Atty. Arnold C.

Bucoy – Persons and Family Relations

F.F. CRUZ & CO., INC., PETITIONER, VS. HR CONSTRUCTION CORP., RESPONDENT.

G.R. No. 187521: March 14, 2012

PONENTE: REYES, J.

FACTS
Sometime in 2004, F.F Cruz and Co., INC., (FFCCI), petitioner entered into a contract
agreement with DPWD for the construction of the Magasaysay Viaduct, know as the lower
Agusan Development project. On august 9, FFCCI entered into a sub-contract agreement with
HR Construction Corp., Respondent for supply of materials and contraction of a portion of the
project called the East Bank Levee and Cut-off Channel in accordance to the specifications of the
main contract.
The subcontract price agreed upon by the parties amounted to Php.31,293,532.72.
along with these terms, both parties agreed respondent would submit monthly progress billing
report subject to stipulated deductions within 30 days of receipt. Furthermore, both parties also
agreed respondent request for payment should include a progress accomplishment as approved
by petitioner. For this, a joint inspection of completed work be done with the presence of the
representative of the respondent, petitioner, and DPWH to arrive at a common quantity.
From September 17 – November 25 respondent submitted a total of 4 progress billing
reports to petitioner for payment, of which each monthly report has encountered one
complication or another.
Subsequently, petitioner after evaluating respondents work for the 3 rd to 4th progress billing
report, approved the payment in the gross amount of Php 1,505,570.99 to respondent.
Petitioner again deducted fees Php 150,557.10 for retention and Php P27,374.02 withholding
tax leaving the a NET of Php 1,327,639.87.
On December of the same year, Respondent sent Petitioner a letter demanding payment of
its progress billing in the total amount of P7,340,046.09 including interest. Subsequently,
respondent halted all operations on the subcontracted agreement.
On march 7 Respondent filed an arbitration case against petitioner in the Construction
Industry Arbitration Commission (CIAC) for relief. Petition counter claims that it has already
satisfied its part in the agreement by having made 3 payments which has been corroborated
with the DPWH and delays in the payment was as much the respondent’s fault as it was theirs
due to respondents failure to comply with conditions stated in the subcontract agreement. Thus
not making petitioner liable to pay.
 On September 6, HRCC won the case against FFCCI and was awarded monetary claim by the
CIAC. Later on FFCCI brought the matter up to the Court of Appeals for review which was later
on denied, CA siding with the lower court decision .
ISSUE/S
does the act of FFCCI, in conducting a verification survey of HRCC's billings in the latter's
presence amount to a waiver of the right of FFCCI to verify and approve said billings? What, if
any, is the legal significance of said act?
RULING
the court citing Executive Order (E.O.) No. 1008 vests upon the CIAC original and exclusive
jurisdiction over disputes arising from, or connected with, contracts entered by parties involved
in construction in the Philippines. Under Section 19 of E.O. No. 1008, the arbitral award of CIAC
"shall be final and inappealable except on questions of law which shall be appealable to the
Supreme Court.
DOCTRINE Used:
People of the Philippines v. Donato, the court explains the doctrine on Waiver. "a voluntary and
intentional relinquishment or abandonment of a known existing legal right, advantage, benefit,
claim or privilege, which except for such waiver the party would have enjoyed; the voluntary
abandonment or surrender, by a capable... person, of a right known by him to exist, with the
intent that such right shall be surrendered and such person forever deprived of its benefit; or
such conduct as warrants an inference of the relinquishment of such right; or the intentional
doing of an act inconsistent... with claiming it."