William Golangco Construction Corporation v. Philippine Commercial International Bank

Summary

This commercial law case involved a construction contract dispute between WGCC and PCIB over liability for defects in granitite wash-out finish that appeared after the contractual one-year defects liability period expired. PCIB accepted the completed PCIB Tower II Extension Project in 1992, but defects appeared in 1993. When WGCC declined to redo the entire work, PCIB hired another contractor at a cost of P11.665 million and sought reimbursement through CIAC arbitration. The Supreme Court reversed lower tribunals, ruling that the one-year defects liability period was valid under the principle of autonomy of contracts (Article 1306, Civil Code). The Court held that defects appearing after the contractual guarantee period cannot make the contractor liable, emphasizing that contracts have the force of law between parties and courts cannot relieve parties from unfavorable but validly entered contracts.