Case Digest (G.R. No. 141510)
Facts:
In Systems Energizer Corporation (SECOR) and Bellville Development Incorporated (BDI) executed an Owner-Contractor Agreement on May 21, 2009 to install electrical works for Molito 3/Puregold in Muntinlupa City at a fixed lump sum of ₱15,250,000.00, incorporating Articles 2.02 and 5.05 to allow later agreed documents and price adjustments. Work began but was suspended due to issues with BDI’s structural contractor and the deaths of two signatory vice presidents. On March 25, 2010, BDI issued a new Notice of Award/Notice to Proceed for additional works—architectural vault substation, vault substation system, CCTV system, revised electrical building plans—totaling ₱51,550,000.00 inclusive of VAT. The parties signed a Second Agreement on April 5, 2010 with Article 2.4 expressly abandoning the First Agreement, detailed billing on accomplished percentages, and a contract price of ₱51,550,000.00. Subsequent Work Authorization Orders raised the total cost to ₱80,711,308.05, of which SECCase Digest (G.R. No. 141510)
Facts:
- Parties and First Agreement
- On May 21, 2009, Systems Energizer Corporation (SECOR) and Bellville Development Inc. (BDI) entered into an Owner-Contractor Agreement for electrical works at the Molito 3aPuregold Building, Muntinlupa City, at a fixed lump sum of ₱15,250,000.00.
- Key stipulations:
- Article 2.02 – all mutually agreed documents form part of the Contract Documents;
- Article 5.05 – additional or reduced work costs shall be added to or deducted from the Contract Price.
- Suspension, Notice to Proceed, and Second Agreement
- Work under the First Agreement was suspended. On March 25, 2010, BDI issued a new Notice of Award/Notice to Proceed for revised electrical scope—including vault sub-station, CCTV and plan revisions—totaling ₱51,550,000.00.
- On April 5, 2010, Parties executed a Second Agreement expressly superseding all prior agreements (Article 2.4), fixing the price at ₱51,550,000.00 with monthly billing based on actual accomplishment.
- Additional Work, Billing, and Dispute
- Multiple Work Authorization Orders (WAOs) increased actual cost to ₱80,711,308.05. Retention fees (10% under each contract) and unpaid WAO No. 20 (₱1,350,000.00) totalling ₱8,030,000.00 remained unpaid despite demand.
- SECOR filed arbitration with the CIAC on September 13, 2011. Final Award (July 16, 2012) ordered BDI to pay the ₱8,030,000.00 plus 12% interest; all other claims were denied.
- Court of Appeals Decision
- BDI sought review under Rule 43; on January 31, 2013, the CA modified the CIAC award: found the First Agreement novated by the Second, awarded SECOR only retention fee under the Second Agreement (₱5,155,000.00), 6.774% of the First Agreement (₱1,033,035.00), and WAO 20 (₱1,350,000.00), and ordered SECOR to reimburse BDI ₱13,593,273.00.
- CA relied on an unsigned progress report showing only 6.774% completion under the First Agreement and on “as-built” plans matching the revised design.
Issues:
- Whether Article 2.4 of the Second Agreement clearly supersedes and novates the First Agreement.
- Whether there is sufficient evidence to establish that the Second Agreement objectively novated the First Agreement.
- Whether the percentage of work accomplished under the First Agreement (6.774%) is adequately supported.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)