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    16 William Golangco Construction Corp V PCIB

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    This document summarizes a Supreme Court case regarding a construction contract dispute between William Golangco Construction Corporation and Philippine Commercial International Bank. The key points are: 1) WGCC constructed a building for PCIB and provided a 1-year defects liability period in the contract. PCIB accepted the completed work. 2) After 1 year, portions of the building's exterior finish began peeling, and PCIB incurred over 11 million pesos to repair it. 3) The Supreme Court ruled that WGCC was not liable for the repairs because the contract stipulated their liability ended after 1 year, and the defects were not considered "hidden" so as to extend their liability. 4) The

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    16 William Golangco Construction Corp V PCIB

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    G S
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    This document summarizes a Supreme Court case regarding a construction contract dispute between William Golangco Construction Corporation and Philippine Commercial International Bank. The key points are: 1) WGCC constructed a building for PCIB and provided a 1-year defects liability period in the contract. PCIB accepted the completed work. 2) After 1 year, portions of the building's exterior finish began peeling, and PCIB incurred over 11 million pesos to repair it. 3) The Supreme Court ruled that WGCC was not liable for the repairs because the contract stipulated their liability ended after 1 year, and the defects were not considered "hidden" so as to extend their liability. 4) The

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    Obligations and Contracts; Civil Law

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    16 William Golangco Construction Corp v PCIB

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    This document summarizes a Supreme Court case regarding a construction contract dispute between William Golangco Construction Corporation and Philippine Commercial International Bank. The key points are: 1) WGCC constructed a building for PCIB and provided a 1-year defects liability period in the contract. PCIB accepted the completed work. 2) After 1 year, portions of the building's exterior finish began peeling, and PCIB incurred over 11 million pesos to repair it. 3) The Supreme Court ruled that WGCC was not liable for the repairs because the contract stipulated their liability ended after 1 year, and the defects were not considered "hidden" so as to extend their liability. 4) The

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views1 page

    16 William Golangco Construction Corp V PCIB

    Uploaded by

    G S
    This document summarizes a Supreme Court case regarding a construction contract dispute between William Golangco Construction Corporation and Philippine Commercial International Bank. The key points are: 1) WGCC constructed a building for PCIB and provided a 1-year defects liability period in the contract. PCIB accepted the completed work. 2) After 1 year, portions of the building's exterior finish began peeling, and PCIB incurred over 11 million pesos to repair it. 3) The Supreme Court ruled that WGCC was not liable for the repairs because the contract stipulated their liability ended after 1 year, and the defects were not considered "hidden" so as to extend their liability. 4) The

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    of 1

    In characterizing contracts as having the force of law between the parties, the law stresses the

    obligatory nature of a binding and valid agreement (William Golangco Construction Corporation vs. Phil.
    Commercial International Bank, 485 SCRA 293 [2006].), absent any allegation that it is contrary to law,
    morals, good customs, public order, or public policy. (Art. 1306.) De Leon, p.13.

    Article 1159 – Binding Force

    WILLIAM GOLANGCO CONSTRUCTION CORPORATION, petitioner, vs. PHILIPPINE COMMERCIAL


    INTERNATIONAL BANK, respondent, G.R. No. 142830, 24 March 2006, Corona [J].

    Facts: William Golangco Construction Corporation (WGCC) and the Philippine Commercial
    International Bank (PCIB) entered into a contract for the construction of the extension of PCIB Tower II
    (denominated as PCIB Tower II, Extension Project [project]) on October 20, 1989. The project included,
    among others, the application of a granitite wash-out finish on the exterior walls of the building.
    PCIB, with the concurrence of its consultant TCGI Engineers (TCGI), accepted the turnover of the
    completed work by WGCC in a letter dated June 1, 1992. To answer for any defect arising within a period
    of one year, WGCC submitted a guarantee bond dated July 1, 1992 issued by Malayan Insurance
    Company, Inc. in compliance with the construction contract.
    The controversy arose when portions of the granitite wash-out finish of the exterior of the
    building began peeling off and falling from the walls in 1993. WGCC made minor repairs after PCIB
    requested it to rectify the construction defects with another contractor amounting to over Php11M.
    PCIB filed a petition to reimburse the expenses it incurred from the repair work against WGCC to
    the Construction Industry Arbitration Commission (CIAC). The CIAC ruled in favor of the petitioner.
    Hence this petition.

    Issue: Whether WGCC is still liable to the repair work of the defects found int the building

    Ruling: No, WGCC is no longer liable.


    The autonomous nature of contracts is enunciated in Article 1306 of the Civil Code. Article 1306.
    The contracting parties may establish such clauses, terms and conditions as they may deem convenient,
    provided they are not contrary to law, morals, good customs, public order, or public policy. Obligations
    arising from contracts have the force of law between the parties and should be complied with in good
    faith. In characterizing the contract as having the force of law between the parties, the law stresses the
    obligatory nature of a binding and valid agreement.
    Here, it is expressly stated in the contract that “defects liability period was precisely to give
    PCIB additional, albeit limited, opportunity to oblige WGCC to make good any defect, hidden or
    otherwise, discovered within one year.” Acceptance of the work by the employer relieves the
    contractor of liability for any defect in the work, unless: (1) The defect is hidden and the employer is not,
    by his special knowledge, expected to recognize the same; or (2) The employer expressly reserves his
    rights against the contractor by reason of the defect. The lower courts conjectured that the peeling off
    of the granitite wash-out finish was probably due to “defective materials and workmanship.” This they
    characterized as hidden or latent defects. We, however, do not agree with the conclusion that the
    alleged defects were hidden.

    Fallo: WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R.
    SP No. 41152 is ANNULLED and SET ASIDE. SO ORDERED.

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