Thursday, May 08, 2008
CA orders Araneta Center to pay damages (11:16 a.m.)
MANILA -- The Court of Appeals (CA) has ordered Araneta Center Incorporated to pay about P114 million in damages to a contractor for work done for the construction of the high-end Gateway Mall in Cubao, Quezon City.
In a decision penned by Associate Justice Agustin Dizon, the CA's 16th Division modified a ruling of the Construction Industry Arbitration Commission (CIAC) that ordered Araneta to pay respondent CE Construction Corporation (Cecon) about P231 million.
The appellate court, however, also directed Cecon to award P31.5 million to Araneta representing liquidated damages, defective and incomplete works, bookmarking granite tiles and permit license and other advances.
"On a practical matter, despite the extended and unauthorized delay by Cecon, Araneta cannot deny that it was able to obtain benefits from the Gateway Mall. Araneta was able to accept tenants and correspondingly start to earn rental income from the partially completed Gateway Mall," the Court ruled.
The CA added that Araneta, to this day, continued to earn income from the mall, notwithstanding that there are many defects and some uncompleted parts left by Cecon.
It added that awards of liquidated damages must be tempered by the Courts to prevent abuse and for equity.
"This recognition of the CIAC's technical know-how does not, and should not be considered as a grant of the unbridled authority to change the parties' agreement," the CA ruled.
The court further said there is no basis in the arbitral tribunal's ruling, particularly the latter's findings that Araneta must bear all the cost of arbitration amounting to P1.08 million because Cecon was forced to seek arbitration.
"It is settled principle that no premium is to be placed on the right to litigate," the CA said, adding that it is concerned about the "excesses" that the arbitral tribunal has shown in reaching its decision. (ECV/Sunnex) |
