G.R. No. 267541 , April 02, 2025
Grand Exploit Builder Development, Inc. vs. Hoegaarden Realty Corporation

FACTS

Grand Exploit Builder Development, Inc. (GEBDI) and Hoegaarden Realty Corporation executed three separate Construction Contracts for the Hokka I, II, and III Projects. Each contract contained an arbitration clause. GEBDI discontinued construction in July 2022, claiming Hoegaarden owed it over PHP 182 million. Hoegaarden sent demand letters and initially filed a case for rescission in the Regional Trial Court but later withdrew it to file a Request for Arbitration before the Construction Industry Arbitration Commission (CIAC). Hoegaarden alleged overpayment and sought a refund, damages, and an accounting. GEBDI filed an Amended Answer with a prayer for interim relief, which the CIAC Arbitral Tribunal rejected and ordered stricken from the records for being irregularly filed after the Terms of Reference were finalized.
The CIAC Arbitral Tribunal proceeded with hearings and rendered a Final Award. It found that Hoegaarden failed to substantiate its claim of overpayment, as its evidence, including the report of its witness Engr. Navarro, was insufficient. Conversely, the Tribunal found merit in GEBDI’s counterclaim for unpaid progress billings and the value of misappropriated construction materials, awarding GEBDI a net amount of PHP 218,058,077.24. Hoegaarden filed a Petition for Review with the Court of Appeals, which vacated the CIAC’s Final Award, finding that the CIAC committed grave abuse of discretion in rejecting GEBDI’s Amended Answer and in its appreciation of evidence. GEBDI elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in vacating the Final Award of the CIAC Arbitral Tribunal.

RULING

Yes, the Court of Appeals erred. The Supreme Court reinstated the CIAC’s Final Award. The legal logic is anchored on the limited scope of judicial review over arbitral awards and the finality of factual findings by arbitral tribunals. Judicial review of CIAC awards is not an appeal; courts cannot re-examine the evidence or substitute their judgment on factual matters. Review is confined to grounds provided by law, such as evident partiality or corruption, or where the arbitrators exceeded their powers. The CA overstepped by conducting a factual review, re-evaluating evidence like Engr. Navarro’s report, and concluding the CIAC abused its discretion in its evidentiary assessment. This was impermissible.
The Supreme Court found no grave abuse in the CIAC’s procedural ruling on GEBDI’s Amended Answer. The CIAC acted within its authority to control the proceedings, as the filing was irregular after the Terms of Reference—which define the issues—were signed and finalized. On the merits, the CIAC’s factual findings, including its determination that Hoegaarden’s evidence was insufficient to prove overpayment and that GEBDI’s counterclaim for unpaid obligations and misappropriated materials was supported by demand letters, are conclusive and binding. The award was based on the evidence on record and not tainted with evident partiality. Therefore, the CA’s decision was reversed.