Philippine Race Horse Trainers Assn entered into Contract with Fil-Estate for the construction of 170

housing units in Batangas for more or less P67M.

Fil-Estate later assigned its rights and obligations under the project to Piedras Negras Construction &
Devt Corp.

A 2nd Contract was forged which increased the price to P80M and later on a 3 rd contract increasing the
amount to P101M. Deducting the advances of 42M there remains a balance of P58M.

Piedras issued a Certificate of Completion and Acceptance in favor of Phil Race Horse Trainers.

However, when Phil Race Horse Trainers was not able to pay the balance of P14M, Piedras Negras
requested for arbitration/complaints with the Construction Industry whereby CIAC rendered a decision
that the 3rd Contract was unenforceable and as such Race Horse Trainers has actually overpaid by P14M.
CIAC directed Piedras to pay PRHT P14M + Attorney’s and legal fees+ Interest of 6% and 12% after finality
of this decision.

CA overturned the CIAC ruling. Ordering PRHT to pay Piedras the balance of final contract amounting
to P6.4M + legal interest of 6% from finality of its decision.

PRHT filed a Motion for Recon but was denied. Hence, it filed a Petition for Review of the Decision of CA
to the SC.

ISSUE:
1. W/N CIAC has jurisdiction to pass upon the enforceability of the contract bet Piedras and PRHT
2. W/N the 3rd Contract in Unenforceable
3. W/N there is overpayment on the part of PRHT

HELD:
1. CIAC has original and exclusive jurisdiction over disputes arising arising from or connected with
Contracts of Construction in the Phil.
a. Factual finding of CIAC are not reviewable by the Court except: a) when award was
procured by corruption, fraud, or other undue means; b) there was evident partiality or
corruption of arbitrators; c) arbitrators are guilty of misconduct; d) one or more
arbitrators were disqualified to act as such; e) arbitrators exceeded their powers or
acted in grave abuse of discretion; f) when findings of the CA are contrary to those of
the CIAC
b. In this case, though CA upheld the CIAC’s ruling on the computation of payments, it
disregarded the rest of tribunal’s award.
2. PRHT ‘s President, Catajan, was authorized only to enter into a contract with Fil-estate not with
Piedras
a. Catajan exceeded his authority when it agreed to pay Piedras an increased contract price
of P101M after only a span of less than a year
b. Piedras acted with gross negligence in relying on the Sec Cert as said Cert was falsified
containing statements not found in the Board Resolution
 c. Minutes of the Meeting of the new Board of Directors did not contain consent of the
Board to the 3rd Contract entered by Catajan but simply requested for copies of certain
documents because said were missing from PRHT’s office files.
i. On May 5, 2008 was the very first organizational meeting of the new Board still had no
knowledge of Catajan’s unauthorized execution of the 3 rd contract (Aug 23, 2005)

d. CA held that contracts entered into by a corporate officer or obligations assumed by such
officer for and in behalf of the corporation are binding on said corporation, if such officer has
acted within the scope of his authority, or even if such officer exceeded the limits of his
authority, the corp. still ratifies such contracts or obligations.
i. A corp. will be stopped in denying the agent’s authority if it knowingly permits one of
its officer or any other agent to act within the scope of an apparent authority, and it
holds out to the public as possessing the power to do those acts.
1. Said circumstances are LACKING in the present case/ Neither did Piedras
acted in good faith.
e. In a Corporation it is the BOD that exercises corporate powers not the President.
i. While in the absence of a charter or by-law provision to the contrary, the Pres is
presumed to have authority, the questioned act should be within the domain of the
general objectives of the company’s business and WITHIN the scope of the USUAL
duties.
ii. PRHT is committed to the uplifting of economic condition of the working sector of the
racing industry. Entering into a housing project is NOT ordinary to its course of business
especially NOT in such a scale and magnitude of P101M

3. There is indeed overpayment. CA decision reversed—CIAC affirmed with interest only at 6%

instead of 12%.