Facts:

On May 29, 1996, the Department of Public Works and Highways (DPWH) awarded a contract to ALC Industries, Inc. (ALC) for the construction of a 105-kilometer section of the Davao-Bukidnon Road, specifically from Calinan to Maramag. The contract, known as Contract Package 09B, was signed on January 28, 1997, and ALC commenced work after receiving the notice to proceed on March 3, 1997. However, issues arose when it was discovered that the original design plans did not accurately reflect the actual ground levels, necessitating a full-scale redesign of the project. Due to delays, ALC and DPWH executed a Reduction in Scope Agreement (RISA) on July 17, 1998, which reduced the project scope from 105 kilometers to 46.2 kilometers and the contract price from approximately P396 million to P194 million. Despite this reduction, ALC continued to experience delays, prompting DPWH to issue multiple warnings regarding ALC's performance. In March 1999, DPWH proposed a Supplemental Agreeme...

Facts:

1. Contract Award and Initial Work

   • On May 29, 1996, the Department of Public Works and Highways (DPWH) awarded ALC Industries, Inc. (ALC) the construction of a 105-kilometer section of the Davao-Bukidnon Road.
   • The contract, signed on January 28, 1997, had a price of P396,336,381.48.
   • ALC began work on March 3, 1997, after receiving the notice to proceed.

2. Design Errors and Redesign

   • The parties discovered that the original design plans and drawings did not reflect actual ground levels, necessitating a full-scale redesign.
   • This redesign caused significant delays in the project.

3. Reduction in Scope Agreement (RISA)

   • Due to delays, ALC and DPWH executed a Reduction in Scope Agreement (RISA) on July 17, 1998, reducing the project scope to 46.2 kilometers and the contract price to P194,802,386.89.
   • Despite the reduction, ALC continued to fall behind schedule.

4. Warnings and Rescission

   • DPWH issued multiple warnings to ALC about the delays.
   • On April 19, 1999, DPWH rescinded the contract, citing ALC's negative slippage exceeding the 15% threshold under Presidential Decree (P.D.) 1870.

5. ALC's Defense

   • ALC argued that the delays were caused by DPWH's errors in design and approval processes, as well as inclement weather.
   • ALC claimed its negative slippage was only 8.72%, below the 15% threshold.

6. Arbitration and CIAC Decision

   • ALC submitted the dispute to the Construction Industry Arbitration Commission (CIAC).
   • CIAC voided DPWH's rescission, finding the adjusted negative slippage to be 12.85%.
   • CIAC awarded ALC P190,355,820.84, offset by prior payments, resulting in a net award of P125,623,284.09.

7. Court of Appeals (CA) Decision

   • The CA upheld DPWH's rescission, citing ALC's breaches beyond negative slippage.
   • The CA reduced ALC's award to P45,687,595.25 and ordered ALC to return P19,044,941.50 to DPWH.

Issue:

1. Whether the CA erred in failing to dismiss DPWH's appeal for being filed beyond the reglementary period.
2. Whether the CA erred in upholding DPWH's rescission of the contract with ALC.
3. Whether the CA erred in not allowing ALC to recover stand-by costs for equipment and manpower.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)