Case Digest (G.R. No. 167829-30)
Facts:
Filipinas (Pre-Fab Bldg.) Systems, Inc. v. MRT Development Corporation, G.R. Nos. 167829-30, November 13, 2007, Supreme Court Second Division, Velasco, Jr., J., writing for the Court.
Petitioner Filipinas Systems, Inc. (FSI) was the second-lowest bidder for the construction of a two-level podium/depot (the Project) for MRT Development Corporation (MRTDC). After the lowest bidder declined the strict timetable, MRTDC issued a Notice of Award/Notice to Proceed (NOA/NTP) dated June 17, 1998 to FSI, which FSI accepted. The NOA/NTP contained a bonus/penalty scheme (US$30,000/day bonus for early completion; US$100,000/day liquidated damages for delay). FSI’s June 6, 1998 proposal contained a provision (par. 12) that an owner’s delayed payment would trigger interest and an automatic time extension equal to the delay.
During construction, MRTDC (through its Project Management Team, PIJV) issued multiple change orders; David Sampson, PIJV’s Area Construction Manager, acted on-site as the Project Manager. FSI completed substantially all work by April–May 1999. Months later FSI claimed extensive time extensions (200 days technical extension allegedly approved by Sampson and an asserted 1,800-day financial extension for delayed payments), and sought a large early-completion bonus and other extra costs.
FSI filed a Request for Adjudication with the Construction Industry Arbitration Commission (CIAC). After hearings the CIAC issued an Award dated May 6, 2003 granting an early completion bonus of US$2,820,000 (corresponding to 94 days early based on a 200-day technical extension), but denying claims for extra costs and overhead; it held the NOA/NTP, FSI’s letter-proposal, and the General Conditions governed the parties’ relationship and found Sampson authorized to approve change orders and time extensions.
Both parties sought review in the Court of Appeals (CA) under Rule 43. On January 6, 2004 the CA modified and set aside the CIAC Award by deleting the US$2,820,000 early-completion award (holding that contract modification by the owner was required to bind MRTDC to change orders/time extensions) but affirmed the remainder of the CIAC Award. FSI filed a Petition for Review on Certiorari under Rule 45 with the Supreme Court seeking reversal of the CA decision; the CA denied reconsideration by Resolution dated April 8, 2005.
The Supreme Court’s review addressed whether (1) FSI was entitled to early completion bonus based on technical ti...(Subscriber-Only)
Issues:
- Is FSI entitled to an early completion bonus based on the 200-day technical time extension approved by the Project Manager?
- Is FSI entitled to include financial time extensions (delayed payments) in computing the early completion bonus?
- Is FSI entitled to recovery for extended overhead costs?
- Is FSI entitled to recovery for extra costs due to a change in construction methodology? ...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)