on g
...continue readingCase Syllabus (G.R. No. 235853)
Case Overview
- The case involves a Petition for Review under Rule 45 of the Rules of Court by the Department of Public Works and Highways (DPWH) against Italian-Thai Development Public Company, Ltd. (ITD) and Katahira & Engineers International (KEI), seeking to reverse the Court of Appeals' Decision dated November 27, 2017.
- The case number is G.R. No. 235853, and the ruling was issued by the Supreme Court on July 13, 2020.
Background Facts
- On March 15, 2002, DPWH entered into a Consultancy Agreement with a Joint Venture including KEI for the engineering and construction supervision of various road improvement projects.
- The scope of services included detailed engineering design, bidding assistance, construction supervision, monitoring environmental compliance, and assisting in land acquisition.
- In 2003, the scope of work was expanded to include the Engineering Geological and Geohazard Assessment Report (EGGAR) to analyze the geological conditions of the project site.
- KEI initially proposed a sloping design but later, with DPWH's agreement, adopted an Overhang Design which replaced the original plans.
- The civil works were divided into sections, with ITD submitting the lowest bid for the Suyo-Cervantes Road Section, leading to a contract agreement on March 27, 2006.
Contractual Developments
- The project involved significant construction wo