SC settles BFC and Shangri-La money claims over EDSA Plaza
Published Jan 15, 2020 12:00 am
By Rey Panaligan
The Supreme Court (SC) has ordered Shangri-La Properties, Inc. (Shangri-La) to pay BF Corporation (BFC) P52.63 million for the construction of Phases I and II and the car park structure of the EDSA Plaza project in Mandaluyong City.
Supreme Court of the Philippines (MANILA BULLETIN)
At the same time, the SC ordered Shangri-La to pay BFC six per cent interest annually on P52.63 million award “reckoned from July 31, 2007, the date of the Arbitral Tribunal’s decision, until this decision becomes final and executory; and, thereafter, the principal amount due, plus the six per cent per annum, shall likewise earn interest at six per cent per annum until full satisfaction.”
This means that, based on a rough estimate, Shangri-La will have to pay BFC almost P100 million representing the principal amount and the interests earned since 2007.
While the SC decision, written by the now retired Chief Justice Lucas P. Bersamin, was handed down last October 15, a copy was made public only last week through the SC’s public information office (PIO).
It was not known immediately if any of the parties has filed its motion to reconsider the SC’s decision.
The legal dispute between the two firms arose from a contract involving the EDSA Plaza Project. The regional trial court directed the contending parties to pursue their case before the Construction Industry Arbitration Commission (CIAC) for resolution of their conflicting and varying claims.
In its 2007 decision, the CIAC recognized BFC’s right to recover its claims for unpaid progress billings. The arbitration commission also acknowledged Shangri-La’s entitlement to liquidated damages for the delays incurred in finishing the EDSA Plaza project.
Both parties elevated the 2007 decision before the Court of Appeals (CA) which partially granted their petitions.
Dissatisfied, both parties appealed before the SC.
A press statement issued by the SC’s PIO stated:
“As a rule, the findings of facts of the arbitrators of the CIAC are deemed final and conclusive and are accorded full respect by the SC. This is true especially since Rule 45 petitions must only raise questions of law under the Rules of Court.
“However, the SC decided to review the findings of facts of the CIAC considering that its findings are contrary to those of the CA.
“After considering the allegations and evidence presented by the parties, the SC partially granted BFC’s petition but denied Shangri-La Properties’ petition for lack of merit.
“The SC agreed with the findings of the Arbitral Tribunal when it considered the specific variation orders with the conformity of the Shangri-la Properties. It therefore reinstated the arbitral award in favor of BFC, which the CA previously disregarded.
“However, the SC denied BFC’s claim for fire damage and repair works as there was no proof that Shangri-La Properties received any fire insurance proceeds. Moreover, the CIAC and the CA both found that BFC assumed the sole risk for damages or losses sustained due to fire.
“Both CIAC and the CA agreed that the original scope of work had been completed and performed by BFC; hence, the SC considered such finding as final and conclusive.
“Nevertheless, the SC had to determine Shangri-La Properties’ obligation due to BFC. In this case, the SC sustained the CA in holding that Shangri-La Properties is still liable to pay BFC the amount of PhP24,497,555.91.
“The SC held that BFC is also liable for the delays in the completion of the Project suffered by Shangri-La Properties. Considering that both parties have money obligations to each other, on offsetting of obligations was in order.
“In the end, the SC ordered Shangri-La Properties to pay BFC the total amount of PhP52,635,679.70, plus legal interest of 6% per annum reckoned from the date of the Arbitral Tribunal’s decision.”
Supreme Court of the Philippines (MANILA BULLETIN)
At the same time, the SC ordered Shangri-La to pay BFC six per cent interest annually on P52.63 million award “reckoned from July 31, 2007, the date of the Arbitral Tribunal’s decision, until this decision becomes final and executory; and, thereafter, the principal amount due, plus the six per cent per annum, shall likewise earn interest at six per cent per annum until full satisfaction.”
This means that, based on a rough estimate, Shangri-La will have to pay BFC almost P100 million representing the principal amount and the interests earned since 2007.
While the SC decision, written by the now retired Chief Justice Lucas P. Bersamin, was handed down last October 15, a copy was made public only last week through the SC’s public information office (PIO).
It was not known immediately if any of the parties has filed its motion to reconsider the SC’s decision.
The legal dispute between the two firms arose from a contract involving the EDSA Plaza Project. The regional trial court directed the contending parties to pursue their case before the Construction Industry Arbitration Commission (CIAC) for resolution of their conflicting and varying claims.
In its 2007 decision, the CIAC recognized BFC’s right to recover its claims for unpaid progress billings. The arbitration commission also acknowledged Shangri-La’s entitlement to liquidated damages for the delays incurred in finishing the EDSA Plaza project.
Both parties elevated the 2007 decision before the Court of Appeals (CA) which partially granted their petitions.
Dissatisfied, both parties appealed before the SC.
A press statement issued by the SC’s PIO stated:
“As a rule, the findings of facts of the arbitrators of the CIAC are deemed final and conclusive and are accorded full respect by the SC. This is true especially since Rule 45 petitions must only raise questions of law under the Rules of Court.
“However, the SC decided to review the findings of facts of the CIAC considering that its findings are contrary to those of the CA.
“After considering the allegations and evidence presented by the parties, the SC partially granted BFC’s petition but denied Shangri-La Properties’ petition for lack of merit.
“The SC agreed with the findings of the Arbitral Tribunal when it considered the specific variation orders with the conformity of the Shangri-la Properties. It therefore reinstated the arbitral award in favor of BFC, which the CA previously disregarded.
“However, the SC denied BFC’s claim for fire damage and repair works as there was no proof that Shangri-La Properties received any fire insurance proceeds. Moreover, the CIAC and the CA both found that BFC assumed the sole risk for damages or losses sustained due to fire.
“Both CIAC and the CA agreed that the original scope of work had been completed and performed by BFC; hence, the SC considered such finding as final and conclusive.
“Nevertheless, the SC had to determine Shangri-La Properties’ obligation due to BFC. In this case, the SC sustained the CA in holding that Shangri-La Properties is still liable to pay BFC the amount of PhP24,497,555.91.
“The SC held that BFC is also liable for the delays in the completion of the Project suffered by Shangri-La Properties. Considering that both parties have money obligations to each other, on offsetting of obligations was in order.
“In the end, the SC ordered Shangri-La Properties to pay BFC the total amount of PhP52,635,679.70, plus legal interest of 6% per annum reckoned from the date of the Arbitral Tribunal’s decision.”