G.R. No. 205007 - The Mercantile Insurance Co., Inc. vs. DMCI-Laing Construction, Inc.

On March 17, 1997, Rockwell Land Corporation (“Rockwell”) engaged DMCI-Laing Construction, Inc. (“DLCI”) as General Contractor for the construction of condominium towers and landscaping works at Rockwell Center, Makati. Rockwell’s Main Contract nominated Altech Fabrication Industries, Inc. (“Altech”) as DLCI’s subcontractor for the supply and installation of glazed aluminum and curtain walling.
On July 30, 1997, Rockwell issued a Notice to Proceed to Altech with DLCI’s conformity. Pursuant thereto, Altech secured from The Mercantile Insurance Co., Inc. (“Mercantile”) Performance Bond No. G(13)-1500/97 in the amount of PhP 90,448,941.60, naming Rockwell and DLCI (later amended to DLCI alone) as obligee. Endorsements corrected the bond’s effectivity and extended its term to March 5, 2000.

From November 1998 onward, DLCI repeatedly notified Altech of poor progress, substandard work, and delay, and at times completed and rectified works at Altech’s cost.
On September 3, 1999, DLCI served its First Call on Mercantile demanding liquidation of the Performance Bond (unspecified amount). After further reiterations and fruitless negotiations, DLCI terminated the Sub-Contract on February 21, 2000 for Altech’s default and formally reserved its right to charge all resulting costs and damages against Altech.

Mercantile initially deferred evaluation pending amicable settlement; denied DLCI’s claim on February 26, 2001, citing bond expiration (March 5, 2000).
On May 29, 2003, DLCI filed a CIAC Complaint against Altech and Mercantile for PhP 31,618,494.81 in completion costs, with interest and litigation expenses.
On November 7, 2003, the CIAC Arbitral Tribunal dismissed the complaint for unreasonable delay, invalid First Call, bond expiration, unjustified termination, and applied Article 2080 (Civil Code) to release Mercantile.
DLCI’s petition for review before the Court of Appeals (CA) succeeded on July 30, 2012: CA set aside the CIAC decision, held the First Call valid, bond unexpired, Altech’s termination justified, and Mercantile jointly and solidarily liable for PhP 31,618,494.81 plus 2% monthly interest, but denied litigation fees. Mercantile’s motion for reconsideration was denied January 7, 2013.
Mercantile filed this Rule 45 Petition for review on certiorari on February 20, 2013.

Did DLCI file its CIAC Complaint within a “reasonable time” after efforts to settle amicably failed (Section 2, Paragraph 25, Sub-Contract)?

Did DLCI’s First Call satisfy the bond’s “first demand” requirement despite not specifying the amount claimed?

Does the Performance Bond cover completion costs incurred after termination of the Sub-Contract?
Can Mercantile invoke laches, bond expiration, or Article 2080 (Civil Code) to avoid liability?