GR 192659; (December, 2015) (Digest)
G.R. No. 192659 December 2, 2015
PHILIPPINE RACE HORSE TRAINER’S ASSOCIATION, INC., Petitioner, vs. PIEDRAS NEGRAS CONSTRUCTION AND DEVELOPMENT CORPORATION, Respondent.
FACTS
Petitioner Philippine Race Horse Trainer’s Association, Inc. (PRHTAI) entered into a series of contracts with respondent Piedras Negras Construction & Development Corporation (PNCDC) for the construction of 170 housing units. The final contract, dated August 23, 2005, stipulated a revised contract price of ₱101,150,000.00. After deducting advances, the balance due to PNCDC was ₱58,281,951.80. PNCDC completed the project and issued a Certificate of Completion in April 2007. In January 2008, PNCDC demanded payment of the remaining balance. PRHTAI acknowledged the debt but cited financial difficulties. Subsequently, PRHTAI’s new board of directors, elected in April 2008, initiated an inquiry into the project.
ISSUE
The core issues were: (1) whether the Construction Industry Arbitration Commission (CIAC) had jurisdiction to rule on the enforceability of the construction contract; (2) whether the third and final contract was unenforceable; and (3) whether PRHTAI had overpaid PNCDC.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the CIAC Award with modification on the interest rate. On jurisdiction, the Court held that the CIAC properly exercised its original and exclusive jurisdiction under Executive Order No. 1008. Its jurisdiction extends to all disputes arising from or connected with construction contracts, which includes resolving questions on a contract’s enforceability when such determination is necessary to settle the monetary claims submitted by the parties for arbitration.
On the contract’s enforceability and overpayment, the Court affirmed the CIAC’s factual findings. The CIAC, possessing specialized expertise, had meticulously examined the evidence and concluded the third contract was unenforceable due to lack of valuable consideration, as it merely repackaged the scope of work from prior contracts without additional substantial benefit to PRHTAI. Based on this and a detailed audit of payments and work accomplished, the CIAC correctly found that PRHTAI had overpaid PNCDC by ₱14,351,484.61. The Court emphasized that factual findings of quasi-judicial agencies like the CIAC, when supported by substantial evidence, are accorded respect and finality. The legal interest on the award was modified to six percent (6%) per annum from finality of judgment until full satisfaction, in accordance with Bangko Sentral ng Pilipinas Circular No. 799.