Case Summary (G.R. No. 224626)
Contracts and Agreements
Megaworld entered into three separate contracts with DSM Construction for various works, including architectural finishing, interior finishing, and the supply and installation of kitchen cabinets and closets. A significant clause in these contracts outlined "Retention Money," a portion of the total contract price (10% in this case) retained by the project owner to ensure the contractor's performance during the defect liability period.
Interim Agreement and Payment Issues
On February 21, 2000, an Interim Agreement was signed, establishing a new payment schedule totaling PHP 53 million, with releases contingent upon the turnover of units. Disputes later arose regarding varying amounts payable, leading DSM Construction to file a complaint for compulsory arbitration before the Construction Industry Arbitration Commission (CIAC) for an outstanding balance of approximately PHP 97 million, citing various causes for this amount.
Megaworld's Defenses and Counterclaims
Megaworld primarily posited defenses based on alleged delays in unit turnover and questioned the quality of work delivered by DSM Construction. This led to a counterclaim for loss of profits and liquidated damages amounting to approximately PHP 85 million. Prudential Guarantee and Assurance acted as a third-party respondent due to a performance bond issued to Megaworld.
CIAC Proceedings and Decision
Following an evidentiary hearing, the CIAC issued a decision on September 28, 2001, awarding PHP 62,760,558.49 to DSM Construction and PHP 9,473,799.46 to Megaworld. Megaworld subsequently sought review from the Court of Appeals, raising substantial questions about the findings of the CIAC, including the level of accomplished work and the basis for awarding liquidated damages.
Court of Appeals Rulings
On February 14, 2002, the Court of Appeals affirmed the CIAC decision, emphasizing that the review of CIAC awards typically pertains to questions of law. It noted that the CIAC findings were substantiated by substantial evidence. Megaworld's motion for reconsideration was denied, prompting the case's elevation to the Supreme Court.
Supreme Court's Analysis
The Supreme Court analyzed Megaworld’s claims, emphasizing that the issues mainly involved facts rather than legal questions. Under Section 19 of Executive Order No. 1008, CIAC awards are generally deemed final and appealable only on legal grounds; consequently, Megaworld's disputes around factual determinations were found to not substantiate sufficient grounds to overturn the CIAC and Court of Appeals' findings.
Findings on Key Issues
The Court upheld the CIAC's finding that DSM Construction achieved a 95.
...continue readingCase Syllabus (G.R. No. 224626)
Case Overview
- Citation: 468 Phil. 305
- Date: March 02, 2004
- Division: Second Division
- Petitioner: Megaworld Globus Asia, Inc.
- Respondents: DSM Construction and Development Corporation, Prudential Guarantee and Assurance, Inc.
- Nature of Action: Petition for Review on Certiorari.
Background
- The case arises from a contractual dispute concerning the construction of a condominium project named "The Salcedo Park" in Makati City.
- Megaworld and DSM Construction entered into three separate contracts for various construction works, initially valued at P300 Million, later reduced to P240 Million due to deleted items.
- The contracts included a Retention Money stipulation, typically 10% of the total contract price held to ensure contractor performance during a defect-liability period of twelve months.
Interim Agreement
- An Interim Agreement was signed on February 21, 2000, establishing a new schedule and a consideration of P53,000,000, with specific payments tied to the turnover of units.
- Differences arose regarding billings, leading DSM Construction to file a complaint for compulsory arbitration, claiming P97,743,808.33 for various outstanding balances.
Arbitral Tribunal Proceedings
- An Arbitral Tribunal was formed, and on September 28, 2001, it issued a decision awarding DSM Construction P62,760,558.49 and Megaworld P9,473,799.46.
- Megaworld's counterclaim included losses, liquidated damages, and other expenses totaling P85,869,870.28.
Court of Appeals Decision
- On February 14, 2002, the Court of Appeals affirmed the Arbitral Tribunal's decision, stating it reviewed the evidence and found it substantially supported the Tribunal's findings.
- Megaworld's subsequent motion for reconsideration was denied, prompting the present petition.
Issues Raised by Megaworld
- Megaworld contended that the Court of Appeals did