Case Summary (G.R. No. 245617)
Facts of the Case
On July 27, 2014, El Dorado entered an Owner-Contractor Agreement with ASPF Construction at a contract price of PHP 170,000,000.00. Initially, ASPF Construction secured a Performance Bond from PUIC worth PHP 19,641,807.80, later amended to PHP 98,209,039.00 due to contract adjustments. Throughout the construction, El Dorado issued multiple notices to ASPF Construction regarding delays and performance defects. ASPF requested modifications to payment terms due to liquidity issues, which El Dorado rejected. Eventually, El Dorado terminated the contract and made a claim against PUIC, asserting defaults by ASPF.
CIAC Ruling
On March 6, 2017, the Construction Industry Arbitration Commission (CIAC) ruled that El Dorado could not recover the PHP 17,000,000.00 down payment, as ASPF Construction had completed approximately 10.39% of the project. The CIAC awarded PHP 1,700,000.00 in liquidated damages to El Dorado but denied other claims from both parties, stating that since El Dorado had been partly at fault for delays, it could not claim damages.
Ruling of the Court of Appeals
The Court of Appeals, in its July 23, 2018 decision, upheld CIAC’s findings and deleted the PHP 1,700,000.00 liquidated damages award, stating that El Dorado had insufficient evidence of ASPF's delays, and noted that El Dorado was also at fault for not making timely payments. Both parties appealed to the CA but were denied relief.
Legal Issues and Jurisdiction Questions
The primary legal issue before the Supreme Court was whether the CIAC had jurisdiction over PUIC, which had not signed the Owner-Contractor Agreement. Jurisprudence indicates that a surety may not be subject to arbitration unless explicitly included in the arbitration clause, as established in previous cases. Since the Performance Bonds were not integral to the Owner-Contractor Agreement and no arbitration clause existed involving PUIC, the CIAC lacked j
...continue readingCase Syllabus (G.R. No. 245617)
Case Background
- The case involves a Petition for Review on Certiorari filed by El Dorado Consulting Realty and Development Group Corporation (El Dorado) against Pacific Union Insurance Company (PUIC), challenging the rulings of the Court of Appeals (CA) which modified the decision of the Construction Industry Arbitration Commission (CIAC).
- The dispute arises from an Owner-Contractor Agreement dated July 27, 2014, between El Dorado and ASPF Construction and Development, Inc. (ASPF Construction) for a seven-storey condominium hotel project in Pampanga, with a contract price of P170,000,000.00.
- A Performance Bond was obtained from PUIC to guarantee compliance with the obligations under the agreement.
Facts of the Case
- ASPF Construction initially secured a Performance Bond of P19,641,807.80, which was later amended to P98,209,039.00 to cover the total contract price for Phase 1.
- El Dorado issued multiple notices to ASPF Construction regarding delays, defects, and non-compliance.
- ASPF Construction faced liquidity issues and requested a change in payment terms, which El Dorado denied.
- On April 30, 2015, El Dorado issued a Notice of Default and subsequently filed a Notice of Claim against PUIC for the total amount of the Performance Bonds after ASPF Construction failed to meet its obligations.
- PUIC canceled the bonds due to non-payment of premium