Case Summary (G.R. No. 152505-06)
Background Facts
In 1996, Equinox decided to expand its building and invited bids from contractors. J'Marc was awarded the contract, with a total consideration of P37,000,000. Upon acceptance of the contract on February 22, 1997, J'Marc submitted two bonds issued by Prudential: a surety bond of P9,250,000.00 and a performance bond of P7,400,000.00. Following various performance issues, including delayed work and improper handling of materials, Equinox terminated the contract on July 10, 1997, and subsequently claimed damages from both J'Marc and Prudential.
Procedural History
Equinox initiated legal proceedings against J'Marc and Prudential in the Regional Trial Court (RTC), which led to Prudential filing a motion to dismiss, asserting lack of jurisdiction on the RTC's part based on Executive Order No. 1008, which designates the Construction Industry Arbitration Commission (CIAC) as the appropriate forum for construction disputes. The RTC granted Prudential’s motion to dismiss on February 12, 1999, which resulted in Equinox filing a request for arbitration before the CIAC.
CIAC Decision
The CIAC ruled in favor of Equinox on December 21, 1999, affirming the termination of the contract based on J'Marc’s failure to meet its obligations. Equinox’s claims for direct payments made on behalf of J'Marc were upheld, with J'Marc held liable for P4,639,285.34. Prudential's liability was also addressed, determining that it owed amounts under both the surety and performance bonds.
Court of Appeals Review
Prudential challenged the CIAC's decision before the Court of Appeals, asserting it should not be bound by the construction contract conditions and is not solidarily liable with J'Marc. The Court of Appeals confirmed the CIAC’s jurisdiction and found Prudential solidarily liable alongside J'Marc for damages due to the suretyship implications established in their contracts.
Key Legal Issues
Jurisdiction: The assertion that the CIAC held exclusive original jurisdiction over construction contracts according to Executive Order No. 1008 was upheld. The Court established that Prudential, having earlier invoked CIAC jurisdiction, was estopped from contesting it later.
Liability of Surety: The nature of Prudential's obligation as a surety was affirme
Case Syllabus (G.R. No. 152505-06)
Case Background
- The case involves Prudential Guarantee and Assurance, Inc. (Petitioner) and Equinox Land Corporation (Respondent) regarding a construction contract.
- The decision under review was issued by the Court of Appeals on November 23, 2001, concerning CA-G.R. SP No. 56491 and CA-G.R. SP No. 57335.
- The dispute arose from J'Marc Construction & Development Corporation's failure to meet its contractual obligations with Equinox while Prudential served as the surety.
Facts of the Case
- In 1996, Equinox decided to build five additional floors on its Eastgate Centre building in Mandaluyong City and invited bids from contractors.
- J'Marc was awarded the contract after its bid was deemed most advantageous, with a total contract price of P37,000,000.00.
- J'Marc submitted two bonds from Prudential: a surety bond for P9,250,000.00 and a performance bond for P7,400,000.00.
- The contract was signed on March 17, 1997, with a 25% downpayment of P9,250,000.00 made to J'Marc.
- J'Marc failed to submit required monthly billings and encountered delays due to neglect in covering drainpipes, leading to additional complications.
Issues Leading to Termination of Contract
- J'Marc requested multiple cash advances, citing cash flow problems, which Equinox granted to avoid delays.
- By June 1997, J'Marc's progress billing indicated onl