Case Digest (G.R. No. L-76787)
Facts:
- Baylen Corporation, Reynaldo M. Reyes, Edna L. Reyes, and Emmanuel I. Astillero are the petitioners.
- Respondents include the Hon. Court of Appeals (14th Division) and Jose Rizal College.
- In August 1969, Jose Rizal College invited bids for a five-storey school building in Mandaluyong, Metro Manila.
- Baylen Corporation won the bid of P1,196,000.00, agreeing to complete the project in 200 working days.
- Baylen began work on September 16, 1969, before a formal contract was signed.
- Unstable ground conditions were discovered, prompting the College to conduct sub-surface tests, increasing the contract price to P1,276,000.00.
- Baylen posted a Surety Bond of P255,200.00 in November 1969.
- Rising material costs due to peso devaluation affected the project.
- The College's Supervising Architect deducted significant amounts from Baylen's billings, approving only P210,716.00 after four submissions.
- Baylen ceased work in April 1970, leading to mutual civil suits filed on July 29, 1970.
- An independent Commissioner assessed the project, reporting on June 1, 1973.
- The trial court ruled in favor of the College, ordering Baylen to pay damages and fees.
- Both parties appealed, and the Court of Appeals affirmed the trial court's decision with modifications.
- Baylen filed a Petition for Review with the Supreme Court.
Issue:
- (Unlock)
Ruling:
- The Supreme Court denied the Petition for Review, affirming the Court of Appeals' decision with modifications.
- The Court determined that damages were based on increased construction costs due to Baylen's abandonment...(Unlock)
Ratio:
- The Supreme Court upheld the College's interpretation of the payment terms, stating payments should reflect the percentage of work completed.
- The contract was a fixed-price, lump-sum agreement without an escalation clause, placing the risk of cost increases on Baylen.
- The Commissioner’s report was deemed valid as both parties accepted it without objecti...continue reading
Case Digest (G.R. No. L-76787)
Facts:
The case involves Baylen Corporation, Reynaldo M. Reyes, Edna L. Reyes, and Emmanuel I. Astillero as petitioners against the Hon. Court of Appeals (14th Division) and Jose Rizal College as respondents. The events leading to the case began in August 1969 when Jose Rizal College, anticipating an increase in student enrollment for the academic year 1970-1971, issued invitations to bid for the construction of a five-storey school building (Building H, Phase II) in Mandaluyong, Metro Manila. Baylen Corporation submitted the winning bid of P1,196,000.00, agreeing to complete the project within 200 working days. On September 16, 1969, before a formal contract was executed, Baylen mobilized its labor force and began delivering materials to the site. However, upon commencing excavation, Baylen discovered unstable ground conditions, which were reported to the College. The College agreed to conduct sub-surface tests, adding the cost of P80,000.00 to the original bid, leading to a formal contract of P1,276,000.00 executed on October 30, 1969.
In November 1969, Baylen posted a Surety Bond of P255,200.00 as a performance bond. As construction progressed, the costs of materials surged due to the devaluation of the Philippine peso. Despite this, Baylen continued work and submitted periodic billings. However, the College's Supervising Architect, Fernando Abad, deducted substantial amounts from these billings, resulting in only P210,716.00 being approved for payment after four submissions. Baylen sought explanations for these deductions but received no response. Consequently, Baylen unilaterally ceased work in April 1970, leading to mutual civil suits filed by both parties on Ju...