SC rules in favor of construction firm in contract dispute case

THE Supreme Court (SC) has ruled in favor of Design Arki, Inc. against a couple in a contract dispute for the construction of a  residential building in Quezon City worth P8.22 million.

In a six-page resolution on Sept. 28 and made public on Oct. 26, the SC First Division affirmed the ruling of the Court of Appeals (CA), which said a Quezon City regional trial court (RTC) had jurisdiction over the case.

“No fault may therefore be attributed to the CA whose Decision to dismiss the appeal and remand the case to the RTC for further proceedings is in line with existing laws and jurisprudence,” said the High Court.

Ricardo C. Papa and Hermilina P. Papa, the petitioners, argued that the firm repeatedly deviated from the plans for the residential building and failed to supervise the project with adequate manpower.

They added that the value of the construction work cost more than the amount demanded by the firm, which prompted them to terminate the agreement.

The firm then filed a damages claim with the Quezon City trial court after the couple abruptly terminated the construction deal.

The construction company demanded the payment of P2.38 million for the work performed at the time the agreement had been terminated.

It also demanded the return of the construction bond in the amount of P200,000, plus P73,561.69 on the ground that it had fulfilled its obligations under the agreement.

The Quezon City trial court dismissed the firm’s petition and remanded the case to the Construction Industry Arbitration Commission (CIAC).

The appellate court then granted the construction firm’s appeal to reverse the trial court’s decision as it ruled the CIAC only had jurisdiction over disputes where parties agree to voluntary arbitration.

“In this case, there is nothing in the records that would indicate that the parties agreed to submit their dispute to arbitration,” said the High Court, citing the CA decision.

The court then remanded the case to the Quezon City trial court to resolve the dispute.

The couple appealed the appellate court’s decision to overturn the trial court’s ruling, which was denied by the CA.

“The construction agreement entered into by the parties did not include any agreement to refer to any dispute between them for voluntary arbitration before the CIAC,” the SC noted. — John Victor D. Ordoñez